Costly lesson of tortuous legal battle: Get it in writing

A parking garage holds inventory for Jerry Durant Auto Group’s stores. The dealership group faces a judgment by the Texas Supreme Court in a lawsuit filed by a former employee. Photo credit: YOUTUBE

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It’s a bitter 6½-year conflict that “played out like a modern-day Greek tragedy,” as a former general manager in Texas with high aspirations put it in legal papers.

In the latest round of battle, the Texas Supreme Court in June reinstated parts of a multimillion-dollar jury verdict against Jerry Durant Auto Group of Weatherford, Texas, stemming from a dispute over whether longtime employee Andrew Anderson was to have a long-sought chance to become a part owner. Anderson sued the retailer in 2012 for breach of contract, defamation and fraud.

If the reinstatement stands, it could cost dealer Jerry Durant more than $1 million. The dispute, which included accusations of kickbacks, cost Anderson his dream of becoming a dealer and hurt his reputation and chance to land high-profile dealership management jobs, his lawsuit claimed.

Anderson: Accusations "basically destroyed me."

Beyond the drama, mounting legal fees and feelings of betrayal, the conflict offers an important lesson for dealers and dealership managers: Get it in writing. The Durant-Anderson conflict centers on an oral buy-in agreement.

The experience shows why every dealership needs a human resources department, Jerry Durant, the retailer’s majority shareholder, told Automotive News.

“I don’t care what your size is. All matters regarding employees and pay ought to be documented and witnessed,” said Durant, who noted that his dealership group now has that HR department. “There’s no such thing as going in and having a good-old-boy handshake. In my case, [without a signed, written contract], it got twisted and turned around.”

For Anderson, the dispute turned his life upside down.

During a 2014 trial in Tarrant County District Court, Anderson testified that the accusations “basically destroyed me.”

“My wife and daughter always called me ‘Mr. Happy,’ ‘Mr. Sunshine,’ ” Anderson said in court. ” … But since these accusations have come about, I’m paranoid about going outside. Have trouble focusing. Anxiety, anxious. It’s been a two-year nightmare trying to get my life back and my reputation back.”

That 2014 trial went Anderson’s way, with a jury awarding him $2.6 million. The Court of Appeals overturned the entire award in 2016.

In the June decision, the state Supreme Court restored $383,150 in fraud damages against Jerry Durant Auto Group. It also restored awards of $400,000 for past mental anguish and $400,000 for past damage to reputation but said the Court of Appeals should determine whether those amounts are excessive, plus resolve some other issues.

Anderson’s lawyer, John Cayce Jr. of Fort Worth, Texas, told Automotive News that his client is pleased overall with the Supreme Court decision.

The promise

Anderson, who began his 30-plus-year career as an entry-level service adviser, joined Jerry Durant Auto Group as a used-vehicle manager in 2001. “During the course of his decadelong tenure with the company, Anderson’s career flourished,” the Supreme Court said in an opinion written by Justice Eva Guzman.

In 2006, Anderson was promoted to general manager of the group’s Chevrolet store in Weatherford and appointed to the board of directors, according to court filings.

Anderson’s suit claimed that Jerry Durant offered him the chance to buy into the business in February 2011 in exchange for taking over management of the group’s “underperforming” Toyota and Hyundai stores in Granbury, Texas. That would be “the fulfillment of a lifelong goal,” he said in a court filing.

But, as the Supreme Court concluded, “the buy-in agreement was never reduced to writing, and as often happens in such cases, the terms of the deal are disputed.”

Anderson asserted that Durant offered him 10 percent ownership of both Granbury dealerships and associated real estate interests. The dealership group countered that Durant’s offer applied to only the Hyundai dealership and was contingent on the store earning a $400,000 net profit despite a $250,000 loss the previous year, a target it failed to achieve.

Durant told Automotive News that he gave a written offer to Anderson but Anderson never signed it, unlike two other general managers who received similar offers and did sign them.

Regardless of the specific terms that the sides believed they’d agreed to, Anderson assumed management of the Granbury Toyota and Hyundai dealerships.

The dealership group’s marketing materials and press release at the time described him as a “partner/principal” and said, “Good fortune comes to those who work for it. No one understands that better than Andrew Anderson. We want our new Granbury division to provide exceptional automotive service, and Anderson is the right man to achieve that goal.”

In legal papers, Anderson said after he took over management in Granbury, “there was ‘significant improvement’ ” in the stores’ performance, and “focusing strictly on used-car operations, the Granbury dealerships were the only Durant dealerships to generate net income in 2011.”

The unraveling

Texas timeline
General Manager Andrew Anderson and Jerry Durant Auto Group of Weatherford, Texas, have been embroiled in a bitter legal dispute for more than six years.

  • 2001: Anderson hired as a used-car manager at the group
  • 2006: Anderson promoted to GM of Chevrolet store
  • February 2011: Buy-in deal offered
  • December 2011: Anderson accused of dishonesty
  • January 2012: Anderson terminated (his version) or resigned (dealership’s version)
  • January 2012: Anderson files lawsuit
  • March 2014: Jury awards Anderson $2.6 million
  • July 2015: Anderson joins Capitol Hyundai in Montgomery, Ala.
  • February 2016: Court of Appeals overturns jury award
  • March 2018: Anderson becomes general manager of Brewbaker Infiniti in Montgomery, Ala.
  • June 2018: Texas Supreme Court partially reinstates award

Source: Court documents, interview

But Anderson never acquired an interest in either dealership and, within months, was unemployed and under a cloud of suspicion.

