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MICHAELS LAW GROUP, APLC
A Professional Law Corporation
Jonathan A. Michaels, Esq. – State Bar No. 180455
Kathryn J. Harvey, Esq. – State Bar No. 241029
Lisa S. Inouye – State Bar No. 272177
2801 W. Coast Highway, Suite 370
Newport Beach, CA 92663
Telephone: (949) 581-6900
Facsimile: (949) 581-6908
([email protected])
([email protected])
([email protected])
Attorneys for Plaintiffs,
Groth-Hill Land Company, LLC, Robin Hill,
Joseph Hill, and Crown Chevrolet
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
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FOR THE COUNTY OF ALAMEDA, ADMINISTRATION BUILDING
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GROTH-HILL LAND COMPANY, LLC, a
California limited liability company; ROBIN
HILL, an individual a/k/a Robin Groth a/k/a
Robin Groth-Hill; JOSEPH HILL, an
individual; and CROWN CHEVROLET, a
California corporation,
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Plaintiffs,
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Assigned for All Purposes to:
Judge Wynne Carvill
Case No: HG12653631
FIRST AMENDED COMPLAINT FOR:
Claims by Crown Chevrolet
vs.
1. FRAUD - CONCEALMENT;
2. RACKETEERING [18 U.S.C. §
1962(c) and 18 U.S.C. § 1962(d)];
3. BREACH OF THE COVENANT OF
GOOD FAITH AND FAIR
DEALING;
4. UNFAIR BUSINESS PRACTICES –
PRIVATE ATTORNEY GENERAL
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GENERAL MOTORS, LLC, a Delaware
limited liability company; ALLY
FINANCIAL INC., a Delaware corporation
as the successor-in-interest to GMAC Inc.,
GMAC Financial Services LLC, GMAC
LLC and General Motors Acceptance
Corporation; RANDY PARKER, an
individual; JAMES GENTRY, an individual;
KEVIN WRATE, an individual; INDER
DOSANJH, an individual; CALIFORNIA
AUTOMOTIVE RETAILING GROUP,
INC., a Delaware Corporation; and DOES 1
through 25, inclusive,
Claims by Groth-Hill Land Company,
Robin Hill and Joe Hill
5. FRAUD - FALSE PROMISE;
6. FRAUD - CONCEALMENT;
7. RACKETEERING [18 U.S.C. §
1962(c) and 18 U.S.C. § 1962(d)];
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FIRST AMENDED COMPLAINT
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8. INTENTIONAL INFLICTION OF
EMOTIONAL DISTRESS;
9. UNFAIR BUSINESS PRACTICES –
PRIVATE ATTORNEY GENERAL;
AND
10. DECLARATORY RELIEF
Defendants.
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[UNLIMITED CIVIL ACTION]
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JURY TRIAL DEMANDED
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THE PARTIES
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1.
Plaintiff Groth-Hill Land Company, LLC is a California limited liability
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company, domiciled in Livermore, California. Groth-Hill Land Company is partially owned by
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Plaintiff Robin Hill and her husband, Plaintiff Joseph Hill.
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Plaintiff Robin Hill, also known as Robin Groth and Robin Groth-Hill, is
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an individual residing in Livermore, California. For most of the 2000’s Robin Hill operated
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Groth Bros. Chevrolet, a franchised General Motors dealership that had been in business in
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Livermore, California since 1934.
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Plaintiff Joseph Hill is an individual residing in Livermore, California.
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Plaintiff Crown Chevrolet is a California corporation domiciled in
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Dublin, California. Crown Chevrolet has been a franchised General Motors dealership in
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Dublin, California since 1961.
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Defendant General Motors, LLC is a Delaware limited liability company
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that was formed on May 29, 2009 to assume the business operations of General Motors
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Corporation, following General Motors Corporation’s fall into bankruptcy. Defendant General
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Motors, LLC is authorized to do business in the State of California.
For purposes of
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convenience, General Motors, LLC will be referred to as “New GM,” and General Motors
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Corporation will be referred to as “Old GM.”
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Defendant Ally Financial Inc. is a Delaware corporation that is the
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successor-in-interest to GMAC Inc., GMAC Financial Services LLC, GMAC LLC and General
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Motors Acceptance Corporation. Defendant Ally Financial Inc. is authorized to do business in
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the State of California. For the relevant periods discussed herein, Ally served as the inventory
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“floorplan” lender for Groth Bros. Chevrolet and Crown Chevrolet.
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7.
Defendant Randy Parker is an individual believed to be residing in
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Southern California. At all times relevant hereto, Randy Parker was employed by Old GM, and
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then by New GM, as the Western Regional Director for Chevrolet.
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Defendant James “Jim” Gentry is an individual believed to be residing in
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in Simi Valley, California. From 1998 through 2004, Jim Gentry was employed by Old GM as
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a Zone Manager and a Market Area Manager; and then from 2004 through 2010, as a Regional
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Dealer Network Manager, first by Old GM, and then by New GM. In 2010, Jim Gentry became
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employed by Defendant California Automotive Retailing Group, Inc. as its Chief Operating
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Officer.
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9.
Defendant Kevin Wrate is an individual believed to be residing in
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Northern California. At all times relevant hereto, Kevin Wrate was employed by Defendant
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Ally Financial Inc. as Director of Sales.
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Defendant Inder Dosanjh is an individual residing in Lafayette,
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California. At all times relevant hereto, Inder Dosanjh controlled the business operations of
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Defendant California Automotive Retailing Group, Inc.
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Defendant California Automotive Retailing Group, Inc. is a Delaware
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corporation that owns several General Motors franchises doing business in Alameda County,
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California.
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Plaintiffs are unaware of the true names of Does 1 through 25 and
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therefore sue them by such fictitious names, and will ask for leave of court to insert their names
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when such have been ascertained.
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Plaintiffs are informed and believe and thereon allege that each
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Defendant named in this action, including Doe Defendants, at all relevant times, was the agent,
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ostensible agent, servant, employee, representative, assistant, joint venturer, and/or co-
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conspirator of each of the Defendants, and was at all times acting within the course and scope of
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his, her, or its authority as agent, ostensible agent, servant, employer, representative, joint
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venturer, and/or co-conspirator, and with the same authorization, consent, permission or
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ratification of each of the Defendants.
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JURISDICTION AND VENUE
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Because New GM and Ally failed to identify a California principal place
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of business in their Statements of Information filed with the California Secretary of State as
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required by California Corporations Code § 2105, venue is proper in this County and judicial
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district.
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STATEMENT OF OPERATIVE FACTS
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The 1990s: GM’s Historical Attempt at Controlling the Los Angeles Market
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Certain car markets have long been considered by auto manufacturers to
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be important footholds for consumer acceptance of their vehicles. The San Fernando Valley,
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located in the Los Angeles basin, is one of those markets. In the 1990s, Old GM established an
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elaborate plan to take control of the important San Fernando Valley marketplace by holding a
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series of “factory-owned” dealerships in the market. By owning the San Fernando dealerships,
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Old GM could put all of its financial might into operating the stores, and thereby (hopefully)
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control the critical market.
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Because factory-owned dealerships have a strong competitive advantage
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over privately-owned franchises (e.g., they are not on equal financial footing, and the
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manufacturers could manipulate vehicle allocation), California has long prohibited
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manufacturers from owning dealerships that are within 10 miles of private franchises, except in
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two limited circumstances: i) a manufacturer may hold a dealership for less than a year (such as
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when a dealer gives the franchise back to the auto maker); and ii) a manufacturer may own a
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dealership as part of a bona fide “dealer development program.” The dealer development
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program was designed by the California Legislature to enable those who lack the capital or
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experience to become part of the dealer network by having them buy into the dealership over
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time. Under the typical dealer development program, the manufacturer starts by owning nearly
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all of the dealership (often 85%), with the dealer development candidate owning the balance,
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and buying out the manufacturer over time. The Legislature has tolerated this type of joint
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ownership because while the stores are partially owned by the manufacturer, they are fully
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operated by the dealer development candidate, and this provides a pathway for individuals to
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break into the industry who would otherwise be unable to do so.
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In its quest to control the San Fernando Valley, Old GM attempted to use
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the dealer development exception as a cover for what were really dealerships that were owned
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and controlled by the manufacturer. The auto maker enlisted the assistance of Wes Rydell as
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the “front man” to its operation, who was to play the part of the inexperienced dealer who
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lacked the capital or experience to otherwise break into the industry. In truth, however, Rydell
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did not even remotely qualify as a dealer development candidate, having built a chain of 30
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successful dealerships in the Midwest. GM then executed its plan by purchasing nine private
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dealerships in the Valley, closing five that it thought were underperforming, and placing the
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remaining five with Rydell. GM then infused $18 million into the dealerships for a 90 percent
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share of the illicit enterprise.
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GM’s actions resulted in a firestorm of criticism: neighboring dealers
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objected profusely, the Department of Motor Vehicles launched an official investigation, and
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the California Senate Judiciary Committee conducted hearings. Eventually, GM admitted to the
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Judiciary Committee that its ownership of the San Fernando Valley dealerships did not actually
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involve a dealer development candidate, but claimed that its actions were “necessary” to
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recapture its lost market share.
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The DMV investigation found that GM’s actions, while unfortunate, did
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not violate the California Vehicle Code, as then written.
Hence, in 2000 the California
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Legislature amended the Vehicle Code to prevent a manufacturer from ever being able to game
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the system again. In what has become known as the “GM Amendment,” the Legislature took
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the exceptional act of codifying its Legislative intent by stating that the dealer development law
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should never again be used for “any improper purpose, including the consolidation of privately
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owned dealerships by a sophisticated investor or operator posing as a dealer development
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candidate.”
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The 2000s: GM Attempts to Increase
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Its Market Share in the San Francisco East Bay Market
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20.
Like the San Fernando Valley, the San Francisco East Bay market is
extremely important to GM. In the 2000s, with its market share continuing to decline, Old GM
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developed a plan to strengthen its position in this market. In furtherance of this, the automaker
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assembled an association-in-fact enterprise to focus on its marketing and distribution in the San
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Francisco East Bay market. This enterprise was comprised of the following individuals and
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entities:
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Defendant Randy Parker – Employed by Old GM, and then New
GM, as the Western Regional Director for Chevrolet. In this
position, Parker was responsible for the Chevrolet brand
throughout the Western United States.
