LEGAL FILE

N.J. Honda store takes another hit in point fight

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Willis Honda in Burlington, N.J., and its owner have lost another round in their long-running legal battle with Honda and a rival store over how the competing point in Hamilton, N.J., was awarded.

Last month Willis Honda's federal lawsuit accusing American Honda of breach of fiduciary duty and Hamilton Honda and its principals of racketeering and other charges was dismissed by U.S. District Judge Sandra Feuerstein in Central Islip, N.Y. The plaintiffs filed a notice of appeal on May 16.

They previously pursued administrative and judicial proceedings in New Jersey but brought the federal suit in New York, where some of the defendants live or are incorporated.

From 2000 to 2004, Willis Honda submitted four proposals to American Honda offering to relocate to the new point, the judge said. But Honda awarded it to Hamilton Honda, which listed former New York Giants linebacker Jessie Armstead as the owner of 51 percent.

Willis Honda unsuccessfully protested to the New Jersey Motor Vehicle Franchise Committee, contending the award would "seriously endanger" its viability and profits and alleging that Hamilton Honda had an undisclosed majority owner other than Armstead and that minority-ownership statutes were abused to secure the dealership. Armstead, who is black, retired from the NFL in 2004 and opened Hamilton Honda in 2009.

The franchise committee, New Jersey Appellate Division and state Supreme Court all ruled against Willis Honda.

The federal suit accused Honda of breach of fiduciary duty, negligence and bad faith and accused the other defendants of violating the Racketeer Influenced and Corrupt Organizations Act and New Jersey law. In part, it alleged that the Hamilton Honda-related defendants lied in the administrative proceedings. In addition to damages, Willis Honda sought to obtain the franchise.

In dismissing the suit against Hamilton Honda and related defendants, the judge said federal courts have no authority to invalidate state administrative and court proceedings or to award the disputed franchise to Willis Honda. As for the RICO allegations, she said Willis Honda "failed to adequately allege an open-ended pattern of racketeering" or "threat of continuing criminal activity."

"The judge got it right," said Hamilton Honda's lawyer, Francis Riley of Princeton, N.J. "She found there was no way the plaintiff under any circumstances could plead a RICO claim" against his clients and that Willis Honda and its dealer "were never entitled to the franchise,"

The judge also ruled that the factual allegations against Honda, including its franchisee selection process, had been "fully litigated" in New Jersey and couldn't be raised again.

A lawyer for Willis Honda, Eric Chase of Florham Park, N.J., said he was not authorized to discuss the case. A Honda spokesman said he couldn't discuss the case because it involves an internal matter between Honda and its dealerships.

You can reach Eric Freedman at freedma5@msu.edu.

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