Opinion
01 Civ. 6410 (NRB).
August 9, 2006
MEMORANDUM AND ORDER
Fulton Chevrolet-Cadillac Co., Inc. ("Fulton" or "plaintiff"), an authorized Cadillac and Chevrolet dealer located in Middletown, New York, brings this diversity action against General Motors Corporation ("GM" or "defendant"). Fulton alleges that GM failed to adequately reimburse it for parts used in the course of repairs pursuant to GM's warranty program, in violation of New York State Vehicle and Traffic Law ("VTL") §§ 460, et seq. and in breach of its contractual obligations. Defendant now moves for summary judgment. For the reasons set forth below, defendant's motion is granted.
As further explained below, see infra p. 11, Fulton is the "test" plaintiff in a case which includes sixteen other GM dealers: Tom Rice Buick-Pontiac GMC Truck, Inc., Garsten Motors, Inc., d/b/a Apple Chevrolet, Bright Bay GMC Trucks, Inc., Cars Unlimited of Suffolk LLC, d/b/a Nesenger 112 Chevrolet, Garden Buick, Inc., Kayson Chevrolet, Inc., Kurland Cadillac Oldsmobile-GMC, Inc., Manfredi Cadillac Oldsmobile, Inc., Smithtown Buick, Inc., Van Buren Buick Pontiac, Inc., Kinney Motors, Inc., MS Chevrolet, Inc., MS of Pawling, Inc., Woodbury Auto Park, Inc., Geis Auto, Inc., and Dobler Chevrolet, Inc.
BACKGROUND
Except where indicated, there are no genuine issues regarding the following facts. We note that in many instances Fulton purports to dispute GM's statements of fact. However, in the vast majority of such cases, Fulton offers only argumentative, conclusory, and often completely irrelevant responses to GM's Rule 56.1 Statement.
This action arises out of a dispute involving GM's obligations under VTL § 465 ("§ 465"), which requires automotive franchisors such as GM to pay their dealers "fair and reasonable compensation," which is equal to at least the rate charged by other dealers in the same community for like services to non-warranty customers, for parts purchased and used in the course of warranty repairs. Fulton asserts that after § 465 was amended in 1992, GM reimbursed it and other dealers for warranty parts at rates lower than that which would constitute fair and reasonable compensation. GM denies any violation of § 465 and asserts that even if there were a violation, any claim Fulton might once have had now would be barred. Specifically, GM argues that since 1996, Fulton regularly submitted warranty claims to GM without ever submitting a claim seeking reimbursement in excess of GM's standard rates, or otherwise notifying GM in any way that its reimbursement rates were not fair and reasonable under § 465. In short, GM asserts that because of Fulton's silent acceptance of GM's standard warranty payments, Fulton failed to make a "claim" for higher reimbursement, as was required in order to trigger GM's statutory obligations under § 465.
Section 465 provides in relevant part that:
1. Every franchisor shall properly fulfill any warranty agreement and/or franchisor's service contract and shall compensate each of its franchised motor vehicle dealers for warranty parts and labor in amounts which reflect fair and reasonable compensation for such work. All warranty claims and/or claims under a franchisor's service contract made by franchised motor vehicle dealers shall be paid within thirty days following their approval. . . . For parts . . . and labor reimbursement, fair and reasonable compensation shall not be less than the price and rate charged by the franchised motor vehicle dealers in the community or marketing area for like services to non-warranty and/or non-service contract customers, provided such price and rate are reasonable.
2. All warranty claims shall be either approved or disapproved within thirty days after their receipt. When any such claim is disapproved the franchised motor vehicle dealer shall be notified in writing of its disapproval within said period. Each such notice shall state the specific grounds upon which the disapproval is based.
N.Y. Veh. Traf. Law § 465 (McKinney's 1996).
Prior to 1992, § 465 required that manufacturers reimburse dealers for labor at fair and reasonable rates but not parts.
As Fulton has acknowledged, the statute of limitations on its claims is three years. See Bayridge Volvo American, Inc. v. Volvo Cars of North America, Inc., No. 01 Civ. 1890 (RMB), 2004 WL 1824379, at *1 (S.D.N.Y. Aug. 16, 2004).