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Defendant Jim Gentry – Employed by Old GM, and then New
GM, as a Regional Dealer Network Manager through 2010. In this
capacity, Gentry was responsible for awarding, and closing,
dealership franchises throughout the Western United States. In
2010, Gentry left New GM to become employed by Defendant
California Automotive Retailing Group.
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Defendant Kevin Wrate – Employed by Ally (formerly GMAC) as
Director of Sales, in charge of managing dealership inventory
“floorplans” (i.e., credit lines for inventory).
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Non-Party Old GM – The manufacturer who issued certain
franchises in the East Bay Market. Old GM engaged in the
enterprise through the actions of Defendants Randy Parker and Jim
Gentry, as well as through the actions of non-parties Susan
Keenehan (Zone Manager), Rick Sitek (West Region Dealer
support Manager) and Dale Sullivan (Regional Operations
Manager).
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Defendant New GM – The newly created entity who was formed
on May 29, 2009 to assume the business operations of Old GM.
New GM also engaged in the enterprise through the actions of
Randy Parker and Jim Gentry, as well as Susan Keenehan, Rick
Sitek and Dale Sullivan.
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Defendant Ally (formerly GMAC) – The company who had been
the financing arm of Old GM since 1919, until Old GM sold its
controlling interest in the company to Cerberus Capital
Management in 2006. Ally engaged in the enterprise through the
actions of Defendant Kevin Wrate, as well as non-parties Brian
Lazar (Operations Manager), Christian Kemp (Portfolio Manager),
Gary Spinella (Branch Manager), Daniel Antonelli (Area Manager)
and Tammy Linkfield (Operations Manager).
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Defendant Inder Dosanjh – A GM dealer who owned and
controlled several GM franchises in the San Francisco East Bay
market through his entity California Automotive Retailing Group.
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Defendant California Automotive Retailing Group – The entity
owned and controlled by Inder Dosanjh, and used by Old GM and
New GM to hold certain GM franchises in the San Francisco East
Bay market.
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The Defendants Use the Enterprise to
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Engage in a Pattern of Racketeering Activity
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Based on a long-standing personal relationship that GM manager Randy
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Parker had with Inder Dosanjh, in the mid-2000s the Defendants engineered a plan to illicitly
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use this enterprise to engage in a pattern of racketeering activity throughout the San Francisco
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East Bay market. The overarching plan worked as follows: Randy Parker, Jim Gentry and
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Kevin Wrate would use their positions of authority at GM and Ally to coerce existing East Bay
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dealers to either sell their dealerships to Dosanjh’s company, California Automotive Retailing
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Group, or surrender their dealerships altogether, eliminating Dosanjh’s competition in the
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marketplace. Dosanjh would then provide the GM managers with illegal kickbacks, and allow
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them to control the operations of the dealerships. With this, the GM managers were able to
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enrich themselves personally, GM was able to gain control over the East Bay market without
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running afoul of California’s newly-tailored prohibition of factory-owned stores, and Ally was
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able to obtain millions of dollars from the dealerships and theirs owners that it otherwise would
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not have received.
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Because California greatly restricts a manufacturer’s ability to terminate
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a franchised dealer, the plan required elaborate execution. The California Vehicle Code only
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allows a manufacturer to terminate a dealer on a showing of “good cause,” and even then the
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action may be challenged through a lengthy administrative hearing – a process that is not overly
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different from a civil lawsuit. Hence, simply terminating the dealerships and awarding them to
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Dosanjh’s company would never have worked.
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To accomplish their goal, the Defendants employed the services of Ally
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manager Kevin Wrate. Wrate was the individual responsible for managing the floorplans
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(inventory credit lines) for all of the GM dealers in the East Bay market who floored their
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vehicles with Ally (which was most of them). When a specific dealer was targeted by Randy
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Parker and Inder Dosanjh, Wrate was charged with unleashing severe economic pressure on the
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dealer. Wrate would accomplish this by scheduling repeated audits of the dealership, the cost of
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which was to be borne by the dealerships themselves, imposing curtailment charges on the
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floored vehicles (where the financing on the vehicles was required to be immediately paid
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down), demanding that the dealership’s owners pledge considerable personal assets to Ally, and
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requiring the dealership and its owners deposit substantial sums of cash into an Ally captive
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account. Knowing that a floorplan was the life-blood of the dealership, and that finding
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alternative financing was a lengthy and difficult process, Wrate threatened immediate
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termination of the dealership’s floorplan if the dealership and its owner did not comply.
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Through this process, Wrate was able to create an environment of severe economic duress,
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where the dealership and its owner would agree to just about anything to stay in business.
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Using these tactics, Wrate was able to severely weaken several dealerships’ position in the
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marketplace, and coerce several owners into providing Ally with millions of dollars in cash and
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property to which it was not entitled.
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After Wrate had applied Ally’s financial pressure, Jim Gentry was sent in
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to strong-arm the owner into selling. As the Regional Dealer Network Manager, Gentry was
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responsible for awarding, and terminating, GM dealership franchises in the East Bay market.
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Gentry used this managerial position to tell the dealer that they really had no choice but to sell
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their franchise. However, as Gentry knew, this was a closed-end option. Under the GM
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franchise agreements, GM has the right to approve – or deny – any proposed sale, and the
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person at GM responsible for making such decisions in the East Bay market was Gentry.
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Hence, when Gentry told the dealer that had no choice but to sell, he also told them that the only
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person who would be approved for the transaction was Inder Dosanjh. If Gentry’s strong-arm
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tactics didn’t work, Kevin Wrate was sent back in to terminate the dealer’s floorplan, which
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under the GM franchise agreement would enable GM to terminate the dealer without having to
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show good cause.
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25.
The Defendants carried out their plan through the multiple acts of mail
fraud and wire fraud. The Plaintiffs have discovered that over a two-and-a-half year period, the
Defendants sent no less than 17 letters to carry out their scheme to defraud:
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Date
Letter
07/08/2008
Letter from Kevin Wrate of GMAC to Pat Costello
09/26/2008
Letter from Brian Lazar of GMAC to Pat Costello
10/09/2008
Letter from Vince Harrington of GMAC to Robin Hill
01/12/2009
Letter from Christian Kemp of GMAC to Robin Hill
06/01/2009
Letter from C. Kemp of GMAC to Candy Gallegos
06/09/2009
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12/01/2009
Letter from Tammy Linkfield of GMAC to Robin Hill
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02/05/2010
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04/15/2010
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04/29/2010
Letter from C. Kemp of GMAC to Challenge Dairy
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04/29/2010
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05/18/2010
Letter from GMAC to Robin Hill
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08/02/2010
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08/18/2010
Letter from Michele Smith of GMAC to GM
08/19/2010
09/30/2010
11/01/2010
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In addition, the Defendants sent no less than 24 emails over a four-and-a-half
year period to carry out their scheme to defraud:
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Date
Email
08/07/2007
Email from Jim Gentry of GM to Robin Hill
12/03/2007
Email from Susan Keenehan of GM to Robin Hill
03/28/2008
03/20/2008
04/25/2008
04/28/2008
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05/02/2009
Email from Randy Parker of GM to Robin Hill
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05/31/2009
Email from Kevin Wrate of GMAC to Robin Hill
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06/14/2010
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06/14/2010
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06/16/2010
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06/16/2010
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06/17/2010
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07/10/2010
07/10/2010
07/14/2010
08/19/2010
Email from Christian Kemp of GMAC to Robin Hill
08/19/2010
Email from Rick Sitek of GM to Randy Parker
01/03/2011
01/03/2011
01/07/2011
Email from Rick Sitek of GM to Robin Hill
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01/10/2011
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11/02/2011
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02/06/2012
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26.
Through this conspiracy, Dosanjh was able to acquire nine dealerships in
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the San Francisco East Bay Market between 2008 and 2010: i) Saturn of Oakland, ii) Saturn of
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Fremont, iii) Dublin Cadillac, iv) Dublin Chevrolet, v) Hayward Chevrolet, vi) Fremont
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Chevrolet, vii) Dublin Buick GMC, viii) Chevy Concord, and ix) Freemont Buick GMC
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Cadillac.
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during this same time period: Groth Bros. Chevrolet, Marina GMC and Good Chevrolet. With
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this, Dosanjh – and GM – controlled the East Bay market for GM products. As Dosanjh would
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later admit: “I don’t have to please customers; they have nowhere else to go.”
In addition, Dosanjh had three direct-competitor dealerships terminated by GM
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In exchange for funneling the nine dealerships to Dosanjh, and closing
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three of his competitors, Randy Parker and Jim Gentry received illicit kickbacks from Dosanjh
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and his company, California Automotive Retailing Group. Parker – a long time married man -
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frequently received free accommodations and entertainment for he and his various girlfriends in
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Hawaii and other cities throughout the United States, had his cell phone bill paid for, received a
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free trip to New York on a private jet, and had a free car given to his girlfriend. Gentry received
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a high paying job at California Automotive Retailing Group, where he became employed in
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2010 as the Chief Operating Officer, charged with managing the empire that he helped create.
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Dosanjh also frequently bragged that he was bringing the “GM guys over to Hawaii [where he
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had a house] and getting them prostitutes,” although he did not identify which GM employees
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he was referring to. In addition, Ally received millions of dollars in new collateral and cash
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handed over by the dealers and their owners, and GM was able to control an important market
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without violating California’s prohibition on factory-owned stores.
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The Defendants Develop a Scheme to
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Acquire Crown Chevrolet’s Franchises
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Crown Chevrolet was originally formed as Friendly Chevrolet, a
Chevrolet franchise, in 1961 by Robert Woolverton. In 1968, Friendly Chevrolet’s name was
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changed to Crown Chevrolet and the dealership moved to Dublin, California. Comprising part
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of the San Francisco East Bay market, Crown Chevrolet was operated in Dublin by Woolverton
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through 1986, when the dealership was purchased by his son-in-law, Pat Costello. When
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Costello assumed operation of the dealership, the store was selling 15 to 20 new units per
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month, and it had approximately 25 employees. Under Costello’s guidance, the dealership
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added a Cadillac franchise and grew its operations to approximately 140 employees, selling 250
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to 300 new units per month. Crown was one of the larger GM dealers in the East Bay market.
