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setting forth burden of proof for plaintiff
Summary of this case from GABE STAINO MOTORS, INC. v. VOLKSWAGEN OF AMERICA, INC.Opinion
CIVIL ACTION NO. 99-5034
November 13, 2003
MEMORANDUM AND ORDER
Currently before the Court are Defendant's Motion for Summary Judgment (Docket No. 28), Plaintiffs' Memorandum of Law in Opposition to Defendant's Motion for Summary Judgment (Docket No. 33), and Defendant's Reply to Plaintiff's Memorandum of Law in Opposition (Docket No. 40).
I. FACTUAL AND PROCEDURAL BACKGROUND
This case arises out of Defendant's allegedly unreasonable rejections of Plaintiffs' proposals to sell a Volkswagen franchise. Plaintiffs Gabriel Staino and Gabe Staino Motors, Inc., attempted to sell their Volkswagen franchise to Plaintiffs Vincent Piazza and Charlie Victor, Inc. Two deals were proposed and both were rejected by Defendant Volkswagen of America.
Plaintiff Gabriel Staino was president and sole shareholder of Gabe Staino Motors, Inc., from 1990 through 1998 (referred to collectively as the "Staino Plaintiffs"). The Staino Plaintiffs owned and operated Chrysler-Plymouth and Volkswagen dealerships from the same facility in Chadds Ford, Pennsylvania. The Chadds Ford facility was owned by Chrysler Realty and leased to Staino for use by both dealerships.
Plaintiff Vincent Piazza has owned and operated a number of automobile dealerships in the Philadelphia area, including Ardmore Acura, Ardmore Volkswagen, Main Line Chrysler-Plymouth, and several Honda dealerships. Piazza also owned and operated Plaintiff Charlie Victor, Inc. ("CVI") (referred to collectively as the "Piazza Plaintiffs"). The Piazza Plaintiffs together owned and operated West Chester Acura.
Defendant Volkswagen of America ("VWA") is the exclusive distributor of Volkswagen products in the United States.
In 1996 the Staino Plaintiffs were facing financial difficulties. Additionally, Chrysler headquarters began pushing its franchisees to consolidate Chrysler-Plymouth dealerships with Jeep dealerships. As a result of these circumstances, Mr. Staino sold his Chrysler-Plymouth franchise to a Jeep dealer in March 1997. After the sale, Mr. Staino ceased operating a Chrysler dealership from the Chrysler-owned facilities in Chadds Ford. Consequently, Mr. Staino was no longer allowed to operate his Volkswagen franchise from the Chrysler-owned facility. Mr. Staino was faced with a dire need to either relocate or sell his Volkswagen franchise.
At this time Mr. Staino entered into talks with the Piazza Plaintiffs. On April 4, 1997, all Plaintiffs entered into an Asset Purchase Agreement ("APA") under which the Piazza Plaintiffs would acquire the assets of the Staino Volkswagen dealership for $650,000, plus existing vehicle inventory at dealer cost, pending approval by VWA. Pursuant to the APA, both the Volkswagen and the Acura dealerships would be run from Piazza's West Chester Acura facility.
Plaintiffs submitted the Asset Purchase Agreement to VWA for approval. William Welsh, an area executive for VWA, then inspected the West Chester Acura facility. Mr. Welsh concluded that the facility was inadequate to accommodate a Volkswagen and an Acura franchise. On April 17, 1997, Mr. Welsh issued a letter rejecting the APA in part because of the inadequacy of the West Chester facility. See Def.'s Stmt. of Facts in Sup. of Sum. J., Tab P.
Mr. Staino then began negotiating with Craig Scott Honda ("Scott Honda") at the suggestion of VWA and Mr. Welsh. Those negotiations fell apart for disputed reasons and Mr. Staino renewed discussions with Piazza. This time, the parties agreed upon a Stock Purchase Agreement ("SPA"), whereby Piazza would buy 49 percent of Mr. Staino's stock in Staino Volkswagen for $290,000. Under this arrangement, Mr. Staino would remain in charge of the Volkswagen dealership. However, the West Chester facility would still be used for both the Acura and Volkswagen franchises.
