Mercedes-Benz USA has beaten all claims but one in a lawsuit challenging its use of the right of first refusal to block a dealership buy/sell deal in Fresno, Calif.
The 9th U.S. Circuit Court of Appeals rejected the would-be buyers' claim that Mercedes tortuously interfered with their contract to buy the assets of what was then Asbury Fresno Imports. The court also found no basis for claims of fraudulent concealment and unfair competition.
But the court reinstated the buyers' claim for reimbursement of the expenses they incurred in negotiating the asset purchase agreement.
The dispute arose after Dwight Nelson, owner of Selma Motors in Selma, Calif., negotiated the agreement to buy Asbury Fresno Imports and applied to Mercedes for approval.
A few months later, in early 2009, the parties submitted a revised agreement to Mercedes with a floorplan financing commitment letter from Mercedes-Benz Financial. Selma Motors assigned that agreement to another Nelson company, Fresno Motors, and notified Mercedes of the change in purchasers.
Mercedes exercised its right of first refusal, and Fresno Motors and Selma Motors filed a federal lawsuit alleging that they'd spent more than $200,000 to prepare for the purchase and had lost more than $8 million because the transaction fell through. A judge dismissed the case without trial. Mercedes awarded the franchise to a different dealer.
In a decision written by Judge Robert Gettleman, the appeals court said Mercedes didn't wrongfully interfere with plaintiffs' contract to buy the dealership. It also said Mercedes had no legal duty to notify the plaintiffs it was exercising its right of first refusal, and even if there were a duty, Mercedes had provided notice.
Second, the court found no evidence Mercedes made misrepresentations about the property where the store was located and found no basis for a claim of unfair competition.
The appeals court returned the case to the lower court to consider plaintiffs' demand for reimbursement of expenses in negotiating the deal.
The plaintiffs' lawyer, Alex Stuart of San Jose, Calif., said no decision has been made on a further appeal.