PRIORITY AUTO GROUP v. FORD MOTOR COMPANY, NO. 13-1696

Decided: July 30, 2014

The Fourth Circuit affirmed the district court’s decision to dismiss Priority’s right of first refusal claim for lack of standing, and also dismissed Priority’s claim for tortious interference with a contract.

Priority Auto brought both claims against Ford Motor Company (“Ford Motor”) for obstructing its attempt to purchase the Kimnach Ford car dealership. Ford Motor’s contract with Kimnach Ford gave Ford Motor the right of first refusal, which Ford Motor exercised, then used to direct a sale of Kimnach Ford’s assets, and to close the dealership. Priority Auto brought suit in Virginia state court, claiming that Ford Motor unlawfully exercised its right of first refusal, and, in the alternative, that Ford Motor tortiously interfered with the sales contract between Priority Auto and Kimnach Ford. After Ford Motor removed the case to federal court based on diversity jurisdiction, the district court dismissed both of Priority Auto’s claims, and Priority Auto appealed.

The Court reasoned that Priority Auto lacked standing to bring the right of first refusal suit because it was not within the class of plaintiffs that the Virginia statute sought to protect. According to the Court, only the dealer—Kimnach Ford—had standing to bring an action against Ford Motor for unlawfully exercising its right of first refusal. Priority Auto could only recover—and had already recovered from Ford—for its reasonable expenses paid in pursuit of the sale.

Alternatively, the Court reasoned that Priority Auto’s tortious interference claim was properly dismissed because Ford Motor did nothing unlawful by exercising its right of first refusal. A claim for tortious interference with a contract requires the tortfeasor to interfere using an “improper method.” Here, Ford Motor did not interfere with the sale using an improper method because it had a right to interfere with the sale pursuant to its contract with Kimnach. Therefore, the Court affirmed the district court’s dismissal of Priority Auto’s claims.

Full Opinion

James Bull Sterling

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