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Ford Motor Company v. Motor Vehicle Review Board

March 28, 2003



The opinion of the court was delivered by: Presiding Justice Campbell


Plaintiff Ford Motor Company (Ford) appeals an order of the circuit court of Cook County in administrative review, affirming the decision of the defendant Motor Vehicle Review Board that Ford did not have good cause to terminate its Ford Sales and Service Agreement (Agreement) with Village Ford Sales, Inc (Village Ford).

The record on appeal discloses that in March 1984, Ford and Village Ford entered into the Agreement, which sets forth various new sales, parts sales and personnel obligations that Village Ford was required to meet as a dealer for Ford. The Agreement allowed for either party thereto to terminate the relationship under a variety of circumstances, including a failure to meet the new sales, parts sales and personnel obligations. The Agreement also provided that any protest or claim by Village Ford with respect to termination of the Agreement by Ford shall be appealed to Ford's policy board (the Policy Board) within 15 days of notice of termination as a condition precedent to Village Ford's right to pursue any other remedy under the Agreement or the law. The Agreement further provided that the Policy Board's decisions were binding on Ford, but not on Village Ford.

The Agreement also appears to have been amended from time to time. Some of these amendments appear to be amendments to the basic form Agreement that were implemented by Ford prior to the relationship with Village Ford. On at least two occasions, amendments were signed by the president of Village Ford. In other cases, Ford waived formal acceptance on the ground that the amendment worked to the benefit of Village Ford.

Ford assigned Village Ford a "primary market area" (PMA), which is a geographical grouping of census tracts designating the dealership's main sales territory. In developing PMAs for its dealerships, Ford is supposed to consider: the proximity of each tract to actual dealer locations; natural and man-made barriers that would tend to restrain customers in a tract from going elsewhere for Ford service and products, such as rivers and freeway systems; traffic flow between the tract and the dealership; sales patterns of other Ford dealers; and trading habits of people in the tract. Village Ford consistently took issue with being assigned to a PMA within the Chicago multiple point region, as all other dealerships in Will County were assigned to single point markets with less stringent sales requirements.

In 1986, Ford began encouraging Village Ford to relocate from Romeoville to the Bolingbrook area, due to expected growth in that area, including an auto mall. Ford suggested a relocation site that already had four foreign car dealerships and a Chevrolet dealership in the area; Buick and Toyota dealerships were anticipated to move into this area also. In July 1989, due in part to Ford's promises of assistance with advertising and lease payments, Village Ford relocated to Bolingbrook. This location is at an intersection with I-55, but is not visible from I-55.

In 1990, Village Ford had its best year, with 13.1% market penetration. In September 1990, the 135th Street Bridge, which spanned the Illinois River and connected the north and south portions of the PMA, was removed and never replaced. The auto mall never materialized; four of the dealerships in the area relocated. The area took on an industrial character. Retail traffic patterns shifted to developments north of I-55. Village Ford, which sold 713 new cars in 1990, sold only 353 new cars in 1998. However, in 1998 Village Ford ranked in the top 15% of total sales in the Chicago region, ranking 45th out of 322 dealerships.

Ford first notified Village Ford of its concerns regarding deficiencies in vehicle sales, parts sales and personnel in November 1992. Further letters followed in January and July 1996, January, July and October 1997, notifying Village Ford of the deficiencies and giving Village Ford an opportunity to cure them. Village Ford also corresponded with Ford during this period, seeking explanations and assistance to meet Ford's numerical goals. Village Ford also communicated its concerns regarding the designation of its PMA, its location, and the changing nature of the area. Village Ford requested relocation to a more modern facility north of I-55, but Ford denied these requests because a study commissioned by Village Ford, while noting problems with the current location, described the location as adequate.

In June 1998, Village Ford sent Ford a package of materials detailing its concerns and again requesting relocation and the opportunity to build a new facility. Ford agreed, on the condition that Village Ford enter into a limited two-year agreement with Ford under which the dealership would be sold if the sales targets were not met. Village Ford's owner declined to invest in a new facility under that condition.

On April 23, 1999, Ford sent Village Ford a notice of termination, citing below average car and truck retail shares in 1996, 1997 and 1998 as the basis for the termination. The notice also reminded Village Ford that Ford had established a Policy Board to review termination decisions and that a request for review had to be submitted in writing within 15 days of the receipt of the notice. Village Ford did not submit a request for review to the Policy Board.

Village Ford filed a notice of protest with the Motor Vehicle Review Board, stamped as received on May 10, 1999, claiming that Ford lacked good cause to terminate the Agreement. The Motor Vehicle Review Board sent notice to Ford on May 14, 1999. Following preliminary motions and hearings on the matter, a hearing officer for the Motor Vehicle Review Board issued a recommended decision in favor of Village Ford on September 29, 2000. The Motor Vehicle Review Board adopted that decision and granted Village Ford's protest on November 17, 2000.

On December 18, 2000, Ford filed a complaint for administrative review by the circuit court of Cook County. The circuit court affirmed the decision of the Motor Vehicle Review Board in an order dated June 20, ...

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