The SPA was submitted to VWA's counsel Debra Kingsbury for VWA approval. VWA rejected the proposed SPA and Ms. Kingsbury sent a letter to Mr. Staino's attorney on June 12, 1997, stating the reasons for rejection. See Def.'s Stmt. of Facts in Sup. of Sum. J., Tab R.
Plaintiffs allege that Mr. Welsh again suggested that Mr. Staino negotiate with Scott Honda. In July 1997, however, Mr. Staino reached an agreement with Garnet Ford ("Garnet Group"), who agreed to pay $650,000 for the Staino Volkswagen franchise. Under the Garnet Group deal, Garnet Ford was to temporarily run a dual dealership, while constructing a Volkswagen dealership on an adjacent property. VWA approved the agreement and Mr. Staino sold his Volkswagen franchise.
Plaintiffs initiated the instant action by filing a Complaint on October 12, 1999. The Court stayed the case on December 8, 1999, pending the outcome of mediation. The mediation session was conducted almost two years later, on October 30, 2001, without successful resolution. Plaintiffs filed a motion to reinstate the case to the active docket on February 15, 2002, and the Court granted the motion. Discovery is complete and expert reports have been exchanged.
Basically, the Plaintiffs claim that VWA's refusals to approve the APA and the SPA were not reasonable and that VWA breached its dealership agreement with the Staino Plaintiffs. Plaintiffs' causes of action are set forth below in full. Defendant seeks summary judgment against all Plaintiffs on all counts. Plaintiffs counter that summary judgment is not appropriate as genuine issues of material fact remain. For the reasons explained below, Defendant's motion is granted in part and denied in part.
II. LEGAL STANDARD
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c)). The party moving for summary judgment has the initial burden of showing the basis for its motion. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant adequately supports its motion pursuant to Rule 56(c)), the burden shifts to the nonmoving party to go beyond the mere pleadings and present evidence through affidavits, depositions, or admissions on file showing a genuine issue of material fact for trial. See id. at 324. The substantive law determines which facts are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). If the evidence is such that a reasonable jury could return a verdict for the nonmoving party, then there is a genuine issue of fact. See id.
When deciding a motion for summary judgment, all reasonable inferences are drawn in the light most favorable to the non-moving party. See Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992), cert. denied, 507 U.S. 912 (1993). Moreover, a court may not consider the credibility or weight of the evidence in deciding a motion for summary judgment, even if the quantity of the moving party's evidence far outweighs that of its opponent. See id. Nonetheless, a party opposing summary judgment must do more than just rest upon mere allegations, general denials, or vague statements. See Trap Rock Indus., Inc. v. Local 825, 982 F.2d 884, 890 (3d Cir. 1992).
III. DISCUSSION
Plaintiffs set forth three Counts in their Complaint and Defendants seek summary judgment against all of them. In Count III, all Plaintiffs set forth a claim under the Pennsylvania Board of Vehicles Act, 63 P.S. § 818.12(b)(3), for VWA's allegedly unreasonable refusals to approve the sale of the Staino Volkswagen franchise. In Count IV, all Plaintiffs set forth a claim under Pennsylvania's common law for tortious interference with prospective economic advantage. Finally, in Count I the Staino Plaintiffs set forth a breach of contract claim for VWA's alleged breach of the Dealer Agreement. Each claim is discussed below in light of Defendant's summary judgment arguments.
Count II was dismissed by the Court's Order of April 1, 2002.
A. Count III: The Pennsylvania Board of Vehicles Act 1. Statute of Limitations and Possible Tolling Mechanisms
Defendant's first argument against Count III is that both sets of Plaintiffs are time-barred from asserting a violation of the Pennsylvania Board of Vehicles Act ("BVA"). The parties agree that the applicable statute of limitations is two years. See Northview Motors, Inc. v. Chrysler Motors Corp., 227 F.3d 78, 91-92 (3d Cir. 2000).
