Jury awards $256M to auto dealer
SANTA ANA — A jury has awarded nearly $256.5 million to a California auto dealership owner who claimed Nissan had a secret plan to put him out of business during the recession.
The Orange County Superior Court panel ruled Monday in favor of Michael Kahn, who owned seven Nissan, Toyota and Chevrolet dealerships in the Los Angeles and San Francisco Bay areas.
Six dealerships were financed by Nissan Motor Acceptance Corp., Nissan Motor Limited’s financing arm.
Kahn charged that the corporation committed fraud and negligent misrepresentation to foreclose on the dealerships after he defaulted on about $6.7 million in loans in 2009.
“We are disappointed with the jury’s decision,” Nissan said Tuesday. “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.”
The 2008 worldwide recession caused auto sales to plunge and left many Nissan dealerships unable to immediately pay the company for cars they sold, as required under loan agreements.
The problem wasn’t confined to Nissan cars. Large numbers of dealerships around the country were purged by auto companies. Many dealers later sued, and most cases were settled.
Kahn was late with payments, but he eventually paid them. He alleged that a Nissan executive had promised flexibility on the payments and that Kahn would receive financing to keep his dealerships afloat through 2009. However, Kahn alleged the company actually had a “secret plan” to “pull the plug” after squeezing as much money out of him as possible.
After his dealerships again came up short on loan payments, Nissan foreclosed and began selling off Kahn’s assets, including his Orange County home and other property he’d put up for collateral to raise more money.
The company also sued for breach of loan guarantees and was awarded $40 million by a jury. Kahn wasn’t allowed to submit evidence at that trial alleging fraud.
An appeals court reversed that prohibition, and Kahn’s fraud and misrepresentation allegations went to trial, resulting in Monday’s jury award of nearly $122 million in compensation and nearly $134.6 million in punishment.
Kahn’s case was handled by a Los Angeles legal firm, Miller Barondess. Skip Miller, the firm’s managing partner, said he was pleased by the verdict.
Kahn “has finally obtained justice for what was done to him and his business and family. Mike is a great guy, and a great car dealer, and he deserves this so he can get his life back,” Miller said.