A federal judge in California has issued a preliminary injunction in favor of Kia America Inc. and against the would-be seller and purported buyer of a dealership in Palmdale.
U.S. District Judge James Selna found a likelihood of consumer confusion if franchisee Rally Auto Group and would-be purchasers Alam Khan and his Dalia Auto Group continue to use Kia's trademark and other intellectual property.
"The preliminary injunction means that the Dalia defendants are prohibited from continuing to operate the dealership," said James Mulcahy, a franchise law expert in Irvine, Calif., who is not involved in the litigation.
Defense lawyer Victor Danhi said, "Despite the successful sale of its GMC, Cadillac, Buick, Hyundai and Genesis franchises to Dalia Auto Group, with the consent of those manufacturers — including Hyundai Motor Co., Kia's parent company — Kia withheld its consent to the sale of Rally Kia to Dalia Auto Group, a successful dealership group owned and operated by Alam Khan."
Danhi, of San Francisco, said: "Nothing in the court's ruling requires Rally Auto Group to close or otherwise suspend its Rally Kia dealership operations. Rally Auto Group continues to operate the dealership under its Kia dealer sales and service agreement."
As Automotive News reported Feb. 7, Kia America twice rejected Rally Auto Group's request to sell the assets of its store to Khan and Dalia, saying their application failed to mention Khan's "previous unsatisfactory ownership" of another Kia store.