(dissenting).
I respectfully dissent. I have two substantial disagreements with the majority.
First, as I understand the New Mexico Motor Vehicle Dealers Franchising Act, a prospective purchaser of an automobile dealership cannot sue a manufacturer for refusing to permit a dealer to transfer the franchise to the prospective purchaser unless the dealer did not receive “fair and reasonable compensation for the value of the [dealership].” NMSA 1978, § 57-16-9 (Repl.Pamp.1987). After Borman’s sale to Key fell through, Borman sold the dealership to a third party. Because Key neither pleaded nor proved that Borman failed to receive proper compensation, Key does not have a claim against Chrysler.
Second, even if Key may maintain a cause of action against Chrysler for unreasonably withholding consent to the transfer of the Borman franchise to Key, I disagree with the majority’s understanding of what it means to withhold consent unreasonably. I do not read the Act to require a manufacturer to conduct a reasonable investigation to determine whether a prospective franchisee is qualified to hold a franchise. I read the Act to require only that the manufacturer exercise objectively reasonable business judgment. In particular, the manufacturer satisfies its statutory duty if it informs the prospective franchisee of the criteria for selection and makes a reasonable business judgment based on what it knows, including information provided by the prospective franchisee. If Chrysler made clear to Key that Key’s application for the franchise could well be rejected because he had fallen far short of meeting his minimum sales responsibility (MSR) for' the Jeep-Eagle line of vehicles sold under his existing franchise, then Chrysler had no further duty to discover factors indicating that the MSR computation for Key was inaccurate. If Key thought that reliance by Chrysler on his MSR was inappropriate, he had the burden of advising Chrysler of the potential inaccuracies. Because it appears that the district court did not apply the proper standard in determining whether Chrysler unreasonably withheld consent to the transfer of the franchise, I would remand to the district court for further findings and conclusions.
I. KEY HAS NO CAUSE OF ACTION
NMSA 1978, Section 57-16-13 (Repl.Pamp.1987), states that “any person who shall be injured in his business or property by reason of anything forbidden in this act may sue therefor.” Does this language authorize the present suit?
Two reported decisions have interpreted similar language in similar circumstances. In Big Apple BMW v. BMW of North America, 974 F.2d 1358, 1382-83 (3d Cir.1992), cert. denied, — U.S. -, 113 S.Ct. 1262, 122 L.Ed.2d 659 (1993), the court considered whether the Pennsylvania Board of Vehicles Act permitted a prospective purchaser of an automobile dealership to sue a franchisor for withholding consent to transfer of the franchise. The Pennsylvania statute authorized suit by “any person who is or may be injured by a violation of a provision of this act.” Id. at 1382 (quoting 63 Pa.Stat.Ann. § 818.20(a)). Focusing on the words “any person who is or may be injured,” the court predicted that the Pennsylvania Supreme Court would grant standing to the purchaser.
In Roberts v. General Motors Corp., 138 N.H. 532, 643 A.2d 956 (1994), the New Hampshire Supreme Court reached the opposite result. A prospective purchaser sued General Motors for refusing to consent to the transfer to him of a dealership franchise. The New Hampshire statute conveyed standing upon “any person who is injured in his business or property by a violation of this chapter.” Id. 643 A.2d at 958 (quoting N.H.Rev.Stat.Ann. 357-C:12, II (1984)). The court ruled that a prospective purchaser cannot be injured in “business or property” and therefore lacks standing.
I would not rely on either of these opinions. Rather than focusing on the language “any person who shall be injured in his business or property,” I would focus on the remaining language of Section 57-16-13, namely the requirement that the injury be “by reason of anything forbidden in this act.” The dispositive question is whether Chrysler has done “anything forbidden in this act” if Borman received proper compensation for the value of the dealership.
