The president of a bankrupt trucking company in suburban Minneapolis must pay almost $1.4 million to Ford Motor Credit Co. after personally guaranteeing truck loans for his fleet, a federal appeals court has ruled.
The court rejected the president's argument that Ford Credit is not entitled to the money because Ford Motor Co. covered the deficiency under a loss-sharing agreement for fleet borrowers.
Under that arrangement, Ford assumed responsibility for losses caused by the default of Ford Credit fleet borrowers for up to 4 percent of Ford Credit's accounts receivable, according to the court.
The lawsuit stems from Wintz Cos. Inc.'s purchase of 150 Ford trucks between 1993-95. George Wintz, the president and sole shareholder of the company, signed a personal guarantee to secure the loan.
After the company defaulted in 1996, Ford Credit repossessed and resold most of the trucks and applied the proceeds to the debt. It then sued Wintz and the company to recover the deficiency.
While the case was pending, some of Wintz Cos.' creditors forced it into bankruptcy proceedings.
As a result, the suit went to trial against Wintz alone. He conceded liability, and the jury awarded $1,391,562. Judge John Tunheim refused to reduce the verdict.
In the latest decision, the 8th U.S. Circuit Court of Appeals in St. Louis unanimously upheld the verdict.
Requiring Wintz to pay will not overcompensate Ford Credit, the court said in an opinion by Judge Pasco Bowman. It also rejected Wintz's claim that the jury should have been told about the loss-sharing agreement.
Dan Jarvis, a spokesman for Ford Credit, said if Wintz pays the judgment, 'we would be required then to make Ford whole for that amount.'
Jarvis added that the loss-sharing arrangement is still in effect.
Wintz's lawyer, Ralph Mitchell of Minneapolis, said his client will not appeal further. However, Mitchell noted that a breach-of-warranty suit by Wintz and the Wintz Cos.' bankruptcy trustee is pending against Ford in state court. The suit alleges that some of the trucks were defective because of peeling paint.