Gary Pearson, who is black, was part owner and manager of Fort Walton Beach Lincoln-Mercury Inc. until his termination in 1991. He sued Ford Motor Co. in U.S. District Court in Pensacola, alleging that Ford relocated the dealership to a poor site in an attempt to ensure its failure. He also alleged that Ford breached his contract and committed fraud in interfering with the business.
The automaker's dealer development plan assists minorities in obtaining franchises by establishing a company-owned dealership, then hiring a minority as a dealer candidate with the potential to become the franchise holder.
Pearson signed a dealer development contract with Ford on July 12, 1983. Six days later, Ford formed Fort Walton Beach Lincoln-Mercury Inc.
Ford supplied $320,000 in capital and Pearson $80,000; Ford received 1,600 shares of convertible preferred stock with voting rights. Pearson received 800 shares of non-voting common stock with additional purchase options from his dealership profits.
The dealership was profitable in 1984-86, until Ford and three Ford-appointed directors decided to relocate it, contends Steven Bauman, an attorney for Pearson.
According to Bauman, Pearson opposed the move to what he saw as a poor site. After six months, the dealership began to lose money in the new location. Pearson lost his entire investment.
U.S. District Court Judge Roger Vinson ruled this fall that Pearson was excluded from the definition of 'dealer' within the Automobile Dealers Day-in-Court Act because the dealership, not Pearson, signed the franchise agreement.
Ford denied Pearson's other allegations, said John Fleming, an attorney for Ford. Even if Pearson had standing as a dealer, the court ruled Ford didn't engage in 'coercion' or 'intimidation,' Fleming said.
Larry Brown, chairman of the National Association of Minority Automobile Dealers, says the case is a barometer of dealer development problems nationally.
'Although Ford prevailed in this case, the mere fact a suit was filed indicates problems still exist concerning minority dealers with misunderstandings and false promises,' Brown said. 'Auto manufacturers and other corporations that engage in franchising need to do a better job to minimize the number of dealer terminations and broken dreams.'
- Ann Therese Darin
Dodge dealer settles
sales contract disputes
A North East, Pa., Dodge dealer has agreed to compensate customers that dealership personnel overcharged to process new-vehicle sales contracts.
The compensation will settle a complaint by the Pennsylvania Attorney General.
The state also levied a $7,500 civil penalty on the dealership and assessed Mackay-Swift Dodge Inc. $7,500 for investigative costs, as part of the settlement.
Jess Harvey, attorney in charge of the state Bureau of Consumer Protection at the Erie, Pa., regional office, says Mackay-Swift Dodge charged $75 to process the sales contracts. The state only allows a $40 maximum charge.
The settlement is retroctive to January 1992 and involves at least 1,300 customers, Harvey says.
- Kathy Jackson
Jury clears Nissan
in shoulder belt death
A federal court jury in Tennessee has ruled that Nissan is not at fault in the death of a 4-year-old who died after an accident when an automatic shoulder belt cut off the oxygen supply to her brain.
Tracy and Janet Trotter sued Nissan Motor Co. Ltd. and Nissan Motor Corp. in U.S.A. for medical and funeral expenses plus compensation for wrongful death and mental anguish.
April Trotter died after her mother ran a 1991 Stanza off the road and hit a tree. The force of the impact threw April into the shoulder belt, said Randolph Bibb, an attorney for Nissan.
The girl's trachea was crushed, which cut off the flow of oxygen to her brain, according to the complaint filed in U.S. District Court for the Eastern District of Tennessee in Knoxville. She died after three days on a life support system, Bibb said.
The plaintiffs argued that the motorized shoulder belt should have been designed to better fit their daughter and that the manufacturer did not adequately warn them against the danger of children using the shoulder restraint.
Nissan said the injuries were due to the accident occurring on a hillside and not the shoulder belt's construction. According to Bibb, the car was on a 25-degree angle during impact, which placed the belt at a higher position on April's neck than its position during normal driving.
Paul Gillenwater, the Trotters' attorney, said no appeal is planned, but added: 'I think we proved that there is a need in the automobile manufacturers' community to take a look at how they design seat belts.'
- William DeGenaro