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Bobcat of Duluth, Inc. v. Clark Equipment Co.

United States District Court, D. Minnesota

January 25, 2018

Bobcat of Duluth, Inc., a Minnesota corporation, Plaintiff,
v.
Clark Equipment Company, a Delaware corporation d/b/a Bobcat Company, Defendant.

          MEMORANDUM AND ORDER

          Paul A. Magnuson United States District Court Judge

         This matter is before the Court on Defendant's Motion for Summary Judgment. For the following reasons, the Motion is granted.

         BACKGROUND

         Defendant Clark Equipment Co. d/b/a Bobcat Co. (“Bobcat”) manufactures and sells compact equipment, which it distributes to consumers through a network of independently owned dealers. (Ross Aff. (Docket No. 27) at 2-3.) Bobcat maintains one-year dealer agreements with its independent dealers, who sell Bobcat products directly to consumers. (Id. at 3-4.) Its dealer agreements include two provisions relevant to this lawsuit. The first provision prohibits a dealer from assigning or transferring the dealer agreement without Bobcat's prior written consent. (Id. (Docket No. 29) Ex. 1 ¶ 16.) The second is a right-of-first-refusal provision, which gives Bobcat the right to buy a dealership first if the dealer receives an offer from another prospective buyer that it is willing to accept. (Id. ¶ 21.)

         Since 2000, Plaintiff Bobcat of Duluth, Inc. (“Bobcat of Duluth”), has been one of Bobcat's independent dealers and in that capacity has signed Bobcat's annual dealer agreements. (Holland Decl. (Docket No. 34-3) Ex. 3 at 3-4.) From 2000 to 2002, Bobcat of Duluth exclusively sold Bobcat equipment. (Id. at 4.) In 2002, a Bobcat representative recommended that Bobcat of Duluth also sell equipment manufactured by Kubota Tractor Corporation to supplement its Bobcat sales. (Id.) Kubota maintains product lines that compete with Bobcat. (Ross Aff. at 4.) Since 2002, Bobcat of Duluth has sold both Bobcat and Kubota equipment. (Id.)

         In 2012, Bobcat implemented a policy of exclusivity by requiring its new dealers to sign a dealer agreement that prohibited the sale of products that compete with Bobcat's product lines. (Holland Decl. (Docket No. 34-1) Ex. 1 at 9-12.) This exclusivity policy was not reflected in Bobcat's annual dealer agreements with Bobcat of Duluth, and in 2013, Bobcat of Duluth added two Kubota products that compete with Bobcat's products. (Id. at 17-18; Ross Aff. at 4.) Bobcat of Duluth claims that it was not aware of this policy until it attempted to sell its dealership.

         On December 5, 2014, the president of Bobcat of Duluth, Matthew Mahoney, notified Bobcat that he intended to sell his business. (Ross Aff. at 5.) Bobcat responded by stating that it would require any prospective buyer to sell only Bobcat product lines as a condition of its approval and consent. (Id. (Docket No. 28-1) Ex. 3.) Consequently, it suggested that Bobcat of Duluth should sell the Bobcat portion of its dealership separate from the Kubota portion. (Id.)

         In November 2015, Bobcat of Duluth identified a prospective buyer, Quality Forklift Sales and Service, Inc., (“Quality Forklift”). Quality Forklift was interested in purchasing the dealership, but it wanted to buy both the Bobcat and the Kubota businesses. (Gleekel Aff. (Docket No. 26-1) Ex. B.) Bobcat of Duluth forwarded to Bobcat a copy of Quality Forklift's non-binding letter of intent (“LOI”) to purchase the dealership for $2.3 million, as well as information about Quality Forklift, and requested Bobcat's consent to sell Bobcat of Duluth to Quality Forklift and transfer the dealer agreement. (Holland Decl. (Docket No. 34-4) Ex. 4.)

         On December 7, 2015, after reviewing the business plan and conditionally approving the transfer, Bobcat sent a letter and new dealer application to Quality Forklift. (Ross Aff. (Docket No. 28-1) Ex. 5 at 2-3). The letter set out certain requirements to purchase the dealership and transfer the dealer agreement, including that Quality Forklift must (1) sign a new dealer agreement that contained exclusivity provisions, (2) not sell any competitive attachments with Bobcat equipment, (3) achieve specific market share commitments as specified in Quality Forklift's business plan, (4) have at least 50% Bobcat equipment in its rental fleet, and (5) agree that Bobcat may terminate the dealer agreement if Quality Forklift fails to cure any breach of these requirements within 60 days. (Id.) Three days later, Quality Forklift responded by modifying or omitting these conditions. (Holland Aff. (Docket No. 34-6) Ex. 6.) Quality Forklift would only agree to (1) sign a dealer agreement consistent with Bobcat of Duluth's existing dealer agreement, (2) “use its best efforts to increase market share commitments, ” (3) “have a rental fleet of Bobcat equipment, ” and (4) “resolve in good faith” any breaches in requirement “in a timely manner.” (Id.) Based on Quality Forklift's unwillingness to agree to its conditions, Bobcat withheld consent to approve the dealership transfer. (Ross Aff. Ex. 7.)

         Mahoney then sought prospective buyers to purchase the Bobcat and Kubota businesses separately. Quality Forklift offered $525, 000 for the Kubota business. (Holland Aff. (Docket Nos. 34-7. 34-8) Exs. 7, 8.) And two other existing Bobcat dealers offered to buy Bobcat of Duluth's Bobcat business. Tri-State Bobcat “offered in the 500 range” and Mahoney recalled that Bobcat of Grand Forks offered less than Tri-State. (Mahoney Dep. (Docket No. 34-3) at 139-40, 189.) Tri-State also made a verbal offer to buy the dual-brand dealership for $2.3 million and divest itself of the Kubota business within three years. (Id. at 132-33.) Bobcat withheld its consent for this proposal.

         Bobcat of Duluth then filed this lawsuit, arguing that Bobcat imposed unreasonable conditions on the transfer of its dealer agreement, which allegedly reduced the potential purchase price from $2.3 million to $1, 025, 000. Counts I and II of the Complaint allege that Bobcat violated the Minnesota Heavy and Utility Equipment Manufacturers and Dealers Act (“MHUEMDA”), Minn. Stat. § 325E.0681, and the Minnesota Agricultural Equipment Dealers Act (“MAEDA”), Minn. Stat. § 325E.062. (Compl. (Docket No. 1) ¶¶ 48-73.) Count III contends that Bobcat breached the terms of its dealer agreement. (Id. ¶¶ 74-83.) Count IV seeks declaratory relief against Bobcat. (Id. ¶¶ 84-87.) Bobcat moves for summary judgment.

         DISCUSSION

         Summary judgment is proper if there are no disputed issues of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The Court must view the evidence and inferences that “may be reasonably drawn from the evidence in the light most favorable to the nonmoving party.” Enter. Bank v. Magna Bank of Mo., 92 F.3d 743, 747 (8th Cir. 1996). The moving party bears the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A party opposing a properly supported motion for summary judgment may not rest on mere allegations or denials, but must set forth specific facts in the record showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986).

         A. ...


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