Plaintiffs filed their Complaint on October 12, 1999. VWA rejected Plaintiffs' Asset Purchase Agreement by letter dated April 17, 1997. VWA also rejected Plaintiffs' Stock Purchase Agreement by letter dated June 12, 1997. Plaintiffs were aware of the rejections within a few days after the letters were sent. Thus, Plaintiffs filed the Complaint more than two years after the accrual of the statute of limitations and approximately four months after the two-year statutory period expired. Unless some tolling mechanism applies, Count III is time-barred for all Plaintiffs.
a. Demand for Mediation
Title 63 P.S. § 818.11(a)(1) provides that a dealer or distributor must serve a demand for mediation as a prerequisite to filing a complaint in court. Section 818.11(a)(3) states that the "service of a demand for mediation under paragraph (1) shall stay the time for the filing of any complaint, petition, protest or action under this act . . .," until the parties have met with a mediator in an attempt to resolve the dispute.
Staino attorney Robert Arangio served a demand for mediation on VWA on May 9, 1997. See Def.'s Stmt. of Facts in Sup. of Sum. J., Tab S. The parties did not meet for purposes of mediation until October 30, 2001. The statute of limitations, therefore, was tolled until October 31, 2001, for those Plaintiffs who requested mediation.
Plaintiffs and Defendant agree that the Staino Plaintiffs meet the tolling mechanism of 63 P.S. § 818.11. Thus, the Staino Plaintiffs' BVA claim survives because they requested mediation as required by the BVA to toll the statute of limitations.
The issue is not as clear for the Piazza Plaintiffs. Piazza Plaintiffs argue that because a demand was made for mediation by the Staino Plaintiffs' attorney, the statute of limitations should be tolled forall Plaintiffs. Specifically, Plaintiffs argue that the demand for mediation letter should be read to demand mediation for both sets of Plaintiffs. The Court disagrees.
Mr. Arangio's letter demanded mediation for the Staino Plaintiffs only. The letter states in conclusion, "As it is my client's sincerest desire to resolve this matter amicably, I shall await your timely reply prior to advising the Pennsylvania State Board of Vehicles Manufacturers, Dealers and Salespersons and/or the commencement of litigation." See id. (emphasis added). The reference to one client reinforces Defendant's position that only the Staino Plaintiffs demanded mediation. Moreover, during this time period, the Piazza Plaintiffs were represented by their own attorney, Stuart Cohen. See Def.'s Stmt. of Facts in Sup. of Sum. J., Tab B at 65 (Staino dep.); Tab C at 25-26 (Piazza dep.); Tab 0 at 59-60 (Weiss dep.). The Court concludes, therefore, that the Piazza Plaintiffs never made a formal demand for mediation as required by the statute. Their BVA claim is barred by the statute of limitations unless another tolling mechanism applies.
b. Waiver of the Demand Requirement
The Piazza Plaintiffs argue that even if the demand letter is read to demand mediation for the Staino Plaintiffs only, the BVA' s demand requirement should be waived as to the Piazza Plaintiffs because the Staino demand letter provided notice to VWA of all causes of action for all Plaintiffs. Thus, according to the Piazza Plaintiffs, the superfluous act of writing their own letter requesting mediation should not be required because the Defendant was already aware of Piazza's claim.
The Plaintiffs rely on Zack v. Saxonburg to support this proposition. See, 386 Pa. 463, 469, 126 A.2d 753, 756 (Pa. 1956). In Zack the Supreme Court of Pennsylvania interpreted a statute requiring a potential plaintiff to give a municipality formal notice of the facts of a potential claim before filing a law suit. The Court held that where a municipality already has notice of a plaintiff's cause of action, the formal notice requirement mandated by statute must be waived. See Zack, 386 Pa. at 468, 471. The Zack decision was predicated on a statutory provision vesting courts with a duty to waive the formal notice requirement upon a showing of "reasonable excuse." See id.
The statute at issue in Zack reads in relevant part:
No cause of action may be validly entered of record where there was a failure to file such notice within the time required by this act, except leave of court to enter such action upon a showing of a reasonable excuse for such failure to file said notice shall first have been secured.See Zack, 386 Pa. at 465 (quoting 53 P.S. § 2774 (1937)).
