UTILITY TRAILERS OF INDIANAPOLIS, INC. et al v. UTILITY TRAILER MANUFACTURING COMPANY
Filing
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ENTRY ON CROSS-MOTIONS FOR PARTIAL SUMMARY JUDGMENT - Plaintiff's Motion for Partial Summary Judgment (Dkt. 35 ) is DENIED, and Utility's Cross-Motion for Partial Summary Judgment (Dkt. 60 ) is GRANTED. Signed by Judge Tanya Walton Pratt on 3/18/2013. (JD)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
UTILITY TRAILERS OF INDIANAPOLIS,
INC., and, PETERBILT OF INDIANA, INC.,
Plaintiffs,
v.
UTILITY TRAILER MANUFACTURING
COMPANY,
Defendant.
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Case No. 1:11-cv-01597-TWP-DML
ENTRY ON CROSS-MOTIONS FOR PARTIAL SUMMARY JUDGMENT
This matter is before the Court on Plaintiffs Utility Trailers of Indianapolis, Inc.’s (the
“Seller”) and Peterbilt of Indiana, Inc.’s (“Peterbilt”) (collectively “Plaintiffs”) Motion for
Partial Summary Judgment (Dkt. 35), and Defendant Utility Trailer Manufacturing Company’s
(“Utility”) Cross-Motion for Partial Summary Judgment (Dkt. 60). The parties each argue that
they are entitled to partial summary judgment on the issue of whether Utility violated the notice
provision of Indiana Code § 9-23-3-22, thus committing an unfair practice and constructively
approving the transfer of the Seller’s trailer dealership business to Peterbilt. For the reasons set
forth below, Utility’s motion is GRANTED and the Seller’s and Peterbilt’s motion is DENIED.
I. BACKGROUND
The following material facts are not in dispute for purpose of the parties’ motions.
Utility is a manufacturer of semi-trailers. The Seller has been a Utility trailer dealer since
approximately 1979. Utility has a general policy against permitting its dealers to sell both trucks
and semi-trailers, a practice often referred to as “dueling,” because in Utility’s experience it has
found that these dual dealers tend to focus more attention and resources on the truck side of their
business to the detriment of the trailer side of the business. Nevertheless, sometime after Seller
became a Utility trailer dealer, Utility consented to Seller’s request to become a “dueling” dealer
based upon particular circumstances which existed in the market at that time.
In Indiana, this type of transaction is regulated by statute. Under Indiana Code § 9-23-322, a dealer is required to obtain the consent of a manufacturer or distributor prior to transferring
its business and assets to another entity where that transfer contemplates or is conditioned upon
the continuation of the franchise relationship between the manufacturer and the transferee. On
July 15, 2011, Seller entered into an asset purchase agreement with JX Enterprises, Inc. (“JX”)
whereby Seller was to sell substantially all of its assets to JX under the terms of an Asset
Purchase Agreement (the “Purchase Agreement”) (the “Proposed Sale”).1
Thereafter, JX
assigned all its rights in and to the Purchase Agreement to its direct and wholly owned
subsidiary, Peterbilt, under the terms of an assignment agreement (the “Assignment
Agreement”). Some time prior to July 19, 2011, Harold “Steve” Riddle (“Mr. Riddle”) on behalf
of the Seller and Bob Conlee (“Mr. Conlee”), Director of Dealer Relations at Utility, had a
telephone conversation in which Mr. Riddle informed Mr. Conlee that JX and Seller had entered
into the Purchase Agreement, and that Seller wanted to transfer its trailer dealership to JX. Mr.
Conlee informed Mr. Riddle that Utility would not approve the sale. However, despite having
voiced its disapproval, Utility e-mailed a dealer application to Seller on July 19, 2011 (the
“Application”).
On July 21, 2011, Eric Jorgensen (“Mr. Jorgensen”) from JX e-mailed Mr.
Conlee asking to meet with Utility to discuss JX’s desire to take over the Seller’s trailer
dealership. The same day, Mr. Conlee responded to Mr. Jorgensen via e-mail and stated that,
based upon Utility’s policy, that being, Utility would not approve the dealership transfer, so such
1
Plaintiffs’ briefs repeatedly state that the Purchase Agreement was between Seller and Peterbilt; however, a copy
of the Purchase Agreement shows that the Purchase Agreement was entered into between Seller and JX Enterprises,
Inc. Dkt. 64-2 at 3.
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a meeting would not be useful. Mr. Jorgensen responded, again via e-mail, that he respected that
corporate policy and found it “unfortunate that other multiple location, truck and trailer franchise
dealers set a sour taste over the years with Utility.” Dkt. 62-2 at 2.
