Download - Combined Dealer Statements
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Hearing Date and Time: June 3, 2009 at 10:00 a.m., ET ROBINSON BROG LEINWAND GREENE, GENOVESE & GLUCK, P.C. 1345 Avenue of the Americas New York, New York 10105 Telephone: (212) 603-6300 Facsimile: (212) 956-2174 Russell P. McRory Fred B. Ringel A. Mitchell Greene Robert R. Leinwand MYERS & FULLER P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 Telephone: (850) 878-6404 Facsimile: (850) 942-4869 Richard Sox Shawn D. Mercer Robert Byerts Attorneys for Cape County Autopark I Inc. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------------x In re : Chapter 11 : Chrysler, LLC, et. al., : Case No. 09-50002 (AJG) : Debtors. : (Jointly Administered) ------------------------------------------------------------x
DECLARATION OF CHRIS AUFFENBERG IN SUPPORT OF
CAPE COUNTY AUTOPARK I INC.’S OBJECTION TO CHRYSLER’S MOTION
TO REJECT AUFFENBERG CHRYSLER DODGE JEEP’S DEALER AGREEMENT
Chris Auffenberg, pursuant to 28 U.S.C. §1746, make this Declaration under penalty of
perjury as follows:
1. I am President of Cape County AutoPark I Inc. d/b/a Auffenberg Chrysler Dodge
Jeep, a Missouri company (the “Dealership”), which operates a Chrysler, Dodge and Jeep
franchise from a facility located in Cape Girardeau, Missouri at 611 South Kings Highway Street
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(the “Current Facility”). I am older than 21 years of age and suffer no legal disabilities. I am
competent to make this declaration.
2. The Dealership has been operating at the Current Facility for over twenty (20)
years. The Current Facility was extensively renovated ten (10) years ago at a cost of Three
Hundred Thousand and 00/100 Dollars ($300,000.00). This cost has not been fully depreciated.
3. The Dealership has historically been in the top 10 out of all approximately
105 Chrysler dealers in the State of Missouri in new car sales volume. Cape Girardeau
County is the 14th largest county in the State with a population of 74,313. The County continues
to grow in population.
4. The Dealership is performing at 100 % of its Minimum Sales Responsibility
as established by Chrysler.
5. On May 13, 2009, I received a letter from Chrysler notifying the Dealership that
Chrysler had elected to “reject” our Chrysler, Dodge and Jeep Sales and Service Agreement (the
“Rejection Letter”). The rejection of our Dealership leaves no Chrysler, Dodge or Jeep
dealer in Cape Girardeau County. The next closest Chrysler, Dodge and Jeep dealers are
located in small, outlying towns – Perryville and Sikeston. Chrysler customers in Cape
Girardeau will be forced to travel 42 miles and a 40 minute drive to Perryville or 35 miles and
a 30 minute drive to Sikeston.
6. The Current Facility has 3,800 square feet of showroom space with indoor display
space for up to 4 vehicles. The Current Facility has a 6,000 square foot service center with 7
service bays to meet customer demand. The Current Facility sits on 4 acres of land with ample
customer and vehicle inventory parking. The customer write-up and waiting areas are
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impeccably furnished and have all the comforts of home including internet access and large-
screen television. The Current Facility exceeds Chrysler’s facility planning guidelines.
7. The Current Facility is ideally located along South Kings Highway in Cape
Girardeau which is the main thoroughfare through the City. The Dealership is located within a
less than 2 mile radius from all other “first-tier” new car dealerships and the largest mall
in the City.
8. As set forth in the summary chart below, the Dealership has provided Chrysler
with excellent customer service in the market:
2009 (ytd)
2008 2007 2006
CSI Performance: N.A. 92.0 87.0 89.0SSI Performance: N.A. 98.0 98.0 96.0
9. Historically, the Dealership spends in excess of $18,000 per month in advertising
and promoting itself and the Chrysler brands to customers in the greater Cape Girardeau area.
The Dealership is prepared to continue to invest in promoting itself and the Chrysler brand
products at this same rate going forward.
10. The Dealership has a history of stability in its staffing and management. The
Dealership’s General Manager, Darrin Garner, has been employed with the Dealership for two
(2) years and many years of automotive dealership experience. Our Service and Parts Manager,
Kenneth Seabaugh, has been with the Dealership for over twenty (20) years. These dedicated
employees have helped the Dealership earn numerous sales and service awards. These
individuals have long-term, solid relationships with the Dealership’s large customer base in the
Cape Girardeau, Missouri area.
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11. The Dealership’s vehicle inventory is financed through Ford Motor Credit and
provides capacity of up to $4,000,000.00 for new car purchases and $750,000.00 for used car
purchases. The Dealership’s floorplan line complies with Chrysler’s requirements.
12. The Dealership has relationships with many high-quality retail finance providers
which provide competitive financing for customers purchasing vehicles from the Dealership.
13. The Dealership has repeatedly purchased additional inventory from Chrysler,
even when not needed to meet customer demand, when asked to do so by Chrysler
representatives over the past 24 months.
14. The Dealership is best suited in size, location, personnel and performance to serve
the sales and service needs of Chrysler, Dodge and Jeep customers in the Cape Girardeau,
Missouri market.
Dated: May 26, 2009
/s/ Chris Auffenberg Chris Auffenberg, President Cape County Autopark I Inc
Hearing Date and Time: June 3, 2009 at 10:00 a.m., ET ROBINSON BROG LEINWAND GREENE, GENOVESE & GLUCK, P.C. 1345 Avenue of the Americas New York, New York 10105 Telephone: (212) 603-6300 Facsimile: (212) 956-2174 Russell P. McRory Fred B. Ringel A. Mitchell Greene Robert R. Leinwand MYERS & FULLER P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 Telephone: (850) 878-6404 Facsimile: (850) 942-4869 Richard Sox Shawn D. Mercer Robert Byerts Attorneys for Coleman Auto Group, Inc. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------------x In re : Chapter 11 : Chrysler, LLC, et al. al., : Case No. 09-50002 (AJG) : Debtors. : (Jointly Administered) ------------------------------------------------------------x
DECLARATION OF BRUCE COLEMAN IN SUPPORT OF
COLEMAN AUTO GROUP INC.’S OBJECTION TO CHRYSLER’S MOTION
TO REJECT COLEMAN AUTO GROUP INC.’S DEALER AGREEMENT Bruce Coleman, pursuant to 28 U.S.C. §1746, makes this Declaration under penalty of
perjury as follows:
1. I am the president of Coleman Auto Group, Inc, a New Jersey corporation (the
“Dealership”). I am older than 21 years of age and suffer no legal disabilities. I am competent
to make this declaration.
2. Mr. William Kendall, Mr. Gary Coleman and I own the Dealership. We represent
the Jeep franchise, which we acquired in 1991, for $325,000. With Chrysler Corporation approval
we moved it into our existing Oldsmobile/Subaru dealership, and agreed to spend $500,000 to
build a new showroom to Chrysler's specifications where we display Jeep vehicles and all
required support materials.
3. On May 13, 2009, I received a letter from Chrysler notifying the Dealership that
Chrysler had elected to “reject” our Chrysler and Jeep Sales and Service Agreements.
4. The Dealership operates from a facility located in Trenton, New Jersey, at 171
North Olden Avenue. Coleman Jeep is bordered by Ewing, Trenton, Lawrenceville and our
roots, planted 42 years ago, extend past those locales and into all of Mercer County. Routes 95,
1 and 31 bring traffic to or right past our store. The Coleman name has been associated with
automobiles in our area for 63 years.
5. The Dealership’s location is part of automobile row in Trenton, within one block
of a Cadillac and Hyundai dealership, on the same block as a major high line pre-owned
dealership. The area’s major shopping mall is five miles away. Our dealership is bordered on
the west by the Delaware River which insulates our market from a large portion of Pennsylvania
residents. Our market is influenced by a prosperous region to our north and east. Well known
municipalities like Princeton, Hopewell, Pennington, and West Windsor provide affluent buyers
who buy upscale Jeep products because our good service backs them up. Our long standing
reputation and family name merited these customers' consideration and business.
6. The Dealership stands on more than five and one quarter acres of prime real
estate, with 450 feet of frontage on North Olden Road. Our 5,000 sq. ft. Jeep Subaru showroom
displays eight (8) vehicles. Our 20,800 sq. ft. service area and body shop provides 17 service
bays and 10 body shop stalls. Our customer service parking area provides 22 parking slots.
7. The Coleman Auto Group invested in the Dealership in excess of Five Hundred
Thousand Dollars ($500,000.00) in 1991 to provide a separate Jeep/Subaru showroom and
assist Chrysler with its efforts to strengthen its brand identity and representation in the Trenton,
New Jersey market. The Dealership spent an average of nearly Five Hundred Fifty-Eight
Thousand Dollars ($558,000.00) annually over the past four years in advertising and promoting
itself and the Jeep brand. This expense does not represent the true investment in marketing as
Coleman Auto Group also uses a customer-relationship management system and personal
marketing.
8. The Dealership’s sales performance has been dramatically impacted by the
addition of two (2) Jeep franchises into our market since 1999. We are less than eight miles
from the closer of the two dealerships whose adverse affect has taken approximately 25% of our
sales over the past seven years.
9. Coleman Jeep has a great reputation in this market. The Dealership’s Customer
Service Index (CSI) has kept pace with its peers. Since 2005, the Dealership has received better
than average marks for providing Chrysler customers with excellent service:
CSI Peer Group Avg 2005 91% 91% 2006 92% 92% 2007 90% 91% 2008 88% 93%
10. The current actual net working capital currently well exceeds the Chrysler
requirement. Given the healthy balance sheet the Dealership has no current or historical need to
recapitalize or to infuse further capital.
11. Our service and Parts Department have the best factory trained automotive
personal in the area. Our company environment has enabled 13 of our employees to remain with
us for more than 25 years.
12. Coleman Jeep is profitable based on earnings before interest, depreciation, taxes
and amortization.
13. The Dealership’s vehicle inventory is financed through Chase Financial, which
provides a credit line in the amount of one million five hundred thousand dollars ($1,500,000.00)
for Jeep vehicles, in compliance with Chryslers’ floorplan financing requirements.
14. The Dealership has relationships with high-quality retail finance providers, such
as Chase Financial, T.D. Bank, M&T Bank, P.N.C. Bank and local credit unions, which provide
competitive financing for customers purchasing vehicles from the dealership.
The Dealership is optimally suited in size, capacity, personnel, and performance to serve the
sales and service needs of Chrysler, Dodge and Jeep customers in the Trenton, New Jersey,
market.
Dated: May 26, 2009.
/s/ Bruce Coleman Bruce Coleman, President
Coleman Auto Group, Inc.
Hearing Date and Time: June 3, 2009 at 10:00 a.m., ET ROBINSON BROG LEINWAND GREENE, GENOVESE & GLUCK, P.C. 1345 Avenue of the Americas New York, New York 10105 Telephone: (212) 603-6300 Facsimile: (212) 956-2174 Russell P. McRory Fred B. Ringel A. Mitchell Greene Robert R. Leinwand MYERS & FULLER P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 Telephone: (850) 878-6404 Facsimile: (850) 942-4869 Richard Sox Shawn D. Mercer Robert Byerts Attorneys for Coleman Chrysler Jeep, Inc.. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------------x In re : Chapter 11 : Chrysler, LLC, et al. al., : Case No. 09-50002 (AJG) : Debtors. : (Jointly Administered) ------------------------------------------------------------x
DECLARATION OF WILLIAM KENDALL IN SUPPORT OF
COLEMAN CHRYSLER JEEP INC.’S OBJECTION TO CHRYSLER’S MOTION
TO REJECT COLEMAN CHRYSLER JEEP INC.’S DEALER AGREEMENT
William Kendall, pursuant to 28 U.S.C. §1746, makes this Declaration under penalty of
perjury as follows:
1. I am the president of Coleman Chrysler Jeep, Inc, a New Jersey corporation (the
“Dealership”). I am older than 21 years of age and suffer no legal disabilities. I am competent
to make this declaration.
2. Mr. Bruce Coleman, Mr. Gary Coleman and I own the Dealership. We represent
the Chrysler and Jeep franchises. The Dealership initially purchased a Chrysler/Plymouth
franchise at this location in 1998 for $525.000.00. Chrysler Corp. told us that the local Jeep
franchise would be available to us whenever the Ford dealer decided to sell, which occurred in
April of 2001, at an additional cost of $575,000.00.
3. On May 13, 2009, I received a letter from Chrysler notifying the Dealership that
Chrysler had elected to “reject” our Chrysler and Jeep Sales and Service Agreements.
4. The Dealership operates from a facility located in Hightstown, East Windsor
Township, New Jersey, at 917 Route 130. Route 130 is a major state highway and provides a
variety of traffic, both local and regional past our store. Coleman Chrysler Jeep is bordered by
Hightstown, East Windsor, West Windsor, Robbinsville and their Route 130 highway location
connects to all points north, south and east of central NJ. We are next to the NJ Turnpike.
Although we are still considered a rural community, we are located just 50 miles from downtown
Manhattan, N.Y. and 55 miles from center city Philadelphia. Our community is upscale as we are
located just 8 miles from Princeton, N.J., and 2 miles from West Windsor Twp., which have the
2nd and 4th best local school systems rated in the state of N. J. Our market is prime Jeep
country, as they say.
5. The Dealership’s location is part of automobile row in East Windsor. We are
located on a major state highway within one half of a mile of a Ford store and a Nissan store, and
roughly three miles from a Buick, Pontiac, GMC, Hummer, and Saab store.
6. The Dealership stands on two and one half acres of prime real estate fronting
State Hwy. Route 130 North, with secondary road access to Conover Road from the rear of the
property. We have driveway access from two separate points at the front of the property and
from two separate drives at the rear of the property. A 5500 sq. ft. building contains our New Car
showroom and office area with approximately 1200 sq. ft., our service reception and parts area
provides an additional 1200 sq. ft., and our service department consists of six service bays with
roughly 3000 sq. ft. of area. Our customer service parking area provides 40 parking spaces and
we have display area under lights, on freshly blacktopped parking for roughly 100 units for new
and used vehicles for sale. Although the building is not quite up to Chrysler requirements, the
total land far exceeds Chrysler requirements and provides the space need for the improvements
we planned to make to add Dodge.
7. The Dealership facility is Chrysler exclusive. To demonstrate Coleman Chrysler
Jeep’s commitment to Chrysler's Project Genesis, we purchased, for approximately $500,000.00,
the property next door to our dealership, demolished the existing structure, and improved the
property with paving and lighting and landscaping to greatly enhance our presence on Route 130
and provide additional room to add Dodge.
8. Coleman Chrysler Jeep recently invested in the Dealership in excess of Five
Hundred Thousand Dollars ($500,000.00) in facility improvements to assist Chrysler with its
efforts to strengthen its brand identity and representation in the Hightstown, New Jersey market.
The Dealership spent an average of nearly One Hundred Twenty-two Thousand Dollars
($122,000.00) annually over the past five years in advertising and promoting itself and the
Chrysler and Jeep brands. This expense does not represent the total investment in marketing as,
in addition to traditional media, the Dealership uses a customer-relationship management system
and direct marketing approach.
9. Our sales performance dramatically improved over our predecessor’s. Within 2-3
years of acquiring the Dealership we increased sales 4-500%. After the Dealership added Jeep in
2001, our volume increased 1,000% over our predecessor, to 30-40 new vehicles/month. The
Dealership’s MSR numbers range from 83-109% in recent years. Even though we were in a
rural market, the Dealership often out sold our local metro market, combined, and kept pace with
the Dodge dealer, who is now the sole survivor in the county after Chrysler’s proposed rejection
of all others. We typically leased 70% of our new car purchases. Although our sales numbers
declined in July of 2008, Chrysler's cancellation of its leasing program, followed by the
economic bust that began in early October 2008 when the stock market dropped over 900 points,
caused that decline. Chrysler has never notified the Dealership of its failure to comply with its
sales and service obligations under the Chrysler Sales and Service Agreement.
