Md. new car dealers try to guard their turf Group may seek law to block same-brand sellers in their area

September 16, 1997|By Ted Shelsby | Ted Shelsby,SUN STAFF

Maryland's new car dealers are considering seeking legislation to prevent auto manufacturers from locating another dealership that sells the same cars near them.

The move comes one week after the Court of Special Appeals ruled that a state law enacted last year does not give the dealers the protection they thought they had won from the General Assembly.

"The [Maryland New Car and Truck Dealers] Association has formed a committee to consider the possibility of new legislation" when the General Assembly convenes in January, Robert Russel, chairman of the auto retailers group, said yesterday.

The association represents 320 of the state's 350 new-car and truck dealers.

"We had hoped the law would protect dealers from manufacturers who could come in and put somebody else in our back yard," Russel said.

The court action stemmed from a lawsuit filed in Circuit Court last year by Herb Gordon Dodge in Silver Spring. The dealer sought to block Chrysler Corp. from awarding a franchise to Antwerpen Dodge, a competing dealer in nearby Clarksville.

In its filing with the Circuit Court for Montgomery County, Herb Gordon Dodge said Chrysler's decision threatened about 43 percent of its business. The dealership also claimed that Chrysler's action was a violation of the Maryland law, enacted Oct. 1, that was designed to protect existing auto dealers from manufacturers' decisions to locate a new dealer in close proximity to them.

The lower court sided with Herb Gordon Dodge and issued an injunction July 15, 1996, barring Antwerpen Dodge from selling cars in its showroom adjacent to its Toyota store.

Judge James R. Eyler of the Court of Special Appeals lifted the injunction Sept. 8. He ruled that the state's law did not give Herb Gordon Dodge the right to challenge Chrysler's decision to locate a new dealer in proximity of his operation.

He ruled that the Maryland statute was not "relative market area" legislation such as that enacted by other states.

Joseph P. Carroll, president of the state dealers group, said he was disappointed that Eyler did not interpret Maryland's law to include relative market area protection. He acknowledged, though, that the law did not specifically prohibit a manufacturer from locating a new franchise within a certain radius of an existing dealership. There were attempts to pass such legislation in 1989 and 1990, but both times the bills were withdrawn when the industry could not agree on the details of the proposed legislation.

Eyler ruled that the state law only restricted auto manufacturers if they caused "substantial financial hardship" on an existing dealer.

The judge ruled that Herb Gordon Dodge derived less than 11 percent of its sales from Clarksville. "Thus, the evidence does not support the finding that Herb Gordon is likely to lose 43 percent of its business," he wrote in a 29-page opinion.

Steven M. Nemeroff, an attorney representing Herb Gordon Dodge, said a decision has not been made on whether to file an appeal.

Price O. Gielen, a lawyer representing Antwerpen, said the dealership "is now in discussion with Chrysler about how soon we can open the Clarksville facility."

Pub Date: 9/16/97

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