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07/21/87 Northwest Lincoln-Mercury, v. Lincoln-Mercury Division

July 21, 1987

NORTHWEST LINCOLN-MERCURY, PLAINTIFF-APPELLANT

v.

LINCOLN-MERCURY DIVISION FORD MOTOR COMPANY, DEFENDANT-APPELLEE



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, SECOND DIVISION

511 N.E.2d 810, 158 Ill. App. 3d 609, 110 Ill. Dec. 633 1987.IL.1031

Appeal from the Circuit Court of Cook County; the Hon. Anthony J. Scotillo, Judge, presiding.

APPELLATE Judges:

JUSTICE BILANDIC delivered the opinion of the court. STAMOS and HARTMAN, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE BILANDIC

Plaintiff, Northwest Lincoln-Mercury (Northwest), an auto dealer, appeals from an order granting summary judgment in favor of defendant Lincoln-Mercury Division Ford Motor Company (Ford). Northwest brought suit against Ford under a section of the Illinois Motor Vehicle Franchise Act to enjoin the proposed location of another authorized dealer within 10 miles. (Ill. Rev. Stat. 1985, ch. 121 1/2, par. 751 et seq.) The circuit court found that the contracts between the parties predated the enactment of the MVFA. Therefore, the MVFA could not be applied retroactively.

The issues presented are: (1) whether Northwest waived certain arguments by failing to make them in a timely manner before the trial court; and (2) whether the contracts entered into between Ford and Northwest in 1978 were so "renewed, changed, amended, modified or subject to novations" after November 3, 1983, that they became new contracts which could be properly regulated under an amendment to the MVFA that was enacted on that date.

Northwest is a Lincoln-Mercury dealer located in Schaumburg, Illinois. In 1978, Northwest entered into two sales and service agreements with Ford, one covering the sale of Lincolns and the other the sale of Mercurys. Under those agreements, which are identical in form, Ford had an absolute right to award additional dealerships for Lincolns and Mercurys. The only exception was where the new dealer would be both within Northwest's contractually assigned "dealer locality" and within 10 driving miles of Northwest's principal place of business.

In November 1985, Ford notified Northwest that it intended to award a Lincoln-Mercury dealership to a new dealer to be established in Bloomingdale. Although the proposed dealership would be located within 10 miles of Northwest, Northwest has conceded that it is not within Northwest's assigned locality under the relevant sales and service agreements.

The MVFA, which went into effect in 1979, severely limits a manufacturer's right to grant "additional franchises . . . of the same line" where the new dealership is to be located within the first dealer's "relevant market area." Prior to 1983, the term "relevant market area" was construed to mean the area assigned to the dealer in its agreement with the manufacturer. (See Scala/O'Brien Porsche Audi, Inc. v. Volkswagen of America, Inc. (1980), 87 Ill. App. 3d 757, 761, 410 N.E.2d 205.) In 1983, however, the General Assembly amended the MVFA by adding a definition of "relevant market area" that includes any point within a 10-mile radius of the dealer's principal place of business, regardless of whether that point is also within the dealer's contractually assigned territory. Ill. Rev. Stat. 1985, ch. 121 1/2, par. 752(q).

In January 1986, Northwest brought this action, seeking injunctive relief pursuant to the MVFA, as amended, to prohibit Ford from awarding the Bloomingdale Lincoln-Mercury dealership. In March, Ford moved for partial judgment on the pleadings or partial summary judgment on the ground that the statutory provisions enacted in 1983 could not supersede the provisions of the 1978 contracts between Ford and Northwest. *fn1 In support of its motion, Ford argued that the MVFA was not intended to apply, and cannot constitutionally be applied, to impair contractual rights that were created before its effective date. Because Ford's contractual right to award a dealership to another dealer anywhere outside of Northwest's assigned locality was created in 1978, it could not be diminished by changes in the MVFA that did not go in effect until November 3, 1983.

After hearing the arguments of counsel, the trial Judge rejected Northwest's argument that the agreements had been renewed after the MVFA was amended and held that the MVFA could not be retroactively applied to alter Ford's contractual rights.

At the hearing on May 19, 1986, the trial Judge declined to consider further argument by Northwest, noting that his ruling on the retroactivity issue had been made on April 25. This appeal followed. I

Ford contends that Northwest failed to raise the new contract or novation type theory before the trial court and is therefore precluded from raising that argument on appeal. The order of May 19, 1986, recites that the court "considered the submissions and arguments of the parties" and was "fully advised in the premises." During the ...


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