330 F.Supp.2d 9 (2004) | Cited 2 times | D. Maine | August 24, 2004


On July 13, 2004, this Court rendered judgment in favor ofPlaintiff General Motors ("GM") on all counts of the complaintand counterclaim then remaining. The factual and legal bases forthe decision were set forth in Findings of Fact and Conclusionsof Law issued the same day. GM has now filed a motion to amendthe judgment (Docket #89), seeking a further declaration of theparties' respective rights and obligations. For the reasons setforth below, the motion is GRANTED IN PART and DENIED IN PART. Asrequested by GM, the Court clarifies its previous ruling, but tothe extent GM requests an additional declaration that it mayreverse reimbursement to Darling's after the expiration of thestatutory period for approval or disapproval of a warrantyreimbursement claim, the Court cannot assent.


The Court limns only the facts essential to the resolution ofthis motion: a more thorough description of the disputes betweenthe parties can be found in this Court's Findings of Fact andConclusions of Law. The parties to this action are GM, an automobile manufacturer, and its franchisee, Darling's, anautomobile dealer. The contractual relationship between GM andDarling's obligates Darling's to perform warranty repairs onqualified vehicles at the owner's request. The warranty repairsare performed at no cost to the customer, and GM reimbursesDarling's for the expenses incurred in performing such repairs.General Motors processes and pays warranty reimbursement claimselectronically. A dealer's electronic claim includes data aboutthe repairs performed and the vehicle repaired. GM's computersystem reviews the information provided by the dealer, and if thevehicle and repair data matches the computer's parameters forpayment, funds are electronically transferred to the dealer.Although the process is somewhat more complicated when the dealerrequests supplemental reimbursement pursuant to Maine statute(this is discussed in great detail in the Findings of Fact andConclusions of Law), the main point for purposes of the presentmotion is that the manufacturer performs a cursory review of thedealer's request for reimbursement, then pays the claim.

The contract that governs the parties' relationship provides GMwith certain rights to review warranty claims submitted by thedealer after they are paid, and to charge back amounts that wereimproperly paid. Maine statute, on the other hand, currentlyprovides that: Any claim made by a franchisee for compensation for parts provided or for reimbursement for labor performed in satisfaction of a warranty must be paid within 60 days of its approval. All the claims must be either approved or disapproved within 60 days of their receipt. A claim may be submitted within 90 days after the performance of services. 10 M.R.S.A. § 1176 (2004).1 In its Findings of Fact and Conclusions of Law, this Court concluded that GM was entitled to exercise its contractual rights to audit and chargeback during the statutory period for approval or disapproval of a warranty reimbursement claim, but expressed no opinion as to whether GM could exercise those rights outside the sixty-day statutory period. In its motion to amend the judgment, GM seeks a decision on this question. Darling's opposes the motion. DISCUSSION

In the Findings of Fact and Conclusions of Law, the Courtdeclined to address the question of whether GM may charge backamounts previously paid after the expiration of the statutoryperiod for approval or disapproval of warranty reimbursementclaims. However, GM correctly points out in its motion to amendthat its declaratory judgment complaint requested a fulldeclaration that "section 1176 of the Maine Dealer Act does notprohibit GM from exercising its contractual right to audit paidwarranty claims and charge back improperly paid amounts," andthat there is in fact a present controversy between the partiesas to whether GM may exercise its contractual rights outside ofthe statutory period. To the extent GM seeks additionalclarification of its rights, GM's motion to amend the judgment isGRANTED. As for the substantive issues presented in Count III ofthe Complaint, the Court concludes, for the reasons set forthbelow, that section 1176 does not permit GM to charge backamounts previously paid after the expiration of the statutoryperiod. Thus, to the extent GM seeks a declaration to thecontrary, the motion is DENIED. As a preliminary factual matter, the trial testimony andexhibits make clear that charge-backs after the expiration of thestatutory period in fact operate as disapprovals of the claim,since the dealer is deprived of some or all of the amount that itwas previously awarded as reimbursement for performing warrantyrepairs.

In evaluating the meaning of a statute, the Court must "firstexamine [its] plain meaning, and only look beyond that languageto the legislative history to determine the intent of theLegislature if [the Court finds] the statute ambiguous."Darling's v. Ford Motor Co., 825 A.2d 344, 346 (Me. 2003)("Darling's Ford III"). The statute clearly states that "claimsmust be either approved or disapproved within 60 days of theirreceipt." 10 M.R.S.A. § 1176. The plain language of the statutemakes no provision for future disapprovals after an audit. ThisCourt must "avoid statutory constructions that create absurd,illogical or inconsistent results." Darling's Ford III,825 A.2d at 346. It would render the statutory language virtuallymeaningless to allow automobile manufacturers to tentativelyapprove and pay claims within the period set forth in thestatute, only to disapprove the claim after further review oncethe statutory period for approval or disapproval had expired.

GM argues in its post-trial submissions that an obligation todefinitively approve or disapprove a dealer's claim during thestatutory period would render the warranty reimbursement system"unworkable," and would require "wholesale changes to theadministration of warranty claims in the State of Maine . . .ultimately at the expense of the consumer." GM relies on footnotethirteen of Judge Hornby's opinion in Darling's v. Ford MotorCo., No. 95-398-B-H (D. Me. Apr. 1, 1998) ("Darling's FordI"), which described the difficulties presented by section 1176as then enacted. However, significant changes to the statute have occurred since Darling'sFord I was issued: section 1176 now specifically allows for theuse of an average percentage markup to calculate a dealer's"retail rate customarily charged for parts," and the period forapproval or disapproval of claims has been doubled, from thirtydays to sixty days.

The fact that GM will have to make changes to itsadministration of warranty claims in order to comply with thestatute does not indicate that the statute does not mean what itsays. Moreover, the changes required are not as drastic as GMwould lead one to believe, particularly in light of this Court'sruling that GM may make charge-backs during the statutory periodfor approval or disapproval. GM also has other contractual rightswhich it can attempt to exercise to manage recalcitrant dealers.

GM contends that charge-backs after the expiration of thestatutory period for approval or disapproval are "reasonableverification requirements" authorized by the Maine SupremeJudicial Court in Darling's v. Ford Motor Co., 719 A.2d 111,117 (Me. 1998) ("Darling's Ford II"). However, the "reasonableverification requirements" described in Darling's Ford IIreferred to the types of information that the manufacturer mayrequire the dealer to provide before paying a warrantyreimbursement claim, not to the manufacturer's verificationprocedures. Having observed the trial testimony and reviewed thetrial exhibits, the Court is confident that GM will be able toeffectively implement reasonable verification procedures withinthe confines of the sixty-day requirements. GM is, of course,permitted to review the information it has received from dealersas often as it likes, and section 1176 does not prohibit GM fromconducting audits (without corresponding charge-backs) outside ofthe statutory period for approval or disapproval of warrantyreimbursement claims. CONCLUSION

GM's motion to amend the judgment (Docket #89) is GRANTED INPART and DENIED IN PART. To the extent that GM requestsadditional clarification of its rights under section 1176, themotion is GRANTED. However, to the extent that GM seeks adeclaration that it may debit Darling's for warrantyreimbursement claims after the expiration of the statutory periodfor approval or disapproval of such claims, the motion is DENIED.


1. Before it was amended in 2003, this portion of the statuterequired the manufacturer to approve or disapprove a claim withinthirty days, and to pay the claim within thirty days of itsapproval. There was no provision as to the timeframe in which afranchisee might submit claims for reimbursement.

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