The instant case is distinguishable from Zack in several aspects. First, there is no provision in 63 P.S. § 818.11 that permits a court to waive the demand for mediation requirement. The Zack decision, on the other hand, was based almost entirely upon such a provision. Second, the Plaintiffs do not cite to, nor has the Court found in its own research, any case law suggesting that the Pennsylvania legislature intended the demand for mediation requirement to be waivable upon a showing of "reasonable excuse" or superfluity. The Zack decision, on the other hand, followed a long line of Pennsylvania cases interpreting the statutory notice requirement of 53 P.S. § 2774 (1937) to be expressly waivable. Thus, even taking the Plaintiffs' allegations as true that VWA had notice of the Piazza Plaintiffs' cause of action under the BVA, Plaintiffs have not shown as a matter of law that the BVA's demand for mediation requirement is waivable. Therefore, the Piazza Plaintiffs' BVA claim remains time-barred.
See, e.g., Housely v. City of Phila., 107 F. Supp. 141 (E.D.Pa. 1952); Badger v. Upper Darby Twp., 348 Pa. 551 (1944); McBride v. Rome Twp., 347 Pa. 228 (1943); Lutz v. Scranton, 140 Pa. Super. 139 (1940)).
The Court must next discern whether any other tolling mechanisms are available to the Piazza Plaintiffs.
c. Relation Back Pursuant to Fed.R.Civ.P. 15(c)
Piazza Plaintiffs next argue that, regardless of the effect of the mediation demand, the Piazza Plaintiffs are not time-barred from raising a claim under the BVA because they may be joined as plaintiffs under Fed.R.Civ.P. 15(c). Summary judgment would be inappropriate as to Count III for the Piazza Plaintiffs because their claim would relate back to the filing of the Complaint by the Staino Plaintiffs. Plaintiffs' reliance on Rule 15(c) is misplaced.
Rule 15(c) provides that an amendment of a pleading may relate back "to the date of the original pleading" if certain requirements are met. See Fed.R.Civ.P. 15(c). The relation back mechanism is used to add claims or parties left out of an original complaint. It is used when the statute of limitations expired after the filing of the original complaint. As a prerequisite, then, the initial complaint must have been timely filed for relation back to be effective.
See, e.g., Nelson v. County of Allegheny, 60 F.3d 1010 (3d Cir. 1995) (allowing amendment of a complaint to relate back to the initial filing date so that plaintiffs could be added, when the limitations period expired after the original filing date, but before the amendment was made); Arthur v. United States, No. 02-2931, 2003 U.S. Dist. LEXIS 18050 (E.D. Pa. Sept. 13, 2003) (same, except allowing defendants to be added); Gollinger v. Dreyfus Realty Advisors, No. 96-2740, 1997 U.S. Dist. LEXIS 13589 (E.D. Pa. Aug. 27, 1997) (same).
In this case, all parties agree that the Complaint was filed after the statute of limitations period expired. The only reason the Staino Plaintiffs' BVA claim survives the statute of limitations is because of Pennsylvania's statutory tolling provision. Thus, even if the Piazza Plaintiffs relate back to the date of the filing of the original complaint, which is what Plaintiffs argue for, their BVA claim is still time-barred.
No tolling mechanism is available to the Piazza Plaintiffs that would place their BVA claim within the two year statute of limitations. Accordingly, summary judgment for VWA is granted as to the Piazza Plaintiffs' claim under Count III of the Complaint.
2. Substantive Evaluation of Count III
As discussed above, the Staino Plaintiffs claim under the BVA is not barred by the statute of limitations. The Court now must determine whether Count III can withstand VWA's argument that it fails to meet the substantive requirements of the BVA.
a. Statutory Construction of the BVA
"The Pennsylvania Board of Vehicles Act is a comprehensive statute governing the relationship between automobile manufacturers and their franchise dealers. The Act prohibits a manufacturer from unreasonably withholding consent to the sale of a franchise to a qualified buyer."Rosado v. Ford Motor Co., 337 F.3d 291, 293 (3d Cir. 2003); 63 P.S. § 818.12(b)(3) (2003). Applicable portions of the Act were renumbered and revised in 1996. Those revisions are at issue in this case.