10. Coleman Chrysler Jeep has a great reputation in this market. The Dealership’s
Customer Service Index (CSI) continues to meet or exceed our competitive averages on almost
every front, including the latest figures in April of 2009. Our CSI places us in the top 20 % of
dealers. Coleman Chrysler Jeep is now and has always been very concerned with customer
satisfaction. Our most recent Customer Promoter Score (75), one of Chrysler’s measurements of
customer satisfaction, demonstrates we far exceed local (62), regional (61) and national (61)
averages. Our repeat sales and service business speaks very highly of our excellent customer service
record. Since 2005, the Dealership has favorably compared to the National Average scores for
providing Chrysler customers with excellent service:
Sales Natl Avg Svc Natl Avg 2008 91.4% 94% 89% 90% 2007 91% 94% 95% 90% 2006 96% 94% 95% 90% 2005 95% 94% 92% 89%
11. Chrysler currently imposes upon the Dealership a working capital requirement of
Four Hundred Fifty Thousand Dollars ($450,00.00). The current actual net working capital
well exceeds the Chrysler requirement. Given the healthy balance sheet the Dealership has no
current or historical need to recapitalize or to infuse further capital.
12. Our service and Parts Department have the best factory trained automotive
personal in the area.
13. The Dealership has a history of stability in its staffing and management. Our
company environment has enabled 13 of our employees to remain with us for more than 25
years.
14. The Dealership’s vehicle inventory is financed through Chrysler Financial Corp.
which provided a credit line in the amount of two million dollars ($2,000,000.00) for vehicles, in
compliance with Chryslers’ floorplan financing requirements. We are in the process of obtaining
financing from alternative sources.
15. The Dealership has relationships with high-quality retail finance providers, such
as Chase Bank, T D Bank, Drive Financial, Valley National Bank, Condor Capital, GMAC,
Chrysler Financial and local credit unions, which provide competitive financing for customers
purchasing vehicles from the dealership. The Dealership consistently achieved Platinum status
with Chrysler Financial Corp. (“CFC”) as a dealer who provided over 75% of our financial
business to CFC. CFC designated the Dealership as Platinum status since 2002. Our high level
of sustained financial performance has garnered the maximum dividend income from CFC
programs for the history of our relationship.
16. The Dealership is optimally suited in size, capacity, personnel, and performance
to serve the sales and service needs of Chrysler, Dodge and Jeep customers in the East Windsor
Township, New Jersey, market.
Dated: May 26, 2009.
/s/ William Kendall William Kendall, President Coleman Chrysler Jeep, Inc.
{00435461.DOC;1}1
Hearing Date and Time: June 3, 2009 at 10:00 a.m., ETROBINSON BROG LEINWAND
GREENE, GENOVESE & GLUCK, P.C.1345 Avenue of the AmericasNew York, New York 10105Telephone: (212) 603-6300Facsimile: (212) 956-2174Russell P. McRoryFred B. RingelA. Mitchell GreeneRobert R. Leinwand
Attorneys for Cook Jeep Chrysler, Inc.
UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK-------------------------------------------------------------xIn re : Chapter 11
:Chrysler, LLC, et. al., : Case No. 09-50002 (AJG)
:Debtors. : (Jointly Administered)
------------------------------------------------------------x
DECLARATION OF ETHEL L. COOK IN SUPPORT OFCOOK JEEP CHRYSLER INC.’S OBJECTION TO CHRYSLER’S MOTION
TO REJECT COOK JEEP CHRYSLER INC.’S DEALER AGREEMENT
Ethel L. Cook, pursuant to 28 U.S.C. §1746, makes this Declaration under penalty of
perjury as follows:
1. I am the dealer principal of Cook Jeep Chrysler Inc., which operates “Cook Jeep
Chrysler” (“Cook” or the “Dealership”) from a facility located in downtown Little Rock,
Arkansas at 1000 Main Street (the “Facility”). Cook is currently one of two dealers selling
Chrysler’s brands in the City of Little Rock. The other is Crain Chrysler Jeep (“Crain”).
2. Paul Roger Cook, Jr. and I are the co-owners of the Dealership. The Dealerships
Cook Family and the automobile industry go back to 1914. Cook first began selling Jeeps
following World War II. At Chrysler’s urging, Cook added the Chrysler brand in 1996.
{00435461.DOC;1}2
3. Cook has been a Five Star Dealer for decades and our customer satisfaction and
loyalty are through the roof.
4. On May 13, 2009, I received a letter from Chrysler notifying the Dealership that
Chrysler had elected to “reject” our Dealer Agreement. I am obviously very familiar with the
Little Rock, Arkansas dealer network and was surprised because both Cook and Crain, the only
Chrysler dealers in Little Rock, were both rejected. Therefore, Chrysler’s action would, on its
face, result in a complete lack of representation in a major American city. Since that would be a
ludicrous result, one can only infer that Chrysler has a more sinister motive.
5. Because it is inconceivable that Chrysler will not have a dealership in Little Rock
going forward, the only conclusion that one could draw is that, after review, the evidence in
other markets in the region, that Chrysler now intends to “give” the Little Rock market to a
Landers-related dealer.
6. Having reviewed the pattern of assumption and rejection of dealers throughout
their region, I have detected a pattern: In every market where there is a dealership connected
with former Penske Automotive executive Steve Landers, or his new automotive partnership
with “Mac” McLarty (former Chief of Staff for President Clinton) and Robert L. Johnson
(majority owner of the Charlotte Bobcats), the competitors are rejected.
7. In the Little Rock, Landers Chrysler Dodge Jeep is located far out of town in
Benton, Arkansas. Nevertheless, the two Little Rock dealers, Cook and Crain were rejected.
8. In the Fayetteville, Arkansas area, Landers-McLarty Dodge Chrysler Jeep is
located far out of town in Bentonville, Arkansas. Competitors Springdale Dodge Chrysler, Steve
Smith County Jeep and Jones Brothers were all rejected.
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9. In the Shreveport, Louisiana market, Lee’s Summit Dodge Chrysler Jeep (a
Landers McLarty dealership) is located in Bossier City, Louisiana. Both competitive dealers,
Claude de Beaux in Vivian, Louisiana and Greater Birmingham Dodge Chrysler in Shreveport
were rejected.
10. In the Springfield, Missouri market, Tri-Lakes Motors (a Landers-McLarty
dealership) is located in Branson, Missouri. Competitors Heritage Chrysler Jeep in Ozark,
Missouri and Ramsay Motor Company in Harrison, Arkansas were rejected. A pattern seems to
be emerging. Everywhere there is a Landers-McLarty dealership, Chrysler has rejected the
competition.
11. In the Huntsville, Alabama market, Landers McLarty Dodge Chrysler Jeep, is
located in Huntsville. Competitor Cloverleaf Chrysler Dodge Jeep was rejected.
12. Favoritism and cronyism towards preferred dealer group is not a valid exercise of
business judgment.
Dated: May 26, 2009
/s/ Ethel L. CookEthel L. Cook,Cook Jeep Chrysler, Inc.
Hearing Date and Time: June 3, 2009 at 10:00 a.m., ET ROBINSON BROG LEINWAND GREENE, GENOVESE & GLUCK, P.C. 1345 Avenue of the Americas New York, New York 10105 Telephone: (212) 603-6300 Facsimile: (212) 956-2174 Russell P. McRory Fred B. Ringel A. Mitchell Greene Robert R. Leinwand MYERS & FULLER P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 Telephone: (850) 878-6404 Facsimile: (850) 942-4869 Richard Sox Shawn D. Mercer Robert Byerts Attorneys for Golden Motors, Inc. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------------x In re : Chapter 11 : Chrysler, LLC, et. al., : Case No. 09-50002 (AJG) : Debtors. : (Jointly Administered) ------------------------------------------------------------x
DECLARATION OF ROBERT GOLDEN IN SUPPORT OF
GOLDEN MOTORS, INC.’S OBJECTION TO CHRYSLER’S MOTION
TO REJECT VENICE CHRYSLER’S DEALER AGREEMENT
Robert Golden, pursuant to 28 U.S.C. §1746, makes this Declaration under penalty of
perjury as follows:
1. I am the president of Golden Motors, Inc., a Florida corporation (the
“Dealership”), which operates under the tradename Venice Chrysler from a facility located in
Venice, Florida at 1550 South Tamiami Trail (the “Current Facility”). I am older than 21 years
of age and suffer no legal disabilities. I am competent to make this declaration.
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2. The Dealership has been operating at the Current Facility for 16 years and is
owned by Donna Golden (25%), Natalie Pileggi (24%) and I (51%) (collectively referred to as
“the Owners”).
3. As described below, the Owners have made capital investments in the Dealership
and the Facility Company in excess of Two Million Two Hundred Fifty Thousand and 00/100
Dollars ($2,250,000.00) (the “Chrysler Capital Investment”) to assist Chrysler with its efforts
to strengthen its brand identity and representation in the Venice, Florida market.
4. Beginning in 2004, Chrysler aggressively sought our agreement to upgrade our
Dealership Facility. Chrysler represented that their market studies projected increase population
growth and increases in demand for Chrysler products in our market. Chrysler Executives
reviewed our construction plans before we commenced construction. In reliance upon these
representations by Chrysler, we remodeled the showroom facade, the service lane, customer
lounge, and administrative offices as well as constructed covering over the vehicle display area
and the service drive at a cost of $750,000.
5. In 2005, Chrysler was aware of the Dealership’s plans to improve the property.
Chrysler again represented that market studies projected major increases in population and
increases in demand for Chrysler products. Chrysler acquiesced and encouraged our
development of the northern contiguous 2 ½ acres of raw land into paved, landscaped, lighted
outdoor display area and a detail center building which includes a drive through car wash at a
total cost of approximately $1,500,000.
6. The Current Facility currently has an approximately 3,000 square foot showroom,
covered outdoor display space of 1,386 square feet and a service department containing 22
service bays and 15 vehicle lifts. The customer write-up and waiting areas are impeccably
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furnished and have all the comforts of home including internet access and large-screen
television. The Dealership has ample customer and vehicle inventory parking. The Current
Facility exceeds Chrysler’s facility planning guidelines.
7. The Current Facility is ideally located at the southern-most entrance to the City of
Venice with 1,200 feet of frontage on the main North-South thoroughfare known as US
Highway 41. The Current Facility is located within a few hundred yards from other “first-tier”
automobile franchised brands and is, likewise, only a short walk to the nearest shopping center.
8. On May 13, 2009, I received a letter from Chrysler notifying the Dealership that
Chrysler had elected to “reject” our Chrysler Sales and Service Agreement (the “Rejection
Letter”). I have reviewed the dealers in the Venice, Florida market that have also been rejected
by Chrysler. There are currently three Chrysler-brand dealerships in the Venice area, a Dodge
franchise, a Jeep franchise and our Dealership. Our Dealership and the Dodge store received a
rejection letter.
9. Beginning in approximately 2001, Chrysler began to emphasize its Alpha Project,
which consisted of combining the Dodge, Chrysler, and Jeep brands under one rooftop with
uniform branding, to all dealers. The Alpha Project later evolved into the Genesis Project in
2005 with the same goal of combining all Chrysler brands into a single dealership location.
Despite repeated discussions, we could not convince the owners of the Dodge and Jeep stores to
sell us their franchises in order to comply with the Alpha and Genesis Project.
10. We expect that Chrysler intends to provide the Jeep dealer with both a Chrysler
and Dodge franchise. Our Dealership is, however, as much as 3 times larger in both showroom
space and service capacity than the Jeep store and is, thus, better suited to maintaining all 3
brands at one dealership location. If, on the other hand, Chrysler does not intend to reestablish a
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Chrysler store in Venice then customers are left with a very long and inconvenient drive to either
Sarasota, Florida (14 miles and approximately a 30 minute drive-time) or Punta Gorda, Florida
(26 miles and approximately a 45 minute drive-time).
11. While gross sales of the Dealership has fallen in the last four (4) years, as is the
case with most all Chrysler dealers, the Dealership has been able to maintain strong sales
performance by consistently exceeding 100% of Minimum Sales Responsibility (MSR) – a
difficult task in these economic times. As set forth in the summary chart below, the Dealership
has provided Chrysler with excellent representation in the market:
2009
(ytd) 2008 2007
New Unit Sales: Sales Effectiveness: 103% 118% 145% CSI Performance: N.A. 93.82 94.16SSI Performance: N.A. 96.24 97.04
12. The Dealership has spent approximately Twenty Thousand Dollars ($20,000.00)
per month (average of $240,000.00 per year) in advertising and promoting itself and the Chrysler
brands to customers in the Venice market.
13. Chrysler currently imposes upon the Dealership a working capital requirement of
Nine Hundred Forty-Two Thousand Seven Hundred Thirty-Seven and 00/100 Dollars
($942,737.00). The current actual net working capital is in excess of One Million One
Hundred Thousand and 00/100 Dollars ($1,100,000.00).
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14. The Dealership has a history of stability in its staffing and management. The
Dealership’s general manager, Donna Golden, has been employed as GM of the Dealership for
ten (10) years. Bill Smith, the Dealership’s Part’s Manager has been employed in that capacity
for sixteen (16) years. Although the General Sales Manager, Tom Gould, has been with the
Dealership since only 2008, his predecessor held the position for thirteen (13) years. These
dedicated employees have helped the Dealership earn the Five Star Award since its inception in
1998 as well as First Place finishes in the “Winning Combination Vehicle Sales and Parts Sales
in 2000, 2004, 2005 and 2006. These individuals have long-term, solid relationships with the
Dealership’s large customer base in the Venice area.
15. The Dealership’s vehicle inventory is financed through SunTrust Bank, which
provides a total credit line in the amount of Four Million and 00/100 Dollars ($4,000,000.00).
This line complies with Chryslers’ requirements.
16. The Dealership has relationships with many high-quality retail finance providers,
such as SunTrust Bank and Bank of America, which provide competitive financing for customers
purchasing vehicles from the dealership.
17. The Dealership is best suited in size, location, personnel and performance to add
the Dodge and Jeep franchises to the Current Facility, and to ultimately serve the sales and
service needs of customers in the Venice, Florida area.
Dated: May 26, 2009
/s/ Robert Golden Robert Golden, President Golden Motors, Inc.
Hearing Date and Time: June 3, 2009 at 10:00 a.m., ET ROBINSON BROG LEINWAND GREENE, GENOVESE & GLUCK, P.C. 1345 Avenue of the Americas New York, New York 10105 Telephone: (212) 603-6300 Facsimile: (212) 956-2174 Russell P. McRory Fred B. Ringel A. Mitchell Greene Robert R. Leinwand MYERS & FULLER P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 Telephone: (850) 878-6404 Facsimile: (850) 942-4869 Richard Sox Shawn D. Mercer Robert Byerts Attorneys for Neil Huffman, Inc. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------------x In re : Chapter 11 : Chrysler, LLC, et. al., : Case No. 09-50002 (AJG) : Debtors. : (Jointly Administered) ------------------------------------------------------------x
DECLARATION OF DOW HUFFMAN IN SUPPORT OF
NEIL HUFFMAN, INC.’S OBJECTION TO CHRYSLER’S MOTION
TO REJECT NEIL HUFFMAN CHYRLSER JEEP’S DEALER AGREEMENT
Dow Huffman, pursuant to 28 U.S.C. §1746, makes this Declaration under penalty of
perjury as follows:
1. I am the president of Neil Huffman, Inc., a Kentucky corporation (the
“Dealership”), which operates under the tradename Neil Huffman Chrysler Jeep from a facility
located in Louisville, Kentucky at 4126 Shelbyville Road (the “Current Facility”). I am older
than 21 years of age and suffer no legal disabilities. I am competent to make this declaration.
1
2. The Dealership been operating at the Current Facility for 20 years and is owned
by Ethel Huffman, NAH QSST Marital Trust and I (collectively referred to as “the Owners”).
3. As described below, the Owners have made capital investments in the Dealership
and the Current Facility in excess of Two Million Five Hundred Thousand and 00/100
Dollars ($2,500,000.00) (the “Chrysler Capital Investment”) to assist Chrysler with its efforts
to strengthen its brand identity and representation in the Louisville, Kentucky market.
4. The Current Facility currently has an approximately 2,300 square foot showroom
which allows for the indoor display of 10 vehicles and a service department with approximately
10,000 square feet containing 28 service bays. The customer write-up and waiting areas are
impeccably furnished and have all the comforts of home including internet access and large-
screen television. The Dealership has ample customer and vehicle inventory parking. The
Current Facility exceeds Chrysler’s facility planning guidelines.
5. The Current Facility is ideally located just inside the Interstate 264 loop around
the City of Louisville which provides easy customer access from all parts of the City.
Approximately 27,618 vehicles per day pass in front of or near the Dealership. The Current
Facility is located with a few hundred yards from most other automobile franchised brands,
including Nissan, Acura, Toyota, Ford, Lincoln, Mercury, Mazda, Hyundai, Kia and Mercedes
and is, likewise, only a short walk to the nearest shopping mall, the Mall of St. Matthews.
