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.
Showing posts with label Nextgear Capital. Show all posts
Showing posts with label Nextgear Capital. Show all posts
Monday, June 11, 2018
Friday, May 12, 2017
An update regarding Nextgear Capital
I received four calls today from dealers involving Nextgear Capital. All of the dealers felt Nextgear treated them unfairly. Two of them wondered if I was planning a class action against Nextgear. The answer is no. Nextgear writes very tough, tight contracts. Some things that dealers think are unfair are allowed buy the contract. In my opinion, Nextgear is run by smart people, and they have smart, competent attorneys. You have to bring your "A" game if you are litigating against them. If you are professional, they will be professional. If you are reasonable. They will be reasonable. I have not identified any systematic conduct by Nexgear that would justify suing them on a group or class action basis offensively. Right now, I am just defending dealers as they are sued in Indiana. If you have a beef with Nextgear, tell your story online. You cannot be successfully sued for defamation for making true statements of fact or stating your clearly articulated opinion. If a pattern emerges of conduct that would give rise to a legal case, it may become clear through the stories of many dealers. If it is juicy enough, a large law firm will probably pick it up and run with it.
There are actually two areas that I am looking at with floorplan lenders in general. The first involves the relationship between floorplanners and the auto auctions under shared ownership. IF there is "tying" involved between one business and the other, then in certain circumstances, if there is sufficient market power involved, antitrust law could be implicated. If this sounds vague, that's because it is. It would cost a lot of money to develop this theory in any case where it might apply.
The second theory involves cases where a floorplan lender does not release the title to a vehicle that the dealer has sold in the ordinary course of business. It appears to me that under Uniform Commercial Code 9-320 and 2-403, the dealer has the power to transfer the car to an ordinary buyer free and clear of the security interest of the floorplanner in almost every case. The question then becomes who has the ability to sue the floorplanner when the floorplanner refuses to release the title? the dealer? the buyer? both? When titles are wrongfully withheld, how does that implicate damages?
There are actually two areas that I am looking at with floorplan lenders in general. The first involves the relationship between floorplanners and the auto auctions under shared ownership. IF there is "tying" involved between one business and the other, then in certain circumstances, if there is sufficient market power involved, antitrust law could be implicated. If this sounds vague, that's because it is. It would cost a lot of money to develop this theory in any case where it might apply.
The second theory involves cases where a floorplan lender does not release the title to a vehicle that the dealer has sold in the ordinary course of business. It appears to me that under Uniform Commercial Code 9-320 and 2-403, the dealer has the power to transfer the car to an ordinary buyer free and clear of the security interest of the floorplanner in almost every case. The question then becomes who has the ability to sue the floorplanner when the floorplanner refuses to release the title? the dealer? the buyer? both? When titles are wrongfully withheld, how does that implicate damages?
Sunday, January 15, 2017
My Accidental Practice Area Representing Out-of-State Dealers against Floorplanning Companies
The vast majority of my practice involves representing consumers bringing claims under consumer protection statutes like he Fair Debt Collection Practices Act, Fair Credit Reporting Act, Credit Services Organizations Act, Telephone Consumer Privacy Act, and more. Recently, as it so happens I have been contacted by multiple individuals who have needed help because were alleged to have signed personal guarantees on behalf of car dealers on Floorplanning contracts, and I have built up some experience in this area. As a member of the National Association of Consumer Advocates, I have pledged not to represent corporations against consumers, but I have no problem representing businesses and individual proprietors in cases where a business is on the other side.
A floorplanning company provides financing to auto dealers for their inventory, taking a lien on the vehicles and releasing the liens as the vehicles are sold. The financing of the lot of cars is called a "floorplan". As it so happens, two of the most important floorplanning companies in the United States are based immediately to the north of my homebase in Indianapolis, Indiana, in the northern suburbs of Hamilton County. These copanies are Automotive Serices Corporation (AFC) and Nextgear Capital, Inc. (Nextgeer). The floorplan contracts issued by these companies often have provisions that suits are to be brought in Hamilton County, Indiana. This gives the companies the ability to sue dealers and personal guarantors from all over the country in Noblesville, Indiana.
