Auto Erratic

SunCor filed a lawsuit, and wound up getting slapped with a $28.6 million jury verdict

Despite SunCor's attempt at mollification, the auto mall dream was a shambles, in Bergstrom's view. He pulled the plug on his Autoplex II project in April 1998. In a stock deal, he sold his store to Auto Nation, which was owned by Blockbuster founder Wayne Huizenga.

Two months later, SunCor sued Bergstrom, demanding that he return the $1 million.

"I almost died," John Bergstrom says. "I'd never been sued for anything before. I had never been in a courtroom in my life.

Michael Manning: "The level of fraud here was amazing."
Casey McKee
Michael Manning: "The level of fraud here was amazing."

"When they sued us and attacked our integrity, we weren't going to roll over."

He dispatched a partner with orders: "Spend whatever it takes to go find the best attorney that you can" in Arizona.

Michael Manning was loosening up.

SunCor's lawsuit against Bergstrom opened Pandora's box. Documents contained in SunCor's own files doomed their cause. Manning had to get a court order to see them, but once he did, he was dumbfounded at the "incredible arrogance and corporate greed" of SunCor.

"The level of fraud here was just amazing," he says.

SunCor's files held more smoking guns than Puff Daddy's entourage. As he introduced them to the jury, Manning says he felt "like a kid in a candy store."

SunCor marketed Autoplex II as a development that "will feature pre-owned vehicles and other automotive uses." Its pamphlet enthused, "Car buyers will have the opportunity to view the inventory of eight to 12 used vehicle dealers at one convenient location . . ." SunCor issued a press release in November 1996 touting "an auto park exclusively designed for the fast-growing pre-owned auto market."

In winning the City of Tempe's agreement to repay SunCor $500,000 for infrastructure improvements, SunCor averred that Autoplex II would offer 54 acres "created specifically for the growing pre-owned vehicle market." Tempe would rake in sales tax, SunCor said. The city's economic development director testified that SunCor Vice President Margaret Kirch told her that Autoplex II would contain 22 sites.

Yet a marketing study prepared in 1995 for SunCor told a far different story. The report's opening line stated: "We estimate that the . . . site has the potential to secure five to seven used car and truck dealerships." SunCor removed this telltale "Summary and Recommendations" page from the copy of the marketing study it gave Bergstrom.

Document after document unearthed by Manning indicated that while SunCor was crowing publicly about its commitment to Autoplex II, behind the scenes it was undercutting Bergstrom, hawking the land to anyone who had the cash to help SunCor "upstream" money to its voracious parent, Pinnacle West.

About the same time that Mullin was selling Bergstrom on the exclusive used-auto park, an internal SunCor memo announced the appointment of a new project manager for Autoplex II. The memo noted that the official would "focus on the next phase of Autoplex-Autoplex II which will feature 'new car alternatives' (a.k.a. used cars) and back office . . ."

A SunCor-circulated map of Autoplex II showed one continuous loop road lined with automotive businesses. Yet before Bergstrom's land purchase closed, SunCor was working with its architects on other uses. One map from September 1996 labels the interior of the loop as "office or auto" -- a designation that prompted the architect to scribble: "Office & auto uses are intermixed -- will this be confusing to buyers?"

David Merkel, who served as Tempe city attorney at the time, says the city's contract with SunCor required the developer to inform the city of any change in plan.

"We found out about the sale [of 22 acres to General American] after, not before the fact. That was contrary, we believe, to what the contract provided for," Merkel says.

He says he and other Tempe officials had a "contentious" meeting with SunCor chief Odgen. Merkel testified that Odgen told him "how stupid he thought we were." Tempe's economic development director testified that Odgen was "intimidating" and raised his voice. Odgen denies both assertions.

Despite what Merkel perceived as SunCor's breach of contract, the city did little other than try to renegotiate its reimbursement deal with SunCor (that deal has since completely unraveled, Merkel says). Perhaps not coincidentally, SunCor officials -- including Odgen and Kirch -- have been frequent and generous donors to the campaigns of Tempe Mayor Neil Guiliano, contributing $1,660 since 1993.

Once the land was in the hands of General American, Kirch met with Bergstrom to convince him of SunCor's commitment to the used-car park. Within a week, however, Kirch made notes of a phone conversation with Mullin in which the two discussed "why might DM [Bergstrom] fail."

The damning evidence clearly impressed the jury. It means little to Steve Gervais, SunCor's vice president and general council.

"We obviously disagree with the verdict," he says. "We're going to ask the trial court judge to set the verdict aside, and, if necessary, we'll appeal, because the verdict is not supported by the evidence or the law.

". . . This case is far from over."

He declined to comment on specific allegations.

Today, the property that was to become Autoplex II is a mélange of office buildings. Tempe isn't getting the sales tax it expected.

The structure that Bergstrom built is now occupied by an Enterprise car rental sales outlet. No other auto-related businesses are visible in Autoplex II.

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