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In 2008, Crown Chevrolet became one of the first GM dealerships to be
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targeted by the Defendants for transitioning to California Automotive Retailing Group. Once
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the Defendants set their sights on Crown, they began implementing their plan. In furtherance of
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this, in 2008 Kevin Wrate notified Costello via frequent letters and telephone calls to the
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dealership that Ally was going to start auditing Crown’s floorplan and imposing significant
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curtailments on his dealership’s inventory financing. Ally required that the curtailment charges
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be paid monthly, despite the fact that Ally had demanded and received $400,000 of cash from
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Crown just months before, which Ally was holding in a captive account.
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In July 2008, in an effort to increase the financial pressure on Crown,
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Wrate sent Costello a letter demanding that Crown pay Ally another $400,000 as a lump sum
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curtailment pay-down – in addition to the monthly curtailment payments already being
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imposed, and in addition to the $400,000 that Ally already taken from Crown. Ally refused to
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use the $400,000 that it had in its captive account, and instead continued to demand the
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additional payment.
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$400,000, Wrate pressured Costello to have his mother-in-law give Ally a first trust deed on the
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dealership property (which she had owned since the passing of her husband in 1986). Wrate
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told Costello that if the monthly curtailment payments were not made, and if the $400,000 lump
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sum curtailment pay-down was not made or a first trust deed was not given, that Ally would
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terminate his floorplan.
When Costello told Wrate that the dealership didn’t have another
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Knowing that Crown was struggling to comply with the exorbitant
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financial demands from Wrate and Ally, Defendants then launched the next step of their plan.
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While Costello was attempting to deal with Ally’s financial demands, he received a phone call
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from Randy Parker who asked him how he planned on resolving the dealership’s financial
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troubles. Costello informed Parker that he was thinking of selling the dealership’s Cadillac
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franchise to raise capital, so that he could give Ally the money it was demanding, and for
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operating capital. Randy Parker told Costello that this was the right move, and that he needed
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to sell the franchise to Inder Dosanjh, as he was the only candidate who would be approved for
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the transaction.
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32.
When Costello met with Dosanjh, Dosanjh told him that he would only
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pay $300,000 for the valuable Cadillac franchise. Cadillac has long been considered GM’s
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premier brand, resulting in significant premiums being paid for the rare franchises. This was
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particularly true in Crown’s case, given that it was one of the largest Cadillac dealerships in the
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market. However, with no real alternative, Costello agreed to the deal. Hence, on September
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11, 2008, Crown sold its Cadillac franchise to Dosanjh for $300,000. [See Section 2.8 of the
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executed Asset Purchase Agreement, a copy of which is attached hereto and incorporated herein
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as Exhibit A, which states that the “Purchase Price of the Goodwill is Three Hundred Thousand
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Dollars ($300,000)”.]
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With a sales price of only $300,000, virtually all of the proceeds would
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be consumed by Ally. However, Costello believed that this would at least resolve Ally’s
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demands, and stop Kevin Wrate and Ally from continuing to harass him. This was particularly
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true given that: i) Ally had already approved Dosanjh’s application to transfer the floorplan and
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had transferred the floor plan from Crown to Inder prior to the closing of the sale; and ii) the
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deal was structured by Randy Parker of GM – an entity that, while separate from Ally, still
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functioned as its sister corporation.
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34.
Two weeks after Crown’s Asset Purchase Agreement with Dosanjh was
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signed, at 5:00 p.m. Friday, September 26, 2008, Ally personally delivered an unexpected letter
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to Costello. The letter stated that Crown’s act of selling the Cadillac franchise was a breach of
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Ally’s financing agreement. What’s more, Ally accused Crown of selling the franchise for
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$1.75 million – a number that was nowhere near the actual sales price. As the letter stated:
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This letter is about Crown Chevrolet’s recent sale of
all of its assets related to is Cadillac franchise,
including Cadillac inventory, the goodwill,
franchise rights and other intangibles, (“Cadillac
Assets”) to Inder Dosanjh, pursuant to that Asset
Purchase Agreement dated August 7, 2008
(“APA”). Under the APA, the purchase price of the
goodwill alone is $1,750,000.00.
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The letter informed Costello that Ally had “a security interest in all assets of
Crown Chevrolet (including the Cadillac Assets) and all proceeds thereof – including the
$1,750,000.00 due under the APA.” Ally informed Costello that it “did not consent to the sale
of the Cadillac assets,” and that this was a “clear and undeniable violation of its Wholesale
Security Agreement.” Ally then demanded “full payment of all proceeds of the Cadillac Assets,
including the $1,750,000 referenced above, by 5:00 pm (PST) on September 30, 2008” – a mere
two business days later. The letter concluded by informing Costello that “[Ally] has suspended
Crown Chevrolet’s wholesale credit line, and it will remain suspended until further written
notice from [Ally].” [The September 26, 2008 letter is attached hereto, and incorporated herein,
as Exhibit B.]
23
24
25
26
27
35.
Upon receipt of this letter, Costello immediately called Kevin Wrate and
told him that Crown had not sold the Cadillac franchise for $1.75 million (the price was
$300,000), and that it did not sell the franchise in August 2008 (it was September). Wrate
listened to Costello and then informed him that Ally was nevertheless terminating Crown’s
28
15
1
floorplan. [A true and correct copy of a letter from Ally to Crown, detailing the material terms
2
of Crown’s Financing Agreement with Ally is attached hereto, and incorporated herein, as
3
Exhibit C. As a result of Defendants conspiracy and fraudulent actions, Crown’s Cadillac and
4
Chevrolet franchises were sold in 2008. Since that time, the full and complete Financing
5
Agreement has been misplaced. Crown is currently continuing its efforts to locate the full and
6
complete Agreement.]
7
8
36.
Left with no floorplan and very few alternatives, Costello called Randy
9
Parker to discuss his options. Parker once again told Costello that he needed to sell to the
10
Chevrolet franchise to Dosanjh, and that if he didn’t sell to him, Parker “didn’t know what he
11
[Costello] was going to do.” Costello told Parker that he was concerned that Dosanjh didn’t
12
have the money to buy the dealership, and that he wanted to sell the dealership to Ed Cornelius,
13
a large and well-financed Toyota dealer in the market. Ed Cornelius had told Costello that he
14
would beat any price that Dosanjh offered.
15
16
37.
Parker told Costello that GM would not approve Ed Cornelius’s purchase
17
of Crown Chevrolet, and that Dosanjh was the only dealer that GM would approve. Parker
18
further told Costello not to worry because he “guaranteed” that Dosanjh had the money to
19
purchase the dealership.
20
21
38.
With no real alternative, in October 2008, Costello agreed to sell the
22
dealership that had been in his family for nearly 50 years. Crown sold the Chevrolet dealership
23
to Dosanjh’s company for approximately $2.4 million, $700,000 of which was to be paid to
24
Costello and $1.7 million in liabilities that were to be assumed by California Automotive Retail
25
Group.
26
27
39.
However, Parker told Costello that the deal needed to be structured in an
28
unorthodox way.
Rather than sell the franchise, parts and equipment to Dosanjh (as is
16
1
customarily done), Parker told Costello that he needed to surrender his franchise to GM, who
2
would then award it to Dosanjh; and then sell the parts and equipment to Dosanjh separately.
3
As requested, in October 2008 Crown surrendered its Chevrolet franchise to GM and then sold
4
the parts and equipment to California Automotive Retailing Group.
5
6
40.
After the deal closed, and importantly after Crown had already
7
surrendered its Chevrolet franchise to GM, California Automotive Retailing Group defaulted on
8
the purchase price, by failing to pay Costello the $700,000 and refusing to pay for many of the
9
liabilities it was to assume. However, because Crown had already surrendered its franchise to
10
GM, Costello was no longer a “dealer,” and Crown was only left with a breach of contract claim
11
against California Automotive Retailing Group.
12
13
41.
Although California Automotive Retailing Group had defaulted on the
14
purchase price of the Chevrolet franchise, because Crown was one of the first dealerships to fall
15
victim to Defendants’ fraud, Costello and Crown did not suspect that Defendants were engaging
16
in a fraudulent scheme to gain control of the San Francisco East Bay Marketplace. Further,
17
given that Defendants took great care to conceal their association and scheme from Costello and
18
Crown, Crown could not, in the exercise of reasonable diligence, have discovered that it had
19
been defrauded by Defendants’ actions.
20
21
The Defendants Develop a Scheme to Shutdown Dosanjh’s Competitor,
22
Groth Bros. Chevrolet, and Defraud Robin Hill, Joe Hill
23
and Groth-Hill Land Company in the Process
24
25
42.
Like Crown Chevrolet, Groth Bros. Chevrolet was a long-standing dealer
26
in the East Bay market. Originally founded by 1934, Groth Bros. Chevrolet had been handed
27
down three generations until it was operated by Robin Hill (the granddaughter of the founder) in
28
the early 2000s.
17
1
2
43.
Also like Crown Chevrolet, the Defendants targeted Groth Bros.
3
Chevrolet as a dealership to be transitioned to Inder Dosanjh. As the closest competitor to
4
Crown Chevrolet (which was being transferred to Dosanjh), the Defendants sought to transition
5
Groth Bros. Chevrolet to Dosanjh where it would be closed, giving Dosanjh complete control of
6
the local market.
7
8
44.
In furtherance of the plan, in mid-2008 Kevin Wrate notified Robin Hill
9
that Ally was going to start auditing the dealership’s floorplan and imposing harsh curtailments
10
on the dealership’s inventory financing. At the time of taking these actions, Wrate knew that
11
Robin Hill, Joe Hill and the Groth-Hill Land Company (collectively referred to as the “Groth
12
Plaintiffs”) had purchased a parcel of raw land in December 2007 for $3.1 million in cash, and
13
were in the process of developing it as the new location for Groth Bros. Chevrolet. Wrate was
14
also aware that when Ally began imposing the floorplan audits and curtailments, the dealership
15
was spending substantial amounts of cash on entitlements for the development of the property.
16
Hence, Wrate understood that floorplan audits and curtailments would result in an immediate
17
cash flow shortage for the dealership.
18
19
45.
When Robin Hill first told GM in the mid-2000s that she was planning
20
on buying a parcel of land and building a new dealership, GM was supportive of the decision.
