A California jury has ordered dealership software producer Market Scan Information Systems Inc. to pay almost $3.2 million to its former Northeastern U.S. distributor for breach of contract.
However, the jury rejected John Morrison's fraud claim against the Westlake Village, Calif., company's owners, Russell and Rusty West.
Market Scan has asked Los Angeles Superior Court Judge Leon Kaplan to set aside the verdict and order a new trial. A ruling is expected by mid-January.
Morrison is the former owner of Morrison Automotive Group, which held seven dealerships in the San Fernando Valley. In 1993, he became Market Scan's exclusive California distributor of the Lease Prophet automotive leasing software package.
'In a year and a half, he brought it up from 50 to 80 customers to 350 customers around the state,' said Morrison's lawyer, Gregory Dovel of Los Angeles.
Then he moved in 1995 to New Jersey to become exclusive distributor for the Northeast. In July 1996, Market Scan terminated him.
The company's lead lawyer at trial, Aton Arbisser of Los Angeles, said, 'Morrison repudiated the contract and failed to meet his quota, and my client was justified in terminating him on that basis.'
Market Scan initiated the litigation, accusing Morrison of breach of contract and seeking about $250,000 in damages for his alleged failure to fulfill his marketing commitments, leading to canceled orders, Arbisser said. Morrison, who is now a Utah-based consultant to dealerships, counterclaimed for breach of contract and fraud.
Dovel said Market Scan's real motivation in scrapping the agreement was to move the lucrative distributorship inside the company, thus reducing the expense of commissions, and to better position the company to go public. 'They demanded he come inside for a salary and some bonuses and incentives, but he wanted to remain independent.'
At the end of the three-week trial, the jury awarded the full $3,172,090 Morrison had asked for breach of contract but cleared the Wests of the fraud allegations. The judge also threw out Morrison's claim that he had been promised a 10 percent stake in the company, Arbisser said.
The jury rejected Market Scan's claims against Morrison.
Arbisser said the jury was wrong, because Market Scan was entitled to terminate the contract and that any damages should have been limited to the balance of 1996 because the contract expired at the end of the year. If Kaplan rejects the company's motion for a new trial, it will appeal, he said.
Meanwhile, Dovel said Morrison intends to file a lawsuit for malicious prosecution, contending his reputation had been damaged by false rumors that he had lied to customers and bribed them.