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Fireside Chrysler-plymouth v. Chrysler

OPINION FILED DECEMBER 13, 1984.

FIRESIDE CHRYSLER-PLYMOUTH MAZDA, INC., PLAINTIFF-APPELLANT,

v.

CHRYSLER CORPORATION, DEFENDANT-APPELLEE (B.G.C.P., INC., INTERVENOR-APPELLEE).



Appeal from the Circuit Court of Cook County; the Hon. Albert Green, Judge, presiding.

PRESIDING JUSTICE LINN DELIVERED THE OPINION OF THE COURT:

Plaintiff, automobile franchisee, brought an action against defendant, automobile franchiser, alleging violation of the Illinois Motor Vehicle Franchise Act, as amended (Ill. Rev. Stat., 1981 & 1983 Supp., ch. 121 1/2, pars. 751 through 764). Plaintiff asserts that the amended Act should be applied to protect not only those dealers that entered into franchise agreements after the effective date of the Act, but also those which, like plaintiff, entered into agreements prior to that date. Plaintiff specifically urges application of a 1983 amendment which defines "relevant market area" in such a way as would include an area not encompassed within the "sales locality" set forth in plaintiff's 1971 franchise agreement and would give plaintiff standing to protect the granting to others of an additional franchise in that area.

Defendant and intervenor, the additional franchisee, moved for summary judgment on the grounds that retroactive application of the Act would unconstitutionally impair vested contractual rights in this instance. The trial court granted summary judgment in their favor.

We affirm the decision of the trial court.

BACKGROUND

In 1971, plaintiff/franchisee, Fireside Chrysler-Plymouth, Inc. (Fireside), and defendant/franchiser, Chrysler Corporation (Chrysler), entered into a direct dealer agreement wherein plaintiff was granted the nonexclusive right to purchase defendant's products for retail sale within a defined "sales locality." The sales locality set forth in the agreement did not include Buffalo Grove.

In 1979, some eight years after Fireside and Chrysler had entered into their agreement, the Illinois legislature passed the Motor Vehicle Franchise Act (Ill. Rev. Stat. 1981, ch. 121 1/2, pars. 751 through 764). The Act makes it unlawful for any automobile manufacturer, distributor, or wholesaler to grant an additional franchise of the same line make in the relevant "market area" previously granted to another franchisee, without first giving the existing franchisee notice and an opportunity to be heard in opposition to the issuance of the additional franchise. (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 754(e)(8).) Should the franchisee protest, the propriety of granting the additional franchise is to be determined by the circuit court, and the franchiser bears the burden of proving "good cause" to grant the franchise. The 1979 statute defined "market area" as "the franchisee's area of primary responsibility as defined in its franchise." (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 752(p).) The statute provided no definition of the term "relevant market area" until the Act was amended to include such definition in November 1983. Ill. Rev. Stat., 1983 Supp., ch. 121 1/2, par. 752(q).

On or about September 1983, Chrysler notified Fireside of its intention to grant B.G.C.P., Inc., the intervenor in this action, an additional franchise in Buffalo Grove. In October 1983, Chrysler and B.G.C.P. executed a letter of intent whereby Chrysler agreed to grant such a franchise upon B.G.C.P.'s agreement to meet certain terms and conditions. After this letter of intent was executed and prior to the passage of the November 1983 amendment to the Act defining the term "relevant market area," Fireside brought the present action. B.G.C.P. sought and was granted leave to intervene.

In response to Fireside's allegations that Chrysler had violated the Motor Vehicle Franchise Act, Chrysler and B.G.C.P. moved for summary judgment on the ground that the Act could not be applied retroactively to impair the contractual rights that vested upon the signing of the 1971 franchise agreement between plaintiff and defendant. The trial court granted summary judgment in favor of Chrysler and B.G.C.P. Plaintiff now appeals.

OPINION

On appeal, plaintiff contends that it is entitled to injunctive relief against defendant because the Motor Vehicle Franchise Act, as amended (Ill. Rev. Stat., 1981 & 1983 Supp., ch. 121 1/2, pars. 751 through 764) protects not only those automobile dealers that entered into franchise agreements after June 29, 1979, the effective date of the Act, but also those dealers that entered into franchise agreements prior to that date. Accordingly, plaintiff contends that the Act, as amended, applies to the 1971 agreement entered into between plaintiff and defendant and that, had the trial court correctly looked to the 1983 amended definition of "relevant market area," it would have found that numerous genuine issues of material fact exist such as to preclude summary judgment. Defendant, on the other hand, asserts that the 1979 Motor Vehicle Franchise Act cannot be applied retroactively to impair the vested contractual rights of Chrysler and of B.G.C.P. and that the Act, as amended, is unconstitutional. An examination and interpretation of the relevant provisions of the Motor Vehicle Franchise Act is therefore necessary to enable us to determine whether the trial court's grant of summary judgment was proper.

The Illinois Motor Vehicle Franchise Act was enacted in 1979. Its primary effect is to declare unlawful certain enumerated unfair methods of competition and unfair and deceptive acts or practices. (Ford Motor Credit Co. v. Aaron Lincoln-Mercury, Inc. (N.D. Ill. 1983) 563 F. Supp. 1118.) One such practice prohibited by the Act is the granting of an additional franchise within the market area previously granted to another franchisee. (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 754(e)(8).) This prohibition is set forth in section 4(e)(8), which provides, in pertinent part, as follows:

"(e) It shall be deemed a violation for a manufacturer, a distributor, a wholesaler, a distributor branch or division or officer, agent or other representative thereof:

(8) to grant an additional franchise of the same line make in the relevant market area previously granted to another franchisee; provided, however, that if the manufacturer wishes to grant such an additional franchise to an independent person in a bona fide relationship in which such person is prepared to make a significant investment subject to loss in such a dealership, then the manufacturer shall give notice to the existing dealer or dealers of the same line make within the market area of the proposed additional franchise at least 60 days prior to establishment of the additional franchise. Unless the parties agree upon the establishment of such additional franchise, the propriety of the granting of such additional franchise ...


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