Nissan Dealerships Slapped With $40M Fine for Loan Defaults
Nissan Motor Acceptance Corp. has won its legal battle with a group of Manhattan-based franchise dealerships. The captive is entitled to $40.1 million after the dealerships and their guarantors defaulted on loan obligations, according to court documents.
The litigation was sparked by the dealerships initially suing NMAC for a “breach of contract,” the filing notes. In 2015, NMAC, Nissan of Manhattan, Infiniti of Manhattan, and Jaguar Land Rover Manhattan, entered into a series of agreements to establish and build new Nissan and Infiniti dealerships in Manhattan.
NMAC, in turn, filed counterclaims against the dealerships and owners after defaulting on floorplan, mortgage, and revolving lines of credit loans.
NMAC claimed the dealerships failed to repay lines of credit under three revolving credit and security agreements of $2 million, $6 million, and $7 million. Additionally, the dealerships failed to pay a $3 million term loan under a capital loan and security agreement and a $12.2 million loan secured by a mortgage.
Business records submitted by NMAC provided proper evidence of the dealerships’ misconduct, including invoices, emails, spreadsheets, and screenshots of internal accounting systems that track the loan payments and outstanding amounts.
However, the dealerships attempted to convince the court that NMAC’s evidence was insufficient, claiming the court “needs every document that underlies every number, all the way down to each individual receipt for every transaction,” the filing notes.
Despite the dealerships’ attempts, U.S. District Judge Katherine Forrest wrote in the filing that the dealerships “failed” to retaliate as they were unable to create a “genuine dispute” against NMAC’s evidence.
“Because NMAC is a prevailing party and plaintiffs and third-party defendants fail to raise any plausible challenge to the costs charged, the court awards costs to NMAC,” Forrest wrote. The stores are no longer operating under the Nissan franchise.
The settlement comes a month after NMAC accused another dealer group with operations across Pensylvania and Michigan of failing to repay floorplan loans and selling $10.5 million worth of vehicles out of trust.
