Sud v. Import Motors Limited, Inc., No. K-74-118 C.A.

CourtUnited States District Courts. 6th Circuit. United States District Court (Western District Michigan)
Writing for the CourtFOX
Citation379 F. Supp. 1064
Docket NumberNo. K-74-118 C.A.
Decision Date30 April 1974
PartiesGian C. SUD and Harish C. Sud, Plaintiffs, v. IMPORT MOTORS LIMITED, INC., a Michigan Corporation, dba Import Motors, Ltd., et al., Defendants, v. Lowell BLOSSOM and David Vance, Intervenors.

379 F. Supp. 1064

Gian C. SUD and Harish C. Sud, Plaintiffs,
v.
IMPORT MOTORS LIMITED, INC., a Michigan Corporation, dba Import Motors, Ltd., et al., Defendants,
v.
Lowell BLOSSOM and David Vance, Intervenors.

No. K-74-118 C.A.

United States District Court, W. D. Michigan, S. D.

April 30, 1974.


379 F. Supp. 1065

George H. Lennon, Kalamazoo, Mich., for plaintiffs.

Henry L. Guikema, Grand Rapids, Mich., for defendants Import Motors, Limited, Inc., Import Motors, Ltd. and Import Parts Corp., and Volkswagen Battle Creek, Ltd.

H. Van Den Berg Hatch, Marshall, Mich., for remaining defendants.

Peter A. Titta, Grand Rapids, Mich., for intervenors.

ORDER AND PRELIMINARY INJUNCTION

FOX, Chief Judge.

The subject of this suit is a Volkswagen (hereafter VW) dealership, including the physical assets and good will, but more particularly including, for the purposes of this suit, the franchise to be a VW dealer in Battle Creek, Michigan. The plaintiffs, Dr. Gian C. Sud and his brother, Harish C. Sud, natives of India, allege that certain of the named defendants denied them the franchise on the basis of race and national origin, contrary to 42 U.S.C. Sec. 1981 and other federal and state statutory and constitutional provisions. Jurisdiction is properly asserted under 28 U.S.C. Sec. 1343(3) and (4).

The case is presently before the court on the plaintiffs' motion for a preliminary injunction. The course of dealing and legal relationships among the various parties are complex, and will be summarized as necessary for the purposes of this motion.

Dr. Sud and his brother Harish have been for some time permanent resident aliens of the United States. They are in the process of completing their residence requirements for naturalization as United States citizens.

Dr. Sud is the older of the two, and has been the moving force in the events leading to this suit. He holds a Ph.D. in biology from the University of Wisconsin and is currently an associate professor at Western Michigan University in Kalamazoo, Michigan. He is also principal owner or heavily involved in three multiple automobile dealerships, a VW, AMC and Jeep dealership in West Bend, Wisconsin; a VW, Datsun, and Suzuki Four-Wheel Drive dealership in Fond du Lac, Wisconsin; and a Mazda, Volvo dealership in Kalamazoo, Michigan. Dr. Sud first became an automobile dealer in Wisconsin in May of 1972, and, after some early difficulties long since overcome, he has been quite successful in each operation. Dr. Sud is also part owner of a real estate company which owns and leases business properties. Dr. Sud participates in the making of policy decisions, but ordinarily does not manage these individual enterprises on a day-to-day basis. It is important that Dr. Sud is very dark complexioned.

Harish C. Sud presently lives in Kalamazoo, and closely oversees all the Sud enterprises, including the automobile dealerships. Mr. Sud has a bachelor's degree in economics from Western Michigan University and had done graduate work in personnel management and business administration. He has been supervising the operations of one or more automobile dealerships since May 1972.

Both Dr. Sud and Harish Sud speak perfect English which does not sound noticeably "foreign" to the midwestern ear. They readily adopt and easily use the current business jargon, such as "track record."

