STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CHRYSLER CORPORATION, )

)

Petitioner, )

)

vs. ) CASE NO. 90-6014

) LAKE CHRYSLER PLYMOUTH DODGE, INC., ) CLARENCE H. CURBOW and JOSEPH H. NOLETTE, )

)

Respondent. )

)

RECOMMENDED ORDER

The final hearing in the above-styled matter was heard pursuant to notice by Stephen F. Dean, assigned Hearing Officer of the Division of Administrative Hearings, on February 1, 1991, in Tallahassee, Florida.

APPEARANCES

FOR PETITIONER: Dean Bunch, Esq.

RUMBERGER, KIRK, ET AFL.

106 E. College Street Suite 700 Tallahassee, FL 32301

FOR RESPONDENTS, Lawrence J. Semento, Esq. LAKE CHRYSLER STONE & SEMENTO

PLYMOUTH DODGE, P.O. Drawer 2048

INC., and Eustis, FL 32727 CLARENCE H. CURBOW:

FOR RESPONDENT, J. Robert Duggan, Esq. JOSEPH H. NOLETTE: P.O. Box 490268

Leesburg, FL 34749 STATEMENT OF THE ISSUES

The issue in this case is whether Respondent, Joseph H. Nolette, fails to meet Chrysler standards for customer satisfaction and whether this failure is a basis for denying the proposed transfer.

PRELIMINARY STATEMENT

On July 26, 1990, Respondents, Lake Chrysler Plymouth Dodge, Inc., a Florida corporation, and Clarence H. Curbow (hereinafter collectively referred to as "Lake"), filed an intent to sell said dealership to Respondent, Joseph H. Nolette (hereinafter referred to as "Nolette").

On September 13, 1991, the Petitioner filed a verified complaint with the Department of Highway Safety and Motor Vehicles (hereinafter referred to as "Department") rejecting the proposed transfer between Lake and Nolette.

The Petitioner was also informed that the proposal included relocation of the dealership from the current location to 710 South Bay Street, Eustis, Florida. The Petitioner moved to dismiss that portion of the matter related to relocation of the dealership. By Order dated December 19, 1990, that portion of the complaint relating to the approval of the change of location was dismissed.

The only matters before the Division of Administrative Hearings are those related to the change of ownership. The Petitioner's basis for opposing the proposal is the failure of Nolette, a Jeep Eagle dealer (another Chrysler subsidiary), to meet existing customer satisfaction standards for Chrysler dealers.

The Petitioner's agreements with its dealers require them to maintain certain objective customer satisfaction standards. The Petitioner asserts its standards are reasonable; Nolette failed to meet those standards; and the Petitioner has rejected other proposed transfers for the acquiring dealer's failure to meet those standards.

Only the Petitioner appeared at the hearing. The Petitioner called one witness, John R. I'Anson, and introduced four (4) exhibits.

Although all parties received notice, only the Petitioner appeared at the final hearing. Counsel for the Respondents filed pleadings and participated in a telephone conference hearing on the Petitioner's Motion to Dismiss. Only the Petitioner filed proposed findings of fact, which were read, considered and adopted.

FINDINGS OF FACT

1. On July 26, 1990, Lake filed an intent to sell said dealership to Nolette.

   
   

2. On September 13, 1991, the Petitioner filed a verified complaint with the Department rejecting the proposed transfer between Lake and Nolette.

   
   

3. The Petitioner was also informed that the proposal included relocation of the dealership from its current location to 710 South Bay Street, Eustis, Florida. The Petitioner moved to dismiss that portion of the matter related to relocation of the dealership. By Order dated December 19, 1990, that portion of the complaint relating to the approval of the change of location was dismissed.

   
   

4. The only matters before the Division of Administrative Hearings are those related to the change of ownership. The Petitioner's basis for opposing the proposal is the failure of Nolette, a Jeep Eagle dealer (another Chrysler subsidiary), to meet existing customer satisfaction standards for Chrysler dealers.

   
   

5. The Petitioner's agreements with its dealers require them to maintain certain objective customer satisfaction standards. The Petitioner asserts its standards are reasonable; Nolette failed to meet those standards; and the Petitioner has rejected other proposed transfers for the acquiring dealer's failure to meet those standards.

6. The Petitioner markets Chrysler, Plymouth, Dodge, and Dodge Trucks, which are the line-makes sold by Lake. (TR-7). Nolette, the proposed purchaser of Lake, is the current owner and operator of Plaza Jeep Eagle, located in Lake County, Florida. (TR-8; EX-2, pg. 1).

