|[January 20, 2014]
Court Decision Could Significantly Impact All GMAC Automobile Dealer Financing Agreements
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 opportunit 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
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
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.
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