GM's Warranty Information Network System
GM is a Delaware corporation engaged in the manufacture and distribution of motor vehicles through a network of authorized dealers. Defendant's Rule 56.1 Statement ("Def. 56.1 Stmt.") ¶ 1; Plaintiff's Response to Defendant General Motors Corporation's Statement of Undisputed Material Facts ("Pl. Resp.") ¶ 1. Fulton has been an authorized GM dealer since 1981, and as such, is subject to a series of GM Dealer Sales and Service Agreements ("Dealer Agreements") and their accompanying Standard Provisions. Def. 56.1 Stmt. ¶ 2; Pl. Resp. ¶ 2.
These dealers operate under the Buick, Chevrolet, Pontiac, GMC Truck, Hummer, and Cadillac trade names. Def. 56.1 Stmt. ¶ 1.
Similar to other automotive manufacturers, GM provides warranties for certain parts, systems, and accessories in connection with the retail sale of motor vehicles. Def. 56.1 Stmt. ¶ 4; Pl. Resp. ¶ 4. Pursuant to the terms of the Dealer Agreement, Fulton and other dealers agree to perform required warranty repairs on qualified vehicles upon request of the owners. Def. 56.1 Stmt. ¶ 6; Pl. Resp. ¶ 6. GM in turn agrees to reimburse dealers for warranty parts and labor, in accordance with the GM Service Policies and Procedures Manual ("Service Manual"). Def. 56.1 Stmt. ¶ 7; Pl. Resp. ¶ 7. In order to collect on this reimbursement, dealers such as Fulton must submit a claim to GM for each specific repair. Def. 56.1 Stmt. ¶ 8; Pl. Resp. ¶ 8. As stated in the Standard Provisions to the Dealer Agreement:
The policies and procedures contained therein apply to all dealers throughout the United States. Def. 56.1 Stmt. ¶ 7; Pl. Resp. ¶ 7.
As GM notes, the requirement that there be a claim addresses several important concerns. Specifically, a claim informs GM that the dealer has completed a warranty repair, itemizes the work which was done, and sets forth a requested amount for reimbursement. Using the Vehicle Identification Number ("VIN") which accompanies the claim, GM is able to update the repair history for the vehicle which received the repair, monitor vehicle performance, and track recurring part failures. This information enables GM to manage warranty expenses and, if appropriate, recoup warranty costs through national or regional wholesale price increases on the vehicles it sells to dealers. Def. 56.1 Stmt. ¶ 9; Pl. Resp. ¶ 9.
Dealer also agrees to timely submit true and accurate applications or claims for payments, discounts or allowances; true and correct orders for Products and reports of sale and delivery; and any other reports or statements required by General Motors, in the manner specified by General Motors, and to retain such records for at least two years.
Def. 56.1 Stmt. ¶ 10; Pl. Resp. ¶ 10 (emphasis added).
The Standard Provisions also state that "Dealer and General Motors will each provide the other with such information and assistance as may reasonably be required by the other to facilitate compliance with applicable laws. . . ." Def. 56.1 Stmt. ¶ 11; P1 Resp. ¶ 11.
In order to obtain reimbursement, all GM dealers in the United States submit warranty claims electronically to GM through its computerized Warranty Information Network System ("WINS"). Def. 56.1 Stmt. ¶¶ 12, 26; Pl. Resp. ¶¶ 12, 26. GM processes and pays approximately 48 million claims through WINS per year and in 2003 approved approximately 1.9 million warranty and other claims from New York dealers, resulting in reimbursements totaling approximately $183 million. Def. 56.1 Stmt. ¶ 26; Pl. Resp. ¶ 26.
The process by which dealers should submit claims through WINS as well as the process by which GM calculates and pays such reimbursements is set forth in the Service Manual and the WINS Claims Processing Manual. Def. 56.1 Stmt. ¶ 12; Pl. Resp. ¶ 12.
