Jury Awards Ex-Calif. Dealer $256 Million from Nissan’s Finance Arm

A jury in Orange County, Calif., has awarded a former Nissan dealer $256 million in damages in his 7-year-old lawsuit against Nissan Motor Acceptance Corp., Automotive News reports.

Michael Kahn’s seven-store Superior Automotive Group, which included four Nissan outlets, was a strong performer and NMAC’s biggest borrower when the economic crisis hit in 2008. Superior used the finance unit to handle inventory purchases along with customer and dealership financing.

But when car sales plummeted, Kahn fell delinquent on $1.6 million in loans. NMAC, under pressure to conserve cash, called the loans in 2009 and successfully sued the company for $40 million for breach of loan guarantees. Kahn sold a Toyota dealership for $30 million and turned over the proceeds to NMAC. But by then he owed a total of $70 million.

In 2009, NMAC canceled all financial services to Superior, forcing the group into bankruptcy. A year later, Kahn countersued. He asserted that NMAC had told him it would continue to work with him despite the delinquency, noting that many other dealers faced the same cash flow problem. Kahn’s lawsuit insisted that NMAC defrauded Superior by reneging on its assurances of continued financial support.

Kahn’s claim was rejected by an earlier jury. But he successfully appealed, allowing a new trial. NMAC says it will this week’s award.