A Toyota program to establish more black-owned dealerships has hit a legal snag.
The former general manager of Lexus of Modesto, Calif., filed a suit in Superior Court in Stanislauscq County seeking to reverse the sale of the store to a black dealer.
In the complaint, David Hupart, who is white, said Ed Fitzpatrick was allowed to purchase the dealership because he is black. 'I was told Lexus was on a minority push to place an African-American within the position of an owner/operator,' Hupart said in the suit.
In January, Hupart alleges that his investment group, KLH Investments, signed an agreement with owner Lynn Stinson to purchase the dealership for $1.5 million.
But on May 8, Hupart said Toyota Motor Sales U.S.A. Inc. exercised its right of first refusal, a clause in the franchise agreement that gives Lexus' parent company the right to match the purchase offer.
Toyota assigned the right to purchase the dealership to Fitzpatrick, who owns Puget Sound Chrysler-Plymouth and Puget Sound Dodge, both in Renton, Wash.
Hupart told the court that KLH was unaware that Toyota had first refusal rights. He said in the suit, filed June 10, that Stinson assured KLH in the purchase agreement that he had sole power to complete the sale.
Further, Hupart contends that Lexus violated its own franchise contract when it missed the 30-day deadline to provide a matching offer.
Toyota spokesman Robert Wade said Lexus, indeed, exercised its contractual right of first refusal and the dealership was sold to Fitzpatrick.
But he said, 'Ed Fitzpatrick was the best dealer candidate for the Modesto Lexus point. Any claim that he was selected solely on the basis of his ethnic background is absurd.'
Lawrence Niermeyer, Hupart's attorney, replied: 'Even in their own legal documents they have admitted that this decision was based on their diversification plan of Toyota.'
Toyota announced Fitzpatrick's acquisition of the dealership as part of its new diversity program. Three other blacks also were granted dealerships.
Niermeyer also claimed that Fitzpatrick does not meet Lexus' criteria for being an owner/operator.
'At least one person has to be a 25 percent (equity holder) and has to be on the premises,' he said. 'Mr. Fitzpatrick lives in Seattle. He's not here.'