A federal judge has allowed Nissan Motor Acceptance Corp. to repossess 90 vehicles valued at $2.8 million from a dealership the captive sued for defaulting on loans and selling vehicles out of trust.
Helena, Mont.-based Robert Allen Nissan received loans from NMAC to purchase new and used vehicles for its inventory. Under the terms of the agreement, the dealership was required to pay back the loan for each vehicle as soon as it was sold.
However, the dealership sold vehicles out of trust for months by keeping the proceeds and failing to pay them to NMAC, according to a Feb. 22 complaint filed by the captive. NMAC alleged the dealership failed to repay loans totaling $795,584 for 25 vehicles, according to a Jan. 31 audit report.
In addition to the unpaid loan amount, NMAC demanded the dealership surrender collateral or shell out a total of $6.8 million comprised of $6,300 worth of contractor fees, wholesale charges of $39,566 and a principal balance of $5.9 million. According to NMAC, the dealership refused to surrender the vehicles or pay the amounts the captive listed.
By March, the captive filed another complaint claiming that “NMAC’s security interest in the cash collateral is easily and quickly lost as [Robert Allen Nissan] can spend the sales proceeds for other purposes. At the same time, the vehicles are depreciating in value.”
Finally, the U.S. District Court of Montana, Helena Division, ruled in favor of the captive allowing the levying officer to seize the collateral at any time, “using any necessary reasonable force,” according to a July 2 order signed by Judge Charles C. Lovell.