6. The Dealership is located in the east end of Louisville, Jefferson County, which is
centrally located in the most affluent portion of the County. The County has a population of
713,877 and is growing yearly. There are at least 50,000 people living in the area immediately
surrounding the Dealership. The area surrounding the Dealership as well as a large area to the
east (which is further away from the other 2 Chrysler dealerships in Jefferson County) is served
2
7. On May 13, 2009, I received a letter from Chrysler notifying the Dealership that
Chrysler had elected to “reject” our Chrysler and Jeep Sales and Service Agreement (the
“Rejection Letter”). I have reviewed the dealers in the Louisville, Kentucky market that have
also been rejected by Chrysler. There are currently three (3) Chrysler, Dodge and Jeep stores in
the City of Louisville and Jefferson County. Our Dealership was the only one to receive a
rejection letter.
8. We acquired the Chrysler franchise in November, 1989. In 1989, the Owners also
acquired a Dodge franchise which operates in a showroom and service center contiguous to the
Current Facility and which is the subject of a separate Sales and Service Agreement. The Dodge
dealership is likewise being proposed for rejection by Chrysler.
9. Beginning in approximately 2001, Chrysler introduced its Alpha Project, which
consisted of combining the Chrysler, Dodge and Jeep brands at one location with uniform
branding, to all dealers. As it was doing throughout the United States, Chrysler representatives
visited the Dealership to discuss the Alpha Project and encouraged the Owners to invest in
helping Chrysler to achieve is program objectives for the Louisville market. Following
representations made by Chrysler as to the expected advantages of combining all three brands
under one roof, the Owners negotiated the purchase of the a Jeep franchise to be combined with
the Chrysler franchise in December, 2004.
10. As a condition to the approval by Chrysler for the Owners to acquire the Jeep
franchise in 2004, Chrysler required us to remodel both the Chrysler and Dodge store. Chrysler
represented that their market studies projected increase population growth and increases in
3
demand for Chrysler products in our market. In reliance upon these representations by Chrysler
and the demands by Chrysler, we remodeled the Dealership at a total cost of $2,500,000. This
expense will not be fully depreciated for a number of years.
11. Chrysler sold the land upon which the Chrysler, Dodge, and Jeep facilities are
located to the Owners in November 2000. As part of that transaction, we were required to grant
to Chrysler Realty Corporation a 20 year right of first refusal. Attached is a copy of the Right of
First Refusal document as Exhibit A.
12. As part of Chrysler’s requirement that the Current Facility be at least 5 acres, the
Owners contracted in May of 2006 with a nearby property owner to purchase 1.6 acres of
additional land at a cost of $1,0250,000. This contract resulted in litigation with another
neighbor who claimed a right of first refusal. To date, we have spent over $50,000 on attorneys
fees in attempting to enforce its contract.
13. While gross sales of the Dealership has fallen in the last year, as is the case with
most all Chrysler dealers, the Dealership has been able to maintain strong sales performance in
these difficult economic times.
14. The Dealership’s average absorption rate the last four (4) years has been nearly
65%. Absorption rate means the percentage that the Dealership’s total operating costs are
covered by the income of the Dealership’s service department. A larger absorption rate is better.
According to the National Automobile Dealers Association, the average absorption rate of a
franchised motor vehicle dealer for 2008 was 55%. The Dealership exceeds the NADA stated
average.
4
15. Historically, the Dealership spends in excess of Three Hundred Thirty-Six
Thousand and 00/100 Dollars ($336,000.00) a year in advertising and promoting itself and the
Chrysler brands to customers in the Louisville market.
16. Chrysler currently imposes upon the Dealership a working capital requirement of
Nine Hundred Twenty Thousand and 00/100 Dollars ($920,000.00). The current actual net
working capital is in excess of Six Hundred Thousand and 00/100 Dollars ($600,000.00) and the
dealership recently accessed an additional approximately Four Hundred Thousand and 00/100
Dollars ($400,000) in order to meet Chrysler’s working capital requirements.
17. The Dealership has a history of stability in its staffing and management. The
Dealership’s general sales manager, Shane Huffman, has been employed with the Dealership for
twelve (12) years. Mark McDougall, the Dealership’s Fixed Operations Manager has been
employed in that capacity for three (3) years. These dedicated employees have helped the
Dealership earn the Five Star Award since the program’s inception in 1998. These individuals
have long-term, solid relationships with the Dealership’s large customer base in the Louisville
area.
18. The Dealership’s vehicle inventory is financed through National City Bank,
which provides a credit line in the amount of Three Million Seven Hundred Fifty Thousand and
00/100 Dollars ($3,750,000.00). This line complies with Chryslers’ requirements.
19. The Dealership has relationships with many high-quality retail finance providers,
such as Chase Bank and BB&T Bank, which provide competitive financing for customers
purchasing vehicles from the dealership.
20. The Dealership is best suited in size, location, personnel and performance to serve
the sales and service needs of Chrysler, Dodge and Jeep customers on the East side of Louisville,
5
6
Jefferson County, Kentucky. Without the Dealership a large number of customers will not have
access to a Chrysler, Dodge or Jeep sales and service facility.
Dated: May 26, 2009
/s/ Dow Huffman Dow Huffman, President Neil Huffman, Inc.
Hearing Date and Time: June 3, 2009 at 10:00 a.m., ET ROBINSON BROG LEINWAND GREENE, GENOVESE & GLUCK, P.C. 1345 Avenue of the Americas New York, New York 10105 Telephone: (212) 603-6300 Facsimile: (212) 956-2174 Russell P. McRory Fred B. Ringel A. Mitchell Greene Robert R. Leinwand MYERS & FULLER P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 Telephone: (850) 878-6404 Facsimile: (850) 942-4869 Richard Sox Shawn D. Mercer Robert Byerts Attorneys for Milam Jeep Mazda Inc., UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------------x In re : Chapter 11 : Chrysler, LLC, et al. al., : Case No. 09-50002 (AJG) : Debtors. : (Jointly Administered) ------------------------------------------------------------x
DECLARATION OF KENNETH K. DINSMORE IN SUPPORT OF
MILAM JEEP MAZDA INC.’S OBJECTION TO CHRYSLER’S MOTION
TO REJECT MILAM JEEP MAZDA INC.’S DEALER AGREEMENT
Kenneth K. Dinsmore, pursuant to 28 U.S.C. §1746, makes this Declaration under
penalty of perjury as follows:
1. I am the president of Milam Jeep Mazda Inc., a Washington corporation (the
“Dealership”), which operates under the trade name Milam Jeep. I am older than 21 years of
age and suffer no legal disabilities. I am competent to make this declaration.
2. Mr. Harold Milam and I own the Dealership. We are Washington's oldest Jeep
dealer, having first began as a stand alone Jeep dealership in 1962 (i.e., the Dealership
represented only Jeep and no other brands) and adding Mazda in 1974.
3. On May 13, 2009, I received a letter from Chrysler notifying the Dealership that
Chrysler had elected “reject” our Chrysler, Dodge, Jeep Sales and Service Agreements.
4. Milam Jeep operates from a facility located in Puyallup, Washington at 608 River
Road. We have over 5 acres in the heart of auto row, just down the road from the South Hill
Mall, with over 500 feet of coveted River Road frontage. Milam Jeep’s location is part of
automobile row on River Road, which features Toyota, Nissan, Chevrolet, Saturn, Lincoln,
Mercury, Subaru, Hyundai, Mitsubishi, and Kia. Though we also sell new Mazda's we have
totally separated Jeep and Mazda in both sales and service. Mazda has a completely separate
show room. Our steady growth motivated us to recently sign a new 5 year lease on an adjacent
lot and building on River Road.
5. The Dealership facility meets Chrysler guides and standards for Jeep facilities. The
net area available for Dealership operations consists of 5 acres. Customer’s vehicles are serviced
on one (1) of eleven (11) available service bays dedicated to Jeep customers with 4950 SF, 3500
SF in the Parts Department, and1200 SF in the Service Advisor Area. Dealership sales are
conducted out of a 2400 SF Jeep Showroom and Display Space. There is ample parking for
display and customers, all in compliance with Chrysler’s requirements. The Daily Traffic Count
for the Service Department averages 40 per day, 20 per day in the Parts Department, and 20 per
day in the Sales Department.
6. Mr. Milam and I invested in the Dealership in excess of One Million Five
Hundred Thousand Dollars ($1,500,000.00) in 1994 to assist Chrysler with its efforts to
strengthen its brand identity and representation in the greater Tacoma, Washington market.
Moreover, the Dealership spent an average Three Hundred Forty Three Thousand Seven
Hundred Seventy-Eight Dollars ($343,778.00) a year in advertising and promoting itself and
the Jeep brand.
7. Four out the last five months Milam Jeep led the State of Washington in Jeep sales.
We sold 251 new Jeeps in 2008. According to Chrysler Milam Jeep sold 168 % of our sales goal.
Milam Jeep has increased new Jeep sales four out of the last five years. Milam Jeep is the 3rd
largest volume Jeep Dealership in the state of Washington. Milam Jeep has continued to grow
despite the current poor economy, showing strong Jeep sales in the 1st qtr of 2009. We are
currently on pace to exceed our sales forecast for 2009. Chrysler’s sales goal for us this year is 198
units. Through April we are on pace to sell 225 units. In a more favorable economic climate, Milam
Jeep expects to sell more than 300 units annually.
8. In contrast, over the last 3 years, Milam Jeep has out sold our facing larger
Dealers (Larson Jeep, Matson Jeep), by more than 100 new units in 2008. The “proposed
replacement Jeep dealer” sold 149 new Jeeps in 2008 in our facing Market (Tacoma), which has
twice the population as our market. Removing Milam Jeep as a Jeep Dealer would cost Chrysler
$3 million dollars a year in lost revenue just from a sales perspective. (Min. sales loss of 100
units per year @$30,000 per unit.)
9. Chrysler has often expressed its satisfaction with the Dealership’s operations and
performance. Chrysler has never notified the Dealership of its failure to comply with its sales
and service obligations under the Chrysler Sales and Service Agreement. The Dealership
received the Nardelli Challenge Award in 2007.
10. The proposed location for the replacement Jeep dealer is not on Dealer row in
Puyallup but is located away from the other dealers that exist along River Road. The Chrysler
franchise recently moved to this new location. When it moved, the Chrysler franchise sales slumped
from 40 per month to 15 per month. Dodge sales also saw a dramatic decline. Simply put this market
has been trained for years that "Cars Cost Less on Puyallup's River Road.”
11. Milam Jeep has a great reputation in this market. Milam has achieved undeniable
sales success while consistently maintaining a CSI score well over the Region average in 2008.
12. Larson Automotive Group (proposed dealer) does not have a good reputation, in fact
have been in the local media because of their deceptive sales practices. Their CSI has been
consistently below the region average.
13. Milam Jeep is well capitalized, with over one million dollars ($1,000,000.00) of
working capital, substantially in excess of Chrysler’s working capital guide for our dealership.
14. Milam’s strong presence in the local community, has allowed Milam Jeep to
continue to exceed all Sales and Service growth expectations over the past years with no signs of
slowing down. Milam Jeep has been able to hold its share of the New Jeep sales Market because
of this strong bond with the community and the repeat customers that have been doing business
with us in both sales and service for more then 45 years. Great customers and great employees
make Milam Jeep a well run local Jeep dealership.
15. Our service and Parts Department have the best top factory trained automotive
personal in the area. Milam Jeep has sent more employees to Chrysler Factory Training in the
past 6 years then almost any other dealer in our area.
16. The Dealership is profitable based on earnings before interest, depreciation, taxes
and amortization.
17. The Dealership has a history of stability in its management. The Dealership’s
owners, Milam and Dinsmore, have been employed at the Dealership for twenty eight (28) and
fifty (50) years, respectively.
18. The Dealership’s vehicle inventory is financed through KeyBank, which provides
a credit line in the amount of five million dollars ($5,000,000.00) for new vehicles, along with
three million dollars for used, in compliance with Chryslers’ floorplan financing requirements.
19. The Dealership has relationships with many high-quality retail finance providers,
such as Bank of American, Wachovia, Chase Bank, CUDL, Kitsap Credit Union and Alaska
Federal Credit Union, as well as other credit unions, which provide competitive financing for
customers purchasing vehicles from the dealership.
20. The Dealership is optimally suited in size, capacity, personnel, and performance
to serve the sales and service needs of Jeep customers in the Greater Tacoma, Washington,
market.
Dated: May 26, 2009
/s/ Kenneth K. Dinsmore Kenneth K. Dinsmore, President Milam Jeep Mazda Inc.,
Hearing Date and Time: June 3, 2009 at 10:00 a.m., ET ROBINSON BROG LEINWAND GREENE, GENOVESE & GLUCK, P.C. 1345 Avenue of the Americas New York, New York 10105 Telephone: (212) 603-6300 Facsimile: (212) 956-2174 Russell P. McRory Fred B. Ringel A. Mitchell Greene Robert R. Leinwand MYERS & FULLER P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 Telephone: (850) 878-6404 Facsimile: (850) 942-4869 Richard Sox Shawn D. Mercer Robert Byerts Attorneys for Performance Dodge, LLC and PD Properties LLC UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------------x In re : Chapter 11 : Chrysler, LLC, et. al., : Case No. 09-50002 (AJG) : Debtors. : (Jointly Administered) ------------------------------------------------------------x
OBJECTION OF PERFORMANCE DODGE, LLC AND PD PROPERTIES LLC TO THE OMNIBUS MOTION OF DEBTORS AND DEBTORS IN POSSESSION, FOR
AN ORDER, PURSUANT TO SECTIONS 105, 365 AND 525 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 6006, (A) AUTHORIZING THE REJECTION OF
EXECUTORY CONTRACTS AND UNEXPIRED LEASES WITH CERTAIN DOMESTIC DEALERS AND (B) GRANTING CERTAIN RELATED RELIEF
Performance Dodge, LLC (“Performance”) and PD Properties LLC, by and
through their undersigned counsel, respectfully submits their individual objection
(“Individual Objection”) to the motion (the “Rejection Motion”) of Debtors and Debtors
in Possession, for an Order, pursuant to Sections 105, 365 and 525 of the Bankruptcy
Code and Bankruptcy Rule 6006, (A) authorizing the rejection of executory contracts and
{00435452.DOC;1}
2
unexpired leases with certain domestic dealers and (B) granting certain related relief.1
Contemporaneously herewith, Performance, together with seventeen (17) other dealers2,
filed their joint objection (“Joint Objection”) to the Rejection Motion. The points and
issues raised in the Joint Objection are incorporated by reference herein.
PRELIMINARY STATEMENT
1. On April 30, 2009, Chrysler filed a voluntary petition for relief under
chapter 11 the Bankruptcy Code.
2. On May 3, 2009, Chrysler filed a motion pursuant to Section 363 of the
Bankruptcy Code (the “363 Motion”) seeking authorization of Chrysler’s proposed sale
of substantially all of its assets pursuant to a Master Transaction Agreement to a new
entity (hereinafter referred to as “New Chrysler”) in exchange for $2 billion in cash and
the assumption of certain liabilities (the “Sale Transaction”). Following the closing of
the proposed Sale Transaction, New Chrysler would be owned fifty-five percent (55%)
by a new United Auto Workers’ Voluntary Employees’ Benefits Association (“VEBA”),
ten percent (10%) by the American and Canadian governments, and twenty percent
(20%) by Fiat S.p.A. (“Fiat”). Fiat’s interest in New Chrysler can grow to thirty-five
(35%) if certain benchmarks are met.
3. The 363 Motion was granted, in part, by order of this Court dated May 7,
2009, approving the bidding procedures for the Sale Transaction and scheduling a Sale
Hearing on May 27, 2009 (the “Bidding Procedures Order”). On May 19, 2009,
1 Capitalized terms not defined herein have the meanings set forth in the Rejection Motion. 2 The fifteen (15) dealers joining in the Joint Objection include: Performance Dodge, LLC, John Cullen Dodge, LLC., Quality Jeep Chrysler, Inc, Golden Motors Inc., Wallace Chrysler Jeep, LLC, Cook Jeep Chrysler, Inc., Milam Jeep Mazda Inc., Neil Huffman Inc., Neil Huffman Enterprises, Inc., Wright Dodge, LLC, South Shore Chrysler, Inc., Riverside Auto Sales of Marquette, Inc., Cape County Autopark I Inc., Chris Auffenberg Ford, Inc., Southeast Automotive, Inc., Coleman Auto Group, Inc., and Coleman Chrysler Jeep Inc.
