The Franchise Memorandum

In Andy Mohr Truck Center, Inc. v. Volvo Trucks North America, 2012 U.S. Dist. LEXIS 145057 (S.D. Ind. Oct. 9, 2012), the United States District Court for the Southern District of Indiana denied Volvo’s motion to dismiss a dealer’s breach of contract claims. According to plaintiff Mohr, Volvo represented that it would grant him a Mack Trucks franchise in a separate transaction if he first entered into an agreement to operate a Volvo Trucks dealership. Mohr accepted his appointment as a Volvo Trucks dealer based on the understanding that he could later combine that franchise with a Mack Trucks franchise under one dealership. Mohr claimed that Volvo had since failed to honor its commitment to award him the Mack Trucks franchise, in breach of the oral agreement the parties allegedly had reached. He further alleged that Volvo had breached their written dealer agreement by failing to provide him with effective sales support after he opened the Volvo Trucks dealership. Volvo moved to dismiss these claims on the grounds that they were not adequately pled.

The court denied Volvo’s motion. It determined that Mohr had adequately set forth facts regarding Volvo’s alleged oral offer to grant him a Mack Trucks franchise and its mutual assent to the agreement, as his complaint described the specific representations that Volvo executives had made to him and the dates of those conversations. In addition, taking the facts in the light most favorable to Mohr, he succeeded in stating a plausible claim that Volvo breached the dealer agreement by refusing to grant him a price concession that would have enabled him to make a lucrative sale.

In a companion opinion, Volvo Trucks North America v. Andy Mohr Truck Center, Inc., 2012 U.S. Dist. LEXIS 145054 (S.D. Ind. Oct. 9, 2012), the same court held that Volvo failed to state claims of fraudulent inducement, promissory estoppel, and constructive fraud against Mohr. Volvo alleged that Mohr had not fulfilled numerous promises, representations, and unqualified guarantees that he made in his application to obtain the Volvo Trucks dealership. The court determined that the promises of which Volvo complained all concerned future conduct and could not form the basis of a fraudulent inducement claim. The court also held that the integration clause in the parties’ written dealer agreement superseded any promises Mohr made in his application for the franchise, thereby defeating Volvo’s promissory estoppel claim. Lastly, the court dismissed Volvo’s constructive fraud claim because no fiduciary or buyer-seller relationship existed between the parties.