Kia dealer: Judge missed legislators' intent
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DETROIT -- A federal judge in Detroit has rebuffed a suburban Kia dealership's challenge to a proposed new point 7 miles from its store.
U.S. District Judge Arthur Tarnow said Glassman Automotive Group is bound by the 6-mile relevant market area in effect when the dealer signed the sales and service agreement with Kia, even though Michigan's dealer law was later amended to allow challenges to new points within a 9-mile market area.
The store, which does business as Glassman Kia in Southfield, Mich., will appeal, its dealer principal says.
At the time of the 1998 sales and service agreement, an "anti-encroachment" provision allowed existing dealers to protest new or relocated points within 6 miles. An amendment that took effect on Aug. 4, 2010, extended the relevant market area definition to 9 miles.
Soon after, Kia Motors America Inc. verbally told Glassman of plans to establish a point in Troy, Mich., 7 miles from the Southfield store. Kia didn't send a written notice, and Glassman rejected Kia's request to waive the right to object.
Kia then sought a court ruling on whether the 2010 legislative amendment applies to the dispute.
In his decision, Tarnow held that the amendment doesn't apply because the legislature didn't make it retroactive. He also said Glassman's sales and service agreement clearly allows Kia to alter or adjust its relevant market area. As a result, Kia was not required to notify Glassman formally that it planned to authorize a new store. Nor would adding the new point violate Glassman's legal or contractual rights, he said.
Kia spokesman James Hope declined to say whether Kia has awarded the proposed franchise or what its timetable is to do so. "While we do not comment on market plans, Kia Motors America is pleased with the recent federal court decision in Detroit," he said.
Dealer principal George Glassman said he is appealing Tarnow's ruling because it conflicts with the legislature's intent. "The whole reason was to protect existing dealers. Everybody understood that," he said, noting that dealer associations supported the 9-mile relevant market area. "The legislature reacted to dealers looking for more protection, and it was consistent with what General Motors and Chrysler were saying during their bankruptcies: There are too many dealers too close together."
Glassman said Kia hasn't awarded the Troy point pending an appeal. "I have no problems" with a new point, he said, "as long as it's 9.1 miles from my existing store."
Where it stands: Federal judge says no; dealer says he'll appeal.
You can reach Eric Freedman at freedma5@msu.edu.