21
Because the new dealership would enhance GM’s brand equity, and the cost of development
22
would be borne entirely by the dealership and its owners, GM committed to providing the
23
dealership with $750,000 in financial assistance. Such financial assistance is frequently given
24
to dealers who commit to supporting the brand by building new facilities. Hence, in a 2006
25
letter, GM agreed to give the dealership $375,000 at the close of escrow, and $375,000 when
26
the new dealership opened.
27
28
18
1
46.
When Ally began demanding substantial payments for its curtailment
2
charges in mid-2008, Robin Hill contacted Jim Gentry and reminded him that GM had not paid
3
the $375,000 that it was required to pay at the close of escrow (which had occurred some six
4
months earlier). While she had originally intended to use the money to help defray the cost of
5
developing the new dealership, she decided to give the money to Ally for its curtailment
6
charges. However, when Robin Hill asked Gentry for payment of the past due amount, he told
7
her that GM had “no more funds” available for her and that she would not be receiving any of
8
the $750,000 due from GM.
9
10
47.
With Gentry refusing to authorize payment of the $375,000, and Wrate
11
ratcheting down the dealership’s inventory financing, the dealership became “out of trust” with
12
Ally – a term used when a dealer sells a vehicle and fails to pay off the loan amount. Typically,
13
when a vehicle is sold by a dealership, the money received in the transaction is credited to the
14
loan against the particular car. In this instance, however, when vehicles were sold by Groth
15
Bros. Chevrolet, Ally first applied the funds to its curtailment charges, and then any remaining
16
amounts were credited against the loan balance. This naturally left a shortfall on the loan
17
balance, which resulted in the dealership being out of trust.
18
19
48.
The out of trust status was significant, as it constituted a breach of Ally’s
20
financing agreement, enabling Ally to terminate the floorplan. Hence, in October 2008, Kevin
21
Wrate contacted Robin Hill and told her that Ally was going to terminate the dealership’s
22
floorplan if the dealership didn’t immediately pay the out of trust balance of $588,331.73.
23
24
49.
The Defendants’ scheme was to have Ally terminate the Groth Bros.
25
Chevrolet floorplan, and then either force Robin Hill to either sell to Dosanjh, who would close
26
the dealership, or have her simply surrender the franchise back to GM altogether. However, the
27
plan was complicated by the fact that the dealership was owned by a woman – a rarity in the
28
industry – and the fact that there were no personal guarantees on the Ally financing. Because
19
1
Groth Bros. Chevrolet had such a longstanding relationship with Ally, and because it had
2
always been a standout dealer (it repeatedly won the GMAC “Platinum Award” for outstanding
3
performance), Ally had never required personal guarantees.
4
5
50.
Hence, when Wrate told Robin Hill that Ally was going to terminate the
6
dealership’s floorplan, he also told her that Ally would agree to not take the drastic action if the
7
Groth Plaintiffs gave the bank personal guarantees and additional collateral. Specifically, Wrate
8
told her that the Groth Plaintiffs would be required to: i) sign personal guaranties in favor of
9
Ally covering all of the dealership’s debt, ii) give Ally a first position deed of trust on their
10
newly acquired property, iii) agree in writing that the dealership was in default and that Ally
11
had a right to terminate the floorplan, iv) execute a release in favor of Ally, releasing it from all
12
wrongful conduct, v) waive their right to a jury trial, and vi) pay Ally the amounts it was
13
demanding within 90 days.
14
15
51.
To induce the Groth Plaintiffs to give Ally the personal guarantees and
16
additional collateral, Wrate told her that if the Groth Plaintiffs agreed to the terms, Ally would
17
not terminate the dealership’s floorplan, and it would stop harassing the dealership.
18
19
52.
With no choice but to agree to whatever conditions Ally demanded, on
20
October 27, 2008, the Groth Plaintiffs gave Ally a First Trust Deed on their new property and
21
executed Secured Guaranty in favor of Ally. [A copy of the Secured Guaranty is attached
22
hereto, and incorporated herein, as Exhibit “D.”] Then, on November 4, 2008, the Groth
23
Plaintiffs executed the Forbearance Agreement and Release in favor of Ally. [A copy of the
24
Forbearance Agreement is attached hereto, and incorporated herein, as Exhibit “E.”] Under the
25
Forbearance Agreement and Release, Ally increased its interest rate to Prime plus 200 basis
26
points, and required the dealership to pay for a “keeper” at the store at the rate of $750 per day.
27
28
20
1
53.
Robin Hill planned on paying the $588,331.73 that Ally was demanding
2
by taking a loan out on the $3.1 million property that the Groth Plaintiffs had just purchased.
3
However, because Ally now enjoyed an open-ended first trust deed on the property, she was
4
unable to obtain the necessary financing. Robin Hill then contacted Brian Lazer, another
5
manager of Ally, asked if Ally would subordinate its position to the $588,331.73 loan, so that
6
she could pay Ally the money it was demanding. Had Ally agreed to subordinate, it would have
7
immediately received $588,331.73 in cash, still had a trust deed on a parcel of property that had
8
several million dollars in equity, still had personal guarantees from the Groth Plaintiffs, and
9
been owed no money by the dealership other than the amount lent on the vehicles (which was a
10
wash, since the loan on the vehicles was equal to the value of the vehicles). Yet, Ally refused to
11
subordinate.
12
13
54.
When Ally would not subordinate, Robin Hill then asked Kevin Wrate if
14
she could sell the property and pay Ally the amount it was demanding from the proceeds.
15
Wrate agreed, but only on the condition that the Groth Plaintiffs sell the property within 90
16
days, and that they give Ally an additional $700,000 in cash (beyond the amounts that Ally was
17
claiming was due), that Ally would hold in a captive account. Wrate told Robin Hill that if the
18
Groth Plaintiffs agreed to the terms, Ally would not terminate the dealership’s floorplan, and it
19
would stop harassing the dealership. This was also repeated by Brian Lazar, another manager
20
of Ally, who Robin Hill spoke to over the phone.
21
22
55.
With no other choice, the Groth Plaintiffs agreed. On February 13, 2009,
23
they executed the First Amendment to Forbearance Agreement and Release.
24
attached hereto and incorporated herein.] Under this Agreement, Ally increased its interest rate
25
to Prime plus 300 basis points, continued the requirement of the keeper at $750 per day, charged
26
a $50,000 extension fee, and required that the Groth Plaintiffs release Ally from all wrongful
27
acts. The Groth Plaintiffs then had 90 days to sell the property.
28
21
[Exhibit F,
1
56.
With only 90 days in which to operate, the Groth Plaintiffs had to fire
2
sale the property. Hence, on June 1, 2009, the Groth Plaintiffs sold the property for $1.7
3
million, or just about half of what they had recently paid for it. However, over the course of the
4
forbearance period Ally imposed significant additional charges against the dealership, including
5
over $400,000 in extension fees, keeper fees and other term fees. With the addition of these
6
new fees, by the time the property was sold the amount that Ally claimed was due had
7
ballooned to $1,070,852.04. Thus, with the $700,000 cash deposit that Ally was requiring, Ally
8
demanded that the Groth Plaintiffs pay Ally $1,770,852.04 out of escrow. Because the amount
9
Ally was demanding was more than the purchase price, and because there were other costs
10
associated with the transactions (such as escrow fees, commissions, transfer tax, mechanics
11
liens for the entitlement work, etc.), the Groth Plaintiffs had to borrow $415,497.26 from Robin
12
Hill’s brother to close escrow.
13
14
57.
Inder Dosanjh was intimately involved in orchestrating these financial
15
pressures on Groth Bros. Chevrolet. On multiple occasions, Dosanjh was observed having
16
phone calls with Kevin Wrate, where Dosanjh and Wrate discussed how Ally was going to
17
apply financial pressure on the Groth Bros. Chevrolet to put it out of business. At one point,
18
Dosanjh stated: “I’m going to put that cunt out of business, and GM is going to help me do it.”
19
20
58.
Unaware of the conspiracy among the Defendants, after the Groth
21
Plaintiffs executed personal guaranties and gave the proceeds of their property to Ally, they
22
expected that Ally would keep its promise to stop harassing the dealership. Yet, in December
23
2009, Ally began repeatedly auditing the dealership. Initially, the audits were every other week,
24
but in February 2010, Ally increased the frequency to every week. Ally engaged in this process
25
despite the fact that Groth Bros. Chevrolet was not delinquent in its financing, and that it had
26
$700,000 of the Groth Plaintiffs’ money in its captive account.
27
28
22
1
59.
In April 2010, Ally once again started imposing curtailments on the
2
dealership. At this point, Robin Hill refused to allow Ally to conduct any further audits. This
3
resulted in Ally sending a letter to Robin Hill, informing her that the dealership was in default,
4
and demanding immediate payment of the $2,715,125.09 that was outstanding against the
5
dealership’s vehicle inventory. [Exhibit G, attached hereto and incorporated herein.] In an
6
incredibly insensitive act, Ally also secretly sent a copy of the letter to Robin Hill’s elderly
7
parents, the prior owners and operators of the dealership. [Exhibit H, attached hereto and
8
incorporated herein.]
9
10
60.
From the original point of forbearance in October 2008, Robin Hill had
11
been very clear with Ally that her parents were medically infirm, not involved with any of the
12
dealership operations, and in the care of full time caregivers. Hence, she had requested that
13
Ally not subject them to any threats of financial pressure, and Ally agreed to honor the request.
14
15
61.
The letter that was sent to Robin Hill indicated that she was the only
16
recipient of the letter. However, Ally had also prepared a different version of the letter, which
17
indicated that her parents were being sent a copy. [Compare p.2 of Ex. G to p.2 of Ex. H.] The
18
result of this was that Robin Hill was unaware that her elderly parents were being copied on the
19
letter from Ally demanding immediate payment of $2,715,125.09.
20
21
62.
Robin Hill’s mother had been hospitalized in April 2010 with terminal
22
health problems. On May 1, 2010, she returned home with hospice care set up, knowing these
23
would be her final days. Upon return from the hospital, her mother found Ally’s Fed Ex
24
package waiting for her at her house. Robin Hill’s mother opened the package, read the letter,
25
and passed away only two days later.
