United States Court of Appeals
For the First Circuit
No. 97-1981
COONEY INDUSTRIAL TRUCKS, INC.,
Plaintiff, Appellant,
v.
TOYOTA MOTOR SALES, U.S.A., INC.,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Robert E. Keeton, U.S. District Judge]
Before
Selya, Circuit Judge,
Aldrich and Campbell, Senior Circuit Judges.
Thomas S. Francis with whom William M. Clark and Law Offices
of Thomas S. Francis were on brief for appellant.
William N. Berkowitz with whom Daniel L. Goldberg, David
Yamin, Bingham Dana LLP, and David D. Laufer were on brief for
appellee.
February 25, 1999
ALDRICH, Senior Circuit Judge. In this action
Cooney Industrial Trucks, Inc. (CITI) sued Toyota Motor Sales,
U.S.A., Inc. (Toyota) for breach of contract and unfair
business practices during the course of a franchise
relationship. Following trial and receipt of the jury's
answers to special questions, one of which, under Mass. G.L.
ch. 93B, favored CITI, but another of which was that CITI
suffered no damages, the court ruled for Toyota. We affirm.
Since 1970, CITI purchased and resold Toyota
forklifts pursuant to consecutive dealer agreements, the last
of which was executed on October 21, 1992. This agreement
allowed CITI to sell equipment from other manufacturers but
required it, by December 31, 1993, to equal or exceed, and
thereafter maintain, Toyota's national retail market share.
When that date arrived, CITI's market share was 7.7%, well
below Toyota's national market share of just over 15%.
In early 1994, Toyota removed New Hampshire from
CITI's Area of Primary Responsibility, a change authorized by
the dealer agreement, because of CITI's inadequate sales
performance in that state. Then, on August 15, 1994, Toyota
advised CITI that, despite CITI's poor sales performance, it
was willing to offer a new four-month dealer agreement that
would include the same sales performance requirements but,
unlike the 1992 dealer agreement, would not provide for the
automatic granting of a six-year agreement if CITI met the
stated market share. If CITI met those requirements, however,
Toyota would consider offering another long-term dealer
agreement. CITI failed to execute the proposed four-month
agreement before the previous contract's original end date,
September 30, 1994, and the franchise relationship terminated,
after a two-month unilateral extension by Toyota, on November
30, 1994.
After deciding to reject Toyota's offer, Mr. Cooney,
CITI's owner and president, made contact with Mitsubishi
Caterpillar (Caterpillar), another manufacturer, to discuss
the possibility of CITI becoming a dealer of Caterpillar
forklifts. Caterpillar and CITI ultimately executed a sales
and service agreement on November 7, 1994. According to Mr.
Cooney, he never had an intention to represent Toyota and
Caterpillar at the same time, and he negotiated this agreement
in an attempt to mitigate whatever damage CITI would sustain
as a result of Toyota's actions.
In fact, CITI's operations under the Caterpillar
contract were, allegedly, better than with Toyota. CITI
requested the court to charge as follows:
Gains made by the injured party on other
transactions after the breach are never
to be deducted from the damages that are
otherwise recoverable, unless such gains
could not have been made, had there been
no breach.
Why it wanted the jury to be told of the "unless" portion does
not appear; it was its position that it did not apply.
Thereafter, the court put a special question to the jury, in
effect applying it:
The law imposes a duty upon every
person to take reasonable steps to
mitigate, or avoid altogether, damages.
Under the law, a plaintiff cannot recover
damages that it has successfully avoided
through such efforts.
. . . .
If you find that [CITI] successfully
mitigated or avoided losses by its
acquisition and operation of the
Caterpillar dealership you may not award
as damages any losses so avoided.
The jury so answered, awarding no damages.
At a post trial hearing the court spelled out its
thinking: CITI had "benefitted rather than sustained any loss
or harm from accepting a franchise from Caterpillar that
prohibited CITI from representing at the same time any
competitor of Caterpillar, including defendant Toyota." Thus
the special question was predicated on an implied ruling, or
conclusion, that CITI fit the "unless" provision because, but
for Toyota's breach and departure, its presence would have
prohibited the Caterpillar contract. The case hangs on the
correctness of that conclusion.
