Lake Charles Diesel, Inc. v. General Motors Corp.

                                                      United States Court of Appeals
                                                               Fifth Circuit
                                                            F I L E D
                                                             April 14, 2003
                IN THE UNITED STATES COURT OF APPEALS
                        FOR THE FIFTH CIRCUIT       Charles R. Fulbruge III
                                                            Clerk
                      __________________________

                             No. 01-31442
                      __________________________


LAKE CHARLES DIESEL, INC.

                                                   Plaintiff-Appellee,

versus


GENERAL MOTORS CORP.; ET AL,

                                                              Defendants,

GENERAL MOTORS CORP.,

                                                  Defendant-Appellant.


         ___________________________________________________

             Appeal from the United States District Court
                 For the Western District of Louisiana
         ___________________________________________________

Before JONES, WIENER, and DeMOSS, Circuit Judges.

WIENER, Circuit Judge:

     Defendant-Appellant General Motors Corp. (“GM”), through its

aftermarket automotive parts division, AC Delco (“Delco”), appeals

from the district court’s grant of a preliminary injunction to

Plaintiff-Appellee Lake Charles Diesel, Inc. (“LCD”), preventing

Delco from terminating its “ACDELCO Direct Account Supply Agreement
(“Parts Agreement”) with LCD.        Delco contends, among other things,

that the district court erred when it concluded that LCD had a

substantial likelihood of success on the merits of its contention

that Delco’s putative termination of the Parts Agreement pursuant

to the termination provision of that contract was invalid because

it contravened applicable Louisiana law.          Delco asserts that the

court mistakenly concluded that the termination provision of the

Parts Agreement is contravened —— and thus trumped —— by the

termination    provision      of    Louisiana’s    Repurchase     of   Farm,

Industrial,    and   Lawn   and    Garden   Equipment   by   Wholesaler   Act

(“Repurchase Act”).1        This statute specifies that a contract to

which it applies cannot be terminated by a party in Delco’s

position except for good cause after furnishing 90 days prior

written notice to a party in LCD’s position, and giving such party

the opportunity to cure the cause. Delco argues further that, even

if, as a general proposition, a termination provision like the one

in the Parts Agreement would be trumped by the mandated termination

provision of the Louisiana statute, the contract’s termination

provision is not barred in this particular case.                This is so,

insists Delco, because the Parts Agreement is not a contract to

which the Repurchase Act applies. For the reasons expressed in the



     1
         La. Rev. Stat. Ann. 51:481-490 et seq. (West 2003).

                                       2
remainder of the opinion, we agree with Delco that the Parts

Agreement is not a contract to which the Repurchase Act applies.

       Absent such applicability, Delco’s termination in compliance

with the contract could not be invalidated by a provision in the

Repurchase Act that is “contravened” by the provision of the

contract.    This, in turn eliminates LCD’s likelihood of success on

the merits and makes the district court’s grant of the instant

preliminary injunction improvident.                We therefore reverse the

district court’s grant of the preliminary injunction and remand

with instructions to vacate that injunction and to conduct any

further proceedings in a manner consistent with this opinion.

                         I. Facts and Proceedings

       Delco is a national supplier of automotive repair parts which

it markets through a nationwide network of warehouse distributors.

LCD has been a dealer in Delco automotive parts since 1977.

       The   instant    controversy     arose     when   Delco   purported    to

terminate the Parts Agreement by having a letter hand-delivered to

LCD,   notifying   it    that   Delco       was   terminating    that   contract

effective 30 days after delivery.            At the time, Delco and LCD were

operating under the most recent version of their Parts Agreement,

which had been extended for an indefinite term by a letter mailed

less than two months prior to the delivery of the termination

notice. That extension letter was from Delco’s general manager and

                                        3
included the statement that “[w]e intend to operate under this

extension until we execute new supply agreements with our warehouse

distributors, which will coincide with the implementation of the

Dedicated Distribution Group.          Required standards and guidelines

must be achieved to enter into a new Dedicated Distribution Group

agreement.”        Nevertheless, within a matter of weeks, Delco’s

regional manager personally delivered the 30-day termination notice

to LCD.    That notice did not state or imply that the relationship

was    being   terminated     for    cause;       neither   did     it    offer    any

explanation for Delco’s decision to terminate the Parts Agreement.

