Rochester Ford Sales, Inc. v. Ford Motor Co.

United States Court of Appeals
For the First Circuit

No. 01-2049

ROCHESTER FORD SALES, INC.,

Plaintiff, Appellant,

v.

FORD MOTOR COMPANY,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Steven J. McAuliffe, U.S. District Judge]

Before

Boudin, Chief Judge,

Lynch, Circuit Judge,

and Gertner,* District Judge.

Daniel A. Laufer was on brief for appellant.
Nicholas T. Christakos, with whom Brian M. Haynes and
Sutherland Asbill & Brennan LLP, were on brief for appellee.

April 24, 2002

*
Of the District of Massachusetts, sitting by designation.
 GERTNER, District Judge. This case asks us to construe

the validity of a general release provision in a sales and service

(i.e., dealership) agreement between an automobile manufacturer and

its licensed dealer. In December 1999, plaintiff-appellant

Rochester Ford Sales ("RFS"), a Ford dealership, sued defendant-

appellee Ford Motor Co. ("Ford"), claiming, inter alia, that Ford's

refusal to approve another licensed dealer's offer to purchase

RFS's assets and dealership rights in 1995 violated N.H. Rev. Stat.

Ann. § 357-C:3:I ("§ 357-C"). The statute provides:

It shall be deemed an unfair method of
competition and unfair and deceptive practice
for any [m]anufacturer, factory branch,
factory representative, distributor,
distributor branch, distributor representative
or motor vehicle dealer to engage in any
action which is arbitrary, in bad faith, or
unconscionable and which causes damage to any
of such parties or to the public.

In response, Ford argued that any claims RFS may have had
under § 357-C were barred by a general release RFS executed vis-à-
vis Ford when it exercised certain options under Ford's Sales and

Service Agreement ("Agreement"). In 1998, Ford approved the sale of
RFS's dealership assets to Granite State Ford, LLC ("Granite Ford").
When RFS elected to have Ford repurchase certain Ford products in

order to facilitate the sale, it also executed a release of all
claims against Ford.
In December 2000, Ford moved for summary judgment on the

release issue. The district court1 granted Ford's motion in June

1
The case was before the federal district court on diversity
grounds, pursuant to 28 U.S.C. § 1332(a).

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2001. Rochester Ford Sales, Inc. v. Ford Motor Co., No. Civ. 99-

559-M, 2001 WL 799594 (D.N.H. June 21, 2001). The district court

found that the terms of the general release in question were both
valid and binding on RFS, rejecting RFS's arguments that the release

was supported by insufficient consideration and/or that it was the

product of coercion.
RFS now raises two issues on appeal: (1) the validity of

the release and (2) assuming the release is not valid, whether RFS

presented sufficient evidence to warrant a jury trial on the § 357-C

claim. We hereby AFFIRM the decision of the district court in all

respects.

I. BACKGROUND

A. Factual Background

As the law requires, we construe the facts of this case

in the light most favorable to RFS, the nonmoving party. Houlton

Citizens' Coalition v. Town of Houlton, 175 F.3d 178, 184 (1st Cir.

1999). As the district court observed, the parties agree regarding
many basic facts, although RFS would have us draw inferences from

some of those facts that even the lenient summary judgment standard

cannot support.
RFS first entered into a Sales and Service Agreement with
Ford in 1980. After the dealer principal, James Peirce, died in

1994, his widow Meredith S. Peirce became its sole owner. In 1996,
she executed a new Sales and Service Agreement with Ford, which the

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parties agree was identical to the first in all relevant respects.

The Agreement itself is an extensive document, addressing in detail

the procedures for running and selling a dealership. For the
present purposes, several provisions are relevant.

