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Ford Motor Company’s decision to end the Mercury brand gave rise to at least two lawsuits. In Francis Scott Key Lincoln / Mercury, Inc. v. Ford Motor Company, the Plaintiff car dealer filed a complaint in federal court in Maryland for violations of the Maryland Transportation Code, violations of the Automobile Dealers Day in Court Act, tortious interference with present and prospective economic advantage, promissory estoppel, and equitable estoppel, all based on Ford’s discontinuance of the Mercury brand.
Ford sent a notice of discontinuance of the Mercury brand to its Mercury dealers on June 2, 2010. In the notice of discontinuance, Ford offered a Mercury “resignation benefits offer” to Plaintiff of $181,026.00.
The Plaintiff contends that this amount was woefully inadequate. Under the Maryland Transportation Code, the Plaintiff argues that it is entitled to the fair value of its business as a going concern. Plaintiff also claims that because Ford discontinued Mercury and terminated its dealership in violation of the Maryland Transportation Code, it is entitled to damages including the economic loss from the investment made in a new facility which can no longer be used, the present value of the past and future increase in rent expense for the new facility, and lost profits as well as other losses incurred. The Plaintiff also alleges that Ford has failed to act in good faith towards the Mercury dealership in attempting to coerce the dealer to release all claims against Ford. Furthermore, the Plaintiff claims that in February of 2010, Ford made statements that it was committed to growing its Mercury line and in reliance on these statements the Plaintiffs invested significantly in growing its Mercury dealership.
In a separate suit, North Palm Motors, LLC v. Ford Motor Company, another dealer sued Ford for discontinuing the Mercury line, alleging violations of Florida statutes relating to the termination, cancellation, or non-renewal of a dealer’s franchise. Florida law requires that a manufacturer terminating a dealer’s franchise must pay the dealer an amount at least equal to the fair market value of the franchise. The plaintiff alleges that Ford’s offer was significantly less than the fair market value of the franchise terminated. The plaintiff seeks compensatory damages, treble damages, court costs, and attorneys’ fees. This is another example of how the evolving American car market may impact automobile dealers around the country.
Automobile dealers should recognize that state statutes offer them significant protections. Dealers facing termination should seek experienced franchise attorneys to review options.