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Former Owner of California Dealerships Wins Lawsuit Against Nissan

The one-time owner of a successful car dealership group in California has been awarded more than $256 million by a jury. Mike Kahn, who ran the Superior Automotive Group with dealerships in LA and San Francisco, fought Nissan Motor Acceptance Corp. for eight years before achieving this judgment. NMAC is the financing arm of the Nissan company, and its representatives say that they plan to appeal this verdict.

1504001-Gavel-Money-2During the financial crash of 2008-2010, many new-car dealerships were struggling. Superior’s were among these, but this wasn’t always the case. Nissan had recognized Superior as one of the top three dealership groups in the world prior to 2008. The company had sold more than $1 billion of inventory in the period between 2001 and 2008. That all changed with the economic downturn. Suddenly, consumers weren’t buying cars.

Typically, car dealerships finance the purchase of new cars through an organization like NMAC. The loan on the car is frequently paid back when the car is sold to a consumer. However, with cars not moving, dealerships everywhere were defaulting on these loans. Mike Kahn’s dealerships were among these. He reached out to NMAC, asking for them to not default him on his outstanding loans. The company agreed, and then proceeded with a default anyway.

Kahn sold one of his dealerships to cover some of what he owed to NMAC, but it wasn’t enough. More than 800 employees were put out of work when all seven dealerships had to close, and NMAC sued Kahn for an additional $40 million while also seizing all of his personal and business assets. A relationship that once thrived was now deeply contentious.

Kahn countersued and eventually prevailed after nearly a decade of litigation. A jury awarded him compensatory and punitive damages in what appears to be an indictment of large corporations deliberately putting local companies on the chopping block. NMAC plans to appeal the decision, so this saga is not over yet. Nonetheless, this is an apt demonstration of how an excellent partnership can quickly go wrong, making the requirement for careful planning and good contracts a necessity.