LOS ANGELES -- Shelby Automobiles Inc. is being sued by one of its dealers, who claims the company pocketed upfront payments for vehicles that have yet to be delivered, or even built.
Shelby, which makes replicas of the iconic 1960s Cobra roadster with modern enhancements, sold orders for 12 vehicles to dealer Stephen Becker between 2007 and 2010, according to the suit filed Sept. 18 in Central District Superior Court in Los Angeles.
The suit accuses breach of contract, breach of covenant, negligence and fraud by Shelby Automobiles, a subsidiary of Carroll Shelby International Inc. The company's namesake, auto legend Carroll Shelby, passed away in May at age 89.
Joe Conway, president of Carroll Shelby International, said the suit has "no basis… zero credibility to it."
"It's a shame that [Becker] resorted to such a position after everything Mr. Shelby did for him," Conway said. "Mr. Shelby personally loaned Mister Becker money to stay in business."
Last year, Shelby Automobiles changed vendors for the car body shells from a bankrupt Mexican supplier to a new one in South Africa, and retroactively raised prices on the unbuilt cars, the suit alleges. Shelby also demanded payment for the cars when the vehicle shells left South Africa, rather than when the cars left Shelby's final assembly line in Las Vegas, according to the suit.
When Becker declined to pay the higher retroactive price on the cars he had ordered several years earlier, Shelby threatened to sell the cars to other dealers, the suit alleges.
"Stephen Becker spent hundreds of thousands of dollars for high-ticket Cobra vehicles, but Shelby Automobiles shelved the orders and did not produce the ordered vehicles for years, and in some cases not at all," the dealership said in a statement.
Becker had previously sold and delivered 49 Shelby vehicles through his Planet Cobra dealership near Atlanta in Gwinnett County, Ga.
Becker also had not received several special edition cars that were to arrive in time for the 50th anniversary of the original Cobra. The suit says Becker has had to pay all costs for advertising, even though the franchise agreement states a co-op deal is in place with Shelby, the suit alleges.
The suit seeks unspecified damages, due to Becker paying operating costs for an empty showroom, paying all advertising costs, lost interest on capital paid for undelivered cars, lost working capital required by the upfront payment, and lost good will due to angered clients who are waiting for undelivered cars.