Here’s what happened, according to court filings:

Events unfolded “fast and furiously” in December 2011, mere months after Anderson took over in Granbury, the Supreme Court said. The dealership group paid Anderson and two other general managers $75,000 each that month. In the retailer’s version of events, the payment was in lieu of their buy-in option agreements. In Anderson’s contrary view, the payment was a Christmas bonus after the company’s most profitable year ever.

Although the Hyundai store didn’t reach the $400,000 net-profit threshold for a buy-in interest, Durant said Anderson was included in the buyout payments because he’s a “generous man” trying to take care of employees. The defense argued in court papers, “The premise of Anderson’s case is that Jerry Durant deprived Anderson of an alleged oral contract ownership interest in land and two dealerships in Granbury for one reason — greed. But Anderson’s story is neither true nor supported by the record.”

Still, the payments proved a turning point.

“The spirit of generosity was short-lived,” the Supreme Court observed. Within days of the payments, Jerry “Durant assembled the used-car managers and salesmen and publicly accused Anderson of mismanaging inventory and buying cars directly from wholesalers rather than at auction as company policy mandated.”

“What seemed like the opportunity of a lifetime soon became Anderson’s nightmare after he was falsely accused of taking illegal kickbacks on used-car acquisitions,” the Supreme Court said.

The dealership group claimed Anderson had violated company policy by buying used vehicles directly from wholesalers without Jerry Durant’s permission and had kept many unsold used vehicles longer than the 90 days allowed under company policy.

At a meeting just before the end of the year, Durant accused Anderson of taking kickbacks on 15 vehicles, the Supreme Court said.

Anderson denied any wrongdoing but initially offered to cover an estimated $30,856 in lost profits. He rescinded that offer after his own review of the transactions showed no loss, telling Durant in January 2012, “It’s wrong, Boss. It’s wrong.”

Durant responded, “If you think that’s wrong, you can hit the dirt.” Anderson interpreted that to mean he was terminated, and he never returned to the company. He had been earning about $300,000 a year, court documents said.

At the time of Anderson’s departure, Jerry Durant was negotiating to sell the dealerships for $44 million because his “family wasn’t as interested in the car business,” but the sale didn’t materialize, the suit claimed. Had it materialized, Anderson said, he would have been entitled to part of the proceeds.

The accusations

The accusations contradict what Anderson’s court filings describe as a close mutual relationship between the two men, saying Durant “acknowledged that Anderson was an extremely capable executive, a hard worker, honest and loyal. Anderson considered Durant a mentor, and Durant thought of Anderson like a son. Contrary to Durant’s mean-spirited portrayal of Anderson now, Anderson’s ability and dedication led Durant to rely heavily on him to handle a number of high-level operational matters.”

The Supreme Court opinion said Durant later acknowledged that there was no proof of kickbacks, and Anderson subsequently passed a polygraph test.

By then it was too late.

“Rumors of Anderson’s alleged misdeeds quickly spread in the closely connected auto industry, and Anderson, who was unemployed for months, was unable to obtain comparable employment,” the court said.

The dealership group’s legal filings said Anderson was hired in October 2012 as used-car manager at a Honda store, then became pre-owned sales director at a Hyundai dealership and was promoted to new-car sales director, earning about $120,000 a year plus bonuses, but was fired for “performance reasons.”

At the time of the 2014 trial, Anderson, who by then worked for a different dealership in fleet sales, said the dispute hindered his daily life.

“I had trouble sleeping. I had trouble eating. I had trouble focusing on things,” Anderson testified. “I worried about my family’s future. Worried about my 30-year career that had been slandered all over town.”

After a seven-week trial, the jury found that the dealership group had defrauded him and that individual defendants had defamed him. However, the jury also found that the 10 percent verbal buy-in offer applied to only one of the dealerships. It awarded Anderson $2.2 million for defamation, including $629,000 for lost earnings, plus $383,150 for fraud.

The kickback tale was spread by a number of people at other dealerships. They were named in the suit and reached confidential settlements with Anderson.

The aftermath

Though the Court of Appeals in 2016 overturned the jury award, the Supreme Court found sufficient evidence that the company had “struck a bargain” to give Anderson a 10 percent interest in both dealerships, although not in the real estate, in exchange for agreeing to leave his more secure general manager position at the Chevrolet store.

Durant and the dealership group argued that the defamation claim was “supported by nothing more than smoke and mirrors,” but the Supreme Court ruled that there was enough evidence to justify compensation for past loss of reputation and past mental anguish. Anderson had been unable to secure regular employment for 10 months before landing permanent employment at a significant pay cut, according to the court.

But Anderson isn’t entitled to future damages, said the Supreme Court, because he failed to prove that he’d probably continue to suffer mental anguish or that his reputation would “remain tarnished.” The Supreme Court agreed with the Court of Appeals in rejecting the $629,000 award for past and future lost income.

Today, Anderson is still not a dealer. But he’s making a living again as a general manager — three states away in Alabama.

Reached at Brewbaker Infiniti in Montgomery, Ala., where he took the general manager role in March, Anderson declined to talk about the latest ruling in the lawsuit while matters are still pending. Before the Infiniti store, he was general manager at Capitol Hyundai Montgomery for nearly three years.

“It’s been a long road, and it continues to be a long road,” Anderson told Automotive News. “We just need people to do the right thing.”

Amy Wilson contributed to this report.

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