26
27
28
63.
On April 19, 2010, just days after sending the letter, Ally filed a lawsuit
against Groth Bros. Chevrolet, and attempted to seize the dealership’s inventory. Ally also told
23
1
the Groth Plaintiffs that the floorplan was being terminated. In conjunction with their lawsuit
2
against the dealership, Ally also sought a temporary restraining order. The dealership opposed
3
the temporary restraining order, and the Court agreed with the dealership that the temporary
4
restraining order was unmerited, finding that the dealership had sufficient capital on hand with
5
Ally and was not in default. Upon being defeated in their attempt to obtain a temporary
6
restraining order, Ally offered to work with the dealership.
7
8
64.
In its purported efforts to “work” with Groth Bros. Chevrolet, Ally
9
presented the dealership with a series of workout agreements, which extended the date that Ally
10
would terminate the floorplan, in exchange for the Groth Plaintiffs releasing Ally from any
11
wrongdoing. The workout agreements were dated May 18, 2010 [Ex. I], August 2, 2010 [Ex.
12
J], August 19, 2010 [Ex. K], September 30, 2010, [Ex. L], and November 1, 2010 [Ex. M]. The
13
Groth Plaintiffs believe that Ally presented them with the series of workout agreements in order
14
to obtain the general releases in Ally’s favor, and to give the appearance of trying to work with
15
Robin Hill. Robin Hill had become extremely vocal about going to the press with Ally’s
16
harassment, causing GM to become concerned about its plan to terminate a female dealer.
17
18
65.
Immediately after Ally was unsuccessful in obtaining a temporary
19
restraining order against Groth Bros. Chevrolet, but while he knew that the dealership was still
20
weak from the financial pressure applied by Ally, Inder Dosanjh sent one of his partners, Rick
21
Corso Jr. to approach Robin Hill about purchasing the dealership. Mr. Corso informed Robin
22
Hill that he was well aware of the pressure Ally was asserting and the financial struggles this
23
pressure had caused the dealership. Mr. Corso then made an offer to purchase the dealership for
24
well below the dealership’s fair market value. Robin Hill declined Mr. Corso’s “low ball” offer.
25
26
66.
Shortly thereafter, still hoping to pressure her into voluntarily walking
27
away from her family’s dealership, Dosanjh approached Robin Hill with plans to purchase and
28
move the dealership to approximately 3 miles from his Dublin location. When Robin responded
24
1
that GM would never allow the move, Dosanjh informed her that, “GM will do anything I want
2
them to”.
3
4
67.
Still hoping to pressure Robin Hill into voluntarily relinquishing control
5
of the Groth Bros. Chevrolet dealership, in June 2010, Susan Keenehan of GM approached
6
Robin Hill and presented her with “self-termination” documents for the dealership. Robin Hill
7
refused to sign the terminating documents, ordered Ms. Keenehan to leave the dealership and
8
immediately called Randy Parker to request a meeting. Parker informed Robin Hill that he was
9
extremely busy, and setup a meeting for the following month (which he later cancelled).
10
11
68.
Seeing that Groth Bros. Chevrolet was unwilling to bend under Ally’s
12
financial pressures, Parker decided to apply additional pressure to the dealership and instructed
13
GM to hold all open account monies which were to be paid to Groth Bros. Chevrolet. Despite
14
the fact that there was no justification for holding the dealership open account money, GM
15
continued to hold the funds for approximately six weeks, until Robin Hill threatened to sue GM
16
for their unlawful withholding.
17
18
69.
Ultimately, in their purported attempts to work with Groth Bros.
19
Chevrolet, Ally agreed to allow the dealership until December 31, 2010 to locate an alternative
20
floorplan. However, in mid-December 2010, ten days before the date agreed to by Ally, Robin
21
Hill was informed by Ally that it was shutting down its floorplan early. Ally terminated Groth
22
Bros. Chevrolet’s floorplan on December 20, 2012.
23
24
70.
Ally’s early termination of the Groth Bros. Chevrolet floorplan
25
created a crisis for the dealership, as Groth Bros. had started setting up a new floorplan with US
26
Bank, but the process had not been completed. Moreover, when Ally terminated the floorplan,
27
all of the vehicles that were on order from GM were deleted from the system, meaning that the
28
dealership would soon be deprived of inventory.
25
1
2
71.
In early January 2011, the US Bank floorplan was nearly established, and
3
GM was notified that the credit facility would soon be complete. In mid-January, two new
4
Aveo vehicles were mysteriously delivered to the dealership. The arrival of the vehicles was
5
not expected, as GM informed Robin Hill that all of dealership’s orders had been dropped from
6
the system at the end of December, when Ally terminated the floorplan agreement early. Robin
7
Hill contacted GM and asked why the vehicles were dropped off, to which the GM
8
representative merely said that the system showed that the vehicles were to be received, and
9
paid for, by Groth Bros. Chevrolet. When Robin Hill told GM that she had been informed that
10
all orders had been dropped from the system, and that because of this she was not yet in a
11
position to pay for them, GM contacted US Bank and told Robin Hill’s banker that the vehicles
12
were US Bank’s responsibility, and that that if Groth Bros. wasn’t going to pay for them, then
13
GM would hold US Bank responsible. Robin Hill also discovered that another vehicle was in
14
transit that was also not expected. Given that the floorplan was still in the final stages of being
15
completed, after being threatened by GM, US Bank informed Robin Hill that they were
16
withdrawing the floorplan.
17
18
72.
In April 2011, having just orchestrated the withdraw of US Bank as a
19
floor plan lender for Groth Bros. Chevrolet, thus leaving the dealership without a floorplan
20
option, GM sent the dealership a franchise termination letter.
21
22
23
73.
Without a floorplan in place, and under threat of termination by GM, on
May 18, 2011, Groth Bros. Chevrolet was forced to file for bankruptcy protection.
24
25
74.
Upon Groth Bros. Chevrolet’s filing of bankruptcy, GM again began
26
withholding open account monies from the dealership. This unmerited withholding of the
27
dealership’s funds had a crippling effect on the dealership’s ability to perform during the
28
bankruptcy proceedings. Without the open account money the dealership was entitled to, it was
26
1
unable to pay many of its liabilities. As such, after two months of GM’s withholding of funds
2
from Groth Bros. Chevrolet, the bankruptcy court found that the dealership was unable to meet
3
its demands and ordered that a change in bankruptcy terms to a liquidation. As a result of the
4
liquidation order, the dealership was taken over by a bankruptcy trustee and on August 25,
5
2011, the dealership was closed. Distraught over the loss of his families’ dealership, Robin
6
Groth’s father passed away on Sept 5, 2011, just days after the dealership was forced to close its
7
doors.
8
9
75.
In an attempt to salvage their dealership’s reputation, Robin Hill brought
10
in several bidders to purchase the dealership out of bankruptcy, but on October 12, 2011, GM
11
filed an objection to the sale of the franchise on the ground that the dealership had been closed
12
for more than seven consecutive days (a default under the GM agreement). The bankruptcy
13
court sustained GM’s objection, and GM terminated the franchise.
14
15
76.
On November 4, 2011, Inder Dosanjh formed a new company called
16
INMATO, LLC to purchase the remaining dealership assets from the bankruptcy estate for
17
$550,000. The sale included all of Groth Bros. Chevrolet’s parts, fixtures and legal claims, and
18
was completed on November 16, 2011. However, on December 17, 2011, a mere 31 days later,
19
Dosanjh sold all the assets he had just purchased – other than Groth Bros. Chevrolet’s legal
20
claims – for $140,000. This resulted in a virtual overnight loss of $410,000. The truth is that
21
Dosanjh’s purchase, and instant resale, of the Groth Bros. Chevrolet assets was merely a ploy to
22
buyout the dealership’s legal claims so that Defendants could not be sued for their wrongful
23
conduct.
24
///
25
///
26
///
27
///
28
///
27
1
FIRST CAUSE OF ACTION
2
Fraud – Concealment
3
(By Plaintiff Crown Chevrolet Against Defendants Ally
4
Financial Inc., Randy Parker and Kevin Wrate, and Against
5
Jim Gentry as a Co-Conspirator)
6
7
8
77.
Each of the preceding paragraphs are re-alleged as if fully set forth
78.
As detailed in in paragraphs 28 through 41 above, from early 2008
herein.
9
10
11
through October 2008 Defendants Randy Parker, Kevin Wrate and Ally actively concealed
12
important facts from Crown Chevrolet. Specifically, Parker, as the Western Regional Director
13
for Chevrolet of Old GM, and Wrate, as the Director of Sales for Ally, concealed from Costello,
14
the owner and CEO of Crown Chevrolet, that the fact that they, along with Jim Gentry, the
15
Regional Dealer Network Manager of Old GM, had devised a conspiracy whereby they were
16
going to force Crown Chevrolet to sell its Cadillac and Chevrolet franchises to Inder Dosanjh,
17
and Dosanjh’s company, California Automotive Retailing Group, Inc.
18
19
20
79.
In furtherance of this plan, Wrate, as the authorized representative of
Ally, undertook the following acts:
21
22
a.
In early 2008, Wrate notified Costello via frequent letters and
23
telephone calls to the dealership that Ally was going to start auditing Crown’s floorplan
24
and imposing significant curtailments on his dealership’s inventory financing.
25
26
b.
In July 2008, Wrate sent Costello a letter demanding that Crown
27
pay Ally $400,000 as a lump sum curtailment pay-down. This was to be in addition to
28
the $400,000 of Crown’s money that Ally was already holding in a captive account, and
28
1
in addition to the monthly curtailments already being imposed upon Crown. When
2
Costello told Wrate that the dealership didn’t have another $400,000, Wrate pressured
3
Costello to have his mother-in-law give Ally a first trust deed on the dealership property.
4
Wrate told Costello that if the monthly curtailment payments were not made, and if the
5
$400,000 lump sum curtailment pay-down was not made or a first trust deed was not
6
given, that Ally would terminate his floorplan.
7
8
c.
