ROANOKE, Va. – A federal court has granted Volvo Trucks North America’s motion for partial summary judgment in a lawsuit over the disputed sale of truck dealerships in Maryland, West Virginia and Virginia.
Volvo sought to determine the scope of its contractual and statutory rights of first refusal over the proposed sale of Truck Enterprises Inc., a company which owns and operates commercial truck dealerships.
TEI and several of its subsidiary dealerships sell trucks from Volvo and other manufacturers. The proposed stock sale would transfer TEI’s entire business, including the portions unrelated to Volvo, to a third party.
Volvo and the dealers agree that Volvo has statutory and contractual rights of first refusal that apply to the proposed sale, but disagree on the scope of those rights, according to the memorandum decision issued on March 31 by the judge.
In an unusual case that focused on the extent and interpretation of Volvo’s right of first refusal, U.S. District Court Judge Elizabeth Dillon ruled that TEI must apprise Volvo of the value of its assets before moving forward with its proposed sale to Transport Equipment Company Inc.
TEI argued that right of refusal did not require it to separate Volvo from the rest of the anticipated sale, and instead obliged Volvo to stand in the shoes of Transport Equipment Company and acquire all of TEI at the negotiated price.
Volvo filed suit in 2016. TEI responded by seeking summary judgment plus damages for Volvo’s delaying the sale to Transport Equipment Company.
“A right of first refusal does not function for the benefit of manufacturers—the holders of the right—if dealers can freely bundle encumbered property with unencumbered property and force a manufacturer to buy the whole package or waive its right,” Dillon wrote in her decision.
In addition to denying TEI’s motion for summary judgment, the judge ruled that the sale proposal between TEI and Transport Equipment Company must include the price for Volvo’s assets, at which time Volvo’s period for deciding whether to exercise its right of first refusal will commence.
Volvo is represented by Billy Martin Donley, David Ray Jarrett and Elizabeth Anne Scully of Baker & Hostetler
TEI is represented by Mark Bowman Callahan of Clark & Bradshaw; and Michael G. Charapp and Brad Darin Weiss of Charapp & Weiss.
U.S. District Court for the Western District of Virginia case number: 7:16-cv-00025