Taylor Equipment, Inc. v. John Deere Co.

98 F.3d 1028 (1996)

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Nature of the Case

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Facts

D sells its construction and industrial equipment to independent dealers who sell or lease the equipment to end users. D provides its dealers 'floor plan' financing -- the dealer must take title to a piece of equipment, but the dealer does not pay D until it sells or leases the equipment, and it pays no interest on this credit transaction for the first nine months after delivery. Midcon (P) was a long-time D dealer. D discovered that P had sold $370,000 in equipment 'out of trust' by failing to timely pay D after the sales. The dealer contract provided that D could terminate immediately for cause and that either party could terminate without cause upon one hundred twenty days written notice. In lieu of immediate termination, D allowed P to continue as a dealer for up to eighteen months while P attempted to locate a buyer. The contract further provided that it 'cannot be assigned by the Dealer without prior written consent of D.' P entered into an agreement to sell nearly all its assets to Interstate. The agreement was subject to a number of contingencies, including D's consent. D had approved Interstate's acquisitions of dealers in Montana and Des Moines. D notified Interstate that it would not approve this assignment unless Interstate enhanced its financial strength with additional equity capital. Interstate declined, and P's sale to Interstate fell through. Eventually, P sold to Midwest and another company called Swaney with substantially less favorable terms than Interstate had previously offered ($1.715 million less). P sued D in part for breach of the implied covenant of good faith and fair dealing. The jury awarded P $ 1,715,710 in compensatory damages and $381,240.55 in prejudgment interest and denied D's alternative motions for judgment as a matter of law or a new trial. D appealed.