   
   

7. Jeep was manufactured by American Motors. The Petitioner purchased American Motors and entered into uniform dealer agreements with American Motors' Jeep and Eagle dealers, including Plaza Jeep Eagle. (TR-9; EX-2).

   
   

8. Upon entering into the agreement with Plaza Jeep Eagle, the Petitioner, through its subsidiary, American Motor Sales Corporation, relied "on the active, substantial and continuing personal participation in the management of Dealer's organization by Joseph H. Nolette". (EX-2, pg. 1, paragraph 2).

   
   

9. As a part of the Jeep Eagle sales agreement, Nolette agreed, in paragraph 11B, on page 4, as follows:

   
   

   Dealer shall at all times during this agreement meet its minimum service satisfaction requirements by maintaining a rating on American Motors Sales Corporations' Customer Satisfaction Index, Prep-It-Right and Deliver-It-Right evaluations, as determined by American Motors Sales Corporation from time to time based upon surveys conducted of the dealer's customers, which is equal to or greater than the average Customer Satisfaction Index, Prep-It-Right and Deliver-It-Right ratings for the National sales group levels as those groups are determined by AMSC from time to time in which the dealer is included. (emphasis supplied).

   
   

10. The sales group referred to in the dealer agreement are determined by the sales volume of the dealership so that similar size dealers may be compared. (TR-11).

    
    

11. The system by which dealers are measured is explained to the dealer through booklets detailing the operation of the surveys and their results. (EX- 3).

    
    

12. Customer satisfaction is sampled by questionnaires to the dealer's customers. Only questions relating to the operation of the dealership are used to assess the dealership, including courtesy of dealership personnel, convenience of scheduling, vehicle ready when promised, work done right the first time, the availability of parts, explanation of service, repairs, charges, and service and maintenance work after the sale. (TR-30). Other questions dealing with the vehicle itself, such as "Would you buy another vehicle from Chrysler Corporation?", are asked; however, the dealer is not scored on those questions. (TR-30).

    
    

13. Nolette's operation at Plaza Jeep Eagle does not comply with the standards set out in its dealer agreement for Customer Satisfaction Index (hereinafter referred to as the Prep-It-Right, and the Deliver-It-Right standards. (TR-13).

14. In the CSI survey, Plaza Jeep Eagle scored a 2.70 on a 0 to 4 scale, compared to 3.40 for similar dealers throughout the nation ("National Sales Group") for the twelve (12) month period ending June of 1989. (EX-4, pg. 6). Utilizing other standards to review Plaza Jeep Eagle's performance, similar results appear. Plaza Jeep Eagle is also substantially below the national average for all dealers (3.12); the average for dealers in the Orlando zone (3.00); the average for the Orlando zone for Similarly-sized dealers ("Zone Sales Group")(2.83); and for all dealers in the central Florida district near Plaza Jeep Eagle (3.19).

    
    

15. Since June of 1989, Plaza Jeep Eagle's cumulative twelve (12) month average score has decreased, both in absolute terms and as a percentage of the National Sales Group standard, as follows:

    
    

    	6/89	12/89	6/90
    Plaza Jeep Eagle	2.70	2.63	2.29
    National Sales Group	3.40	3.40	3.38
    Plaza, as a percentage of National Sales Group	79%	77%	68%

    
    

16. Similarly, Plaza Jeep Eagle is consistently below other measures of CSI performance which, although not contractually mandated for comparison, demonstrate the reasonableness of the National Sales Group standard, as follows:

    
    

    	6/89	12/89	6/90
    Plaza Jeep Eagle	2.70	2.63	2.29
    National Average	3.12	3.15	3.14
    Orlando Zone Average	3.00	3.02	3.01
    Orlando Zone Sales Group	2.83	3.04	2.95
    Central Florida District
    Average	3.19	3.12	3.12

    
    

17. With regard to the Prep-It-Right and Deliver-It-Right questions of consumers, a consistent and substantially lower percentage of buyers were satisfied with Plaza Jeep Eagle than with the national group of similarly-sized dealers.

