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Toyota dealership's relocation halted by appeals court

August 13, 2015

Whether three competing Indianapolis-area Toyota dealers may block the relocation of another Toyota franchise from Anderson to Noblesville divided a panel of the Indiana Court of Appeals on Thursday.

Anderson-based Ed Martin Toyota has proposed a relocation to the fast-growing Hamilton County city with the carmaker’s blessing. Andy Mohr Toyota, Butler Toyota and Tom Wood Toyota, however, said not so fast, and after talks with Toyota broke down, the dealers sought relief from the state.

The three Indy-area dealerships were unsuccessful in getting the Auto Dealer Services Division of the Indiana Secretary of State’s Office to find the proposed relocation was without good cause, which would have blocked the move. The division denied their requests, ruling that because the dealerships were outside the 6-mile market area where the dealership would relocate, they lacked standing for a challenge under state law.

The dealerships appealed to a Marion Superior Court that affirmed the division’s ruling, but in a 2-1 ruling Thursday, the Indiana Court of Appeals reversed and sent the matter back to the division for a do-over.

Judges wrangled with interpreting the Indiana Dealer Services statutes and whether the planned entry into the market constituted a proposed dealership or a relocation, each of which is addressed separately in Indiana Code.

Toyota argued Indiana law gives newly established dealerships a 10-mile radius of protection from competition from other dealers, while existing dealers that are moving to the area get only a 6-mile radius.

“The Division disregards the statutory scheme and fails to account for the fact that the relocation of an existing dealer into the relevant market is every bit as much a threat, if not a greater threat, to the existing dealers within that area as the establishment of a new dealership,” Judge Edward Najam wrote for the majority. He was joined by Judge John Baker. “An agency’s interpretation that is contrary to law is entitled to no deference. Accordingly, we reverse the trial court’s judgment and remand to the Division for further proceedings.”

Dissenting Judge Ezra Friedlander wrote that the statutes in question are “undoubtedly inartful, but I am convinced that the Division’s interpretation is reasonable.” He wrote that the majority’s reliance on imprecise language in the statute leads to “troubling results.”

“Under its reasonable interpretation of the relevant statutes, the Division determined that the applicable relevant market area in this case was the six-mile radius. ...  The Dealers do not dispute that they are outside this area. Accordingly, I would affirm the trial court’s judgment based upon lack of standing.”

The full decision can be found here.

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