Menu
Blog Banner Image

The Franchise Memorandum

Court Dismisses Claims Over Addition of Competing Dealer
Posted in Encroachment

In Transport Truck & Trailer, Inc. v. Freightliner LLC, 2008 WL 4239002 (D. Idaho, Sept. 20, 2008), the court granted Freightliner, LLC’s motion for summary judgment dismissing all claims, including a claim for breach of the implied covenant of good faith and fair dealing based on Freightliner’s grant of a competing dealership in the territory of Transport Truck & Trailer, Inc. (“TTT”). 

Although it had a non-exclusive territory, TTT claimed that by granting another dealership in its territory, Freightliner violated its implied covenant of good faith and fair dealing. Following Ninth Circuit precedent, the court examined whether Freightliner’s actions essentially and purposefully destroyed TTT’s ability to enjoy the fruits of the distribution agreement.  In determining whether Freightliner acted in bad faith by allowing another dealership in the area, the court noted, among other things, that there was a legitimate purpose for opening the dealership because Freightliner received an economic benefit from it. Additionally, TTT was able to sell parts to the new dealership and also receive referrals for certain services. These economic benefits, coupled with the fact that TTT showed no actual injury from the competing business, led the court to conclude that TTT could not prove a claim.

Email LinkedIn Twitter Facebook

The information contained in this post is provided to alert you to legal developments and should not be considered legal advice. It is not intended to and does not create an attorney-client relationship. Specific questions about how this information affects your particular situation should be addressed to one of the individuals listed. No representations or warranties are made with respect to this information, including, without limitation, as to its completeness, timeliness, or accuracy, and Lathrop GPM shall not be liable for any decision made in connection with the information. The choice of a lawyer is an important decision and should not be based solely on advertisements.

About this Publication

The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

To subscribe to monthly emails for The Franchise Memorandum, please click here

Topics

Archives

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Blog Authors