Editor's note: An earlier version of this story misstated some of Superior's franchises.
California dealer Michael Kahn has sued Nissan North America Inc., its Japanese parent company and its U.S. finance arm, Nissan Motor Acceptance Corp., alleging that the automaker intentionally destroyed his $500 million-a-year dealership group last year.
Kahn, who seeks $250 million in the suit, had used Nissan loans to finance and open a $35 million Toyota dealership in Oakland, Calif., just as the economic crisis began slamming dealers last winter. To wage his attack, Kahn has hired both a law firm and a public relations firm.
A spokesman for Nissan North America in Franklin, Tenn., declined to comment on the suit, filed in Los Angeles Superior Court.
Kahn filed the lawsuit Monday, the same day that new owners began selling Nissans on the site of Kahn's former Superior Nissan store in Fremont, Calif. The site had sat vacant since February 2009, when Kahn's multistore financial troubles prompted Nissan to withdraw its financing of Superior Automotive Group.
6 days and gone
Kahn's newly opened Toyota store closed after only six days in business.
Superior Automotive also operated Chrysler-Jeep-Dodge and other Nissan franchises, all financed through Nissan Motor Acceptance.
Before that time, “Kahn was Nissan's ‘go to' dealer in California,” according to the lawsuit.
“When a large automotive company sought to buy out Kahn in 2004 and again in late 2006, Nissan insisted that he not sell and told Kahn he was a key component of Nissan's future plans in California,” Kahn says in court documents.
Superior had revenues of $500 million in 2007 and employed 800 people, according to a multipage press release distributed by Kahn last night.
But Kahn's own lawsuit paints a picture of a high-volume dealer spiraling deeper into trouble as the economy collapsed in 2008 and early 2009.
Bent the rules
The suit reveals that Nissan had been bending its operating rules to keep Kahn in business. In November 2008, according to the suit, Kahn was $7.7 million out of trust -- meaning that Superior allegedly had sold inventory and not repaid the factory for it. Nissan agreed to lend Kahn $7.7 million more as a five-year capital loan to cover the $7.7 million shortfall, Kahn's suit reveals.
The dealer alleges that he pleaded with Nissan to continue to support Superior through 2009 and that Nissan executives agreed to be flexible in collecting his debts.
According to the suit, Kahn pledged to turn over to Nissan Motor Acceptance his $3 million income-tax refund check in early 2009, $1 million from the sale of his share of a private jet and $1 million from his sale of other real estate.
But Nissan forced Kahn to sell his dealership holdings at fire-sale prices, the lawsuit alleges.
“While Kahn did what Nissan demanded,” the suit claims, “Nissan dishonestly strung Kahn along and then stabbed him in the back. Under the guise of asking for additional collateral for a loan, in fact it was seeking additional money and collateral from Kahn so that it could pull the plug on him and then go after him personally for all of his assets.”