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Kahlo Jeep Chrysler Dodge of Knightstown10/12/2005
oes not in any way limit the modifications DaimlerChrysler could make to only "insubstantial" modifications. The fact remains here that DaimlerChrysler's stock franchise agreement allowed it to alter the agreement's terms, without limitation and without first obtaining the written consent of the Dealers. Such power necessarily would include the ability to make either substantial or insubstantial changes to the agreement. Indiana Code Section 23-2-2.7-1(3) expressly prohibits contractual provisions "allowing" for substantial modification, not merely attempts at such a modification.
The Dealers also argue, however, that Section 23-2-2.7-1(3) should be read not only as prohibiting contractual provisions allowing substantial, unilateral modifications of franchise agreements by the franchisor without the written consent of the franchisee, but also as prohibiting any actual attempts at such modification, irrespective of what the franchise agreement provides or expressly allows. Under this theory, the relevant event for triggering the two-year statute of limitations is when an attempt at substantial modification is made, not when the contract was originally executed. The Dealers rely primarily upon Continental Basketball Association v. Ellenstein Enterprises, Inc., 669 N.E.2d 134 (Ind. 1996), in support of their argument
In Ellenstein, a franchisee claimed that the franchisor had terminated the franchise agreement unilaterally, and without good cause or in bad faith. Our supreme court first held that the Deceptive Franchise Practices Act applied to the contract. Id. at 136-37. It then noted that the Act "prohibits any provision in franchise agreements that provides for unilateral termination of a franchise without good cause or in bad faith . . . or that permits a franchisor to fail to renew a franchise without good cause or in bad faith . . . ." Id. at 139 (citing I.C. ยงยง 23-2-2.7-1(7) and (8)). Citing Section 23-2-2.7-4, the court then stated, "the Practices Act expressly provides for a cause of action against the franchisor in cases where the agreement contains a provision prohibited by the Practices Act, and/or where the franchise agreement is terminated without good cause or not renewed without good cause." Id. (emphasis added). The Dealers focus on the emphasized portion of this last sentence and extrapolate that the inclusion in a franchise contract of any prohibited provision listed in Section 23-2-2.7-1 not only is a violation in its own right, but that there is a separate violation of the Act if a franchisor engages in any conduct that parallels one of the prohibited provisions. They correctly note that Section 23-2-2.7-2 lists several types of conduct by franchisors that is expressly prohibited, as opposed to prohibited contract provisions. Termination or non-renewal without good cause is not separately listed as prohibited conduct, but only a prohibited contract provision; the same is true of substantial modifications to franchise agreements.
Ellenstein is not dispositive of the question before us. It did not mention or address the question of when a cause of action accrues for purposes of the Act's statute of limitations. It is also unclear from the opinion whether the franchise contract at issue allowed for termination or non-renewal without cause or in bad faith, or whether the franchisor allegedly attempted such termination or non-renewal in the absence of any such contract provision. Here, there was a clear contract provision allowing substantial unilateral modification that the Dealers failed to challenge for more than two years after executing the DaimlerChrysler franchise agreements. Finally, Ellenstein noted that neither the trial court nor this court had addressed the que
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