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Holbert's Inc. et al. v. Audi of America

May 8, 2012

HOLBERT'S INC. ET AL.
v.
AUDI OF AMERICA, INC.



The opinion of the court was delivered by: McLaughlin, J.

MEMORANDUM

The plaintiffs brought this suit for damages alleging a violation of the Pennsylvania Board of Vehicles Act ("BVA"). The defendant moves to dismiss for lack of subject matter jurisdiction. Because the plaintiffs did not comply with the BVA's statutory requirement before filing suit, the Court will grant the motion.

I. Facts as Alleged in the Complaint

The plaintiffs are Laurence and Jean Holbert and Holbert's Inc., a former Audi dealership. In December of 2009, Holbert's Inc. entered into an Asset Purchase Agreement ("APA") with Thompson Auto Group to sell the dealership to Thompson for $4,000,000. Compl. ¶¶ 9, 10. In addition to the APA, Thompson's acquisition included an agreement to lease the dealership premises owned by the individual Holberts. Id. ¶ 11. On December 4, 2009, the APA was submitted to the defendant for approval. Id. ¶ 10. On February 11, 2010, Audi notified the plaintiffs that it was exercising its Right of First Refusal under the Pennsylvania Board of Vehicles Act ("BVA"). Id. ¶ 12.

Audi refused to guarantee the lease of the dealership premises as Thompson had agreed to do. Id. ¶ 15. Believing this to be a violation of the BVA, the plaintiffs filed a Protest with the State Board of Vehicle Manufacturers, Dealers, and Salespersons ("the Board"). Id. ¶ 16. Following a hearing on June 7, 2010, the Board issued its opinion on August 6, 2010.

Id. ¶ 17. The Board found that Audi violated the provisions of the BVA governing the Right of First Refusal and ordered Audi to approve the sale to Thompson. Id. ¶ 17.

Audi filed and withdrew an appeal to the Commonwealth Court. Id. ¶¶ 18, 24. On December 9, 2010, after it filed a Praecipe for Discontinuance of the appeal, Audi approved the plaintiff's sale of the dealership to Thompson. Id. ¶ 27. That day, Thompson paid the plaintiffs the $4,000,000 purchase price and the lease of the premises commenced. Id. ¶¶ 25, 28.

The plaintiffs bring this suit for lost interest on the $4,000,000 sale price and lost rent of the dealership premises from December 10, 2009 until December 9, 2010. Id. ¶¶ 31, 34.

II. Discussion*fn1

The BVA says that "[a] dealer or distributor may not file a complaint . . . against a manufacturer or distributor based on an alleged violation of this act . . . unless the dealer or distributor serves a demand for mediation upon the manufacturer or distributor before or contemporaneous with the filing of the complaint . . . ." 63 Pa. Cons. Stat. § 818.11(a)(1). The statute does not contain any exceptions, and each plaintiff must make a mediation demand. Gabe Staino Motors, Inc. v. Volkswagen of Am., No. 99-5034, 2003 U.S. Dist. LEXIS 21092, at *13 (E.D. Pa. Nov. 13, 2003).

Unlike a non-statutory rule of procedure, "statutory exhaustion requirements deprive [the courts] of jurisdiction" over the case. Bin Lin v. Attorney General of the U.S., 543 F.3d 114, 120 (3d Cir. 2008); Metro. Life Ins. Co. v. Price, 501 F.3d 271, 278 (3d Cir. 2007).

The plaintiffs did not serve a demand for mediation before or contemporaneous with filing this complaint. The plaintiffs argue that they did not need to file a mediation demand for two reasons.

First, the plaintiffs argue that they served a mediation demand before bringing their protest to the Board in 2010, and therefore that they are not obligated by the Act to do so again. The defendant argues that the plaintiffs were required to serve a new demand letter before filing this complaint. The Court does not need to reach this issue, however, because it appears that the plaintiffs' 2010 mediation demand letter did not include "the relief sought by the dealer" in this case, as required by the statute. 63 Pa. Cons. Stat. § 818.11(a)(1).

Neither party has provided the Court with a copy of the 2010 mediation demand letter. In oral argument on May 7, 2012, both parties represented to the Court that the relief sought in the plaintiff's 2010 mediation demand letter did not include damages as a result of the delayed transaction. Because the plaintiffs seek that ...


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