This column summarizes selected published opinions of the Wisconsin Supreme Court (except those involving lawyer or judicial discipline, which are digested elsewhere in the magazine). Prof. Daniel D. Blinka and Prof. Thomas J. Hammer invite comments and questions about the digests. They can be reached at the Marquette University Law School, 1103 W. Wisconsin Ave., Milwaukee, WI 53233, (414) 288-7090.
Vol. 83, No. 4, April 2010
Motor Vehicle Dealers
Termination of Franchise Agreements –“Curing” Breach of Agreements Within Reasonable Time
Volvo Trucks N. Am. v. Wausau Truck Ctr. Inc., 2010 WI 15 (filed 11 March 2010)
This litigation arose under Wis. Stat. sections 218.0101-.0172, which govern motor-vehicle dealers. Volvo Trucks North America issued a termination notice to Wausau Truck Center Inc., canceling the latter’s Volvo franchise. The parties agreed and the Wisconsin Division of Hearings and Appeals (DHA) found that Wausau Truck committed a material breach of the dealer agreement. Once the DHA found material breach, it had to determine whether Wausau Truck “cured” the breach within a reasonable time after it received written notice of the breach. If the breach was cured, then Volvo lacked the “just provocation” necessary to cancel the dealer agreement. See Wis. Stat. § 218.0116(1)(i)1.b.
A critical issue before the supreme court involved a determination of the meaning of the word cured as used in the statute cited above. Volvo argued that cure means to restore matters to the status quo ante, that is, to restore matters to the way they were before the breach (see ¶ 32). Wausau Truck contended that cured should be defined according to its usage in contract law (see ¶ 35).
In a unanimous decision authored by Chief Justice Abrahamson, the supreme court concluded that Volvo’s interpretation of the word cured is not reasonable. Said the court, “A reasonable interpretation of the statutory word ‘cured’ means the breaching party is to stop the offending conduct and to substantially perform the contract” (¶ 48). The court reasoned that dealership law “relates to and governs a particular kind of contract, a dealer agreement. A dealer agreement is defined by statute as a contract between manufacturers, distributors, or importers and dealers. The statutory provision for ‘cured’ relates to a breach of a dealer agreement, to a breach of a contract. Wisconsin Stat. § 218.0116(1)(i)1.b. codifies a motor vehicle dealer’s right to ‘cure’ breaches of the dealer agreement. In this regulatory context, it would make little sense to use the ‘common and ordinary’ meaning of ‘cured,’ even if there were only one such meaning. It makes more sense to refer to terms and concepts established in contract law when we interpret the meaning of ‘cured’ in Wis. Stat. § 218.0116(1)(i)1.b., which governs breach of a contract” (¶ 37).