LMP Automotive Holdings Inc. has sued two dealership owners for combined $3 million in deposits it made to acquire stores and property in New York and Texas. LMP Automotive terminated these deals earlier this year.
An affiliate of the auto retailer filed a lawsuit May 27 in federal court in Albany, N.Y., against James Zappone, Zappone Chrysler-Jeep-Dodge-Ram in Clifton Park, N.Y., Zappone Property Management and an escrow agent. LMP Automotive’s lawsuit seeks the return of the $1 million deposit the company made for the acquisition.
LMP filed a lawsuit two weeks later in federal court in Houston against Houston dealerships Tom Peacock Nissan and Tom Peacock Cadillac, partners David Peacock and Aldo Paret, and affiliated real estate companies. This lawsuit demands the return of $2 million in deposits made to purchase the dealerships and real estate.
LMP acquired its first franchised dealership in 2021, but announced in early 2022, plans to terminate seven pending acquisitions over an inability to secure financing. At that time, he retailer noted plans to explore strategic alternatives, including a possible sale.
LMP has yet to report financial results for the fourth quarter of 2021 and first quarter of 2022. The company reports plans to restate financial results for the first three quarters of 2021.
Originally, LMP planned to buy the Cadillac and Nissan dealerships from Peacock and Paret for $141 million and the Stellantis brand dealership in New York for $19.2 million. Both deals included real estate.
In the New York suit, LMP alleges the seller "improperly" told the escrow agent that the buyer failed to close by the agreed upon date, demanded the deposit be paid to Zappone and objected to LMP's efforts to have the deposit returned following the March 21 contract termination.
In the Texas lawsuit, LMP reported it could not obtain automaker approval barring the transaction from closing on Feb. 28. LMP reportedly sent the sellers a notice of termination on March 29 and demanded the title company return the deposit.
LMP’s lawsuits also seek reimbursement for lawyer fees, expenses and costs and for interest in the New York case.
The Albany Business Review reported that Brian Carr of Monaco Cooper Lamme & Carr law firm in Albany noted his client, Zappone, would "vigorously" defend the allegations in LMP's lawsuit and that "we also intend to be asserting our own claims against LMP in the very near future."
LMP has lost deposits in other failed acquisitions. The retailer lost over $2 million in a failed plan to purchase an 85% stake in 10 franchised dealerships in Florida from Alan Jay Automotive Network and $1.5 million in a failed acquisition of five Texas import dealerships.
A Kia dealership in connected has filed a lawsuit against LMP in federal court, seeking $100,000 in deposits held in a failed acquisition. The plaintiffs, Kia of East Hartford and Ash Street Holdings, entered a voluntary motion in April to dismiss the lawsuit after the parties agreed to a settlement. This case closed in May.
Originally posted on Auto Dealer Today
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