Man claims he was falsely induced into purchasing failing auto dealership

Michelle Massey, East Texas Bureau May 26, 2010, 10:43am

MARSHALL-Don Harvey of Harvey-Washburn Sales is accusing the General Motors Corp. of knowingly allowing his company to assume a dealership it knew would fail.

Accusing GMC of trying to squeezing all of its working capital and cash flow, Harvey-Washburn Sales Inc., doing business as All American Buick, Pontiac, GMC; filed suit against GM and General Motors Acceptance Corp. on May 19 in the Marshall Division of the Eastern District of Texas.

According to the court records, Don Harvey filed a lawsuit against Alford Buick Pontiac Inc. after the dealer defaulted on several drafts. During the course of the lawsuit, Harvey was given the opportunity to purchase the Alford dealership in Marshall.

Harvey formed All American and began negotiations with GMC to purchase the dealership. In November 2007, the parties entered into an agreement that was to be completed in January 2008.

All American alleges GMC induced it into assuming Alford dealership's operations and obligated it to pay numerous charges and expenses generated by Alford.

The plaintiff states that it expressed concerned about being undercapitalized and failing to meet GMC's requirement as to the amount of cash on hand needed to own and operate a dealership. GMC agreed to waive their cash-on-hand requirement so that All American could acquire the Alford dealership.

The Buy-Sell Agreement was not concluded until May of 2008, according to the complaint. The plaintiff states that it was forced to pay hidden fees, charges and unknown financial obligations, such as paying for Alford's equity in the used vehicles.

"As a result of this entire process, which was far different from what Defendants represented, All American suffered major economic loss, virtually eliminating its working capital," the lawsuit states.

GMC seized the titles and keys to both new and used vehicles on All American's lot on March 12, 2009.

The plaintiff states that GMC altered the original agreement by changing the floor plan financing, rebate payments and other related matters to allow All American to operate the dealership in the undercapitalized state promised by defendants.

Causes of action filed against the defendants include fraudulent inducement, fraud, fraudulent misrepresentation, fraud by nondisclosure and promissory estoppels.

The plaintiff is asking the court for an award of out of pocket expenses, lost profits, interest and/or finance charges, attorneys' fees, court costs, inconvenience and interest.

The plaintiff is represented by Longview attorneys Scott E. Stevens of Stevens Law Firm, Gregory P. Love of Love Law Firm, Matthew M. Hill and Jason A. Holt of Hill & Holt.

Jury trial demanded.

U.S. District Judge T. John Ward is assigned to the litigation.

Case No. 2:09cv00076

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