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MID-ATLANTIC TOYOTA DISTRIBUTORS v. CHARLES A. BOTT (09/26/86)

decided: September 26, 1986.

MID-ATLANTIC TOYOTA DISTRIBUTORS, INC., PETITIONER
v.
CHARLES A. BOTT, INC., RESPONDENT



Appeal from the Order of the State Board of Vehicle Manufacturers, Dealers and Salespersons, in case of Charles A. Bott, Inc. v. Mid-Atlantic Toyota Distributors, Inc., File No. 85-MV-538.

COUNSEL

Arthur Newbold, with him, Jean Wegman Burns, Dechert, Price & Rhoads, Of Counsel: J. Coleman Bean, C. Michael Deese and Brad D. Weiss, Webster, Chamberlan & Bean, for petitioner.

Robert McL. Boote, with him, Debra Klebanoff, Of Counsel: Wolf, Block, Schorr and Solis-Cohen, for respondent.

Judges Craig and Doyle, and Senior Judge Blatt, sitting as a panel of three. Opinion by Judge Doyle.

Author: Doyle

[ 101 Pa. Commw. Page 48]

Mid-Atlantic Toyota Distributors, Inc. (Appellant) appeals from an order of the State Board of Vehicle Manufacturers, Dealers and Salespersons (Board) which determined that the Board had jurisdiction over a dispute between Appellant and its franchisee, Charles A. Bott, Inc. (Appellee). Because this issue involved a controlling question of law, the Board certified the matter for immediate appeal to this Court, and permission to appeal was granted.

Appellee is a vehicle dealer licensed in Pennsylvania, and Appellant is a vehicle distributor, also licensed in Pennsylvania, but with its principal place of business in Maryland. Since 1968, the parties have maintained a Toyota Sales and Service Agreement (Agreement) under which Appellee serves as a dealer of Toyota products. On February 14, 1985, Appellant notified Appellee that this Agreement was to be terminated in sixty days, on the basis of Appellee's "weak sales/penetration performance."

On April 11, 1985, Appellee filed a complaint with the Board alleging that the proposed termination was unlawful, unfair, unprovoked, not for good cause, and not in good faith. In accordance with Section 9(c) of the Board of Vehicles Act (Act), Act of December 22, 1983, P.L. 306, as amended, 63 P.S. § 818.9(c), Appellee petitioned the Board for a hearing to determine whether such termination was for good cause and in good faith. Section 9(c) of the Act prohibits the termination of

[ 101 Pa. Commw. Page 49]

    a dealer's franchise "unfairly, without due regard to the equities of said dealer and without just provocation". Appellee's complaint also alleged other violations of the Act, specifically, Appellant's unreasonable withholding of consent to an ownership and management change, which, according to Appellee, had originally been required by Appellant, and Appellant's failure to respond to Appellee's request for consent to such ownership change within the statutorily prescribed time period. See 63 P.S. §§ 818.9(b)(3), (4) and (5).

On April 19, 1985, the Board notified Appellant that no termination would become effective until final determination of the issues before the Board. On May 10, 1985, Appellant filed a motion to dismiss asserting that the Board lacked jurisdiction to hear Appellee's claim of unlawful termination because the parties' Agreement provided that arbitration, in accordance with the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., was the exclusive remedy for determining whether or not cause existed for the termination of the Agreement. On June 21, 1985, the Board continued the hearing in order to review prehearing pleadings and memoranda filed by the parties, and on July 25, 1985, the Board issued the opinion which is the subject of this appeal.

Section 4 of the Act provides, in pertinent part, that the Board has the power and the duty to:

(1) provide for and regulate the licensing of salespersons, dealers, brokers, manufacturers, factory branches, distributors, distributor branches, factory or distributor ...


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