Bergstrom resolves clash with Chrysler over Fiat points in Wis.
Bergstrom Corp., Wisconsin's largest auto retailer, has settled its dispute with Chrysler Group over allocation of Fiat points in the state after its lawsuit against the automaker failed.
John Hogerty, Bergstrom Corp. general counsel, said the parties have reached "an amicable settlement that both sides are happy with."
He said the settlement is confidential but that Bergstrom "may operate a new Fiat store in the future." Bergstrom and Chrysler "continue to have a close relationship," he added.
Bergstrom had sued Chrysler in federal court charging that the automaker had violated a commitment to award Bergstrom near exclusivity for Fiat points in Wisconsin. It also claimed that Chrysler had acted in bad faith by failing to properly support and supply the first Fiat store in Wisconsin, opened by Bergstrom in Milwaukee.
But U.S. District Judge William Griesbach, in dismissing the suit, said the Milwaukee dealership, Bergstrom Fiat, simply got tangled up in an investment gamble and Chrysler's botched relaunch of the Fiat brand in the United States.
"We must remember that businesses, and particularly new business ventures such as car dealerships selling new lines, are inherently risky undertakings," the judge said. "They are fraught with uncertainty not just in the consumer marketplace but on the manufacturing side as well."
After Chrysler awarded the Milwaukee point to Bergstrom, it gave another dealer the second Wisconsin point, in Kenosha. A Fiat representative then made verbal commitments that Bergstrom would have the right of first refusal for any other prospective points in the state, according to the lawsuit.
Bergstrom spent more than $800,000 to remodel the Milwaukee store, which was ready to open in January 2011. But Fiat didn't ship vehicles until March, and the overall reintroduction of the brand proved "tepid," the judge said.
When Bergstrom discovered Chrysler's plan to authorize a dealership in Madison, it sued for bad faith, unconscionable conduct, breach of contract and related claims, alleging more than $1 million in losses.
In dismissing the case, the judge found no evidence that "Chrysler acted with some sort of intentional or reckless disregard of the Bergstrom dealership in particular. Instead, the picture that emerges is one of a universal failure to support the new Fiat launch throughout the country."
He continued: "It could be called 'business negligence,' perhaps, but Chrysler's actions were not directed at intentionally harming Bergstrom Fiat."
Also, he said, the dealership agreement was "unmistakably clear as to its non-exclusivity" because it gave Chrysler the right to establish additional dealers anywhere.
"It is simply not plausible that the CEO of the state's largest dealership would believe he had an oral promise that his parent company would have an exclusive right to sell cars in the state at the same time he signed a dealership agreement while represented by counsel indicating that the Fiat dealership was not exclusive," the judge said.
A Chrysler spokesman said Chrysler now has a letter of intent with another candidate for the store in Madison.
The Bergstrom group of Neenah, Wis., ranked No. 59 on Automotive News' list of the top 125 dealership groups in the United States with retail sales of 9,622 new vehicles in 2011. It had 23 stores that year.
Outcome: Federal judge says no, dismissing the retailer's claim. The parties have settled.
You can reach Eric Freedman at email@example.com.