We consider first some legal principles. To begin
at the beginning, the court was correct in saying that the law
imposes on a plaintiff the duty to take reasonable steps to
mitigate meaning reduce or offset damage. However, the
duty applies only when the defendant's breach created the
opportunity to take those steps. If a defendant had agreed
to pay for plaintiff's personal services and then rejected the
contract, by freeing plaintiff's time the breach created the
opportunity to sell his services to someone else, and the
plaintiff would have the duty to make a reasonable attempt to
do so. If, however, plaintiff was a stockbroker, and
defendant's failure to place orders would not have created an
opportunity to deal with other customers, defendant's breach
afforded him nothing; he would have had no duty. Hence the
mitigation rule, footnote 1, ante, which we accept. As the
Supreme Judicial Court of Massachusetts has said, "[i]t is not
the policy of our law to award damages which would put a
plaintiff in a better position than if the defendant had
carried out his contract." Ficara v. Belleau, 331 Mass. 80,
82, 117 N.E.2d 287, 289 (1954). Failing to deduct from a
plaintiff's award those gains he could not have made had the
defendant not breached would, of course, violate this
principle. So we must ask the question: If there had been no
breach, could CITI have kept Toyota and, at the same time,
made the profitable contract with Caterpillar?
CITI correctly asserts that the Toyota contract had
not forbidden its dealing with Caterpillar. Recognizing that
there were two sides, CITI's brief noted that Caterpillar
allowed it to carry competing lines, "if certain conditions
were met." The conditions were these:
Dealer [CITI] . . . will not display,
inventory, demonstrate, or sell
[competing goods] except (i) by an entity
separate from Dealer, (ii) under a trade
name which is different and distinct from
that of Dealer, (iii) in facilities
separate and distinguishable from those
of Dealer, and (iv) by employees other
than persons who are also employed or
otherwise furnish personal service to
Dealer.
In its reply brief CITI is reduced to claiming that these
conditions could be satisfied by creating a subsidiary
company:
The exception specifically allows CITI,
through a wholly-owned subsidiary, under
a different name, in a separate facility,
and with separate employees to sell
competitive products.
We are not told why CITI shortened the actual wording and
substituted "and with separate employees" for "and (iv) by
employees other than persons who are also employed by or
otherwise furnish personal services to Dealer" (emphasis
added). We would read the emphasized words to mean that Mr.
Cooney could not even be an unpaid officer of the subsidiary.
A greater difficulty, it is not clear from its quoted sentence
where CITI would place the subsidiary. Is Caterpillar to
contract with CITI, with Toyota to shift to the subsidiary?
It is hard to visualize Toyota accepting such an arrangement.
Equally, we cannot think that a prosperous company like
Caterpillar would itself deal with Cooney through some
isolated, hypothetical subsidiary. The district court was
right in holding that CITI contracted with Caterpillar only by
reason of Toyota's breach and disappearance. Hence the
mitigation rule's "unless" clause applies.
We would suggest, further, that even if Caterpillar,
as well as Toyota, had no objection to competition, it would
have been totally impractical for CITI to be a dealer for both
manufacturers simultaneously. As we have seen, Toyota had a
minimum production requirement that CITI was not meeting. Can
it be thought that it could have taken on another substantial
dealership in such circumstances? Mr. Cooney's statement that
he had never intended being a dealer for both manufacturers
simultaneously was more than a thought; it was a recognitionof impossibility. We can only think of the present lawsuit
as a flat attempt to make simultaneous, double collections.
CITI's unfairness complaint, that it alone bore the risk of
the Caterpillar operation's not being successful, overlooks
the fact that if it had been a failure, Toyota's damage
liability would not have been offset. What is unfair is CITI
seeking to have it both ways.
Attorneys' Fees
The concept that a plaintiff who has recovered no
damages or other relief should receive attorneys' fees is so
unusual that we need a clear showing to support CITI's
contention that the legislature was so anxious to pursue
business wrongdoing that it wished to reward discoverers even
if they had not been harmed themselves. This is far too
substantial a matter to depend on legal argument; we depend on
elementary language. Ch. 93B 12A reads, in part, as follows:
Section 12A. Any franchisee or motor
vehicle dealer who suffers any loss of
money or property, real or personal, as a
result of [listed acts] may bring an
action in the superior court for damages
and equitable relief, including
injunctive relief.
Plainly this means that a plaintiff must show loss to itself,
not merely the occurrence of a wrongful act. Plainly, also,
such loss is a predicate for attorneys' fees. Section 12A
continues:
If the court finds for the franchisee
or motor vehicle dealer in any action
commenced hereunder, that there has been
a violation of sections three to eleven,
inclusive, or of any rule or regulation
issued under paragraph (c) of section
three, such franchisee or motor vehicle
dealer shall, in addition to any other
relief provided for by this section and
irrespective of the amount, if any,[ ] in
controversy, be awarded reasonable
attorneys' fees and costs; . . . .
(emphasis added)
Something cannot be "in addition" if there was nothing
preceding. Cf. Jet Line Services, Inc. v. American Employers
Ins. Co., 404 Mass. 706, 718, 537 N.E.2d 107, 115 (1989)
("[T]he reference to an award 'in addition to other relief'
indicates that relief solely in the form of attorneys' fees
may not be had."). Any other result would change the whole
concept of the statute.
Affirmed.