Antwerpen Dodge, Ltd. v. Herb Gordon Auto World, Inc.

• Decision Date: 01 September 1997
• Docket Number: No. 156,156
• Citation: 117 Md.App. 290,699 A.2d 1209
• Parties: ANTWERPEN DODGE, LTD., et al., v. HERB GORDON AUTO WORLD, INC. ,
• Court: Court of Special Appeals of Maryland

Page 290

117 Md.App. 290

699 A.2d 1209

ANTWERPEN DODGE, LTD., et al., v. HERB GORDON AUTO WORLD, INC.

No. 156, Sept. Term, 1997.

Court of Special Appeals of Maryland.

Sept. 8, 1997.

Price O. Gielen, Nathan D. Adler and Neuberger, Quinn, Gielen, Rubin & Gibber, P.A., Baltimore, for appellant, Antwerpen.

Clyde H. Sorrell, Douglas R.M. Nazarian and Hogan & Hartson, L.L.P., Bethesda, Robert D. Cultice and Goldstein & Manello, P.C., Boston, Massachusetts, for appellants Chrysler Corp.

Peter H. Gunst and Weiner, Astrachan, Gunst, Hillman & Allen, P.C., Baltimore, for amicus curiae, the Maryland New Car and Truck Dealers Association.

Steven M. Nemeroff and Wortman & Nemeroff, P.A., College Park, for appellee.

Submitted before WENNER and EYLER, JJ., and ROBERT F. FISCHER, J. (Retired Specially Assigned).

EYLER, Judge.

This case is an interlocutory appeal from a denial of a motion to dissolve an interlocutory injunction ¹ enjoining appellant Chrysler Corporation (Chrysler) from establishing or granting a new Dodge dealership in Clarksville, Maryland, and from negotiating with and making any commitments to appellant Antwerpen Dodge, Ltd. (Antwerpen Dodge) in connection therewith. Relying primarily upon Md.Code Ann., Transp. art. § 15-207 (1992 Repl.Vol., 1996 Supp.), the trial court held that appellee Herb Gordon Auto World, Inc. (Herb Gordon) had presented a justiciable issue regarding whether establishment of a Dodge dealership in Clarksville, eleven miles ² from Herb Gordon's Dodge dealership, violates § 15-207, and that a preliminary injunction was necessary to preserve the status quo pending trial. Given that appellee did not meet the requisites for the grant of a preliminary injunction, we shall reverse the trial court's order.

Facts

Herb Gordon is an automobile dealership operating from facilities located in the Montgomery Auto Sales Park in Silver Spring, Maryland. Although Herb Gordon's mailing address is Silver Spring, the parties acknowledge that the actual location of its Dodge dealership is Burtonsville. Herb Gordon is a substantial business enterprise selling and servicing hundreds of new and used vehicles annually from five facilities in Silver Spring. In addition to Dodge vehicles, Herb Gordon sells Oldsmobile, Nissan, Mercedes-Benz, and Volvo vehicles. In 1995 alone, Herb Gordon sold in excess of 1500 Dodge vehicles.

Herb Gordon has a Dodge Sales and Service Agreement with Chrysler, dated October 10, 1988 (Dealer Agreement). Under the Dealer Agreement, Herb Gordon is required to sell a minimum number of Dodge vehicles as set by Chrysler. The Dealer Agreement further grants Herb Gordon a non-exclusive right to purchase Dodge vehicles from Chrysler and to sell them at retail in a territory known as its "Sales Locality." The Dealer Agreement provides that Gordon's Sales Locality may be shared with other Chrysler dealers as Chrysler determines to be appropriate.

Herb Gordon's Sales Locality is described in an addendum to the Dealer Agreement entitled "Notice of Sales Locality Description." It lists approximately 55 cities and towns, not including Clarksville, Maryland. Although Dodge dealers, including Herb Gordon, are free to sell Dodge vehicles outside their designated Sales Localities, the Notice of Sales Locality provides as follows:

The above Sales Locality is hereby designated as the territory of DEALER's responsibility for the sale of [Chrysler] vehicles, vehicle parts and accessories therefor, and will be used by [Chrysler] to determine DEALER's Minimum Sales Responsibility (MSR) and to measure DEALER's sales performance in relation to such MSR, and to evaluate DEALER's performance pertaining to other matters relating to DEALER's operations.

Herb Gordon has enjoyed great success as a Dodge dealership and, over the years, has been the recipient of a number of awards from Chrysler for outstanding sales and customer service. Chrysler recognized Herb Gordon as the seventh largest Dodge sales dealership in the nation for the calendar year 1991. Until 1992, Herb Gordon was consistently the second highest volume seller of Dodge vehicles in the Washington Zone until he became the highest volume seller in 1992 and 1993.

