Finance company suing car firm
A California corporation that provided financing for DealMaker Auto Group's Honda dealerships in Watertown and Potsdam has started legal action to seize the dealerships' inventory for alleged default on several finance agreements.
American Honda Finance Corp., Torrance, Calif., filed a complaint Tuesday in U.S. District Court against V.M Paolozzi Imports Inc., which does business as DealMaker Honda of Watertown, and DealMaker of Potsdam LLC, which does business as DealMaker Honda of Potsdam.
According to court documents, American Honda Finance claims the dealerships are "out of trust" on their wholesale finance, or floor plan, agreements and have failed to make full payments on term loans made to both businesses.
When a dealership sells a vehicle, it is supposed to hold, or keep in trust, the proceeds of the sale and use them to pay the amount advanced by a finance company. Failure to do so results in a dealership being considered out of trust.
American Honda Finance claims that as of Jan. 19, the Potsdam dealership was out of trust on its wholesale finance agreement in the amount of $1,173,589 and the Watertown dealership was out of trust in the amount of $1,757,619.
The corporation maintains that based on the out of trust status, DealMaker must now repay all credit it has extended to the business. The corporation claims that amount exceeds $2.57 million for the Potsdam location and $3.74 million for the Watertown dealership. In all, the corporation is claiming damages of $6,315,938.
In addition to alleged damages, the corporation is asking a judge for preliminary and permanent injunctions preventing DealMaker from selling or otherwise disposing of any vehicle for which it has provided financing and asking that the vehicles be ordered seized.
The action also names DealMaker's owners, P.J. Simao and Mark V. Picarazzi, as they provided personal guarantees for the money financed, according to court documents.
David Grandeau, a spokesman for DealMaker, said DealMaker and American Honda Finance have "a long history of mutually extending credit terms," including recently, and he questioned why the corporation chose now to bring legal action.
"This doesn't happen by accident," he said. "These loans were done by mutual consent. Every month, they were aware of what loans they had extended."
He said DealMaker will answer the complaint and may respond with a counterclaim against American Honda Finance.