If you are a dealer or a personal guarantor of a dealership that gets sued by ASC in Indiana, you should be aware that even if you or your dealership legitimately owes money to the floorplanner, you may still find it in your interest to hire a lawyer to contest the suit. For one thing, there may be the opportunity to settle short or to get favorable payment plans. Another thing is that the lawsuit against you may include a claim that payments owed to the dealer were fraudulently diverted. Fraud is hard to prove when contested, but it is easy for them to get a default judgment for fraud. If they get a judgment for fraud, you likely will not be able to discharge that judgment in bankruptcy.
The bottom line is that if you are sued by ASC or Nextgear in Indiana, you should strongly consider hiring an attorney to defend you. For a retainer less than the amount owed on one car, you may be able to protect yourself from much higher liability.
Note that if you are an Indiana dealer sued by ASC or Nextgear, I will probably not personally represent you, I will probably refer you to another attorney; however if you are from out-of-Indiana I can provide you affordable options for defense of floorplanning suits.
A floorplanning company provides financing to auto dealers for their inventory, taking a lien on the vehicles and releasing the liens as the vehicles are sold. The financing of the lot of cars is called a "floorplan". As it so happens, two of the most important floorplanning companies in the United States are based immediately to the north of my homebase in Indianapolis, Indiana, in the northern suburbs of Hamilton County. These copanies are Automotive Serices Corporation (AFC) and Nextgear Capital, Inc. (Nextgeer). The floorplan contracts issued by these companies often have provisions that suits are to be brought in Hamilton County, Indiana. This gives the companies the ability to sue dealers and personal guarantors from all over the country in Noblesville, Indiana.
If you are a dealer or a personal guarantor of a dealership that gets sued by ASC in Indiana, you should be aware that even if you or your dealership legitimately owes money to the floorplanner, you may still find it in your interest to hire a lawyer to contest the suit. For one thing, there may be the opportunity to settle short or to get favorable payment plans. Another thing is that the lawsuit against you may include a claim that payments owed to the dealer were fraudulently diverted. Fraud is hard to prove when contested, but it is easy for them to get a default judgment for fraud. If they get a judgment for fraud, you likely will not be able to discharge that judgment in bankruptcy.
The bottom line is that if you are sued by ASC or Nextgear in Indiana, you should strongly consider hiring an attorney to defend you. For a retainer less than the amount owed on one car, you may be able to protect yourself from much higher liability.
Note that if you are an Indiana dealer sued by ASC or Nextgear, I will probably not personally represent you, I will probably refer you to another attorney; however if you are from out-of-Indiana I can provide you affordable options for defense of floorplanning suits.
Wednesday, September 21, 2016
Were you sued by Nextgear Capital, Inc. in Hamilton County, Indiana?
Nextgear Capital, Inc. is a company that provides floorplan dealer financing for car and RV dealers. Nextgear has grown rapidly, and it finances a lot of dealerships, especially small dealers.
It appears that Nextgear also sues a lot of dealers. Although I usually represent car buyers, not dealers, it just so happens that int he past month I was contacted by two people relating to suits against them by Nextgear Capital. These people had very different stories, but I was surprised to get two business loan intakes involving the same company within weeks of each other. I checked to see how many lawsuits Nextgear files, and it apears that recently they have been filing about a dozen a month. That's a lot for business-to-business cases. It's not illegal, just unusual.
Nextgear finances dealerships all over the country, but their contracts specify that venue for disputes will be in Hamilton County, Indiana. Because Nextgear finances a lot of small mom and pop dealerships, nextgear frequently gets third party guarantees on the loans. Many people who Next Gear sues may have a tough time defending the case in Indiana.
Understand that the restrictions on where businesses can sue consumers don't apply to business-to-business contracts. It is very likely that if you signed a contract with Nextgear either as a dealer or as a guarantor, that Nextgear can enforce the venue clause and require you to defend yourself in Hamilton County, Indiana. That being said, you are entitled to get service of process and to know about a lawsuit before a default judgment is taken against you. If a creditor gets a default judgment against you, and you had no notice at all of the suit, there is a good chance that if you hire a lawyer, the lawyer can get the default judgment set aside. After the judgment is set aside, you likely will have to fight Nextgear on the merits of the claim, and fight in Indiana.
