Dealer found liable for fraud, defamation of former manager
$2.6 million is awarded; retailer plans to appeal
A jury in Fort Worth, Texas, has ordered dealer Jerry Durant and his retail group to pay $2.6 million for falsely accusing a former general manager of accepting kickbacks.
The verdict against Durant and Jerry Durant Auto Group in Weatherford, Texas, included damages for injury to reputation, fraud, mental anguish and lost earnings.
Durant and his group have filed a motion to overturn the verdict and intend to appeal if the trial judge's final order is unfavorable, according to their lawyer, Andrew Sims of Fort Worth.
"I feel like I've been persecuted for 21/2 years, and I didn't do anything wrong except try to help a man," Durant told Automotive News this month.
According to court papers, Durant hired Andrew Anderson as used-car manager of the group's Nissan dealership in 2001. Anderson was promoted to new-car manager for Chevrolet in 2005 and to general manager for sales and marketing for Chevrolet, GMC, Buick, Nissan, Toyota and Hyundai in 2006.
He also received a seat on the group's board of directors.
In February 2011 Anderson became general manager of the group's "struggling" Hyundai and Toyota dealerships in Granbury, Texas. Anderson asserts that Durant verbally promised him 10 percent ownership interest in the two stores and their real estate.
Within 10 months, Anderson had turned the troubled dealerships around. But things fell apart that December when Durant announced plans to sell the group and, according to the suit, accused Anderson of purchasing 15 used vehicles at inflated prices without permission and of taking kickbacks from the seller.
Durant demanded that Anderson repay $30,856 in alleged losses from the transactions. Company records showed a profit from the transactions of about $16,000, according to trial evidence. But, according to Durant, "none of those cars made any money at the front end."
Anderson claimed that when he refused Durant's repayment demand, he was fired and soon found himself the subject of libelous comments. "Word spreads fast in the auto industry," the suit said, and the kickback tale was spread by a number of people at other dealerships. They were named in the suit and reached confidential settlements with Anderson.
In an interview with Automotive News, Durant offered a different version of events: "In December , I checked his used-car inventory and found he purchased cars against company policy. I questioned him. He offered to take a lie detector test. He did not pass the lie detector test.
"He came into my office, picked a fight, recorded the conversation and sued me," Durant said.
Anderson's suit sought damages for defamation, breach of contract, fraud, conspiracy and related claims. He contended that Durant trumped up the phony kickback charge out of "greed" to "deprive Anderson of his ownership interest" when the sale of the group was looming and after Anderson's work had increased the desirability of the Hyundai and Toyota stores.
The sale of the group didn't go through.
After a two-month trial, a Tarrant County District Court jury found Durant liable for fraud and defamation. It awarded Anderson 10 percent of the value of the two dealerships, but not of the real estate. It also rejected Anderson's conspiracy claim.
At the same time, the jury rejected Durant's counterclaims that Anderson had violated his fiduciary duties and had committed fraud or misrepresentation. "Basically the jury wanted to penalize me for being successful," Durant said.
Anderson's lawyer, Hugh Connor of Fort Worth, said one lesson for dealers is that "if you're going to give away an ownership interest, put it in writing so everybody is clear what the deal is."
Anderson is now a salesman at a dealership outside the Fort Worth area.
You can reach Eric Freedman at email@example.com.