United States District Court, Northern District of Illinois, E.D
November 10, 1982
DEVALK LINCOLN MERCURY, INC., AN ILLINOIS CORPORATION, HAROLD G. DEVALK, AND JOHN M. FITZGERALD, PLAINTIFFS,
FORD MOTOR COMPANY, A DELAWARE CORPORATION, FORD MARKETING CORPORATION, A DELAWARE CORPORATION, FORD MOTOR CREDIT COMPANY, A DELAWARE CORPORATION, AND FORD LEASING DEVELOPMENT COMPANY, A DELAWARE CORPORATION, DEFENDANTS.
The opinion of the court was delivered by: Bua, District Judge.
This case involves claims arising under the Automobile Dealer's
Day in Court Act, 15 U.S.C. § 1221 et seq. (1976) (Counts I &
II), the Clayton Act, 15 U.S.C. § 12 et seq. (1976) (Count
VII), and the Robinson-Patman Price Discrimination Act,
15 U.S.C. § 13 (1976) (Count VIII). The complaint also contains
state law claims for breach of contract (Count III),
misrepresentation (Count IV), breach of fiduciary duty (Count
V) and civil conspiracy (Count VI). Various defendants*fn1
have moved under Fed.R. Civ.P. 12(b)(6) for dismissal of parts
of Counts I & II and all of Counts V and VI.
In Counts I & II, Plaintiff DeValk Lincoln Mercury, a corporate
automobile dealership and Plaintiffs Harold DeValk and John
Fitzgerald, owners of the dealership stock, complain that Ford
Motor Company (Counts I and II), Ford Motor Credit Company and
Ford Leasing Development Company (Count II) violated the
Dealer's Day in Court Act (the "Act"). The Act authorizes suits
by an automobile dealer against an automobile manufacturer for
the failure of the manufacturer to act in good faith in
performing or complying with terms or provisions of their
franchise agreement, or in terminating, canceling or not
renewing the franchise.
All three defendants have moved to dismiss the claims of the
individual plaintiffs, Harold DeValk and John Fitzgerald,
from Counts I and II. Defendants assert that the Act authorizes
suits only by automobile "dealers," that individual
shareholders of the corporate dealership are not dealers within
the meaning of the Act, and that therefore those plaintiffs
must be dismissed because, on the face of the complaint, they
lack standing to sue.*fn2
Defendants have cited various cases which they claim support
their motion. This Court disagrees. In each case cited by
defendants and similar cases, individual plaintiffs were
dismissed in response to a motion for summary judgment under
Fed. R.Civ.P. 56 or upon review of a full evidentiary
record.*fn3 Thus, the court was able to consider affidavits,
depositions and other evidentiary material in determining
whether the individual plaintiff fell within the statutory
definition of "dealer." In the instant case, on the other hand,
this Court has before it only the pleadings of the parties,
making dismissal of the individual plaintiffs' claims improper.
Lewis v. Chrysler Motors Corp., 456 F.2d 605, 606-607 (8th
Cir. 1972); Schmitt-Norton Ford, Inc. v. Ford Motor Co.,
524 F. Supp. 1099, 1107 (D.Minn. 1981); accord, Conley v. Gibson,
355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957).
For this reason, the motion to dismiss the claims of plaintiffs
Harold DeValk and John Fitzgerald from Counts I and II is
In addition to joining the latter motion, Defendant Ford Motor
Credit Company (Ford Credit) seeks to be dismissed from Count
II of the complaint as to all plaintiffs. Ford Credit contends
that § 1222 of the Act authorizes suits only against an
automobile "manufacturer" and that Ford Credit is not a
manufacturer within the meaning of the Act.
The term manufacturer is defined in § 1221(a) of the Act as:
[A]ny person, partnership, corporation, association, or other
form of business enterprise engaged in the manufacturing or
assembling of passenger cars . . . including any person,
partnership, or corporation which acts for and is under the
control of such manufacturer or assembler in connection with
the distribution of said automotive vehicles.