       The Parts Agreement consists of a two-page document entitled

“General Motors      Corporation,      SERVICE      PARTS   OPERATIONS       ACDelco

Direct Account Supply Agreement” appended to a copy of Delco’s 14-

page    standard    form    dealership       agreement.        In   the     two-page

instrument, LCD is named as the “direct account” and is authorized

to sell each checked-off product line from among a list of 57 —— in

this case, 53 of the 57 listed product lines.                     One of the four

product   lines     not    checked   off     is   “Engines.”        Among    the   53

authorized product lines are a number that clearly are automotive

parts but just as clearly are not engine parts:              radiators, shocks,

batteries, Durastop brakes, air conditioning, brake parts, steering

and drive systems, transmission parts, and lighting.                     In Delco’s

mission statement at the top of page 4 of its 14-page standard form

                                         4
instrument, the product lines covered by the Parts Agreement are

referred to globally as “vehicle replacement parts.”

       LCD’s business operations include, without limitation, the

repair and rebuilding of engines of numerous manufacturers.                                LCD

uses       some   of    these    Delco   automotive           parts     in    repairing    and

rebuilding engines and other equipment, and sells some of the

stocked parts to third parties.                   The engine repair and rebuilding

aspect       of    LCD’s    business,        as       well   as   the   parts      sales   and

distribution           aspect,    have   a    substantial         (but       not   exclusive)

connection with several significant Southwest Louisiana industries,

such as marine, agriculture, construction, and the like.

       LCD    is    not    in    the   business         of   selling,    distributing       or

retailing any new equipment, engines, implements, machinery, or

attachments that are wholesaled, manufactured or distributed by

Delco or GM.           Rather, vis-à-vis GM and Delco, LCD maintains only a

stock of Delco’s vehicle replacement parts, which it either uses

itself or sells, distributes, or retails to third parties.2

       Shortly after receiving Delco’s termination notice, LCD filed

this suit in state court.              In addition to Delco, LCD named another

Louisiana distributor of Delco automotive parts as a co-defendant.

Delco removed the case to the district court, asserting fraudulent

       2
       At oral argument, counsel for LCD advised that the only
new engines marketed by LCD are Volvo’s.


                                                  5
joinder of the Louisiana defendant, and the district court denied

LCD’s subsequent motion to remand.

     In    its   injunction   suit,       LCD   complained   that   Delco’s

termination of the Parts Agreement violated both the Repurchase Act

and Louisiana’s Used Motor Vehicle Dealers and Marine Products

Dealers Act3 (“Marine Act”).    In regard to the latter statute, LCD

alleged that some of the engines it repairs and rebuilds, and some

of the Delco parts it distributes, are used in the marine industry.

     In its petition, LCD also complained that, by engaging in

misleading and disingenuous correspondence in the weeks preceding

delivery of its notice of termination, Delco breached an applicable

Michigan law that proscribes violations of express covenants of

good faith and fair dealing.          In support of this charge, LCD

pointed to the parties’ mutual covenant in the Parts Agreement to

communicate with each other in an “honest, ethical and professional

manner.”

     The district court rejected as inapplicable LCD’s attempt to

invoke the Marine Act; and the court mused without ruling that LCD

might well prevail on its claim that Delco breached the Parts

Agreement by violating its honest-communication covenant.            In the

end, however, the court concluded that the Repurchase Act does

apply to the Parts Agreement, and that the termination provision of

     3
         La. Rev. Stat. Ann. § 32:771 et seq. (West 2003).

                                      6
that statute governs, because the termination provision of the

Parts Agreement does not merely differ from that of the Repurchase

Act but directly contravenes it.               As Delco’s 30-day, no-cause

termination notice failed to satisfy the applicable 90-day, good-

cause termination provision of the Repurchase Act, reasoned the

court, LCD met the likelihood-of-success prong of the temporary

injunction test.      After addressing the three remaining prongs of

that test and concluding that LCD met them all, the district court

granted    the    preliminary   injunction      that   prohibits   Delco   from

terminating the Parts Agreement.            Delco timely filed a notice of

appeal.

                                II. Analysis

     A.     Standard of Review

     We    have    jurisdiction    to       review   grants   of   preliminary

injunctions under 22 U.S.C. § 1292(a)(1).              We review such grants

for abuse of discretion.4         Even though “the ultimate decision

whether to grant or deny a preliminary injunction is reviewed only

for abuse of discretion, a decision grounded in erroneous legal

principles is reviewed de novo.”5




     4
       Mississippi Power & Light Co. v. United Gas Pipeline Co.,
760 F.2d 618, 621 (5th Cir. 1985).
     5
         Women’s Med. Ctr. v. Bell, 248 F.3d 411, 419 (5th Cir.
2001).