There are three sets of defendants in this case. The first is Import Motors Limited, Inc., and a parallel organization, Import Parts Corporation (hereafter referred to collectively as Import Motors or IM), along with a recently formed dummy corporation, Volkswagen Battle Creek, Ltd. Import Motors is part of the VW distribution chain in the United States, being the wholesaler for Michigan and Indiana. Import Motors contracts with retail dealers and this contractual relationship, when established, amounts to a dealer franchise to sell VW's to the public. Import Motors has effective power to choose who will and who will not be VW franchisees in

379 F. Supp. 1066
its area, although its final selection for a particular dealership must be formally approved by Volkswagen of America. Volkswagen Battle Creek, Ltd., purchased the assets of the VW dealership in Battle Creek, Burgess Motors, Inc., on April 5, 1974, and now holds the franchise and operates the dealership. The company plans to convey the assets to Mr. Lowell Blossom and Mr. David Vance

The second set of defendants is Burgess Motors, Inc., and its owners. Burgess Motors held the VW franchise in Battle Creek from June 15, 1973, to April 5, 1974, when it conveyed its assets to Volkswagen Battle Creek, Ltd.

The third set of defendants is Mr. Lowell Blossom and Mr. David Vance. Blossom and Vance have been approved by IM to be the new permanent VW franchisees in Battle Creek, although no formal contract to this effect has been signed. These defendants claim an equitable interest in the franchise, and were admitted as intervenors in this lawsuit on motion, with the court reserving the power to realign them as plaintiffs if it appeared appropriate to do so.

Because the focus of this suit is the awarding of franchises by Import Motors, IM's method of selecting new dealers is especially important. At the earliest stages, often before a dealership is even vacant, or "open," there are informal, in the sense of unstructured, contacts between IM personnel and those interested in acquiring a dealership. Mr. David Watson is IM's Dealer Organization Manager, and usually it is his department which is initially in contact with prospective dealers. Although there apparently is no set practice, IM will on occasion actively solicit formal application from those it believes may be especially qualified. Conversely, IM will discourage application, or not inform an interested party of an opening, if it does not wish to give the party further consideration. In many cases, one or more of those who do make some formal application are rejected immediately by Mr. Watson's department. The most promising candidates are interviewed and otherwise fully reviewed by the IM staff. This staff then makes its final selection.

There was testimony from members of the IM staff, and particularly from Mr. Robert Hooker, IM Vice President, as to the qualities IM seeks in a new dealer. In general, IM tries to find a person or persons who can operate successfully and who will maintain high standards. Adequate financing is, of course, absolutely essential. In addition, IM insists upon integrity, managerial ability, and, to a somewhat lesser extent in particular cases, experience. IM prefers to have an equity owner serve as the day-to-day manager of the business. Apart from adequate financing and equity ownership, none of these factors is quantifiable, and the combination of factors varies from selection to selection, according to the requirements for the particular dealership, the available applicants, and IM's business judgment.

Since at least January 1972, Dr. Sud has been in contact with Import Motors concerning the possibility of his acquiring a large dealership in the southwestern Michigan area. Dr. Sud has talked with IM officials concerning the possibility of opening a second VW dealership in Kalamazoo; concerning Dr. Sud's supplying capital for the construction of a building for a VW dealership in Michigan City, Indiana; concerning ownership of a VW dealership in Menominee, Michigan; concerning a VW dealership in northern Indiana; concerning the ownership of the Porsche-Audi dealership in Kalamazoo; and concerning the ownership of the VW dealership in Battle Creek which is the subject of this action. Between January 1972 and the bringing of this action, Dr. Sud has often contacted IM by letter or telephone, and has had several meetings with IM personnel, concerning the possibility of his acquiring VW interests. On the basis of IM business records and the testimony, the court concludes that at all times material to this controversy,

379 F. Supp. 1067
Import Motors, through its key personnel, was fully aware of Dr. Sud's intense desire to acquire a dealership in the southwestern Michigan area

The parties focused on the VW dealerships in Menominee and Battle Creek, and the Porsche-Audi dealership in Kalamazoo as the most important subjects of negotiations, or non-negotiations, between Dr. Sud and Import Motors.

Menominee, Michigan, is a small city located on the Michigan-Wisconsin border in Michigan's upper peninsula, about 475 miles from Kalamazoo. In the late spring of 1972, Mr. Lawrence Goff, IM's Market Manager, informed Dr. Sud of the potential availability of the VW dealership in Menominee. During the summer and fall of 1972, Mr. Goff and Dr. Sud had several discussions concerning this franchise. In October, Dr. Sud informed Mr. Goff that he did not really want a dealership as small and unpromising as that in Menominee, but that he would take it as an accommodation to IM, and in order to establish a "track record" which would qualify him for a larger dealership closer to home. Although there was testimony that Dr. Sud could have had Menominee if he had wanted it, IM was apparently not prepared to implicitly obligate itself to give Dr. Sud a larger dealership in return for his taking Menominee. When Menominee finally became open in December 1972, Dr. Sud was not invited and did not in fact make formal application for the franchise.

