Federal judge says dealers cannot make Nissan supply vehicles
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[12/30/2005] PIERRE, S.D. - Nissan does not have to continue supplying its cars and trucks to a Watertown dealership that was sold without the manufacturer's approval, a federal judge has ruled.
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PIERRE, S.D. - Nissan does not have to continue supplying its cars and trucks to a Watertown dealership that was sold without the manufacturer's approval, a federal judge has ruled.
In late 2004, Krantz Inc. sold all its assets in several Watertown dealerships to Billion Southtown Inc., which for many years has operated a number of dealerships in the Sioux Falls area. The sale of Krantz's Nissan dealership was made without getting permission from Nissan North America Inc.
But under a franchise agreement between Krantz and Nissan, Krantz was required to give Nissan advance notice and a chance to evaluate any proposed transfer. Nissan had notified Krantz in 2002 that Krantz could continue to operate the Watertown dealership, but Nissan wanted eventually to leave the Watertown market and would not approve the transfer of the franchise to anyone else.
Nissan in February 2005 sent Krantz a notice terminating the franchise agreement, and the company said it would not honor a transfer of the franchise to Billion.
U.S. District Judge Charles Kornmann of Aberdeen ruled that Nissan acted in good faith and did not violate a federal law that covers dealer franchise agreements. However, Krantz violated its contracts with Nissan, so Krantz cannot claimed that Nissan breached the franchise agreement, the judge said.
"Billion and Krantz caused all of their problems, legal and otherwise," Kornmann wrote.
The judge's opinion threw out two lawsuits. One sought to make Nissan continue supplying vehicles to the Watertown dealership. The other sought to overturn a state administrative judge's decision in favor of Nissan.
Billion paid Krantz more than $3 million, and the sale did not depend on a transfer of the Nissan franchise to Billion, according to court documents. Kornmann noted that when he earlier refused to temporarily order Nissan to supply vehicles to the dealership, he "found that what has occurred here has been a series of shell games."
The judge said Billion sought a state license in late 2004 to sell Nissans in Watertown, telling the state Division of Motor Vehicles that it had a franchise agreement with Nissan. The department later let Billion sell Nissans in Watertown, with the vehicles carrying affidavits saying the vehicles actually had been sold by Krantz.
"The court very frankly takes a dim view of people and state agencies concocting materially false affidavits," Kornmann wrote.
Krantz and Billion also may have told state officials that a Nissan franchise "was on the way," the judge said.
Kornmann said he stands by his earlier ruling in the case, when he said he could not order Nissan to continue supplying vehicles to the Watertown dealership because that might amount to ordering violations of the law and the franchise agreement.
"I found that any harm to Krantz was caused by Krantz and Billion and not by Nissan. I found that parties cannot act as Krantz and Billion have acted and then claim irreparable harm," Kornmann wrote.
The judge also strongly criticized a lawyer representing Krantz and Billion for missing deadlines to file written documents in one of the lawsuits.
In late 2004, Krantz Inc. sold all its assets in several Watertown dealerships to Billion Southtown Inc., which for many years has operated a number of dealerships in the Sioux Falls area. The sale of Krantz's Nissan dealership was made without getting permission from Nissan North America Inc.
But under a franchise agreement between Krantz and Nissan, Krantz was required to give Nissan advance notice and a chance to evaluate any proposed transfer. Nissan had notified Krantz in 2002 that Krantz could continue to operate the Watertown dealership, but Nissan wanted eventually to leave the Watertown market and would not approve the transfer of the franchise to anyone else.
Nissan in February 2005 sent Krantz a notice terminating the franchise agreement, and the company said it would not honor a transfer of the franchise to Billion.
U.S. District Judge Charles Kornmann of Aberdeen ruled that Nissan acted in good faith and did not violate a federal law that covers dealer franchise agreements. However, Krantz violated its contracts with Nissan, so Krantz cannot claimed that Nissan breached the franchise agreement, the judge said.
"Billion and Krantz caused all of their problems, legal and otherwise," Kornmann wrote.
The judge's opinion threw out two lawsuits. One sought to make Nissan continue supplying vehicles to the Watertown dealership. The other sought to overturn a state administrative judge's decision in favor of Nissan.
Billion paid Krantz more than $3 million, and the sale did not depend on a transfer of the Nissan franchise to Billion, according to court documents. Kornmann noted that when he earlier refused to temporarily order Nissan to supply vehicles to the dealership, he "found that what has occurred here has been a series of shell games."
The judge said Billion sought a state license in late 2004 to sell Nissans in Watertown, telling the state Division of Motor Vehicles that it had a franchise agreement with Nissan. The department later let Billion sell Nissans in Watertown, with the vehicles carrying affidavits saying the vehicles actually had been sold by Krantz.
"The court very frankly takes a dim view of people and state agencies concocting materially false affidavits," Kornmann wrote.
Krantz and Billion also may have told state officials that a Nissan franchise "was on the way," the judge said.
Kornmann said he stands by his earlier ruling in the case, when he said he could not order Nissan to continue supplying vehicles to the Watertown dealership because that might amount to ordering violations of the law and the franchise agreement.
"I found that any harm to Krantz was caused by Krantz and Billion and not by Nissan. I found that parties cannot act as Krantz and Billion have acted and then claim irreparable harm," Kornmann wrote.
The judge also strongly criticized a lawyer representing Krantz and Billion for missing deadlines to file written documents in one of the lawsuits.
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