To put this question in perspective, one should note an important feature of the Act: the Act evinces no legislative concern for the interests of those who wish to acquire dealer franchises. The various conduct prohibited by the Act is conduct that would directly injure consumers and franchise holders. To be sure, some prohibited actions that would injure franchise holders could also injure prospective franchisees. For example, if a manufacturer unreasonably withholds consent to the transfer of a franchise, both the prospective seller and the prospective purchaser could be injured. What is striking, however, is that no provision of the Act prohibits conduct that would injure a prospective franchisee when no current holder of a franchise would be injured. A prospective franchisee could be injured just as much by being denied a new franchise as by being denied the right to acquire an existing franchise. Yet, nothing in the Act restricts a manufacturer from denying a new franchise to an applicant, regardless of whether the denial is unreasonable, in bad faith, etc. This is not because the drafters of the Act did not consider the possibility of new franchises. On the contrary, the Act addresses the awarding of new franchises. But the only restrictions on new franchises are for the protection of those already holding franchises, not those seeking a franchise. NMSA 1978, Section 57-16-5(P) (Repl.Pamp.1987), makes it unlawful to “establish an additional franchise for the same line-make in a community where the same line-make is presently being served by an existing motor vehicle dealer if such addition would be inequitable to the existing dealer[.]”
This view of the Act is supported by the opinion of the Massachusetts Supreme Judicial Court in Beard Motors v. Toyota Motor Distributors, 895 Mass. 428, 480 N.E.2d 303 (1985). Our Act is modeled closely in structure and substance on the comparable Massachusetts statute. The Massachusetts court said of that statute:
It is clear from a reading of [the Massachusetts act] as a whole that the intention of the Legislature was to protect 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. The injuries alleged by [the prospective purchaser] — 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 [the Massachusetts statute].
Id. 480 N.E.2d at 306.
This perspective suggests the proper interpretation of Section 57-16-9, which states:
Anything to the contrary notwithstanding, it shall be unlawful for the manufacturer, distributor or representative without due cause to fail to renew on terms then equally available to all its motor vehicle dealers, to terminate a franchise or to restrict the transfer of a franchise unless the dealer shall receive fair and reasonable compensation for the value of the business. (Emphasis added.)
If the manufacturer acts with due cause, there can be no violation. But even if the manufacturer acts without due cause, the conduct is not unlawful if the dealer receives “fair and reasonable compensation for the value of the business.” In other words, if the manufacturer “buys out” the dealer, or arranges for the dealer to be bought out, then the manufacturer can treat the franchise almost any way it wants — refusing to renew the franchise, terminating the franchise, or restricting the transfer of the franchise. The unambiguous language of Section 57-16-9 indicates that the legislature’s underlying concern is protecting the financial equity of the dealer/franchisee.
Because Section 57-16-13 authorizes suit only for an injury “by reason of anything forbidden in this act,” a prospective purchaser has a claim against the manufacturer for improperly rejecting a transfer of a franchise only if the seller/franchisee did not receive fair and reasonable compensation for the business. Otherwise, the rejection of the transfer was not forbidden by the Act.
I recognize, as the majority opinion points out, that other provisions of the Act appear to forbid a manufacturer from unreasonably denying transfer of a franchise and do not contain any escape clause permitting the manufacturer to buy out the franchise holder. NMSA 1978, Section 57-16-5(L) (Cum. Supp.1994), makes it unlawful for a manufacturer to
prevent or attempt to prevent by contract or otherwise any motor vehicle dealer or any officer, partner or stockholder of any motor vehicle dealer from selling or transferring any part of the interest of any of them to any other person or party; provided, however, that no dealer, officer, partner or stockholder shall have the right to sell, transfer or assign the franchise or power of management or control thereunder without the consent of the manufacturer, distributor or representative except that consent shall not be unreasonably withheld. (Emphasis added.)
The exception to the proviso in the prohibition could be read as itself a prohibition against the manufacturer’s unreasonably withholding consent to a transfer of the franchise. Similarly, NMSA 1978, Section 57-16-8 (Repl.Pamp.1987), states:
It shall be unlawful directly or indirectly to impose unreasonable restrictions on the motor vehicle dealer or franchise relative to transfer, sale, right to renew, termination^] discipline, noncompetition covenants, site control (whether by sublease, collateral pledge of lease or otherwise), right of first refusal to purchase, option to purchase, compliance with subjective standards and assertion of legal or equitable rights. (Emphasis added.)