The definition is a broad one, and cases interpreting it have
properly recognized that there exist situations in which one
not a manufacturer in the traditional sense may nonetheless
fall within its scope. For example, if a nonmanufacturer is but
an "instrumentality" of the manufacturer, in the sense that
"instrumentality" is used in corporation law, that entity may
properly be sued under the Act. Volkswagen Interamericana,
S.A., v. Rohlsen, 360 F.2d 437
, 441-442 (1st Cir. 1966).
Similarly, applying general agency principles, if a
nonmanufacturer is subject to the manufacturer's control or
right to control, a suit against the nonmanufacturer may
for construing § 1221(a) to encompass nontraditional
manufacturers is that such an approach is necessary to enforce
the broad remedial purposes of the Act. The Act was designed to
curtail coercion and intimidation of retail dealers by
manufacturers made possible because of the parties' economic
inequality. See Colonial Ford, Inc. v. Ford Motor Co.,
592 F.2d 1126
, 1129 (10th Cir. 1979). This goal easily could be
thwarted, however, by manufacturers who transacted business
through alter-egos, agents or wholly owned subsidiaries. In
order to avoid such a result, the possibility must exist that
nontraditional manufacturers may be found to fall within §
1221(a). See Volkswagen Interamericana, S.A., 360 F.2d at
441; Colonial Ford, Inc., 592 F.2d at 1129.
In the instant case, the plaintiff alleges that Ford Credit
provided financing to facilitate the sale of Ford manufactured
vehicles through plaintiff's dealership. This assertion (which
must be assumed to be true at this stage of the proceedings)
and the reasonable inferences to which it gives rise, are
sufficient to state a claim against Ford Credit. The
allegations indicate, at the least, possible proof of an agency
relationship between Ford Motor Company, the manufacturer, and
Ford Credit, the defendant, in the distribution of Ford
Ford Credit next contends that even if it is a manufacturer
within the meaning of the Act, it cannot be subjected to
liability because it is not a signatory to the written
franchise agreement and, in this circuit, only a signatory may
be held liable under the Act. Ford Credit cites Lawrence
Chrysler Plymouth, Inc. v. Chrysler Corp., 461 F.2d 608 (7th
Cir.), cert. denied, 409 U.S. 981, 93 S.Ct. 317, 34 L.Ed.2d
245 (1972), in support of its contention.
This Court does not agree with Ford Credit's reading of the
case law. In Lawrence, the Seventh Circuit did not find that
a nonsignatory to a franchise agreement may never be found
liable under the Act. Rather, the Court adopted the reasoning
of York Chrysler-Plymouth, Inc. v. Chrysler Credit Corp.,
447 F.2d 786 (5th Cir. 1971) wherein a suit was permitted against
a nonparty to the franchise agreement. The Fifth Circuit
refused to impose liability primarily because, in analyzing the
evidence regarding the relationship between Chrysler
Corporation and Chrysler Motors, the two relevant parties, the
Court found that there was "no showing that would make either
responsible for the acts of the other on an agency theory." In
light of this and the fact that, by all indications, the two
parties were "separate legal entities each operating in its own
sphere," the Court concluded that "only the one which has
entered into a franchise agreement could be held accountable
for performing or complying with it." Id. at 613. See also
Marquis v. Chrysler Corp., 577 F.2d 624, 630 (9th Cir. 1978)
citing Stansifer v. Chrysler Motors Corp., 487 F.2d 59, 64
(9th Cir. 1973) (manufacturer may be liable even if nonparty to
franchise only upon showing that party contracting with dealer
is agent of manufacturer of "straw man" erected to insulate
manufacturer from liability); Evanston Motor Co., Inc. v.
Mid-Southern Toyota, 436 F. Supp. 1370 (N.D.Ill. 1977)
(importer, a nonsignatory to franchise agreement, is liable
only if evidence indicates that importer had actual or apparent
authority under agency theory to bind manufacturer or was alter
ego of manufacturer).
Thus Lawrence and the above-cited cases do not prevent
liability from being imposed on Ford Credit simply because it
was not a signatory to the franchise agreement. The case law
simply sets forth the proof required for a finding of liability
against such a party. Therefore, defendant Ford Credit cannot
support its motion to dismiss Count II on the above-mentioned
Defendant Ford Credit has also moved pursuant to Fed.R.Civ.P.