{00435452.DOC;1}
3
Performance, together with several other dealers, filed their Objection to the 363 Motion
(the “363 Motion Objection”). [Docket No. 1189].
4. On May 14, 2009, Chrysler filed the instant Rejection Motion seeking
authorization to reject certain executory contracts and unexpired leases consisting of
nearly 800 Dealer Agreements and other ancillary agreements related thereto in
connection with the Sale Transaction [Docket No. 780]. The Rejection Motion
designated nearly 800 Dealer Agreements for rejection on the grounds they were not to
be included in the Sale Transaction (the “Excluded Dealers”). Performance is a “full
line” Genesis-compliant Chrysler Dodge Jeep dealer located in Phoenix, Arizona whose
Dealer Agreement is one of those designated for rejection in the Rejection Motion.
5. For the reasons set forth herein, and in the Joint Objection to the Rejection
Motion, and in the 363 Motion Objection, Chrysler’s motion to reject Performance’s
Dealer Agreement must be denied. Chrysler’s application to reject Performance’s Dealer
Agreement flunks the business judgment test and improperly attempts to reject only
Performance’s Dealer Agreement and certain ancillary agreements connected therewith
while not rejecting the Site Control Agreement connected therewith.
OBJECTION
Chrysler’s Rejection of Performance’s Dealer Agreement Flunks the Business Judgment Test
6. Chrysler’s motion to authorize the rejection Performance’s Dealer
Agreement will be judged against the requirements of the business judgment test. In re
Minges, 602 F. 2d 38 (1979). In deciding a motion to reject an executory contract, the
Bankruptcy Court places itself in the position of the Debtor in possession and determines
whether rejection of the contract is a reasonable business decision.
{00435452.DOC;1}
4
7. Under the business judgment test, the primary factor to be considered is
whether the rejection will likely benefit the estate. Id. However, the courts consider
other factors, including: i) whether the contract financially burdens the estate, Id. ii)
whether real economic benefits will result from the rejection, In re Matusalem, 158 B.R.
514 (Bankr. S.D. Fla. 1993); iii) whether the rejection will result in a large claim against
the estate, In re Sun City Investments, Inc., 89 B.R. 245 (Bankr. M.D. Fla. 1988); and iv)
whether, after balancing the equities, rejection will do more harm to the non-debtor
counterparty than to the debtor if not rejected, In re Midwest Polychem Ltd., 61 B.R. 559
(Bankr. N.D. Ill. 1986).
8. Notably, several courts have refused to authorize the rejection of a
contract where such rejection would inflict disproportionate harm on the non-debtor
counterparty. For example, citing Minges, the Ninth Circuit Bankruptcy Appellate Panel
held that “[t]his statement [in Minges] illustrates that it is proper for the Court to refuse to
authorize rejection of a lease or executory contract where the party whose contract is to
be rejected would be damaged disproportionately.” In re Chi-Feng Huang, 23 B.R. 798,
801 (9th Cir. BAP 1982); accord, In re Sundial Asphalt Co., Inc., 147 B.R. 7282
(E.D.N.Y. 1992) (“The Court may refuse to authorize rejection where the party whose
contract is to be rejected would be damaged disproportionately to any benefit to be
derived by the general creditors of the estate”); In re Monarch Tool Mfg. Co., 114 B.R.
134, 137 (Bankr. S.D. Ohio 1990) (“Disproportionate damage to the other party provides
a ground for disapproving rejection.”); In re Midwest Polychem Ltd., 61 B.R. 559, 562
(Bankr. N.D. I1l. 1986) (“the Court may withhold approval where the party whose
contract stands to be rejected will likely be damaged disproportionately to any potential
benefit to be derived by the general unsecured creditors.”).
{00435452.DOC;1}
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9. The issues presented here are closely analogous to those present in In re The
Monarch Tool & Mfr. Co., 114 B.R. 134, albeit, writ large. In Monarch, the debtor
manufacturer sought to reject its contract with its exclusive distributor. The
manufacturer/distributor relationship described by Monarch is similar to the
manufacturer/dealer relationship present in this proceeding.
10. In Monarch, the distributor had obtained a pre-petition state court injunction
enjoining the debtor from terminating the contract. In the instant proceeding, the
Excluded Dealers, including the Objectants, have state law statutory rights to automatic
injunctive relief enjoining the termination of their franchises under their respective state
Dealer Laws.
11. Like the debtor in Monarch that sought to reject the distributorship contract
in bankruptcy to avoid the state court injunction, here, Chrysler seeks to reject one-
quarter of its Dealer Agreements in bankruptcy in order to avoid the injunctive mandates
of the state Dealer Laws.
12. In Monarch, the debtor’s principals stated they would refuse to advance
continued funding to the debtor unless the distributorship agreement was rejected. Here,
the American government has threatened to withdraw its funding for Chrysler unless the
Sale Transaction closes within two months of the commencement of this proceeding
(although, critically, the American government has not conditioned its funding in the
rejection of any or all of the Dealer Agreements, per se).
13. In short, except for its scale, the issues presented in Monarch bear striking
similarities to those presented here. It is compelling, therefore, that in Monarch, the
debtor’s motion to reject the distributorship agreement was denied. The Monarch Court’s
rationale is squarely relevant here:
{00435452.DOC;1}
6
Disproportionate damage to the other party to the contract provides a ground for disapproving rejection. We find this factor to be present in the case before us. Distributor was set up for the express purposes of dealing exclusively with the products of Debtor. Quite simply, if rejection is permitted here, Distributor will be ruined…In the case before us the factor of disproportionate harm to Distributor is reinforced by other consequential facts…In this connection, it is relevant to make reference to the evidence that the Hall family, principals of Debtor, stated in court that they would advance no further funds to Debtor unless the exclusive distributorship agreement with Monarch products was rejected. If it is rejected, they are prepared to advance substantial funds to the Debtor in order for it to continue operations…[however,] there was no inclusion in this statement that the Hall family would agree to subordinate its further loans to the claims of unsecured creditors. From this, we think it fair to infer that a condition of any such further loan by the Hall family would be coupled with a request for priority status over existing creditors, and no benefit to general creditors in the foreseeable future can be anticipated. Rejection of the subject exclusive distributorship agreement will be disapproved.
Id. at 137-138.
14. Furthermore, Chrysler has not submitted any empirical evidence (such as
statistical or financial analysis) that Performance’s Dealer Agreement (or any other
Dealer Agreement, or all of them) burdens the estate. The Second Circuit’s decision in
Minges is directly applicable to the issue presented here. In Minges, the Bankruptcy
Court approved the trustee’s rejection of a lease in which the debtor-landlord was
required to provide utilities and janitorial services to the tenant, and the District court
affirmed. However, the Second Circuit overruled the rejection in Minges for the precise
reason Chrysler’s application here must be denied. As the Second Circuit explained in
Minges:
We are not satisfied that the record before us on the issue is adequate to decide this issue. We find only the most general estimate of increase in market value if the covenants involved here are rejected and no detailed
{00435452.DOC;1}
7
support, by appraisal or otherwise, for this statement. Nor do we know the amount of the secured debt. Further relevant facts are whether the estate is likely to be adequate to cover administrative expenses and other priority claims, whether there are other properties beside Pro Park in the estate, and if there are, the extent of encumbrances on them. In short, we do not know either a sound basis exists for a finding that there is a reasonable likelihood that general creditors will derive substantial or significant benefit from the proposed lease rejection. We therefore believe that the proceedings should be returned to the bankruptcy judge to make specific findings after giving the parties an opportunity to repent further evidence.
Minges, 602 F.2d at 44.
15. In short, there is an utter lack of any empirical evidence in the record that
the termination of Performance’s franchise will benefit the Debtors’ estates. Minges
mandates that this Court must make specific findings based on an evidentiary record
developed in the process in which all parties have an opportunity to present their
evidence. Id.
16. Annexed hereto is the Declaration of William R. Coulter (the “Coulter
Declaration”) in support of this Individual Objection. The Coulter Declaration
demonstrates the substantial investments (in excess of $11,000,000.00, Coulter Decl. at
¶4), sacrifices (site control, Id. at ¶8), and commitments (development agreements with
taxing authorities, Id. at ¶10) made by Performance in furtherance of the best interests of
the Chrysler brand and the achievement of Chrysler’s Project Genesis in Phoenix,
Arizona, which, most notably, establishes that Chrysler’s decision to reject
Performance’s Dealer Agreement flunks the business judgment test.
17. Throughout Chrysler’s moving papers, Chrysler has identified Project
Genesis as the guiding principle behind the dealer network rationalization it seeks to
obtain by rejecting nearly 800 Dealer Agreements. See, Rejection Motion, at ¶36.
Broadly speaking, Project Genesis seeks to streamline Chrysler’s dealer network into
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8
“full line” dealers (i.e. those that sell Chrysler, Dodge and Jeep brands) located in
desirable locations in desirable markets. Id. at ¶33. The Coulter Declaration underscores
the efforts undertaken by Performance to achieve Chrysler’s Project Genesis and meet
requirements imposed by Chrysler. For example, in 2003, at the urging of Chrysler and
at a cost of over $2,750,000.00, Performance purchased Chrysler and Jeep franchises,
which resulted in all 3 of Chrysler’s brands being under a single roof. Coulter Decl. at ¶9.
In 2007, and also at Chrysler’s urging, Performance purchased, at a cost of nearly
$3,700,000.00, an undeveloped site for construction of a new dealership facility in the
desirable Presada Auto Park in Surprise, Arizona. Id. at ¶10. Performance never received
any indication from Chrysler that it was not in compliance with its Dealer Agreement. Id.
at ¶5. Just recently, local Chrysler representatives expressed Performance was “good to
go” in its current plans for the Phoenix market. Id. at ¶12.
18. Fatal to Chrysler’s application to reject Performance’s Dealer Agreement is
the fact that to do so would directly contravene Project Genesis. That is because
Performance is the only Project Genesis-compliant full-line dealership in the entire
Phoenix, Arizona market that was rejected by Chrysler. Coulter Decl. at ¶6. With utter
disregard of its Project Genesis plan, Chrysler did not reject (and by implication has
assumed) two (2) Chrysler dealers that are proximate to Performance’s market and not
Genesis complaint. Id. If Chrysler is to achieve its Project Genesis, one can only
conclude that rejection of Performance must result in Chrysler constructing a plan
involving those survivors; a plan that would result in one (1) of the surviving dealers
enjoying all three (3) brands, the other surviving dealer receiving consideration for the
sale or transfer of its business, and Performance receiving Chrysler’s rejection and being
shown a door that exits to economic disaster. Setting aside the unreasonableness and
unfairness of that result, such a scheme cannot meet the business judgment test when
{00435452.DOC;1}
9
Chrysler achieves through bankruptcy what it otherwise could not lawfully achieve under
Arizona state law. In sum, on the one hand, Chrysler invokes Project Genesis as the
standard under which it is operating; yet on the other hand, Chrysler ignores non-
compliant dealers in the Phoenix, Arizona market and rejects a Project Genesis-compliant
dealer.
19. In the absence of any plausible explanation for Chrysler’s decision to reject
Performance’s Dealer Agreement (a decision that dismays Chrysler’s own
representatives, Coulter Decl. at ¶6), this Court should properly infer an improper reason
and bad faith on Chrysler’s part and deny the Rejection Motion with respect to
Performance.
If Chrysler Rejects Performance’s Dealer Agreement, It Must Also Reject the Site Control Agreement Ancillary Thereto
20. Chrysler’s Rejection Motion presumes Chrysler can reject Performance’s
Dealer Agreement and all Ancillary Agreements connected therewith EXCEPT the Site
Control Agreement:
By this Motion, the Debtors seek to reject all Ancillary Agreements with the Affected Dealers that relate to the dealership locations on the attached Exhibit A, other than Site Control Agreements and similar agreements with Debtor Chrysler Realty Company LLC (collectively, the “Site Control Agreements”). If this Motion is granted, all Ancillary Agreements with an Affected Dealer at the dealership locations listed on Exhibit A (excluding any Site Control Agreements) will be rejected. As used herein, the term, “Ancillary Agreements” does not include any Site Control Agreements.
Rejection Motion, at ¶22(a), n.7
21. Chrysler’s definitional gymnastics aside, it is painfully obvious that Site
Control Agreements are “ancillary agreements and leases related to such Affected
{00435452.DOC;1}
10
Dealers and Rejected Dealer Agreements at the identified dealership location.” Rejection
Motion, at ¶22(a).
22. Performance’s Site Control Agreement (a copy of which is annexed to the
accompanying Coulter Declaration) provides that if a dealer’s Dealer Agreement is
terminated, Chrysler shall have certain rights with respect to that Performance’s facility
location. Those rights include a right to purchase the dealership facility for a stated price,
if the termination is within five (5) years of the date of the Site Control Agreement, or the
right to lease the dealership facility for a stated rent, if the termination is within twenty-
five (25) years of the date of the Site Control Agreement. Chrysler offers no plausible
legal rationale for excluding Performance’s Site Control Agreement from the definition
of Ancillary Agreements that are rejected along with the Dealer Agreement.
23. It is axiomatic that if a debtor rejects a contract, it must reject the whole
contract. NLRB v. Bildisco & Bildisco, 465 U.S. 513, 531 (1984); see also, In re TSW
Stores of Nanuet, 34 B.R. 299, 304 (Bankr. S.D.N.Y. 1983). (“An executory contract
cannot be rejected in part, and assumed in part…The contract must be rejected entirely or
not at all. Moreover, where several contracts are part of an integrated whole, they must
be assumed or rejected together. In re Kopel, 232 B.R. 57, 64, n. 4 (Bankr. E.D.N.Y.
1999). "Correspondingly, all of the contracts that comprise an integrated agreement must
either be assumed or rejected, since they all make up one contract." In re Exide Techs.,
340 B.R. 222, 228 (Bankr.D.Del.2006), citing, In re Philip Servs., Inc., 284 B.R. 541
(Bankr.D.Del.2002), aff'd, 303 B.R. 574 (D.Del.2003); see also, In re Karfakis, 162 B.R.
719, 725 (Bankr. E.D.Pa. 1993) (franchise agreement and facility lease integrated
agreements requiring they be rejected or assumed together). Therefore, if Chrysler
rejects a Dealer Agreement, it must reject all other agreements ancillary thereto,
including Site Control Agreements. Chrysler may not cherry-pick.
{00435452.DOC;1}
11
24. Moreover, what Chrysler asks is not permitted under the Bankruptcy Code.
The triggering event in Performance’s Site Control Agreement is the termination of the
Performance’s Dealer Agreement. Here, the triggering event would be the rejection of
Performance’s Dealer Agreement, which would constitute a breach of that agreement by
Chrysler but would not terminate of the agreement. See, In re Lavigne, 114 F.3d 379,
386-387 (2d Cir. 1999).
25. To permit Chrysler to self-trigger any site control rights by breaching, by
rejection, the Dealer Agreement with Performance would be a manifest injustice.
CONCLUSION
For the reasons set forth herein in the Joint Objection and the in 363 Motion
Objection, both the Rejection Motion and the 363 Motion must be denied.
{00435452.DOC;1}
12
Dated: May 26, 2009 New York, New York ROBINSON BROG LEINWAND GREENE GENOVESE & GLUCK P.C. By: /s/ Russell P. McRory
Russell P. McRory Fred B. Ringel A. Mitchell Greene Robert R. Leinwand 1345 Avenue of the Americas New York, New York 10105 Telephone: (212) 603-6300 Facsimile: (212) 956-2164
MYERS & FULLER P.A.
