Byron Z. Moldo, et al. v. Nissan North America, Inc., et al. Los Angeles County Superior Court Case No. 19STCV45899
LOS ANGELES--(BUSINESS WIRE)--The court-appointed receiver for the Sage Group of auto dealerships has filed a lawsuit against Nissan Motor Co. and two subsidiaries for fraudulently forcing two popular Southern California dealerships into a fire-sale to a crony of Carlos Ghosn, the automaker’s fallen CEO. The Sage Group was founded by Morris Sage in 1969 and operated a group of successful automobile dealerships, including one of the first Nissan dealerships in the country, Universal City Nissan.
The lawsuit was filed on December 19, 2019 by Byron Z. Moldo, court-appointed receiver for Universal City Nissan, Glendale Nissan/Infiniti, and West Covina Nissan, against Nissan Motor Co., Nissan North America, Inc., Nissan Motor Acceptance Corp., and the Trophy Automotive Dealer Group LLC, which is owned by Nasser Watar. Watar’s business partner is Saudi billionaire Khaled al-Juffali.
Moldo claims the dealerships fell victim to the culture of corporate corruption and greed that flourished at the Japanese automaker under Ghosn before he was arrested in November 2018 for underreporting compensation and raiding corporate accounts.
One of the charges facing Ghosn is that he used $14.7 million in corporate money to repay a personal loan from al-Juffali. The lawsuit claims that Ghosn repaid al-Juffali and Watar’s loyalty by having Nissan enter into a lucrative joint venture with al-Juffali and Watar’s company in Saudi Arabia.
The lawsuit also alleges al-Juffali and Watar unfairly benefitted in the United States from the fraudulent actions of two other Nissan subsidiaries - Nissan North America and its dealer financing arm, Nissan Motor Acceptance Corp., which conspired to financially bleed the Sage Group’s dealerships and force a fire-sale to Ghosn’s cronies at Trophy Automotive.
The popular dealerships enjoyed decades of financial success but had fallen on hard times after the death of patriarch and businessman Morris Sage. In 2017, Nissan Motor Acceptance Corp. stopped financing the family’s purchase of cars, cutting off the dealerships’ lifeblood of inventory; and when the dealerships’ finances declined, Nissan North America introduced Trophy Automotive as a potential purchaser.
“Nissan was digging a grave for the Sage Group and simultaneously burying them in it,” the lawsuit says. Nissan and Trophy concealed their pre-existing financial entanglement from the Sage Group.
Pushed to the financial brink by Nissan, the Sage heirs agreed to sell the Universal City and West Covina Nissan dealerships to Trophy for millions less than expected.
“The deal that eventually closed between Trophy and the Sage Group … was a fraction of Plaintiffs’ worth,” the lawsuit says. “Trophy profited immensely—and Plaintiffs were damaged—from Nissan’s fraud and duplicity,” the lawsuit claims.
Making matters worse, during the sale process, it is alleged that Trophy secretly recruited the Sage Group’s high-level employees to work surreptitiously on Trophy’s behalf. By the time it closed the sale, Trophy had the Sage Group’s CFO, Director of Finance, a General Manager, and a Used-Car Manager working on its behalf—unbeknownst to the Sage Group.
After the sale to Trophy, when Plaintiffs were left with only two Nissan/Infiniti dealerships in Glendale, Nissan allegedly wrongfully withheld almost $3 million from the Sage Group, thereby forcing it to sell the two remaining dealerships to another favored Nissan dealer, Dennis Lin, for $0 in franchise value—unheard of in the auto industry.
Plaintiffs’ claims against the Defendants include concealment, breach of contract, breach of the implied covenant of good faith and fair dealing, tortious interference with contract, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and declaratory relief. These claims go to the heart of Defendants’ fraud and misconduct—and the harm done to Plaintiffs.
The Plaintiffs are represented by Amnon Siegel and a team of associates at Miller Barondess, LLP in Los Angeles. Per Siegel, who is lead counsel:
“This is a case that involves Nissan’s unethical corporate culture and failed corporate governance at the highest levels of the company that harmed a group of long-time California dealerships,” said Siegel. “We look forward to trying the case to a jury.”
About Miller Barondess, LLP:
Miller Barondess, LLP is a 40-lawyer firm in Los Angeles handling high-stakes litigation and trial work. Amnon Siegel is a top trial lawyer who has achieved significant victories for both plaintiffs and defendants. In addition to his automotive expertise, Siegel has handled intellectual property and business competition disputes involving trade secrets, trademark, trade dress, unfair business practices, fiduciary duties and restrictive covenants. Siegel has also represented policyholders in high-stakes, bad faith insurance coverage disputes. The firm’s attorneys hail from top law schools and aggressively and effectively litigate for their clients. For more information, please visit www.millerbarondess.com.
Contacts
Amnon Siegel
Miller Barondess, LLP
asiegel@millerbarondess.com
Office: 310-552-7557
Cell: 310-270-3324