In the winter of 1972-1973, IM began to move definitely towards the opening of a new Porsche-Audi dealership in Kalamazoo. There were several parties interested in the new dealership, but IM selected two for staff interviews. One was Dr. Sud. The other was a partnership composed of Mr. John Bylsma, who had been employed as zone manager for IM, and Mr. Louis Slavin, the past president of a paper company who had no previous experience as an automobile dealer. After the staff interview on January 30, 1973, the Bylsma-Slavin partnership was selected. Dr....

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3 practice notes
  • Duane v. Government Employees Ins. Co., Civ. No. HM-91-2654.
    • United States
    • U.S. District Court — District of Maryland
    • 7 Febrero 1992
    ...Malherbe, 438 F.Supp. at 1140 (§ 1981 prohibits "state laws that denied equal protection to aliens"); Sud v. Import Motors Ltd., Inc., 379 F.Supp. 1064, 1071 (W.D.Mich.1974) ("Sec. 1981 by its terms applies to all persons within the jurisdiction of the United States, and thus plainly embrac......
  • Bhandari v. First Nat. Bank of Commerce, No. 85-3445
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • 29 Enero 1987
    ...claim, while seeming to assume that the allegations, if true, would state a claim under Sec. 1981); Sud v. Import Motors Limited, 379 F.Supp. 1064, 1072 (W.D.Mich.1974) (Sec. 1981 prohibits private alienage and national origin 15 See Ben-Yakir v. Gaylinn Associates, Inc., 535 F.Supp. 543 (S......
  • RI Chapter, Assoc. Gen. Contractors v. Kreps, Civ. A. No. 77-0676.
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Rhode Island
    • 6 Febrero 1978
    ...410, 419-20, 68 S.Ct. 1138, 92 L.Ed. 1478 (1948); Spiess v. C. Itoh & Co., 408 F.Supp. 916 (S.D.Tex.1976); Sud v. Import Motors Ltd., 379 F.Supp. 1064, 1071-72 (W.D. Mich.1974). Contra Nat. Assn. of Government Employees v. Rumsfeld, 413 F.Supp. 1224, 1228 (D.D.C.1970) aff'd 556 F.2d 76 (D.C......
3 cases
  • Duane v. Government Employees Ins. Co., Civ. No. HM-91-2654.
    • United States
    • U.S. District Court — District of Maryland
    • 7 Febrero 1992
    ...Malherbe, 438 F.Supp. at 1140 (§ 1981 prohibits "state laws that denied equal protection to aliens"); Sud v. Import Motors Ltd., Inc., 379 F.Supp. 1064, 1071 (W.D.Mich.1974) ("Sec. 1981 by its terms applies to all persons within the jurisdiction of the United States, and thus plainly embrac......
  • Bhandari v. First Nat. Bank of Commerce, No. 85-3445
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • 29 Enero 1987
    ...claim, while seeming to assume that the allegations, if true, would state a claim under Sec. 1981); Sud v. Import Motors Limited, 379 F.Supp. 1064, 1072 (W.D.Mich.1974) (Sec. 1981 prohibits private alienage and national origin 15 See Ben-Yakir v. Gaylinn Associates, Inc., 535 F.Supp. 543 (S......
  • RI Chapter, Assoc. Gen. Contractors v. Kreps, Civ. A. No. 77-0676.
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Rhode Island
    • 6 Febrero 1978
    ...410, 419-20, 68 S.Ct. 1138, 92 L.Ed. 1478 (1948); Spiess v. C. Itoh & Co., 408 F.Supp. 916 (S.D.Tex.1976); Sud v. Import Motors Ltd., 379 F.Supp. 1064, 1071-72 (W.D. Mich.1974). Contra Nat. Assn. of Government Employees v. Rumsfeld, 413 F.Supp. 1224, 1228 (D.D.C.1970) aff'd 556 F.2d 76 (D.C......

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