Walser v. Toyota Motor Sales, U.S.A., Inc.,

Facts

D was looking for Lexus dealers. They contacted P, who was then co-owner with McLaughlin of a BMW dealership and a Lincoln-Mercury dealership both located in Bloomington. P indicated that they would be interested in obtaining the Lexus dealership. D had instituted a three-step process to establish dealerships. The prospective dealer would fill out a formal application and propose a dealership plan to D. If acceptable, D would issue a letter of intent signed by the head of the Lexus division and to be signed by the prospective dealer, which would contain final conditions that had to be satisfied before the agreement was finalized. If all conditions were satisfied, then a formal dealership agreement would be approved by D and signed by the parties to establish the dealership. P applied for the Lexus dealership by completing and signing the formal application for the dealership. The application specifically and clearly provided that a dealership agreement was not effective until a formal dealership agreement was approved and signed by an officer of D. P's preliminary proposals, to have the Lexus dealership share space with the BMW dealership or to move the BMW business and to retrofit the BMW facility for Lexus, were both rejected by D, but negotiations continued between the parties. P was also negotiating at the same time to buy a Mazda/BMW dealership in St. Paul. P began negotiating to acquire additional property adjacent to their Bloomington BMW dealership as a site for the Lexus dealership. P's father reached a 'handshake deal' to purchase that property for the proposed Lexus dealership from its owner. P did not disclose to d that R. J. Walser, the father, was buying the land. After a face to face meeting, P called to inquire and was told that while the letter was not yet executed, things looked positive, the deal was done, only one more signature was needed, and finalizing the deal was basically a rubber stamp. Later that day, R. J. Walser entered into a purchase agreement and paid $50,000 in earnest money for the land for the proposed Lexus dealership. In December 1989, the letter of intent was formally approved. P was verbally told that 'you're our dealer' and the letter would be coming by mail. Later in the day, however, the letter of intent was put on hold. A couple days later, D called P to tell him that a mistake had been made and that the letter had not been finally approved. D requested additional financial information. On January 3, 1990, R. J. Walser closed on the property. On February 5, 1990, P provided additional financial information and disclosed that R. J. Walser was available, but not necessary, to supply the required financing. On February 23, 1990, D told P that Lexus would not be issuing the letter of intent. P filed a seven-count complaint in Minnesota state court against D. D was granted partial summary judgment on the claims for breach of the Minnesota motor vehicle franchise statute and recovery on a joint venture theory. The parties dismissed without prejudice the claims for intentional interference with contractual relations and interference with a prospective business advantage. The case went to trial ion the breach of contract, promissory estoppel, and fraud claims. P sought $7,600,000 in damages, which included expected lost profits. D got the verdict on the contract and fraud claims. P got the verdict on the promissory estoppel claim. The jury awarded P $232,131 in accordance with the district court's instruction to limit damages on the promissory estoppel claim to out-of-pocket expenses. P appealed.

Issues

Rule of Law

Holding and Decision

Legal Analysis

© 2007-2024 ABN Study Partner.