Court denies motion to dismiss counterclaims in transfer of dealership case

Jason Cannon

December 28, 2012

A federal court in Maryland has denied a truck manufacturer’s motion to dismiss its dealer’s counterclaims in an action regarding the unauthorized transfer of a dealership according to a report posted by the law firm of Gary Plant Moody.

In Paccar Inc. d/b/a Peterbilt Motors Company v. Elliot Wilson Capitol Trucks LLC, 2012 U.S. Dist. LEXIS 166962 (D. Md. Nov. 21, 2012), Peterbilt filed suit alleging that Elliot Wilson had materially breached its dealer agreement by selling rights to the dealership without prior approval.

Wilson responded by filing counterclaims alleging that Peterbilt was aware of the potential sale and that Peterbilt had failed to act in good faith in refusing the transfer approval. The dealer also claimed the supplier had breached the dealer agreement because it failed to make its “best efforts” to approve the proposed transfer.

The court also found plausible Wilson’s claim for breach of the dealer agreement based on Peterbilt’s failure to use its best efforts to approve the proposed transfer. The court interpreted the agreement as including an obligation that Peterbilt not unreasonably reject a proposed transfer. This meant that the supplier still could reject any proposal that it deemed unacceptable as a rational business matter.

The court found, however, that Wilson had plausibly alleged that Peterbilt improperly rejected the proposed transfer because of its insistence that the business be transferred to its preferred buyer. Furthermore, the court found that Wilson had sufficiently alleged a claim for tortious interference with contract because Peterbilt’s preferred buyer had exerted influence on Peterbilt to ignore or reject Elliot Wilson’s proposed transfers.

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