On January 5, 2010, one of Nissan’s largest and most successful dealers from 2001-2008 filed a $250 million fraud and breach of contract suit against three entities controlling the Nissan automotive empire – Nissan Motor Co., Ltd., Nissan North America Inc. and Nissan Motor Acceptance Corp.
Filed in Los Angeles, the plaintiff was Orange County businessman Michael A. Kahn and Superior Automotive Group, LLC, and in his lawsuit, he charged that Nissan had “destroyed” his business, which by 2007 had become the 73rd largest auto dealership group in the United States – generating more than $500 million in revenues and employing approximately 800 people.
According to the lawsuit, “Kahn was Nissan’s ‘go-to’ dealer in California. At the behest of Nissan, he acquired troubled or underperforming dealerships and turned them around. When a large automotive company sought to buy out Kahn in 2004 and again in late 2006, Nissan insisted that he not sell and told Kahn he was a key component of Nissan’s future plans in California.”
The lawsuits pointed out that Kahn’s “dealerships were consistently awarded Nissan North America‘s Circle of Excellence Award,” a coveted honor given only to the nation’s top dealers. Kahn was flown to Tokyo, honored by Nissan and met with its top executives. The lawsuit also stated that “Nissan made millions and benefited greatly from Kahn’s success in selling cars, and made millions more from financing Kahn to buy Nissan vehicles, to operate his dealerships, and to borrow money to buy new dealerships.”
When the great recession hit in 2008, the auto industry was hit hard. Nissan saw its sales in the U.S. plummet. The company laid off tens of thousands of workers and drastically cut back vehicle production. In February 2009, according to Kahn’s lawsuit, “despite Nissan agreeing to a debt forbearance period through March 31, 2009, and despite Kahn’s long history of profitability and success with Nissan, Nissan precipitously cut off financing to Kahn, and forced all his dealerships out of business.”
According to the lawsuit, Kahn and the relevant dealerships have suffered damages in excess of $250 million, with the exact amount to be proven at trial.
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Jack Zinda is an Austin business lawyer with Heselmeyer Zinda, PLLC. To learn more about Austin business attorney Jack Zinda visit http://www.texasbusinessattorneys.net.