Appellant Antwerpen Dodge also has been a successful Dodge dealer. In January 1994, Jack Antwerpen, principal of Antwerpen Dodge, entered into a buy/sell agreement with the owner of a failing Dodge dealership in Randallstown, Maryland and ultimately transformed it into a successful operation. In 1993, the Randallstown dealership sold only 172 Dodge vehicles, but in 1995 Antwerpen Dodge sold 802 vehicles at that location. Prior to Antwerpen Dodge's purchase of the Randallstown location, Chrysler made the location available to Antwerpen Dodge, Herb Gordon, and others, and informed them that, if the opportunity arose, it was Chrysler's plan eventually to relocate the Randallstown dealership to Clarksville.

Very soon after Antwerpen Dodge entered into the buy/sell agreement for the Randallstown dealership, and prior to Chrysler's official approval of the sale, Chrysler began informing Herb Gordon that it intended to support a move of Antwerpen Dodge's dealership from Randallstown to Clarksville once Chrysler determined that the Clarksville market was ready. From the very beginning, Herb Gordon expressed its opposition to such a move and indicated that if a new dealership were established in Clarksville, it should be awarded to Herb Gordon. Herb Gordon informed Chrysler that Clarksville constituted a significant portion of its market and that additional competition there would threaten its business.

Herb Gordon alleges that, at a meeting between it and Chrysler in January 1994, Chrysler informed Herb Gordon that it "would not establish a Dodge dealership in another dealer's market area, if the conditions did not warrant it, or it was detrimental to the existing Dodge dealer." Herb Gordon further alleges that, in May or early June, 1994, a Chrysler official, William Glaub, informed Herb Gordon that "Dodge in Columbia ^{3 3} is dead." Mr. Glaub denies that he ever told Herb Gordon that the Columbia location was forever dead. Mr. Glaub does admit to having informed Herb Gordon, in or about February 1994, that Chrysler was prepared to delay establishment of a dealership in Clarksville for one year.

Herb Gordon alleges that, based in part upon Chrysler's representation that "Dodge in Columbia is dead," Herb Gordon invested $750,000 to improve its facilities. Chrysler points out that the improvements to the facilities were necessary to accommodate Herb Gordon's then existing business and that Herb Gordon had retained an architect in 1993, prior to the alleged representation. Chrysler further notes that the expenditures were made by a separate corporate entity rather than by Herb Gordon, and that Herb Gordon already has realized $500,000 in additional net profits as a result of the increase of service bays.

In July 1995, Chrysler approved the establishment of a Dodge dealership in Clarksville and prepared a Letter of Intent to be issued to Antwerpen Dodge. Upon learning of the approval, Herb Gordon requested a meeting with Chrysler and a meeting was held on September 11, 1995. At that meeting, Chrysler informed Herb Gordon that it would not proceed with establishment of a dealership in Clarksville for another one year period, and after a year, it would review the market data for the area and decide whether or not to proceed with Dodge representation.

In a letter to Antwerpen Dodge, dated March 17, 1996, Chrysler informed Antwerpen Dodge that it planned to appoint a Dodge dealer in Clarksville after September 17, 1996, and that, assuming it meets all of Chrysler's criteria regarding capital, facilities, and management, Antwerpen Dodge would be the dealer in Clarksville. The letter further informed Antwerpen Dodge that "should circumstances beyond Chrysler's control, including State RMA [Relevant Market Area] legislation or litigation brought on by a third part[y], prevent the appointment of a Dodge dealer in Clarksville, the construction of a new facility prior to September 17, 1996, is done at your own risk." Jack Antwerpen, through another corporate entity, Antoy Limited Liability Company, began construction of a Dodge dealership and an adjoining Toyota dealership in Clarksville in June, 1996.

On July 15, 1996, Herb Gordon filed, in the Circuit Court for Montgomery County, a verified complaint for injunctive and other relief against Chrysler based on breach of contract, breach of implied covenant of good faith and fair dealing, breach of fiduciary duty, deceit, negligent misrepresentation, promissory estoppel, negligence, and violation of the Maryland Dealer's Act. Along with the complaint, Herb Gordon filed, pursuant to former Rule BB72, a motion for ex parte, interlocutory, and permanent injunctions. In support of its motion, Herb Gordon alleged that establishment of a Dodge dealership in Clarksville would result in a loss of 43% of its business and, ultimately, the likely "ruination" of its business. On the date suit was filed, the trial court entered an order granting an ex parte injunction enjoining Chrysler from "establishing or granting a new Dodge motor vehicle dealership in the Clarksville, Maryland area and from negotiating and making any commitments with Antwerpen Dodge in connection therewith." Thereafter, Chrysler filed a motion to dismiss and an opposition to Herb Gordon's motion for interlocutory injunction. After a hearing, the trial court denied Chrysler's motion and upheld its prior ordering granting injunctive relief. In continuing the injunction, the trial court apparently accepted Herb Gordon's representation that it would permanently lose 43% of its business if the injunction were not granted. Further, although Antwerpen Dodge was not a party at the time, the trial court considered the potential impact of an injunction upon Antwerpen. With respect to...