The statute is unclear as to exactly what a plaintiff's burden is to prove that a manufacturer unreasonably withheld consent to the proposed sale of a franchise. Further, there is little Pennsylvania case law discussing the burden and there is no case law addressing the effect of the 1996 revisions. VWA argues that the Staino Plaintiffs' burden is two-fold. First, Plaintiffs must prove that the proposed purchasers of the Staino franchise met VWA's "reasonable requirements" for a new dealer as set forth in the Dealer Agreement. Then, and only then, Plaintiffs can challenge the reasonableness of VWA's rejections of the proposed sales. The Staino Plaintiffs respond that regardless of how the burden is described, in the end, VWA's purported reasons and its "reasonable requirements" are nothing more than pretext.
The old version of the statute provided in pertinent part:
(b) Additional unlawful acts of manufacturers.-It shall be a violation of this act for any manufacturer, factory branch or distributor licensed under this act to:
. . .
(3) Unreasonably withhold consent to the sale, transfer or exchange of the franchise to a qualified buyer capable of being licensed as a new vehicle dealer in this Commonwealth.63 P.S. § 818.9(b)(3) (1996) (revised and redesignated as § 818.12 by P.L. 104, April 19, 1996).
The current version of the BVA, as amended in 1996, provides in pertinent part that it is a violation for any manufacturer or distributor to:
(3) Unreasonably withhold consent to the sale, transfer, or exchange of the franchise to a qualified buyer capable of being licensed as a new vehicle dealer in this Commonwealth who meets the manufacturer's or distributor's reasonable requirements for appointment as dealer.63 P.S. § 818.12(b)(3) (2003) (emphasis added to highlight applicable changes to the law).
Under both versions, Plaintiffs need to prove that a franchisor unreasonably withheld consent to a sale proposal. The difference appears in the application of the term "qualified buyer."
Under the pre-1996 statute, plaintiffs should have been forced to prove that the rejected sale would have been made to a "qualified buyer." Rather than place a two-tiered burden on plaintiffs, however, the few courts that have applied this provision have allowed the status of the proposed buyer to be evaluated within the overall reasonableness of the rejection of the proposed sale. See Crivelli, 215 F.3d at 389-94. If a proposed buyer were not "qualified," then, any rejection of a sale proposal would be deemed reasonable.
Under the current statute, the additional language indicates that a plaintiff should still prove that the proposed buyer of an automobile franchise is a "qualified buyer;" "qualified buyer" is now defined by the franchisor's "reasonable requirements for appointment as a dealer." Given the fact that previous courts that have considered § 818.12(b)(3) claims have not interpreted the "qualified buyer" phrase to create a two-tiered test, the Court concludes that, even after the 1996 revisions, it is sufficient to consider the qualifications of the proposed buyer within the context of the overall reasonableness of a defendant's actions.
This reading of the statute comports with the public policy of the Commonwealth as declared by the state legislature. In the preface to the 1996 amendments to the BVA, the legislature explained that its intent was:
to provide for fair and impartial regulation of those persons engaged in manufacturing, distributing or selling of vehicles. The provisions of this act which are applicable to such activities shall be administered in such a manner as will continue to promote fair dealing and honesty in the vehicle industry and among those engaged therein without unfair or unreasonable discrimination or undue preference or advantage.
1996 Pa. Laws 104 (Act No. 1996-27, S.B. 808). In the spirit of promoting "fair dealing and honesty" between franchisors and franchisees, without affording either one "undue preference or advantage," it seems unlikely that the legislature intended a court to just assume that a franchisor's requirements for new dealers are per se reasonable. Such a reading of the statute would force an aggrieved franchisee to prove compliance with the requirements before allowing him to challenge them. Accordingly, the Court interprets § 818.12(b)(3) to require one step, that a plaintiff prove the rejection of a proposed sale is unreasonable. b. The Reasonableness of VWA's Refusals
Pennsylvania law requires that "[e]very statute shall be construed, if possible, to give effect to all its provisions." 1 Pa. Cons. Stat. Ann. § 1921(a) (2003). "When the words of a statute are clear from all ambiguity, the letter of it is not to be disregarded under the pretext of pursuing its spirit." Id. at § 1921(b). Although the Court finds the language added in 1996 does not have meaning for this case, the Court does not conclude the revisions are meaningless. It is this Court's interpretation that the new language was intended to change the standard for claims made by proposed purchasers, like the Piazza Plaintiffs, and not for claims made by aggrieved franchisees, like the Staino Plaintiffs. See Big Apple BMW, 974 F.2d at 1383 (holding in 1992 that prospective purchasers have standing to sue under the BVA);Crivelli, 215 F.3d at 392 n. 3 (noting that most BVA claims are brought by prospective purchasers rather than the dealer selling his franchise).
