I received four calls today from dealers involving Nextgear Capital. All of the dealers felt Nextgear treated them unfairly. Two of them wondered if I was planning a class action against Nextgear. The answer is no.   Nextgear writes very tough, tight contracts. Some things that dealers think are unfair are allowed buy the contract. In my opinion, Nextgear is run by smart people, and they have smart, competent attorneys.  You have to bring your “A” game if you are litigating against them. If you are professional, they will be professional. If you are reasonable. They will be reasonable.  I have not identified any systematic conduct by Nexgear that would justify suing them on a group or class action basis offensively.  Right now, I am just defending dealers as they are sued in Indiana.  If you have a beef with Nextgear, tell your story online.  You cannot be successfully sued for defamation for making true statements of fact or stating your clearly articulated opinion.  If a pattern emerges of conduct that would give rise to a legal case, it may become clear through the stories of many dealers.   If it is juicy enough, a large law firm will probably pick it up and run with it.

There are actually two areas that I am looking at with floorplan lenders in general. The  first involves the relationship between floorplanners and the auto auctions under shared ownership. IF there is “tying” involved between one business and the other, then in certain circumstances, if there is sufficient market power involved, antitrust law could be implicated.  If this sounds vague, that’s because it is. It would cost a lot of money to develop this theory in any case where it might apply.

The second theory involves cases where a floorplan lender does not release the title to a vehicle that the dealer has sold in the ordinary course of business. It appears to me that under Uniform Commercial Code 9-320 and 2-403, the dealer has the power to transfer the car to an ordinary buyer free and clear of the security interest of the floorplanner in almost every case. The question then becomes who has the ability to sue the floorplanner when the floorplanner refuses to release the title? the dealer? the buyer? both? When titles are wrongfully withheld, how does that implicate damages?