San Antonio, Texas
On Friday, August 30th, a 12-person jury returned a unanimous verdict in favor of Hyundai Motor America, in a long-running dispute with one of its dealers. The case was tried to Hon. Rosie Alvarado, 438th District Court in San Antonio, Bexar County, Texas. The jury deliberated for 4 1/2 hours after a two-week trial before rendering the defense verdict.
The Plaintiff, Ahmad Zabihian, owns and operates two Hyundai dealerships in San Antonio under the “World Car” name. Zabihian also owns Kia, Nissan and Mazda dealerships in the San Antonio area. In 2006, Hyundai Motor America (HMA) entered into a one-page contract with Zabihian, which stated if Hyundai opened a new dealership in the San Antonio area in the next seven years, Zabihian would have the right of first refusal. Zabihian sued Hyundai, alleging a breach of the 2006 contract and claiming he was guaranteed the right to open the area’s next Hyundai dealerships. Hyundai breached the contract, Zabihian alleged, when it awarded rights to a new dealership in New Braunfels, TX to a competitor in 2013. Zabihian also sued the other dealer for intentionally interfering with the contract. All total, Plaintiff sued for lost profits of $7 million, attorneys’ fees, and punitive damages.
At trial, Plaintiff’s counsel attempted to convince the jury of a conspiracy to defraud Plaintiff, and Zabihian testified the contract guaranteed him two additional Hyundai dealerships. During closing arguments, Zabihian’s attorney, Mikal Watts, told the jury it should award $4.5 million in lost profits and $142 million in punitive damages against HMA.
HMA countered that the right of first refusal agreement was not a guarantee of future dealership and that HMA fully honored the contract. Evidence presented at trial showed that during the seven-year term of the contract, HMA did not award any new dealerships in the San Antonio/New Braunfels area, although multiple requests were received from other dealers. During that same time, World Car’s performance dropped, with one store actually being the lowest performing Hyundai dealer in Texas for several years. In May 2013, after the expiration of the contract, HMA began to negotiate with another dealer (Roger Beasley Hyundai) and eventually awarded the New Braunfels dealership to Beasley in Octoer 2013. Zabihian filed suite two months later in December 2013.
During trial, HMA successfully argued that Plaintiff’s claim for attorneys’ fees should be dismissed, and that certain opinions given by the Plaintiff’s damage expert (Keith Fairchild, PhD) should be struct pursuant to Daubert challenge. The court rendered directed verdict on Zabihian’s attorneys’ fees claim and only allowed Dr. Fairchild to give limited damage opinions. The jury deliberated for 4 1/2 hours before reaching its unanimous verdict rejecting all of Plaintiff’s claims. “In speaking with some of the jurors after receiving their verdict,” said Kevin Young, “it is clear they agreed ‘a deal is a deal’ and that Hyundai honored that deal. That’s very gratifying given the good lawyering by my opponents.”
The case was hotly contested for six years, and was stayed for a period of time while these same parties litigated other claims made by World Car in an administrative proceeding before the Texas Department of Motor Vehicles. [In that proceeding, an Administrative Law Judge issued a 27-page proposed ruling in favor of HMA, was recently approved by the Texas DMV board]. World Car recently litigated with Nissan and is currently in litigation with Mazda before the Texas DMV.
David Prichard, Kevin Young and Mark Wolfe (Prichard Young, LLP – San Antonio, TX) and Tom Vanderford (Associate General Counsel, Hyundai Motor America – Fountain Valley, CA) represented HMA. Mikal Watts, Frank Guerra and Ed Allred of the Watts/Guerra firm (San Antonio, TX) and Jason Thompson (San Antonio, TX) represented Plaintiffs. Travis E. Plummer (Dykema, Cox, Smith – Austin, TX) represented Roger Beasley Hyundai.