California Dealer Awarded $256M in Nissan Suit

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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, according to The Daily Journal.

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 of the dealerships were financed by Nissan Motor Acceptance Corp., Nissan Motor Limited’s financing arm. Kahn charged that the corporation committed fraud and negligent misrepresentation in order 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 in a statement 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.”

Back in 2008 when the Great Recession hit, 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.


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