Obaugh sues Elliott Auto, claiming business conspiracy – Staunton News Leader
STAUNTON – Auto dealership owner Eric Obaugh has filed a civil suit against Elliott Auto and others, claiming there was a business conspiracy to sell the now-closed dealership group while in negotiations with Obaugh.
According to documents at the Staunton Circuit Court, Obaugh has filed a lawsuit against M&T Bank, David L. Weimer, Weimer Automotive, William Elliott, Augusta Automotive, Elliott & Elliott and Elliott Chevrolet.
Obaugh currently co-owns dealerships in Staunton and Waynesboro. Documents were filed with the court on Friday.
Court documents said Obaugh had the intent to acquire the franchise rights, business assets and real estate of Elliott Chevrolet Cadillac and Elliott Chrysler Dodge Jeep RAM, both in Staunton through a non-binding letter of intent. Obaugh later had a real estate purchase and sale agreement for the Chrysler franchise, according to documents.
Obaugh alleges Elliott broke a clause in the letter of intent and sold part of his company to another buyer.
Now, Obaugh is asking for $5 million in damages and a jury trial.
Starting in November 2015, Obaugh started negotiating with Elliott, through a non-binding letter of intent, to buy the two franchises and inventory — for an expected $6.1 million.
Although not binding, the letter apparently did have a “no shop clause,” which stated there would be a period of 90 days in which the seller or seller affiliates could not “solicit, encourage, participate in, or accept any offer, discussion, or proposal regarding the possible acquisition by any person or entity” other than the buyer.
Obaugh then allegedly entered into a confidential information agreement with Elliott to move forward in the buying process.
But by the end of December, Elliott ceased negotiations with Obaugh, court documents said. Elliott then closed both the Chevrolet and Chrysler franchise dealership in Staunton at the beginning of January.
Negotiations later resumed weeks later, and on Jan. 22, Obaugh and Elliott entered into a real estate purchase and sale agreement for the Chrysler franchise of the business, documents said. That agreement is the step prior to drawing up the deed, and is not a binding contract.
According to the agreement, Obaugh would acquire Elliott’s Chrysler real estate and franchise for $2.4 million. With the new purchase, Obaugh named his newly formed corporation Automotive of Staunton, Inc. for the purchase of the Elliott Chrysler Dodge Jeep RAM franchise rights, documents said.
After signing the agreement on Jan. 22, Elliott negotiated with David Weimer of Frostburg, West Virginia, and Weimer Chevrolet, Inc., of Moorefield, West Virginia, to sell the same assets that were agreed to Obaugh, documents said. Court documents also said Elliott did so with pressure from M&T Bank. It’s unclear what business relationship Elliott and M&T have.
The defendants were aware of the agreements and previous negotiations Elliott had with Obaugh, court documents said.
Before Feb. 22, court documents allege “all of the new car and truck inventory disappeared from the business premises of ‘Elliott Chevrolet Cadillac’ and shortly thereafter all or almost all of the new car inventory appeared a few days later on the automobile dealers lots of companies owned by David L. Weimer.”
Then after Feb. 22, the same thing allegedly happened at the Elliott Chrysler franchise. Documents said new car and truck inventory from that lot disappeared and appeared on lots owned by Weimer.
Obaugh’s claim says Elliott breached their contractual obligations, there was “tortious interference with contracts, business relations and business expectancies” and statutory and common law civil conspiracy.
Elliott’s lawyer Stephan Milo would not comment on the lawsuit.