Richard Sox Shawn Mercer Robert Byerts. 2822 Remington Green Circle Tallahassee, Florida 32308
Telephone: (850) 878-6404 Facsimile: (850) 942-4869
Attorneys for Performance Dodge, LLC and PD Properties LLC
1
Hearing Date and Time: June 3, 2009 at 10:00 a.m., ET ROBINSON BROG LEINWAND GREENE, GENOVESE & GLUCK, P.C. 1345 Avenue of the Americas New York, New York 10105 Telephone: (212) 603-6300 Facsimile: (212) 956-2174 Russell P. McRory Fred B. Ringel A. Mitchell Greene Robert R. Leinwand MYERS & FULLER P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 Telephone: (850) 878-6404 Facsimile: (850) 942-4869 Richard Sox Shawn D. Mercer Robert Byerts Attorneys for Performance Dodge, LLC and PD Properties LLC UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------------x In re : Chapter 11 : Chrysler, LLC, et. al., : Case No. 09-50002 (AJG) : Debtors. : (Jointly Administered) ------------------------------------------------------------x
DECLARATION OF WILLIAM R. COULTER IN SUPPORT OF
PERFORMANCE DODGE, LLC’S AND PD PROPERTIES, LLC’S OBJECTION TO CHRYSLER’S MOTION
TO REJECT PERFORMANCE DODGE’S DEALER AGREEMENT
William R. Coulter, pursuant to 28 U.S.C. §1746, make this Declaration under penalty of
perjury as follows:
1. I am the president of Performance Dodge, LLC, an Arizona limited liability
company (the “Dealership”), which operates under the tradename Performance Chrysler Jeep
Dodge from a facility located in the Glendale section of Phoenix, Arizona at 4240 Glendale Ave.
2
(the “Current Facility”). I am older than 21 years of age and suffer no legal disabilities. I am
competent to make this declaration.
2. Mr. Mills A. Brown and I are the owners of the Dealership.
3. Mr. Brown and I are also the members of PD Properties, LLC (the “Facility
Company”), which was formed to purchase and develop real estate on which the Dealership
would operate.
4. As set forth herein, Mr. Brown and I have made capital investments in the
Dealership and the Facility Company in excess of Eleven Million and 00/100 Dollars
($11,000,000.00) (the “Chrysler Capital Investment”) to assist Chrysler with its efforts to
strengthen its brand identity and representation in the Phoenix, Arizona market. Moreover, the
Dealership spends Seven Hundred Fifty Thousand and 00/100 Dollars ($750,000.00) a year in
advertising and promoting itself and the Chrysler brands. In addition to the major capital
improvements outlined herein, the Dealership has made countless improvements and changes to
its operations in response to Chrysler’s requirements; participated in most, if not all, of
Chrysler’s programs for its dealers; consistently accepted additional Chrysler vehicle inventory
when other surrounding dealers had declined and the business demands of the Dealership did not
warrant extra inventory; and has otherwise been an excellent partner with Chrysler with a shared
vision of the Phoenix market.
5. Over half of the Chrysler Capital Investment has been made in the last six (6)
years, as Chrysler aggressively sought our cooperation in achieving its Alpha Project, which
consisted of combining the Dodge, Chrysler, and Jeep brands under one rooftop with uniform
branding, and which later evolved into the Genesis Project. Based on numerous discussions with
Chrysler representatives about Chrysler’s vision for the Phoenix, Arizona market, we made these
3
substantial investments with the expectation that the Dealership would represent Chrysler and its
brands in Phoenix, Arizona for years to come. In addition, the Dealership has negotiated
development planning agreements with local taxing authorities. These development agreements,
which are no longer available, will increase the profitability of the Dealership in the future and
greatly enhance the Dealership’s representation of the Chrysler brands. As recent as last
summer, Chrysler expressed its satisfaction with the Dealership and its plans for relocation of its
operations. Chrysler has never notified the Dealership of its failure to comply its sales and
service obligations under the Chrysler Sales and Service Agreement.
6. On May 13, 2009, I received a letter from Chrysler notifying the Dealership that
Chrysler had elected to “reject” our Chrysler, Dodge, Jeep Sales and Service Agreements (the
“Rejection Letter”). I have reviewed the dealers in the Phoenix, Arizona market that have also
been rejected by Chrysler. The Dealership is the only dealer with all three (3) of Chrysler’s
brands that Chrysler rejected in the Phoenix, Arizona market. As a result and in order to achieve
its Genesis Project objectives, Chrysler will have no choice but to negotiate with two (2)
Phoenix, Arizona non-Alpha Project dealers and facilitate the combining of the brands under a
single rooftop, which such resulting dealer will be granted the same market in which the
Dealership and its ownership have made substantial investments. We have discussed the
Rejection Letter with Chrysler field personnel whom we have worked with over an extended
period of time and they have expressed they are dismayed at Chrysler’s decision. If Chrysler’s
rejection is permitted, the Dealership will have no choice but to close and go out of business. It
is not dualled with any other brands and it is not a heavy used vehicle sales operation, so there is
not alternative to closing its doors.
4
7. The Dealership first began as a stand alone Dodge dealership in 1993 (i.e., the
Dealership represented only Dodge and no other brands), after purchasing the Dodge operating
assets and inventories of a retiring dealer. At the outset of operations, the Dealership rented the
current location. In 1994, at urging of Chrysler, the Dealership purchased the Current Location
from Chrysler Realty Corporation and as part of that transaction Chrysler required the
Dealership to demolish the property’s then existing improvements and build the Current
Facility’s improvements – at a cost of approximately Five Million and 00/100 Dollars
($5,000,000.00).
8. As part of this real estate purchase, Chrysler required the Dealership to enter into
a site control arrangement with Chrysler Realty Corporation through the execution of an Option
Agreement. A copy of the Option Agreement is annexed hereto as Exhibit “A.” Under the
Option Agreement, if the Dealership were to discontinue Dodge dealership operations, Chrysler
Realty Corporation had the right during the ensuing 5-year period to purchase the Current
Facility and the right during the ensuing 25-year period to lease the Current Facility. The Option
Agreement substantially encumbered the Current Facility, but Mr. Brown and I made the above
stated investment and caused the Dealership to agree to the encumbrance because we believed in
the Dodge product, the Chrysler brand, and expected to be a Dodge dealer for many years.1
9. Around 2001 or 2002, Chrysler introduced its Alpha Project. As it was doing
throughout the United Stated, Chrysler representatives visited the Dealership to discuss the
Alpha Project and encouraged Mr. Brown and I to invest in helping Chrysler to achieve its Alpha
Project objectives for the Phoenix market. In light of the changes on Glendale Ave. and
numerous discussions with Chrysler representatives, we saw merit in the Alpha Project and the
1 In 2003, the Dealership conveyed its fee interest in the Current Facility to the Facility Company. Chrysler consented to this transfer of interest.
5
Dealership undertook to acquire the Chrysler and Jeep franchises. In 2003, at an investment of
over Two Million Seven Hundred Fifty Thousand and 00/100 Dollars ($2,750,000.00), the
Dealership purchased the operating assets and inventories of a neighboring Chrysler Jeep dealer.
The Dealership now had all three (3) of Chrysler’s brands under a single roof as required under
Chrysler’s Alpha Project.
10. A shift in the Glendale marketplace began to occur in 2001. A few substantial
automobile dealers began to relocate from Glendale Avenue to other areas of Phoenix that
provided improved facilities and access to customers. In 2003 and in conjunction with the
Chrysler and Jeep acquisition and at Chrysler’s urging, Mr. Brown and I began discussing with
Chrysler a proposed relocation of the Dealership’s operations to Surprise, Arizona. In August of
2005, Chrysler approved a 12 acre site in Prasada Auto Park, located in Surprise, Arizona (the
“Proposed Location”), which the Facility Company purchased in 2007 at a cost of nearly Three
Million Seven Hundred Thousand and 00/100 Dollars ($3,700,00.00). As part of this
acquisition, the Dealership entered into development agreements with local taxing authorities.
After the Dealership becomes operational at the Proposed Location, these agreements will
provide substantial benefits to the Dealership by increasing its profitability. This additional
capital would benefit Chrysler as the Dealership will be able to better represent the Chrysler
brands.
11. While poised to relocate the Dealership to the Proposed Location, we continued to
make investments in Chrysler branding. In 2005, the Dealership added a large arched front
façade on the Current Facility as part of Chrysler’s new design theme, at a cost of Forty Five
Thousand and 00/100 Dollars ($45,000.00). Recently, the Dealership invested approximately
Eighty Thousand and 00/100 Dollars ($80,000.00) constructing a service-bay and vehicle lift
6
for Chrysler’s heavy-duty truck program. These additional investments have all been done with
the encouragement and approval of Chrysler. Chrysler never suggested that such investments
should not be made because the Dealership’s future was in jeopardy.
12. The development of the Proposed Location and relocation of Dealership
operations has been delayed because of the current state of the United States’ economy and the
uncertainty of the future of Chrysler; other dealers representing the major brands, such as
Toyota, Nissan, Honda and Ford, have similarly delayed their relocation to the Surprise, Arizona
market. Nevertheless, Chrysler representatives have continued to express support for our
relocation plans and the Dealership. In the summer of 2008, Joe Polson, Chrysler’s Dealer
Network Specialist, stated that the Dealership was “good to go” with its relocation to the
Proposed Location . . . which we wrongly assumed remained Chrysler’s position until receipt of
the Rejection Letter.
13. The Current Facility meets Chrysler’s facility planning guides, and consists of a
total of 50,000 square feet under roof. The net area available for Dealership operations consists
of 8.4 acres. Dealership sales are conducted out of a 14,256 sq. ft. building and the parts
department, warehouse storage, and service write-up bays are located in an 11,585 sq. ft.
building. Customer’s vehicles are serviced on one (1) of fifty-six (56) available service bays in
the Dealership’s two (2) vehicle service buildings, with a total area of 26,373 sq. ft. There is
ample parking for display and customers, all in compliance with Chrysler’s requirements. Aside
from its orientation at the corner of a major thoroughfare, the location of the Current Facility has
its shortcomings. That is why we made the investment and prepared to relocate to the Proposed
Location, which Chrysler had encouraged and approved.
7
14. While gross sales of the Dealership has fallen in the last four (4) years, as is the
case with most all Chrysler dealers, the Dealership has shown resilience and the ability to
generate sales that make it nearly 100% effective – a rare feat during such difficult economic
times. As set forth in the summary chart below, the Dealership has provided Chrysler with
excellent representation in the market:
2008 2007 2006 2005
New Unit Sales: 479 1048 1245 1372
Sales Effectiveness: 98% 94% 96% 106% CSI Performance: 88.1 86.6 88.8 87SSI Performance: 97 95.7 97 97
15. The Dealership is profitable on an earnings before interest, depreciation, taxes and
amortization basis. Its average absorption rate the last four (4) years has been nearly 82%.
Absorption rate means the percentage that the Dealership’s total operating costs are covered by
the income of the Dealership’s service department. Bigger absorption rate is better. According
to the National Automobile Dealers Association, the average absorption rate of a franchised
motor vehicle dealer for 2008 was 55%. The Dealership exceeds the NADA stated average.
16. Chrysler currently imposes upon the Dealership a working capital requirement of
Nine Hundred Eighty Four Thousand Nine Hundred Ninety Six and 00/100 Dollars
($984,996.00). The current actual net working capital is in excess of Two Million Five
Hundred Thousand and 00/100 Dollars ($2,500,000.00), and well exceeds the Chrysler
requirement.
8
17. The Dealership has a history of stability in its staffing and management. For
example, the Dealership’s general manager, Terry Lee, has been employed as GM of the
Dealership for sixteen (16) years. Eric Dohrman, the Dealership’s general sales manager, has
been employed by the Dealership for sixteen (16) years and held his management position for six
(6). The fixed operations (service) manager, Rick Humphrey, has worked for the Dealership for
fourteen (14) years and in management the last five (5) years. These are dedicated employees of
the Dealership and critical ambassadors of the Chrysler brand, as they are on the front line with
customers on a daily basis.
18. The Dealership’s vehicle inventory is financed through J.P. Morgan Chase, which
provides a credit line in the amount of Seven Million and 00/100 Dollars ($7,000,000.00). This
line complies with Chryslers’ requirements.
19. The Dealership has relationships with many high-quality retail finance providers,
such as Bank of American, Wachovia, Bank of the West, M&I Bank, US Bank, City Financial,
Chase Bank, and credit unions, which provide competitive financing for customers purchasing
vehicles from the dealership.
20. The Dealership is optimally suited in size, capacity, personnel, and performance
to serve the sales and service needs of Chrysler customers in the Phoenix, Arizona market.
Dated: May 26, 2009
/s/ William R. Coulter William R. Coulter, President Performance Dodge LLC
Hearing Date and Time: June 3, 2009 at 10:00 a.m., ET ROBINSON BROG LEINWAND GREENE, GENOVESE & GLUCK, P.C. 1345 Avenue of the Americas New York, New York 10105 Telephone: (212) 603-6300 Facsimile: (212) 956-2174 Russell P. McRory Fred B. Ringel A. Mitchell Greene Robert R. Leinwand MYERS & FULLER P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 Telephone: (850) 878-6404 Facsimile: (850) 942-4869 Richard Sox Shawn D. Mercer Robert Byerts Attorneys for South Shore Chrysler Inc. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------------x In re : Chapter 11 : Chrysler, LLC, et al. al., : Case No. 09-50002 (AJG) : Debtors. : (Jointly Administered) ------------------------------------------------------------x
DECLARATION OF MICHAEL A. SHEA IN SUPPORT OF
SOUTH SHORE CHRYSLER INC.’S OBJECTION TO CHRYSLER’S MOTION
TO REJECT SOUTH SHORE CHRYSLER INC.’S DEALER AGREEMENT
Michael A. Shea, pursuant to 28 U.S.C. §1746, makes this Declaration under penalty of
perjury as follows:
1. I am the president of South Shore Chrysler Inc., a Massachusetts corporation (the
“Dealership”), which operates under the trade name South Shore Chysler. I am older than 21
years of age and suffer no legal disabilities. I am competent to make this declaration.
2. Mr. Gregory M. Shea and I own the Dealership. South Shore has been family
owned and operated since its beginnings in 1967. Both dealers are outstanding members in their
community. We are directors on the Braintree Board of Trade and the Massachusetts State Auto
Dealers Association. Both of us are graduates of the high school located directly across the
street from the dealership. We both attended local colleges and the National Auto Dealers
Association Dealer Training Academy. We run a successful business which enjoys high regard
in the Braintree community and the Boston area.
3. On May 13, 2009, we received a letter from Chrysler notifying the Dealership that
Chrysler had elected to “reject” our Chrysler Sales and Service Agreements.
4. South Shore operates from a facility located in Braintree, Massachusetts at 178
Washington Street. The Dealership’s location is the best dealership location available in the
important South Shore Boston Metro market. According to the Massachusetts Highway
Department, the South Shore Chrysler location, and brand sign, is directly visible to over
132,000 travelers on Route 3 each day. South Shore Chrysler sits at a major intersection and
stop light on Braintree’s main street. Additional traffic flows by direct frontage on Washington
Street (18,800 vehicles per day) and Church Street (data unavailable). South Shore’s owners
invested $325,000 in 2004 to purchase an adjacent lot in order to increase the Dealership’s
capacity. Highway access to Route 3, Route 93, and Route 128 is within sight of the front door.
In a letter dated November 20, 2003, Judy Wheeler, Chrysler Director of Retail Network
Development, noted: “It is a great location with high visibility”. New Chrysler will not be able
to duplicate the location and visibility of South Shore Chrysler.
5. South Shore Chrysler is within 1 mile of the South Shore Plaza, the largest
shopping mall in the region.
6. The Auto Row in Braintree runs along the Route 3 corridor and consists of a
recently built Toyota facility, South Shore Chrysler, and Herb Chambers Ford. The new Toyota
facility is .6 miles away. The other dealers in Braintree are without highway visibility. The
South Shore Boston Metro Market includes South Shore, a 42 year Chrysler dealer, as well as a
40 year Dodge dealer, and a 1 year Jeep dealer. The Chrysler and Dodge dealers operate single
franchise dealerships. The Jeep dealer is a local mega dealer with many franchises. It has
become clear that Chrysler representatives would like to take away South Shore Chrysler’s
franchise and give it to the new Jeep dealer. As South Shore Chrysler is a single franchise
dealer, cancellation of the South Shore dealer agreement will leave the Dealership with no other
franchise.
7. The newly appointed Jeep dealer is likely to receive the Chrysler franchise if
South Shore’s Chrysler dealer agreement is rejected. However, the Jeep dealer is not a positive
ambassador for the Chrysler brand, having recently been investigated by, and agreed to a
settlement of a lawsuit filed by, the Massachusetts Attorney General based upon deceptive
advertising practices.
8. By way of comparison, South Shore’s ratings have been very favorable as related
by the Chrysler LLC internal scorecard. For 2008, South Shore Chrysler was rated 679 out of
3000 dealers nationally.
