United States Court of Appeals
For the First Circuit
No. 03-1172
JAMES G. BOYLE and
TUCK'S TRUCKS, INC.,
Plaintiffs, Appellants,
v.
INTERNATIONAL TRUCK AND ENGINE CORPORATION,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]
Before
Torruella, Circuit Judge,
Cyr, Senior Circuit Judge,
and Lipez, Circuit Judge.
John J. Kuzinevich, for appellants.
Matthew A. Porter, with whom Timothy C. Blank and Dechert LLP,
were on brief, for appellee.
May 21, 2004
TORRUELLA, Circuit Judge. This case involves a dispute
between a manufacturer of trucks and a man who would like to sell
and service those trucks. The former chose to discontinue a
working relationship that developed between the two, and the latter
sued for damages and injunctive relief. The district court granted
defendant-appellee International Truck and Engine Corporation
("Navistar") summary judgment, and plaintiff-appellant James G.
Boyle's appeal brings the dispute before us. After careful review,
we affirm.
I. Factual Background
In April 1997, Boyle contracted with Thomas Walsh through
a Purchase and Sale Agreement ("P&S") to acquire Walsh's truck
dealership, Tuck's Trucks Sales ("Tuck's"), located in Hudson,
Massachusetts. Tuck's dealt and serviced GMC and Navistar
vehicles.
The Navistar franchise that Boyle hoped to acquire was
not in great shape. In February, prior to signing the P&S, Walsh
received a letter from Navistar advising him of deficiencies at the
site and proposing termination of the franchise due to low business
volume. Boyle helped Walsh respond to that letter, and Navistar
decided not to terminate the dealership at that time. In fact,
shortly after signing the P&S, Walsh had to leave Massachusetts for
personal reasons, and Boyle took over management duties and sold
eight Navistar trucks over the summer.
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According to Tuck's contracts with GMC and Navistar, the
dealership contracts were not assignable. Instead, Boyle could
purchase Tuck's assets, excluding the dealerships, and reach
agreements with those manufacturers directly to secure the value of
the assets. The P&S specified as a purchase contingency Boyle's
success in reaching dealership agreements with both GMC and
Navistar.
The GMC dealership, representing over 80% of Tuck's
business, was the prize Boyle had to win. If he could not secure
a dealership contract with GMC, Boyle made clear all along, he
could not go ahead with the purchase. In contrast, Boyle did not
secure -- or even apply for -- the Navistar dealership before
closing the deal with Walsh, figuring that GMC's answer one way or
the other controlled his intentions to purchase Tuck's.
Navistar wrote Walsh on May 5, 1997, to remind him that
the dealership was not assignable and to specify what Boyle should
submit as an application. According to that letter a complete
application would include: (1) a statement of Boyle's relevant
background; (2) a Letter of Intent indicating how Boyle planned to
be successful in that market; and (3) personal financial
information (relevant to financing).
Before the deal closed, Walsh wrote Boyle on October 1,
1997, to explain that Boyle would have to waive the condition on
the P&S regarding the Navistar dealership, and offered to retain
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the dealership at that site, after the assets had transferred,
under Walsh's own auspices, "until such time as Navistar makes its
decision [regarding Boyle's dealership] but in no event later than
October 31, 1997." Thus, Boyle could continue to manage Walsh's
dealership even after he owned the site.
Later in October 1997, Boyle got the long-awaited GMC
approval, and the purchase of assets from Tuck's went through.
When Walsh and Boyle closed the deal, there was no agreement
between Boyle and Navistar, so Boyle had to waive the contingency
in the P&S permitting him to back out of the deal if he had not
gotten Navistar's approval to become the dealer. Nevertheless,
Boyle continued doing warranty work and made a few sales for
Navistar in the following months; Boyle does not claim that
Navistar failed to compensate him for this work.
On October 31, 1997, Navistar sent Walsh a letter
indicating that Boyle had never applied for the dealership, despite
having twice stated an intention to do so, and terminating Walsh's
franchise effective December 31, 1997.
On November 4, 1997, Boyle submitted a photocopy of his
GMC application to James Williams, Navistar's Manager of Dealer
Operations. On November 24, 1997, Williams wrote Boyle to tell him
that Navistar had concluded that the market could not support the
dealership and suggested that he might become an associate dealer
through a full dealer located in nearby Bedford, Massachusetts.
