Sunday, April 4, 2010

S.C. Court of Appeals Construes Protest Exemption Provision of South Carolina Dealers Act

In Southeast Toyota Distributors v. Jim Hudson Superstore, a panel of the South Carolina Court of Appeals ruled that the relocation of the Toyota Center dealership in Lexington County was exempt from protest pursuant to S.C. Code Ann. § 56-15-46(C) (2006). This issue was a question of first impression in South Carolina, as no appellate court had previously construed this particular statute.

On May 30, 2006, Anderson Columbia Acquisition, LLC, d/b/a/ Toyota Center (Anderson) entered into an agreement with Rish-Corey Automotive, Inc. to purchase the assets of the Toyota Center dealership. Toyota Center has been located at 1640 Airport Boulevard in West Columbia since 1972. Anderson also entered into a dealer agreement with Appellant Southeast Toyota Distributors, LLC (SET), the authorized distributor of Toyota vehicles, parts, and accessories for South Carolina, North Carolina, Georgia, Florida, and Alabama. Because of the inadequacy of the existing facility at 1640 Airport Boulevard, Anderson's dealer agreement with SET required Anderson to construct and occupy a new facility at a site to be approved by SET. SET later approved Anderson's choice of the site at 2136 Sunset Boulevard in West Columbia, less than three miles away from the facility at 1640 Airport Boulevard, and sent letters to Respondent Jim Hudson Superstore, Inc., d/b/a Jim Hudson Toyota/Scion (Hudson), and Dyer, Inc., d/b/a Dick Dyer Toyota (Dyer) informing them of the proposed relocation of the Toyota Center dealership.

SET sought a declaratory judgment action in the circuit court for Lexington County seeking a determination whether the relocation of the Toyota Center dealership in Lexington County was exempt from protest. Hudson and Dyer filed counterclaims asserting protests to the proposed relocation under subsection (B) of the statute. SET and Hudson then filed cross-motions for summary judgment on the exemption issue. The circuit court granted Hudson's summary judgment motion and denied SET's summary judgment motion.

The Court of Appeals, reversed, ruling that the circuit court erred in concluding that the relocation of the Toyota Center dealership is not exempt from protest pursuant to S.C. Code Ann. § 56-15-46(C)(3) (2006). The Court of Appeals agreed with Anderson and SET that a change in ownership does not alter the status of a dealership as “existing” " for purposes of section 56-15-46(C)(3), and that because the statute in question focuses on the “introduction of new competition for an existing dealership,” the location of a dealership—and not the identity of its owner—determined whether or not the protest exemption applied.

The preceding does not constitute legal advice. Consult counsel in your jurisdiction for advice regarding this subject matter.