VWA asserts several reasons in support of summary judgment against the Staino Plaintiffs. First, VWA explains that the dual facility at West Chester Acura was inadequate to house both Volkswagen and Acura dealerships because (1) the exterior space is insufficient to accommodate new and used car displays, inventory storage, and customer parking for both dealerships; (2) there are not enough service bays and lifts; and (3) there is not sufficient space for parts storage. Second, VWA argues that the customer service ratings of the Piazza Plaintiffs' Ardmore Volkswagen franchise were unsatisfactory. Third, VWA argues that the Piazza Plaintiffs were too undercapitalized to sufficiently run another Volkswagen franchise. And fourth, the proposed location of the Staino dealership encroached upon the market area of another dealership, YBH Volkswagen in Edgemont, Pennsylvania.
Plaintiffs respond that, even though VWA has published standards for new dealers and has set forth specific reasons for rejecting the proposed sale to Piazza, the standards are applied inconsistently to different dealers and that the specific reasons are nothing more than pretext.
Specifically, Plaintiffs argue that the West Chester facility is not inadequate when compared with other facilities that VWA has approved. Plaintiffs also allege that the Acura facility was intended only for temporary use in order to meet Mr. Staino's dire situation. Further, during Mr. Welsh's tour of the facility, Plaintiffs allege that Matt Weiss, a representative of the Piazza Plaintiffs, suggested how the Acura location could be made adequate for a Volkswagen franchise. To prove that VWA applies its standards inconsistently, Plaintiffs argue that the Scott Honda deal proposed by VWA's Mr. Welsh was very similar to the Piazza deal that Mr. Welsh and Ms. Kingsbury rejected. Plaintiffs also argue that VWA rejected the sales proposals because of Mr. Welsh's efforts to protect the interests of his family members.
Mr. Welsh's father-in-law is the part owner of YBH Volkswagen, located near the Staino Volkswagen dealership, West Chester Acura, and Scott Honda. Further, Mr. Welsh's brother worked for Scott Honda.
The Staino Plaintiffs have alleged sufficient evidence to create a question of material fact. Thus, the ultimate decision must be left to a jury to determine the reasonableness of VWA's actions. See Big Apple BMW, 974 F.2d at 1377 n. 15 (holding that a jury could infer that the purported reason for rejection of a dealership transfer was pretextual where a manufacturer treats the proposed dealers differently). Therefore, summary judgment for VWA is denied as to the Staino Plaintiffs' BVA claim.
B. Count IV: Intentional Interference with Prospective Economic Advantage 1. Statute of Limitations
In Pennsylvania the statute of limitations for tortious interference with prospective economic advantage is two years. See Northview Motors, Inc., 227 F.3d at 91-92 (citing 42 Pa. C.S.A. § 5524(7) (2003)); Powell v. First Republic Bank, 274 F. Supp.2d 660, 673 (E.D. Pa. 2003) (same). As explained in Section III.A.I, VWA rejected Plaintiffs' Asset Purchase Agreement by letter dated April 17, 1997. VWA also rejected Plaintiffs' Stock Purchase Agreement by letter dated June 12, 1997. Plaintiffs filed their Complaint on October 12, 1999. Thus, Plaintiffs filed the Complaint approximately four months after the two-year statute of limitations period expired. Unless some tolling mechanism applies, summary judgment should be granted for VWA as to Count IV.
a. Staino Plaintiffs
___VWA argues that although the Arangio Letter demanding mediation tolled the Staino Plaintiffs' BVA claim, it did not toll the limitations period for the tortious interference claim. The Staino Plaintiffs contend that Count IV is not time-barred because (1) a Standstill Agreement between the parties effectively stopped the clock on the two year period, or (2) the demand for mediation tolled the statute of limitations for this claim, as well as for the BVA claim. The parties' briefs cite no law in favor of their arguments either in favor of or against the application of the statue of limitations to Count IV. The Court is, therefore, left to decide this issue with very little discussion from the parties themselves.
