Modification Law Case Study

In Beck, the Court of Appeals interpreted New York vehicle and Traffic Law (NYVTL) 463(2)(ff)(“the Modification Law”) to provide a dealer with a private right of action to “challenge a modification and places on a franchisor the burden of proving that such modification is fair and not prohibited.” 27 N.Y. 3d at 393. In furtherance of the legislative intent, to counter the unequal will of the manufacturer, the Modification Law contemplates legal action prior to the cause of the negative consequences of the modification. In contradiction to the Beck decision (interpreting the Act in favor of a dealer’s challenge), the Appellate Division ruling ignored the statutory right recognized by this Court and instead, turned that legal premise upside …show more content…
Evans’ Complaint asserted an injunctive and declaratory relief action for GM’s violation of the Modification Law after Evans became aware, through GM, that its APR would be modified when GM approved another dealer’s relocation into Baldwinsville, New York -- the same village and zip code in which Evans operates. As this Court confirmed in Beck, the purpose of the Modification Law is to give a dealer the right to challenge a modification. Recognizing that the legislature’s intent was to abrogate common law contract principles, the Beck court reasoned that the Modification law was enacted to prevent the manufacturer’s circumvention of the Act by “reserving the right to change franchise terms at will, even where a change results in significant adverse affects on the dealer.” Beck, 27 N.Y.3d at 396. The Appellate Division decision allows GM to do that which this Court recently found contrary to the legislature’s purpose in enacting the Modification Law. GM notified Evans of the negative APR modification that would occur as a result of GM’s approval of another dealer’s relocation. GM’s two prior denials of the proposed relocation, based on GM’s two commissioned market studies, confirmed the negative consequences to Evans and the Syracuse dealer network that would result from GM’s approval of the relocation. Despite GM’s admission that the APR change was a “modification,” and GM’s knowledge of the resulting negative consequences to its dealers, including Evans, the Appellate Division relied upon the “in writing” language of the Modification Law to reverse the summary judgment to Evans. Further, the Appellate Division found that GM did not have to notify Evans “in