                                        7
      B.     Requirements for Preliminary Injunction

      To be entitled to a preliminary injunction, the applicant must

show (1) a substantial likelihood that he will prevail on the

merits, (2) a substantial threat that he will suffer irreparable

injury if the injunction is not granted, (3) his threatened injury

outweighs the threatened harm to the party whom he seeks to enjoin,

and (4) granting the preliminary injunction will not disserve the

public interest.6       We have cautioned repeatedly that a preliminary

injunction is an extraordinary remedy which should not be granted

unless the party seeking it has “clearly carried the burden of

persuasion” on all four requirements.7                   Citing our opinion in

Martinez v. Mathews, Delco maintains that a mandatory preliminary

injunction that goes beyond the status quo is even more disfavored

and “should not be issued unless the facts and law clearly favor

the   moving   party.”8      We    fail       to   see   the   relevance   of   that

proposition     here,   however,    because        the   preliminary   injunction

granted by the district court does precisely that; it maintains the

status quo by keeping in effect a contractual relationship that has

existed between the parties for almost a quarter century.                        The



      6
          Canal Auth. v. Callaway, 489 F.2d. 567, 572 (5th Cir.
1974).
      7
          Mississippi Power & Light Co., 760 F.2d at 621.
      8
          544 F.2d 1233, 1243 (5th Cir. 1976)(citations omitted).

                                          8
court    merely      commanded     Delco     to    maintain     the    status   quo    by

refraining from terminating the Parts Agreement.9

     C.        Likelihood of Success on the Merits

     The principal thrust of LCD’s merits claim is that Delco’s 30-

day, no-cause letter, ostensibly notifying LCD of the termination

of the Parts Agreement, was ineffectual as a matter of law.                           The

legal syllogism that is the gravamen of LCD’s appeal goes:                      (1) The

choice-of-law        provision     of   the      Parts    Agreement     subjects      that

contract to the substantive law of Michigan unless a provision of

the contract contravenes the law of Louisiana, being the state

where    the    agreement   is     to   be       performed;    (2)    the   termination

provision of the Repurchase Act, which is the performance forum’s

suppletive law affecting every dealership contract to which it

applies, is contravened by the termination provision of the Parts

Agreement; ergo, (3) Delco’s use of the termination provision of

the Parts Agreement was ineffectual, leaving the Parts Agreement in

full force and effect.

     On appeal, Delco counters, as it did in the district court,

that the Repurchase Act —— specifically, its termination provision

—— is different from, but is not contravened by, the termination

provision       of   the   Parts    Agreement,           so   that    the   contractual


     9
       The parties voluntarily continued to operate under the
Parts Agreement during the pendency of this litigation.

                                             9
termination provision remains in effect.        Delco continues by urging

that, even if this were not so, the law of Louisiana that the

termination   provision   of    the Parts     Agreement   is     purported     to

contravene —— the Repurchase Act —— is not applicable to that

contract.

     We shall assume for the sake of argument that the differences

between that contract’s termination provision and the termination

provision of the Repurchase Act are sufficient to trigger the

contravention exception of the Parts Agreement’s choice-of-law

stipulation,10 and proceed directly to test the Parts Agreement

against the requirements of the Repurchase Act to determine whether

that statute is even applicable to the Parts Agreement.

     1.     Methodology

     Although   appellate      jurisdiction   in   this   case    rests   on    §

1292(A)(1) because we are reviewing the district court’s grant of

a preliminary injunction, federal jurisdiction rests on diversity

of citizenship pursuant to § 1332(a).          We therefore consider the

     10
       Paragraph G. Applicable Law, of the General Provisions of
Delco’s 14-page standard form instrument, states:
     This Agreement is to be governed by and construed
     according to the laws of the state of Michigan,
     excluding any such laws which direct the application of
     laws of any other jurisdiction. However, any provision
     which contravenes the laws of any state or jurisdiction
     where this Agreement is to be performed will be deemed
     not a part of this Agreement in such state or
     jurisdiction. (emphasis added).


                                     10
substantive law of Louisiana under the well-known standard of Erie

Railroad v. Tompkins.11    As the propriety of the district court’s

grant of a preliminary injunction turns on the applicability of a

particular Louisiana statute, our ultimate “Erie guess” requires

that we employ the appropriate Louisiana methodology to decide this

issue the way that we believe the Supreme Court of Louisiana would

decide it.

