General Motors Corp. v. Miller Buick, Inc.

WILNER, Judge. On August 11, 1983, the Circuit Court for Montgomery County declared appellant, General Motors Corporation (GM), to be in contempt of court by reason of its having ³⁷⁸ violated an interlocutory injunction issued by the court on July 8, 1982. The company was fined $1,000 a day, commencing August 5, 1983, for each day that the violation continued. Aggrieved by the court’s action, GM has brought this appeal, arguing that the contempt order was improper in that the injunction had previously expired by operation of law.

In the circumstances of this case, we think that the argument is valid, and we shall therefore reverse. I. Background The underlying dispute arises out of the relationship and certain agreements between GM and one of its dealers, Miller Buick, Inc. (Miller). The relationship began in 1956, when Miller first became a Buick dealer. The latest franchise agreement was entered into on November 1, 1975.

On July 22,1980, GM, apparently dissatisfied with Miller’s facilities and sales performance, sent Miller a notice that the franchise agreement would not be renewed when it expired on October 31, 1980. Miller complained to the State Motor Vehicle Administration (MVA), arguing that the termination of its franchise was in violation of Md.Code Ann.Transp. art., § 15-209. That section provides, in relevant part, that, notwithstanding any term or provision in the franchise agreement, a manufacturer may not terminate a dealer’s franchise unless the dealer has failed to comply substantially with the reasonable requirements of the franchise. After a hearing, MVA concluded that Miller’s failure to provide adequate facilities was excused by its inability to obtain necessary financing, and that GM was estopped from discontinuing the franchise.

GM appealed to the Circuit Court for Montgomery County, which reversed. Miller then appealed that decision to this Court and obtained a stay of the circuit court judgment. While the appeal was pending, the parties resolved their differences and, on December 23,1981, entered into a settlement agreement. Miller acknowledged in the agreement that its current facilities were inadequate and that its “fail ³⁷⁹ ure to provide new facilities as required by [GM] constitutes a failure to comply substantially with a reasonable requirement of the dealer agreement.” It also acknowledged that the decision of the circuit court, reversing MVA, “is correct in all respects, is final, and is binding upon the parties”, and it agreed to dismiss its appeal therefrom.

GM, for its part, agreed to continue the franchise relationship under the 1975 agreements, provided that Miller would promptly build new facilities. In particular, the extension was conditioned upon Miller (1) applying for construction financing and obtaining necessary construction permits by January 31,1982; (2) commencing construction of new facilities by May 1, 1982, in accordance with plans approved by GM; and (3) completing construction and occupying the new facilities by July 1, 1983. The parties agreed that “the failure by Miller to perform any one of the [above enumerated obligations] shall cause the current arrangement to cease”, and that “section 15-209 of the Transportation Article does not apply to this settlement agreement or the arrangement made hereby....” The agreement was signed not only by GM and Miller, but also by the Administrator of MVA. On May 18, 1982, GM sent Miller a letter calling attention to the settlement agreement and declaring that, as construction of the new facility had not commenced by May 1,1982, the business relationship between the parties would terminate “effective with receipt of this notice to you.” Miller responded on June 7,1982, with a four-count Declaration in the Circuit Court for Montgomery County against GM and a number of its officials.

In Count I, Miller recited some of the above history, claimed that it had complied with its obligations under the settlement agreement, charged that GM’s termination was therefore wrongful and constituted both a breach of the agreement and a violation of §§ 15-207 and 15-209 of the Transp. art., and asserted that the purported waiver of § 15-209 in the agreement was against public policy and therefore void. It asked, as relief, $10,000,- ³⁸⁰ 000 in damages “and an immediate ex parte, interlocutory, and final injunction against [GM] enjoining it from terminating its franchise agreement with Plaintiffs.” Counts II, III, and IV incorporated by reference the allegations in Count I. Count II claimed that GM’s action involved a coercive attempt to wrest the dealership away from Miller and was in violation of Transp. art., § 15-207; 1 Count III charged a violation of § 15-209; and Count IV, brought not against GM but against four of its officials, charged a conspiracy to cause GM to breach its agreements with Miller. Additional damages of $10,000,000 were sought in each of those three counts. Trial by jury was requested.

With the Declaration, Miller filed a separate motion for ex parte and interlocutory injunctive relief. The motion incorporated the allegations of the Declaration, averred that immediate, substantial, and irreparable harm would result if GM terminated the franchise, and asked that GM be enjoined from terminating the agreement “until such time as the merits of its right to do so can be tried and decided by this court.” On June 16, 1982, the court issued an ex parte injunction; on July 8,1982, it issued an interlocutory injunction. The July 8 order recited the four factors to be examined in determining whether an interlocutory injunction ought to issue — the likelihood that the plaintiff will succeed on the merits, the balance of convenience, irreparable injury, and the public interest. The court found all four in favor of Miller, concluding, in particular, that “there is a likelihood that Petitioners will succeed on the merits of its case.” The ³⁸¹ order enjoined GM from terminating the 1975 franchise agreement with Miller “until such time as the issues joined have been fully and finally adjudicated... . ” After a trial spread over ten days, the court directed a verdict in favor of defendants as to Counts III and IV, and submitted Counts I and II to the jury.

During its deliberations, the jury sent out this question: “Can the settlement contract supersede the requirements of Section 15-209 of the Transportation Article of the Annotated Code of Maryland regardless of the nature, cause, or circumstances of Miller’s failure to comply? If so, please explain why.” That issue was at the heart of Count III of the Declaration and had been resolved in GM’s favor through the directed verdict entered on that count. The court, in response, therefore, told the jury not to concern itself with that issue. The jury then, on May 26, 1983, returned a defendant’s verdict on Counts I and II.

