A BakerHostetler trial team achieved a decisive victory on March 31 on behalf of Volvo TrucksNorth America in U.S. District Court for the Western District of Virginia over the disputed sale of truck dealerships in Maryland, West Virginia, and Virginia.
In an unusual case that focused on the extent and interpretation of Volvo’s right of first refusal, U.S. District Court Judge Elizabeth Dillon ruled that Truck Enterprises, Inc., owner of dealerships selling several truck brands, must apprise Volvo of the value of its assets before moving forward with its proposed sale to Transport Equipment Company, Inc. In addition to Volvo, some of the TEI dealers also sell Kenworth and Isuzu vehicles.
TEI argued that right of refusal didn’t require it to separate Volvo from the rest of the anticipated sale, and instead obliged Volvo to stand in the shoes of Transport Equipment Company and acquire all of TEI at the negotiated price.
Volvo filed suit in 2016. TEI responded by seeking summary judgment plus damages for Volvo’s delaying the sale to Transport Equipment Company.
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Judge Dillon’s summary judgment ruling completely vindicated BakerHostetler’s argument on behalf of Volvo. She wrote, “A right of first refusal does not function for the benefit of manufacturers—the holders of the right—if dealers can freely bundle encumbered property with unencumbered property and force a manufacturer to buy the whole package or waive its right.”
In addition to denying TEI’s motion for summary judgment, the judge ruled that the sale proposal between TEI and Transport Equipment Company must include the price for Volvo’s assets, at which time Volvo’s period for deciding whether to exercise its right of first refusal will commence.