Car dealer wrong to sue Honda, Justices affirm

CHARLESTON – South Charleston auto dealer Lester Raines jumped the gun by suing his Honda distributor before it triggered a state law that kept dealers of the same brand at least 15 miles apart, the West Virginia Supreme Court of Appeals has decided.

The Justices on Jan. 30 affirmed Kanawha Circuit Judge Charles King, who ruled that Lester Raines Imports lacked standing to sue American Honda Motor Company.

Raines claimed a letter from American Honda, stating that another Honda dealer might open in the area, provided legal notice of possible harm.

Honda claimed it sent the letter as a courtesy, and the Justices read it that way.

"From the contents of this letter, it is impossible to ascertain where, exactly, it is anticipated that the new dealer will be located because no information is provided with respect to the new dealer's precise location," Justice Robin Davis wrote.

American Honda sent the letter on May 24, 2006, advising Raines that a new dealer might be operational in the area by December 2007.

"Currently, no exact location or specific timeline has been established," it read.

Raines wrote back that West Virginia Code provided for declaratory judgment to show good cause for establishing a dealership in the area.

"I fully intend to file such declaratory judgment action absent a representation by you that you will not establish another franchise in the South Charleston area," he wrote.

He sued American Honda the next day.

American Honda sent him a letter stating it didn't understand his objection.

"American Honda has not decided on any specific location for a new dealership in the South Charleston area," the letter stated.

"American Honda does not anticipate that the prospective new dealership in the South Charleston area will be within your relevant market area," it read.

In January 2007, American Honda sent Raines a letter informing him that a new dealer would open in Hurricane, 16.3 miles away.

Judge King granted summary judgment to American Honda in March 2007.

Meanwhile, Moses Honda of Barboursville unsuccessfully tried to sue American Honda over a letter similar to the first one Raines received.

Though the dealers lost their cases, the commotion stirred West Virginia legislators to pass a bill expanding the buffer zone to 20 miles.

Gov. Joe Manchin signed the bill nine days after King granted summary judgment.

Raines appealed King's judgment, but the Justices agreed that he lacked standing.

Davis wrote that "statutory notice is necessary only if the new or relocated dealer will be located within the preexisting dealer's 'relevant market area.'"

Statutory notice "must contain information regarding the location of the new or relocated dealer," she wrote.

"Applying these holdings to the facts of this case, it is apparent that the May 24, 2006, letter that American Honda sent to Lester Raines Imports does not constitute statutory notice," she wrote.

Mychal Schulz, of Dinsmore and Shohl in Charleston, represented American Honda.

David Barnette, Laurie Miller and Vivian Basdekis of Jackson Kelly in Charleston represented Lester Raines Imports.