     The primary sources of law in Louisiana are constitutions,

codes, and statutes; judicial decisions acquire the force of law

only when their numerosity and uniformity are sufficient to achieve

the status of jurisprudence constante.12 Here, we deal with neither

constitutions nor codes, but with the Louisiana Revised Statutes.

And, strangely enough, in this case we not only start with the

governing statute, we end there:       Even though the Repurchase Act

was added to the Revised Statutes more than a quarer century ago,13

and even though the current version of the Repurchase Act is the

product of a comprehensive revision enacted more than a decade

ago,14 we have been able to locate only a handful of cases that


     11
          304 U.S. 64 (1938).
     12
       See Alvin B. Rubin, Hazards of a Civilian Venturer in
Federal Court: Travel and Travail on the Erie Raliroad, 48 La.
L. Rev. 1369, 1372 (1988).
     13
          1975 La. Acts 283, at 626-29.
     14
          1991 La. Acts 627, at 2012-18.

                                  11
construe this legislation, none of which affects the outcome of

this appeal.15

     2.   Overview of the Repurchase Act

     Title 51 of the Louisiana Revised Statutes addresses “Trade

and Commerce,” and Chapter 2 of that Title covers “Particular

Goods.”   Part I-A of Chapter 2, entitled “Repurchase of Farm,

Industrial   and   Lawn   and   Garden    Equipment   by   Wholesaler,”   the

Repurchase Act, is the 10-section Part on which this appeal turns.

A brief overview of Part I-A reveals the framework within which we

must determine whether the Repurchase Act applies to the Parts

Agreement.



     15
       See Cherokee Pump & Equip., Inc. v. Aurora Pump, 38 F.3d
246, 252-53 (5th Cir. 1994)(finding that the Repurchase Act does
not constitute public policy and therefore does not override the
contractual choice-of-law provision at issue); Delta Truck &
Tractor, Inc. v. J.I. Case Co., 975 F.2d 1192 (5th Cir.
1992)(indirectly referring to Repurchase Act in discussing
whether farm implement dealership contract was breached);John
Deere Co. v. Slidell Tractor Co., Inc., Civ. A. No. 89-1953, 1992
WL 245609, at *12 (E.D.La. Sept. 15, 1992)(adjudicating the terms
and timing of inventory repurchase under the Repurchase Act, not
whether or not the law applies); John Deere Co. v. Slidell
Tractor Co., Inc., Civ. A. No. 89-1953, 1995 WL 758933 (E.D.La.
Dec. 20, 1995)(similarly inapposite); Int’l Harvester Credit
Corp. v. Seale, 518 So. 2d 1039, 1041-42 (La. 1988)(discussing
overall purpose of the Repurchase Act and in particular
explicating its damages provisions); Echo, Inc. v. Power Equip.
Distrib., Inc., 719 So. 2d 79, 91 (La. Ct. 1 App.)(finding that
because Power was in default of its obligations under the
collateral chattel mortgages, the notice and right to cure
provisions of the Repurchase Act were inapplicable); writ denied,
729 So. 2d 555 (La. 1998).

                                     12
      The title of the Repurchase Act presages a statutory mandate

requiring that a “wholesaler” (expanded in the statute to include

manufacturers and distributors as well) to “repurchase,” i.e., buy

back, “equipment” that it previously transferred to its vendee.

Although the title refers only to farm, industrial and lawn and

garden equipment, the list of covered industries is expanded in the

statute to comprise “farm, construction, heavy industrial material

handling, utility and lawn and garden” equipment.16                   Likewise, the

term “equipment” in the title of the Repurchase Act is expanded in

the   body       of   the    statute   to      comprise     “equipment,    engines,

implements,       machinery,    attachments       and     repair   parts   for   such

equipment.”17         Both    statutory     lists    are     finite   rather     than

illustrative.

      Section 481, the initial section of Part I-A, serves two

functions.        It describes the kind of conventional obligation to

which the Part applies, and it defines a few particular terms as

they are used in the statute.          The remaining nine sections of Part

I-A lay out the substance of the Repurchase Act and together

reflect its nature, purpose, and function.                 In broadest terms, the

substantive sections of the Repurchase Act embody the Louisiana

Legislature’s         determination       to     protect      resident     sellers,