From the verdict sheet, it seems clear that the verdicts were based upon a finding of no liability, rather than a finding that damage had not been proven. Miller filed a timely motion for new trial, claiming a variety of errors, including the court’s refusal to submit the case on specific issues. On June 21, 1983, GM moved the court for an order directing the clerk “to make an appropriate docket entry acknowledging that the interlocutory injunction entered in this case on July 7, 1982 was dissolved by the verdict of the jury and is of no further effect.” Both motions came before the court on August 1, 1983. The court denied the motion for new trial, and, as a result, the clerk entered final judgment in favor of the defendants.

The court also denied GM’s peculiar motion for a clarifying docket entry. It explained: “All right. The issue before the Court on this Motion, of course, having looked at the order itself, the injunction is answered by Judge Mitchell. It was to continue until such time as the issues joined had been fully and finally adjudicated. ³⁸² Now that, of course, is a pretty broad statement as to what is meant by fully and finally adjudicated.

We have here a jury verdict in favor of the Defendant with respect to a claim for damages. The issues are not necessarily identical. The status, of course, may ultimately hinge on whether or not there was a violation of the contract. And if upheld or if finally adjudicated — and, again, I don’t know whether that means by a Court at the trial level or subsequent to a finding on appeal.

I would think at least it would encompass the passage of thirty day[s’] time following which an appeal had not been entered, I think that would probably be a final adjudication, at least as to that issue. In any event, the Court will have to consider at this time it seems the relative hardships that might be imposed on the parties in the event it terminates the injunction at this stage. I think it’s obvious from the position of the parties that the Plaintiff would be so affected as to prevent his recovery or being placed back in this present status should he ultimately prevail. I think that’s the proper consideration in determining whether or not an injunction ought to be dissolved.

In any case I do not believe that it is, at this time, right or for the — proper for the Court to terminate the injunction. Whether or not subsequent proceedings might have that result I can’t say. But in any event the Court is not inclined to grant the Motion to enter such a docket entry.. That Motion then is denied.” Notwithstanding the court’s refusal to enter the clarifying docket entry, GM, on August 3, 1983, sent a letter to Miller advising it that the franchise agreement was terminated effective upon receipt of the letter.

Miller responded two days later with a motion to hold GM in contempt for violating the preliminary injunction entered on July 8, 1982. On August 11, 1983, after a hearing, the court found GM to be in contempt and assessed a fine of $1,000 for each day, beginning August 5,1983, that ³⁸³ GM refused to do business with Miller. 2 GM appealed the next day. On August 31, 1983, in an obvious effort to purge itself of any contempt, GM, through counsel, wrote to counsel for Miller, pointing out that, notwithstanding GM’s August 3 letter, the company did not, in fact, terminate its relationship with Miller. Although maintaining that the contempt order was improper, GM advised that it would continue the business relationship until the final judgment of August 1 becomes enrolled or the contempt order is vacated.

II

The Issues GM’s position is a simple one. It maintains that the interlocutory injunction, as a matter of law and by its own terms, lasted only “until such time as the issues joined have been fully and finally adjudicated”, that the jury verdicts in its favor necessarily amounted to such a full and final adjudication, and that the injunction thus expired upon the rendition of those verdicts. Miller, of course, disputes that; it also argues that, by effectively purging itself of contempt, GM has made the appeal moot. The mootness argument is absurd.

GM effectively remains under an injunctive order that it maintains is legally nonexistent. Moreover, in light of the possible inconsistency between the court’s oral remarks and the clerk’s docket ³⁸⁴ entry, it is not altogether clear whether the company presently remains liable for part of the fine imposed. The appeal is not moot.

III

Viability of the Injunction In considering the viability of the interlocutory injunction, we look first to its terms. It restrained GM from severing its relationship with Miller “until such time as the issues joined have been fully and finally adjudicated.” The “issues joined” were those raised in Miller’s Declaration; they were the only issues before the court. When were they “fully and finally adjudicated”? Notwithstanding the court’s musing to the contrary, it is evident that those issues were “fully” adjudicated when, on August 1, 1983, judgment absolute was entered on the verdicts previously rendered by the court and jury.

The court, through its entry of directed verdicts on Counts III and IV, effectively rejected Miller’s contention that GM’s actions constituted a violation of § 15-209 and that GM’s officials had been guilty of a civil conspiracy. Under the law, those verdicts could only have rested upon findings that the evidence was insufficient to sustain those two charges. The jury, by returning defendant’s verdicts on Counts I and II, necessarily determined that the settlement agreement was valid and that the agreement had not been breached by GM. Those four verdicts, once extended to judgment, answered fully and completely every claim made by Miller against GM.

A “full adjudication”, of course, is not necessarily a “final” one. A “final adjudication” can mean different things, and may occur at different times, depending upon the context in which the term is used. In many instances— perhaps most — an adjudication is not regarded as final until all appeals have been exhausted or the time for noting them has expired. See, for example, People v. Brady, 14 Ill.

App.3d 830 , 303 N.E.2d 528 (1973); State v. Berube, 139 Me. 11 , 26 A.2d 654 (1942); and cf. People v. McCloskey, 2 ³⁸⁵ Ill.App.3d 892, 274 N.E.2d 358 (1971); compare, however, McGuire v. City of Cedar Rapids, 189 N.W.2d 592 (Iowa 1971). In that sense, a “final adjudication” may not be synonymous with the term “final judgment”, which often relates to appealability rather than unassailable conclusiveness. It seems clear to us that the court’s intention, as expressed in the injunction, was to extend the life of the injunction beyond the mere entry of an appealable judgment. Its aim, in using the term “finally adjudicated”, as opposed, for example, to