Nevertheless, there are sound reasons to interpret Section 57-16-9 as constituting a limitation on Sections 57-16-5(L) and 57-16-8. First, Section 57-16-9 addresses a more limited class of manufacturer conduct than either of the other sections. Both Sections 57-16-5(L) and 57-16-8 are broader in scope than Section 57-16-9. Ordinarily, a section specifically addressing a matter controls over more general language elsewhere in a statute. See In re Rehabilitation of W. Investors Life Ins. Co., 100 N.M. 370, 372-73, 671 P.2d 31, 33-34 (1983); Lumbermen’s Mut. Casualty Co. v. Insurance Comm’r, 302 Md. 248, 487 A.2d 271, 281 (1985).
Second, if Section 57-16-9 is not a limitation on Sections 57-16-5(L) and 57-16-8, then it appears to have no purpose whatsoever. The majority opinion suggests that Section 57-16-9 serves the purpose of spelling out the result that would arise under general principles of contract law — “[I]f the dealer received fair and reasonable compensation, the dealer would have no damages.” Yet, I fail to see why the legislature would feel a need to enact a provision that would produce the same result as would be reached under generally accepted legal principles.
A more likely construction of Section 57-16-9 is that it sets a limit on damages. If, for example, the dealership is improperly terminated, the dealer can recover only fair and reasonable compensation for the value of the business. Consequential damages (such as injury to reputation) would not be included. It makes little sense, however, to foreclose the recovery of consequential damages by the franchise holder while permitting a potential purchaser to recover consequential damages from the denial of the transfer. Thus, inasmuch as Section 57-16-9 sets a limit on damages for restricting a transfer without due cause, the most reasonable inference is that liability to the proposed transferee is eliminated altogether.
Third, the clause at the beginning of Section 57-16-9 — “Anything to the contrary notwithstanding” — supports the interpretation that Section 57-16-9 limits Sections 57-16-5(L) and 57-16-8. Initially, one might interpret this introductory language to mean “notwithstanding any other provisions that make such conduct lawful”; but no other provisions make lawful the conduct described in Section 57-16-9. Rather, the conduct enumerated as unlawful in Section 57-6-9 is presumably already unlawful under Section 57-16-5(L) or 57-16-8 or both. Thus, such a construction of the introductory language would make the language surplusage. To give substance to the introductory phrase of Section 57-16-9, it should be construed as saying, “regardless of any other provisions to the contrary, the following rule controls.” The controlling rule is that if the dealer/franchisee receives fair and reasonable compensation, then the manufacturer need not have due cause to restrict the transfer of the franchise, terminate the franchise, etc.
Admittedly, the above construction of the statute is somewhat uncertain. The language of the statute is far from clear. Attempts to extract an unequivocal meaning from the language of the statute are hardly esthetically satisfying. Nevertheless, the above construction best fits the language of the statute.
Moreover, it also best fits the overall legislative intent of the Act. That intent, at least insofar as it relates to the conduct of manufaeturers and distributors with respect to franchise ownership, is to protect franchise holders, not prospective franchisees. Not only does an appreciation of this intent explain why Section 57-16-9 would evince no concern about possible losses to prospective purchasers of franchises, it also explains why the legislature might affirmatively wish to foreclose prospective purchasers from suing under the Act.
Allowing prospective purchasers to sue could injure holders of franchises. The majority opinion recognizes that a prospective purchaser could cause injury to the franchise holder by obtaining an injunction against a sale by the franchise holder to a second prospective purchaser. Although the majority opinion points out that equitable considerations could well cause a court to deny injunctive relief, a prospective purchaser who makes a strong showing of an unreasonable denial might well obtain at least temporary relief. Also, even if relief is not granted, the franchise holder could incur substantial legal expenses. In addition to potential harm from a suit for injunctive relief, the threat of a suit for damages could hamstring the manufacturer and the dealer in arranging a sale to someone other than the prospective purchaser who files suit.