      16
           La. Rev. Stat. Ann. § 51:481 (West 2003).
      17
           Id.

                                          13
distributors, and retailers (defined by the statute and hereafter

referred     to    as        “Dealers”18)    who    contract        with     wholesalers,

manufacturers,          or     distributors       (defined     by    the     statute   and

hereafter referred to as “Agents”19) from two potential economic

risks that the Legislature perceived as likely to result from the

superior bargaining power of the Agents.                            First, Dealers are

protected        from        arbitrary      and    precipitous         termination      or

cancellation of dealership relationships without being furnished

adequate advance notice that specifies good cause and gives the

Dealer an opportunity to cure the cause.                      Second, former Dealers

are   protected         from    being    left     holding     large    inventories      of

equipment or spare parts, or both, with no choice but to incur

substantial economic losses by “fire-sale” dispositions of such

assets.20

      The    Legislature’s          solution       to   the    risk    of     precipitous

termination was to prohibit Agents from terminating, canceling,

failing     to    renew,       or   substantially       changing       the    competitive

circumstances of such dealership agreements “without good cause.”21

      18
           La. Rev. Stat. Ann. § 51:481.B.(3).
      19
           La. Rev. Stat. Ann. § 51:481.B.(4).
      20
       Int’l Harvester Credit Corp., 518 SO. 2d at 1041 (“The
legislation is designed to protect the dealer in the event the
contract is terminated, for whatever reason, by requiring the
manufacturer to repurchase the dealer’s unsold inventory.”)
      21
           La. Rev. Stat. Ann. § 51:482.A.(1).

                                             14
The Legislature first defined “good cause” in general terms of

failure to comply substantially with essential and reasonable

requirements of the dealership contracts,22 and identified nine

particular      situations    that   constitute      good    cause.23    It   then

provided pre-termination protection for the local Dealer by (1)

requiring the Agent to provide “at least ninety days’ written

notice     of   termination,     cancellation,       or     nonrenewal   of    the

dealership agreement,” and (2) specifying the mandatory contents of

such notices, including cure provisions.24

     To complement the pre-termination protection afforded by the

tightened notice requirement, the Legislature gave post-termination

protection to local Dealers by providing a source for disposing of

their leftover inventories of the Agent’s equipment or parts, or

both.     Section 484 requires the Agent to buy back the terminated

Dealer’s    inventory    of   all    new    and   unused    “complete”   engines,

implements, equipment, machinery, and attachments that the Dealer

tenders to the Agent, at a price determined by a formula contained

in that section.25      Similarly, § 485 requires the Agent to buy back

the terminated Dealer’s inventory of the Agent’s “repair parts” at


     22
          La. Rev. Stat. Ann. § 51:482.A.(2).
     23
          La. Rev. Stat. Ann. § 51:482.B.(1-9).
     24
          La. Rev. Stat. Ann. § 51:482.C.
     25
          La. Rev. Stat. Ann. § 51:484.

                                           15
a price determined by a slightly different formula.26                    Sections 484

and 485 both state that they are not binding on the Dealer, who is

free to keep the inventory or dispose of it in some other manner.27

The final five sections of Part I-A —— §§ 486-490 —— supply a

number of details, such as passage of title, right of possession,

supplementary nature of the provisions, repurchase from heirs on

death     of   a   Dealer,    liability    for   failure    to    repurchase,    and

reimbursement for handling costs.28

     The perspective of the Repurchase Act that emerges from a

comprehensive reading of the statute as a whole is one of statutory

protection for the benefit of Louisiana Dealers in (1) specified

kinds     of    equipment     (2)   for    use   in   one   or    more    identified

industries.         This is accomplished first by prohibiting short-

notice, at-will termination of dealership contracts by Agents and,

second,    by      ensuring   that,   if   dealerships      are   terminated,    the

Dealers are not left “holding a bag” of equipment or repair parts,

or both, without a ready source of liquidation at a fair price.

With this framework firmly established,                 we proceed to parse §

481.A, the applicability provision of the Repurchase Act.
     26
          La. Rev. Stat. Ann. § 51:485.
     27
       Although not expressed, it appears that a Dealer could
accept a termination other than for good cause and with or
without ninety days notice and an opportunity to cure; that is, a
non-complying termination by an Agent is voidable, not void.
     28
          La. Rev. Stat. Ann. §§ 51:486-90.

                                           16
       3.    Section 481.A:           Prerequisites to Applicability

       Section 481 is entitled “Applicability of Part,” referring to

Part   I-A       of    Title    51    of    Louisiana’s       Revised          Statutes,     the

Repurchase        Act.         As    subsection        B.    of    §     481     is    entirely

definitional, the task of describing and delimiting the kinds of

contractual relationships to which the Repurchase Act applies is

left entirely to subsection A. —— in fact, entirely to the first

sentence of subsection A.

