Ernie Haire Ford, Inc. v. Ford Motor Company

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
________________________ AUGUST 8, 2001
THOMAS K. KAHN
No. 00-14701 CLERK
________________________
D. C. Docket No. 99-00059 CV-T-25F

ERNIE HAIRE FORD, INC.,
AUTO ASSETS TRUST,
MARY K. HAIRE, individually and as
trustee of the Ernest B. Haire, Jr., Revocable Trust,
ERNEST B. HAIRE, III,

Plaintiffs-Appellants,

versus

FORD MOTOR COMPANY,

Defendant-Appellee.
________________________

Appeal from the United States District Court
for the Middle District of Florida
_________________________
(August 8, 2001)

Before BLACK and BARKETT, Circuit Judges, and TIDWELL*, District Judge.

BLACK, Circuit Judge:
______________________
*Honorable G. Ernest Tidwell, U.S. District Judge for the Northern District of Georgia, sitting by
designation.
 Appellee Ford Motor Company distributes its automobiles through a nationwide

network of independently-owned dealerships. Appellants Mary Haire and Ernest B.

Haire, III (the Haires) are shareholders of Ernie Haire Ford, Inc. (EHF), an automobile

dealership located in Tampa, Florida.1 Appellant Auto Assets Trust (Auto Assets) was

to serve as a broker in a proposed transaction. Appellants claim Appellee is liable,

under Florida law, for its refusal to approve the proposed transaction. The district

court granted summary judgment to Appellee. We affirm.

I. BACKGROUND

We set forth the facts in the light most favorable to Appellants. On

March 31, 1985, Appellant EHF and Appellee entered in a Ford Sales and Service

Agreement (Dealership Agreement), which was amended on January 5, 1994. On

September 5, 1996, EHF and Appellee executed a Dealer’s Facility Supplement

(Supplement). The Dealership Agreement and the Supplement contain three

provisions pertinent to this case.

First, section 5(b) of the Dealership Agreement states that the dealership

location is described in the Supplement, which in turn specifies two addresses on

1
Mary K. Haire is a shareholder both in her individual capacity and in her
capacity as trustee of the Ernie B. Haire, Jr. Trust.
2
North Florida Avenue in Tampa as the location for EHF’s dealership. Second,

section 5(c) in the Dealership Agreement provides in part:

[EHF] shall not move or substantially modify or change the usage of
any of the DEALERSHIP LOCATION or FACILITIES . . . , nor shall
[EHF] . . . directly or indirectly establish or operate in whole or in part
any other locations or facilities . . . without the prior written consent
of [Appellee]. (emphasis added)

Third, section 9(a) in the Dealership Agreement provides:

[Appellee] reserves the right to determine, from time to time, in its
best judgment, the numbers, locations and sizes of authorized dealers
necessary for proper and satisfactory sales and service representation .
. . within and without the DEALER’S LOCALITY. In making such
determinations, [Appellee] from time to time conducts, to the extent
deemed adequate by [Appellee] and subject to the ready availability of
information, studies of the locality, including such factors as
geographic characteristics, consumer shopping habits, competitive
representation patterns, [etc.] . . . . (emphasis added).

Throughout 1997 and 1998, EHF negotiated a transfer of its dealership to

CarMax, a non-party. Under the proposed transaction, the Haires would sell their

shares in EHF to Auto Assets, which in turn would sell EHF’s operating assets,

including the Dealership Agreement, to CarMax. The proposed transaction also

called for the relocation of the dealership from North Florida Avenue to CarMax’s

superstore on Bearss Avenue. The transaction was conditioned on Appellee’s

approval of both the transfer and relocation of the dealership.

3
 In October 1998, EHF requested Appellee’s approval for the proposed

transaction, including the transfer of the dealership to CarMax and the relocation to

Bearss Avenue. In December 1998, Appellee disapproved the relocation to Bearss

Avenue, and because the transfer was conditioned on the relocation, Appellee also

disapproved the transfer to CarMax. Contemporaneously, to ensure the transaction

would not be consummated, Appellee filed a verified complaint with Department

of Highway Safety and Motor Vehicles (DHSMV) pursuant to Fla. Stat. § 320.643;

the sole basis for Appellee’s verified complaint was its objection to the proposed

relocation. Shortly thereafter, CarMax terminated the proposed transaction, and

the DHSMV dismissed the verified complaint as moot.

