General Motors Corp. v. Bannings Beltway Pontiac

JAMES R. EYLER, Judge. In this judicial review of a decision by the Motor Vehicle Administration (MVA), we are faced with an issue of statutory interpretation. Md.Code (1977, 1992 Repl.Vol.) Transportation § 15-209 prohibits the wrongful termination of an automobile dealer’s franchise by an automobile manufacturer. 1 Section 15-209(a) provides that a manufacturer may not terminate, cancel, or fail to renew the franchise of a dealer unless (1) the dealer has failed to comply substantially with the reasonable requirements of the franchise and (2) the manufacturer gives the dealer at least 90 days prior written notice of the termination, cancellation, or nonrenewal and provides the MVA with a copy of that notice. We interpret the provision to require that the relationship remain in existence for 90 days after the notice is given, even if the contract term expires prior to that time.

We do not interpret it as requiring that 90 days notice be given prior to the expiration date of the contract term in order to effect a termination, cancellation, or nonrenewal. ⁶⁷⁴ Factual Background Bannings Beltway Pontiac, appellee, entered into a dealership agreement -with General Motors Corporation, appellant, in 1981. A series of dealership agreements followed, each with a definite term. Beginning in 1986, appellee’s sales performance started to decline. The parties attempted to address the problems with the dealership.

Appellee was placed in appellant’s Dealer Development Assistance Program in 1986 and remained in that program for ten years. The last long-term dealership agreement between the parties expired on October 31, 1995. At that time, the parties entered into a short-term dealership agreement, which expired on April 30, 1996. The parties again entered a short-term agreement, which expired on August 31,1996.

Because appellee’s sales continued to decline, appellant decided to terminate the relationship. By letter dated July 3, 1996, appellant informed appellee that it was terminating the relationship, effective 90 days later, on October 3,1996. On August 13, 1996, pursuant to Transportation § 15-209(e)(2), appellee requested a hearing to determine whether it had “failed to comply substantially with the reasonable requirements of the franchise.” A hearing was held before an administrative law judge (ALJ) on January 7 through 9, 1998. Appellee raised various arguments challenging the purported termination of the relationship, including an argument that the notice given by appellant did not comply with the statute.

Appellee argued that the statute required that notice be given at least 90 days prior to the expiration of the term of the agreement, rather than 90 days notice. The ALJ, in a proposed decision, rejected all of appellee’s arguments and found that appellee was not in substantial compliance with the requirements of the franchise. 2 The ALJ ⁶⁷⁵ also found that notice had been properly given. On October 19,1999, the MVA adopted the proposed decision. On November 4, 1999, appellee filed a petition for judicial review in the Circuit Court for Prince George’s County.

On July 17, 2000, the circuit court reversed the MVA’s decision and remanded the case for further proceedings. The circuit court held that appellant had failed to provide adequate notice of termination of the parties’ agreement in accordance with § 15-209. Standard of Review In reviewing an administrative agency’s decision, we must defer to the agency’s fact-finding and drawing of inferences so long as they are supported by the record. Board of Physician Quality Assur. v. Banks, 354 Md. 59, 68 , 729 A.2d 376 (1999).

In our review, we apply the substantial evidence test to determine “whether a reasoning mind reasonably could have reached the factual conclusion the agency reached.” Id. (quoting Bulluck v. Pelham Wood Apartments, 283 Md. 505, 512 , 390 A.2d 1119 (1978)). When an administrative agency’s decision is founded on an erroneous legal conclusion, however, “we will substitute our own judgment for that of the agency.” Mayberry v. Board of Educ., 131 Md.App. 686, 701 , 750 A.2d 677 (2000). The issue before us is more appropriately categorized as a question of law, rather than a finding of fact.

While ordinarily we accord an administrative agency’s legal conclusions no deference, “an administrative agency’s interpretation and application of the statute which the agency administers should ordinarily be given considerable weight by reviewing courts. Furthermore, the expertise of the agency in its own field should be respected.” Solomon v. Board of Physician Quality Assurance, 132 Md.App. 447, 455 , 752 A.2d 1217 , cert. denied, 360 Md. 275 (2000) (quoting Banks, 354 Md. at 69 , 729 A.2d 376 (1999)). In determining the weight to be accorded an agency’s interpretation of a statute, we consider the extent to which the agency engaged in a process of reasoned deliberation in interpreting the statute. ⁶⁷⁶ Haigley v. Department of Health & Mental Hygiene, 128 Md.App. 194, 216 , 736 A.2d 1185 (1999). As we stated in Haigley , [wjhen an agency clearly demonstrates that it has focused its attention on the statutory provisions in question, thoroughly addressed the relevant issues, and reached its interpretation through a sound reasoning process, the agency’s interpretation will be accorded the persuasiveness due a well-considered opinion of an expert body.

In addition, the nature of the process through which the agency arrived at its interpretation is a relevant consideration in assessing the weight to be accorded the agency’s interpretation. If the interpretation is the product of neither contested adversarial proceedings nor formal rule promulgation, it is entitled to little weight. 128 Md.App. at 216-17 , 736 A.2d 1185 (quoting Baltimore Gas & Elec. Co. v. Public Service Comm’n, 305 Md. 145 , 501 A.2d 1307 (1986) (alteration in original)). The ALJ’s proposed decision was issued following a contested adversarial proceeding, and it is apparent from a reading of that decision that the ALJ focused specifically on § 15-209 and interpreted that provision through a sound reasoning process.

The MVA subsequently adopted the proposed decision of the ALJ. We shall give the MVA’s interpretation of § 15-209 significant weight, see Solomon, 132 Md.App. at 455 , 752 A.2d 1217 , and absent authority to lead us to a contrary conclusion, we shall affirm the MVA’s decision. Discussion We believe it would be helpful to begin our analysis by setting forth § 15-209 in full. Wrongful termination of dealer’s franchise prohibited.

