Ally ordered to pay dealer sanctions for lawsuit
A federal judge in Pennsylvania has lambasted lawyers for Ally Financial, who "knew the utter falsity" of allegations made by Ally in its bid to collect $1.1 million from a former dealer and his closed dealerships.
Attorneys for Ally Financial Inc. were "well aware of the blatant and knowing misrepresentations made to this court and the lack of factual and evidentiary support," U.S. District Judge Juan Sanchez said in ordering the lender and its lawyers to pay sanctions, including attorney fees, to Donald Mente and his company.
Mente's two lawyers have asked for $193,162 in attorney fees, which Ally is challenging as excessive and unreasonable, court papers show. Ally also has filed a notice that it will appeal Sanchez's decision, an Ally spokeswoman said.
In 2007, GMAC -- Ally's predecessor -- suddenly shut down Mente's Chevrolet store in Richmond Township and Chrysler-Dodge store in Maxatawny Township, asserting the Pennsylvania dealerships were out of trust although they were not.
Two years later, Mente and the company won a $4 million verdict from a jury that concluded the stores hadn't been in default on their floorplan loans and that GMAC had acted in bad faith and wrongfully seized their assets.
After a federal appeals court upheld the award, Ally filed a new suit claiming that Mente and the company still owed $1.1 million under their wholesale security agreement.
But in the new decision, Sanchez dismissed Ally's suit, ruling that the original suit had resolved all such arguments.
Mente's court papers labeled the second suit "a poster child" for sanctions, while Ally argued that it was "filed in good faith upon legally supportable grounds."
In agreeing with Mente, Sanchez not only found the suit to be baseless but also said Ally had "blindsided" Mente and his company and "effectively tied up more than $1 million awarded to them" three years earlier by having that part of the $4 million put into a court escrow account.
Ally did pay the other $2.9 million of the judgment.
Mente's lawyers did not respond to requests for comment.
You can reach Eric Freedman at email@example.com.