       For reasons known only to the drafters of this legislation,

every delimiting feature of the types of contracts and agreements

to which the Repurchase Act applies is contained in this one, 91-

word, 14-comma, seemingly interminable, sentence.                              Nevertheless,

when a tediously exhaustive parsing of this serpentine sentence is

performed within the framework established by the substantive

provisions of the Repurchase Act, there emerges an unambiguous

catalog     of    every    feature         that    a   contract        must     have    if   the

Repurchase       Act     is to      apply.        In   all   its       Gordian    glory,     the

applicability sentence of the Repurchase Act reads as follows (with

emphasis added to highlight the particular features that the Parts

Agreement must possess):

       § 481. Applicability of Part

       A. The provisions of this Part shall apply to written
       contracts or oral agreements of definite or indefinite
       duration between [a.] any person, firm or corporation


                                              17
     engaged in the business of selling, distributing or
     retailing [1] farm, [2] construction, [3] heavy
     industrial material handling, [4] utility and [5] lawn
     and garden [i] equipment, [ii] engines, [iii] implements,
     [iv] machinery, [v] attachments and repair parts for such
     equipment and [b.] any wholesaler, manufacturer or
     distributor of such equipment and repair parts, whereby
     the retailer agrees with the wholesaler, manufacturer or
     distributor to maintain a stock of such [x] parts, or [y]
     complete equipment or machines, or [z] attachments.29

Thus, for the Repurchase Act to be applicable to a dealership

arrangement, the following features must be present:

•    There must be a contract or agreement (although it can be
     either written or oral, and can be for either a definite or
     indefinite duration).

•    The contract or agreement must between a

            1. “Dealer,” as defined in § 481B(3); and an
            2. “Agent,” as defined in § 481B(4).

•    The Dealer must be in the business of selling, distributing or
     retailing.

•    The Agent must be in the            business     of   wholesaling,
     manufacturing, or distributing.

•    The tangible movable (personal) property that the Dealer
     agrees to sell, distribute or retail and that the Agent agrees
     to wholesale, manufacture or distribute, must pertain to one
     or more of five industries only:

            1.   farming
            2.   construction
            3.   heavy industrial material handling
            4.   utility
            5.   lawn and garden

•    The tangible movables that are the objects of the dealership
     contract must be of one or more of the following types:

     29
          La. Rev. Stat. Ann. § 51:481.A (emphasis added).

                                  18
          1.   equipment
          2.   engines
          3.   implements
          4.   machinery
          5.   attachments

•    In addition to the type or types of equipment that are the
     objects of the dealership contract, the Dealer must also agree
     to sell, distribute or retail, and the Agent must also agree
     to wholesale, manufacture or distribute,

          1.   repair parts
          2.   for such equipment.

•    And, in the dealership contract, the Dealer also must agree to
     maintain a stock [inventory] of one or more of the following:

          1.   repair parts for the subject tangible movables, or
          2.   the tangible movables themselves, or
          3.   attachments30

     30
       A cursory reading of the subject sentence appears to
reveal a slight ambiguity as a result of the punctuation of the
phrase “equipment, engines, implements, machinery, attachments
and repair parts....” Because there is neither an “and” nor an
“or” between the words “machinery” and “attachments” and no comma
between the words “attachments” and “and,” it is not absolutely
clear whether “attachments” (whatever that term might mean here)
is (1) a fifth category of basic tangible movables (“equipment,
engines, implements, machinery, attachments”) or (2) merely an
ancillary tangible movable (“attachments and repair parts”). The
final phrase in the first sentence of § 481A —— “parts, or
complete equipment and machines, or attachments” —— seems to
separate attachments from major pieces of equipment, but also to
separate attachments from parts as well; and never even mentions
engines or implements, two categories of movables that appear in
the initial list of the kinds of movables that must be covered by
contracts or agreements to which the Repurchase Act applies.
This putative ambiguity, evanesces, however, when read in context
with § 484, which creates the Agent’s obligation to repurchase
new unused “engines, implements, equipment, machinery, and
attachments (emphasis added), and § 485, which creates the
parallel obligation for repurchase of “repair parts” only.
Fortunately, it is not necessary to resolve this ambiguity to
decide the instant appeal.

                                19
     Reduced to its essentials, the first sentence of § 481.A

requires    a    contract         to    have    two   key    characteristics       if   the

Repurchase       Act    is   to    be    applicable:         (1)   The   contract       must

establish a dealership that sells, distributes or retails the kind

or kinds of (a) equipment and (b) repair parts that are identified

in that sentence; and (2) in the contract, the Dealer must agree to

maintain an inventory of (a) such equipment or (b) such parts, or

(c) both.