In their lawsuit before the district court, Appellants presented a plethora of

evidence about Appellee’s motive for rejecting the proposed transaction. For

instance, as early as the late 1970s or early 1980s, and then again in late 1995 or

early 1996, Appellee had suggested that EHF’s dealership be moved to Bearss

Avenue. Nevertheless, in early 1998, Appellee tried to persuade Appellants not to

transfer the dealership to CarMax, despite admitting that the Bearss Avenue

location had several advantages over the North Florida Avenue location. At an

August 1998 meeting, Appellee informed CarMax that it would not approve the

transaction even if CarMax offered to operate the dealership at the North Florida

4
Avenue location. Prior to rejecting the transaction, Appellee performed a limited

amount of due diligence; in particular, Appellee requested far less information

from CarMax than it normally requested from other proposed transferees.

Additionally, had Appellee adhered to its own relocation manual, nine of the ten

factors listed therein favored the Bearss Avenue location.

Appellee presented evidence of several reasons supporting its refusal to

approve the relocation and transfer. For example, the proposed relocation

conflicted with Appellee’s market plan, which encompassed placing a new

dealership in a different area of Tampa. Moreover, Appellee did not want to move

EHF from the “auto row” on North Florida Avenue, and it believed the Bearss

Avenue location was near some undesirable businesses. Additionally, Appellee

feared the relocation would generate protest litigation by other dealerships

pursuant to Fla. Stat. § 320.642. Lastly, Appellee did not want EHF’s new-car

dealership co-located with CarMax’s used-car superstore.

II. STANDARD OF REVIEW

We review a grant of summary judgment de novo, with all facts and

reasonable inferences construed in the light most favorable to the nonmoving party.

See, e.g., Harbert Int’l, Inc. v. James, 157 F.3d 1271, 1277 (11th Cir. 1998). This

case requires us to examine issues concerning the substantive law of Florida. In

5
rendering a decision based on state substantive law, a federal court must “decide

the case the way it appears the state’s highest court would.” E.g., Royal Ins. Co. of

Am. v. Whitaker Contracting Corp., 242 F.3d 1035, 1040 (11th Cir. 2001) (internal

quotations and citation omitted). Where the state’s highest court has not spoken to

an issue, a federal court “must adhere to the decisions of the state’s intermediate

appellate courts absent some persuasive indication that the state’s highest court

would decide the issue otherwise.” Ins. Co. of N. Am. v. Lexow, 937 F.2d 569, 571

(11th Cir. 1991) (internal quotations omitted).

III. DISCUSSION

Appellants claim Appellee is liable, under Florida law, for (1) a breach of

contract, (2) a violation of Fla. Stat. § 320.643 (1997), and (3) tortious interference

with contract. We examine each of these contentions.2

2
Appellants also contend the district court improvidently granted summary
judgment because there was a pending discovery dispute. We conclude the district
court did not abuse its discretion, as the discovery requested by Appellants was
unlikely to produce a genuine issue of material fact. See, e.g., Patterson v. U.S.
Postal Serv., 901 F.2d 927, 929 (11th Cir. 1990).
6
A. Breach of Contract

To support their breach of contract claims,3 Appellants make two arguments.

First, they argue that Appellee did not use “its best judgment,” contrary to section

9(a) of the Dealership Agreement, when it rejected the relocation and the transfer

of the dealership. Second, Appellants argue Appellee violated the implied

covenant of good faith and fair dealing.

For their first argument, Appellants concede that, under sections 5(b)&(c) of

the Dealership Agreement, any relocation of the dealership from its North Florida

Avenue location required Appellee’s written consent. Appellants nonetheless

argue that the “best judgment” clause of section 9(a) modified Appellee’s

discretion when approving or rejecting a proposed relocation. To comply with

“best judgment” clause, Appellants say that Appellee was required to “gather

sufficient information and perform an analysis to have a proper basis to exercise its

‘best judgment’ and at least follow its own guidelines and procedures.”

