Encouraging results in Nextgear Cases

We have had encouraging results lately in settling cases where Nextgear Capital Corporation sued our clients.  Nextgear filed summary judgment motions in over 40 of our cases in October and November 2019, and since that time we have been systematically trying to resolve these cases, and we've gotten through most of them. Quite frankly in more than one case that I thought our client would have no choice but bankruptcy we were able to work out a deal. 

Of course, not every case can be settled, and not every case should be settled.  We really do try to get to a win-win solution though.  Part of the credit for completing the recent rash of settlements, quite frankly, needs to go to Nextgear's litigation team.  They have shown flexibility in customizing deals to the situations our individual dealers find themselves in.  If they had taken a hard line in these cases, I think 90% of our clients would have had no choice but bankruptcy or an adverse judgment. 

The bottom line is that if you are sued by Nextgear or another floorplan lender in Indiana, even if you think your situation is hopeless, give us a call at 317-662-4529. 

Nextgear vs the Wholesalers

I have been receiving a rash of complaints lately from Wholesale auto and truck sellers who floorplanned with Nextgear. It seems the Nextgear model of requiring periodic inventory checks at the dealer's place of business doesn't mesh with typical wholesaling practice where vehicles are physically located in warehouses or out on consignment.  This has the potential to cause breaches of contract (or claimed breaches of contract)  when the floorplanning account is up-to-date. 

If you are a wholesale dealer financing with Nextgear, I suggest that you read the whole boring Nextgear contract and make sure you are in compliance.  If you aren't, and practically can't be, I suggest you shop for alternate financing, and proactively come up with a plan that will satisfy nextgear, and put it in writing. 

By the way, consignment selling to used car dealers is an unavoidably risky business.  I personally question whether it is compatible with a floorplanned inventory in any case.  Who knows, maybe Nextgear sees things the same way.  That might be true, but the fact is that Nextgear has financed numerous wholesalers. Complaining that they are wholesalers now seems questionable to me. 

We have defended or are defending over 50 dealers and guarantors sued by Nextgear, in suits rainging from around $10,000 to over $2 million.  If you are sued by Nextgear in Indiana, call us at 317-662-4529. 

Analysis of Two Months of Nextgear Filings - Only 7% of defendants hired an attorney

We just completed an analysis of two months of suits filed by Nextgear Capital, Inc. in Hamilton County, Indiana. Nextgear filed 127 cases.  Of those cases, only 9 defendants hired an attorney. Six hired an assortment of other attorneys, and three hired us.  Only seven percent of Nextgear defendants hired an attorney. Of the cases where attorneys weren't hired, Nextgear started moving for default judgments roughly 6 weeks after the suits were filed.  We believe that ultimately, Nextgear will move for default judgments in all the cases where they received service of process but where the defendant didn't answer the complaint or file an answer.

This analysis reaffirms our conclusion that it it is imperative for a dealer sued by Nextgear to hire an attorney and answer the complaint.    Simply by hiring an attorney, you place yourself in the top 10% of defendants, and you take yourself off of the fast track to judgment.  I believe that no matter what attorney you choose, you are likely better off than not hiring an attorney t all.  I believe, however, that Keith Hagan and I have the most experience in handling defense claims to Nextgear cases.  We have attempted to price our services so that dealers can afford them.  Call us at 317-662-4529 if you are sued by Nextgear Capital, Inc.

The Relationship between Nextgear and Manheim Auctions - Dealers Are Complaining

I have fielded a number of complaints about the interaction between dealer floorplanning company Nextgear Capital and Manheim Auctions.  Both Nextgear and Manheim are units of Cox Enterprises, Inc.

To give you some perspectives: in the modern-day car business, buying and selling vehicles at auctions is essential.  Because of the marketplace nature of auctions, once an auction becomes entrenched in an area, it is a natural monopoly.  Even the largest markets might have only one or two working auctions.   According to Wikipedia, Manheim is the largest vehicle auction company in the world, with 145 locations worldwide.

Nextgear Capital, the dealer financing division of Cox Enterprises, doesn't hold the same dominant position as Manheim, but in localized areas may be the only financing alternative, and whether it is the only option available to a dealer, once the dealer signs up, the dealer can be utterly dependent on having a functional relationship with Nextgear.

Because my firm defends dealers who are sued by Nextgear, I hear a lot of complaints by dealers who are unhappy with Nextgear's policies and practices.  They have complained about the fees, complained that vehicles were floorplanned that weren't requested, complained that inventory was repossessed without default, and several have complained that when there is a dispute with Nextgear, the dealership gets frozen out of the auto auctions, especially Manheim, but not even limited to Manheim.  Of course, I realize in the course of fielding these complaints, I am hearing only one side of the story.  There may be facts that I don't even know about. That being said, Nextgear filed over 1,000 suits in Hamilton County, Indiana in the past year.  If you are a dealer who is behind with Nextgear, and you can't get things resolved with their collection department, it is a reasonable guess that you will be sued in Indiana.

I started with a working theory that IF Nextgear, a company that probably would not be considered to have monopoly power for purposes of antitrust law, conspires with Manheim, a company which might be held to yield monopoly power, to refuse to let a dealer participate in an auction, that could be conceivably be an illegal vertical tying arrangement pursuant to antitrust law.  After coming up with that theory, I reached the conclusion that as a private attorney, it doesn't look like even if the facts can be proven, and that's a big if, neither my firm, nor my clients would be able to finance a private antitrust action.  I'm putting this theory out in a public forum for anybody who reads it to look into the facts and into the law, and go further if warranted.This theory may have some bugs and has not been tested in court

What that means is that if you are a dealer who is reading this and has a complaint about an unfair trade practice with Nextgear, you should consider making a formal complaint with the Federal Trade Commission, the federal agency with jurisdiction over the antitrust law.  You can file your complaint here.  If the FTC doesn't think the complaint is meritorious, it will go nowhere.  If the complaints build up, and if the FTC thinks there could be a violation, the FTC could take action.

By the way, even if Nextgear does not violate antitrust law, that doesn't mean that any action taken by Nextgear would be shielded from any scrutiny.  Unfair and deceptive acts are also regulated under the Federal Trade Commission Act as well as some state UDAP laws.  There is a covenant of good faith and fair dealing in every contract under the Uniform Commercial Code, and if a company intentionally and unjustifiable acts to prevent a company from dealing with a third party, there is a tort called intentional interference with business relations.  In addition, if you are a dealer whose vehicles are repossessed and those vehicles are resold in a commercially unreasonable way, you may have a defense to deficiency claims by the floorplanner.  If you are sued by Nextgear, you should not necessarily assume that everything Nextgear claims from you is owed, no matter how high the claimed balance, and you shouldn't assume that there is nothing you can do to get the balance down.  My firm regularly defends dealers from lawsuits brought by Nextgear in Indiana.  We will talk to you on the phone with no obligation to hire us.  317-662-4529.  

Have You been Sued by Nextgear Capital, Inc.?

Many car dealers and guarantors of auto floorplan loans are sued in Indiana by Nextgear Capital, Inc.  Most of the people sued don't know how to defend themeselves.  Some think that just because the dealership owes money on the loan, there is nothing they can do. This is not necessarily the case, and this is especially true if the lawsuit alleges fraud.  If you are sued by Automotive Finance Corporation, we urge you to call us. We will talk to you on the phone at no charge.

If you guaranteed an auto floorplan loan you may have defenses that you don't know about. That's why it is very important for you to contact a lawyer as soon as you are sued.