     The    Parts       Agreement        obviously     contains     a    number    of    the

features required by the first sentence of § 481.A.:                              It is a

written contract; it is of indefinite duration; it is between a

Dealer     and     an    Agent;         its     objects     are    tangible       movables

(specifically, 53 product lines of automotive parts); and the

Dealer agrees to maintain a stock of repair parts.                        The remaining

prerequisites to applicability of the Repurchase Act, however, are

problematical.

     In the Parts Agreement, LCD as the Dealer and Delco as the

Agent do not agree that Delco will supply and LCD will sell,

distribute       or     retail         any     “equipment,     engines,     implements,

machinery, attachments” whatsoever.                    Yet § 481A only applies to

contracts under which the Agent supplies and the Dealer sells,

distributes or retails both (1) one or more categories of “such

equipment” (listed types of tangible movables for use in listed


                                                20
industries) “and” (2) “repair parts for such equipment.”                   True, in

the Parts Agreement, LCD agrees “to maintain a stock of such

parts”; however, that requirement in the statute presupposes that

the Dealer is agreeing to sell, distribute or retail not just

repair parts, but one or more categories of tangible movables that

the Repurchase Act subsequently refers to globally as “equipment.”

The Repurchase       Act    literally     requires    that,   for    a   dealership

contract to be covered by the statute, the Dealer must commit to

sell the Agent’s “equipment...and repair parts for such equipment.”

In   sum, §   481.A.       cannot    be   read   to   make   the   Repurchase   Act

applicable to a contract that establishes only a freestanding

dealership in repair parts.

      We acknowledge that the Repurchase Act could be applicable to

a dealership contract in which the Dealer in equipment manufactured

or wholesaled by the Agent does not agree to “maintain a stock” of

complete equipment or machines or attachments (presumably selling

equipment on special order only and not maintaining a “showroom”

inventory of equipment), but does agree to “maintain a stock” ——

keep an inventory —— of repair parts for such equipment.                    Crucial

to   understanding         the    distinction     between     this   hypothetical

arrangement    and     the       Delco-LCD     arrangement,    however,    is   the

recognition that the term “such parts” refers to “repair parts for

such equipment”; and, in turn, that the term “such equipment”


                                          21
comprises exclusively, and is limited to, the kinds of tangible

movables (“equipment, engines, implements, machinery, attachments”)

that appear in the statute’s exclusive list and are (1) wholesaled,

manufactured or distributed by the Agent and (2) sold, distributed

or retailed by the Dealer.       In other words, if the dealership

contract commits the Dealer to deal in both equipment and parts for

that equipment, the Dealer need not keep an inventory of the

equipment as long as he keeps an inventory of parts.              But the

obverse is not true:      keeping a parts inventory without being a

dealer in the equipment itself is not sufficient to make the

Repurchase Act apply.

     Albeit not without considerable effort, the picture finally

comes into    crisp   focus:   The    Repurchase   Act   can   apply   to   a

situation in which the “stock,” i.e., the inventory, that the

Dealer “agrees to maintain” is repair parts only; but only if those

repair parts are for equipment of the Agent that the Dealer, in the

self-same contract, agrees to sell, distribute, or retail.              For

example, if LCD contracted with John Deere to sell, distribute or

retail —— but not maintain a stock (inventory) of —— large and

expensive farm machines; and LCD further agreed to “maintain a

stock of” “repair parts for such equipment,” i.e., replacement and

repair parts for the farm machinery, the Repurchase Act could be

applicable.   This is because the hypothetical dealership agreement


                                     22
that requires the dealer to (1) sell but not stock the equipment,

but (2) maintain an inventory of repair parts for such equipment,

fits within the plain wording of the statute (and is commercially

realistic as well).     Not so, however, for a Dealer that, without

contracting to sell, distribute or retail any of the Agent’s

underlying equipment, only contracts to “maintain a stock” of the

Agent’s repair parts.

