Hyundai Capital America has launched foreclosure proceedings against the owners -- auto industry veteran Michael Saporito and ex-NFL linebackers Jessie Armstead and Antonio Pierce -- of Hyundai and Kia dealerships in Pennsylvania accused of failing to repay vehicle floorplan loans.
Hyundai's captive finance unit filed the mortgage foreclosure lawsuit Friday against the trio's All Pro Airport Rd. K/HY 2, which is accused of owing millions of dollars for the construction of Hazleton Hyundai and Hazleton Kia in Hazle Township, Pa. Hyundai Capital said as of Sept. 6 that it is owed $16.2 million involving loans for vehicle floorplan, mortgages and more for the two Pennsylvania stores.
The move by Hyundai Capital follows another lawsuit it filed last month against the dealership group.
In August, Hyundai Capital and Nissan Motor Acceptance Corp. accused the ownership group and five of its dealerships in various lawsuits for selling nearly 500 vehicles out of trust — or selling a vehicle but not repaying the lender for the vehicle that had been financed in time. The Nissan lawsuits involve three Nissan stores: Hazleton Nissan in Hazle Township, All Pro Nissan of Macomb in Clinton Township, Mich., and All Pro Nissan of Dearborn in Michigan.
In the most recent mortgage foreclosure lawsuit, Hyundai Capital says it loaned the defendants $7.52 million in June 2015 for construction and a mortgage on the property. In June 2016, the construction loan was amended and increased to $9.76 million. The mortgage also was amended at that time. Hyundai Capital says in its lawsuit that the group defaulted on numerous loan agreements and has not repaid Hyundai Capital when it demanded accelerated payments in August.
A lawyer for Hyundai Capital and a Hyundai Capital spokeswoman declined to comment on Monday on the mortgage foreclosure lawsuit. A spokesman for Kia declined comment. Hyundai referred comment to Hyundai Capital.
On Aug. 31, Hyundai Capital, through a court order, removed remaining vehicles from the two dealerships, which have essentially closed.
Last week, the trio of defendants asked the Pennsylvania court to dismiss the first lawsuit filed by Hyundai Capital and send the parties to an arbitrator to settle their differences. In previous court documents, the defendants have denied the allegations.
Hyundai's captive filed its initial lawsuit in August against the dealerships, Saporito, Armstead and Pierce after audits identified 86 vehicles had been titled either to the group's Hazleton Nissan or Hazleton Honda stores, violating loan agreements. Days later, in subsequent audits, the 86 vehicles couldn't be located and more vehicles were missing, court filings said.
Hyundai Capital said it was owned nearly $2.7 million on 184 vehicles, and it alleges the dealerships missed Aug. 1 loan payments.
Restraining orders that cover the three Nissan stores run until Sept. 28. Nissan has said the stores are open and operating, but Automotive News on three trips to the Michigan stores found they weren't able to sell vehicles and in one case couldn't service them.
The dealership group also owns Hamilton Honda in Hamilton Township, N.J., and Englewood Cliffs Cadillac in Englewood Cliffs, N.J. Honda and General Motors have said the two Honda dealerships and Cadillac store are open and operating.