In September 2008, Wrate directed that a letter from Ally be
9
prepared and delivered to Crown, informing Crown that the dealership’s sale of its
10
Cadillac franchise violated the Ally financing agreement, and demanding that Crown
11
pay Ally $1.75 million from the sale within two business days. [Ex. B]. Wrate took this
12
action despite knowing that: i) Ally had approved Dosanjh’s application to transfer the
13
floorplan, and had transferred the floorplan to Dosanjh prior to the close of the sale, ii)
14
the sale of the Cadillac franchise had been arranged by Parker, and iii) that Crown had
15
not actually received $1.75 million from the sale.
16
17
18
80.
In furtherance of their plan, Parker, as the authorized representative of
Old GM, undertook the following acts:
19
20
a.
In August 2008, when Costello informed Parker that he was
21
considering selling his Cadillac franchise to address Ally’s financial demands, Parker
22
told him over the phone that Dosanjh was the only candidate who GM would approve
23
for the transaction.
24
25
b.
After Ally sent its September 26, 2008 letter to Crown [Ex. B],
26
Parker told Costello over the phone that he needed to sell the Chevrolet franchise. When
27
Costello told Parker that he wanted to pursue a transaction with Ed Cornellias, a large
28
and well-financed Toyota dealer in the market, Parker told him that Dosanjh was the
29
1
only candidate whom GM would approve for the transaction. When Costello expressed
2
his concern that Dosanjh did’t have the money for the transaction, Parker told Costello
3
not to worry because he “guaranteed” that Dosanjh had the money to purchase the
4
dealership.
5
6
c.
Parker told Costello that the Chevrolet transaction needed to be
7
structured in an unorthodox way. Rather than sell the franchise, parts and equipment to
8
Dosanjh, Parker told Costello that he needed to surrender his franchise to GM, who
9
would then award it to Dosanjh; and then sell the parts and equipment to Dosanjh
10
separately. Hence, when Dosanjh defaulted on the agreement, Crown was no longer a
11
“dealer” and was only left with a breach of contract claim against Dosanjhs’ company.
12
13
81.
At the time of making these phone calls and sending these letters to
14
Costello, both Wrate and Parker actively concealed from Crown the fact that the curtailments,
15
the audits, the demand for $400,000 lump sum curtailment pay-down, the demand for the
16
payment of $1.75 million, and the statements that only Dosanjh would be approved for the two
17
transactions were not legitimate business requests from Ally and Old GM, but instead were
18
designed solely to put substantial financial pressure on Crown. This financial pressure was put
19
on Crown so that it would be forced to either terminate its Cadillac and Chevrolet franchises
20
and surrender them to Old GM, who would then award them to Dosanjh and California
21
Automotive Retailing Group, or to sell the franchises to Dosanjh and California Automotive
22
Retailing Group directly.
23
24
82.
Neither Crown, nor its owner and CEO Pat Costello, knew of the
25
concealed facts, nor could they have reasonably discovered them through the use of due
26
diligence.
27
28
30
1
83.
Had Crown or Costello known of these concealed facts, they would not
2
have: i) sold the Cadillac franchise to Dosanjh; ii) sold the Cadillac franchise a fraction of its
3
actual fair market value; iii) sold the Chevrolet franchise to California Automotive Retailing
4
Group; or iv) sold the Chevrolet franchise for a fraction of its fair market value.
5
6
84.
Parker, individually and as an authorized representative of Old GM, and
7
Wrate, individually and as an authorized representative of Ally, intended to deceive Crown and
8
Costello by concealing these facts.
9
10
85.
Crown and Costello reasonably relied on the deception of Parker, Wrate
11
and Ally because Crown was in a long standing business relationship with Old GM and Ally,
12
and because Parker and Wrate held managerial positions at their companies, and were in charge
13
of overseeing Crown’s business affairs.
14
15
86.
Crown was harmed by the actions of Parker, Wrate and Ally, in that it
16
sold both its Cadillac and Chevrolet franchises when it otherwise would not have done so, and
17
in that it sold them for significantly less than fair market value.
18
19
20
87.
Crown’s justified reliance on the concealment of Parker, Wrate and Ally
was a substantial factor in causing its harm.
21
22
88.
Gentry, the Regional Dealer Network Manager of Old GM, is liable as a
23
co-conspirator for the fraudulent concealment engaged in by Parker, Wrate and Ally. As
24
detailed in Paragraphs 28 to 41 above, in the mid-2000s a conspiracy was formed by Gentry,
25
Parker, Wrate, Old GM, Ally, Dosanjh and California Automotive Retailing Group for the
26
purposes of closing certain GM dealerships, and transferring others to Dosanjh and California
27
Automotive Retailing Group. By engaging in such conduct, Gentry, Parker, Old GM, Dosanjh
28
31
1
and California Automotive Retailing Group were able to control the San Francisco East Bay
2
market, and Gentry and Parker received personal financial rewards.
3
4
89.
Gentry was aware that Parker, Wrate and Ally were concealing material
5
facts from Crown in their quest to force Crown to sell its Cadillac and Chevrolet franchises to
6
Dosanjh and California Automotive Retailing Group, and Gentry agreed with Parker, Wrate and
7
Ally and intended that the fraudulent concealment be committed.
8
9
90.
Dosanjh and California Automotive Retailing Group were also part of the
10
conspiracy to conceal material facts from Crown, but were the subject of a release when Crown
11
had to pursue them for breach of the Chevrolet asset purchase agreement.
12
13
91.
Crown and Costello did not discover the fraudulent conduct of Parker,
14
Wrate and Ally, or the conspiracy that they formed with Gentry, nor could they have reasonably
15
done so, until late 2012 when Costello was subpoenaed to testify as a witness in this case. Upon
16
being served with a subpoena, Costello independently obtained a copy of the underlying
17
Complaint from the Alameda County Superior Court and learned that other dealers had also
18
been targeted by Parker and Wrate for closure.
19
conducted a thorough and prompt investigation into the matter, by actively seeking out other
20
individuals who he thought may have knowledge of the events. Costello then immediately
21
began interviewing the individuals, and upon discovery of the facts surrounding his claim, filed
22
this lawsuit.
Upon learning of such events, Costello
23
24
92.
As a direct and proximate result of the conduct of Parker, Wrate and
25
Ally, Crown was harmed in an amount within the jurisdiction of this Court, and in an amount to
26
be proved at trial. As a co-conspirator, Gentry is jointly and severally liabile for all harm
27
suffered by Crown pursuant to this cause of action.
28
32
1
93.
The conduct of Parker, Wrate, Gentry and Ally was fraudulent, malicious
2
and oppressive such that the Crown is entitled to an award of punitive damages pursuant to
3
California Civil Code § 3294, in an amount to be determined at trial.
4
5
SECOND CAUSE OF ACTION
6
Racketeering
7
[18 U.S.C. §1962(c) and 18 U.S.C. §1962(d)]
8
(By Plaintiff Crown Chevrolet Against Defendants Ally Financial
9
Inc., Randy Parker, Kevin Wrate, and Against Jim Gentry as a
10
Co-Conspirator)
11
12
13
94.
95.
As discussed in greater detail in the proceeding paragraphs, in the 2000s,
herein.
14
15
16
with its market share continuing to decline, Old GM developed a plan to strengthen its position
17
in the San Francisco East Bay. In furtherance of this, the automaker assembled an association-
18
in-fact enterprise to focus on its marketing and distribution in the market. This enterprise was
19
comprised of Old GM (until its demise in 2009), Parker, Gentry, New GM (beginning in 2009),
20
Ally, Wrate, Dosanjh and California Automotive Retailing Group (hereinafter referred to
21
collectively as the “Enterprise”).
22
23
96.
This association-in-fact Enterprise had a definable structure. It had a
24
purpose, which was to gain control over the San Francisco East Bay market.
25
interpersonal relationships among its members and a common interest, in that Parker, Gentry,
26
Wrate, Ally, Dosanjh and California Automotive Retailing Group worked together to
27
accomplish its purpose, as did Old GM while it was in existence, and New GM after it was
28
created. It had longevity sufficient to permit its members to pursue the Enterprise’s purpose, in
33
It had
1
that the aforementioned parties worked together for several years to gain control over the San
2
Francisco East Bay market.
3
4
97.
The Enterprise is engaged in, and its activities affect interstate commerce
5
in that it was established to address the marketing and distribution of GM automobiles in the
6
San Francisco East Bay market. All such automobiles were shipped from outside of California
7
to dealerships within California.
8
9
98.
Parker, Ally and Wrate conducted the affairs of the Enterprise through a
10
pattern of racketeering activity and for the unlawful purpose of intentionally defrauding and
11
injuring Crown.
12
13
99.
Pursuant to any in furtherance of their fraudulent scheme, Defendants
14
committed multiple related acts of mail fraud and wire fraud. As detailed in Paragraphs 28
15
through 41, over a two-and-a-half year period the Defendants sent no less than 17 letters to
16
carry out their scheme to defraud. In addition, the Defendants sent no less than 24 emails over a
17
four-and-a-half year period to carry out their scheme to defraud. Specifically, with regard to
18
Crown, Defendants engaged in the following racketeering acts:
19
20
a.
In early 2008, Wrate notified Costello via frequent letters to the
21
dealership that Ally was going to start auditing Crown’s floorplan and imposing
22
significant curtailments on his dealership’s inventory financing.
23
24
b.
In July 2008, Wrate sent Costello a letter demanding that Crown
25
pay Ally $400,000 as a lump sum curtailment pay-down. This was to be in addition to
26
the $400,000 of Crown’s money that Ally was already holding in a captive account, and
27
in addition the monthly curtailments already being imposed upon Crown.
28
Costello told Wrate that the dealership didn’t have another $400,000, Wrate pressured
34
When
1
Costello to have his mother-in-law give Ally a first trust deed on the dealership property.
2
Wrate told Costello that if the monthly curtailment payments were not made, and if the
3
$400,000 lump sum curtailment pay-down was not made or a first trust deed was not
4
given, that Ally would terminate Crown’s floorplan.
5
6
c.
In September 2008, Wrate directed that a letter from Ally be
7
prepared and delivered to Crown, informing Crown that the dealership’s sale of its
8
Cadillac franchise violated the Ally financing agreement, and further demanded that
9
Crown pay Ally $1.75 million from the sale within two business days. [Ex. B]. Wrate
10
took this action despite knowing that: i) Ally had approved Dosanjh’s application to
11
transfer the floorplan, and had transferred the floorplan to Dosanjh prior to the close of
12
the sale, ii) the sale of the Cadillac franchise had been arranged by Parker, and iii) that
13
Crown had not actually received $1.75 million from the sale.
