Saturday, January 20, 2018

Beartooth Ford strikes back

House files counterclaim, alleging Columbus Spartan motivated by intent to close dealership down

Tonya House is no push- over.
Two months after having the brakes slammed on a buy-sell agreement with RFJ Auto Partners Holdings, Inc., that would have brought 75 jobs to the area within five years, House is fighting for the dealership’s future in court.
RFJ, which owns Dave Smith dealerships in Idaho, and House entered into an agreement in which RFJ would run the business while House would stay on as the general manager. Employees would get better benefit packages with the opportunity for advancement and the staff of 14 would grow to 75 people within five years.
Good for Beartooth Ford and good for Stillwater County.
A buy-sell was submitted to the Ford Motor Company in February. The company opted to exercise its right of first refusal and assigned that right to a newly formed company called Columbus Spartan, LLC — owned by Don H. Jones Jr. and Garry Brayko. Jones owns Laurel Ford and Brayko owns Archie Cochran Ford in Billings.
In short order, Columbus Spartan filed suit in the 22nd Judicial District Court in Columbus seeking clarifications on House’s deal with RFJ, specifically questioning her employment agreement, her role and the cost of the sale.
House filed a response to the suit this week, as well as a counterclaim, alleging Columbus Spartan’s refusal to accept the terms of the agreement with RFJ is due to what she believes is that company’s intention to shut down Beartooth Ford completely.
Under a right of refusal, the terms and conditions of a sale made with one company must be honored if another company is given the right to make the purchase from underneath the first company.
In House’s response, filed by Columbus attorney Ann Davey, Columbus Spartan’s lawsuit “fails to state a cause of action upon which relief may be granted” and that its right of first refusal was terminated because it refused to “perform and match the terms of the underlying transactions” between House and RFJ.
In other words, Columbus Spartan has terminated its right of first refusal because it has rejected the purchase terms without any actual reason.
House also alleges Columbus Spartan has committed breach of contract, breach of implied covenant of good faith and fair dealing, intentional interference with contractual and economic relation and violated state law, which have damaged — or sought to damage her and Beartooth Ford, according to court documents.
“Columbus Spartan intentionally and willfully interfered with Beartooth and House’s contractual and economic relations with RFJ with no intent to perform as the assignee of Ford’s right of first refusal and with no intent to comply with Mont. Code Ann. 61-04-0141,” wrote Davey in court documents. “Columbus Spartan’s actions were calculated to cause damage to Beartooth Ford, House or were calculated to interfere with a legitimate business transaction between Beartooth Ford, House and RFJ.”
The counterclaim seeks actual damages to be determined by a jury and attorney’s fees. Court documents lay out how the purchase agreement came to be as follows:
•Ken Smith, on behalf of RFJ Partner Holdings, Inc., approached House about buying Beartooth Ford in August 2016, at which time House said the dealership was not for sale.
•A few months later, Rick Ford, CEO and president of RFJ, approached House again about buying the dealership.
•At a later point, House agreed to consider selling and met with Ford to gather more information. Ford’s offer was to have House remain as the general manager and receive a salary of $20,000 a month for up to three years. In addition, House would receive a monthly bonus equal to 10 percent of the net profit of the dealership and 25 percent ownership of a warranty program that would be installed once the purchase was complete, according to court documents.
•Ford and House agreed to include a provision in the Dealership Asset Purchase Agreement (APA) regarding the requirement that RFJ and House reach an agreement regarding House’s employment with RFJ following the acquisition.
•With respect to real estate, the agreed upon purchase price was $1 million for the dealership real property or appraised value, whichever was less. (Ford also agreed to pay $601,425 for schedule 2)
•Cushman & Walkfield of Oregon, Inc., conducted an appraisal and reported the purchase price of the real property at $1 million. This was done prior to Columbus Spartan being given the right of first refusal.
•Columbus Spartan rejected that appraisal and notified House it would conduct its own appraisal.

MORE THAN JUST BUSINESS
This is more than just a business matter for House. It’s a community matter.
She had often been offered — and turned down — purchase offers.
It took Rick Ford researching House and her involvement in the community to sway her. During the course of six months, Ford did his homework and when he approached her about a merger again, he showed her parallels between Columbus and Kellogg, Idaho, where the main dealership is located — both are situated along I-90, both are mining towns and both are small.
The prospect of improving things for her employees, and the prospect of being able to help create more jobs, spoke loudly enough to sway House.