Flooring Loans

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In Auto. Fin. Corp. v. DZ Motors, LLC, Civil Action No. 16-7955 (MAS) (DEA), 2021 U.S. Dist. LEXIS 69915 (D.N.J. Apr. 9, 2021), Judge Shipp reached different conclusions on a lien priority dispute between a Floorplan lender and credit union with respect to 2 luxury vehicles “purchased” by an SoT dealer’s manager. With respect to the Bentley, the Court found… Read More

In Toyota Motor Credit Corp. v. Cte 1, Civil Action No. 19-19092 (CCC), 2021 U.S. Dist. LEXIS 54385, at *3-7 (D.N.J. Mar. 23, 2021), Judge Cecchi dismissed dealer principals'/guarantors claims against their floorplan lender. WHEREAS TMCC argues that DeMaio's and Zeccardi's counterclaims must be dismissed on the basis that they lack standing to sue TMCC because they are bringing derivative… Read More

In Fca Us Llc v. Santander Bank, N.A., No. 19 C 1516, 2021 U.S. Dist. LEXIS 52353 (N.D. Ill. Mar. 17, 2021), Judge Lee estopped a dealership from asserting defenses against a Floorplan lender. Here, Santander asserts that it is entitled to the funds held by FCA under the following logical sequence: (1) New City entered into and defaulted under… Read More

In Ct102 Llc v. Nextgear Capital, No. 20A-CC-1909, 2021 Ind. App. Unpub. LEXIS 223, at *3-5 (Ct. App. Mar. 19, 2021), the Court of Appeals affirmed the trial court's finding of damages sustained by a floorplan lender. The facts and procedure were as follows: On remand, the trial court held an evidentiary hearing on damages on October 6, 2020. Tr. Vol.… Read More

In In re Haw. Motorsports, No. 20-10006-BPH, 2020 Bankr. LEXIS 3428 (Bankr. D. Mont. Dec. 7, 2020), the Bankruptcy Court found that AHFC did not own the retailer’s collateral, but retained an unperfected security interest pursuant to a Wholesale Financing Agreement. In its Motion and accompanying Brief, Honda asserts that stay relief is appropriate because Debtor is in possession of inventory… Read More

In Nbt Bank Na, No. 528759, 2020 N.Y. App. Div. LEXIS 2382, at *3-4 (App. Div. 3rd Dept. Apr. 16, 2020), the N.Y. Appellate Division held that a floorplan lender properly debited a dealer's dealer reserve. Upon our review of the record, we find that a fair interpretation of the evidence supports Supreme Court's determination that the "dealer reserve account… Read More

In In re Ferreira, No. 18-5264, 2019 Bankr. LEXIS 3342, at *6-8 (Bankr. N.D. Ga. Oct. 24, 2019), the Bankruptcy Court found no fiduciary duty between a floorplan lender and dealer. A number of courts have considered whether contracts in a floor planning relationship create such a technical trust. As the bankruptcy court explained in VW Credit, Inc. v. Salim… Read More

In Swl v. Nextgear Capital, No. 18A-CC-2955, 2019 Ind. App. LEXIS 387, at *14-19 (Ct. App. Aug. 28, 2019), the Court of Appeals held that the trial court should not have granted summary judgment to a floorplan lender against the dealer on the dealer's promissory estoppel claim. Dealer also asserts that the trial court erred when it entered summary judgment… Read More

In Wester Americredit Fin. Servs. v. Adams Motor Co., No. C18-4067-LTS, 2019 U.S. Dist. LEXIS 141889, at *2-5 (N.D. Iowa Aug. 20, 2019), the District Court threw out counter-claims filed against a floorplan lender.  The facts were not atypical: GM Financial acted as AMC's floorplan lender and entered into a term loan and revolving line of credit with AMC on… Read More

In Auto. Fin. Corp. v. Nunez (In re Nunez), Nos. 17-33845-hdh7, 18-03004, 2019 Bankr. LEXIS 824 (Bankr. N.D. Tex. Mar. 15, 2019), Judge Hale denied a Floorplan lender’s non-dischargeability claim. The Plaintiff alleges that the Defendant committed fraud in securing advances from the Plaintiff and by transferring the Secured Vehicles without being paid in full. The Plaintiff also alleges the… Read More