Dealers are not required to submit underlying repair orders or any other back-up information in connection with warranty claims. Def. 56.1 Stmt. ¶ 13; Pl. Resp. ¶ 13. Rather, dealers are required to submit only limited information electronically from their internal computer systems to WINS. Def. 56.1 Stmt. ¶ 13; Pl. Resp. ¶ 13. The total amount of the claim is calculated automatically by the dealership's own computer system, and each dealer is able to review the applicable Line Total prior to submission of the claim. Def. 56.1 Stmt. ¶ 15; Pl. Resp. ¶ 15. GM uses such information to monitor general trends and to audit dealers when it deems necessary. Def. 56.1 Stmt. ¶ 15; Pl. Resp. ¶ 15. However, for the most part, GM pays claims without detailed review so long as they fall within broad parameters. Def. 56.1 Stmt. ¶ 15; Pl. Resp. ¶ 15. Pursuant to the terms of the Service Manual, GM typically reimburses its dealers across the country based upon a uniform methodology. Def. 56.1 Stmt. ¶ 16; Pl. Resp. ¶ 16. This methodology employs a fixed markup rate (generally 40%) over the "dealer list price" of the warranty parts, plus the dealer's established hourly rate for service labor multiplied by GM's labor time guidelines, which specify the number of labor hours allotted for a given repair. Def. 56.1 Stmt. ¶ 16; Pl. Resp. ¶ 16.
This information includes the repair order number and date, the vehicle's mileage and VIN, the "labor operation" code, the primary failed part number, the parts reimbursement amount, and the "Line Total," which "[r]eflects the total amount the Dealership is requesting for each Repair Case." Def. 56.1 Stmt. ¶ 14; Pl. Resp. ¶ 14. Dealers are not required to specifically identify every part used and covered by the request. Def. 56.1 Stmt. ¶ 15; Pl. Resp. ¶ 15.
Fulton notes that the amount is calculated pursuant to a formula ultimately specified by GM rather than the dealer's own computer system. Pl. Resp. ¶ 15.
This markup rate for parts was increased nationwide from 30% to 40% over the dealer list price in the early 1990s. Def. 56.1 Stmt. ¶ 18. There is some suggestion that this increase was due to statutory changes such as the 1992 amendment of § 465.See Pl. Opp. at 4.
The dealer list price for a particular part is used regardless of the dealer's actual "acquisition cost" for that part. The list price often is higher than the acquisition cost for various reasons. Specifically, dealers receive discounts, rebates, and stocking allowances from GM which reduce acquisition costs. In addition, GM reimburses dealers based on the prevailing dealer list price at the time of claim submission, regardless of whether there has been an intervening price increase since the dealer acquired the part. As a result, the effective markup rate may often exceed 40%. Def. 56.1 Stmt. ¶ 17; Pl. Resp. ¶ 17.
Once a claim for reimbursement has been submitted by a dealer, WINS typically reviews, approves, and pays the claim without any individual review by a GM employee. Def. 56.1 Stmt. ¶ 19; Pl. Resp. ¶ 19. Pursuant to this automated review process, WINS determines whether the claim falls within established parameters based upon the information submitted by the dealer as well as the existing computer records for the vehicle corresponding to the specified VIN. Def. 56.1 Stmt. ¶ 19; Pl. Resp. ¶ 19. WINS calculates the maximum parts reimbursement by multiplying the dealer list price of the parts associated with the repair by the standard parts markup amount for that dealer. Def. 56.1 Stmt. ¶ 19; Pl. Resp. ¶ 19. Provided that the dealer's claim does not exceed the permissible ceiling, WINS approves and pays the claim. Def. 56.1 Stmt. ¶ 19; Pl. Resp. ¶ 19.
WINS determines this information in part by using the labor operation code submitted by the dealer. Def. 56.1 Stmt. ¶ 19; Pl. Resp. ¶ 19.
Individual Claim Review Process
Should a dealer desire individual review of a submitted claim (for instance to seek authorization to submit a claim in excess of the standard amount), it may "H-route" the claim via WINS to its GM Service Representative. Def. 56.1 Stmt. ¶ 20. If a dealer chooses to "H-route" a claim, it then is permitted to include comments explaining why it wants the claim reviewed.Id. Dealers also are able specifically to designate a claim for special treatment when submitting it through WINS. Id. at ¶ 21. For example, it is possible for dealers to enter a "P" code claim (for "excessive parts and/or net amount") when the repair requires more parts than the limit specified for the associated labor operation. Id. In addition, WINS also permits dealers to submit a "case add credit" in situations where the dealer is seeking additional reimbursement for a previously submitted claim. Id. Therefore, it is possible for a dealer to seek reimbursement for parts at more than the standard reimbursement rate by submitting a P code claim or H-routing it to its GM Service Representative. Id. at ¶ 22.