First, with regard to a prospective sale of the

dealership, Paragraph 24(a)(2) gives Ford the right to approve or
decline to approve a prospective purchaser. It provides, in

relevant part:

[Ford] has the right to approve or decline to
approve any prospective purchaser as to his
character, automotive experience, management,
capital and other qualifications for
appointment as an authorized dealer in company
products for the dealership operations
involved. Approval . . . of the prospective
purchaser shall not, however, be unreasonably
withheld.

Second, to facilitate the orderly transfer of ownership,
a number of provisions address the right of the Dealer to demand

the repurchase of Ford products by Ford at the time of the

dealership sale and to assign such rights to the successor dealer.

Paragraph 21 describes the right of the Dealer to demand that the
company repurchase certain parts in connection with the Dealer's

notice of termination or nonrenewal, as follows:

Upon . . . termination or nonrenewal of this
agreement by the Dealer, the Dealer may demand
in his notice of termination or nonrenewal, to
have the Company purchase or accept upon return
from the Dealer, in return for his general
release specified in paragraph 23 [certain
vehicles, parts, dealer's signs, special tools
and equipment as outlined in paragraphs 21(a)-
(d)].

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The Dealer could not only demand Ford's repurchase of parts, but

could also assign its repurchase rights to a successor Dealer.

Assignment of Benefits. As an assist to the
Dealer in effecting an orderly transfer of his
assets to a replacement dealer and to minimize
possible interruptions in customer convenience
and service, in the event of termination or
nonrenewal by either party, any rights or
benefits with respect to subparagraphs 21(a),
21(b), 21(c), and 21(d), herein may be
assigned by the Dealer to anyone whom the
Dealer has agreed to sell the respective
property and whom [Ford] has approved as a
replacement for the Dealer. Such assignments
will be subject to Dealer's fulfillment of his
obligations under paragraph 19 and this
paragraph 21 and subject to the Dealer's
tender of a general release as specified in
paragraph 23.

Both of these provisions -- the Dealer's right to have

Ford repurchase parts and the Dealer's right to assign its
repurchase rights to the successor dealer -- required the execution

of a general release between the Dealer and Ford. Paragraph 23

provides, in relevant part, as follows:
[U]pon the Dealer's demand of any of [the
benefits provided for in paragraph 21] upon
any termination or nonrenewal by the Dealer,
[Ford] shall be released from any and all
other liability to the Dealer with respect to
all relationships and actions between the
Dealer and [Ford], however claimed to arise .
. . . Simultaneously with the receipt of any
benefits so elected or demanded, the Dealer
shall execute and deliver to [Ford] a general
release with exceptions, as above described,
satisfactory to [Ford].

Negotiations to sell RFS, which was not doing well

financially, began in 1994. The dealership proved to be difficult

to sell because the real estate on which it was situated was a

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former municipal dump and contaminated by solid waste. Over the

next three years, during which RFS lost almost $700,000, four or

five different prospective sales fell through for various reasons,
including, in 1995, Ford's refusal to approve one of the sales. In

December 1995, RFS sought Ford's approval of a proposed sale of its

Ford dealership to Rochester Lincoln Mercury, Inc. ("RLM"). Ford
refused its consent on the grounds that RLM's track record in sales

was too weak; RFS's owners were disappointed, but continued to

search for a buyer.

On January 23, 1998, RFS finally executed an agreement to
sell the Ford dealership to Dennis Roberts and Kevin Donovan, owners

of Granite Ford. RFS tendered the asset purchase agreement to Ford

on January 26, 1998. Then, in order to facilitate the transfer, RFS
took the following three steps on March 4, 1998:

(1) RFS voluntarily terminated its Sales & Service

Agreement with Ford by signing and tendering a letter of resignation
drafted by Ford. The letter stated that RFS's resignation would be

effective when accepted by Ford Motor Company, "expressly
conditioned upon the successful closing of the pending Purchase and

Sale Agreement between Peirce Ford Sales and Dennis Roberts, Kevin

Donovan, and/or Granite Ford."

