In In re Nissan Litigation, 17-CV-729 (KBF) 2018 WL 2113228 (S.D.N.Y. May 8, 2018), Judge Forrest granted summary judgment to an auto finance company in a floorplan dispute. Judge Forrest first described “sales out of trust”.
In order to keep inventory in their dealerships, car dealers typically enter into Floor Plan Financing agreements with the captive finance arms of the manufacturers—in this case, with NMAC. Under such agreements, funds are advanced from time to time and must be repaid at certain intervals. Anytime property is sold, however, the dealer is required to pay the manufacturer whatever amount is associated with that property. In this case, NMAC’s agreements with the dealers required the following: “Upon any Disposition of Property, Dealer shall promptly pay NMAC the amount due related to the item sold, together with interest, in accordance with NMAC’s Wholesale Floor Plan Payoff Policy.” (See, e.g., ECF No. 394-22 § 2.32.). When a dealer sells a vehicle without prompt payment as agreed under their Floor Plan Financing Agreement, it is known as selling a vehicle “out of trust.” . . .For its part, defendant points to plaintiffs’ and third-party defendants’ answers at ECF No. 169–178, noting that each contains numerous admissions that, for example, “ACIM and ALIM sold certain vehicles out of trust.” (See, e.g., ECF No. 169 ¶ 34.) The Court agrees with defendant—there is no triable issue as to breach of the WSAs. On December 1, 2017, the Court granted defendants’ motions to strike plaintiffs’ amended counterclaims and answers at ECF No. 362 and 363. Thus, the former answers stand; in each of these answers, plaintiffs admitted to selling vehicles out of trust. (ECF Nos. 169–78.). In addition, in Flom’s affidavit in opposition to summary judgment, he states that dealerships were selling vehicles out of trust. That he asserts that the numbers are “grossly inflated,” and/or that White Plains sold out of trust based on capital needs at the other dealerships does not remedy the fact that the dealership sold out of trust—a clear breach of the WSAs. Thus, this Court finds no triable issue as to whether plaintiffs breached the terms of the contract. NMAC has made the required three-pronged showing to enforce the guaranties; plaintiffs, for their part, have not raised any triable issues in response. Therefore, defendant has established its right to recover under the guaranties and the underlying loans.