GM dealerships sue company for breach of contract, aim to keep businesses open

The Canadian Press ~ The News
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TORONTO - Bob Slessor says he was left with no choice but to sue the company he has proudly represented for 34 years after General Motors Canada told him his dealership would have to close before the end of next year.
Slessor's father opened Robert Slessor Pontiac Buick in the southwestern Ontario town of Grimsby in 1955.
So when Slessor, who says it's the only career he's ever known, received notice from GM that his dealership would be one of the approximately 250 in Canada the company will close by October 2010, he decided to fight back.
"I'm a car man, born into a car family," Slessor says.
"I've sold and serviced vehicles for my total career, and I want to pursue that going forward."
Slessor says he's already spoken to several other automakers - including Hyundai, Volkswagen, Nissan, Kia and Subaru - about selling their cars, but his first choice is to keep his 40-odd employees selling GM cars and trucks.
He met with Marc Comeau, GM Canada's vice-president of vehicle sales, service and marketing, but said "that was not fruitful."
"As a result of that, we're really left with no alternative but to pursue what compensation or remedies may be available to us through the courts," he said.
Slessor is one of 12 dealers - 11 in Ontario and one in Prince Edward Island - suing GM for alleged breach of contract in an attempt to keep their businesses open beyond next year.
In a statement of claim filed in the Ontario Superior Court of Justice, the plaintiffs say GM's agreement with its dealers allowed them to renew their contracts and keep selling GM vehicles until at least 2015 as long as the they fulfilled sales and other obligations.
Slessor says he has it in writing that his dealership "performed up to or exceeded their evaluation criteria," yet it is still slated for closure.
"One of the assurances that were in our dealer sales and service agreement was that if a dealer was performing up to expectations and there were no obligations of sub-standard performance, then we were assured of a right to renewal of our contract of a minimum of five years," he said.
"At the present time, due to this termination announcement, they're in breach of that assurance."
The claim asks for punitive damages of $1.5 million as well as additional damages for "loss of profit, loss of goodwill, loss of reputation, loss of business opportunity and loss of market share."
The none of the allegations have been proven and GM Canada said it does not comment on matters before the courts.
The statement of claim also alleges that several of the dealerships invested significant amounts of money into their businesses under the assumption that their contracts would be renewed.
Slessor invested approximately $3.5 million at the request of GM in 2003 to renovate his store "for the purpose and with the effect of enhancing GM's image and reputation," the claim says.
"(The dealers) have, in reliance on the long-term nature of their relationship with GM and the mutual obligation of trust and confidence, made substantial investments in their business and foregone significant other business opportunities in service of the brand and image of GM," it adds.
Slessor and the other dealers named in the suit rejected GM's so-called wind-down agreement to close their stores.
The claim alleges that in asking dealers to accept or reject the agreement within four business days, it didn't leave enough time for the owners to get "meaningful" legal advice. In addition, it says the agreement didn't include enough money to both cover employee severance and other associated costs as well as compensate the owners.
The claim also says GM pressured the plaintiffs to accept the wind-down agreement by "interfering with their businesses and by depriving them of opportunities, advantages and benefits it is extending to its continuing dealers."
GM plans to eliminate more than one-third of its Canadian dealerships by October 2010 in an attempt to cut costs and streamline its business. The company had more than 700 dealerships in Canada before the closures which were estimated to employ 33,000 people.
GM also intends to close 1,100 dealerships in the U.S.

Organizations: GM Canada, General Motors Canada, Hyundai Volkswagen Nissan Subaru Ontario Superior Court

Geographic location: Ontario, Canada, TORONTO Grimsby Prince Edward Island U.S.

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