(i) The Standstill Agreement
The purpose of the standstill agreement was to allow Staino to retain his Volkswagen franchise during the time period after Chrysler would have terminated his lease and before he found a buyer for the Volkswagen franchise. The agreement was necessary because under the standard Volkswagen dealer agreement VWA could have terminated Staino's franchise if he failed "to continue to operate any of Dealer's Premises in the usual manner for a period of five consecutive business days." See Def.'s Stmt. of Facts in Sup. of Sum. J., Tab H, 16.
The parties first began to discuss a standstill agreement on July 9, 1997, when John Oyler, working with Gabe Staino's attorney Robert Arangio, wrote to VWA's counsel and proposed an agreement whereby the Staino Plaintiffs and VWA would agree not to commence "any litigation with respect to the pending dispute." Id. at Tab T. VWA's counsel, John Consevage, responded on July 16, 1997, in a letter stating that VWA "would be agreeable to your proposal of a 30-day standstill agreement whereby both sides would agree not to commence any litigation." Id. at Tab U. In the letter, Consevage also wrote that "VWA expressly reserves all rights under the dealership agreement and applicable law and does not waive any such rights, duties or obligations." Id. Plaintiffs claim that the parties subsequently extended the standstill agreement on two separate occasions, first until September 15, 1997, and again until October 15, 1997. Plaintiffs filed the Complaint on October 12, 1999, three days before the alleged renewed standstill agreement expired.
Staino Plaintiffs argue that under the Standstill Agreement they promised to forego filing "any litigation," tortious interference claims included, for the time periods allotted in the agreement. The statute of limitations, Plaintiffs argue, should not start to run until after the agreement expired on October 15, 1997. VWA argues that the Standstill Agreement did not address any statute of limitations issues. Moreover, VWA points to Mr. Consevage's July 16, 1997 letter, in which VWA expressly reserved its rights under the Dealer Agreement and under the applicable law.
The issue before the Court with respect to Count IV is whether the Standstill Agreement, or the demand for mediation made pursuant to the BVA, estops VWA from raising a statute of limitations defense against the common law claim of tortious interference with prospective economic advantage. The doctrine of estoppel can be applied to bar the application of the statute of limitations if the plaintiff can establish an "unintentional deception" by the defendant. See Ciccarelli v. Carey Canadian Mines, Ltd., 757 F.2d 548, 556 (3d Cir. 1985); Nesbitt v. Erie Coach Company, 416 Pa. 89, 96 (Pa. 1964). The defendant must "have done something amounting to an affirmative inducement to plaintiff to delay bringing the action." Ciccarelli, 757 F.2d at 556 (quoting Gravinese v. Johns-Manville, Corp., 324 Pa. Super. 432, 440 (Pa.Super. 1984)). Further, "[i]t is not the intention of the party estopped but the natural effect upon the other party which gives vitality to an estoppel."Nesbitt, 416 Pa. at 96 (citing 5 Williston, Contracts § 691 (3d ed. 1961)).
If the Plaintiffs' version of the facts surrounding the Standstill Agreement are true, a reasonable jury could conclude that their interpretation of the agreement is correct and that VWA should be estopped from raising the statute of limitations. See Mellon Bank, N.A. v. Aetna Bus. Credit, 619 F.2d 1001, 1011 n. 10 (3d Cir. 1980) (holding that resolution of ambiguous contract terms is a jury question). Thus, the Staino Plaintiffs' claim in Count IV is not barred by the statute of limitations.
