PHILADELPHIA--(BUSINESS WIRE)--A ruling in a Missouri case involving GMAC, Inc. and an automobile dealer could tremendously increase dealer’s legal rights who are floorplanned by GMAC. This decision could impact more than 3,000 dealers currently holding GMAC floorplan agreements.
In GMAC, Inc. vs. Lloyd Belt in Miller County, Missouri Circuit Court, GMAC sought a judgment against Belt, who operated Lloyd Belt GM Center, Inc. and Lloyd Belt Chrysler, Inc., both of Eldon, Missouri. In the 2009 action, GMAC argued that Belt was in default of the GMAC floorplan agreements for each of the Belt dealerships.
Belt argued that he was not in default and that GMAC wrongfully accelerated the payment provisions of both GMAC floorplan agreements.
The case centers on whether GMAC’s financing agreements are “demand” agreements or “default” agreements. In a demand agreement, a note holder may demand payment at any time without cause. In a default agreement, a borrower must be given an opportunity to cure a missed payment and the agreement must not contain any ambiguous language or GMAC can be held liable for breach of contract and breach of good faith.
GMAC treats its financing agreements as demand agreements. William J. Wheeler of William J. Wheeler & Associates, Philadelphia, counsel for Belt, argued that the GMAC agreements were, in fact, default agreements and that GMAC is liable for breach of contract and breach of fiduciary duty.
GMAC requested a summary judgment on GMAC’s lawsuit and a separate summary judgment on Belt’s counterclaims that are based on breach of contract. In a ruling on December 19, 2013, Missouri County Circuit Court Judge Ralph Jaynes denied both of GMAC’s summary judgment motions. A trial date is pending.
“This case directly impacts any automobile dealer in the country with similar language in its GMAC financing agreement,” Wheeler said. “There is a significant difference between a demand agreement and a default agreement. We look forward to proving at trial that GMAC had default agreements with Mr. Belt and therefore wrongfully demanded accelerated payment.”
Mr. Belt’s dealerships closed in 2009 after GMAC wrongfully terminated the floorplan agreements for both dealerships and wrongfully took possession of both dealerships’ open account. He is seeking more than $4 million in compensatory damages plus punitive damages.
About William J. Wheeler & Associates
For more than 30 years, William J. Wheeler & Associates of Philadelphia have represented new and used automobile dealers. The firm exclusively represents auto dealers. Firm principal William J. Wheeler previously served as legal counsel for the Pennsylvania State Motor Vehicle Board and his subsequent experience as a motor vehicle dealer has provided him with invaluable experience in representing dealers.