9. South Shore Chrysler has spent several hundred thousand dollars to improve the
facility and signage. South Shore’s owners have aggressively pursued additional Chrysler group
franchises, and related to Chrysler representatives, on several occasions, their intent to
completely renovate or replace the current facility after the addition of additional Chrysler group
franchises. The dealership facility complies with Five Star Certification. In 2007, the present
South Shore Chrysler facility received passing marks from a Chrysler dispatched third party
inspector. South Shore’s facility presently includes eleven (11) service bays. An additional
building on the property currently used as an auto body repair shop, can be immediately
converted to provide additional sales and/or service capacity.
10. The Dealership spent an average Eighty Thousand Dollars ($80,000.00) a year,
and is prepared to nearly double that in the future, in advertising and promoting itself and the
Chrysler brand.
11. While gross sales of the Dealership have fallen in the last five (5) years, as is the
case with most all Chrysler dealers, the Dealership has been able to maintain strong sales
performance, consistently exceeding 100% of Minimum Sales Responsibility (MSR) – a difficult
task in these economic times. The Dealership has provided Chrysler with excellent
representation in the market the past five years:
New Unit Sales: % MSR
2004 259 122% 2005 240 128% 2006 196. 141%
2007 160. 111%
2008 137 100% thru October 98% thru December
12. South Shore Chrysler has consistently ranked among the top, based on sales, of all
New England Chrysler dealers. In 2008 South Shore Chrysler ranked fifth, based on sales, for
all New England Chrysler dealers.
13. Chrysler has often expressed its satisfaction with the Dealership’s operations and
performance. Chrysler has never notified the Dealership’s owners of any failure to comply with
the sales and service obligations under the Chrysler Sales and Service Agreement
14. South Shore Chrysler’s market stretches well into Boston and as far south as
Hanover. South Shore Chrysler is the only Chrysler brand dealer in this large metro market. In
2007, South Shore Chrysler absorbed most of the sales responsibility of Foley Chrysler, a local
Chrysler brand competitor that ceased operations. South Shore Chrysler received the majority of
Foley Chrysler’s market responsibility as well as an additional area - the Cohasset Sales
Locality. South Shore Chrysler’s responsibility nearly doubled, rising from roughly 6.5% of the
market in 2006 to 12% in 2008. Despite an assignment of a drastically higher percentage of the
market, South Shore Chrysler maintained its sales responsibility. In a letter dated October 7,
2008, J. W. Dimond, Chrysler National Dealer Placement Manager, said “I agree that you have
performed well representing the Chrysler brand and appreciate your efforts”.
15. South Shore has a great reputation in this market, and achieved undeniable sales
success while consistently maintaining a Customer Service Index (CSI) score at or above the
National average. Since 2005, the Dealership has received better than average marks for
providing Chrysler customers with excellent service:
Sales Natl Avg Svc Natl Avg 2005 94% 94% 98% 90% 2006 95% 94% 96% 90% 2007 96% 94% 91% 90% 2008 95% 94% 92% 91%
16. Chrysler currently imposes upon the Dealership a working capital requirement of
Seven Hundred Seventy-One Thousand Eight Hundred Twenty Eight Dollars ($771,828).
The current actual net working capital exceeds One Million Two Hundred Twenty-Eight
Thousand Six Hundred Seven Dollars ($1,228,607.00), and well satisfies the Chrysler
requirement. South Shore is sufficiently capitalized to remain a profitable Chrysler brand dealer
and invest in the necessary measures to improve and expand the business.
17. Despite our dedication and success, Chrysler has consistently failed to support our
efforts to acquire the Jeep and Dodge line makes. In 1999 South Shore began to work in earnest
with representatives of Chrysler to consolidate, first the Jeep and then the Dodge brand with our
Chrysler brand under one roof. The Dealership invested in our facility and in additional land and
committed to Chrysler to invest more. We promised to provide additional working capital and to
contribute to any buyout action that would likely take place. We had more than 100 meetings and
conversations with representatives of Chrysler and with the local dealers involved, working
closely with Chrysler towards our common goal of building a multi-brand Chrysler dealership on
the south shore of the Boston Metro market.
18. South Shore Chrysler has been involved in discussions with Chrysler and made
plans to add the Jeep line to implement Project 2000- combining three linemakes at one location.
The Dealership worked with Foley Chrysler of Quincy and Chrysler Corporation to buyout our
neighboring Jeep store. For 3 years South Shore Chrysler worked with Chrysler to achieve this
plan, committing to invest $600,000 toward the purchase of the Jeep franchise, and to conduct a
major facility renovation. Although South Shore was ready willing and able to close the deal,
the Jeep dealer withdrew his interest in selling in 2001.
19. South Shore continued to invest in the facility and improve the business. In
October 2003, Chrysler Dealer Network representatives Bill Doucette and Judy Wheeler came to
South Shore Chrysler to discuss project Alpha- combining three linemakes at one dealer.
Chrysler told the Dealership that our record and our location were impressive, that Chrysler
would help us buy Jeep, South Shore would renovate the facility, and then add the Dodge brand.
South Shore agreed to the plan, reopened discussions with Hassan Jeep and reported our progress
to Bill Doucette. In March of 2005, South Shore met with Chrysler representatives Steve Corle
and Bill Doucette, who again suggested that South Shore Chrysler purchase Hassan Brother's
Jeep with Chrysler's assistance and move it to our present location. South Shore agreed to invest
in the purchase, to renovate our facility and provide additional capital and land as needed.
Although this plan began to move, another participant had financial difficulties.
20. In March of 2007 South Shore was involved in negotiations to purchase a new
Facility, Chrysler representatives told us that the facility needed a larger showroom and that we
could represent the South Shore of the Boston metro better from our existing location. We
agreed.
21. At an August 15, 2007, meeting Chrysler asked South Shore to invest to help
facilitate the Boston Metro network plans and, once again, we agreed. At an October 11, 2007,
meeting we walked the South Shore Chrysler facility with Chrysler representatives, confirmed
our business plans and reiterated our commitment to invest in capital, land and facility to house
the Chrysler, Jeep and Dodge brands. However, Chrysler was involved in secret negotiations
with Dan Quirk, a neighboring non-Chrysler dealer, to acquire the Hassan Jeep franchise.
22. In January of 2008 Chrysler abruptly announced the transfer of the neighboring
Jeep franchise, a franchise we had worked to acquire, to Dan Quirk, who had no other Chrysler
dealership or linemake. This action breached the repeated representations made to South Shore
by Chrysler representatives confirming that the Jeep franchise would be transferred to South
Shore. Chrysler has moved the Jeep franchise from its former location in Quincy to Braintree,
literally in our back yard. After nearly ten years of planning and working to complete the desired
combination of Chrysler, Dodge and Jeep at South Shore, Chrysler simply gave the franchise to
our competitor, as a stand alone franchise. Although we had been long lead to believe Chrysler
supported our attempt to implement their plan, Chrysler has now rebuffed and blocked our
efforts to achieve their preferred alignment.
23. Our service and Parts Department has the best top factory trained automotive personal in the area.
24. The Dealership is profitable based on earnings before interest, depreciation, taxes
and amortization.
25. The Dealership has a history of stability in its staffing and management. The
Dealership’s owners, Mike and Greg Shea have been employed at the Dealership for twenty two
(22) and eighteen (18) years, respectively. The Dealership’s sales manager, Glenn Smith, has
been with the Dealership for ten (10) years. The Dealership’s parts manager, has been employed
by the Dealership for twenty-four (24) years and held his management position for fifteen (15)
years. Although the fixed operations (service) manager, Paul Sutherland, has worked for the
Dealership for two (2) years, he has thirty (30) years of service management experience. These
are dedicated employees of the Dealership and critical ambassadors of the Chrysler brand, as
they are on the front line with customers on a daily basis.
26. South Shore Chrysler has spent several hundred thousand dollars to improve the
facility and signage. On several occasions, the owners have committed to Chrysler
representatives to completely renovate or replace the current facility in connection with the
proposed acquisition of additional Chrysler group franchises. In 2004 South Shore drew up new
facility plans and shared them with Chrysler representatives. The dealership facility continues to
remain compliant with Five Star Certification and in 2007, the present South Shore Chrysler
facility received passing marks from a Chrysler dispatched third party.
27. The Dealership’s vehicle inventory is financed through Chrysler Financial, which
provides a credit line in the total amount of three million dollars ($3,000,000.00) for vehicles in
compliance with Chryslers’ floorplan financing requirements.
28. The Dealership has relationships with many high-quality retail finance providers,
including Chrysler Financial, as well as credit unions, which provide competitive financing for
customers purchasing vehicles from the dealership.
29. There is no Genesis compliant store in our market. Rejecting South Shore’s
franchise agreement would leave Chrysler with no coverage in a market with two Toyota stores,
two Nissan stores, and two Chevrolet stores. The Dealership location, and history of exceptional
performance, make South Shore the best choice for Chrysler to cover the important South Shore
Metro Boston market.
Dated: May 26, 2009.
/s/ Michael A. Shea Michael A. Shea, President South Shore Chrysler Inc.
Hearing Date and Time: June 3, 2009 at 10:00 a.m., ET ROBINSON BROG LEINWAND GREENE, GENOVESE & GLUCK, P.C. 1345 Avenue of the Americas New York, New York 10105 Telephone: (212) 603-6300 Facsimile: (212) 956-2174 Russell P. McRory Fred B. Ringel A. Mitchell Greene Robert R. Leinwand MYERS & FULLER P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 Telephone: (850) 878-6404 Facsimile: (850) 942-4869 Richard Sox Shawn D. Mercer Robert Byerts Attorneys for Wallace Chrysler Jeep, LLC UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------------x In re : Chapter 11 : Chrysler, LLC, et. al., : Case No. 09-50002 (AJG) : Debtors. : (Jointly Administered) ------------------------------------------------------------x
DECLARATION OF WILLIAM WALLACE IN SUPPORT OF
WALLACE CHRYSLER JEEP, LLC’S OBJECTION TO CHRYSLER’S MOTION
TO REJECT WALLACE CHYRLSER JEEP’S DEALER AGREEMENT
William Wallace, pursuant to 28 U.S.C. §1746, makes this Declaration under penalty of
perjury as follows:
1. I am the president of Wallace Chrysler Jeep, LLC, a Florida company (the
“Dealership”), which operates a Chrysler and Jeep brand franchise from a facility located in Ft.
Pierce, Florida at 5555 South U.S. Highway 1 (the “Current Facility”). I am older than 21
years of age and suffer no legal disabilities. I am competent to make this declaration.
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2. The Dealership has been operating at the Current Facility for 4 years in the case
of the Jeep franchise and for 3 years in the case of the Chrysler franchise.
3. The Dealership purchased the Jeep franchise in October, 2005 at a cost of Fifteen
Million and 00/100 Dollars ($15,000,000.00) and the Chrysler franchise in May, 2006 at a cost
of Four Million and 00/100 Dollars ($4,000,000.00). In addition, we have made capital
investments in the Current Facility of in excess of One Million and 00/100 Dollars
($1,000,000.00) (the “Chrysler Capital Investment”) to assist Chrysler with its efforts to
strengthen its brand identity and representation in the Ft. Pierce, Florida market.
4. Beginning in approximately 2001, Chrysler introduced its Alpha Project, which
consisted of combining the Chrysler, Dodge and Jeep brands at one location with uniform
branding, to all dealers. As it was doing throughout the United States, Chrysler representatives
visited the Dealership to discuss the Alpha Project and encouraged me to invest in helping
Chrysler to achieve its program objectives for the Ft. Pierce market. Following representations
made by Chrysler as to the expected advantages of combining all three brands under one roof,
we negotiated the purchase of the Chrysler franchise to be combined with the Jeep franchise in
May, 2006. Also based upon Chrysler’s representations as to the expected advantages of having
an Alpha store (now known as “Genesis”), for some time we have been attempting to negotiate
the purchase of the local Dodge dealership. That dealership recently sought bankruptcy
protection.
5. On May 13, 2009, I received a letter from Chrysler notifying the Dealership that
Chrysler had elected to “reject” our Chrysler and Jeep Sales and Service Agreement (the
“Rejection Letter”). The rejection of our Dealership leaves no Chrysler dealer in Martin
County or St. Lucie County, Florida. There is currently a Chrysler dealer twenty (20) miles
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north of our location in Vero Beach, Indian River County, Florida. There is currently a Chrysler
dealer twenty-one (21) miles to our south in Hobe Sound, Martin County, Florida but this
dealership has been included on the rejected dealer list which leaves the next closest Chrysler
dealer some sixty (60) miles to our south.
6. The population of Martin and St. Lucie counties is in excess of 400,000 and is
growing on a yearly basis. There are currently 33,000 Chrysler, Dodge and Jeep vehicles in
operation in St. Lucie and Martin counties, Florida. If our Chrysler and Jeep Sales and
Service Agreements are ultimately rejected, the Chrysler customers who live and work in St.
Lucie County will have as much as a 35 mile and 55 minute drive to the nearest Chrysler dealer
to the North and the Chrysler customers who live and work in Martin County will have as much
as a 35 mile and a 60 minute drive to the nearest Chrysler dealer to the south.
7. The Current Facility currently has an approximately 5,000 square foot showroom
which allows for the indoor display of 6 vehicles and a service department with 32 service bays
to meet customer service demands. The customer write-up and waiting areas are impeccably
furnished and have all the comforts of home including internet access and large-screen
television. The Dealership has ample customer and vehicle inventory parking. The Current
Facility exceeds Chrysler’s facility planning guidelines.
8. The Current Facility is ideally located along the newly expanded, six lane U.S.
Highway 1 in Ft. Pierce, Florida. U.S. 1 is the main north-south thoroughfare through St. Lucie
and Martin counties. The Dealership is located at the beginning of an Automotive Row
containing most other “first-tier” franchised vehicle brands, including Toyota and Honda.
The Dealership is located approximately 15 minutes from the Treasure Coast Square Mall, the
largest mall in the area, with 120 stores and shops.
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9. While our percentage of sales to our Minimum Sales Responsibility fell in 2008,
this was due entirely to the massive U.S. Highway 1 expansion project conducted in front of the
dealership. The Road Project was a well-publicized debacle and was a severe hardship for all
businesses on the roadway. In both 2006 and 2007, the Dealership performed at 100% of its
Minimum Sales Responsibility as determined by Chrysler which clearly demonstrates our ability
to effectively sell Chrysler products in our market when not handicapped by factors out of our
control.
10. With the Road Project completed, we are on pace to increase our sales percentage
to our historical levels of meeting and exceeding Chrysler’s expectations for the Dealership.
11. Historically, the Dealership spends in excess of Fifty Thousand and 00/100
Dollars ($50,000.00) per month in advertising and promoting itself and the Chrysler brands to
customers in the St. Lucie and Martin counties market. The Dealership is prepared to continue to
invest in promoting itself and the Chrysler brand products at this same rate going forward.
12. Chrysler currently imposes upon the Dealership a working capital requirement of
Eight Hundred Ninety-Four Thousand and 00/100 Dollars ($894,000.00). The current actual
net working capital is in excess of the required amount. In addition, we have immediate access
to $7,000,000.00 in additional working capital as needed.
13. The Dealership has a history of stability in its staffing and management. The
Dealership’s General Manager, Rusty Wallace, has been employed with the Dealership for
twenty (20) years. Scott O’Keefe, the Dealership’s Fixed Operations Manager, has been
employed in that capacity for the past several months but has over twenty years (20) years
experience in the parts and service areas of another dealership in our market. These dedicated
employees have helped the Dealership earn numerous sales and service awards as well as
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5
Chrysler’s prestigious Five Star Award. These individuals have long-term, solid relationships
with the Dealership’s large customer base in the St. Lucie and Martin county area.
14. The Dealership’s vehicle inventory is financed through SunTrust Bank, which
provides a credit line in the amount of Six Million and 00/100 Dollars ($6,000,000.00). This
floorplan capacity complies with Chryslers’ requirements.
15. The Dealership has relationships with many high-quality retail finance providers,
such as Wachovia Bank, GMAC, Capital One and Chase Bank, which provide competitive
financing for customers purchasing vehicles from the Dealership.
16. The Dealership has repeatedly purchased additional inventory from Chrysler,
even when not needed to meet customer demand, when asked to do so by Chrysler
representatives over the past 24 months.
17. The Dealership is best suited in size, location, personnel and performance to serve
the sales and service needs of Chrysler, Dodge and Jeep customers in St. Lucie and Martin
counties, Florida. Without the Dealership a large number of customers will not have access
to a Chrysler, Dodge or Jeep sales and service facility.