(2) In the letter, RFS explicitly elected the parts

repurchase option available under paragraph 21 of the Sales and

Service Agreement. RFS requested that Ford repurchase its inventory

of new, unused, and undamaged eligible Ford parts and accessories

"upon terms and conditions set forth in subparagraph 21(b) . . . in

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an amount by which the actual audited inventory exceeds recommended

inventory guide levels as determined by Ford Motor Company in its

sole discretion." Having elected the repurchase option, RFS then
assigned it to Granite Ford under paragraph 21(g), pursuant to the

Ford asset sale agreement.

(3) RFS executed and delivered a written general release
in favor of Ford, in exchange for the parts buyback option and right

of assignment, as specified in the Ford Sales & Service Agreement.

At some point between January and March 1998, Ford

approved the sale of RFS to Granite Ford; the precise date is
unclear from the record. On February 24, 1998, Ford sent RFS a

packet of sample forms to be used in effectuating its resignation

"to assist you in the buy-sell agreement with Dennis Roberts."
Moreover, William Albee (the son of Mrs. Peirce, the owner of RFS)

stated in his affidavit in support of the plaintiff's opposition to

summary judgment that "on February 25, 1998 prior to closing, J.H.
Friestedt on behalf of Ford Motor Company had already approved the

purchase [of] the dealership by Roberts and Donovan through Granite
Ford, LLC." However, Friestedt's memorandum recommending approval

of the sale is dated March 12, 1998.

The sale to Granite Ford closed on April 1, 1998. After

closing the sale, and notwithstanding the release it had signed, RFS

brought this suit against Ford, alleging that Ford unreasonably

withheld its consent to the proposed RLM sale in 1995, resulting in

a substantial financial loss to RFS, in violation of N.H. Rev. Stat.

Ann. § 357-C:3. Ford responded that RFS's suit was barred by the

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terms of the general release executed on March 4, 1998, pursuant to

paragraphs 21 and 23 of the Sales and Service Agreement.

B. Decision Below

The district court found the core question on summary

judgment to be a straightforward one: Is RFS bound by the terms of

its general release?2 RFS had argued that the release was not

binding for two reasons: (1) it was not supported by adequate

consideration; and (2) it was coerced or the product of duress. The

district court found both claims to be insufficiently supported by

evidence to survive summary judgment.
As to the consideration question, the district court

explained that the Dealership Agreement "very clearly provided [RFS]
with an option relative to parts repurchase upon its voluntary

termination of the dealership agreement: (1) it could either elect

to put the eligible parts back to Ford (or assign that right to its
purchaser), in exchange for a general release of all claims against
Ford . . . ; or (2) it could elect to keep the parts and/or sell

them to others, giving no release to Ford, and retaining the right
to sue Ford on any claims [RFS] might have." 2001 WL 799594, at *2.
The consideration given by Ford was the agreement to buy back the

eligible parts, or assign them, at RFS's option. The court found
that this was sufficient consideration. See Hyman v. Ford Motor

2
Note that this case concerns only the release of claims that
arose prior to the 1998 sale to Granite Ford. It does not address
the question of releases of any claims arising out of the sales
transaction itself.

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Co., 142 F. Supp. 2d 735 (D.S.C. 2001); Grand Motors, Inc. v. Ford

Motor Co., 564 F. Supp. 34, 39-40 (W.D. Mo. 1982).3

As to the coercion claim, the district court noted that,
once RFS voluntarily terminated its dealership agreement and elected

the repurchase option, Ford was effectively and automatically

released under paragraph 23 of the Service and Sales Agreement. The
subsequent written release "served merely to memorialize" what the

terms of the agreement made automatic. 2001 WL 799594, at *4.

Thus, the district court concluded, any claim that the

release form was coerced was of no moment; Ford had already been

released under the Agreement when RFS made its written demand for

repurchase in its voluntary notice of termination. Moreover, the

court found no other evidence of coercion in the record; RFS may
have later regretted taking the repurchase option in exchange for

releasing Ford from further liability, but its choice to do so was

nonetheless voluntary and uncoerced. 2001 WL 799594, at *5.
Finding no genuine issues of material fact to warrant a trial, the

court granted summary judgment to Ford.