Fulton acknowledges the possibility of H-routing claims but asserts that H-routing "is only intended to be used on extraordinary and infrequent occasions, and Fulton was never instructed that it was a substitute for GM's usual warranty reimbursement process or that it could be utilized to request more than GM's allowance of cost plus 40% for warranty parts reimbursement." Pl. Resp. ¶ 20.
Fulton admits that dealers may designate a "P" code claim but argues that "[i]t is only in highly limited circumstances that dealers such as Fulton have been instructed to submit [`]P' code claims or a `case add credit.'" Pl. Resp. ¶ 21.
Fulton admits that this is possible, but only "in rare and unusual circumstances." Pl. Resp. ¶ 22; see also Plaintiff's Counterstatement of Facts ("Pl. 56.1 Stmt.") ¶¶ 8-11. We should also note that though approximately 90% of warranty claims are approved upon initial submission, a dealer wishing to contest the disposition of a claim may do so in several ways. Def. 56.1 Stmt. ¶ 24; Pl. Resp. ¶ 24. Specifically, the dealer may: (1) resubmit the claim using an H-route to its GM service representative with explanatory comments; (2) make a direct appeal to its service representative or regional personnel; or (3) invoke the dispute resolution procedures pursuant to the Dealer Agreement. Def. 56.1 Stmt. ¶ 24; Pl. Resp. ¶ 24.
Fulton's Warranty Claims
Fulton has submitted warranty claims regularly to GM since 1996. Def. 56.1 Stmt. ¶ 28; Pl. Resp. ¶ 28. From 1999 to 2004, Fulton submitted approximately 22,000 claims for payment, which resulted in reimbursement payments from GM of over $3.8 million. Def. 56.1 Stmt. ¶ 29; Pl. Resp. ¶ 29.
However, prior to filing this action, Fulton never discussed any issue relating to warranty reimbursement with GM, nor did it ever request additional reimbursement for the installation of warranty parts. Def. 56.1 Stmt. ¶ 31; Pl. Resp. ¶ 31. In addition, Fulton has never submitted a warranty claim requesting payment for parts in any amount (including the amount it seeks to recover in this action) other than GM's standard rate. Def. 56.1 Stmt. ¶ 32; Pl. Resp. ¶ 32. Fulton's president and owner, Jonathan Worts, testified that Fulton did not seek additional reimbursement because he believed "[i]t would have been futile." Def. 56.1 Stmt. ¶ 33; Pl. Resp. ¶ 33.
It should be noted that while occasionally Fulton did submit H-route requests for unusual or additional labor costs, it never made a request for additional parts reimbursement. Def. 56.1 Stmt. ¶ 35; Pl. Resp. ¶ 35.
Worts testified that he knew of litigation in several other states relating to warranty reimbursements and that he also owns a GM dealership in New Jersey which has been submitting claims for reimbursement since 1999 in accordance with the changes in New Jersey law. Def. 56.1 Stmt. ¶¶ 37-38; Pl. Resp. ¶¶ 37-38. Despite this knowledge, Fulton never sought greater warranty reimbursement amounts here.
GM's Measures in Other States
In other states where statutes similar to § 465 have been passed, GM has implemented cost recovery mechanisms to compensate for incremental warranty costs. Def. 56.1 Stmt. ¶ 39. Specifically, in New Jersey and Illinois, both of which have passed statutes similar to § 465, GM has increased the wholesale prices of vehicles sold to dealers in those states in order to achieve a roughly "revenue neutral" effect from increased warranty costs. Id.
Procedural History
On July 16, 2001, ten present and former GM dealers filed the complaint in this action. On December 18, 2002, an Amended Complaint was filed, and Fulton and seven other GM dealers were added as plaintiffs. This matter, originally assigned to the late Judge Schwartz, was then reassigned to this Court on April 16, 2003. At a subsequent conference, it was decided that plaintiffs would select a test plaintiff. After Fulton was selected, the parties commenced discovery with respect to its claims, while discovery pertaining to the claims of the other plaintiffs was held in abeyance. Upon completion of discovery on Fulton's claims, GM moved for summary judgment on December 15, 2005.
One of these plaintiffs has since voluntarily dismissed its action pursuant to Fed.R.Civ.P. 41(a).
