A federal court in Maryland recently denied a truck manufacturer’s motion to dismiss its dealer’s counterclaims in an action regarding the unauthorized transfer of a dealership. In Paccar Inc. d/b/a Peterbilt Motors Company v. Elliot Wilson Capitol Trucks LLC, 2012 U.S. Dist. LEXIS 166962 (D. Md. Nov. 21, 2012), Peterbilt filed suit alleging that Elliot Wilson had materially breached its dealer agreement by selling rights to the dealership without prior approval. Elliot Wilson responded by filing counterclaims alleging that Peterbilt was aware of the potential sale and that, by refusing its approval, Peterbilt had failed to act in good faith in violation of various statutes. The dealer also claimed the supplier had breached the dealer agreement because it failed to make its “best efforts” to approve the proposed transfer. Elliot Wilson alleged eleven different instances of Peterbilt’s misconduct, and Peterbilt argued that ten of those instances were not pled sufficiently to survive a motion to dismiss. The court declined to dismiss the allegations of bad faith, noting that even one unchallenged instance of misconduct, if pled in a sufficiently specific and plausible manner, would be enough to prevent dismissal. The court did caution, however, that these claims could succeed at trial only if Elliot Wilson could demonstrate that Peterbilt violated a contractual provision or a statute, or was responsible for tortious conduct.
The court also found plausible Elliot Wilson’s claim for breach of the dealer agreement based on Peterbilt’s failure to use its best efforts to approve the proposed transfer. The court interpreted the agreement as including an obligation that Peterbilt not unreasonably reject a proposed transfer. This meant that the supplier still could reject any proposal that it deemed unacceptable as a rational business matter. The court found, however, that Elliot Wilson had plausibly alleged that Peterbilt improperly rejected the proposed transfer because of its insistence that the business be transferred to its preferred buyer. Furthermore, the court found that Elliot Wilson had sufficiently alleged a claim for tortious interference with contract because Peterbilt’s preferred buyer had exerted influence on Peterbilt to ignore or reject Elliot Wilson’s proposed transfers.