A federal appeals court has dashed a former auto dealer's hope of collecting $2.39 million in damages from General Motors.
William Adkins, former owner of Palanker Chevrolet in West Babylon, N.Y., sued GM for breach of fiduciary duty in 2003. Later that year, GM removed Adkins from the dealership and bought out his stock in the store.
Adkins, who is black, acquired the dealership in 1994 through GM's minority dealer program. GM remained the store's controlling partner.
In his suit, Adkins accused GM of blocking him from taking action against employees whom he said stole from the dealership. In 2004, a federal jury sided with Adkins and awarded him $2.39 million in damages. That amount, the jury said, represented Adkins' actual and projected losses of profits. GM appealed.
This month, a federal appeals court in New York threw out the jury verdict. The court ruled there was "no cognizable theory underlying" Adkins' claim of breach of fiduciary duty.
"GM's decisions as to Adkins personally were enforced pursuant to the terms of the stockholders agreement, which Adkins does not claim was breached," the court said.
Adkins' lawyer, Richard Burton, told Automotive News that his client will continue to pursue claims against the dealership and the accounting firm that oversaw its finances.
GM spokeswoman Deborah Silverman said the company is pleased with the appeals court's decision. The court "found no evidence of conduct supporting any of Mr. Adkins' claims," Silverman said in an e-mail statement.
In 1999, the New York Department of Revenue billed Palanker Chevrolet for more than $1 million in unpaid taxes. That triggered an audit by the dealership's accounting firm that revealed irregularities in records kept by the store's treasurer.
Adkins' lawsuit alleged that the treasurer admitted stealing from the dealership, and that another employee took part in the scheme. He also alleged that the accounting firm failed to uncover the financial irregularities that helped contribute to his loss of the dealership.
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