The legislature may well have concluded that the risk of injury to a dealer/franehisee was great enough that suits by prospective purchasers should be restricted. After all, other provisions of the Act reflect a far greater concern for franchise holders than for prospective franchisees. As already noted, the statute provides no relief to an applicant who is unreasonably denied an additional franchise but does protect existing franchise holders against new franchises that would be inequitable to them. The Act is internally quite consistent in providing that a prospective purchaser of a franchise has no claim if the investment of the franchise holder is secured.
Amici curiae supporting Key argue that Section 57-16-9 should not be interpreted as providing an “escape hatch” for manufacturers, because then various reprehensible conduct would go unpunished and undeterred. One example presented by counsel was racial discrimination. Could a manufacturer discriminate against a transferee on racial grounds and escape liability under the Act so long as the transferor received fair and reasonable compensation for the dealership from a subsequent buyer? This argument has obvious appeal, but it misses the mark. If a prospective transferee were discriminated against on racial grounds, that person may well have a cause of action under various civil rights enactments. Section 57-16-9 would hardly foreclose such a lawsuit. Despite the extraordinarily strong public policy against racial discrimination, there is no need to construe every statute broadly enough to provide an additional cause of action for such discrimination.
In sum, I conclude that Key has no cause of action against Chrysler because he failed to prove, or even plead, that Borman did not “receive fair and reasonable compensation for the value of the business.” Section 57-16-9.
II. UNREASONABLE WITHHOLDING OF CONSENT
I also disagree with the majority’s affirmance of the district court’s decision that Chrysler unreasonably withheld consent to the transfer of the Borman franchise to Key. The majority states that “[Bjecause Chrysler determined the elements for calculating the MSR and the formula for measuring a dealer’s sales performance, Chrysler had an obligation to make reasonable inquiries about whether local conditions rendered the MSR on which it relied inaccurate.” In my view, the Act does not impose such an obligation upon Chrysler. If (1) Chrysler informs the prospective purchaser of its intent to rely on the MSR in evaluating whether to approve the transfer of a franchise, (2) the MSR is, in general, an appropriate measure of dealership performance, and (3) Chrysler is not aware of any reason why the MSR would not be an accurate measure in the particular case, then Chrysler could properly refuse to permit transfer of a franchise to a prospective purchaser whose sales performance has been well below the MSR. If the prospective purchaser of the franchise believes that the calculation of its MSR is inaccurate, it should alert the manufacturer to the problem.
When Section 57-16-5(L) states that a manufacturer’s consent to transfer of a franchise “shall not be unreasonably withheld,” it is not imposing a tort standard of “reasonableness.” It is saying that the manufacturer’s reasons for denial must be sound reasons. It is requiring the manufacturer to make an objectively reasonable business decision. Rather than saying that the manufacturer must act with “due care,” it is saying that the manufacturer must act with “due cause.” See § 57-16-9 (manufacturer cannot restrict the transfer of a franchise “without due cause”). The requirements of “due care” and “due cause” will overlap substantially, but they are not congruent. In particular, the due-cause formulation more clearly indicates that the manufacturer need not undertake any independent investigation to determine whether the applicant for the franchise is qualified.
The above conclusions derive from a review of pertinent landlord-tenant law. The phrase “consent shall not be unreasonably withheld” has achieved the status of a term of art in that area of law. It is reasonable to assume that when the legislature adopted this term of art from a related area of the law, it intended the phrase to have a similar meaning, particularly when the rationale for the cannot-be-unreasonably-withheld requirement in the Act is essentially the same as the rationale for the requirement in the common law governing the landlord-tenant relationship.
Restatement (Second) of Property Section 15.2(2) (1976) [hereinafter Restatement] states:
A restraint on alienation without the consent of the landlord of the tenant’s interest in the leased property is valid, but the landlord’s consent to an alienation by the tenant cannot be withheld unreasonably, unless a freely negotiated provision in the lease gives the landlord an absolute right to "withhold consent.