Not to be deterred, JX filled out and sent the Application to Utility on July 29, 2011, via
United Parcel Service, and Utility received the Application on August 1, 2011. JX left several
questions on the Application blank, and the Application did not include a copy of the Purchase
Agreement, the Assignment Agreement, or any other agreements related to the Proposed Sale.
On August 3, 2011, Mr. Riddle sent an e-mail to Harold Bennett (“Mr. Bennett”), president of
Utility, to again request that Utility accept JX’s Application to acquire the Seller’s dealership.
Mr. Bennett responded the following day and reiterated Utility’s decision not to approve JX’s
Application, stating that their position was “not negotiable.” Dkt. 62-4 at 2.
The Seller did not send a copy of the Purchase Agreement to Utility until September 25,
2011, almost two months after JX submitted the Application. The version of the Purchase
Agreement sent to Utility did not include the schedules to the agreement. On October 7, 2011,
Seller entered into a management agreement with Peterbilt to supervise and manage the Utility
trailer portion of Seller’s operations (the “Management Agreement”), which Utility did not learn
about until April 2012, after this lawsuit had been filed. Utility did not receive a copy of the
Management Agreement until Seller produced it in discovery. The Assignment Agreement
between JX and Peterbilt was never sent to Utility, nor has it been produced to Utility during the
course of this litigation.
Utility has refused to allow the Proposed Sale to go forward and refuses to recognize
Peterbilt as a Utility dealer. Utility did not send written correspondence via certified mail to
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Seller, Peterbilt, or JX regarding its reasons for disapproving the Proposed Sale, and the only
communications regarding its disapproval were via e-mail and telephone.
II.
LEGAL STANDARD
Summary judgment is only appropriate by the terms of Rule 56(c) where there exists “no
genuine issue as to any material facts and . . . the moving party is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56. This notion applies equally where, as here, opposing parties each
move for summary judgment in their favor pursuant to Rule 56. I.A.E., Inc. v. Shaver, 74 F.3d
768, 774 (7th Cir. 1996). Indeed, the existence of cross-motions for summary judgment does not
necessarily mean that there are no genuine issues of material fact. R.J. Corman Derailment
Serv., Inc. v. Int’l Union of Operating Eng’rs., 335 F.3d 643, 647 (7th Cir. 2003). Rather, the
process of taking the facts in the light most favorable to the nonmovant, first for one side and
then for the other, may reveal that neither side has enough to prevail without a trial. Id. at 648.
“With cross-motions, [the Court’s] review of the record requires that [the Court] construe all
inferences in favor of the party against whom the motion under consideration is made.”
O’Regan v. Arbitration Forums, Ins., 246 F.3d 975, 983 (7th Cir. 2001) (quoting Hendricks–
Robinson v. Excel Corp., 154 F.3d 685, 692 (7th Cir. 1998)).
III. DISCUSSION
Seller and Peterbilt allege that Utility’s communications regarding its disapproval of the
Proposed Sale were not in accordance with Indiana Code § 9-23-3-22(b) because it failed to send
a copy of a written notice providing the “material reasons” for disapproving the transfer via
certified mail within sixty days of receiving notice of the Proposed Sale and, therefore, the Court
should find that Utility constructively approved the sale in accordance with Indiana Code § 9-233-22(b), and that Utility committed an unfair practice under Indiana Code § 9-23-3-22(d).
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Utility, in its cross-motion, argues that Seller and Peterbilt did not comply with the requirements
of Indiana Code § 9-23-3-22(a) because they failed to provide Utility with all of the information
required in that subsection, thus its obligation to send such a notice was never triggered.
A.
Statutory Interpretation of Indiana Code § 9-23-3-22
Indiana courts have not had the occasion to address the requirements for dealers and
manufacturers under Indiana Code § 9-23-3-22. When a federal court must interpret and apply
an Indiana statute “we look to see how Indiana courts address a statutory interpretation issue of
first impression.” Brownsburg Area Patrons Affecting Change v. Baldwin, 137 F.3d 503, 508
(7th Cir. 1998) certified question answered, 714 N.E.2d 135 (Ind. 1999). “Indiana courts will
not engage in statutory interpretation unless the language of the statute is ambiguous. . . . If the
statute is not ambiguous, the court will give effect to the plain, ordinary, and usual meaning of
the language of the statute.” Brownsburg, 137 F.3d at 508 (citing Amoco Prod. Co. v. Laird, 622
N.E.2d 912, 915 (Ind. 1993); Indiana v. CSX Transp., Inc., 673 N.E.2d 517, 519 (Ind. Ct. App.
