News Column

Ky. Dealership Sues Nissan Over Auction

July 3, 2012

Kenneth Hart


The owners of a Grayson, Ky., auto dealership have filed a $12 million federal lawsuit against Nissan North America.

In the suit, filed in U.S. District Court in Ashland, Kentucky Automotive Center of Grayson LLC alleges Nissan thwarted its attempt to purchase a bankrupt Ashland auto dealership.

Kentucky Automotive alleges in the suit it attempted to buy the former Giant Auto Group on Winchester Avenue after the dealership filed for Chapter 11 bankruptcy were sold at auction.

However, Kentucky Automotive contends that even though it was the high bidder in the March 5, 2010, auction, Nissan persuaded its chief liquidating officer to sell the dealership to a competing bidder.

The former Giant Auto was sold to Bill Cole of West Virginia and now operates as Bill Cole Auto Mall. The dealership held a ribbon-cutting Thursday for its newly constructed Honda showroom.

In the suit, Kentucky Automotive, which is owned by Greg and Lydia Crawford, claims it went through all the necessary procedures to participate in the auction for Giant Auto, including becoming pre-qualified as a bidder by the chief liquidation officer, or CLO.

"At the time of the auction, the plaintiff owned a new automobile sales and service dealership and had extensive management experience with various domestic and foreign dealerships," the suit.

Kentucky Automotive alleges that despite being the high bider, a qualified buyer and a pre-qualified bidder, the CLO awarded the dealership to Cole because Nissan had said it was "unlikely to approve the plaintiff as the assignee of the dealership agreement and, therefore, as an authorized Nissan dealer."

Ultimately, Nissan did, in fact, refuse such approval, the suit states.

Kentucky Automotive also contends that immediately prior to the auction, it submitted its dealership application to Nissan, only to be told by the automaker that it wasn't processing any applications for the dealership.

"Despite this stated position, (NIssan) had processed and approved the lower bidder's application," the suit states.

Kentucky Automotive argues that Nissan's actions "abundantly show" that after inducing it to participate in the auction, it never intended to approve it as an authorized Nissan dealer.

It also maintains Nissan's "unreasonable failure" to approve Kentucky Automotive as an authorized transferee of the dealership agreement was a violation of the Kentucky Motor Vehicle Sales Act.

Also, Kentucky Automotive alleges that Nissan inducing it to participate in the bidding for Giant Auto, even though it never intended to approve it as a Nissan dealer, constituted "misrepresentation, bad faith, unfair business practices and collusion."

The suit was filed last month. Nissan has been granted an extension of time to file a response.

Claims made in civil lawsuits state only one side of an issue.

Source: (c) 2012 The Daily Independent (Ashland, Ky.)

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