(a) Manufacturers. — A manufacturer may not terminate, cancel, or fail to renew the franchise of a dealer, notwithstanding any term or provision of the franchise, unless: (1) The dealer has failed to comply substantially with the reasonable requirements of the franchise; and ⁶⁷⁷ (2) Except as otherwise provided by subsection (d) of this section, the manufacturer: (i) Gives the dealer at least 90 days’ prior written notice of the termination, cancellation, or nonrenewal and of the specific grounds for the action; and (ii) Provides the Administration 3 with a copy of that notice. (b) Distributors. — A distributor may not terminate, cancel, or fail to renew the franchise of a dealer, notwithstanding any term or provision of the franchise, unless: (1) The dealer has failed to comply substantially with the reasonable requirements of the franchise; and (2) Except as otherwise provided by subsection (d) of this section, the distributor: (i) Gives the dealer at least 90 days’ prior written notice of the termination, cancellation, or nonrenewal and of the specific grounds for the action; and (ii) Provides the Administration with a copy of that notice. (c) Factory branches. — A factory branch may not terminate, cancel, or fail to renew the franchise of a dealer, notwithstanding any term or provision of the franchise, unless: (1) The dealer has failed to comply substantially with the reasonable requirements of the franchise; and (2) Except as otherwise provided by subsection (d) of this section, the factory branch: (i) Gives the dealer at least 90 days’ prior written notice of the termination, cancellation, or nonrenewal and of the specific grounds for the action; and (ii) Provides the Administration with a copy of that notice. ⁶⁷⁸ (d) Exceptions. — The 90-day notice period required by subsection (a) of this section: (1) May be reduced to not less than 15 days, if the ground for the termination, cancellation, or nonrenewal is the dealer’s inability to reasonably serve the interests of the public; and (2) Is not required, if the dealer waives in writing. (e) Hearing.— (1) If a dealer receives written notice that his franchise is being terminated, canceled, or not renewed, the dealer may, within the notice period required by this section, request a hearing under Title 12, Subtitle 2 of this article to determine whether the dealer has failed to comply substantially with the reasonable requirements of the franchise.

(2) If the dealer requests a hearing under this subsection, the dealer’s franchise continues in effect, notwithstanding any term or provision of the franchise or any other provision of this subtitle, until the Administration, after the hearing, makes a final determination. (3) A dealer, manufacturer, distributor, or factory branch may appeal the determination of the Administration to the circuit court for the county in which the person’s principal place of business is located. (4) A dealer, manufacturer, distributor, or factory branch may appeal from a final judgment entered by a circuit court to the Court of Special Appeals as provided in § 12-301 of the Courts and Judicial Proceedings Article. (f) Conveyance of dealership on wrongful termination of franchise.— (1) In addition to any administrative and criminal sanctions imposed under this subtitle, a manufacturer, distributor, or factory branch that terminates, cancels, or fails to renew the franchise of a dealer in violation of this section shall pay to the dealer the fair value of his business as a going concern. ⁶⁷⁹ (2) On payment, the dealer shall convey his business, free of liens and encumbrances, to the manufacturer, distributor, or factory branch.

Section 11-125 of the Transportation Article defines “franchise.” The parties agree that the dealership agreement is a franchise. We also note that the definition indicates that a franchise may or may not be for a definite period. § 11-125. In engaging in statutory interpretation, our goal is “to ascertain and effectuate the intention of the legislature.” Haigley, 128 Md.App. at 214 , 736 A.2d 1185 . We primarily look to the statute itself in order to determine legislative intent.

Id. at 215 , 736 A.2d 1185 . In considering the language of the statute, we must give the words their “ordinary and common meaning” and “avoid constructions that are illogical, unreasonable, or inconsistent with common sense.” Id. Furthermore, as the Court of Appeals stated in Adamson v. Correctional Med. Servs., 359 Md. 238, 251-52 , 753 A.2d 501 (2000) (citations omitted), [w]e often look to the legislative history, an agency’s interpretation of the statute, and other sources for a more complete understanding of what the General Assembly intended when it enacted a particular legislation.

In so doing, “[w]e may also consider the particular problem or problems the legislature was addressing, and the objectives it sought to attain.” Sinai Hosp. of Baltimore v. Department of Employment and Training, 309 Md. 28, 40 , 522 A.2d 382, 388 (1987). This enables us to put the statute in controversy in its proper context and thereby avoid unreasonable or illogical results that defy common sense. Citations omitted; see also Haigley, 128 Md.App. at 214 , 736 A.2d 1185 (stating that “[i]n determining legislative intent, we must never lose sight of the overriding purpose and goal of the statute.”) (quoting Martin v. Beverage Capital Corp., 353 Md. 388, 399 , 726 A.2d 728 (1999)). Before delving into statutory interpretation of § 15-209, we note preliminarily that the cases cited by appellee are not on point.

In Macke Co. v. Pizza of Gaithersburg, Inc., 259 Md. ⁶⁸⁰ 479 , 270 A.2d 645 (1970), the contracts at issue were for terms of one year, automatically renewable for a like term, “unless thirty (30) days written notice is given by either party to terminate service.” Id. at 483 , 270 A.2d 645 . The Court rejected a contention that the contracts were terminable at any time on 30 days notice and held the termination was tied to the expiration of the term. Id. at 492 , 270 A.2d 645 . In Arnold Weiss Corp. v. Manisha Sportswear, Inc., 882 F.Supp. 58, 59 (S.D.N.Y.1991), a contract provided for a one year term that “automatically renewed from year to year unless revoked by