Dealer wins in court but may never collect
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The opening of Tommy Manuel's new Chrysler-Jeep point in South Arlington, Texas, was delayed by a year because of a competitor's protest.
Now the state Court of Appeals says Manuel and his companies are entitled to $370,668 for lost profits because DaimlerChrysler Motors failed to use its "best efforts" to resolve the protest faster.
The three-judge appeals panel unanimously upheld the nonjury verdict in favor of Manuel, plus $126,426 in pretrial interest. It sent the case back to the trial court to award attorney fees, estimated at about $600,000.
Chrysler posted a $614,168 appeal bond in this case in March 2009 before it filed for bankruptcy protection, the Tarrant County District Court clerk's office and dealership lawyer George Haratsis of Fort Worth have confirmed.
The bond was intended to guarantee Manuel's trial award if Chrysler lost again on appeal. But it's uncertain whether Manuel will ever collect.
The bankruptcy estate may try to get the money back, said Jeffrey Ellman, an Atlanta lawyer for Old Carco Liquidation Trust, which is liquidating the remaining assets of bankrupt Chrysler.
"It's an open question who would get the bond money. We do have an interest in it," Ellman said.
He also said he's unfamiliar with the specifics of the Manuel litigation or the impact of the appellate ruling on dealer-manufacturer relationships in Texas.
The case has roots in Chrysler's Project 2000 realignment of dealerships in the Dallas-Fort Worth area.
In 1999, Manuel accepted Chrysler's offer of $15.3 million and a new franchise in South Arlington in exchange for giving up his Chrysler point in Richardson, according to the court.
The agreement acknowledged the possibility of a protest under Texas' 15-mile market area law and pledged Chrysler would "use its best efforts to litigate or settle" any challenge.
In January 2000, a Chrysler-Plymouth dealer filed an administrative protest to Manuel's new point. Before it was settled that October, Chrysler had sued the Chrysler-Plymouth dealership in federal court, and Manuel had sued the dealership in state court.
Manuel then sued Chrysler for breach of contract, alleging that the manufacturer's failure to resolve the protest quickly led to a costly delay, until February 2002, in opening the point.
In the decision, the appeals court rejected Chrysler's argument that the agreement's "best efforts" provision is too vague to enforce because it lacks measurable guidelines or goals.
The court also said Manuel presented enough evidence that Chrysler could have settled the protest earlier, noting the availability of a multimillion-dollar budget to resolve Project 2000 protests.
Chrysler Group spokesman Mike Palese said he could not comment on the case because it involves the remnants of bankrupt Chrysler, or Old Carco.
Where it stands: Appeals court says yes and orders the trial court to award attorney fees, too.
You can reach Eric Freedman at freedma5@msu.edu.