12(b)(6) to dismiss
Counts V and VI of the complaint. Count V alleges that a
fiduciary relationship existed between the Plaintiffs and
Defendant Ford Credit and others. Plaintiffs claim that the
fiduciary relationship arose out of sales agreements entered
into by Ford Motor and plaintiffs, and that Ford Credit
facilitated and implemented these sales agreements by supplying
wholesale financing to the plaintiffs. The sales agreements, it
is claimed, created the alleged fiduciary relationship by
placing plaintiffs substantially under the control of Ford
Credit and others. This allegedly caused plaintiffs to rely on
the latter parties' utmost good faith and fair dealing.
Plaintiffs assert that despite this relationship, Ford Credit
and others committed various acts which breached the duties
imposed upon them.
Count VI realleges the essential elements of Count V and
further alleges that Ford Credit and others conspired to
violate the fiduciary duties imposed upon them by the sales
As with Counts I and II, this court must view defendant's
motion to dismiss Counts V and VI in light of the generally
liberal principles of pleading embodied in the Federal Rules.
Unless it appears beyond a doubt that the plaintiffs can prove
no set of facts entitling them to relief, the motion must be
denied. Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d
80 (1957). This Court has examined Illinois law, which governs
the state law claims of Counts V and VI, and has concluded that
the allegations are sufficient to withstand a motion to dismiss
under Fed.R.Civ.P. 12(b)(6).
Under Illinois law, a fiduciary relationship is created "where
confidence is reposed on one side and resulting superiority and
influence is found on the other." Herbolsheimer v.
Herbolsheimer, 60 Ill.2d 574, 577, 328 N.E.2d 529, 530 (1975).
Moreover, Illinois courts have refused to set definite and
precise boundaries within which a fiduciary relationship may be
found to arise. See Illinois Rockford Corp. v. Kulp,
41 Ill.2d 215, 242 N.E.2d 228 (1968).
This Court has already discussed the allegations upon which
plaintiff based his fiduciary relationship claim. Viewing these
allegations in light of Illinois law, this Court concludes that
Count V states a claim for breach of a fiduciary duty
sufficient to withstand Ford Credit's 12(b)(6) motion.
Therefore, the motion is denied.
Similarly, defendant's 12(b)(6) motion to dismiss Count VI must
also be denied. Under Illinois law, a civil conspiracy arises
where two or more persons combine to accomplish by concerted
action either a lawful purpose by unlawful means or an unlawful
purpose by lawful means. De L'Ogier Park Development Corp. v.
First Federal Savings and Loan Association of Berwyn,
6 Ill. App.3d 807, 286 N.E.2d 583 (1972). Conspiracy associates
all the defendants with the unlawful acts done and may be
considered as an aggravation of the unlawful acts. Ammons v.
Jet Credit Sales, Inc., 34 Ill. App.2d 456, 181 N.E.2d 601
Plaintiffs in the instant case incorporate their Count V claim
for breach of a fiduciary duty into Count VI and further allege
that Ford Credit and others acted jointly, in concert and
conspiracy with each other, to breach the duty alleged in Count
V. Since the allegations of Count V sufficiently allege an
actionable wrong under Illinois law, the additional claim for
conspiracy withstands defendant's motion to dismiss.
Defendant also contends that DeValk and Fitzgerald must be
dismissed from Counts V and VI of the complaint because they
cannot recover for harm suffered as shareholders of the
dealership stock where the corporate dealership has taken legal
action in its own name. However, this claim, like the others,
must be denied. The facts alleged in the complaint and
reasonable inferences taken from those facts sufficiently state
a claim by DeValk and Fitzgerald, not as corporate
shareholders, but as individuals. Even if the allegations are
marginal, dismissal is improper where the allegations viewed as
a whole indicate the possibility of a claim. Asay v. Hallmark
Cards, Inc., 594 F.2d 692 (8th Cir. 1979). Moreover, because
12(b)(6) motion results in a determination on the merits at an
early stage, all inferences favorable to the plaintiff will be
drawn. Mortensen v. First Federal Savings & Loan Association,
549 F.2d 884 (3rd Cir. 1977). Thus, Ford Credit's motion to
dismiss DeValk and Fitzgerald from Counts V and VI is denied.
IT IS SO ORDERED.