DISCUSSION
A motion for summary judgment must be granted "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 judgment as a matter of law." Fed.R.Civ.P. 56(c). In deciding a motion for summary judgment, the evidence submitted must be viewed in the light most favorable to the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). Summary judgment should be granted "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Even if parties dispute material facts, summary judgment must be granted "unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party."Golden Pacific Bancorp. v. F.D.I.C., 375 F.3d 196, 200 (2d Cir. 2004) (internal citations and quotation marks omitted).
Fulton alleges that in violation of both § 465 and its own contractual obligations, GM systematically under-reimbursed it for warranty parts. Fulton argues that GM made no effort to determine the price charged by other franchised motor vehicle dealers in Fulton's community. Instead, GM reimbursed Fulton at a fixed rate, which Fulton asserts was lower than the fair and reasonable rate.
In response to Fulton's claims, GM argues that in order to trigger its obligation to pay additional reimbursement for warranty repairs, Fulton was required under § 465 to submit particularized claims, or at the very least, some claim for an amount greater than GM's standard reimbursement rate. In further support of this position, GM invokes various legal doctrines, including account stated, estoppel, and waiver. At heart, these arguments reduce to the same basic tenet: after years of silently accepting GM's standard reimbursement payments without ever even having made a request for a higher amount, Fulton cannot now be heard to complain that it was insufficiently reimbursed. In light of our interpretation of § 465 and the principles underlying the affirmative defenses asserted by GM, we agree.
GM argues that such a claim would have to provide sufficient detail to allow it to fulfill its own statutory obligations and either approve or disapprove the claim.
Prior Cases
Although no New York state court has yet interpreted § 465, the issues presented in this action have been addressed by other district courts in this Circuit in cases substantially similar to this one. In Ralph Oldsmobile Inc., v. General Motors Corp., No. 99 Civ. 4567 (AGS), 2000 WL 1459767 (S.D.N.Y. Sept. 29, 2000) ("Ralph I"), reh'g denied, 2001 WL 55729 (S.D.N.Y. Jan. 23, 2001), the plaintiff, a former GM dealer, alleged that GM inadequately had reimbursed it for parts used in warranty repairs. As is the case here, the plaintiff in that case made no claim for reimbursement greater than that provided under GM's policy. See id. at *7. The court ultimately denied GM's summary judgment motion, rejecting GM's argument that plaintiff could not recover under § 465 because it had not submitted "particularized claims stating the amount of money sought as reimbursement for parts used in warranty repairs." Id. After reviewing the text and legislative history of § 465, the court concluded that the statute was designed "to benefit dealers, rather than to place additional burdens on them." Id. at *5. Accordingly, the court determined that it was GM's duty to determine the appropriate rate of reimbursement under § 465.Id. at *7. In addition, the court accepted plaintiff's argument that § 465 does not require dealers to notify manufacturers that they have failed to fulfill these statutory obligations and that "[t]here is . . . nothing in the law that prevents a dealer's first notice of violation from taking the form of a complaint in a civil action." Id.
Ralph Oldsmobile also was originally assigned to Judge Schwartz and has since been reassigned before this Court. The parties in that case have agreed to await the outcome of this case before proceeding.
To the extent that our analysis differs from Judge Schwartz' analysis in Ralph I, this can be explained to some degree by the further development of the factual record before us. We note that the court in Ralph I appears to have based its conclusion at least in part on an erroneous assumption regarding GM's claims reimbursement process. GM notes that it moved for summary judgment in that case shortly after the complaint was filed and "on a narrow record after only limited discovery." Def. Mem. at 13 n. 3. Based on the limited record before it, the court in Ralph I incorrectly believed that GM policy required dealers to submit warranty claims which did not specify any amount. See Ralph I, 2000 WL 1459767, at *6 ("A franchisor confronted with a claim stating no dollar figure could simply pay the statutory rate, or it could disapprove the claim and state that the reason for disapproval was the lack of a stated reimbursement amount."). This assumption prompted his conclusion that if, by its own design, GM were faced with generic claims, it would then bear the burden of determining the correct statutory reimbursement amount.
In a subsequent decision, the court clarified the exact scope of its holding in Ralph I, noting that "[w]ith respect to VTL § 465, the summary judgment motion presented a discrete statutory question: whether plaintiff, to recover under VTL § 465, was required to have previously made detailed warranty claims that set forth the statutory reimbursement rate due to plaintiff. The Court answered in the negative, ruling that the statute does not require that claims contain any particular content and that manufacturers receiving a claim must either pay the statutory rate or deny the claims." Ralph Oldsmobile Inc. v. General Motors Corp., No. 99 Civ. 4567, 2002 WL 362796, at *1 n. 2 (S.D.N.Y. March 7, 2002) (emphases added). AssumingRalph I can be so narrowed, we agree to the extent that dealers should be required to make a claim (i.e., request any amount greater than GM's standard reimbursement rate) in some form.
