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When Rally Auto Group sought to promote the belongings of its Palmdale, Calif., Kia dealership final fall, Kia America stated no — twice citing the omission from the potential purchaser’s utility of his “earlier unsatisfactory possession” of one other Kia retailer.

Nonetheless, Rally and the would-be purchasers, Alam Khan and his Dalia Auto Group, closed on the deal in December, based on Kia. Dalia additionally owns Diamond Chevrolet-Buick-GMC in Banning, Calif.

Then final month, Rally Kia’s co-owner and sole director, William Penn, signed a consulting settlement with Khan “to help Rally’s operation and administration” of the shop whereas Khan submits extra materials to Kia America.

Now, in a lawsuit filed Jan. 24 in federal courtroom in California towards Rally Auto Group, Khan and two of his corporations, Kia alleges there was an improper “switch and/or sale of an curiosity in, and administration management” of the dealership. Kia needs an injunction and damages for breach of contract, unfair competitors, trademark infringement and associated claims.

Cellphone calls from Automotive Information to the quantity on the Rally Kia web site have been answered “Diamond Auto.” The receptionist stated the dealership had been “purchased by one other firm in December.”

Khan and Rally Auto Group haven’t but answered Kia’s grievance in courtroom, and so they did not return voicemails and emails looking for remark by press time. Their legal professionals weren’t listed within the courtroom file as of press time. The lawyer who dealt with the August 2021 registration of considered one of Khan’s corporations with the California Secretary of State declined to touch upon the case.

It is extremely uncommon for an automaker to provoke a franchise-related swimsuit towards its sellers, stated Irvine, Calif., franchise lawyer James Mulcahy, who has represented automakers and is not concerned within the Kia case.

“Hardly ever is the producer suing the vendor,” Mulcahy stated. “It’s most frequently, if not nearly each time, that the vendor is looking for to sue the producer for refusing to consent” to a change in possession or administration.

For example in a single such case, a federal decide dominated Jan. 26 that ex-shareholders in a Hollister, Calif., Ford retailer have a proper to a trial on their declare that Ford Motor Co. wrongfully withheld consent to the sale of their pursuits within the dealership, then named Tiffany Ford.

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