3
Appellants’ complaint contains two claims for breach of contract, one on
behalf of EHF and one on behalf of the Haires. The district court rejected the
Haires’ claim on the ground that they were not parties to the Dealership Agreement
and were not entitled to relief as third-party beneficiaries. Since we conclude there
was no underlying breach of contract, we need not address whether the Haires had
standing to sue under the Dealership Agreement.
7
Appellant’s Br. 24. Whether Appellee did this, Appellants argue, is a question of

fact for the jury.

We disagree. As the district court noted, it is well settled that “when the

terms of a voluntary contract are clear and unambiguous, . . . the contracting parties

are bound by those terms, and a court is powerless to rewrite the contract to make

it more reasonable or advantageous for one of the contracting parties.” Emergency

Assocs. of Tampa, P.A. v. Sassano, 664 So. 2d 1000, 1003 (Fla. 2d DCA 1995);

accord Institutional & SuperMarket Equip., Inc. v. C & S Refrigeration, Inc., 609

So. 2d 66, 68 (Fla. 4th DCA 1992); Nat’l Health Labs, Inc. v. Bailmar, Inc., 444

So. 2d 1078, 1080 (Fla. 3d DCA 1984). The district court correctly characterized

the plain meaning of the Dealership Agreement and section 9(a):

Under the [Dealership] Agreement, it is [Appellee’s] own judgment
that controls, not EHF’s judgment, not a jury’s judgment and not a
reasonable business person’s judgment. [Section 9(a)] merely requires
that [Appellee] use its best judgment in determining the relocation of
its dealerships. This clear and unambiguous provision cannot be
interpreted as opening the door for a jury to second-guess [Appellee’s]
judgment or as setting limits on [Appellee’s] reasons for making a
relocation determination.

Turning to Appellants’ second argument, the implied covenant of good faith

and fair dealing is a part of every contract under Florida law. See Burger King

Corp. v. Weaver, 169 F.3d 1310, 1315 (11th Cir.), cert. dismissed 528 U.S. 948,

120 S. Ct. 370 (1999). But the implied covenant cannot override an express

8
contractual term. See Ins. Concepts and Design, Inc. v. HealthPlan Servs., Inc.,

785 So. 2d 1232, 1234 (Fla. 4th DCA 2001) (citing Weaver, 169 F.3d at 1317-18).

Rather than serving as an independent term within a contract, the implied covenant

“attaches . . . to the performance of a specific contractual obligation.” Johnson

Enters. of Jacksonville, Inc. v. FPL Group, Inc., 162 F.3d 1290, 1314 (11th Cir.

1998) (quoted in Ins. Concepts, 785 So. 2d at 1235). In this case, the specific

contractual obligation upon which Appellants rely is section 9(a)’s “best

judgment” clause; therefore, the proper inquiry is to what extent, if any, does the

implied covenant modify the broad discretion accorded Appellee under the “best

judgment” clause.

With the implied covenant, one party cannot capriciously exercise discretion

accorded it under a contract so as to thwart the contracting parties’ reasonable

expectations. See Sepe v. City of Safety Harbor, 761 So. 2d 1182, 1185 (Fla. 2d

DCA 2000) (holding that, even where one party has “sole discretion” under a

contract, that party, in exercising its discretion, must act in good-faith and in

accordance with the contracting parties’ expectations); Cox v. CSX Intermodal,

Inc., 732 So. 2d 1092, 1097-98 (Fla. 1st DCA 1999) (stating “where the terms of

the contract afford a party substantial discretion . . ., the duty to act in good faith

. . . limits that party’s ability to act capriciously to contravene the reasonable

9
contractual expectations of the other party”). Yet, the limit placed on a party’s

discretion is not great. As the Florida Second District Court of Appeal has stated,

“Unless no reasonable party . . . would have made the same discretionary decision

. . . , it seems unlikely that [the party’s] decision would violate the covenant of

good faith . . . .” Sepe, 761 So. 2d at 1185.