3
RFS countered that the consideration was inadequate because
the buyback option was an illusory promise, since New Hampshire law
independently required Ford to buy back the parts on the
termination of the dealership agreement. However, the court found
that the statute in question, N.H. Rev. Stat. Ann. § 357-C:7:VI(b),
by its plain language only applied to "involuntary termination or
nonrenewal by the manufacturer, not voluntary termination by the
dealer, as was the case here." 2001 WL 799594, at *3.
Accordingly, the court found this argument, too, to be without
merit.

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II. DISCUSSION

A. Standard of Review

This Court reviews grants of summary judgment de novo,

construing the record in the light most favorable to the nonmovant
and resolving all reasonable inferences in that party's favor.

Houlton Citizens' Coalition, 175 F.3d at 184. This standard of

review does not limit us to the district court's rationale; we may
affirm the entry of summary judgment on "any ground revealed by the

record." Id.

Summary judgment may be granted only when "the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled

to a judgment as a matter of law." Fed. R. Civ. P. 56(c). "[T]he
mere existence of some alleged factual dispute between the parties

will not defeat an otherwise properly supported motion for summary

judgment; the requirement is that there be no genuine issue of

material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
247-48 (1986) (emphasis in original). To be considered material,
a disputed fact must have the potential to "affect the outcome of

the suit under the governing law." Id. at 248.

The party moving for summary judgment bears the initial

burden of demonstrating that there are no genuine issues of material

fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

This burden "may be discharged by 'showing' -- that is, pointing out

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to the district court -- that there is an absence of evidence to

support the nonmoving party's case." Id. at 325. After such a

showing, the "burden shifts to the nonmoving party, with respect to
each issue on which he has the burden of proof, to demonstrate that

a trier of fact reasonably could find in his favor." DeNovellis v.

Shalala, 124 F.3d 298, 306 (1st Cir. 1997) (citing Celotex, 477 U.S.
at 322-25).

In the end, after examining the facts in the light most

favorable to the nonmoving party and drawing all reasonable

inferences in its favor, we are required to determine if "there is
sufficient evidence favoring the nonmoving party for a jury to

return a verdict for that party." Anderson, 477 U.S. at 249.

B. Consideration

RFS argued before the district court that the buyback

option per se did not constitute valid consideration for the
release. On appeal, RFS makes a different argument: that Ford
failed to give the consideration it was supposed to give RFS because

it varied the description of the parts eligible for return between
the original description in the Sales and Service Agreement and that
in the letter containing RFS's election of the repurchase option (a

letter that Ford drafted, but RFS signed).
According to RFS, paragraph 21(b) of the Sales & Service
Agreement entitles a dealer to request Ford to repurchase all

current unused Ford parts in the dealer's inventory. However, the
March 4, 1998 letter of resignation drafted by Ford requested that

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Ford accept the return of such current unused parts as exceed

recommended inventory guide levels. Thus, RFS argues, in so

drafting the letter, "Ford unilaterally reduced the number of
current unused parts that were covered by the buyback."

RFS maintains that the fact that it did not actually

receive the bargained-for consideration distinguishes the present
case from all the other cases upholding Ford's release provisions.

See, e.g., DeValk Lincoln Mercury, Inc. v. Ford Motor Co., 811 F.2d

326, 329 (7th Cir. 1987); Fabert Motors, Inc. v. Ford Motor Co., 355

F.2d 888, 890 (7th Cir. 1966); Hyman, 142 F. Supp. 2d at 741; Ray

Dobbins Lincoln-Mercury, Inc. v. Ford Motor Co., No. 83-M-10-R, slip

op. (W.D. Va. Aug. 16, 1984), aff'd, 813 F.2d 402 (4th Cir. 1985);

Grand Motors, 564 F. Supp. at 39; Schmitt-Norton Ford, Inc. v. Ford

Motor Co., 524 F. Supp. 1099, 1103 (D. Minn. 1981). Accordingly,

RFS argues, the release must be held invalid for lack of

consideration, and the case should have been allowed to proceed to
trial.