     As LCD has not contracted with Delco to sell, distribute or

retail any equipment, engines, or machinery that Delco (or any GM

division) wholesales, manufactures, or distributes, but has only

contracted to maintain a freestanding stock of generic “vehicle

replacement parts,” the Repurchase Act does not apply to the Parts

Agreement.31   Louisiana protects specified categories of Dealers in

specified categories of new equipment and new spare parts for the

equipment   against   the   risks   of   precipitous   terminations   of

dealership contracts, provided that the Dealer also maintains an

inventory of the equipment or the parts, or both.         In contrast,

     31
       Indeed, if the Repurchase Act were applicable to Dealers
who maintain a stock of an Agent’s repair or replacement parts
for equipment (including vehicles), engines, implements,
machinery or attachments, without contracting with that Agent to
sell, distribute or retail any of the Agent’s equipment for which
the repair parts are intended, the Repurchase Act would, at least
potentially, apply to virtually every NAPA store, Auto Rally,
PepBoys, Western Auto, Autolec, Sears or Penney’s TBA Shop, as
well as Home Depot, Wal-Mart, Ace Hardware, and so on ad
infinitum. That is clearly not what the Legislature intended and
not what the Repurchase Act says.

                                    23
Louisiana has not demonstrated an intention to protect dealers like

LCD that stock and sell or distribute generic repair parts only.

The fact that a free-standing parts dealer like LCD might be an

equipment dealer for some unrelated —— or even competitive —— Agent

is irrelevant.

     In summary, as the Repurchase Act does not apply to the free-

standing, parts-only Parts Agreement between LCD and Delco, LCD is

not entitled to the protection of the Repurchase Act.            It follows

inescapably, therefore, that the termination provision of the Parts

Agreement, with its requirement of no more than a 30-day, no-cause

written notice, does not contravene any law of Louisiana that is

applicable to that agreement.       LCD does not contend that Delco’s

hand-delivered 30-day termination notice failed to comply with

either the notice or the termination provisions of the Parts

Agreement —— indeed, Delco appears to have complied with those

provisions to the letter —— so LCD has no real likelihood of

prevailing on the merits of its claim of invalid termination of the

Parts Agreement.    As alone, the absence of likelihood of success on

the merits is sufficient to make the district court’s grant of a

preliminary injunction improvident as a matter of law, we need not

address   the   three   remaining   prongs   of   the   test   for   granting

preliminary injunctions.32
     32
       Similarly, as we have determined the Repurchase Act to be
inapplicable to free-standing, parts-only agreements between

                                    24
                            III.   CONCLUSION

      The district court based its grant of LCD’s motion for a

preliminary injunction barring Delco’s termination of the Parts

Agreement on, inter alia, the conclusion that LCD had a substantial

likelihood of success on the merits.         To reach that conclusion, the

court had to determine that the Repurchase Act applies to the Parts

Agreement.     In    combination,      our   review   of   the   essentially

undisputed facts, our reading of the Parts Agreement, and our

construction of the Repurchase Act, satisfy us that the statute is

not   applicable    to   the   Parts   Agreement   (and,   other   than   the

inapplicable Marine Act, LCD has proffered no other Louisiana law

that is contravened by the notice and termination provisions of the

Parts Agreement).        Aware of nothing else in fact or in law that

would invalidate Delco’s termination of the Parts Agreement, we are

convinced that LCD has no real likelihood of success on the merits

Agents and Dealers that do not also sell, distribute, or retail
the Agents’ underlying equipment, engines, implements, machinery,
etc., we need not and therefore do not answer the question
whether the Repurchase Act would also be inapplicable because of
LCD’s alleged failure to meet the “industries” requirement of the
first sentence of § 481.A, i.e., that its “vehicle replacement
parts” be sold, distributed or retailed in one or more of the
five industries listed in that subsection. We cannot help but
observe, however, that inasmuch as § 481.B.(1) makes the
Repurchase Act inapplicable to “vehicles” unless they are
designed or adapted and “used exclusively” for operations in one
or more of the five applicable industries, stand-alone dealership
contracts for replacement parts for vehicles surely could not
come under the aegis of the Repurchase Act unless the vehicles
for which those parts are intended are themselves used
exclusively in one or more of the targeted industries.

                                       25
of its claim that Delco did not effectively terminate the Parts

Agreement.

      As the four prongs of the test for granting a preliminary

injunction are conjunctive, LCD’s failure of the likelihood-of-

success prong is fatal to its claim for such relief.33         We therefore

reverse the district court’s grant of a preliminary injunction

prohibiting Delco from terminating the Parts Agreement and remand

this case with instructions to vacate the preliminary injunction

and   to   conduct   any   further   proceedings   in   a   manner   that   is

consistent with this opinion.

REVERSED and REMANDED WITH INSTRUCTIONS.




      33
       As LCD’s breach of contract claim is not before us in
this appeal from the grant of the preliminary injunction, we do
not address that claim.

                                      26