Comment a to the section explains:
The landlord may have an understandable concern about certain personal qualities of a tenant, particularly his reputation for meeting his financial obligations. The preservation of the values that go into the personal selection of the tenant justifies upholding a provision in the lease that curtails the right of the tenant to put anyone else in his place by transferring his interest, but this justification does not go to the point of allowing the landlord arbitrarily and without reason to refuse to allow the tenant to transfer an interest in the leased property. Hence the rule of this section recognizes the restraint on the tenant as valid but allows the tenant to alienate, in spite of the restraint, if the landlord unreasonably withholds his consent to a transfer, unless a freely negotiated provision in the lease gives the landlord an absolute right to withhold consent.
A similar rationale justifies the provision in Section 57-16-5(L). An automobile manufacturer has a strong financial interest in the qualities of its franchise holders. It should have the authority to forbid the transfer of a franchise to an unsuitable person. At the same time, however, it would be unfair to the transferor, who may have a substantial investment in the franchise and associated dealership, to permit the manufacturer to withhold consent “arbitrarily and without reason.”
To be sure, there are differences between the landlord-tenant relationship and the relationship between a franchisor and franchisee. The franchisor and franchisee must work together in ways that are generally unnecessary in the landlord-tenant relationship. The franchisor can therefore argue that in approving franchisees it should not be as restricted as a landlord should be in approving assignees of a tenant. On the other hand, the franchisee can argue that it is entitled to more consideration from the franchisor than a tenant is entitled to from a landlord because its efforts have built goodwill for the franchisor; the franchisee has done more than just pay rent. These interests balance out. The Tenth Circuit Court of Appeals considered both arguments in Larese v. Creamland Dairies, 767 F.2d 716 (10th Cir.1985), and concluded that Colorado would apply the standards of Restatement Section 15.2(2) to the transfer of a franchise.
Similarly, the court in In re Van Ness Auto Plaza, 120 B.R. 545 (Bankr.N.D.Cal. 1990), turned to landlord-tenant law in construing a provision of California law providing that an automobile manufacturer’s consent to the transfer of a franchise “shall not be unreasonably withheld.” Cal.Veh.Code § 11713.3 (West 1987). The court relied on Restatement Section 15.2, although it suggested that courts should defer more to an automobile manufacturer’s decision to withhold consent than to a lessor’s decision to withhold consent because of the greater difficulty in determining whether a dealer will be a suitable franchisee and because of the closer relationship between a manufacturer and dealer than between a landlord and tenant. 120 B.R. at 548.
One obvious difference between Restatement Section 15.2(2) and Section 57-16-5(L) of the Act is that the latter makes no provision for a “freely negotiated provision” giving the manufacturer an absolute right to withhold consent. The reason for this omission is apparent from the entire thrust of the Act. Given the far superior bargaining power of the manufacturer, the legislature could presume that any provision giving the manufacturer an absolute right to withhold consent was not “freely negotiated.” This difference between the Act and the Restatement does not limit the relevance of landlord-tenant law in analyzing Section 57-16-5(L).
Both the Restatement and the above cases applying the Restatement in the franchise context make clear that the cannot-be-unreasonably-withheld requirement does not derive from tort concepts of reasonable care and negligence. The previously quoted paragraph from Comment a to Restatement Section 15.2 states that the landlord should not be able to reject the transfer “arbitrarily and without reason.” Comment g states, “A reason for refusing consent, in order for it to be reasonable, must be objectively sensible and of some significance and not be based on mere caprice or whim or personal prejudice.” Larese based its holding on the general requirement that the parties to a franchise agreement must “deal with one another in good faith and in a commercially reasonable manner.” 767 F.2d at 717. Van Ness, after noting several formulations of the proposition stated in Restatement Section 15.2, concluded that they
are alike in that they focus not on whether the lessor’s decision to withhold consent is correct, but on whether there is a substantial basis for the lessor’s decision under relevant criteria. None of the authorities suggest that a court is to review the lessor’s refusal to consent de novo and find that decision unreasonable because the court would have decided differently. The quotation from [Grossman [Grossmann ] v. Barney, 359 S.W.2d 475 (Tex.Civ.App.1962)] expressly states that withholding consent may be reasonable even if the decision is wrong.
