Kia franchise termination upheld for understaffing
Kia Motors America justifiably terminated a franchisee that repeatedly failed to staff the dealership's service and parts department adequately, the New Hampshire Supreme Court ruled.
The court upheld the automaker's right to terminate for "good cause" under its 2007 dealer sales and service agreement with Kia of Somersworth. The dealership is now closed, said Kevin Fitzgerald, a lawyer for Kia in Manchester, N.H.
Starting in March 2011, Kia notified the dealership about "perceived staffing and training deficiencies," including "failure to meet technician training requirements, to adequately staff and train personnel in its parts and service department and to meet the minimum number of technicians required to participate in Kia's Optima Hybrid Program," the court said.
In November 2014, at a time when the dealership had no service manager, service adviser or parts counter staff member, Kia gave the store 60 days to "cure the staffing breach." In February 2015, Kia sent a 90-day termination notice, saying the dealership "did not have a single position filled in its parts and service department that was required under the dealer agreement," according to the court ruling.
The New Hampshire Motor Vehicle Industry Board rejected the dealership's protest of the franchise termination. It noted that the store had four service managers during one six-month period, and said Kia management had worked with the dealership to try to correct deficiencies.
The dealership unsuccessfully argued that it couldn't hire staff "due to an unprecedented tight labor market for automobile service workers in the area," the court said. Fitzgerald told Fixed Ops Journal that other Kia franchisees in northeast New England haven't had that problem.
Dealership, not insurer, must pay arbitration award
A Texas dealership that didn't notify its insurer of an arbitration demand by its fired collision center manager is on the hook for a $334,992 arbitration award, a federal judge ruled.
U.S. District Chief Judge Lee Rosenthal rejected the argument that Central Houston Nissan wasn't required to tell Federal Insurance Co. that Chris Singleton had filed for arbitration of wrongful termination and breach of contract claims. The store had an employment practices liability policy with Federal.
According to the decision, Singleton became the body shop manager in February 2016. It said he allegedly discovered the shop was "fraudulently billing auto insurers" for repairs and was fired a day after conveying his suspicions to his supervisor. Singleton later reported his concerns to the state insurance department, said his lawyer, Brannon Robertson of Houston.
The dealership notified Federal when Singleton sued it in state court and again when he voluntarily dropped the lawsuit. However, the store failed to notify Federal about the subsequent arbitration until after the arbitrator concluded that Singleton was wrongfully fired for refusing "to participate in illegal and fraudulent activity" and awarded damages for lost earnings.
Siding with the insurer, Rosenthal said Central Houston Nissan failed to give timely notice of the arbitration demand, as Federal's policy required.
Robertson said the Texas Court of Appeals is reviewing the store's challenge to the arbitration award. Lawyers for the dealership and insurer didn't respond to requests for comment.
Negligent-repair suit against dealership nixed on appeal
An appeals court refused to reinstate a negligence suit against a Ford dealership in Charleroi, Pa., by a customer whose conversion van caught fire after undergoing warranty work.
Carl Miller claimed Davies Ford negligently repaired his 1993 Ford E150 after a 2009 recall. The recall notice warned that a speed control deactivation switch could start a fire in the engine compartment.
Five days after the repair, Miller's unattended van caught fire while the engine was off, damaging the interior and the engine compartment, the suit claimed.
Miller offered a report from a mechanic who concluded that the fire started in an area of the compartment where the switch was located. But because the mechanic didn't testify, the trial judge dismissed the case before jury deliberations could begin.
In a unanimous decision, a Pennsylvania Superior Court panel sided with Davies Ford, saying: "A defect or mechanical failure in an automobile is a case involving special skills and training which requires expert testimony to prove negligence. Whether the [switch] was correctly serviced and whether [it] malfunctioned are determinations beyond the skills and training of an ordinary layperson."
Donald McCormick, a lawyer for Davies Ford, told Fixed Ops Journal that the dealership's fire expert "determined that the part replaced by the dealer did not cause the fire, and furthermore, this part wasn't even in the area of the fire.
The investigator was of the opinion that the fire was intentionally set in another portion of the engine."
Federal judge tosses suit over seized grilles
A federal judge in Delaware dismissed a lawsuit accusing U.S. Customs and Border Protection of wrongfully seizing repair grilles, ruling that aftermarket parts importer LKQ Corp. followed the wrong procedures when it sued the Department of Homeland Security. U.S. District Judge Maryellen Noreika said her court lacks authority to review the agency's rejection of LKQ's petitions to force CBP to release the grilles.
The suit challenged more than 165 allegedly "unlawful seizures" of grilles since April 2017 at three ports: International Falls, Minn.; Long Beach, Calif.; and Savannah, Ga. It disputed CBP's claim that the grilles were counterfeit or violated automakers' trademarks.
Noreika said LKQ should have taken steps to force the agency to refer the dispute to the U.S. attorneys' offices where the grilles were seized, and then go to court for a review of applicable trademark laws.
LKQ's attorney, Barry Irwin of Chicago, said: "For nearly a year, the government was seizing LKQ's grilles and refusing to initiate forfeiture proceedings. As the result of the Delaware litigation, and more than a year after the seizures began, the government began referring the matters to the local U.S. attorneys — as it should have already done — and local U.S. attorneys finally initiated the government's first forfeiture proceedings."
Irwin said LKQ "looks forward to finally obtaining judicial review of the government's unlawful seizure of its repair grilles, most of which it has been importing without incident for more than a decade."