More recently, in Aspen Ford v. Ford Motor Co., No. 99 Civ. 5978 (CPS), 2006 WL 842397 (E.D.N.Y. March 28, 2006), the court granted Ford's motion for summary judgment against the plaintiff dealers. In Aspen Ford, the dealers had accepted reimbursement payments from Ford without complaint from 1992 until 2001. See id. at *4. Under Ford's policy, dealers were permitted to request prices above the national reimbursement policy by, among other things, submitting documentation of their own retail rates. See id. at *6. The court concluded that only after a dealer had submitted such information would Ford then have the burden of determining whether or not the requested rate was in fact reasonable under the statute. See id. Therefore, the court concluded that under § 465, a dealer could be required to provide evidence of its own pricing to a manufacturer in order to trigger the manufacturer's statutory obligation. See id. at *7.
The court noted that Ford's policy essentially paralleled statutes similar to § 465 which had been passed in other states. As was the case under those statutes, Ford was required to reimburse dealers at their retail rates rather than at the prevailing rates in the dealers' community or marketing area.See Aspen Ford, 2006 WL 842397, at *6.
In an earlier decision, Judge Sifton had agreed with Judge Schwartz' conclusion in Ralph I that a dealer's first notice of a violation could come in the form of a complaint. See Universal Ford, Inc. v. Ford Motor Co., No. 99 Civ. 5978 (CPS), 2001 WL 1502994, at *7 (E.D.N.Y. Oct. 31, 2001). In that case, unlike in this case and in Aspen Ford, however, the plaintiff dealers knew of no means of submitting claims for amounts greater than those set forth in Ford's policy. See id.
Interpretation of § 465
"It is axiomatic that [t]he starting point in every case involving construction of a statute is the language itself."Samuels, Kramer Co. v. Comm'r of Internal Revenue, 930 F.2d 975, 979 (2d Cir. 1991) (internal quotations and citation omitted). In support of its assertion that § 465 requires that Fulton first make a claim before any obligation arises on GM's part, GM cites to the following provisions of the statute: "[a]ll warranty claims shall be either approved or disapproved within thirty days after their receipt" and "[a]ll warranty claims . . . made by franchised motor vehicle dealers shall be paid within thirty days following their approval." N.Y. Veh. Traf. Law § 465 (McKinney's 1996). GM argues that these provisions make clear that it is under no statutory obligation to pay any amount absent the making of a "claim" by a dealer.
This reasoning also was adopted by Judge Sifton in an earlier decision. See Universal Ford, Inc., 2001 WL 1502994, at *5 ("Section 465 clearly contemplates that dealers will submit claims for reimbursement to franchisors; otherwise, the statutory language relating to the procedures franchisors must follow upon receipt of a claim would be superfluous.").
Although the text of § 465 supports this general proposition, it is unclear from the text alone exactly what constitutes a "claim." Fulton would have us conclude that a claim simply is a request for reimbursement which need not specify any amount. GM asserts that a proper claim, while perhaps not specifying the exact amount which would constitute fair and reasonable compensation, at least would specify a value greater than that provided for under GM's policy.
Because the text of § 465 is silent on the issue of what exactly a claim should contain, we look to the legislative history and purpose of the statute. See Ralph I, at *5. Upon the passage of § 465 in 1983, the Memorandum of Senator Norman J. Levy stated that "[t]he aim of this bill is to establish an equilibrium of bargaining power between the motor vehicle manufacturer and the motor vehicle dealer." New York State Legislative Annual 1983 N.Y. ch. 815 at 347. In addition, he noted that § 465 "seeks to provide certain basis [sic] protection for the dealer in areas where such protection is deemed necessary." Id. Section 465 subsequently was amended in 1992 in part to require fair and reasonable compensation for warranty parts in addition to labor rates. The Governor's Approval Memorandum in support of this amendment states in part that "[t]he primary goal of these changes is to provide greater protections to motor vehicle dealers operating under franchise agreements with manufacturers." 2 McKinney's 1992 Session Laws of New York at 2899. However, it also notes that § 465 "attempts to adopt reasoned reforms to address the major concerns of the motor vehicle dealers . . . without placing undue burdens upon manufacturers." Id. (emphasis added). The legislative history, then, at best reflects a concern for striking a fair balance between dealers and manufacturers. What is clear, however, is that the legislative history behind § 465 and its 1992 amendment does not support the notion that dealers accepting reimbursement payments without complaint can be said to have filed a claim for reimbursement under the statute.