14
15
100.
These letters constitute mail fraud under 18 U.S.C. § 1341, and the emails
16
constitute wire fraud under 18 U.S.C. § 1343, because they were part of a scheme to defraud
17
Crown, they were sent with the intent to defraud Crown, it was reasonably foreseeable that the
18
mail and wire systems would be used, and the mail and wire systems were actually used.
19
20
21
101.
The acts of mail fraud and wire fraud set forth above constitute a pattern
of racketeering activity pursuant to 18 U.S.C. § 1961(5).
22
23
102.
At the time of sending these letters to Costello, both Wrate and Parker
24
actively concealed from Crown the fact that the curtailments, the audits, the demand for
25
$400,000 lump sum curtailment pay-down, the demand for the payment of $1.75 million, and
26
the statements that only Dosanjh would be approved for the two transactions were not legitimate
27
business requests from Ally and Old GM, but instead were designed solely to put substantial
28
financial pressure on Crown. This financial pressure was put on Crown so that it would be
35
1
forced to either terminate its Cadillac and Chevrolet franchises and surrender them to Old GM,
2
who would then award them to Dosanjh and California Automotive Retailing Group, or to sell
3
the franchises Dosanjh and California Automotive Retailing Group directly.
4
5
103.
Parker, Wrate and Ally directly and indirectly conducted the Enterprise’s
6
affairs through the pattern of racketeering activity described above, in violation of 18 U.S.C. §
7
1962(c).
8
9
104.
Gentry, the Regional Dealer Network Manager of Old GM, is liable
10
under 18 U.S.C. § 1962(d) as a co-conspirator for the pattern of racketeering engaged in by
11
Parker, Wrate and Ally.
12
13
105.
As detailed in Paragraphs 28 to 41 above, in the mid-2000s Gentry,
14
Parker, Wrate, Old GM, Ally, Dosanjh and California Automotive Retailing Group conspired to
15
violate 18 U.S.C. § 1962(c) by conducting the affairs of the Enterprise through a pattern of
16
racketeering activities, thereby closing certain GM dealerships, and transferring others to
17
Dosanjh and California Automotive Retailing Group. By engaging in such conduct, Gentry,
18
Parker, Old GM, Dosanjh and California Automotive Retailing Group were able to control the
19
San Francisco East Bay market, and Gentry and Parker received personal financial rewards.
20
21
106.
Gentry, Parker, Ally and Wrate conducted and participated in the conduct
22
of the affairs of the enterprise through a pattern of racketeering activity, including the use of
23
mail and wire fraud.
24
25
107.
Gentry, Parker, Ally and Wrate have intentionally conspired and agreed
26
to directly and indirectly conduct and participate in the conduct of the affairs of the Enterprise
27
through a pattern of racketeering activity. Gentry, Parker, Ally and Wrate knew that their
28
predicate acts were part of a pattern of racketeering activity and agreed to the commission of
36
1
those acts to further the schemes described above. That conduct constitutes a conspiracy to
2
violate 18 U.S.C. § 1962(c), in violation of 18 U.S.C. § 1962(d).
3
4
108.
As a direct and proximate result of Parker, Ally and Wrate’s racketeering
5
activities, Crown has been injured in its business and property in that: i) it was forced to sell its
6
Cadillac franchise to Dosanjh; ii) it was forced to sell its Cadillac franchise for a fraction of its
7
fair market value; iii) it was forced to sell its Chevrolet franchise to California Automotive
8
Retailing Group; and iv) it was forced to sell its Chevrolet franchise for a fraction of its fair
9
market value.
10
11
109.
Because the Defendants continued to actively conceal their scheme to
12
defraud the dealers in the San Francisco East Bay market for a period of years, Crown did not
13
discover, nor could it have reasonably discovered, that it had been injured until late 2012 when
14
Costello was subpoenaed to testify as a witness in the this case. Upon being served with a
15
subpoena, Costello independently obtained a copy of the underlying Complaint from the
16
Alameda County Superior Court and learned that other dealers had also been targeted by Parker
17
and Wrate for closure. Upon learning of such events, Costello conducted a thorough and
18
prompt investigation into the matter, by actively seeking out other individuals who he thought
19
may have knowledge of the events.
20
individuals, and upon discovery of the facts surrounding his claim, filed this lawsuit.
Costello then immediately began interviewing the
21
22
110.
As a direct and proximate result of the conduct of Parker, Wrate and
23
Ally, Crown was harmed in an amount to be proved at trial, but within the jurisdictional limits
24
of this Court. In addition, Crown is entitled to treble damages and its reasonable attorneys’ fees
25
pursuant to 18 U.S.C. § 1964(c). As a co-conspirator, Jim Gentry is jointly and severally liable
26
for all harm suffered by Crown pursuant to this cause of action.
27
///
28
///
37
1
THIRD CAUSE OF ACTION
2
Breach of the Covenant of Good Faith and Fair Dealing
3
(By Plaintiff Crown Chevrolet Against Defendant Ally Financial Inc.)
4
5
6
111.
112.
A written contract exists between Crown and Ally, the material terms of
herein.
7
8
9
which are contained therein. A true and correct copy of a letter from Ally to Crown, detailing
10
the material terms of Crown’s Financing Agreement with Ally is attached hereto, and
11
incorporated herein, as Exhibit C. As a result of Defendants conspiracy and fraudulent actions,
12
Crown’s Cadillac and Chevrolet franchises were sold in 2008. Since that time, the full and
13
complete Financing Agreement has been misplaced. Crown is currently continuing its efforts to
14
locate the full and complete Agreement.
15
16
113.
Pursuant to this contract, Ally was required to provide Crown with a
17
commercial floorplan for its new and used vehicles, and Crown was required to timely pay its
18
financial obligations. Implied in this contract was an implied covenant of good faith and fair
19
dealing.
20
21
22
114.
Crown performed all, or substantially all, of the significant things that the
contract required it to do.
23
24
115.
All of the conditions required for Ally’s performance had occurred.
116.
Ally unfairly interfered with Crown’s right to receive the benefits of the
25
26
27
contract by:
28
38
1
a.
Repeatedly demanding monthly curtailments for the sole purpose
2
of asserting financial pressure on Crown, in an effort to force Crown to either: i) sell its
3
Cadillac and Chevrolet franchises to Dosanjh and/or California Automotive Retailing
4
Group, or in the alternative; or ii) miss a curtailment payment, thus allowing Ally to
5
terminate Crown’s commercial floorplan, and to transition the Crown Cadillac and
6
Chevrolet franchises to Dosanjh and California Automotive Retailing Group.
7
8
b.
Sending a letter to Crown in July 2008, demanding that Crown
9
pay Ally another $400,000 as a lump sum curtailment payment, the sole purpose of
10
which was to assert financial pressure on Crown in an effort to force Crown to either: i)
11
sell its Cadillac and Chevrolet franchises to Dosanjh and/or California Automotive
12
Retailing Group, or in the alternative; or ii) miss a curtailment payment, thus allowing
13
Ally to terminate Crown’s commercial floorplan, and to transition the Crown Cadillac
14
and Chevrolet franchises to Dosanjh and California Automotive Retailing Group.
15
16
c.
Personally delivering a letter to Crown at 5:00 p.m. on Friday,
17
September 26, 2008, which: i) claimed that Crown’s act of selling its Cadillac franchise
18
was a breach of Ally’s financing agreement; ii) accused Crown of selling the franchise
19
for $1.75 million, and iii) demanded that Crown pay the entire alleged amount $1.75
20
million within two business days. Sending this letter was an act of breach because Ally
21
was working with Dosanjh and California Automotive Retailing Group and it therefore
22
knew that the purchase price of the Cadillac franchise was in fact $300,000, and not
23
$1.75 million. Ally sent the letter solely as a pretext for terminating Crown’s floorplan,
24
so that the dealership could be transitioned to Dosanjh and California Automotive
25
Retailing Group.
26
///
27
///
28
///
39
1
As a direct and proximate result of Ally’s breach of the implied covenant
117.
2
of good faith and fair dealing, Crown sustained compensatory damages in an amount that is in
3
excess of the jurisdiction of this Court.
4
5
118.
6
7
8
9
10
11
12
13
14
15
16
FOURTH CAUSE OF ACTION
17
Unfair Business Practices
18
[Cal. Bus. And Prof. Code § 17200]
19
(By Plaintiff Crown Chevrolet Against Defendants Ally
20
Financial Inc., Randy Parker, James Gentry and Kevin Wrate)
21
22
23
119.
120.
Plaintiff Crown brings this cause of action in the public interest and on
herein.
24
25
26
behalf of the general public.
27
28
40
1
121.
This cause of action is brought under California Unfair Competition Law,
2
California Business and Professions Code § 17200, et. seq., which makes it unlawful for one to
3
engage in, “any unlawful, unfair or fraudulent business act or practice ….”
4
5
122.
Parker, Gentry, Ally and Wrate engaged in conduct that was “fraudulent”
6
in that they agreed to a form a conspiracy to fraudulently take the Cadillac and Chevrolet
7
franchises from Crown. Parker, Gentry, Ally and Wrate also engaged in “fraudulent” conduct
8
as part of a larger scheme to gain control of the San Francisco East Bay Marketplace by
9
engaging in a pattern of racketeering activity.
10
11
123.
Parker, Gentry, Ally and Wrate engaged in conduct that was “unlawful”
12
in that they engaged in a pattern of racketeering activity in violation of 18 U.S.C. §1962(c) and
13
18 U.S.C. §1962(d).
14
15
124.
Parker, Gentry, Ally and Wrate engaged in conduct that was “unfair” in
16
that they devised a scheme to steal Crown’s Cadillac and Chevrolet franchises and give them to
17
Crown’s competitor, Dosanjh. Parker, Gentry, Ally and Wrate also engaged in “unfair” conduct
18
as part of a larger fraudulent scheme to gain control of the San Francisco East Bay Marketplace
19
by engaging in a pattern of racketeering activity.
20
21
125.