120 B.R. at 548.
Moreover, the conclusion that the cannot-not-be-unreasonably-withheld requirement does not impose a duty of independent investigation finds specific support in landlord-tenant law applying the same requirement. Milton R. Friedman, Friedman on Leases § 7.304(C), at 322-23 (3d ed. 1990), states: “The burden of ... furnishing information sufficient to determine unreasonableness is on the tenant. Landlord need not seek out such information. In the absence of such information, landlord may refuse consent.” (Footnote omitted.) See D’Oca v. Delfakis, 130 Ariz. 470, 636 P.2d 1252, 1253-54 (Ct.App.1981).
From the above authorities, I would conclude that Chrysler’s withholding of consent was reasonable if (1) the criteria for evaluating the application for transfer were, in general, reasonable; (2) Chrysler informed Key of the criteria so that Key could supply any information he had relevant to the criteria; and (3) Chrysler had no knowledge of factors that would make the criteria inappropriate in evaluating Key’s application. If this construction of Section 57-16-5QL) is correct, then the judgment below must be set aside and the case remanded for further findings by the district court. The district court appears to have applied the wrong standard in determining whether Chrysler violated the statute. Perhaps a fact-finder applying the correct standard would find that Chrysler violated the standard, but that is a matter to be decided on remand.
The district court’s finding number 16 addressed the appropriateness of the use of a dealer’s MSR in general. The finding contained the following language:
MSR is a mathematical calculation designed to measure automobile dealer’s sales ability. Chrysler has used MSR since 1957. The use of MSR, when properly applied, is a reasonable basis for measuring sales ability, and such is a reasonable factor to be considered in determining approval or rejection of a requested franchise. All manufacturers have some basis similar to MSR in measuring sales ability of its dealers, but such frequently are referred to by other names, such as Planning Potential or Safe Reports. Chrysler has a provision in its MSR formula known as a slanted market where exceptional circumstances exist such that the mathematical calculation of a dealer’s percentage sales as compared to the sales of all similar type vehicles in a particular area would not be a fair measure of a dealer’s sales ability. (Emphasis added.)
I see no basis for rejecting this finding that a low MSR is a reasonable criterion for denying an application for transfer of a franchise. To be sure, it would be unreasonable to terminate a franchise solely on the ground that the dealer failed to attain one hundred percent of MSR. After all, the MSR reflects an average, so necessarily some dealers fail to achieve one hundred percent of the MSR. Consequently, to permit termination solely because of failure to meet one hundred percent of MSR would have “the practical effect of transforming a large proportion of [dealer franchise] agreements into franchises terminable at the pleasure of the manufacturer.” Marquis v. Chrysler Corp., 577 F.2d 624, 632 (9th Cir.1978). A far different situation arises when chronic failure to reach fifty percent of MSR is used by the manufacturer to justify denial of an additional franchise.
Despite its finding that use of the MSR was ordinarily reasonable, the district court found that the MSR was misleading in this case because of special circumstances. The court’s finding number 17 states:
Key’s sales area of Dona Ana County has not been recognized as a slanted market, nor has the sales locality been recognized by Chrysler as having its statistics distorted because of the close proximity to the El Paso, Texas metropolitan area. There are geographic and economic factors which are present that distort the total new vehicle registrations in Dona Ana County so that mathematically applying the number of vehicles sold by Key to the total number of new vehicles registered in the county is not representative of the true percentage sales. The two factors that are present in the economic and geographical factors that make the figures distorted are:
A. The State of Texas has a much higher sales tax on new vehicles than the State of New Mexico. Some persons residing in El Paso County, Texas but living close to the New Mexico line purchase new vehicles in El Paso but register them in Dona Ana County so as to take the benefit of the lower sales tax. Such registrations are considered fraudulent but are difficult to detect, principally because the person registering the vehicle will merely give a post office box address for a New Mexico town, such as Anthony or Sunland Park, whereas the applicant actually lives outside the State of New Mexico.
