Chrysler has won another legal victory with a former dealer who sued the company to reopen his showroom following the company's franchise cuts in 2009.
Star Chrysler Jeep in Glendale, Calif., was among 789 Chrysler dealers the automaker terminated in 2009 as part of its taxpayer-funded bankruptcy. In 2010, Star won an arbitration case for reinstatement. Chrysler sent the dealership a letter of intent just as it did with about 30 other former dealers who won their arbitrations.
Star, however, argued the terms of the letter of intent were unreasonable and sued the company. The dealer objected to terms such as Chrysler's requirement that it construct or renovate a showroom before Chrysler enters the agreement.
But Gary Feess, a federal judge in California, disagreed with Star and ruled Monday that Chrysler met its obligations.
"The undisputed facts establish that the letter issued to Star complied with the requirements of (federal law)," Feess ruled. "Star is not entitled to recover money damages ... because Star would have no rights of any sort after its sales and service agreement was extinguished in bankruptcy."
"As we have contended since the beginning of this process, Chrysler Group complied fully with the law by issuing its customary and usual letter of intent," Chrysler wrote.
In March, U.S. District Judge Sean Cox ruled that dealers who won their arbitration cases don't automatically have a right to reopen in their original locations.
Livonia Chrysler Jeep has asked Cox to amend his ruling so it can appeal his decision, arguing that it conflicts with federal law.
In 2010, Congress passed and President Barack Obama signed into law a bill that gave terminated Chrysler and General Motors dealers a chance to take their cases to arbitration. About 108 former Chrysler dealers pursued that process. Chrysler prevailed in 76 of those cases.
Three Detroit-area dealerships -- Village Chrysler-Jeep in Royal Oak, Bruce Campbell Dodge in Redford Township and Livonia Chrysler-Jeep -- won their arbitrations.
But Chrysler and several surviving dealers sued, arguing that Michigan's franchise law would permit surviving dealers to protect new business gained from consumers previously served by the terminated dealers.
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