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Both before and after the closing, Boyle spoke with
several people at Navistar about his dealership prospects. The
Navistar New England Sales Manager, Mark Nicholas, expressed to
Boyle a hope that they could reach a deal. Wayne Krzysiak, the
Vice President of Dealer Operations, told Boyle that, in light of
his approval by GMC, he could not see any reason why Boyle wouldn't
be able to continue dealing for Navistar. Tom Grogan, Nicholas's
boss and a regional Vice President, thought the approval would be
a formality, a matter of getting all the paperwork done. Bob Mann,
the national sales manager, told Boyle that he liked Boyle's
leasing background and that he was sure "we'll get this all worked
out." Boyle admitted in a deposition that he knew that none of
these people had the authority to grant him the dealership and that
he had no reason to believe they were lying in their comments to
him.
Boyle's communications with James Williams revealed a
factor working against his prospects. Williams expressed concern
about granting the dealership because some Ford dealers in
Pennsylvania were suing the factory alleging that Ford put them in
a position in which they could never make money. As Boyle
understood it, Williams was worried that Boyle wouldn't be able to
run a profitable Navistar dealership at the site. Williams
expressed hope they could find a solution, and Boyle offered to
release Navistar from any possible suit.
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After taking over from Walsh, Boyle continued to perform
warranty work for Navistar and to sell Navistar vehicles for
another four months. Even after Navistar terminated Boyle as a
"Ship to Address," permitting direct shipments of parts, Boyle
continued servicing his Navistar clients by buying parts from an
authorized dealer and performing the service work.
II. Analysis
Boyle believes Navistar's decision to cease dealings with
him was wrongful and claims an entitlement to damages and/or
injunctive relief based on five theories. In essence, Boyle wants
access to the legal remedies that would be available to a dealer
whose relationship with the manufacturer is unilaterally
terminated. Because there was never a written contract between the
parties providing for Boyle's dealership of Navistar's trucks,
Boyle's claim requires him to argue that (1) an oral dealership
contract existed; or (2) an implied in fact dealership contract
existed. In the alternative, Boyle makes claims based on Mass.
Gen. Laws ch. 93A & 93B charging that Navistar's termination of the
relation with Boyle amounted to a prohibited business activity.
Finally, Boyle argues that he detrimentally relied on statements
made to him by Navistar's representatives that the application
process was a mere formality.
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A. Oral Contract and Contract Implied in Fact
"It is a settled principle of contract law that a promise
made with an understood intention that it is not to be legally
binding, but only expressive of a present intention, is not a
contract." R. I. Hosp. Trust Nat'l Bank v. Varadian, 647 N.E.2d
1174, 1179 (Mass. 1995) (quoting Schwanbeck v. Federal-Mogul Corp.,
592 N.E.2d 1289, 1292 (Mass. 1992) (internal citations and
quotations omitted)). The comments that Boyle alludes to in
support of the formation of an oral contract -- comments by
Navistar employees that he was or would be the dealer -- pale next
to the unequivocal and written communications from Navistar that
Boyle had to complete a multi-part dealership application before
Navistar would approve him and are also undermined by his own
admissions during his deposition that, as far as he knew, none of
the employees making the alleged statements had the authority to
unilaterally grant the -- as yet ungranted -- dealership to him.
Boyle may have alleged a triable question of fact
regarding Navistar's present intentions to offer him the dealership
during the summer and fall of 2000, based on verbal communications,
but such an intention -- even if proven -- does not suffice to
establish that there was an oral contract. Id. Boyle's argument
for oral contract formation also depends on a proposition that we
cannot accept: that none of the terms of the dealership contract
would require negotiation. See Rosenfield v. U.S. Trust Co., 195
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N.E. 323, 325 (Mass. 1935) ("A failure of the parties to agree on
material terms may not merely be evidence of the intent of the
parties to be bound only in the future, but may prevent any rights
or obligations from arising on either side for lack of a completed
contract.") (citations omitted). Boyle undercuts this point by
recognizing in his deposition that neither the performance
requirements nor the geographic area of the dealership had been
negotiated and set. Furthermore, the claim is inherently
implausible, as manufacturers and dealers frequently adjust
standardized contracts to suit their needs. See, e.g., Coady Corp.
v. Toyota Motor Distrib.,Inc., 361 F.3d 50, 61-62 (1st Cir. 2004)
(discussing that Toyota granted a car dealer with a six-year
contract only a two-year contract extension and required "a non-
standard provision requiring [the dealer] to maintain 100 percent
or better 'retail sales efficiency'").