Dated: May 26, 2009
/s/ William Wallace William Wallace, President Wallace Chrysler Jeep, LLC
Hearing Date and Time: June 3, 2009 at 10:00 a.m., ET ROBINSON BROG LEINWAND GREENE, GENOVESE & GLUCK, P.C. 1345 Avenue of the Americas New York, New York 10105 Telephone: (212) 603-6300 Facsimile: (212) 956-2174 Russell P. McRory Fred B. Ringel A. Mitchell Greene Robert R. Leinwand MYERS & FULLER P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 Telephone: (850) 878-6404 Facsimile: (850) 942-4869 Richard Sox Shawn D. Mercer Robert Byerts Attorneys for Wright Dodge, LLC UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------------x In re : Chapter 11 : Chrysler, LLC, et. al., : Case No. 09-50002 (AJG) : Debtors. : (Jointly Administered) ------------------------------------------------------------x
DECLARATION OF KEN WRIGHT IN SUPPORT OF
WRIGHT DODGE, LLC’S OBJECTION TO CHRYSLER’S MOTION
TO REJECT WRIGHT DODGE’S DEALER AGREEMENT
Ken Wright, pursuant to 28 U.S.C. §1746, makes this Declaration under penalty of
perjury as follows:
1. I am the president of Wright Dodge, LLC, a Pennsylvania corporation (the
“Dealership”), which operates under the tradename Wright Dodge from a facility located in
Wexford, Pennsylvania at 10677 Perry Highway (the “Current Facility”). I am older than 21
years of age and suffer no legal disabilities. I am competent to make this declaration.
1
2. The Dealership been operating at the Current Facility since 2006 and is owned by
Robert Wright and I (collectively referred to as “the Owners”).
3. As described below, the Owners have made capital investments in the Dealership
and the Current Facility in excess of One Million Two Hundred Thousand and 00/100 Dollars
($1,200,000.00) (the “Chrysler Capital Investment”) to assist Chrysler with its efforts to
strengthen its brand identity and representation in the Wexford, Pennsylvania market.
4. On May 13, 2009, I received a letter from Chrysler notifying the Dealership that
Chrysler had elected to “reject” our Dodge Sales and Service Agreement (the “Rejection
Letter”). I have reviewed the dealers in the Wexford and outlying market that have also been
rejected by Chrysler. There is a Chrysler Jeep dealer ten (10) miles south of Wexford that is not
on the rejected dealer list and a Dodge dealer approximately fifteen (15) miles away that if being
eliminated as well.
5. We acquired the Dodge franchise in March of 2006 at a cost of in excess of
$1,000,000. Shortly thereafter, we reconstructed and repaved the entire parking area around the
Dealership at a cost of approximately $200,000. Only months after our purchase of the Dodge
franchise, Chrysler representatives began urging us to purchase the local Chrysler and Jeep
franchises or sell our Dodge franchise to the Chrysler Jeep dealer as part of Chrysler’s Genesis
Project. The Genesis Project consists of combining the Chrysler, Dodge and Jeep brands at one
location with uniform branding. Chrysler representatives visited the Dealership and made
representations as to the expected advantages of combining all three brands under one roof.
Despite our repeated attempts to comply with Chrysler’s desire, we were unable to reach a deal
with the Chrysler Jeep dealer.
2
6. We expect that Chrysler intends to provide the Chrysler Jeep dealer with a Dodge
franchise. Our Dealership is, however, much better suited to maintaining all 3 brands at one
dealership location. If, on the other hand, Chrysler does not intend to reestablish a Dodge store
in the Wexford area then Dodge customers are left with a very long and inconvenient drive
outside of town to the next closest Dodge dealer.
7. The Current Facility has an approximately 3,300 square foot showroom which
allows for the indoor display of 6 vehicles and a service department with approximately 9,500
square feet containing 9 service bays. The customer write-up and waiting areas are impeccably
furnished and have all the comforts of home including internet access and large-screen
television. The Dealership has ample customer and vehicle inventory parking. The Current
Facility exceeds Chrysler’s facility planning guidelines.
8. The Current Facility is ideally located along an “Auto Row” on Perry Highway
which is the main thoroughfare through town. The Current Facility is located within a few
hundred yards from most other automobile franchised brands, including Nissan, Toyota, Honda,
Chevrolet, Hummer, Hyundai, Suzuki, Saab, Pontiac, Buick and GMC. The Current Facility is
substantially compliant with Chrysler’s facility guidelines.
9. While gross sales of the Dealership have fallen in the last year, as is the case with
most all Chrysler dealers, the Dealership has been able to maintain strong sales performance in
these difficult economic times. The Dealership has historically performed to Chrysler’s
standards and has received the coveted “Five Star” dealer rating each year we have been in
business.
3
10. Historically, the Dealership spends in excess of Eighty Thousand and 00/100
Dollars ($80,000.00) a year in advertising and promoting itself and the Dodge brand to
customers in the Wexford market.
11. Chrysler currently imposes upon the Dealership a working capital requirement of
Eight Hundred Fifty-One Thousand and 00/100 Dollars ($851,000.00). The current actual
net working capital is One Million Three Hundred Twelve Thousand and 00/100 Dollars
($1,312,000).
12. The Dealership has a history of stability in its staffing and management. The
Dealership’s general manager, Robert Wright, has been employed in that role since the inception
of the Dealership and has been in the automotive business since 1978. Matt Miller, the
Dealership’s Fixed Operations Manager has been employed in that capacity since the
Dealership’s inception and has been in the automotive business for over twenty (20) years.
These dedicated employees have helped the Dealership earn the Five Star Award since the
Dealership’s inception. These individuals have long-term, solid relationships with the
Dealership’s large customer base in the Wexford area.
13. The Dealership’s vehicle inventory is financed through Chrysler Financial and
complies with Chryslers’ requirements.
14. The Dealership has relationships with many high-quality retail finance providers,
such as GMAC, PNC Bank and Huntington National Bank, which provide competitive financing
for customers purchasing vehicles from the dealership.
15. The Dealership is best suited in size, location, personnel and performance to serve
the sales and service needs of Dodge customers (Chrysler and Jeep customers, as well) in the
Wexford market.
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5
Dated: May 26, 2009
/s/ Kenneth Wright Kenneth Wright, President Wright Dodge, LLC
1
Hearing Date and Time: June 3, 2009 at 10:00 a.m., ET ROBINSON BROG LEINWAND GREENE, GENOVESE & GLUCK, P.C. 1345 Avenue of the Americas New York, New York 10105 Telephone: (212) 603-6300 Facsimile: (212) 956-2174 Russell P. McRory Fred B. Ringel A. Mitchell Greene Robert R. Leinwand MYERS & FULLER P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 Telephone: (850) 878-6404 Facsimile: (850) 942-4869 Richard Sox Shawn D. Mercer Robert Byerts Attorneys for John Cullen Dodge, LLC UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------------x In re : Chapter 11 : Chrysler, LLC, et. al., : Case No. 09-50002 (AJG) : Debtors. : (Jointly Administered) ------------------------------------------------------------x
DECLARATION OF JOHN CULLEN IN SUPPORT OF
JOHN CULLEN DODGE, LLC’S OBJECTION TO CHRYSLER’S MOTION
TO REJECT JOHN CULLEN DODGE’S DEALER AGREEMENT
John Cullen, pursuant to 28 U.S.C. §1746, make this Declaration under penalty of perjury
as follows:
1. I am the president of John Cullen Dodge, LLC, a Georgia limited liability
company (the “Dealership”), which operates from a facility located at 40 Walt Sanders
Memorial Drive, Newnan, Coweta County, Georgia (the “Facility”). I am older than 21 years of
age and suffer no legal disabilities. I am competent to make this declaration.
2
2. I am the sole owner/member of the Dealership, which represents the Dodge brand.
The Dealership represents Dodge, exclusively; no other new vehicle brands are represented by
the Dealership.
3. In June of 2007, I purchased the Dodge franchise and made a capital investment
in excess One Million Eight Hundred Thousand and 00/100 Dollars ($1,800,000.00) (the
“Chrysler Capital Investment”). Given the short time frame since that purchase, I have not
realized my expected return on the Chrysler Capital Investment.
4. On May 13, 2009, I received a letter from Chrysler notifying the Dealership that
Chrysler had elected to “reject” our Dodge Sales and Service Agreement (the “Rejection
Letter”). In addition to the Dealership, Chrysler has also rejected the only other Chrysler
dealership in Coweta, County - Southtowne Chrysler, Jeep. The Dealership has never received
any notice from Chrysler that the Dealership is failing to meet its sales and service obligations
under our dealer sales and service agreement, so receipt of the Rejection Letter was a shock.
5. Chrysler’s decision to reject the Dealership cannot be reconciled with its decision-
making in counties adjacent to Coweta County. Chrysler’s primary performance criteria is the
dealership’s sales performance. The combined Chrysler, Dodge, and Jeep sales from the
Dealership and the other Coweta County Chrysler dealership (314 units/2008; 533 units/2007)
exceeded the sales of four (4) out of the six (6) neighboring Chrysler dealerships. Yet, not a
single one of the six (6) closest Chrysler, Dodge, Jeep dealers in other counties were rejected.
Only Coweta County suffered rejections, despite outselling the neighboring dealers.
6. Among the reasons for the success of the Coweta County Chrysler dealerships are
the county’s demographics, which are far superior to the counties in which the surrounding
Chrysler dealers are located. Coweta County is one of the fastest growing counties in Georgia
3
and the forty-first (41st) fastest growing county in the United States. Atlanta, Georgia is one of
the fastest growing metropolitan markets in the United States, and Coweta County is clearly in
the path of progress. The median household income in the county is greater than each of the
neighboring counties in which Chrysler elected not to reject a dealer. As an example of Coweta
County’s business growth, Toyota Motor Sales, Inc. recently added a dealership to the county
and American Honda Motor Company recently announced it was establishing a dealership in the
county.
7. As a result of Chrysler’s proposed action, the closest Chrysler dealer to Newnan,
Georgia will now be over sixteen (16) miles away.
8. The Dealership has been a excellent business partner with Chrysler. We have
participated in many of Chrysler’s programs for its dealers and have a shared vision for our
market. We invested over Two Hundred Eighty Thousand and 00/100 Dollars ($280,000.00)
in advertising the Chrysler brand in 2008, which was to the mutual benefit of Chrysler and the
Dealership.
9. The Dealership has been well positioned to incorporate into its operations the
Chrysler and Jeep brands. I have been willing and continue to be interested in incorporating all
three brands at the Facility. Based on the substantial investment I made in Coweta County, The
Dealership deserves consideration for any plan to consolidate the Chrysler brands.
10. The Facility, which was originally built in 2000, meets Chrysler’s facility
planning guides and branding requirements, and consists of a total of 17,379 square feet under
roof. There are 11 service bays in the service department, which provides ample capacity to
address customer demand for service. There is also ample parking for display and customers, all
in compliance with Chrysler’s requirements.
4
11. The Facility is optimally located on a corner lot, within one (1) mile of big box
retailers, such as Home Depot, Lowe’s and Walmart. The market’s shopping mall (Ashley Park)
is within two (2) miles. The corner lot location of the Facility plus its proximity to shopping
destinations provides excellent visibility to consumers. For 2008, the average traffic count for
our corner location was 33,240 per day and 232,680 per week. Chrysler has never indicated that
it was dissatisfied with the location of the Facility or its configuration.
12. The Dealership, under its current ownership, was established less than two (2)
years ago. As such, the Dealership has not yet reached its full potential in the Coweta county
market. However, our performance since the Dealership’s inception demonstrates its viability
and the strength of the market. After the Dealership initiated Dodge operations, it doubled the
sales of the previous owner. The year 2008 was a difficult period for all dealers, and should not
be viewed as a standard of comparison because of the historic events that occurred in the banking
industry and the economy. Throughout this challenging period, however, the Dealership took
excellent care of its customers and enjoyed sales and service customer satisfaction scores in the
90th percentile.
13. The Dealership’s absorption rate, which is the percentage that the Dealership’s
total operating costs are covered by the income of the Dealership’s service department, exceeds
54% and is an indicator of profitability. Bigger absorption rate is better. According to the
National Automobile Dealers Association, the average absorption rate of a franchised motor
vehicle dealer for 2008 was 55%.
14. Our current net working capital level is approximately One Million Seventy Five
Thousand and 00/100 Dollars ($1,075,000.00), which is in substantial compliance with
Chrysler’s requirement of One Million Eighty Eight Thousand Eight Hundred Seventy Nine
5
00/100 Dollars ($1,088,879.00). The Dealership has ample working capital to meet the demand
of the current economic climate.
15. Since its inception, the Dealership has enjoyed stability in its staffing and
management. There is a low rate of attrition for employees. The dealership’s employees are
dedicated and critical ambassadors of the Dodge brand, as they are on the front line with
customers on a daily basis.
16. The Dealership’s vehicle inventory is financed through Chrysler Financial, which
provides a new vehicle credit line in the amount of Three Million and 00/100 Dollars
($3,000,000.00). This line complies with Chryslers’ requirements.
17. The Dealership has relationships with many high-quality retail finance providers,
such as Chrysler Financial, BB&T, Bank of America, Citizen’s Auto Finance, Credit Union
Loan Source, and Wachovia, which provide competitive financing for customers purchasing
vehicles from the dealership.
18. The Dealership is optimally suited in size, capacity, personnel, and performance
to serve the sales and service needs of Chrysler customers in the Coweta County, Georgia
market. The Dealership should be afforded the opportunity consolidate with Chrysler Jeep so
that it can serve Coweta County, Georgia as a Chrysler Genesis dealer.
I declare under penalty of perjury that the foregoing statements are true and correct.
Dated: May 26, 2009
/s/ John Cullen John Cullen, President John Cullen Dodge, LLC
{00435460.DOC;1}1
Hearing Date and Time: June 3, 2009 at 10:00 a.m., ETROBINSON BROG LEINWAND
GREENE, GENOVESE & GLUCK, P.C.1345 Avenue of the AmericasNew York, New York 10105Telephone: (212) 603-6300Fascimile: (212) 956-2174Russell P. McRoryFred B. RingelA. Mitchell GreeneRobert R. Leinwand
Attorneys for Southeast Automotive, Inc.
UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK-------------------------------------------------------------xIn re : Chapter 11
:Chrysler, LLC, et. al., : Case No. 09-50002 (AJG)
:Debtors. : (Jointly Administered)
------------------------------------------------------------x
DECLARATION OF JOEY HUFFINES IN SUPPORT OFSOUTHEAST AUTOMOTIVE INC.’S OBJECTION TO CHRYSLER’S MOTION
TO REJECT SOUTHEAST AUTOMOTIVE INC.’S DEALER AGREEMENT
Joey Huffines, pursuant to 28 U.S.C. §1746, makes this Declaration under penalty of
perjury as follows:
1. I am the General Manager of Southeast Automotive Inc., which operates
“Southeast Chrysler Jeep Dodge” (“Southeast Automotive” or the “Dealership”) from a facility
located in Nashville, Tennessee at 2800 Nolensville Road (the “Facility”). Southeast
Automotive is currently the only dealer selling Chrysler’s brands in the City of Nashville.
2. William J. Pratt, Jr. and Dennis Dunker are the co-owners of the Dealership. The
Dealership first began as a stand alone Jeep dealership in 1984. At Chrysler’s urging, Southeast
Automotive added the Chrysler brand in 1995 and Dodge in 2007. Southeast Automotive is,
therefore, fully compliant with Chrysler’s Genesis Program.
{00435460.DOC;1}2
3. The Dealership has a history of stability in its staffing and management. The
Dealer Principal, William J. Pratt, Jr., has served as President since 1984. Mr. Pratt has served
on the National Dealer Council, has received the Chrysler Award for Excellence, Presidents
Club, Eagles Club and is currently a Five-Star Dealer. I am the General Manager/Controller and
I have been with the dealership since 1987 in several capacities including sales person, finance
manager, used vehicle manager, general sales manager, controller, director, and
secretary/treasurer. The new vehicle sales manager is Wayne Beatty and he has been with the
dealership since 1992. He has been a Chrysler Certified Sales Manager for the last 9 years and
was a Chrysler Certified Sales Person for 8 years prior to that. The Service Manager is Milo
Wright and he has been with us since 1983 with a brief interruption from Dec 2002 until April
2006. He is a Certified Master Technician and has been a Chrysler Certified Service Manager
since earning that position. The parts manager is a fairly recent addition to Southeast but has
been a Chrysler Certified Parts Manager for over 20 years. Our previous parts manager was with
us for over 20 years as well and recently retired. Our sales, service and parts teams have all been
Chrysler Certified year in and year out. Our management team has been extremely consistent
over the years and that is also the case within the staff with numerous employees with over 20
years of service with Southeast. These are all dedicated employees of the Dealership and critical
ambassadors of the Chrysler brand, as they are on the front line with customers on a daily basis.
