Laura Peters

lpeters@newsleader.com

This article was first published on May 16, 2016.

STAUNTON - Two area auto dealership owners will be going head-to-head in a five-day trial over conspiracy charges.

Staunton and Waynesboro auto dealerships owner Eric Obaugh 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.

They met in Staunton Circuit Court Monday before Judge Herbert Gill for a hearing where Obaugh is asking for $5 million in damages and a jury trial.

According to documents at the Staunton Circuit Court, Obaugh filed a lawsuit against M&T Bank, David L. Weimer, Weimer Automotive, William Elliott, Augusta Automotive, Elliott & Elliott and Elliott Chevrolet in mid-March.

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.

In court Monday, representatives from M&T Bank, Weimer and Elliott informed the judge Obaugh's claims have no standing since the agreement was non-binding.

Lawrence Gebhart, the lawyer for M&T, said since the bank technically owned Elliott's dealership and land due to nearly $8.5 million in bank loans, they had the rights to the investment. Therefore, argued Gebhart, they were able to be approached by Weimer to purchase Elliott's assets.

According to Gebhart, Weimer became interested in the Elliott franchise and assets and could close immediately, unlike Obaugh. M&T had prior rights and could deal with anyone they wanted to and sell the inventory, Gebhart said.

M&T Bank was aware of the non-binding agreement Elliott had with Obaugh.

Obaugh's lawyer William Shmidheiser said although the agreement his client went into with Elliott was non-binding, the "no shop clause" was binding.

Elliott Auto goes dark

"It says for 90 days you are my one true love," Shmidheiser said. "That no shop clause is entirely enforceable."

Jim Neale, the lawyer for Weimer, said the non-binding contract, which was signed by Elliott, doesn't hold up because Elliott doesn't legally own those assets, M&T Bank does.

"The entity that owns the assets and property didn't sign the non-binding letter of intent," Neale said. He said Elliott was "selling something they don't own or control."

Neale said now Obaugh is the "disgruntled player in a rough and tumble market."

"He wants you to declare him a winner," Neale said to the judge.

The trial is set to start Oct. 24 in Staunton Circuit Court.

Follow Laura Peters@peterslaura and@peterpants. You can reach her at lpeters@newsleader.com or 213-9125.