*

Honorable Charles E. Simons, Jr., Senior U.S. District

Judge for the District of South Carolina, sitting by designation. 

United States Court of Appeals,

Eleventh Circuit.

No. 94-3372.

Gary J. PEARSON, Plaintiff-Counter-Defendant-Appellant,

v.

FORD MOTOR COMPANY, Ford Motor Credit Company, Ford Leasing

Development Company, Ford Corporations from "A" through "Z", Beal

Parkway Lincoln-Mercury Inc., Defendants-Appellees,

Ft. Walton Beach Lincoln-Mercury, Inc., Defendant-CounterClaimant-Appellee.

Nov. 15, 1995.

Appeal from the United States District Court of the Northern

District of Florida. (No. 93-30031-RV) Roger Vinson, Judge.

Before BIRCH and CARNES, Circuit Judges, and SIMONS*

, Senior

District Judge.

PER CURIAM:

Plaintiff-appellant Gary J. Pearson brought this case alleging

a cause of action under the Automobile Dealers' Day in Court Act,

15 U.S.C. Sections 1221-1225, as well as nine additional state law

causes of action. The District Court subsequently granted

defendants' joint Motion for Summary Judgment on the ADDCA claim

and dismissed the state law claims without prejudice. Pearson v.

Ford Motor Company, 865 F.Supp. 1504 (N.D.Fla.1994). We affirm the

District Court on the fundamental ground that appellant lacks

standing.

Defendant Ford Motor Company operates a Dealer Development

Plan in which it assists individuals lacking sufficient investment
capital to become owners of independent dealerships. Participants

may become owners after successfully operating dealerships largely

capitalized by Ford. The program was begun in the early 1950's and

has more recently been used for the additional purpose of

increasing opportunities for members of minorities to become owners

of dealerships. Appellant Pearson, who is of African-American

descent, was first employed by Ford in 1973. By 1975, Pearson had

become a zone manager, and in 1983, he was zone manager of the

territory which included Fort Walton Beach, Florida. Pearson was

interested in an existing dealership there, the owner of which had

determined to close or sell it.

Pearson did not have adequate funds to purchase the

dealership, and consequently the sale was made through the Dealer

Development Program. On July 12, 1983, Pearson signed a letter of

understanding with Ford which provided that Ford would furnish

startup capital of $320,000.00 for Fort Walton Beach LincolnMercury ("FWBLM"). Pearson would provide $80,000.00, to be held in

escrow for the first six months of operation, during which time

Ford would make the entire initial investment. The agreement

provided that if Pearson chose not to continue in the venture

during the initial period, the escrow funds would be returned to

him. If he chose to continue in the venture, the escrowed funds

would be used to purchase common stock in FWBLM.

On July 18, 1983, Ford entered into distinct sales and service

agreements with FWBLM. Pearson was not a party to these

agreements, which identified FWBLM as the "dealer" and which gave

FWBLM the right to acquire Ford vehicles and parts and to sell them
to the public. The sales and service agreements imposed all

obligations on FWBLM and not on Pearson, who was at this point only

the dealership's hired General Manager.

At the conclusion of the initial six month period, Pearson

chose to continue in the undertaking, and on February 1, 1984, he

entered into a Dealer Development Agreement with Ford and a

Management Agreement with FWBLM. Pursuant to the Dealer

Development Agreement, Ford received 1600 shares of convertible

preferred stock in FWBLM, and Pearson received 800 shares of common

stock. The common stock had no voting rights as long as any

preferred stock was outstanding.

The Dealer Development Agreement further provided that if the

dealership were profitable, a portion of Pearson's share of the

profits would be used to gradually purchase Ford's preferred stock

in FWBLM and convert it into common stock. Pearson could only

purchase Ford stock from the profits of FWBLM, not with any other

funds. Under this plan, only if the dealership were profitable

under his management, would Pearson eventually own it. Ford had no

obligation to provide any additional capitalization, but if it

chose to do so, Ford would receive additional preferred stock in

proportion to its contributions.

The Board of Directors of FWBLM was composed of Pearson and

three other Directors chosen by Ford. The Management Agreement

provided that Pearson was to serve as President and Operator of

FWBLM. Pearson was the on-site Manager and was responsible for the

day to day operations of the dealership. Both the Dealer

Development Agreement and the Management Agreement were terminable
 1

The District Court chose not to follow the conclusion

reached in Kavanaugh v. Ford Motor Co., 353 F.2d 710 (7th

Cir.1965). We agree that, on these facts, the better view is the

one reflected herein. 

at will by either party. Both Agreements also stated that

termination was likely if the dealership lost money to the point

that Pearson's equity interest had no value.

The dealership was profitable from 1984 to 1986. Because his

portion of the profits were used to purchase stock, Pearson owned

79% of the total FWBLM stock by the end of 1986. However, in 1987

and the first quarter of 1988, the dealership lost money and as a

result of these losses, offset by Ford's further capital

contributions of more than $1,000,000.00 during the last four years

of operation, Pearson's ownership interest had declined to 34% of

the total stock by the end of 1988. By the end of 1989, Pearson's

common stock had no value and this remained the case until he was

terminated in February of 1991 by the FWBLM Board of Directors.

Against this factual background, we project the following

statutory definition of "automobile dealer", as set out in 15

U.S.C. Section 1221(c):

The term "automobile dealer" shall mean any person,

partnership, corporation, association, or other form of

business enterprise resident in the United States or in any

territory thereof or in the District of Columbia operating

under the terms of a franchise and engaged in the sale or

distribution of passenger cars, trucks, or station wagons.

The District Court concluded that FWBLM, and not appellant

Pearson, was the "automobile dealer" under the statutory

definition. We agree.1

Pearson was himself never a party to FWBLM's Franchise

Agreements with Ford. These Agreements were entirely between Ford
and FWBLM. In support of his position, Pearson cites York

Chrysler-Plymouth, Inc. v. Chrysler Credit Corp., 447 F.2d 786 (5th

Cir.1971), but we find that case to be distinguishable. That

decision relied heavily upon the fact that the Yorks, although not

signers of the franchise agreement, were "inextricably woven into

it." In essence, the court concluded that Chrysler had made the

Yorks essential to the operation of the dealership.

This was manifestly not the case with Pearson, who was in fact

ultimately terminated and replaced. Thus, there is no basis for

applying the rationale of York, which itself recognized that

"individuals would not come within the scope of the Act merely

because they were the sole stockholders, officers and directors of

the corporate franchise holder." 447 F.2d at 790.

Because of our finding with respect to Pearson's lack of

standing, it is not necessary to consider the alternative bases for

the District Court's opinion.

AFFIRMED.