In Red Barn Motors, Inc. v. Nextgear Capital, Inc., No. 18-1409, 2019 U.S. App. LEXIS 4303 (7th Cir. Feb. 13, 2019), the Court of Appeals for the Seventh Circuit remanded for further proceedings the District Court’s de-certification of a class action against a Floorplan Lender.  We previously reported on the District Court’s opinion here:  https://www.severson.com/consumer-finance/district-court-ind-says-floorplan-lender-hoisted-car-dealer-class-representative-petard-floorpan-agreement-ambiguous-individualized-proof-intent-intrinsic-evidence-req/ The facts were as follows: The… Read More

In U.S. Bank Equipment Finance v. J.W. Jones Company, LLC., et. al.,  2018 WL 5312905, at *5–6 (S.D.Ind., 2018), in granting summary judgment to a floorplan lender on its contract/replevin claim, the District Court also found that the borrower owed a fiduciary duty to the floorplan lender due to the trust-relationship. The language of the Agreement meets the high bar… Read More

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… Read More

In Red Barn Motors, Inc. v. NextGear Capital, Inc. f/k/a Dealer Services Corporation, 2018 WL 397231, at *1 (S.D.Ind., 2018), the District Court granted a Motion for Reconsideration Granting Class Certification, and decided to decertify a class action filed on behalf of all used car dealers entering into floorplan agreements with a floorplan lender. The facts were as follows: The Plaintiffs… Read More

In Eddie Yaklin Ford Lincoln Mercury Nissan, Inc. v. American Road Services Company, Universal Underwritings Insurance Company, NO. 2:15-CV-399, 2017 WL 3387186, at *1–3 (S.D.Tex. Aug. 4, 2017), Judge Tagle denied a Dealer's Insurer's MSJ for an identity theft loss presented by the Dealer.  The facts forming the basis of the loss were as follows: Yaklin Ford is an authorized… Read More

In In re: Edwards, No. 14–50717, 2017 WL 3037451 (W.D. Ky, July 17, 2017), Judge Stout found that a marine retailer's conversion of funds out-of-trust from the sale of collateral rendered his debt to his floorpan lender non-dischargeable. Taking these points together, this Court has no trouble finding that Mr. Edwards both read the documents he signed, and was aware of CFSB's… Read More

In Nextgear Capital, Inc. v. International Motors Exchange, Inc., 2017 WL 2591282, at *4 (Cal.App. 2 Dist., 2017), The Court of Appeal found in an unpublished decision that the Floorplan Lender's unlicensed status did not void the commercial loan. Defendants contend the February 6, 2009 promissory note is illegal because plaintiff was not a licensed finance lender under the Finance Lenders Law… Read More

In In re: Moroni (Ford Motor Credit Company v. Moroni), 2017 WL 436148, at *11 (Bkrtcy.N.D.Ill., 2017), Judge Cassling found that a car dealer's principals could not use the bankruptcy laws to discharge their debt to their floorplan lender. Some courts have held that “a debtor did not have the necessary fraudulent intent when the debtor used money in violation… Read More

In Ford Motor Credit Company v. First National Bank of Crossett, 2016 WL 4916829, at *5–8 (Ark.App., 2016), the Arkansas Court of Appeal held that a RISC assignee's security interest was superior to that of a floorplan finance company's. FNBC acknowledges that a buyer in the ordinary course of business takes free of any underlying security interest created by the seller,… Read More

In Bob Smith Automotive Group, Inc. v. Ally Financial, Inc.  2016 WL 3613402 (Md. 2016), the Maryland Court of Appeals was asked to decide a rather unremarkable legal question of whether certain documents were part of a contract.  But, in doing so, the Court of Appeals gave a succinct explanation of what Floorpan Lending: The Automotive Sales Industry 101.  4.... [I]t… Read More

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