Boyle claims, though, that even without an oral contract,
his dealings with Navistar produced a contract implied in fact.
See LiDonni, Inc. v. Hart, 246 N.E.2d 446, 449( Mass. 1969) ("In
the absence of an express agreement, a contract implied in fact may
be found to exist from the conduct and relations of the parties.").
Boyle admits that Navistar compensated him in full for all sales
and services performed for its benefit until the time when their
relationship was dissolved. If there was a contract implied in
fact, it consisted of a promise of payment for these services
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rendered. Moreover, an implied in fact dealership claim cannot
reasonably be inferred after Navistar expressly rejected Boyle's
dealership application. The fact that for several months after
officially denying Boyle the dealership Navistar engaged him in
many of the same business activities that it had with its official
dealers did not impose upon Navistar the further obligation to deal
with Boyle like a dealer under contract.
B. Chapters 93A and 93B
Boyle appeals to provisions in Chapters 93A and 93B to
redress his loss of Navistar business. Chapter 93B, which
generally prohibits "[u]nfair methods of competition and unfair or
deceptive acts or practices" between motor vehicle manufacturers,
distributors and dealers, Mass. Gen. Laws ch. 93B, § 3, "protect[s]
motor vehicle franchisees and dealers from the type of injury to
which they had been susceptible by virtue of the inequality of
their bargaining power and that of their affiliated manufacturers
and distributors." Beard Motors, Inc. v. Toyota Motor Distrib.,
Inc., 480 N.E.2d 303, 306 (Mass. 1985). As such, only dealers, and
not prospective dealers, have standing to sue under Chapter 93B.
Id. Boyle argues that the contractual relationship -- payments for
services rendered -- that existed between him and Navistar suffices
for Chapter 93B standing.
Boyle's continued work with Navistar arguably makes him
more than a prospective dealer in a way that is relevant to his
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Chapter 93B standing.1 Up until the end of 1997, Boyle's
"dealership" work for Navistar was done under the auspices of
Walsh's dealership contract. Boyle acknowledged this by waiving
the condition to the P&S permitting him to walk away from the deal
if he did not have an agreement with Navistar. The Massachusetts
Appeals Court has commented that it does "not think that the
principle established in the Beard case can be circumvented by the
tail chasing expedient of assigning the existing dealer's rights to
the aspiring dealer." Greater Lowell Auto Mall, Inc. v. Toyota
Motor Distrib., Inc., 618 N.E.2d 1369, 1371 (Mass. App. Ct. 1993).
We agree and conclude that Boyle did not gain Chapter 93B standing
by virtue of working for Navistar under Walsh's dealership
contract.
Boyle, though, continued to perform warranty work for
Navistar into the spring of 1998, after Walsh's dealership was
terminated on December 31, 1997. We believe that Beard also
precludes the standing of a prospective dealer whose dealership
application has been formally rejected -- as Boyle's was on
November 24, 1997 -- even where that prospective dealer continues
1
Under the 2002 amendments to Chapter 93B, which do not apply
retroactively, the lack of a written dealership agreement would
explicitly preclude Boyle's claim. See Mass. Gen. Laws ch. 93B,
§ 1 (limiting "dealers" to persons who have obtained "a class 1
license pursuant to the provisions of section 58 and 59 of chapter
140"); Mass. Gen. Laws ch. 140, § 58(b) (authorizing only persons
"whose authority to sell [motor vehicles] is created by a written
contract with such manufacturer" to obtain an agent or seller's
license).
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to perform warranty work for the manufacturer. See Beard, 480
N.E.2d at 306-07 ("The injuries alleged by Beard -- primarily the
loss of anticipated profits from the sale of Toyotas and from
capital appreciation in the value of the Toyota dealership, due to
its inability to obtain the Toyota franchise -- are not injuries
within the area of legislative concern that resulted in the
enactment of [Chapter 93B].").
