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PURDY MOBILE HOMES, INC. v. CHAMPION HOME BUILDERS

April 10, 1981

PURDY MOBILE HOMES, INC., a corporation, Plaintiff,
v.
CHAMPION HOME BUILDERS CO., a corporation, Tamarack Homes, a corporation, Defendants



The opinion of the court was delivered by: MCNICHOLS

MEMORANDUM DECISION

This diversity action for alleged breach of an oral contract is before the Court on defendant Champion Home Builders' Motion to Dismiss for failure to state a claim.

 This action arises out of an alleged oral contract where the defendant, a mobile home manufacturer, allegedly agreed to grant the plaintiff, a mobile home retailer, an exclusive dealership for the sale of "Tamarack" mobile homes. While a February 19, 1968 letter represents a confirmation of the oral grant of the right to sell the "Tamarack", it did not mention the grant of an exclusive dealership. The oral contract was allegedly modified in March, 1970 when the defendant opened a dealership in St. Maries, Idaho. Although additional dealerships were opened in Colville, Washington and Bonners Ferry, Idaho in 1971, the plaintiff did not become aware of the dealerships until potential customers mentioned the dealerships to him. There is nothing in the record to indicate that the defendant, prior to or after the establishment of the Colville and Bonners Ferry dealerships, gave the plaintiff unequivocal, definite and final notice of any proposal to modify the alleged exclusive dealership agreement. The plaintiff filed this action on February 14, 1974. Over a year later, the defendant, by a February 19, 1975 letter, revoked the plaintiff's right to sell the "Tamarack and offered to repurchase any Tamarack parts, equipment or tools." The revocation was effective on May 26, 1975.

 The plaintiff seeks to recover on the basis of common-law breach of contract and one or more of the following statutory grounds:

 
1. Washington Franchise Investment Protection Act, R.C.W. 19.100.010;
 
2. Washington Unfair Motor Vehicle Business Practices Act, R.C.W. 46.70.180(10)(b);
 
a. Monopoly Section R.C.W. 19.86.040
 
b. Unfair Competition & Practices Section, R.C.W. 19.86.020

 The defendant contends that each statutory claim must be dismissed for failure to state a claim and/or because the claims are barred by res judicata. It is argued that the common-law claim must be dismissed because: (1) there was no valid contract, (2) the plaintiff is estopped from asserting such a contract, (3) the plaintiff's claim is barred by the statute of limitations and the statute of frauds.

 Since the parties have agreed that the plaintiff cannot prevail under the Washington Franchise Investment Protection Act, R.C.W. 19.100 or the Monopoly Section of the Washington Consumer Protection Act, R.C.W. 19.86.040, the plaintiff's claims under those statutes will be dismissed with prejudice.

 Since the parties have presented, and the Court has considered matters outside the pleadings on the remainder of the claims, the remainder of defendant Champion's Motion to Dismiss will be treated as a Motion for Summary Judgment. Fed.R.Civ.P. 12(b), Dorado v. Kerr, 454 F.2d 892 (CA9), cert. denied, 409 U.S. 934, 93 S. Ct. 244, 34 L. Ed. 2d 188 (1972). As such, defendant, as the moving party, has the burden of demonstrating the absence of a genuine issue of fact which may affect the outcome of the litigation. Beltz Travel Service v. International Air Transport Association, 620 F.2d 1360 (CA9 1980). The evidence and all reasonable inferences therefrom must be viewed in the light most favorable to the plaintiff. Id. These standards are applied more stringently and summary judgments are granted more warily where as here good faith, motive or intent are at issue. Garter-Bare Co. v. Munsingwear, Inc., 622 F.2d 416 (CA9 1980) (Fraud); Hotel & Restaurant Employees and Bartenders International Union v. Rollison, 615 F.2d 788 (CA9 1980) (Good faith in imposition of a trusteeship).

 WASHINGTON UNFAIR MOTOR VEHICLE BUSINESS PRACTICES ACT

 The defendant contends that the plaintiff has failed to state a claim because: (1) the dismissal of the plaintiff's Federal Automobile Dealer Franchise Act, 15 U.S.C. ยง 1221 et seq., triggered a statutory bar to a similar state claim, R.C.W. 46.70.190, Stansifer v. Chrysler Motors Corp., 487 F.2d 59 (CA9 1973), (2) the statute does not apply because the plaintiff is not a franchisee and (3) the subsection at issue has not been violated.

 Since I find as a matter of law that the statute has not been violated, I need not reach the first two contentions.

 The statute, R.C.W. 46.70.180(10)(b) provides in pertinent part that it is unlawful to:

 
(b) Cancel, or, fail to renew the franchise or selling agreement of any vehicle dealer doing business in this state without fairly compensating the dealer at a fair going business value for his capital investment which shall include but not be limited to tools, equipment, and parts inventory, possessed by the dealer on the day he is notified of such cancellation or termination and which are still within the dealer's possession on the day the cancellation or termination is effective, if: (1) The capital investment shall have been entered into with reasonable and prudent business judgment for the purpose of fulfilling the franchise; and (2) Said cancellation or nonrenewal was not done in good faith.... (Emphasis added)

 R.C.W. 46.70.180(10)(b).

 Assuming that the statute applies, the defendant is liable if (1) he did not act in good faith when he cancelled the agreement and (2) he failed to fairly compensate the dealer for any capital investment entered into with reasonable and prudent business judgment for the purpose of fulfilling the agreement.

 The statute defines good faith as:

 
(T)he duty of each party to any franchise to act in a fair and equitable manner towards each other, so as to guarantee one party freedom from coercion, intimidation or threats of ...

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