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DeValk Lincoln Mercury, Inc. v. Ford Motor Company

United States Court of Appeals, Seventh Circuit
811 F.2d 326 (1987)


Facts

Harold DeValk and John Fitzgerald owned and operated DeValk Lincoln Mercury (DLM) (plaintiff), an automobile dealership. The dealership was a franchise of the Ford Motor Company (Ford) (defendant). Under the dealership leasing agreement, DLM agreed to submit any disputes arising during or after operation of the dealership to mediation by the Dealer Policy Board. DLM was required to submit disputes to mediation before seeking any additional legal remedies. The contract also stated that Ford could not waive the mediation requirement. Finally, the contract provided that in the event of a closure of the dealership, Ford would purchase back any of DLM’s remaining inventory. After operating for several years at a loss, Ford placed DLM on “delete status.” A few months later, DLM decided to terminate the dealership. Ford and DLM began negotiations regarding Ford’s agreement to repurchase DLM’s remaining inventory. Several disputes arose over the repurchase prices during this process. DLM did not submit the disputes to mediation, but instead brought suit against Ford in federal district court. The district court granted summary judgment to Ford on all of DLM’s claims. DLM appealed. 

Rule of Law

Issue

Holding and Reasoning (Wood, J.)

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