1996)); see also Miller v. LaSalle Bank Nat. Ass’n, 595 F.3d 782, 786 (7th Cir. 2010). Under
Indiana law, the primary purpose of statutory interpretation is to ascertain and give effect to the
legislature’s intent, and the statute itself is the best evidence of this intent. Nicoson v. State, 938
N.E.2d 660, 663 (Ind. 2010). “The first and often the only step in resolving an issue of statutory
interpretation is the language of the statute.” State, Ind. Civil Rights Comm'n v. Indianapolis
Newspapers, Inc., 716 N.E.2d 943, 946 (Ind. 1999) (quoting Shell Oil Co. v. Meyer, 705 N.E.2d
962, 972 (Ind. 1998)).
The Court must first determine whether the language in the statue at issue is ambiguous.
The pertinent portions of Indiana Code § 9-23-3-22 state:
(a) A dealer may not transfer, sell, or assign the business and assets of a
dealership or an interest in the dealership to another person that contemplates
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or is conditioned upon a continuation of the franchise relationship with the
manufacturer or distributor unless the dealer first:
(1) notifies the manufacturer or distributor of the dealer’s decision to make
the transfer, assignment, or sale by written notice; and
(2) obtains the approval of the manufacturer or distributor.
The dealer must provide the manufacturer or distributor with completed
application forms and related information generally used by the manufacturer or
distributor to conduct its review of such a proposal, and a copy of all agreements
regarding the proposed transfer, assignment, or sale.
(b) The manufacturer or distributor shall send a letter by certified mail to the
dealer within sixty (60) days of receipt of the information specified in
subsection (a). The letter must indicate any disapproval of the transfer,
assignment, or sale and must set forth the material reasons for the
disapproval. If the manufacturer or distributor does not respond by letter
within the sixty (60) day period, the manufacturer’s or distributor’s consent to
the proposed transfer, assignment, or sale is considered to have been granted.
A manufacturer or distributor may not unreasonably withhold approval of a
transfer, assignment, or sale.
(c) . . .
(d) Violation of this section by the manufacturer or distributor is an unfair
practice by a manufacturer or distributor.
I.C. § 9-23-3-22 (emphasis added). Seller and Peterbilt argue that the requirements of subsection
(b) are not ambiguous, but that “room exists for interpretation” with regard to the requirements
of subsection (a) and that the statute “provides broad leeway” for the Court’s interpretation of
what constitutes compliance on the part of the dealer. Dkt. 78 at 6. The Court disagrees with the
Plaintiffs’ characterization of subsection (a).
Indiana Code § 9-23-3-22(a) requires that a dealer submit a “completed application” and
include a copy of “all agreements” regarding the proposed transfer. There is nothing ambiguous
about this language that would lead the Court to adopt Seller’s interpretation that providing a
“substantially answered” application form completed by the proposed transferee is sufficient for
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purposes of the statute. See Dkt. 78 at 7. The statute specifically uses the word “completed”
with reference to the application, not “substantially completed.”
In addition, there is no
ambiguity in the language requiring that “all agreements regarding the proposed transfer” be
submitted to the manufacturer under subsection (a), which would include, at a minimum, the
Purchase Agreement and documents affecting the ultimate transfer to and management of the
dealership by Peterbilt, i.e. the Assignment Agreement and the Management Agreement. It is
clear from the face of the statute that the purpose behind the requirement that the dealer provide
this information is so that the manufacturer can make an informed decision as to whether it
desires to continue a franchise relationship with the new dealer. This purpose would not be
served if a dealer were permitted leeway to submit incomplete information to the manufacturer,
particularly as it relates to what entity would ultimately be selling the manufacturer’s products,
yet still require the manufacturer to provide a timely notice of its decision. With regard to the
requirements of Indiana Code § 9-23-3-22(b), the plain language of the statute states that the
manufacturer’s obligation to send a notice of its decision not to approve the transfer is predicated
on the receipt of the information in subsection (a), and the sixty day period does not begin to run
until the manufacturer receives the specified information and documentation.
B.
The Parties’ Compliance Under Indiana Code § 9-23-2-22.
Based upon the evidence presented by the parties, there is no dispute of material fact as to
whether Plaintiffs complied with subsection (a) of the statute, and whether Utility’s obligations
were thus triggered under subsection (b). The Court finds that they did not. First, the copy of
the Application, which was completed by JX and not Seller or Peterbilt, shows that some
answers were omitted, and Plaintiffs admit in their answers to the First Request for Admissions
that these questions were left blank. See Dkts. 64-1 at 6-8; 62-8 at 4-5; 62-9 at 4-5. These
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omissions indicate that the Application was not “completed” as required by the statute. Second,
Seller and Peterbilt admitted that they did not provide the Purchase Agreement to Utility, and
even denied that they were required to submit the Purchase Agreement—an agreement clearly
related to the proposed transfer—which is contrary to the unambiguous language in the statute.
See Dkts. 62-1 at 5; 62-2 at 5. Utility states that it did eventually receive a copy of the Purchase
Agreement two months after receiving the Application, but it too was incomplete because the
schedules were omitted.
