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KAISER v. GMC

May 20, 1975

Paul Kaiser t/a Wamsley Pontiac
v.
General Motors Corp. (Pontiac Motor Division)


Ditter, Judge.


The opinion of the court was delivered by: DITTER

In this case, cross-motions for summary judgment require me to determine whether an automobile manufacturer's refusal to permit one of its dealers to relocate his place of business creates a valid claim for relief.

 I. Factual Background

 Plaintiff, Paul Kaiser, is the sole proprietor, chief executive, and general manager of Wamsley Pontiac in Morrisville, Bucks County, Pennsylvania. Defendant, Pontiac Motor Division of General Motors Corporation, manufactures and distributes automobiles and spare parts.

 To market its products, Pontiac has established a system of franchising dealerships that are locally owned and operated by private businessmen. Under this plan, each Pontiac dealer is granted the non-exclusive right to purchase new Pontiacs at dealer prices and to resell them in a manner which promotes maximum sales and preserves the reputation and goodwill of Pontiac.

 Defendant views its dealers not only as salesmen for new automobiles, but as the components of a comprehensive and integrated network of repair and service facilities, each segment of which promotes car sales on a nationwide basis. A continuing effort is made to match dealers with areas where sales and services are needed. Demographic and economic studies are used as a basis for providing the right number of dealers in the right places to attract sales and guarantee convenient accessibility of service franchises and parts supplies to the largest possible segment of the public.

 On March 14, 1962, the parties entered into a five-year dealer selling agreement which imposed upon plaintiff "the obligation to develop properly the sale [of Pontiac automobiles] at retail particularly in the following area: In the State of Pennsylvania: In Bucks County -- Morrisville, Fairless Hills, Yardley." In addition, the agreement stated:

 
In order to provide product representation commensurate with the goodwill attached to the name "Pontiac" and to facilitate the proper sale and servicing of Pontiac Motor vehicles, parts and accessories, Dealer will maintain a place of business satisfactory as to appearance and location, and adequate in size and layout for new motor vehicle sales operations, service operations, parts and accessories sales and used car sales, and will maintain the business hours customary in the trade.

 From Pontiac's standpoint, control over where its dealers locate is a means to avoid ruinous competition among them and to preserve the effectiveness of its nationwide service system.

 In February of 1963, defendant redefined and assigned to plaintiff what it termed its Trenton, New Jersey Metropolitan Area *fn1" to include additional contiguous areas, including the city of Morrisville, Pennsylvania. Plaintiff by letter expressly consented to this expansion, and the parties subsequently executed a supplement to the dealer selling agreement redefining and enlarging the plaintiff's area of sales and service responsibility.

 A new expressway, connecting Trenton, New Jersey with U.S. Route 1 in Pennsylvania at a point near Langhorne, Pennsylvania, was opened in 1965. The effect of this new highway was to reroute some traffic which previously had passed through Morrisville. Plaintiff contends that the change in traffic pattern resulted in a decrease in his volume of business. Nevertheless, the March, 1962, dealer selling agreement was superseded by a new one dated November 1, 1965, for a term expiring October 31, 1970. This agreement assigned to plaintiff the same primary area of responsibility and contained a provision that, absent a mutual modification of the contract, he would continue to operate at his Morrisville location.

 In the summer of 1966 plaintiff first discussed with James Buckland, then district manager for Pontiac, the possibility of relocating his dealership. Plaintiff and Buckland thereafter looked for suitable sites within the Pennsylvania portion of the Trenton Metropolitan Area. Plaintiff subsequently proposed to Pontiac that he relocate his dealership at a point near the Reedman automobile sales complex on Route 1 in Langhorne. Pontiac rejected this suggestion because (1) the contemplated site was outside the Trenton Metropolitan Area; (2) Pontiac regarded the borough of Morrisville as a point to be serviced by plaintiff; and (3) of the potential impact of the change on other Pontiac dealers in the general area.

 Throughout 1967 and 1968, plaintiff continued to express an interest in moving his dealership to the Langhorne area. He was repeatedly refused permission to do so because (1) that location was within the area of responsibility of Reedman Pontiac, a dealership operated by Joseph ("Ted") Reedman in Bristol; (2) the unique circumstances of the Reedman Chevrolet complex *fn2" had resulted in a "false and inflated market"; and (3) because Pontiac believed two dealers were needed in the Trenton Metropolitan Area.

 Plaintiff subsequently sought another site for relocation, and in the fall of 1968, proposed to move to Lincoln Point, Falls Township, Pennsylvania. Pontiac Division's Organization and Analysis departments approved this proposal, and plaintiff pursued negotiations to obtain an option on the Lincoln Point location. Although the validity of the "option" plaintiff obtained in August of 1969 is questionable, it is plain that he failed to preserve or extend whatever rights he did possess with respect to the site. *fn3" By the time Pontiac had fully approved the proposed relocation and the Trenton Metropolitan Area had been redefined by General Motors to encompass the Lincoln Point property, plaintiff notified Pontiac that he had lost his "option", and again requested permission to relocate in Langhorne. Pontiac refused for the same reasons it had proffered previously.

 In November, 1970, the parties entered into a new dealer sales and service agreement for a five year period ending October 31, 1975, and this contract is still in effect. Plaintiff continued to seek Pontiac's consent to relocate in ...


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