According to Appellants, the Cox decision by the Florida First District Court

of Appeal controls the outcome of this case. 732 So. 2d at 1094-1099. In Cox, two

truckers contracted with CSX to haul freight. See id. at 1094. CSX had exclusive

rights to the truckers’ services, thereby prohibiting the truckers from hauling non-

CSX freight. See id. But the contract expressly stated CSX had no obligation to

provide any specific freight to the truckers. See id. The truckers sued for breach

of contract, claiming CSX was routinely giving them only low-paying freight to

haul. See id. CSX argued that the contract gave it complete discretion in the

assignment of freight, and it was under no obligation to assign any freight to the

truckers. Notwithstanding CSX’s broad discretion under the contract, the First

District Court of Appeal reversed a summary judgment, holding that issues of fact

remained as to whether CSX had acted in good faith in assigning freight. See id. at

1097-98.

10
 Appellants’ reliance on Cox is misplaced. The central purpose of the

contract in Cox was the hauling of freight. By failing to assign freight, CSX

frustrated that purpose and the reasonable expectations of the parties. Here,

however, the central purpose of the Dealership Agreement was to sell cars, not to

relocate the dealership. In disapproving the relocation, Appellee did not preclude

Appellants from selling cars. Instead, based on “its best judgment,” Appellee

forbid the relocation of the dealership to a site where, granted, Appellants would

have financially benefitted. Although Appellee’s decision was not in Appellants’

best interests, it was neither capricious nor in contravention of the parties’

reasonable expectations. Therefore, the district court properly granted summary

judgement on Appellants’ breach of contract claims.

B. Fla. Stat. § 320.643 (1997)4

Section 320.697 of the Florida Statutes provides a cause of action to “[a]ny

person who has suffered pecuniary loss or who has been otherwise adversely

affected because of a violation by a licensee of [Fla. Stat. §§] 320.60-320.70.”

4
The events in this case are governed by the 1997 version of the Florida
Statutes, and all references herein are to the 1997 version. Section 320.643 was
amended by Fla. Laws ch. 2001-196, which was signed into law by the Governor
of Florida on June 8, 2001. Those amendments, however, do not govern in this
case. Cf. Barry Cook Ford, Inc. v. Ford Motor Co., 616 So. 2d 512, 517 n.5 (1st
DCA 1993).
11
Appellants contend that Appellee, a licensee,5 is liable under § 320.697 for

violating Fla. Stat. § 320.643.

We recently explained how § 320.643 functions:

Section 320.643 provides a mechanism to regulate the transfer of
dealer franchise agreements and equity interests. A licensee . . . is
entitled to written notice of any such transfer. To object to the
transfer, a licensee must file a verified complaint with the DHSMV no
later than 60 days after receiving notice. The available grounds for
objection differ depending on the type of transfer. For a transfer of a
franchise agreement, a licensee, under § 320.643(1), may not
unreasonably withhold its approval, and all objections to the
transfer—other than objections to the transferee’s moral character or
business experience—are presumed to be unreasonable. In contrast,
for a transfer of the equity interest, a licensee, under § 320.643(2)(a),
may object solely on the ground that the transferee lacks good moral
character.6

Risley v. Nissan Motor Corp. USA, ___ F.3d ___, ___ (11th Cir 2001). What we

did not mention in Risley, as it was not pertinent there, is that a transfer of a

franchise agreement is not valid “unless the transferee agrees in writing to comply

with all requirements of the franchise then in effect.” Fla. Stat. § 320.643(1).

5
A licensee is an automobile manufacturer, distributor, or importer. See Fla.
Stat. §§ 320.60(8), 320.61; see also Mercedes-Benz of N. Am. v. Mike Smith
Pontiac GMC, Inc., 561 So. 2d 620, 623 n.5 (Fla. 1st DCA 1990). The parties do
not dispute that Appellee qualifies as a licensee.
6
Recent amendments have altered § 320.643's procedural mechanism, but
those amendments do not govern in this case. See Fla. Laws ch. 2001-196, § 23;
supra note 4.
12
 In this case, Appellants were proposing both a transfer of EHF’s equity

interest (that is, the sale of EHF’s stock from the Haires to Auto Assets) and a

transfer of the EHF’s franchise agreement (that is, the transfer of EHF’s operating

assets from Auto Assets to CarMax). Appellee disapproved the entire transaction

because it was conditioned on the relocation of the dealership from North Florida

Avenue to Bearss Avenue. Appellants contend this disapproval violated both

§ 320.643(1), which governs transfers of franchise agreements, and

§ 320.643(2)(a), which governs transfers of equity interests.