B. The southern boundary of Dona Ana County in some areas goes into the El Paso metropolitan area. Many persons residing in the southern part of Dona Ana County work in El Paso, Texas. It is unreasonable to expect people living closer to the El Paso metropolitan area to drive a longer distance to Las Cruces to purchase or obtain service for a new vehicle. In 1988 approximately forty-four percent (44%) of the new trucks registered in Dona Ana County were sold by dealers in El Paso, Texas.
The court’s conclusion of law 6 states:
The negligent acts of Chrysler in establishing its MSR area for the Las Cruces dealership without taking into account the distorted market sales area caused by fraudulent registration in New Mexico of vehicles owned by persons living in Texas, and the geographic proximity of the competing dealers in El Paso, renders the mathematical formula inaccurate, and the application of an inaccurate formula constitutes an unreasonable refusal to approve transfer of a franchise.
The respect in which Chrysler was negligent, however, is not clear from the court’s findings and conclusions. Conclusion of law number 5 states in part:
Both parties to this proceeding were negligent in failing to recognize the effect on the sales locality by the southern part adjoining El Paso. Chrysler was under a statutory duty to be reasonable, and its negligence would render its refusal unreasonable.
Yet, finding number 22 states:
The Market Review Committee [which makes Chrysler’s decisions regarding applications for franchise transfers] relied upon the reported MSR of Key, and it did not know of the extenuating circumstances that rendered the MSR inaccurate at the time the committee declined to approve transfer of the franchise.
No other finding by the district court states that Chrysler was in any way informed about, or even alerted to, facts establishing that Key was in a slanted market. Thus, it appears that the district court’s conclusion that Chrysler was negligent is based solely on Chrysler’s use of the MSR without investigating whether Key was in a slanted market.
Judgment against Chrysler cannot rest on that ground. In the absence of Chrysler’s having knowledge of, or being alerted to, information indicating that the market was slanted, Chrysler had no duty to conduct an investigation to determine whether the market was slanted. Assuming, then, that Chrysler had no cause to question the reasonableness of using Key’s MSR to evaluate his performance as a dealer, the only questions remaining are (1) whether Chrysler informed Key that it would rely on his MSR and (2) if Chrysler did not inform him, whether it could reasonably rely on Key’s MSR without giving him the opportunity to alert Chrysler to the inappropriateness of such reliance.
Evidence admitted at trial indicates that Key was advised of the importance of the MSR to his application for the Borman franchise. In a letter from the Phoenix zone office dealer placement manager to him on August 11, 1988, Key was told: “As you are aware, your Jeep Eagle sales performance is" poor, with an MSR rating of 45% through March, 1988. This could be an obstacle to obtaining the Committee approval. The next meeting of the Market Review Committee is September 16, 1988.” Key contends on appeal, however, that he was reassured by the fact that the Phoenix office forwarded his application to Detroit after sending him the August 11 letter. There was also evidence that Chrysler had not indicated to Key in the past that the MSR was of any significance to the continuance of his existing franchise. (This appears to be the foundation of the court’s Finding No. 19: “Chrysler did not call to Key’s attention the importance of his achieving MSR.”) A fact finder might be justified in determining that Key was not adequately advised of the importance of the MSR to his application for the transfer. One might then conclude that it was unreasonable for Chrysler to rely on the MSR in rejecting the transfer to Key. Nevertheless, the evidence supporting Key’s argument on this point is hardly overwhelming. This Court therefore should not presume that the district court’s judgment in favor of Key was based on this theory. Consequently, the judgment below cannot be affirmed, although it would be appropriate to remand for further findings by the district court.
III. SUMMARY
I would dismiss the Complaint for failure to state a cause of action. Moreover, even if the Complaint states a cause of action, Key can prevail only if the district court were to find on remand that (1) Key had not been informed of the importance of his MSR in obtaining approval of the transfer or (2) Chrysler’s rejection of the transfer was unreasonable based on the information actually known to Chrysler at the time of the rejection.