4. The Dealership has made countless improvements and changes to its operations in
response to Chrysler’s requirements; participated in most, if not all, of Chrysler’s programs for
its dealers; consistently accepted additional Chrysler vehicle inventory when other surrounding
dealers had declined and the business demands of the Dealership did not warrant extra inventory;
{00435460.DOC;1}3
and has otherwise been an excellent partner with Chrysler with a shared vision of the Nashville
market.
5. On May 13, 2009, I received a letter from Chrysler notifying the Dealership that
Chrysler had elected to “reject” our Chrysler, Dodge, Jeep Sales and Service Agreements. I am
obviously very familiar with the Nashville, Tennessee dealer network and was surprised because
Southeast is the only surviving dealer in the city of Nashville, and therefore, Chrysler’s action
would, on its face, result in a complete lack of representation in a major American city. Since
that would be a ludicrous result, one can only infer that Chrysler has a more sinister motive.
6. Throughout the years Chrysler sought, and received, Southeast Automotive’s
cooperation in achieving its Genesis Project goal for the Nashville, Tennessee market of
combining the Dodge, Chrysler, and Jeep brands under one rooftop with uniform branding.
Based on numerous discussions with Chrysler representatives about Chrysler’s vision for the
Nashville, Tennessee market, we made substantial investments with the expectation that the
Dealership would represent Chrysler and its brands in Nashville, Tennessee for years to come.
7. In 2007, Southeast Automotive purchased Music City’s Dodge “shingle” and
assets for about $1.5 million. That enabled Southeast Automotive to be a “full line” dealer and
compliant with Project Genesis.
8. To complete Chrysler’s “rationalization” of the Nashville dealer network, in April
2008, Chrysler entered into a Market Action Agreement with Southeast Automotive and the two
other remaining dealers in the Nashville market: Music City Dodge, also in Nashville, and
Vergara Dodge in Antioch, Tennessee. A copy of the Market Action Agreement is annexed
hereto as Exhibit “A.” Furthermore, at Chrysler’s urging, Southeast Automotive purchased
{00435460.DOC;1}4
property from Chrysler Realty Corporation elsewhere in Nashville for a new facility, at a cost of
nearly $5 million.
9. The plan was then for Vergara Dodge to itself become Genesis-compliant;
however, Vergara Dodge went out of business earlier this year leaving Southeast Automotive as
the only dealer for Chrysler brands in Nashville proper.
10. In short, however, pursuant to the Market Action Agreement, Chrysler and
Southeast have achieved Chrysler’s Project Genesis goal in Nashville. All three brands are
under Southeast Automotive’s one roof and Southeast Automotive is ready to operate the
Genesis-compliant dealership for years to come.
11. In fact, with the demise of Vergara, Southeast Automotive is the only dealer of
the Chrysler, Dodge and Jeep brands in the City of Nashville. The nearest alternative dealers are
Bob Frensley Chrysler Jeep Dodge about 18 miles away in one direction and Alexander Chrysler
Jeep Dodge about 20 miles away in the other direction.
12. It therefore came as a shock when Southeast Automotive, Chrysler’s only
remaining dealer in Nashville proper, was designated for rejection. It was particularly surprising
because Southeast Automotive has done everything possible to cooperate with Chrysler’s Project
Genesis, including buying the Dodge shingle to round out the Dealership into a full line dealer
and purchasing property from Debtor Chrysler Realty Corporation.
13. Because it is inconceivable that Chrysler will not have a dealership in Nashville
going forward, the only conclusion that one could draw is that, after inducing Southeast
Automotive just last year into spending millions and millions of dollars buying a Dodge shingle
and real estate, that Chrysler now intends to “give” the Nashville market to another dealer. If
this Court were to allow that to happen, that would be an outrageous miscarriage of justice.
{00435460.DOC;1}5
14. I am informed by our attorneys that Chrysler will be judged against the business
judgment test. Chrysler’s business judgment for years has been implementation of Project
Genesis, which resulted in the execution of the Market Action Agreement by Chrysler and
Southeast Automotive, and the fulfillment of Chrysler’s needs in the Nashville market. With
Southeast Automotive, Chrysler already has in Nashville what it has been telling this Court, and
the world, what it wants: Project Genesis - a healthy and profitable combined Dodge, Chrysler,
and Jeep dealer under one rooftop in a major metropolitan market with uniform branding.
Chrysler’s most recent business judgment in was to induce Southeast Automotive to spend
millions on a Dodge shingle and real estate. Chrysler’s dealer network in Nashville, Tennessee
has already been “rationalized.”
15. Without any explanation or rationale however, Chrysler now asserts that its
business judgment in 2009 is for it to reject Southeast Automotive’s Dealer Agreement.
Chrysler has flunked the business judgment test.
Dated: May 26, 2009
/s/ Joey HuffinesJoey Huffines, General ManagerSoutheast Automotive, Inc.
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Hearing Date and Time: June 3, 2009 at 10:00 a.m., ET ROBINSON BROG LEINWAND GREENE, GENOVESE & GLUCK, P.C. 1345 Avenue of the Americas New York, New York 10105 Telephone: (212) 603-6300 Facsimile: (212) 956-2174 Russell P. McRory Fred B. Ringel A. Mitchell Greene Robert R. Leinwand MYERS & FULLER P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 Telephone: (850) 878-6404 Facsimile: (850) 942-4869 Richard Sox Shawn D. Mercer Robert Byerts Attorneys for Rhoden Auto Center, Inc. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------------x In re : Chapter 11 : Chrysler, LLC, et. al., : Case No. 09-50002 (AJG) : Debtors. : (Jointly Administered) ------------------------------------------------------------x
DECLARATION OF RODNEY D. RHODEN IN SUPPORT OF
RHODEN AUTO CENTER, INC.’S OBJECTION TO CHRYSLER’S MOTION
TO REJECT RHODEN CHRYSLER DODGE JEEP’S DEALER AGREEMENT
Rodney D. Rhoden, pursuant to 28 U.S.C. §1746, makes this Declaration under penalty
of perjury as follows:
1. I am President of Rhoden Auto Center, Inc. d/b/a Rhoden Chrysler Dodge Jeep,
an Iowa corporation (the “Dealership”), which operates a Chrysler, Dodge and Jeep franchise
from a facility located in Council Bluffs, Iowa at 3400 South Expressway, Council Bluffs, Iowa
2
(the “Facility”). I am older than 21 years of age and suffer no legal disabilities. I am competent
to make this declaration.
2. On May 13, 2009, I received a letter from Chrysler notifying the Dealership that
Chrysler had elected to “reject” our Chrysler, Dodge and Jeep Sales and Service Agreement (the
“Rejection Letter”). The rejection of our Dealership leaves no Chrysler, Dodge or Jeep dealer
in Council Bluffs, Iowa.
3. The Dealership has been a Chrysler franchised dealer since 1987, when it was
appointed as an authorized Chrysler and Jeep dealer. As discussed in more detail below, the
Dealership acquired the rights to the Dodge franchise in 2008.
4. The Dealership’s primary market is the Omaha/Council Bluffs Metropolitan Area,
which is divided by the Missouri River. The Omaha/Council Bluffs Metropolitan Statistical
Area has a population in excess of 800,000 and is the 60th largest in the United States. The
Council Bluffs side of the river has a population of approximately 75,000. The population in the
Metro Area is growing.
5. The Dealership is the only Chrysler Dodge Jeep dealer serving Council Bluffs,
Iowa, and is the largest dealer in the entire southwestern area of the state of Iowa. Every year
since 2005, the Dealership has been voted the “Dealership of the Year” by the Daily Nonpareil
of Council Bluffs.
6. The Facility is located on 9.3 acres of land and has over 38,000 square feet of
improvements, and meets Chrysler’s facility guidelines. The Dealership’s Facility is optimally
located along an auto row on an expressway one-quarter mile from Interstate 80/29, which is one
of the most highly traveled stretches of interstate highway system in the United States.
Numerous “big-box” retail shopping businesses are located very near the Dealership, such as
3
Walmart, Sams Club, Menard, Home Depot, Target, Kohls, Best Buy, and Penneys, which
provide the Dealership and the Chrysler brands excellent exposure to consumers.
7. Chrysler has never contacted the Dealership about the Facility failing to meet
Chrysler’s location size, image, or branding requirements.
8. The Dealership has historically performed in excess of 100% of its Minimum
Sales Responsibility, as established by Chrysler. From 2004 through 2008, the Dealership
retailed 1,427 Chrysler, Dodge and Jeep vehicles.
9. The Dealership provides excellent customer service. Since 2007, the Dealership’s
customer satisfaction scores have been in the 90th percentile.
10. The Dealership’s current net working capital requirement (effective 3/09) is
$2,228,029. After an infusion of capital on May 20, 2009, we currently maintain working capital
of approximately $2,082,404. The ownership of the Dealership contributes additional working
capital as needed.
11. The fixed absorption rate (indicating profitability) has averaged over 60%, which
is in excess of suggested guidelines published by the National Automobile Dealers Association.
Historically, the Dealership has been very profitable - it reported net earnings on its 2006 and
2007 year-ending Chrysler statements in excess of $1,000,000.00. As did many Chrysler
dealerships in the United States, the Dealership incurred a loss in 2008 as a result of the
recession and banking crisis.
12. Chrysler has never notified the Dealership that it was failing to fulfill its
obligations under the Chrysler, Dodge, Jeep dealer sales and service agreements or was
otherwise in breach of those agreements.
4
13. The Dealership first began representing the Chrysler and Jeep brands in 1987.
Beginning in the fall of 2007 and continuing into 2008, I began a series of meetings and
discussions with Jim Johnson, who initiated the contacts and was Chrysler’s dealer placement
manager in Chrysler’s Denver Zone Office, to discuss an acquisition of another Chrysler, Dodge,
Jeep store in Omaha and the discontinuance of our Council Bluffs operations as part of any such
acquisition. These conversations never led to a transaction, as the economy began to
substantially weaken; however, Mr. Johnson urged me to combine a Dodge franchise with my
already established Chrysler Jeep operations, implying that having the 3 brands consolidated
would improve my standing with Chrysler. I had previously purchased the stock of Bluffs
Dodge, Inc., an Iowa corporation, in 2001 and I was operating the dealership as a stand alone
(i.e., no other Chrysler brands) Dodge store. In 2008, Chrysler approved the transfer of the
franchise rights and inventories from Bluffs Dodge to the Dealership and the consolidation of the
Dodge dealership operations at the Facility, which should add approximately 160 additional new
vehicle sales to the Dealership. All of my communications with Chrysler suggested that I would
continue as the owner and operator of a Project Genesis store in either Omaha or in Council
Bluffs, and Chrysler gave no indication to the contrary until I received the May 13th letter. The
previous Dodge facility was left vacant and efforts to sell the land and improvements have been
unsuccessful. I continue to pay for the carrying costs of that facility.
14. Historically, the Dealership spends nearly $100,000 per month in advertising. We
aggressively promote Chrysler and its brands to customers in the Omaha/Council Bluffs market.
15. The Dealership has a history of stability in its staffing and management. The
Dealership’s General Manager, James J. Pettit, has been employed with the Dealership since
1985 and has served as GM for the last 5 years. The General Sales Manager, John B. Wilson,
5
began his employment in 2000, and has been the sales manager for the last 5 years. Our Fixed
Operations Manager (Service and Parts), David Borg, has been employed with the Dealership
since 1983 and has served in his current position for the last 5 years. The Dealership has a total
of 90 employees, one-third of which have been employed for 10 years or longer. The service
department employs 8 certified Chrysler technicians, more than any other dealership in
southwest Iowa. Similarly, there are 10 certified sales persons, more than any other dealership in
southwest Iowa. These dedicated employees have helped the Dealership earn numerous sales
and service awards. These individuals have long-term, solid relationships with the Dealership’s
large customer base in the Omaha/Council Bluffs market.
16. The Dealership’s new vehicle inventory is financed through General Motors
Acceptance Corporation, and provides financing for up to 330 new units. The Dealership also
has ample used vehicle inventory financing available.
17. The Dealership has relationships with many high-quality retail finance providers
which provide competitive financing for customers purchasing vehicles from the Dealership,
including US Bank, American National Bank, Harris Bank, Wachovia Dealer Services, SAC
Federal Credit Union, GMAC, Citi Financial, JP Morgan Chase, and Omaha Federal Credit
Union.
18. Over the past 24 months, the Dealership has repeatedly purchased additional
inventory from Chrysler, even when not needed to meet customer demand, when asked to do so
by Chrysler representatives, and the Dealership accommodated Chrysler to an even greater
degree with additional inventory purchases the last part of 2008 and early part of 2009.
6
19. The Dealership is best suited in size, location, personnel and performance to serve
the sales and service needs of Chrysler, Dodge and Jeep customers in Council Bluff and the
Omaha/Council Bluffs market.
Dated: June 1, 2009
/s/Rodney D. Rhoden Rodney D. Rhoden, President Rhoden Auto Center, Inc.
{00436337.DOC;1} 1
ROBINSON BROG LEINWAND GREENE GENOVESE & GLUCK P.C. 1345 Avenue of the Americas New York, New York 10105 Telephone: (212) 603-6300 Facsimile: (212) 956-2164 Russell P. McRory Fred B. Ringel A. Mitchell Greene Robert R. Leinwand Attorneys for South Holland Dodge, Inc. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -----------------------------------------------------------------x In re : Chapter 11 : Chrysler, LLC, et. al., : Case No. 09-50002 (AJG) : Debtors. : (Jointly Administered) -----------------------------------------------------------------x
DECLARATION OF PATRICK J. FITZGIBBON I, Patrick J. Fitzgibbon, make this Declaration under 28 U.S.C. §1746 and state:
1. I am the current principal owner and President of South Holland Dodge, Inc.
2. I operate a Dodge new car dealership at 113 West 162nd Street, South Holland,
Illinois pursuant to a New Car Dealer Agreement with Chrysler Corporation pursuant to the
Illinois Automobile Dealer Franchise Law (“South Holland” and the “Dealership”).
3. I am also the principal of the Patrick J. Fitzgibbon Family Limited Partnership
(the “Limited Partnership”) that owns the property on which South Holland Dodge, Inc. operates
the Dealership (the “Facility Premises”).
4. Pursuant to a lease and lease-back arrangement, the Limited Partnership leases the
Facility Premises to Chrysler Realty Corporation and Chrysler Realty Corporation leases the
Facility Premises back to the Dealership. As recently as April 2009, South Holland Dodge, Inc.
{00436337.DOC;1} 2
was negotiating with Chrysler Realty Corporation to extend the lease and lease-back
arrangements.
5. South Holland Dodge, Inc. has operated a Dodge new car dealership for
approximately 25 years.
6. Chrysler, through “Project Genesis,” has identified South Holland Dodge, Inc. as
its intended Genesis dealer in the area. In reliance upon its selection, South Holland acquired
additional land and built a new service department and body shop building.
7. In further reliance on its selection, South Holland expended in excess of
$2,500,000 to meet the Chrysler’s Genesis requirements for Chrysler and Jeep in addition to
Dodge vehicles.
8. In furtherance of South Holland’s selection as a Genesis dealer, South Holland
entered into an agreement with River Oaks Chrysler Jeep, Inc. to purchase the River Oaks
Chrysler and Jeep franchises with the acquisition of River Oaks Chrysler, South Holland will be
a “full line” Genesis dealer.
9. River Oaks Chrsyler Jeep, Inc. is also included in the dealerships Chrysler seeks
to reject.
10. If South Holland Dodge, Inc. and River Oaks Chrysler Jeep, Inc. are both closed
there will be no dealerships in the area and towns of South Holland and Lansing, Illinois. These
communities will lose significant sales tax and property tax revenue and the residents will be
forced to travel outside their communities for service, repairs or to purchase new vehicles.
{00436337.DOC;1} 3
11. For the reasons set forth herein, Chrysler’s motion to deny South Holland’s
franchise agreement should be denied.
Dated: June 3, 2009
_/s/ Patrick J. Fitzgibbon Patrick J. Fitzgibbon