Ford responds that RFS received adequate consideration
for the release when it exercised the buyback option and assigned

the parts repurchase right to Granite Ford. The repurchase right

is expressly listed as one of the dealership assets to be sold under

the asset purchase agreement between RFS and Granite Ford. Ford

argues that the consideration that RFS received in terms of the

purchase price it negotiated with Granite Ford satisfies the

requirement of consideration. See Hyman, 142 F. Supp. 2d at 742

(under similar circumstances, finding consideration where seller

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assigned repurchase right to replacement dealer; the fact that the

seller was not the one to personally receive the parts return is

irrelevant). As to the variation in terms, Ford acknowledges that
the letter of March 4, 1998 contains a more stringent limitation of

the parts repurchase than the one in the Dealership Agreement, but

argues that it is the Agreement and Rochester Ford's written release
that actually govern the terms of the parts repurchase, and thus

that it is bound to accept return of all current parts in any case.

We find that the district court's reasoning on the

consideration issue was very much on point: RFS obtained the benefit
of the repurchase option in Paragraph 21, which it expressly

included as an asset of the dealership to be sold to Granite Ford,

in exchange for releasing Ford from liability. Ford's agreement to
repurchase the parts in question either from RFS or from RFS's

assignee was sufficient to support the general release obligation;

whether it was RFS or the assignee who would actually receive the
money in exchange for the parts is irrelevant to the consideration

issue. See Hyman, 142 F. Supp. 2d at 742.

Finally, RFS makes an additional argument -- that no

consideration for the release ever materialized because Ford never

actually repurchased any parts from Granite Ford. This argument,

too, is without merit. For the purposes of analyzing whether RFS

received consideration in exchange for the release, the transaction

that concerns us is RFS's exercise of the repurchase option and the

sale of that option, among RFS's assets, to Granite Ford, not any

subsequent transactions between Ford and Granite Ford, to which RFS

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is not a party. We therefore agree with the district court that the

release here was supported by valid consideration.

C. Coercion

Apart from formal challenges to the release and the

consideration underlying it, RFS's core argument is that the release

was coerced. It claims that the district court failed to recognize

that what appeared to be an arm's-length transaction between

consenting parties was in reality an extensive scheme by Ford to

profit from RFS's dire financial straits -- a scheme that began in

1995 with Ford's unreasonable refusal to approve the RLM sale and
continued through the final sale of RFS to Granite Ford. RFS

focuses on two main issues: (1) the fact that the Agreement makes
the release a prerequisite to Ford's consideration of the proposed
sale and (2) Ford's behind-the-scenes conduct in orchestrating the

transaction.

1. The Release

Looking at the timing of the release, RFS notes that,
according to the trial court's interpretation of the agreement (with
which Appellee Ford agrees4), the release became effective on March

4
As Ford points out, other courts to consider the issue have
also interpreted it in this way: An election of benefits under
paragraph 21 automatically triggers the general release of
paragraph 23. See Ray Dobbins Lincoln-Mercury, slip op. at 6-7;
DeValk Lincoln Mercury, 811 F.2d at 331 ("Paragraph 23 is
unambiguous. It plainly states that when the dealer, DLM, demands
the benefits of returning inventory, 'the Company shall be released
from any and all other liability to the Dealer.' We can scarcely
conceive of a more clearly written release of liability. The
subsequent requirement for a written document simply allows the
parties to memorialize an automatic release already in effect.").