I am available to take defense cases on behalf of out of state car dealers and guarantors who are sued by Nextgear Capital, Inc. You need to understand though that commercial litigation cases are expensive to defend. You might have to come to Indiana to defend the lawsuit. If you are a consumer or a business person, think twice before you sign a contract that has a jurisdiction and venue clause. These clauses are only sometimes enforced against consumers, but they are almost all the time enforced against businesses.
If you are sued by a complany that alleges you signed a contract, but you didn't really, it is still crucially important that you defend yourself in court if you are sued. Your defense costs might partially or entirely be covered by your homeowners insurance if you have identity theft coverage. Check your policy and or talk with your insurance agent.
Advice for Would-be Cosigners:
If anybody asks you to cosign or guarantee a loan - as a general rule - don't. The mere fact that you are asked to guarantee suggests that the would-be creditor isn't secure that the borrower will pay the loan, and the lender is in the business of knowing these things. Instead of cosigning, if the loan is for a loved one, offer to put up collateral that you could afford to lose, or subsidize the downpayment to the extent the lender doesn't require a cosigner. I have been asked many times by cosigners if I would represent them to sue a borrower who defaulted on the loan. I have never taken one of these cases. My retainer is always more than the expected recovery against the defaulted borrower.
In two cases I did represent cosigners who alleged their names were forged. One involved a student loan. These cases are interesting. I will consider taking these cases. Generally they are the tip of the iceburg for a more complex identity theft case.
It appears that Nextgear also sues a lot of dealers. Although I usually represent car buyers, not dealers, it just so happens that int he past month I was contacted by two people relating to suits against them by Nextgear Capital. These people had very different stories, but I was surprised to get two business loan intakes involving the same company within weeks of each other. I checked to see how many lawsuits Nextgear files, and it apears that recently they have been filing about a dozen a month. That's a lot for business-to-business cases. It's not illegal, just unusual.
Nextgear finances dealerships all over the country, but their contracts specify that venue for disputes will be in Hamilton County, Indiana. Because Nextgear finances a lot of small mom and pop dealerships, nextgear frequently gets third party guarantees on the loans. Many people who Next Gear sues may have a tough time defending the case in Indiana.
Understand that the restrictions on where businesses can sue consumers don't apply to business-to-business contracts. It is very likely that if you signed a contract with Nextgear either as a dealer or as a guarantor, that Nextgear can enforce the venue clause and require you to defend yourself in Hamilton County, Indiana. That being said, you are entitled to get service of process and to know about a lawsuit before a default judgment is taken against you. If a creditor gets a default judgment against you, and you had no notice at all of the suit, there is a good chance that if you hire a lawyer, the lawyer can get the default judgment set aside. After the judgment is set aside, you likely will have to fight Nextgear on the merits of the claim, and fight in Indiana.
I am available to take defense cases on behalf of out of state car dealers and guarantors who are sued by Nextgear Capital, Inc. You need to understand though that commercial litigation cases are expensive to defend. You might have to come to Indiana to defend the lawsuit. If you are a consumer or a business person, think twice before you sign a contract that has a jurisdiction and venue clause. These clauses are only sometimes enforced against consumers, but they are almost all the time enforced against businesses.
If you are sued by a complany that alleges you signed a contract, but you didn't really, it is still crucially important that you defend yourself in court if you are sued. Your defense costs might partially or entirely be covered by your homeowners insurance if you have identity theft coverage. Check your policy and or talk with your insurance agent.
Advice for Would-be Cosigners:
If anybody asks you to cosign or guarantee a loan - as a general rule - don't. The mere fact that you are asked to guarantee suggests that the would-be creditor isn't secure that the borrower will pay the loan, and the lender is in the business of knowing these things. Instead of cosigning, if the loan is for a loved one, offer to put up collateral that you could afford to lose, or subsidize the downpayment to the extent the lender doesn't require a cosigner. I have been asked many times by cosigners if I would represent them to sue a borrower who defaulted on the loan. I have never taken one of these cases. My retainer is always more than the expected recovery against the defaulted borrower.
In two cases I did represent cosigners who alleged their names were forged. One involved a student loan. These cases are interesting. I will consider taking these cases. Generally they are the tip of the iceburg for a more complex identity theft case.
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