INDIANAPOLIS – The Indiana legislature is stepping in to decide a dispute between two Fort Wayne car dealers by retroactively changing a law to halt a pending lawsuit.
House Bill 1171, authored by Rep. Phil GiaQuinta, D-Fort Wayne, passed out of the House Commerce Committee 8-3 on Thursday. It now moves to the full House for consideration.
Most committee members felt a law restricting where auto dealerships could move was unnecessary and limiting competition.
But a few didn’t like the idea of changing state law in the middle of a legal challenge.
The battle was termed by some as David vs. Goliath – DeHaven’s Summit City Chevrolet vs. Kelley Chevrolet on East State Boulevard.
Current state law generally prohibits an auto dealership of the same manufacturer from moving within six miles of an existing auto dealership in counties with more than 100,000 population.
The law has been on the books since 2001, created to discourage the establishment of new dealerships close to existing ones.
But in this case both dealerships were in their current locations before the law was put in place; they are 4.1 miles apart.
Kelley wants to move to the intersection of Lima Road and Interstate 69, which is 4.3 miles from Summit City’s Illinois Road location.
Attorney Vincent Heiny, on behalf of Kelley Chevrolet, said the company has outgrown its East State Boulevard location and found eight acres where it wants to invest $6 million for a new facility with better market opportunity.
He said the law already would allow Kelley to move within two miles of its current location or more than six miles from an existing competitor. But if it tries to move within the six-mile radius, the competitor can file a legal challenge.
Summit City did just that in September.
Kelley could still win the case, but it is not scheduled for trial until May, which jeopardizes the project, GiaQuinta said.
Heiny is seeking an exception to the law that would allow Kelley – or any other auto dealership – to relocate if it is more than four miles away from a manufacturer competitor and the new site increases the existing distance between the two shops.
“Businesses should not be stifled with this type of stringent regulation,” he said, accusing Summit City of using the state law “mischievously.”
But John Garcia, owner of DeHaven Summit City Chevrolet, said it is following existing state law.
He also pointed out that while Kelley’s new location would be slightly farther away, it is half the drive time between the two.
“If the courts decide it’s best for the business and competition, that’s fine. So be it. But this takes away our right to be heard in court,” he said.
David Bailey, attorney for Summit City, said the legislature would be pulling the rug out from under his client in the middle of a game just because one side is better connected than another.
“Should the legislature referee a dispute between two car dealers in Fort Wayne?” he asked.
GiaQuinta responded by saying: “We make laws. We change laws. That’s what we do.”
Rep. Rebecca Kubacki, R-Syracuse, a co-author of the bill, said the legal process is going to hold things up too long and threaten Kelley Chevrolet’s economic health.
“It’s all about competition,” she said. “To be afraid of another dealership coming in is wrong.”
Several other lawmakers said the legislature likely made a mistake putting in the original law, noting that in this case the two dealerships were already competitors in the same market only a few miles apart.
A similar bill is moving in the Senate. Senate Bill 388 is authored by Sen. Tom Wyss, R-Fort Wayne.
