Dealer Sues Chrysler, Claiming Terms for Reinstatement Violate Arbitration Law
WASHINGTON - In the first lawsuit of its kind, a closed Missouri dealership that prevailed in arbitration over Chrysler Group claims that it received a letter of intent that violates the federal dealer arbitration law, Automotive News reported.
Century Motor Corp., of Wentzville, contends that dealerships seeking reinstatement have to meet conditions not required of the thousands of Chrysler dealerships that were never terminated.
The requirements also were not imposed on dealerships awarded franchises after bankruptcy and before the arbitration law was enacted in December, according to the complaint, filed Thursday, June 17, in U.S. District Court in St. Louis.
The suit says letters of intent given to terminated dealerships that filed arbitration claims should be the same as those given to stores that survived Chrysler's bankruptcy.
Chrysler confirmed today that the suit was the first filed over a letter of intent received by a terminated dealer in arbitration. The automaker, controlled by Fiat S.p.A. since its government-sponsored bankruptcy a year ago, declined additional comment.
"We were outraged by the letter of intent," Kevin Mock, Century's general manager, said in an interview with Automotive News. "We have 20 years and millions and millions of dollars invested in this franchise, and we couldn't just sit back and wait for something to happen."
After receiving the letter of intent, the dealership and its lawyer tried to negotiate with Chrysler over the terms but were "stonewalled," Mock said. The dealership, located in a suburb of St. Louis, is owned by John Mock, 62, and his brother Frank, 54.
A year ago, Chrysler closed 789 dealerships, or a quarter of its dealer network. In January, about 400 of the rejected stores gave notice of their intent to file arbitration claims.
The latest letters of intent violate the federal law's mandate that they be “customary and usual,” Century Motors' suit alleges.
Under the arbitration law, Chrysler and General Motors have seven business days after an arbitration loss "to provide the dealer a customary and usual letter of intent to enter into a sales and service agreement."
“Chrysler is intentionally, knowingly and willfully thwarting the law,” claims the seven-page suit filed by Century's attorney, Allen Press of the Green Jacobson law firm in St. Louis.
One different provision in the new letter of intent would nullify the letter if an existing dealer protested the addition of Century and this protest were not dismissed or denied in 30 days, the complaint alleges.
Another provision would forbid Century to protest if a new dealership were added to its market, the suit claims.
Dealerships must sign letters of intent if they are to be reinstated via franchise agreements, also known as sales and service agreements.
Chrysler has issued letters of intent to two sets of rejected dealerships that filed arbitration claims: the 50 that were given these letters in March and April, before their arbitration hearings were held, and many of the 11 that have won in arbitration since April.
A number of the 50 that received letters of intent this spring said at the time that they didn't intend to sign them because of some of the same provisions cited in Century's suit.
More Industry

Kia Closes Out Summer With a Bang
Its U.S. subsidiary broke multiple records in August, in part due to a surge of demand for hybrids models.
Read More →
Indiana Dealership Changes Hands
A 30-year-old Ford dealership in Indiana has a new owner and will soon be undergoing renovations to meet manufacturer requirements.
Read More →
Texas Dealership No Longer in the Family
The Ford store, a longtime cornerstone of the Houston market, is now part of one of the fastest-growing U.S. auto groups.
Read More →
Genesis Grows California Presence
The Cardinale Automotive Group opened its third Genesis rooftop in the Golden State, Genesis of San Bruno, a stand-alone dealership serving the San Francisco Bay Area.
Read More →
August Auto Sales a Mixed Bag
An early forecast shows strong business despite consumer hurdles, and hybrids are a big piece of their affordability coping strategy.
Read More →
EV Market Humming Along
July sales show steady growth as the segment stabilizes from last year’s artificial surge following pullback of federal support.
Read More →
Auto Loan Delinquency Rates Stabilize
Auto loans are a main driver of nonmortgage consumer debt, but delinquency rates stabilized in the second quarter across all credit risk tiers.
Read More →
EV Sales Recover in Q2
The EV sales roller coaster continues as numbers show improvement, but industry experts predict a year-over-year third-quarter decline and fourth-quarter jump.
Read More →
The Cheapest Hybrids to Fuel
The powertrain is increasing in popularity, in no small part due to its fuel economy. A new report lists the most efficient hybrids on the market.
Read More →
Hybrids and SUVs Gaining Ground
The most recent Kelley Blue Book Brand Watch found that only two nonluxury brands increased in shopper consideration, buoyed by their hybrid and SUV offerings.
Read More →