Chrysler Group LLC has sued seven metro Detroit dealerships in an attempt to gain legal support for the letters of intent it has given dealers reinstated through arbitration. Dealers have challenged the terms of those letters as onerous and unfair.
Chrysler's suit, filed yesterday in U.S. District Court in Detroit, contends Michigan dealer law trumps the federal law, enacted in December, that created an arbitration process for rejected Chrysler and General Motors Co. dealers.
“Chrysler Group is simply seeking clarification of the rights and legal responsibilities of the company and affected dealers,” the automaker said in a statement.
Two of the dealerships named in the complaint — Fox Hills Chrysler-Jeep in Plymouth Township and Village Automotive Center in Royal Oak — prevailed in arbitration, then objected to the letters of intent they received.
These two stores are negotiating with Chrysler to change the terms of reinstatement.
The five other defendants are stores near Fox Hills Chrysler-Jeep and Village Automotive Center that have threatened to contest reinstatement of the two stores, the suit says.
“We think we have a strong argument that federal law trumps state law,” said lawyer Eric Bowden of Colombo & Colombo PC of Bloomfield Hills which is representing Fox Hills Chrysler-Jeep and Village Automotive Center.
The Michigan Dealer Act requires Chrysler to notify existing dealers of its intent to establish a new store within six miles and give them the right to file a legal challenge within 30 days, the automaker's suit says.
Chrysler wouldn't say definitively whether it would file similar suits in other states but has “no plans to file elsewhere at the moment,” company spokesman Michael Palese said.
Rejected Chrysler dealers who prevailed in arbitration have filed suits in Florida and Missouri challenging the letters of intent they received.
Chrysler prevailed in 70 percent of its 105 arbitration cases. The company closed 789 dealerships in bankruptcy last year.
