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$256 million awarded to defunct Newport Beach auto group

A defunct Newport Beach-based auto dealership group has been awarded $256 million in an eight-year legal battle with Nissan Motor Acceptance Corp., a lending division of automaker Nissan Motor Ltd.

The lawsuit stretches back to the Great Recession in 2009, when Michael Kahn, owner of Superior Automotive Group, lost his businesses after NMAC defaulted on his dealerships after payments for inventory missed guidelines stipulated by the lender.

Kahn operated seven Nissan and Toyota dealerships in Los Angeles and the Bay area.

A jury in a retrial on Monday in Orange County Superior Court awarded $121.9 million in compensatory damages and $134.55 million in punitive damages to Kahn and Superior Automotive Group.

“The jury sent a message that a large, wealthy, powerful company cannot come in and destroy local businesses without there being consequences and without them being held accountable,” said Kahn’s lead trial lawyer Amnon Siegel.

NMAC plans to appeal the verdict.

“We are disappointed with the jury’s decision. A prior trial based on similar facts led to a substantial, multi-million dollar jury verdict and judgment in NMAC’s favor. If the jury award stands, we plan to appeal and are confident that justice will ultimately prevail,” NMAC said in a statement.

The case boiled down to payments for inventory at Kahn’s dealerships.

Superior Automotive used Nissan’s finance division to borrow money for its cars. Under NMAC guidelines, the money needed to be repaid two days after funding or 10 days after a vehicle sale, according to Siegel.

Most auto dealers do not actually make the deadlines, he said. Superior paid for its inventory but sometimes paid for it slower than the 2/10 guideline.

“They used it as an excuse to shut down Superior and all its dealerships,” Siegel said.

Kahn was one of NMAC’s leading dealers. Superior Automotive, his law firm said in a press release, sold more than $1 billion worth of cars from 2001 to 2008.

“NMAC took as collateral all of Kahn’s personal assets, including his home, and all of his business assets, including all the dealerships,” Kahn’s lawyers said in a press release. Kahn, they said, was forced to sell one of his Toyota dealerships, generating $30 million, all of which went to NMAC.

NMAC defaulted Kahn for paying $1.6 million in inventory outside the 2/10 guideline. NMAC then defaulted on Superior Automotive and Kahn’s real estate, capital and other loans for more than $100 million.

When Kahn reached out to NMAC, he was told there was nothing he could do. NMAC reportedly claimed $60 million in proceeds.

The case was initially filed in 2009. NMAC received a $40 million judgment on its contract claim. Fraud and tort claims were reversed on appeal in 2014.

Staff writer Sean Emery contributed to this report.

Article source: http://www.ocregister.com/2017/05/23/256-million-awarded-to-defunct-newport-beach-auto-group/

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