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4, 1998, when RFS executed the letter demanding the parts buyback

option. At this point, according to RFS, the Granite Ford deal was

not yet complete; Ford had not yet given its final approval to the
sale. Thus, RFS argues that it was required to release all claims

against Ford "as a condition of Ford even considering the proposed

sale of the RFS dealership to Granite Ford," not just in exchange
for the buyback option itself.

Accordingly, RFS maintains that a jury could find that

making the release a prerequisite to Ford's consideration of the

proposed sale violates Michigan law (which both parties agree
governs this Agreement), and, as such, that Ford's requiring the

release is an unfair and deceptive practice under N.H. Rev. Stat.

Ann. 357-C:3:I. Michigan law, Mich. Comp. Laws Ann. § 445.1573(h),
prohibits auto manufacturers from prospectively assenting to a

release, assignment, novation, waiver, or estoppel that would

relieve any person from liability imposed by the statute. Ford
responds that the release in the Dealership Agreement satisfies all

of the legal requirements for an enforceable release.
Because Michigan courts presume the validity of releases,

RFS bears the burden of demonstrating that the release is invalid.

Stefanac v. Cranbrook Educ. Cmty., 435 Mich. 155, 163-64 (1990).

Michigan law requires that a valid release must be "fairly and

knowingly made." Brusseau v. Elec. Data Sys. Corp., 694 F. Supp.

331, 334 (E.D. Mich. 1988); Skotak v. Vic Tanny Int'l, 203 Mich.

App. 616, 618 (1994). Releases are only invalid where "(1) the

releasor was dazed, in shock, or under the influence of drugs, (2)

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the nature of the instrument was misrepresented, or (3) there was

other fraudulent or overreaching conduct." Skotak, 203 Mich. App.

at 618. It is a prerequisite that the releasor must tender the
consideration received before filing suit and repudiating the

release. Stefanac, 435 Mich. at 173-74.

Plainly, there is no evidence that RFS was in any way
limited in its capacity at the time it executed the original

agreement, or that it was mistaken as to the nature of the

Agreement. See Hyman, 142 F. Supp. 2d at 744 (paragraph 23 release

mechanism not coercive absent evidence of coercion in connection
with original Sales and Service Agreement); see also, e.g., DeValk

Lincoln Mercury, 811 F.2d at 333 (rejecting claim that automatic

release provision was either unconscionable or unreasonable);
Schmitt-Norton Ford, 524 F. Supp. at 1103-04 (granting Ford's motion

for summary judgment on grounds that release was supported by valid

consideration in form of repurchase option and finding no economic
coercion); Grand Motors, 564 F. Supp. at 39 (same); Fabert Motors,

355 F.2d at 888 (same).

None of the statutory provisions to which RFS points bars

the release provision here. Mich. Comp. Laws § 445.1573(W)(h) bars

manufacturers from requiring dealers to "prospectively assent to a

release . . . which would relieve any person from liability imposed

by this act." (Emphasis added.) Not only does the statute provide,

on its face, that it does not apply to dealers located outside the

state of Michigan, Mich. Comp. Laws § 445.1582, but the release at

issue here is not "prospective": It releases Ford from all claims

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"by reason of anything whatsoever occurring prior to the date of

these presents." (Emphasis added.) In other words, a prospective

release is one that would relieve the releasee of all liability for
anything s/he does in the future after the release is signed; this

is the type of release proscribed by the Michigan statute.

Accordingly, because RFS has failed to adduce any evidence that the
release in question is, on its face, barred by Michigan statute,5 we

find that nothing about the release itself entitled RFS to a jury

trial on the question of whether the release violated N.H. Rev.

Stat. Ann. 357-C:3:I.

