Unfair competition, environmental issues claimed
The car dealership issue has heated up. Bob Lynch Ford in Gilroy filed a lawsuit to stop a Ford dealership that has received Morgan Hill City Council approval.
Scott Lynch, owner of Bob Lynch Ford in Gilroy, claims a second dealership so close – they are about 12 miles apart – constitutes unfair competition and that the city overstepped the bounds of legality when approving variances that would allow the development.
Morgan Hill attorney Bruce Tichinin, who represents Lynch, filed the suit July 23 in Santa Clara County Superior Court, asking the court to enforce the state’s Unfair Competition Law.
“The purpose of the Unfair Competition Law is to allow competitors in business to compete fairly,” Tichinin said.
The lawsuit is based, Tichinin said, on environmental protection (the California Environmental Quality Act), the Planning and Zoning Law and quality of life.
Named in the suit are Tim Paulus, who will operate the new dealership; the Horizon Land Co., owners of the property on Condit Road, north of East Dunne Avenue who are selling to the Paulus dealership; the Morgan Hill City Council and staff from the Community Development (Planning) Department and the Business Assistance and Housing Services Department for allowed zoning amendments over the land-use variances.
City Attorney Helene Leichter said the city questions whether it is appropriate for Lynch to file such a suit.
“We are going to challenge this on the basis that (Bob Lynch Ford) has no standing to raise this lawsuit,” said Leichter. “In order to sue for these violations you have to be directly affected.”
Tichinin said the City Council, supported by its staff, has allowed the Paulus dealership to violate the law by allowing the variances.
“A variance is not permission to deviate whenever it is convenient,” Tichinin said, “but only when the characteristics of a parcel prevents the landowner from enjoying one of the rights zoning grants to all landowners in that district.”
Tichinin said there has been no statement by Paulus at any time that, without the variances, he would be prevented from using the parcel.
“This is a state standard,” Tichinin said. He gave an example where the minimum setback might be changed to allow a structure to be built on a too-small parcel.
Paulus was out of town Monday and could not be reached for comment.
Section 17200 of the state Business and Professions Code describes unfair competition as any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Section 17500 of Part 3 of the Business and Professions Code. Section 17500 is the “truth in advertising” clause.
Leichter said she was not sure of the connection between the two code sections.
Leichter said the neighbors who live near the dealership may have had more cause for litigation, being the most impacted, but they were not included as plaintiffs and the deadline for filing lawsuits has passed.
“Besides,” she said, “those issues were obviously addressed (by council).”
At two packed and contentious council meetings, the neighbors’ requests for changes in allowable noise levels, light saturation and test drive restrictions were mostly granted by council, though the council was not willing to deny the Ford dealership entirely, which the neighbors said they would have preferred.
Council members have repeatedly said that the sales taxes coming from the dealership would benefit the entire community; sales taxes pay for police and fire protection, recreation programs and city government.
Since Scott Lynch has no history as an environmentalist, Leichter said, it is odd to find him suing on that basis.
“This is nothing more than trying to stop healthy competition,” she said. “That’s what all this is about – delay.”
Leichter said the city will challenge the lawsuit and said it may be rejected at the first hearing.
THE LAWSUIT
Essentially, the suit claims that there is not enough business in the area for both Bob Lynch Ford and the proposed new dealership to succeed.
“If the new dealership goes into operation, either it or Bob Lynch Ford will fail economically,” the suit claimed.
In June the Council granted six exceptions to the Planned Unit Development (PUD – the design of an entire area to be designed and understood before any ground is broken. Tichinin claims that such special circumstances are not applicable to the 8.65-acre property. The exceptions are not necessary “for the preservation and enjoyment of any substantial property right of Paulus.
Failure to grant the exceptions would not have impeded Paulus’s making a successful go of the business, the suit claimed.
Tichinin also claimed that approving the exceptions violated the noise element of the city general plan saying the impact on noise of a neighborhood east of Murphy Avenue would be effected and that a proper noise study was not performed.
The lawsuit cited the city’s failure to require an environmental impact report covering the effects of noise, light and glare, loss of agricultural lands, adverse aesthetic effects, adverse land-use and planning effects and a cumulative effect from other auto dealerships congregating in the area. Instead of an EIR, the city was satisfied with a Mitigated Negative Declaration, in which ways to ease the above-mentioned impacts would be undertaken.
Tichinin’s brief took issue with the council delaying identification and adoption of the mitigation measures for light and glare until a future photometric study could be done – after the dealership is built.
The lawsuit asks the court to issue a temporary restraining order against any activity concerning the Paulus dealership, to void the approvals given the Horizon Land PUD, and to require a full EIR. It also asks for attorney’s fees and court costs plus an undetermined monetary grant.
Leichter said Ford has no pending applications and the next step would be grading and building permits, about which, she said, Tichinin has asked to be notified.
“He may seek relief,” she said.
“Scott Lynch has a right as a competitor to raise those (noise) issues because he has to follow the rules\,” Tichinin said. “It doesn’t matter that he is in another city. Permitting the violator of the law (to operate) gives a competitive edge to the lawbreaker.”
Scott Lynch said Monday he had no comment on the suit, referring a reporter’s telephone call to Tichinin.
Ted Mengiste, market representation manager for Northern California Ford, said that Ford is not named in the lawsuit – only Paulus – and that he couldn’t comment on any allegations. He did try to ease the competition fears by emphasizing Ford’s market research in the area.
“Morgan Hill is a new and viable market,” he said. “We are not putting (a dealership) in to cover Morgan Hill and Gilroy, which has its own market. We don’t put dealerships in to fail.”
Tichinin estimates a hearing will be held within two months.
“The city has an option to defend itself or to allow Paulus to mount his own defense. The city’s already subsidized him sufficiently,” Tichinin said.
Complete text of the Unfair Competition law, 17200 under the Business and Professional Code, can be found at www.leginfo.ca.gov