We note that the issue of burden allocation, which is not directly raised by this motion because no claim has been submitted, is more relevant to the prospective relationship between the parties, which we discuss infra at pp. 22-24.
We should note that the record makes clear that WINS enabled Fulton (regardless of its own perception of the likelihood of success) to request a higher amount than that set forth in GM's policy. Our conclusion is not dependent on this fact, however, as Fulton also could have notified GM by other means, for example sending a letter to GM setting forth specific instances in which it was insufficiently reimbursed and requesting an amount greater than GM's standard rate. Indeed, GM seems to have invited just such a course of action earlier in this litigation when it sent a letter dated October 23, 2001 to a subset of plaintiffs' counsel in this action. See Def. Reply at 3 ("As always, however, your clients (or any authorized GM dealer) may submit properly substantiated claims requesting reimbursement at a different amount than GM's uniform national reimbursement rate."). There was no response to this letter.
This conclusion is supported by cases which have addressed analogous statutes in other states. See, e.g., Jim White Agency Co. v. Nissan Motor Corp., 126 F.3d 832, 836 (6th Cir. 1997) ("[W]e interpret the statute as first requiring the dealer to present the appropriate claim to the manufacturer, and then requiring that the manufacturer pay the presented claim.");Acadia Motors, Inc. v. Ford Motor Co., 844 F. Supp. 819, 828 (D. Me. 1994) (noting that dealer had to make particularized claim under statute), aff'd in part rev'd in part, 44 F.3d 1050 (1st Cir. 1995); Kronon Motor Sales, Inc. v. Ford Motor Co., No. 93 Civ. 2853, 1994 WL 127322, at *2-3 (N.D. Ill. April 7, 1994). (same), aff'd on other grounds, 41 F.3d 338 (7th Cir. 1994).
As Fulton points out, the statutes at issue in those cases differ from § 465 in at least one significant respect: while § 465 defines "fair and reasonable compensation" as no less than "the price and rate charged by the franchised motor vehicle dealers in the community or marketing area," the statutes involved in those cases effectively set compensation at the individual dealer's prevailing retail price. Therefore, Fulton further asserts that under § 465 the determination of "fair and reasonable compensation" likely would entail a significantly greater burden. However, the focus of our inquiry is not on the relative burdens of compliance but on the basic requirement that dealers make a claim for an amount greater than the standard rate before a manufacturer's statutory obligation is triggered. Therefore, we find these cases to be instructive in our interpretation of § 465.
We note that our interpretation also is supported by the principles underlying the various legal doctrines — account stated, estoppel, and waiver — which GM asserts as affirmative defenses. All of these doctrines require notice to a potential defendant of a claim on a timely basis and preclude a plaintiff from retaining a benefit and/or causing the alteration of a defendant's position without placing the defendant on notice of the disputed issue. See In re Rockefeller Ctr. Props., 272 B.R. 524, 541 (S.D.N.Y. 2000) (noting that express assent to an account can "be inferred by silence when an account rendered remains unquestioned a reasonable time after receipt") (citingWillard Helburn, Inc. v. Spiewak, 180 F.2d 480, 483 (2d Cir. 1950)); Shondel J. v. Mark D., ___ N.E.2d ___, 2006 WL 1835214 (July 6, 2006) ("The purpose of equitable estoppel is to preclude a person from asserting a right when he or she has led another to form the reasonable belief that the right would not be asserted, and loss or prejudice to the other would result if the right were asserted."); see also Fundamental Portfolio Advisors, Inc. v. Tocqueville Asset Mgmt., L.P., 7 N.Y.3d 96, 106-07, 817 N.Y.S.2d 606, 612 (2006) (noting that "estoppel is imposed by law in the interest of fairness to prevent the enforcement of rights which would work fraud or injustice upon the person against whom enforcement is sought and who, in justifiable reliance upon the opposing party's words or conduct, has been misled into acting upon the belief that such enforcement would not be sought") (internal quotations and citation omitted); General Motors Acceptance Corp. v. Clifton-Fine Cent. School Dist., 85 N.Y.2d 232, 236, 623 N.Y.S.2d 821, 823 (1995) ("Waiver may be established by affirmative conduct or by failure to act so as to evince an intent not to claim a purported advantage.").