2. Ford's Conduct

As to Ford's conduct behind the scenes, RFS maintains
that the district court erred in ignoring substantial evidence of
coercion by Ford in obtaining RFS's "voluntary" termination and

release.6 RFS argues that Ford, knowing that RFS was on its last

5
Likewise, N.H. Rev. Stat. Ann. § 357-C:3:III(m), which RFS
also cites, proscribes manufacturer imposition of mandatory
releases of liability. The Sales and Service Agreement does not
mandate the release in question; rather, it makes the release
voluntary, in exchange for the dealer's election of the repurchase
benefit in paragraph 21. As the district court pointed out, RFS
was absolutely free to refuse the repurchase and assignment option
and retain its right to sue Ford; if choosing this path would have
impacted the Granite Ford sale negatively, this was a result of how
RFS and Granite Ford structured that sale, not of Ford's actions.
6
There is some question here as to whether New Hampshire or
Michigan law should govern the coercion issue. On the one hand, as
the parties agree, paragraph 32 of the Sales and Service Agreement
explicitly provides that "[t]he parties intend this agreement to be
executed as a Michigan Agreement and to be construed in accordance
with the laws of the State of Michigan." On the other, the issue
of whether the release was coerced by Ford arguably does not arise
within the four corners of the contract, and thus could be governed

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legs financially, refused to allow the sale to RLM back in 1995,

forced RFS to exercise the buyback option in 1998 by allegedly

telling it that Ford would not go forward with the approval of the
Granite Ford sale unless RFS executed the letter of termination

and the release,7 and underwrote $325,000 of the capital

requirement of the Granite Ford dealership, giving Ford leverage
to require that Granite Ford insist on including the buyback in

the asset sale. Since RFS had no choice but to "opt" for the

buyback option, it also had no choice but to sign the release that

ostensibly eliminated its rights to sue for Ford's failure to
approve the earlier 1995 sale.

by New Hampshire's choice of law rules; see, e.g., Benoit v. Test
Sys., Inc., 142 N.H. 47, 52 (1997) (five-factor test under New
Hampshire law for determining choice of law); Clark v. Clark, 107
N.H. 351, 353-55 (1966).
For the present purposes, however, this is an issue that we
need not decide. Although the respective legal standards are
articulated differently, they are similar in substance, and RFS's
claim fails under either. Compare, e.g., Abbadessa v. Moore
Business Forms, Inc., 987 F.2d 18, 23 (1st Cir. 1993) (setting out
four-part test under New Hampshire law of (1) involuntary
acceptance of terms of another where consent would not otherwise
have been given; (2) coercion resulting from acts of opposite
party; (3) pressure must be wrongful; and (4) circumstances
permitted no alternative but to accept the terms of another), with
Enzymes of America, Inc. v. Deloitte, Haskins & Sells, 207 Mich.
App. 28, 35 (1994) (plaintiffs claiming duress must establish that
they were illegally compelled or coerced to act by fear of serious
injury to their persons, reputations, or fortunes; fear of
financial ruin alone is insufficient), and Hungerman v. McCord
Gasket Corp., 189 Mich. App. 675, 677 (1991).
7
Ford's Boston Regional Sales Manager testified in his
deposition that Ford would have proceeded without a release. RFS
responds that this somehow raises "[t]he clear inference that Ford
treated RFS in a different manner than other dealers," because
"[i]f it was Ford's practice not to require the release then why
did Ford insist on the release in this case?" Appellant's Brief at
14. We agree with Ford that this inference is unwarranted.

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 Ford responds that any constraints operating on RFS to

execute the separate release resulted entirely from RFS's own

actions in structuring the sale of the dealership to Granite. The
asset purchase agreement between RFS and Granite sold Granite the

buyback option as an asset of the dealership.8 Granite would have

been within its rights to withdraw from the sale if RFS did not
provide that option. Thus, insofar as RFS was in any way required

to sign the release, Ford maintains that this was the direct

result of RFS's promise to Granite, not a requirement imposed by

Ford. See Schmitt-Norton Ford, 524 F. Supp. at 1104 (finding that

"[e]ven assuming that at the time they signed the release [the

plaintiffs] had no alternative, this came about because of the way

they structured the sale . . . , not because of Ford's actions").
Moreover, Ford points out that Chip Albee, RFS's Rule

30(b)(6) corporate designee, admitted in his deposition that RFS

signed the release because he had concluded that the release was
unenforceable, not because of any coercion by Ford; Albee later

made the same statement in paragraph 28 of his affidavit attached

to the plaintiff's opposition to summary judgment. It is a well

settled point of law that signing a valid release in the belief

that it is unenforceable nonetheless creates a binding release.

