A Coraopolis, Pa., dealer who alleges that DaimlerChrysler Corp. did him wrong by authorizing a competing "Alpha" dealership to open about 5 miles away, has lost a second round in his legal battle for damages. An Alpha dealership sells Chrysler, Dodge and Jeep vehicles under one roof.
The Third Circuit U.S. Court of Appeals unanimously refused to reinstate fraud, breach of contract and Automobile Dealers' Day in Court Act claims in a lawsuit by William Cutrone and his Chrysler-Jeep West store.
Cutrone became a Chrysler and Plymouth dealer in 1990, the court said. In 1999, he acquired a local Jeep franchise for about $2 million and moved it into his store. The suit alleged that DaimlerChrysler acted in bad faith by pressuring him to buy the franchise in light of plans to discontinue the Plymouth line.
The suit claimed that DaimlerChrysler assured Cutrone that the Jeep franchise would replace his lost Plymouth business and "eliminate competition" from his market area. However, a DaimlerChrysler policy change in 1999 allowed the creation of Alpha dealerships that would be allowed to sell Dodge, Chrysler and Jeep vehicles under the same roof.
One such new dealership was located in nearby Robinson Township.
"I was told that was my territory," Cutrone told Automotive News. But 90 days after acquiring the Jeep franchise, Cutrone said, he attended a meeting at the Chrysler zone office in Pittsburgh, where he learned about the new competitor.
"It has had a dramatic impact on my dealership, to say the least," he said.
A lower-court judge dismissed the suit without trial.
In unanimously upholding that decision, a three-member appeals court panel found no evidence of "coercion or intimidation or any activity on the part of DaimlerChrysler" that would prove lack of good faith under the federal dealer law.
The panel also rejected the fraud allegation based on a new franchise agreement the two sides negotiated in 2000, which was after the allegedly fraudulent representations were made.
Finally, the panel said that "sales locality" under the franchise agreement is nonexclusive and that the plaintiffs failed to offer proof of any specific contract violations.
In a statement, DaimlerChrysler spokesman Michael Palese said the company declined to comment because the period for a possible further appeal was still open.
Plaintiff Cutrone said there will be no further appeal.