As a threshold matter, the Court finds that the terms of the Standstill Agreement are ambiguous and, thus, the dispute is appropriate for a jury. See Mellon Bank, 619 F.2d at 1010 (stating that before reaching a jury, the court must determine as a matter of law whether contract terms are ambiguous). A contract is ambiguous if it is reasonably susceptible to more than one interpretation. See McMillan v. State Mut. Life Assurance Co. of Am., 922 F.2d 1073, 1075 (3d Cir. 1990). Once a contract is determined to be ambiguous, the Court may consider extrinsic evidence beyond the four corners of the contract. See Bohler-Udderholm American, Inc. v. Ellwood Group, Inc., 247 F.3d 79, 93 (3d Cir. 2001). In this case, the parties agreed not to commence "any litigation." It is unclear from the agreement itself, however, whether VWA intended to partially waive its rights under the statute of limitations, or whether the parties entered into the agreement to simply maintain equal bargaining power during the dispute. The fact that VWA reserved all rights not covered in the agreement does not serve to clarify the ambiguity.
b. Piazza Plaintiffs
No tolling mechanism applies to the Piazza Plaintiffs' tortious interference claim. As explained in Part III.A.I, the demand for arbitration made by the Staino Plaintiffs' attorney Robert Arangio did not demand arbitration on behalf of Piazza. Further, the Standstill Agreement between the Staino Plaintiffs and VWA had nothing to do with Piazza. Thus, no tolling mechanism is available to Piazza Plaintiffs' tortious interference claim. Accordingly, summary judgment for VWA is granted against the Piazza Plaintiffs as to Count IV.
2. Substantive Evaluation of Count IV
In the absence of a BVA violation, a tortious interference claim does not exist as a matter of law. See Crivelli, 215 F.3d at 1382; Big Apple BMW, 974 F.2d at 1382. In Part III.A.2 above, the Court concluded that questions of material fact exist and that the Staino Plaintiffs' BVA claim survives summary judgment. VWA concedes that if a jury may find that its acts violate the BVA, those acts could also constitute improper interference. See Big Apple BMW, 974 F.2d at 1382. Accordingly, the Staino Plaintiffs' tortious interference claim survives summary judgment.
C. Count I: Alleged Breach of the Dealer Agreement
The Staino Plaintiffs claim that VWA breached the Dealer Agreement between the parties when VWA refused to approve its proposals to sell the Staino Volkswagen franchise. Arguing for summary judgment, VWA claims that the Dealer Agreement grants VWA express power to approve or reject any proposed new dealers and the proposed new premises.
The Dealer Agreement provides, in pertinent part:
Article 12. . . . (1) If Dealer [Staino] chooses to transfer its principal assets or change owners, Distributor [VWA] has the right to approve the proposed transferees, the new owners and executives and, if different from Dealer's, their premises. Distributor will consider in good faith any such proposal Dealer may submit to it during the term of this Agreement. In determining whether the proposal is acceptable to it, Distributor will take into account factors such as the personal, business and financial qualifications of the proposed new owners and executives as well as the proposal's effect on competition. In such evaluation, Distributor may consult with the proposed new owners and executives on any aspect of the transaction or their proposed dealership operations.
Volkswagen Dealer Agreement: Standard Provisions, art. 12, Def.'s Stmt. of Facts in Sup. of Sum. J., Tab H.
The Court has already explained that Plaintiffs have submitted sufficient evidence to create a jury question regarding whether VWA reasonably rejected the sale proposals. Likewise, the Court concludes that a fact dispute exists regarding VWA's good faith responsibilities under the Dealer Agreement. Summary judgment as to Count I is denied.
IV. CONCLUSION
For the reasons stated above, VWA's Motion for Summary Judgment is granted in part and denied in part. Summary judgment is granted against all claims set forth by the Piazza Plaintiffs. All claims set forth by the Staino Plaintiffs, including Counts I, III, and IV, survive.
An appropriate Order follows.
ORDER
AND NOW, this ___ day of November, 2003, upon consideration of Defendant's Motion for Summary Judgment (Docket No. 28), Plaintiffs' Memorandum of Law in Opposition to Defendant's Motion for Summary Judgment (Docket No. 33), and Defendant's Reply to Plaintiff's Memorandum of Law in Opposition (Docket No. 40), and for the reasons set forth in the accompanying Memorandum, IT IS HEREBY ORDERED that Defendant's Motion is GRANTED IN PART and DENIED IN PART as follows:
(1) Defendant's Motion is GRANTED against all Counts of Plaintiff Charlie Victor, Inc., and Plaintiff Vincent Piazza;
(2) Defendant's Motion is DENIED on all Counts of Plaintiff Gabriel Staino and Plaintiff Gabriel Staino Motors, Inc.