    
    

18. For the period ending in Juice of 1989, 71% of Plaza Jeep Eagle's customers were satisfied with the preparation of their vehicle and 71% with the delivery of the vehicle, compared to 97% for both measures in the National Sales Group. In December of 1989, Plaza Jeep Eagle's percentage of satisfied customers was 75% for both preparation and delivery, compared to 96% on both measures in the national group. For June of 1990, Plaza Jeep Eagle's percentage of satisfied customers was 71% for preparation, compared to 97% for the national group, and 77% for delivery, compared to 96%.

    
    

19. The Petitioner has established written, reasonable, and uniformly- applied standards with respect to performance of a dealership. These standards are published in the dealer sales and service agreements and related documents concerning a dealer's obligation with respect to customer satisfaction.

    
    

20. The Petitioner has rejected other proposed applicants because of their failure to meet such standards. (TR- 42)

    CONCLUSIONS OF LAW

    
    

21. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding, pursuant to Section 120.57(1), Florida Statutes.

    
    

22. Section 320.643, Florida Statutes, governs proposals for the purchase and sale of motor vehicle dealerships. It requires the dealer to notify the manufacturer of its intent to sell the dealership. The manufacturer is required to file a verified complaint with the Department detailing the grounds on which it rejects the proposed transfer.

    
    

23. Section 320.643, Florida Statutes, does not govern proposals submitted by a dealer to relocate a dealership. This Section imposes no obligation upon a manufacturer to approve such a relocation proposal. Matters related to relocation were dismissed and not considered.

    
    

24. Section 320.643, Florida Statutes, provided that the manufacturer may not unreasonably withhold approval of the transfer and offers the following test for assessing the reasonableness of the manufacturer's actions:

    
    

    No such transfer, assignment or sales will be valid unless the transferee agrees in writing to comply with all requirements of the franchise then in effect. Notwithstanding the terms of any franchise agreement the acceptance by the licensee of the proposed transfer shall not be unreasonably withheld. For the purposes of this section, the refusal by the licensee [manufacturer] to accept a proposed transferee who is of good moral character and who otherwise meets the written, reasonable, and uniformly applied standards or qualifications, if any, of the licensee relating to the business experience of executive management required by the licensee of its motor vehicle dealers is presumed to be unreasonable. (emphasis supplied).

    
    

25. The relevant facts are those reflecting the conduct of the proposed transferee as of the time the complaint was filed. General Motors Corp. v. Lord,

    488 F.2d 1096 (8th Cir. 1973); ABA Distributors, Inc. v. Adolph Coors Company, 542 F. Supp. 1272, 1284 (W.D. Missouri 1982).

    
    

26. Section 320.643(1), Florida Statutes, as quoted above, notes the importance of the franchise agreement and requires that the proposed transferee agree, in writing, to comply with it. General Motors Corp. v. Sugarland Motors, Inc., DOAH Case No. 90-2920, Recommended Order issued on April 8, 1991, construe Section 320.644, Florida Statutes, which contains language identically to Section 320.643, Florida Statutes. With respect to the "written, reasonable, and uniformly applied standards...", the dealer agreement was determined to be a source of applicable standards in General Motors v. Sugarland, supra.

    
    

27. It is not "unreasonable" for a manufacturer to oppose the transfer of a dealership to a dealer who is not performing currently in accordance with existing written franchise agreements, particularly as they relate to consumer

satisfaction. Nolette's Jeep dealership has a significant failure to maintain customer satisfaction standards. The Petitioner demonstrated that it has a reasonable basis for opposing the transfer indicated in Section 320.643, Florida Statutes.

RECOMMENDATION

Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is therefore,

RECOMMENDED that the Department enter a Final Order denying the Respondents' proposal to change the ownership of Lake.

DONE AND ENTERED this 19th day of April, 1991, in Tallahassee, Leon County, Florida.

STEPHEN F. DEAN

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 19th day of April, 1991.

COPIES FURNISHED:

Charles J. Brantley, Director Division of Motor Vehicles

Room B439, Neil Kirkman Building Tallahassee, FL 32399-0500

Enoch Jon Whitney, Esq. General Counsel

Department of Highway Safety and Motor Vehicles

Neil Kirkman Building Tallahassee, FL 32399-0500

Dean Bunch, Esq. RUMBERGER, KIRK, ET AL.

106 E. College Street Suite 700 Tallahassee, FL 32301

Lawrence J. Semento, Esq. STONE & SEMENTO

P.O. Drawer 2048 Eustis, FL 32727

J. Robert Duggan, Esq.

P.O. Box 490208 Leesburg, FL 34749

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue tide final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 90-006014

Orders for Case No: 90-006014