Thanks for visiting! Welcome to a new way to research case law. You are viewing a free summary from Descrybe.ai. For citation and good law / bad law checking, legal issue analysis, and other advanced tools, explore our Legal Research Toolkit — not free, but close.
Pearson v. Ford Motor Co.
Citations: 68 F.3d 1301; 1995 U.S. App. LEXIS 31994; 1995 WL 638406Docket: 94-3372
Court: Court of Appeals for the Eleventh Circuit; November 15, 1995; Federal Appellate Court
Original Court Document: View Document
Gary J. Pearson filed an appeal against Ford Motor Company and associated entities, citing claims under the Automobile Dealers' Day in Court Act (ADDCA) and nine state law causes of action. The District Court granted the defendants' Motion for Summary Judgment on the ADDCA claim and dismissed the state law claims without prejudice. The Eleventh Circuit affirmed the District Court's decision, primarily on the grounds that Pearson lacked standing. Ford Motor Company operates a Dealer Development Plan to assist individuals with insufficient capital to own independent dealerships, including efforts to increase minority ownership. Pearson, an African-American who began working at Ford in 1973 and became a zone manager by 1983, sought to acquire a dealership in Fort Walton Beach after the current owner planned to close it. Lacking the necessary funds, he entered into a letter of understanding with Ford on July 12, 1983, where Ford would provide $320,000 in startup capital, while Pearson would contribute $80,000, held in escrow for six months. Pearson, not a party to the sales and service agreements established between Ford and the dealership (FWBLM), was only the dealership's General Manager at that time. After the initial period, he opted to continue and signed a Dealer Development Agreement with Ford and a Management Agreement with FWBLM on February 1, 1984. This agreement granted Ford preferred stock in FWBLM while Pearson received common stock, which had no voting rights as long as Ford held preferred stock. Pearson's ability to purchase Ford's preferred stock depended on the dealership's profitability, as he could only use profits for such purchases, and Ford had no obligation to provide further capitalization. The Board of Directors of FWBLM included Pearson and three other Directors appointed by Ford. Under the Management Agreement, Pearson served as President and on-site Manager, responsible for daily operations. Both the Dealer Development Agreement and the Management Agreement could be terminated at will by either party, with termination likely if the dealership incurred financial losses impacting Pearson's equity value. From 1984 to 1986, the dealership was profitable, leading to Pearson owning 79% of FWBLM stock by the end of 1986. However, due to losses in 1987 and early 1988, Pearson's ownership dropped to 34% by the end of 1988, and by the end of 1989, his stock lost all value. Pearson was terminated in February 1991. Under 15 U.S.C. Section 1221(c), the court defined "automobile dealer" as any entity operating under a franchise engaged in selling vehicles. The District Court determined FWBLM, not Pearson, qualified as the "automobile dealer," as Pearson was not a party to FWBLM's Franchise Agreements with Ford. Pearson's reliance on York Chrysler-Plymouth, Inc. v. Chrysler Credit Corp. was deemed inapplicable since he was not integral to the dealership's operations. Consequently, the court affirmed the District Court's ruling regarding Pearson's lack of standing, rendering further analysis unnecessary.