Appellants’ claims under § 320.643(1) are foreclosed by Gus Machado

Buick-GMC Truck, Inc. v. General Motors Corp., 623 So. 2d 810 (Fla. 1st DCA

1993). In that case, an automobile dealer proposed a transfer of the franchise

agreement coupled with a relocation. See id. at 811-12. The licensee disapproved,

contending, as Appellee does here, that the proposed transfer was invalid under

Fla. Stat. § 320.643(1) because the relocation was a failure to comply with the

franchise agreement. See id. Stated differently, the transferee refused to “comply

with all requirements of the franchise then in effect.” Fla. Stat. § 320.643(1). In

the administrative proceeding, the DHSMV agreed, and the Florida First District

Court of Appeal affirmed, holding that a proposed franchise transfer which

13
contemplates a relocation can fail to comply with the “franchise then in effect” and

thus be invalidated by § 320.643(1). See Gus Machado, 623 So. 2d at 812, 813.

In this case, the “franchise then in effect” (that is, the Dealership Agreement)

plainly articulated that EHF’s dealership had to be located at North Florida

Avenue. Appellants’ proposed transaction did not comply with this requirement,

and thus it was invalid under § 320.643(1). Hence, Appellee could not have

violated § 320.643(1) when it disapproved a transaction which, by its plain terms,

was invalid under § 320.643(1).7

Turning to Appellants’ argument under § 320.643(2)(a), the Florida

Supreme Court has recognized that where a proposed transaction is solely an

equity transfer, then § 320.643(2)(a) may provide the exclusive basis for a licensee

to disapprove the transaction. See Hawkins v. Ford Motor Co., 748 So. 2d 993,

1000-01 (Fla. 1999). Nonetheless, a proposed transaction “cannot be viewed in a

vacuum.” Id. at 1001. Where a proposed transaction involves more than the

7
Appellants argue we should not follow Gus Machado because the First
District Court of Appeal was required, under Florida law, to defer to the statutory
construction of the agency (DHSMV) unless such construction was clearly
erroneous. 623 So. 2d at 812 (citing Braman Cadillac, Inc. v. Dep’t of Highway
Safety & Motor Vehicles, 584 So. 2d 1047, 1050 (Fla. 1st DCA 1991)). But, if
Florida courts must defer to agency interpretations when construing Florida
substantive law, then we must do the same. See supra Part II.
14
“sterile transfer of an equity interest”, then “[§] 320.643(2)(a) does not provide the

exclusive basis for objection.” Id.

In this case, the proposed transfer of EHF’s equity from the Haires to Auto

Assets was inextricably intertwined with the transfer of EHF’s franchise agreement

from Auto Assets to CarMax. Thus, Appellee was free to disapprove the entire

proposed transaction under either § 320.643(1) or § 320.643(2)(a).8 Since it

properly disapproved the transaction under § 320.643(1), Appellee could not have

violated § 320.643(2)(a).

In sum, as a matter of law, Appellee did not violate § 320.643. Therefore,

the district court properly granted Appellee summary judgment on Appellants’

claims alleging a violation of § 320.643.

