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C. EARL BROWN v. COMMONWEALTH PENNSYLVANIA (03/16/89)

decided: March 16, 1989.

C. EARL BROWN, INC., ISAACS GMC, INC., IRON CITY TRUCK CENTER, TORNETTA GMC TRUCK & EQUIPMENT CO., AND TRIANGLE GMC TRUCK, INC., PETITIONERS
v.
COMMONWEALTH OF PENNSYLVANIA, STATE BOARD OF VEHICLE MANUFACTURERS, DEALERS AND SALESPERSONS, RESPONDENT



Appeal from the Order of the State Board of Vehicle Manufacturers, Dealers and Salespersons in the case of In the Matter of General Motors Corporation and Volvo White Truck Corporation -- Heavy Truck Dealers, File No. 8760-0812, dated December 17, 1987.

COUNSEL

David E. Lehman, with him, Stephen A. Moore, McNees, Wallace & Nurick, for petitioners.

April L. McClaine, with her, Joyce McKeever, Chief Counsel, and Velma A. Boozer, Chief Counsel, for respondent.

James A. Mollica, Jr., Meyer, Darragh, Buckler, Bebenek & Eck, for Volvo White Truck Corporation, and intervenor, General Motors Corporation.

President Judge Crumlish, Jr., Judge Smith, and Senior Judge Narick, sitting as a panel of three. Opinion by Senior Judge Narick. Judge MacPhail did not participate in the decision in this case.

Author: Narick

[ 124 Pa. Commw. Page 206]

The two petitioners before this Court, Tornetta GMC Truck & Equipment Co. and Triangle GMC Truck, Inc. (Petitioners) were dealers whose heavy-duty truck franchises were terminated by General Motors Corporation (GMC). Petitioners each filed separate appeals with the State Board of Vehicle Manufacturers, Dealers and Salespersons (Board), which consolidated five separate appeals for hearing.*fn1 Petitioners contended that GMC had illegally

[ 124 Pa. Commw. Page 207]

    terminated their franchises under Section 9(c) of the Board of Vehicles Act (Act), Act of December 22, 1983, P.L. 306, as amended, 63 P.S. ยง 818.9(c). After several days of hearings, the Board concluded, in a twenty-three page adjudication and order filed December 17, 1987, that GMC had acted for good cause and in good faith in terminating Petitioners' franchises and denied their appeals. Petitioners have petitioned for our review of that order and GMC has intervened.*fn2

The facts as found by the Board, which Petitioners do not challenge, may be briefly summarized as follows. Petitioners each held a "Dealer Sales and Service Agreement" with GMC. Each agreement contained three addenda, covering light-, medium- and heavy-duty trucks, and each was to continue until October 31, 1990. On November 7, 1986 and December 23, 1986, GMC sent notices to all its heavy-duty truck dealers, including Petitioners, that it intended to terminate all heavy-duty truck dealer relationships effective on or before December 31, 1987.

The Board found that GMC's decision to terminate Petitioners' heavy-duty truck franchises*fn3 was prompted by the following set of circumstances. GMC, which had been a leader in the heavy truck industry, was experiencing a decline in its market share, down to 8.7 percent in 1985. It had not made sufficient investments in new

[ 124 Pa. Commw. Page 208]

    product development to allow it to maintain its market position and was faced with three options in 1985: to exit the industry, to continue its existing business or to utilize its assets to establish something new. GMC opted for the third choice and began to investigate partnership options. It eventually concluded an agreement with Volvo*fn4 for the formation of a joint venture company, Volvo GM Heavy Truck Corporation (Volvo GM), of which GMC was to have a 24 percent share. Volvo's contribution to the joint venture company was the Volvo White Truck Corporation, a competitor of GMC having 220 dealers across the U.S. GMC itself had 350 U.S. dealerships for its heavy trucks. GMC and Volvo agreed to terminate their existing dealer relationships when they entered into the joint venture agreement. They then established 240 geographical areas of ...


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