Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—W.D. Mo.: Boat dealer’s contract, Missouri franchise law claims survive rough water, (Aug 19, 2015)

By Michael Menzhuber, J.D., LL.M.

A boat dealer’s claims against Crest Marine, LLC for breach of contract and violation of the Missouri Marine Franchise Dealers Act (MMFDA) may proceed, the federal district court in Kansas City, Missouri has ruled. The court determined that the MMFDA applied to the relationship between the parties and that the doctrine of constitutional avoidance applied to Crest’s assertion that the statute violated the dormant Commerce Clause. After considering the assertions of both parties, the court granted the boat dealer leave to amend its breach of contract claim (Lake Regions Partners, LLC v. Crest Marine, LLC, August 17, 2015, Bough, S.).

Background. Lake Regions Partners, LLC, d/b/a All About Boats (AAB), brought an action, pursuant to the “All About Boats Proposal for Crest Marine,” for breach of contract and breach of the MMFDA. AAB attached a copy of the proposal to its complaint, which outlined the terms of the agreement. The words “Annual Renewal” appeared handwritten at the bottom of the document, directly under the signature line for Crest. AAB also attached a letter, stating that Crest had decided to discontinue its relationship with AAB effective immediately. Crest asserted that the subject transaction was not completed pursuant to the “All About Boats Proposal for Crest Marine” and that later contracts, such as the “2014 Dealer Purchase Agreement,” which was not submitted to the court by either party, preempted the proposal.

Missouri Marine Franchise Dealers Act. Crest argued that the MMFDA violated the Commerce Clause because it did not apply to boat and marine manufacturers headquartered in Missouri. Because it facially discriminated against out-of-state boat and marine manufacturers, it was unconstitutional, according to Crest. AAB asserted that it was unnecessary to address the constitutional question because Crest was a vessel manufacturer and the court agreed. It noted that Crest had asserted that it was a “Michigan-based manufacturer of vessels” and that the statutory definition of “vessel” applied evenly to both in-state and out-of-state vessel manufacturers. Consequently, the court determined that the MMFDA, as it pertained to Crest’s business of manufacturing vessels, was not discriminatory. Since the court was able to resolve the issue without delving into the constitutionality of the MMFDA as it pertained to boat or marine manufacturers, it found that the doctrine of constitutional avoidance was appropriate.

Breach of Contract. Crest argued that AAB’s breach of contract claim should be dismissed because (1) the underlying proposal failed to memorialize a “meeting of the minds” and, therefore, it did not constitute a contract; and (2) the 2014 agreement ended on its own terms and was not extended for the 2015 model year, because AAB did not sign the renewal agreement. Crest also argued that, because the action was for breach of contract, a recovery of punitive damages was not available under Missouri law.

AAB argued that the court could infer a valid offer and acceptance from the conduct of the parties and that Crest’s statements conflicted with the assertion that Crest terminated the agreement unilaterally, as alleged in AAB’s complaint. AAB also claimed that punitive damages could be awarded because the breach fell under Chapter 407 of the Missouri statutory code and statutes under that Chapter had been held to allow for punitive damages.

Based on the parties’ written and oral testimony, the court granted AAB leave to amend it breach of contract claim.

The case is No. 2:15-cv-04022-SRB.

Attorneys: J. Michael Dady (Dady & Gardner, PA), and Jason H. Ludwig (Carson & Coil, PC) for Lake Region Partners, LLC. Brian Keith Francka (Schreimann, Rackers, Francka & Blunt, LLC), and Darryl Bressack (Fink and Associates) for Crest Marine, LLC.

Companies: Lake Region Partners, LLC; Crest Marine, LLC

Cases: FranchisingDistribution MissouriNews