See, e.g., Fortino v. Quasar Co., 950 F.2d 389, 395 (7th Cir.

1991); Runyan v. Nat'l Cash Register Corp., 787 F.2d 1039, 1044

8
RFS's inventory of returnable parts and accessories was also
included, separately from the buyback option, in the assets sold to
Granite Ford.

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(8th Cir. 1986); Smith v. City of Flint Sch. Dist., 80 Mich. App.

630, 633 (1978).

As to RFS's claim that the asset purchase agreement and
the assignation of RFS's termination benefits to Granite Ford were

somehow a "sham," Ford maintains that RFS has no evidence to

suggest that Ford is accountable for the agreement between RFS and
Granite Ford. More generally, Ford argues that RFS has failed to

articulate any clear account of how Ford's relationship with

Granite Ford in any way has an effect on the validity of RFS's

release and the Ford-RFS agreement.
We agree with Ford. Although RFS has advanced several

theories of how Ford's actions may have constrained it to opt for

the repurchase option and sign the general release, it has not
substantiated these theories with sufficient evidence to raise a

triable coercion or duress claim to invalidate the release. At a

minimum, a claim of coercion or duress requires that the alleged
pressure result from the other party's conduct, not from other

factors, and that the wrongful pressure occurred in sufficient
measure to overwhelm the coerced party's independent judgment.

Here, RFS's claims of coercion all founder on a core

point: the causation requirement, i.e., proving that the

constraints on its options result from the defendant's conduct.

Insofar as RFS claims that Ford's knowledge of its shaky financial

status renders the release provision coercive, it is axiomatic

that one party's dire financial straits alone are insufficient to

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invalidate a contract on grounds of duress or economic coercion.9
See, e.g., French v. Shoemaker, 81 U.S. (14 Wall.) 314, 332 (1871)

("straitened circumstances" insufficient to negate voluntariness
of consent); Selmer Co. v. Blakeslee-Midwest Co., 704 F.2d 924,

928 (7th Cir. 1983) (Posner, J.) ("The mere stress of business

conditions will not constitute duress where the defendant was not
responsible for the conditions."); Mobility Sys. & Equip. Co. v.

United States, 51 Fed. Cl. 233, 237 (2001) (same). In any case,

there is no indication in the record that RFS was in any such

straits when it originally entered into the Sales and Service
Agreement, which contained the option provisions, with Ford in

1980.

Moreover, the record does not reflect that RFS's
financial status per se drove it to opt for the repurchase

provision in 1998. Rather, as already discussed above, RFS needed

or wanted to include the repurchase right as an asset in the sale
to Granite Ford, based on the agreed-to terms of that sale.

Insofar as RFS now alleges that Ford was the invisible hand on the

scales of those negotiations, these allegations are totally

unsubstantiated in the record. The fact that Ford provided

substantial financing to Granite Ford, standing alone, does not in

any way suggest that Ford forced Granite Ford to insist on the

9
The same rationale applies to RFS's claim that Ford
unreasonably withheld its consent to the RLM deal. Here, again,
the sole evidence advanced by RFS is Ford's knowledge of RFS's
financial circumstances, plus an unsubstantiated suggestion of
Ford's desire to destroy RFS financially.

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repurchase option as a way of tightening the screws on RFS. RFS's

allegations and speculation here fall far short of carrying its

burden to survive summary judgment.

III. CONCLUSION

The judgment of the district court is AFFIRMED.

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