These general principles are especially relevant here, where permitting retroactive relief potentially would deliver a windfall to Fulton. As GM has explained, and as has happened in other states, any increases in the reimbursement rate would be offset by an increase in the vehicle wholesale prices which are charged to dealers. It therefore is not outside the realm of realistic appraisal of competitive considerations that a dealer might even prefer not to receive a higher reimbursement rate in order to be able to charge a lower sales price for the vehicle. Thus, if dealers were to prevail now on claims for additional reimbursement, they could potentially receive additional reimbursement while having benefited from lower wholesale prices for vehicles in years past.
Though all of these doctrines may not literally apply to this situation, they do support the general notion that Fulton's silent acceptance of GM's standard reimbursement amounts precludes it from now claiming it was insufficiently reimbursed. We have found no evidence in the statutory language or the legislative history of § 465 which would suggest that the legislature intended to create a set of obligations wholly inconsistent with these general principles of New York law. See Hall v. EarthLink Network, Inc., 396 F.3d 500, 505 (2d Cir. 2005) ("Statutes should be interpreted to avoid untenable distinctions and unreasonable results whenever possible.") (quoting American Tobacco Co. v. Patterson, 456 U.S. 63, 71 (1982)). In light of the foregoing, we conclude that plaintiff failed to submit a claim, as required under § 465, such as to trigger GM's statutory obligations.
Further supporting the thrust of these doctrines, we note the practical difficulties attendant to the lack of historical records. For instance, Fulton's own expert testified that while historical, general warranty sales data was available, detailed parts data was not. Def. 56.1 Stmt. ¶ 58; October 11, 2005 Deposition of Bernard R. Siskin ("Siskin Dep.") at 74:18-77:6. He further acknowledged that such data might have been available had Fulton made contemporaneous claims. See id. at 217:16-218:11.
Prospective Relief
As noted earlier, our resolution of this motion does not require us to allocate the burdens between manufacturers and dealers with respect to the calculation of fair and reasonable compensation once a proper claim for reimbursement above the GM standard rate is actually made. The subject of a workable regime on a going forward basis arose during oral argument of this motion. In the past, both sides have assumed extreme positions, endeavoring to shift the entire burden to the other. As Judge Schwartz noted, "[i]t would be preferable for franchisors and dealers to cooperate in complying with § 465."Ralph I, 2000 WL 1459767, at *7.
Counsel for GM suggested an approach during oral argument which apparently has worked successfully in other states. Essentially, the approach is a burden shifting one where the dealer's good faith request for reimbursement greater than the GM standard rate would trigger a response from GM. See July 14, 2006 Oral Argument Transcript ("Tr.") at 23 ("Obviously, the dealer can request anything as the trigger. Retail rate would be an appropriate starting point for the dealer to request. . . . But as the trigger, the dealer has to make some kind of claim.").
For purposes of this discussion, we assume that a specific dealer does in fact believe that the standard amount is lower than the price charged for non-warranty repairs by itself or others in the community (although it is far from clear that this would be true in every region of the state or for every repair). The dealer would submit a claim reflecting that good faith belief. The burden then would shift to GM either to accept or reject the dealer's request based upon its own calculation of the fair and reasonable rate of compensation. Should GM require the dealer's own retail rate (had it not already been provided) in order to make this determination, then the dealer would be required to submit it. See Aspen Ford, 2006 WL 842397, at *7 (noting that "while the burden is on the dealer to offer evidence of his own rates, the burden is on the manufacturer to compile evidence of community rates"). This approach seems to be a practical one and intelligently addresses the issue of allocation of burdens between dealers and manufacturers because it provides the manufacturer with a specific demand to which it can respond without requiring dealers to survey competitors, which may be unrealistic and also raises the specter of improper collusion.
CONCLUSION
For the reasons set forth above, defendant's motion for summary judgment is granted.
IT IS SO ORDERED.