C. Tortious Interference with Contract

Under Florida law, a claim for tortious interference with contract cannot lie

where the alleged interference is directed at a business relationship to which the

defendant is a party. Genet Co. v. Annheuser-Busch, Inc., 498 So. 2d 683, 684

(Fla. 3d DCA 1986) (citing Ethyl v. Balter, 386 So. 2d 1220, 1225 (Fla. 3d DCA

8
By contrast, in Hawkins, the proposed transaction involved a transfer of
equity, but not a transfer of the franchise agreement, and therefore, the licensee
could not rely on § 320.643(1) to block the proposed transaction. 748 So. 2d at
1002. Here, however, the proposed transaction involved both a transfer of equity
and a transfer of the franchise agreement.
15
1980)). In other words, “the interfering defendant must be a third party, a stranger

to the business relationship.” Salit v. Ruden, McClosky, Smith, Schuster & Russell,

P.A., 742 So. 2d 381, 386 (Fla. 4th DCA 1999) (citing Abruzzo v. Haller, 603 So.

2d 1338 (Fla. 1st DCA 1992)).

Genet, decided by the Florida Third District Court of Appeal, is materially

indistinguishable from the instant case. 498 So. 2d at 683-85. In Genet, the owner

of an Anheuser-Busch (A-B) wholesalership contracted with the plaintiffs to sell

his wholesalership. See id. at 684. The sales contract between the owner and the

plaintiffs was expressly conditioned on A-B’s approval. See id. Additionally, the

equity agreement between A-B and the owner required A-B’s approval for any sale

of the wholesalership. See id. A-B disapproved the sale to the plaintiffs. In

affirming a grant of summary judgment to A-B, the Third District Court of Appeal

reasoned, “Because plaintiffs’ agreement with [the owner] was specifically

conditioned upon A-B’s approval, as a matter of law, A-B cannot be liable for

tortious interference with their agreement.” Id. Moreover, in support of its

holding, the court emphasized that A-B was not a disinterested third-party, as it

had a contractual right in the equity agreement to disapprove any proposed

transfer. See id.

16
 All the material facts from Genet are present in this case. Just as the sales

agreement in Genet was conditioned on A-B’s approval, the transfer and relocation

agreement here was expressly conditioned on Appellee’s approval. Furthermore,

just as the equity agreement in Genet gave A-B the power to disapprove a sale, the

Dealership Agreement here gave Appellee the power to disapprove a transfer or

relocation. Therefore, pursuant to Genet, the district court properly granted

Appellee summary judgment on Appellants’ tortious interference claims.9

9
Appellants argue that a party’s privilege to interfere, pursuant to Genet, is
qualified and does not apply where a party purposefully interferes or acts
egregiously. See Making Ends Meet, Inc. v. Cusick, 719 So. 2d 926, 928 (Fla. 3d
DCA 1998) (citing McCurdy v. Collis, 508 So. 2d 380, 384 (Fla. 1st DCA 1987);
Nizzo v. Amoco Oil Co., 333 So. 2d 491, 493 (Fla. 3d DCA 1976)). Appellants’
argument is misplaced. The privilege is qualified only where malice is the sole
basis for the interference. See McCurdy, 508 So. 2d at 383-84. In other words, the
party must be interfering solely out of spite, to do harm, or for some other bad
motive. See id. at 383 n.2; see also Nizzo, 333 So. 2d at 493 (upholding tortious
interference claim where sole basis for defendant’s interference was plaintiff’s
race). Appellants have failed to show that Appellee’s sole basis for disapproving
the transaction was malicious.

Appellants also rely on our prior decision in Frank Coulson, Inc.-Buick v.
General Motors Corp., 488 F.2d 202 (5th Cir. 1974). See Bonner v. City of
Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc) (adopting as binding
precedent all decisions of the former Fifth Circuit handed down prior to the close
of business on September 30, 1981). However, compared to Genet, Frank Coulson
is quite dissimilar from the instant case, and thus we are not bound by it.
Furthermore, when Frank Coulson was decided, Florida law concerning the scope
of a party’s privilege to interfere had not yet crystallized. 488 F.2d at 206. Since
then, decisions such as Genet have better defined the contours of the privilege.
17
 IV. CONCLUSION

In this case based on Florida law, Appellants contend that, by disapproving

the relocation and transfer of their dealership, Appellee breached a contract,

violated Fla. Stat. § 320.643, and tortiously interfered with a contract. We

conclude otherwise. The district court correctly granted Appellee summary

judgment on all claims.

AFFIRMED.

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