A federal judge imposed some strict business practices this week on a Laramie car dealership, which is currently being sued by Nissan.
JAG Auto allegedly was selling Nissan vehicles without paying the car manufacturer for the product.
Nissan originally sought to force the car dealership to return the vehicles that had been distributed by the car company.
“(JAG Auto)’s financial position continues to weaken, and as it struggles to make payments as they become due, Defendant has continued the illicit practice of selling vehicles without paying for them, leaving (Nissan) with nothing,” Nissan’s attorney wrote in a June 10 filing. “Defendant has established its erratic ability to make payments due and owing under the parties’ loan agreements. Given Defendant's track record, obtaining possession now is essential.”
Nissan’s financing of the car dealership allowed JAG Auto to acquire an inventory of new and used vehicles without pre-paying for them.
Nissan’s attorneys have said that JAG Auto has sold 27 vehicles, valued at $1.1 million, and has failed to pay off the related liens upon sale. The car manufacturer has also claimed JAG Auto also “refused to turn over vehicles and other secured collateral following (Nissan)’s lawful demand.”
In total, Nissan claims it is owed more than $6.8 million from the Laramie company.
JAG Auto runs two dealerships in Laramie: the Adventure Nissan Store on Third Street and the Snowy Range Store on Pierce Street.
Nissan and the car dealership entered into a financing agreement in May 2017, and Nissan then discovered in late 2018 that the car dealership had “failed to keep its working capital and net cash at or above guidelines” established by Nissan.
Court documents indicate that the two parties agreed to have the car dealership “cure the default by, among other things, depositing additional money" into the dealerships’ accounts.
After the car dealership defaulted on that agreement, however, Nissan “elected to terminate the lending relationship effective as of May 13.”
Nissan then repurchased 28 new Nissan vehicles, but the car company’s attorneys allege that the car dealership owes substantially more.
Nissan originally asked U.S. district court judge Alan Johnson to force the car dealership to return the $4.7 million worth of Nissan vehicles it currently owns.
Instead, a later agreement between the two parties had Johnson impose a preliminary injunction this week that will allow the car dealership to continue selling Nissan vehicles so long as a Nissan representative is on site.
At the time sale or lease of any vehicle, the dealership also needs to immediately notify Nissan.
Nissan’s on-site representative is also “entitled to exercise control over the keys to vehicles which are collateral and shall permit the use of the keys by dealer to conduct normal and routine business operations.”
Before the dealership sells any of the vehicles that are collateral in the court case, JAG Auto is now required to deliver a cashier’s check to Nissan or wire transfer funds to the company.
The injunction puts other limitations on the car dealership, including the amount that vehicles are allowed to be test-driven.