See Dkt. 64-2.
Finally, Utility did not receive a copy of the
Management Agreement—an agreement which dictated who would be responsible for the
management of the Utility trailer dealership portion of Seller—until after this lawsuit was filed
(Dkt. 64-4) and still has never received a copy of the Assignment Agreement—an agreement
which dictated who the ultimate owner of Seller’s Utility trailer dealership would be. These
three agreements are all clearly “regarding the proposed transfer” and should have been
submitted, in their entirety, as part of the Application sent to Utility under Indiana Code § 9-233-22(a).
Plaintiffs ask the Court to strictly construe the statute against Utility and find that notice
of its disapproval provided via telephone and e-mail does not fulfill the requirement that
communication be sent via certified mail; however, under Indiana law “[o]ne who claims a
statutory right must bring himself within the provisions of the statute.” Johnson v. Toth, 516
N.E.2d 85, 86 (Ind. Ct. App. 1987); see also SLR Plumbing & Sewer, Inc. v. Turk, 757 N.E.2d
193, 199 (Ind. Ct. App. 2001) (finding that subcontractor’s notice did not comply with statutory
requirements and thus was insufficient to trigger property owners’ obligation under mechanic’s
lien statute). Plaintiffs argue that Utility did not require the Seller and Peterbilt to comply with
the statute because it did not request the additional documentation, and that Utility’s telephone
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and e-mail responses indicate that it received proper notice of the Proposed Sale. Dkt. 78 at 7.
However, there is nothing in the statute requiring the manufacturer to request such information;
the burden is on the dealer to provide the information indicated in subsection (a). See Salem v.
Cmty. Sch. Corp. v. Richman, 406 N.E.2d 269, 274 (Ind. Ct. App. 1980) (superintendent did not
have burden to inform school board of its statutory requirement to give him written notice of
contract nonrenewal).
Indeed, it would be unfair to expect a manufacturer to know what
information and documents a dealer had failed to provide, so that it could make such a request.
Therefore, the Court finds that because the Plaintiffs never provided all of the documents and
information required under Indiana Code § 9-23-3-22(a) to Utility, the sixty day time period
within which to send Seller and Peterbilt a notice of its disapproval of the Proposed Sale was
never triggered, and Utility had no obligation to send its notice via certified mail or otherwise.
Because the Court has determined that Utility did not have an obligation to comply with
the notice requirements of Indiana Code § 9-23-3-22(b), the Court further finds that Utility did
not constructively approve the Proposed Sale, nor did it commit an unfair practice under Indiana
Code § 9-23-3-22(d). It is irrelevant whether Seller and Peterbilt actually knew of the specific
reason for Utility’s disapproval.2 It is only relevant that the Plaintiffs did not comply with the
statute under which they seek to obtain constructive approval for the Proposed Sale from Utility,
despite already being aware that they would not receive it expressly. The Court will not permit
an interpretation of the Indiana statute in question that would result in such a contravention of the
statute’s purpose.
2
Mr. Riddle claims that he was never informed of the reason for Utility’s disapproval (Dkt. 79-3 at 2); however, the
emails between Mr. Jorgensen and Utility indicate that at least JX was aware of Utility’s corporate policy against
dual dealerships and that he had discussed Utility’s disapproval with Mr. Riddle. Dkt. 62-2 at 2. The Court need
not resolve this factual dispute in order to determine that the Plaintiffs did not meet their burden under the statute,
thus it is not a question of material fact that would preclude summary judgment.
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IV. CONCLUSION
For the reasons set forth above, Plaintiff’s Motion for Partial Summary Judgment (Dkt.
35) is DENIED, and Utility’s Cross-Motion for Partial Summary Judgment (Dkt. 60) is
GRANTED.
SO ORDERED.
________________________
Hon. Tanya Walton Pratt, Judge
United States District Court
Southern District of Indiana
03/18/2013
Date: _____________
DISTRIBUTION:
David K. Herzog
FAEGRE BAKER DANIELS LLP - Indianapolis
david.herzog@faegrebd.com
Katrina Michelle Gossett
FAEGRE BAKER DANIELS LLP - Indianapolis
katrina.gossett@faegrebd.com
Ryan Michael Hurley
FAEGRE BAKER DANIELS LLP - Indianapolis
ryan.hurley@FaegreBD.com
Marc Allen William Stearns
HARRISON & MOBERLY
mstearns@harrisonmoberly.com
Michael P. Shanahan
HARRISON & MOBERLY
mshanahan@harrisonmoberly.com
William Norris Ivers
HARRISON & MOBERLY
wivers@harrisonmoberly.com
Peter S. Kovacs
STEWART & IRWIN P.C.
pkovacs@silegal.com
Ronald C. Smith
STEWART & IRWIN P.C.
rsmith@silegal.com
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