The Rhode Island Motor Vehicle Dealers License and Hearing Board has authority to decide a termination-related dispute between a franchisee and a manufacturer, according to a federal magistrate in Providence.
The magistrate ruled Nissan Motor Corp. U.S.A. can't move the administrative complaint filed by Nissan of Smithfield Inc. from the state oversight board to federal court.
Magistrate Judge Robert Lovegreen said Nissan threatened last October to terminate the franchise as of January 1998, alleging that the dealership falsified sales records. The dealer then filed a complaint with the state board to block the termination.
Nissan unsuccessfully challenged the board's jurisdiction to handle the complaint and moved to transfer the complaint to federal court.
In a decision that Nissan is appealing to U.S. District Judge Ronald Lagueux, Lovegreen said the case belongs before the board because it involves a breach-of-contract action governed by state law.
He found no federal interest in having the dispute resolved in federal court, saying, 'The state has demonstrated an interest in governing the business relations of automobile manufacturers and dealers by enacting laws specifically governing them and by establishing the board as a forum for many of their disputes.'
According to Nissan's lawyer, Gerald De Maria of Providence, a former Nissan of Smithfield sales manager 'was not totally honest and was seeking to get benefits such as free trips by reporting enhanced sales. The dealer acknowledged some lapse in supervision,' and the problem continued 'even after it was brought to their attention.'
Nissan 'wants to terminate and get another dealer in,' De Maria said.
However, Nissan of Smithfield attorney John Biafore of Providence said the dealership, rated one of the top 50 in the nation, disputes the allegations of wrongdoing.
A restraining order blocking the termination is in effect while the dealership's administrative complaint is pending, he said. Meanwhile, Nissan has filed a separate federal suit against the dealership to allow the termination, but that case is on hold while the administrative action is open, he said.
'Both parties are still doing business with each other,' Biafore said. 'Hopefully we can resolve this amicably.'