CHARLESTON – The state Supreme Court says three Ford dealerships in West Virginia met the requirements of a company incentive program.
In a March 11 opinion, the court answered a certified question from U.S. District Judge Irene C. Berger, who asked if a new motor vehicle dealer’s completion of renovations, improvements or image upgrades in accordance with the requirements of an optional franchisor program or incentive provision constitute installation of image elements “required and approved by the manufacturer” such that the 10-year grandfather clause applies and the dealership must be deemed in compliance with any subsequent incentive programs that would require replacement or alteration of those renovations, signs, or image elements.
The justices, in a 3-2 ruling, answered in the affirmative and sent the case back to federal court for further proceedings.
Wooton
| Supreme Court photo
The plaintiffs in the federal case are car dealers Thornhill Auto Group, Moses Ford and Astorg Ford of Parkersburg that sell Fords and Lincolns at dual facilities. Ford requires all dealers that sell both Ford and Lincoln branded vehicles to enter into separate sales and service agreements for each brand. In 2013, Ford offered a program that said any participating dealer was eligible to receive matching funds up to a maximum of $750,000 if it built a Trustmark facility that met certain standards.
Thornhill, Moses and Astorg each renovated their dealerships within the 10 years preceding the filing of the lawsuit. As Trustmark 3 facilities, each were allowed to sell both Ford and Lincoln brands, and each dealer received matching funds from Ford up to $750,000 for their respective remodels and their renovations complied with the specific requirements.
Meanwhile, Ford also started a Lincoln Commitment Program in 2011 that required participating dealer to offer a series of customer amenities and provided a financial offset to assist the dealers in covering the costs. In 2020, that program was changed to include a facility element whereby dealers that chose to have an exclusive Lincoln store had the opportunity to offset some of the costs incurred.
Under the 2023 Lincoln program, the three dealers, which were Trustmark 3 facilities, did not meet the program design standard and did not receive the incentive.
As Berger notes in her certification order, “Ford contests the premise that the plaintiff dealerships are entitled to the payments but does not contest the mathematical calculations in the plaintiffs’ expert report.”
According to an expert’s report, as of February 23, 2023, Thornhill suffered losses of $68,886.89, Moses suffered losses of $223,947.83 and Astorg suffered losses of $118,210.75.
The dealers and the West Virginia Automobile and Truck Dealers’ Association filed the federal lawsuit seeking a declaratory judgment and damages from Ford based on allegations the Lincoln program violated various elements of West Virginia law.
The dealers say Ford is required to provide them with the incentives related to the Lincoln program, which incentives were first offered in 2020 as a component of the pre-existing Lincoln program but were applicable, pursuant to a grandfather clause, during the 10-year period following the construction of their respective Trustmark facilities.
Ford says the state code in question does not apply because both the facility and Lincoln programs are voluntary programs and were not required as set forth in the statute.
“Contrary to Ford’s position that this case is easily resolved by ‘merely … confirming that the word “required” as used in (state code) means “required,”’ we disagree,” Chief Justice Bill Wooton wrote in the majority opinion. “The problem Ford faces is that resolution of the dispute does not depend solely on a definition of the word ‘required’ but also on the context in which the word is used within the statute.
“In this regard, the relevant prohibition is not focused on the dealer’s conduct, including the dealer’s decision to participate in an optional, voluntary incentive program; rather, the focus is on the manufacturer’s conduct.”
The majority says the dealers made significant investments when they constructed new facilities in accordance with the requirements of Ford’s Trustmark program.
“By participating in this program, the dealers installed franchisor image elements that were undeniably required and approved by Ford,” Wooton wrote. “The clear intent of the relevant statute is to protect the dealers’ investments in Ford’s required and approved franchisor image elements for a period of 10 years from the completion of the relevant installations.
Justice Beth Walker authored a dissent joined by Justice Tim Armstead.
In it, they say the majority decision “runs roughshod over the plain language of the statute.”
“Clearly the common, ordinary, and accepted meaning of the term ‘required’ as used in the statute leaves no room for the choice given to the dealers to participate in the Facility Assistance Program,” Walker wrote. “Where the language of a statute is free from ambiguity, its plain meaning is to be accepted and applied without resort to interpretation.”
Justices Haley Bunn and Charles Trump disqualified themselves from hearing the matter. Circuit Judges Kirby and Phillip Stowers, respectively, sat in for them.
Johnnie E. Brown and Geoffrey A. Cullop of Pullin Fowler Flanagan Brown & Poe in Charleston represented the dealerships and the dealers’ association, and Michael Bonasso and Jason A. Proctor of Flaherty Sensabaugh Bonasso in Charleston represented Ford locally.
West Virginia Supreme Court of Appeals case number 23-683 (U.S. District Court for the Southern District of West Virginia case number 2:22-cv-00291)