The Chapter 93A claim involves the related allegation
that Navistar was unfair and deceptive in how it handled and
ultimately denied Boyle's dealership application. Navistar offered
as its explanation for the rejection the limited market potential
of the dealership, as shown by difficulties experienced by Walsh at
the location, combined with Boyle's failure to provide financial
projections with his application. Boyle alleges that Navistar
representatives told him that the problem with his application was
his decision merely to submit a photocopy of his GMC application
instead of providing the application materials specifically
requested by Navistar. From this he concludes that Navistar's
official reasons were a pretext, and thereby surmises the unfair
and deceptive conduct, or as put in the brief: "Navistar's
'tricking' Mr. Boyle into performing services for it while leading
him on as to his status as a dealer constitutes an unfair or
deceptive act." This "leading on," Boyle argues, had as the "net
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effect" his "thinking he was a dealer so that Navistar could ease
the termination of Mr. Walsh's dealership."
"[A] chapter 93A claimant must show that the defendant's
actions fell 'within at least the penumbra of some common-law,
statutory, or other established concept of unfairness,' or were
'immoral, unethical, oppressive or unscrupulous,' and resulted in
'substantial injury . . . to competitors or other
business[persons].'" Quaker State Oil Ref. Corp. v. Garrity Oil
Co., 884 F.2d 1510, 1513 (1st Cir. 1989) (quoting PMP Assocs., Inc.
v. Globe Newspaper Co., 321 N.E.2d 915, 917 (Mass. 1975)).
Navistar offered legitimate business reasons for failing to enter
into a highly regulated business arrangement. See Greater Lowell
Auto Mall, 618 N.E.2d at 1372 (discussing several "relevant
considerations" including "the location of the proposed dealer";
"whether the proposed dealer has a history of profitable
operation"; and "whether the proposed dealer has provided the
manufacturer with solid information about its qualifications").
Navistar's longstanding -- and expressed -- concern with the
potential market at the site endured after Boyle's application, as
Boyle failed to comply with the requirement of submitting a Letter
of Intent demonstrating how he planned to be successful selling
Navistar trucks at Tuck's, in a way Walsh had not been. The
effects of Navistar's actions, e.g., leading Boyle to think he was
a dealer, are not actionable under Chapter 93A. Boyle has not
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stated a claim as to Navistar's unfairness or lack of scruples that
triggers the protections of Chapter 93A.
C. Detrimental Reliance upon Misrepresentation
Since "the evidence in this case did not warrant a
finding that a 'promise' in the contractual sense had been made
. . . no amount of reliance on the part of [Boyle] would give rise
to a 'contract' by virtue of reliance." R.I. Trust Nat'l Bank, 647
N.E.2d at 1179. Nevertheless, Boyle argues that representations
made by Navistar that the application process was a mere formality
led to his failure to properly apply for the dealership. "In order
to establish such a claim, [Boyle], at a minimum, must establish
that [Navistar] made a false representation of a material fact with
knowledge of its falsity for the purpose of inducing the plaintiff
to act thereon, and that [Boyle] reasonably relied upon the
representation as true and acted upon it to his damage." Russell
v. Cooley Dickinson Hosp., Inc., 772 N.E.2d 1054, 1066 (Mass. 2002)
(internal citations and quotations omitted).
Boyle's claim fails because he could not reasonably rely
on these representations because he knew, as he admitted in his
deposition, that none of the individuals making these
representations had the authority to grant or deny him the
dealership. An official Navistar communication indicated to Boyle
that he should submit several items, and by a particular date, in
order to be considered for a dealership. It was unreasonable for
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Boyle to disregard these instructions by relying upon statements
made by Navistar employees who lacked the authority to decide
whether Boyle would become a Navistar dealer.
III. Conclusion
Boyle understandably recoils from the loss of a business
opportunity that he hoped would be part of Tuck's Trucks going
forward. The Purchase and Sale Agreement permitted Boyle to opt
out if he was not able to secure the Navistar dealership. Boyle
waived that condition, and in doing so, exposed himself to the
possibility of running a dealership without Navistar. The work
Boyle did for Navistar does not alter this result.
The district court correctly granted Navistar's motion
for summary judgment.
Affirmed with costs to appellees.
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