As a direct and proximate result of Parker, Gentry, Ally and Wrate’s
22
conduct, Crown has suffered an injury in fact and an economic injury as a result of the unfair
23
competition in that: i) it was forced to sell its Cadillac franchise to Dosanjh; ii) it was forced to
24
sell its Cadillac franchise for a fraction of its fair market value; iii) it was forced to sell its
25
Chevrolet franchise to California Automotive Retailing Group; and iv) it was forced to sell its
26
Chevrolet franchise for a fraction of its fair market value.
27
28
41
1
126.
Crown seeks relief for the general public, and to enforce an important
2
right affecting the public interest, by having an injunction issued against Parker, Gentry, Ally
3
and Wrate enjoining them from engaging in any further unlawful, unfair or fraudulent activities,
4
as discussed herein.
5
6
7
127.
The relief sought herein, if successful, would confer a significant benefit
on the general public.
8
9
10
128.
The value of this injunctive relieve is in excess of the minimum
jurisdictional limit of this Court.
11
12
129.
As a private attorney general seeking to confer an important benefit to
13
upon the public at large, Crown seeks to recover its reasonable attorneys’ fees pursuant to
14
California Civil Procedure Code § 1021.5.
15
16
130.
17
18
19
20
21
22
23
24
25
26
///
27
///
28
///
42
1
FIFTH CAUSE OF ACTION
2
Fraud – False Promise
3
(By Plaintiffs Groth-Hill Land Company, LLC, Robin Hill and Joseph Hill
4
Against Defendant Ally Financial Inc. and Kevin Wrate,
5
and Against General Motors, LLC, Randy Parker, James Gentry, Inder Dosanjh,
6
and California Automotive Retailing Group, Inc. as Co-Conspirators)
7
8
9
131.
132.
As detailed in in paragraphs 42 through 76 above, in October 2008 Kevin
herein.
10
11
12
Wrate, as Director of Sales for Ally, called Robin Hill on the phone and informed her that Ally
13
was going to terminate Groth Bros.’ floorplan if the dealership did not immediately pay it
14
$588,331.73. Wrate also told her that Ally would agree to not take the drastic action if the
15
Groth Plaintiffs gave the bank personal guarantees and additional collateral. Specifically, Wrate
16
told her that the Groth Plaintiffs would be required to: i) sign personal guaranties in favor of
17
Ally covering all of the dealership’s debt, ii) give Ally a first position deed of trust on their
18
newly acquired property, iii) agree in writing that the dealership was in default and that Ally
19
had a right to terminate the floorplan, iv) execute a release in favor of Ally, releasing it from all
20
wrongful conduct, v) waive their right to a jury trial, and vi) pay Ally the amounts it was
21
demanding within 90 days.
22
23
133.
To induce the Groth Plaintiffs to give Ally the personal guarantees and
24
additional collateral, Wrate told Robin Hill that if the Groth Plaintiffs agreed to the terms, Ally
25
would promise to not terminate the dealership’s floorplan, and would stop harassing the
26
dealership.
27
28
43
1
134.
Based on Ally’s promises, made through its authorized agent Wrate, in
2
October and November 2008, the Groth Plaintiffs executed the Forbearance Agreement and
3
Release attached hereto as Exhibit “E,” gave Ally a First Trust Deed on their new property in
4
Livermore, and executed the Secured Guaranty attached hereto as Exhibit “D.”
5
6
135.
After Ally took its first trust deed position on the property, Robin Hill
7
attempted to refinance the Livermore property, but was unable to do so because Ally refused to
8
subordinate its position. Robin Hill then asked Wrate if she could sell the property and pay Ally
9
the amount it was demanding from the proceeds. Wrate agreed, but only on the condition that
10
the Groth Plaintiffs sell the property within 90 days, and that they give Ally an additional
11
$700,000 in cash (beyond the amounts that Ally was claiming was due), that Ally would hold in
12
a captive account. Wrate told Robin Hill that if the Groth Plaintiffs agreed to the terms, Ally
13
would not terminate the dealership’s floorplan, and it would stop harassing the dealership. This
14
was also repeated by Brian Lazar, another manager of Ally, who Robin Hill spoke to over the
15
phone.
16
17
136.
Based on Ally’s promises, made through its authorized agents Brian
18
Lazer and Wrate, on June 1, 2009, the Plaintiffs sold their Livermore property to LHJS for $1.7
19
million, and gave all of the proceeds to Ally.
20
21
137.
Both Wrate and Lazer were managers of Ally who dealt with the Groth
22
Bros. Chevrolet dealership. They were authorized to make the promises referenced herein, and
23
made them in the ordinary course of business.
24
25
138.
The promises made by Ally, though its authorized agents Wrate and
26
Lazer, were important to the transaction contemplated, and ultimately entered into, by the Groth
27
Plaintiffs.
28
44
1
139.
Ally and Wrate did not intend to perform their promises when they were
2
made by. Specifically, Ally and Wrate did not intend to honor the promises made by Wrate in
3
October 2008 that if personal guarantees and additional collateral were given, Ally would not
4
terminate the dealership’s floorplan that it would stop harassing the dealership with undue
5
financial pressure. In addition, Ally and Wrate did not intend to honor the promises made by
6
Wrate and Lazar in February through June 2009 that if the Groth Plaintiffs sold their new
7
property and gave all the proceeds to Ally, Ally would not terminate the dealership’s floorplan
8
that it would stop harassing the dealership with undue financial pressure.
9
10
140.
Ally and Wrate intended that the Groth Plaintiffs rely on these promises,
11
and they made the promises for the purpose of inducing the Groth Plaintiffs to take the acts
12
discussed herein.
13
14
141.
The Groth Plaintiffs reasonably relied on Ally’s promises. Ally had
15
provided floorplan lending for the dealership since 1978, and the dealership had routinely been
16
given the Platinum award. It was reasonable for the Groth Plaintiffs to believe that Ally would
17
follow through on its promises.
18
19
142.
Ally and Wrate did not perform the promised acts. Instead, after the
20
Groth Plaintiffs personally guaranteed the dealership’s debts, granted Ally a first trust deed on
21
the property, and sold their property and gave all the proceeds to Ally, the financing company
22
continued to harass the Groth Plaintiffs and the dealership, continued to exert undue financial
23
pressure on the Plaintiffs and the dealership, and terminated the floorplan agreement. As
24
specific examples of this, in December 2009, just six months after the Groth Plaintiffs gave Ally
25
$1,770,852.04, Lazer informed Robin Hill that Ally was requiring that the dealership perform a
26
full audit through the first 10 months of the year, at the dealership’s expense. Then, the day the
27
auditor started, Christian Kemp, another manager at Ally, called Robin Hill and told her that
28
Ally now wanted the audit to go through December 31, 2009.
45
In January 2010, Ally
1
unexpectedly began sending representatives to the dealership to conduct “inventory audits” of
2
the dealership’s vehicles, which the dealership had to pay for. The inventory audits started
3
every other week, and increased to every week, even though the auditors reported to Ally that
4
the dealership passed each time. In April 2010, Ally again started imposing curtailments on the
5
Groth Bros. dealership, again causing it to go out of trust. Then, on April 15, 2010, Ally sent a
6
letter (Ex. G) to Robin Hill, informing her that the dealership was in default and demanding
7
immediate payment of $2,715,125.09; and also secretly sent a similar letter attached (Ex. H) to
8
her elderly parents, the prior owners and operators of the dealership.
9
10
143.
The Groth Plaintiffs were harmed by the actions of Ally and Wrate, in
11
that they personally guaranteed the dealership’s debts, granted Ally a first trust deed on the
12
property, sold their property at a substantial loss, and then gave all the proceeds from the sale to
13
Ally.
14
15
16
144.
The Groth Plaintiffs’ justified reliance on Ally’s promises was a
substantial factor in causing their harm.
17
18
145.
Jim Gentry (the Regional Dealer Network Manager of Old GM and then
19
new GM), Randy Parker (the Western Regional Director for Chevrolet of Old GM and then
20
New GM), New GM, Inder Dosanjh and California Automotive Retailing Group are liable as
21
co-conspirators for the false promises made by Wrate and Ally. As detailed in Paragraphs 42 to
22
76 above, the mid-2000s a conspiracy was formed by Gentry, Parker, Wrate, Old GM, Ally,
23
Dosanjh and California Automotive Retailing Group for the purposes of closing certain GM
24
dealerships, and transferring others to Dosanjh and California Automotive Retailing Group.
25
26
27
146.
New GM, which was formed on May 29, 2009, joined this conspiracy
when it took over the operations from Old GM in mid-2009. New GM took over these
28
46
1
operations and joined the conspiracy before the Groth Plaintiffs had transferred the
2
$1,770,852.04 to Ally.
3
4
147.
By engaging in this conspiracy, Gentry, Parker, Old GM, New GM,
5
Dosanjh and California Automotive Retailing Group were able to control the San Francisco
6
East Bay market, and Gentry and Parker received personal financial rewards.
7
8
148.
Gentry, Parker, New GM, Dosanjh and California Automotive Retailing
9
Group were aware that Wrate and Ally were making false promises to the Groth Plaintiffs in
10
their quest to financially weaken Groth Bros. Chevrolet and drive it out of business. Gentry,
11
Parker, New GM, Dosanjh and California Automotive Retailing Group agreed with Wrate and
12
Ally and intended that the false promises be made.
13
14
149.
The Groth Plaintiffs did not discover the fraudulent conduct of Ally and
15
Wrate, nor could they have reasonably done so, until late 2010 after Ally: i) required Groth
16
Bros. to conduct a full audit, ii) began requiring weekly inventory audits of the dealership’s
17
vehicles, iii) started imposing curtailments on the Groth Bros. dealership, iv) sent Robin Hill a
18
letter, notifying her that the dealership was in default and demanding immediate payment of
19
$2,715,125.09, and v) secretly sent a similar demand letter to Robin Hill’s elderly parents.
20
21
150.
As a direct and proximate result of the conduct of Wrate and Ally, the
22
Groth Plaintiffs were harmed in the amount of $3,100,000 paid for the Livermore property,
23
$415,497.26 that they had to borrow from Robin Hill’s brother, and approximately $300,000
24
previously paid for land entitlements. The Groth Plaintiffs are also entitled to prejudgment
25
interest at the rate of 7% from June 1, 2009, to the date of judgment, pursuant to California
26
Civil Code § 3287(a) and California Constitution Article 15, § 1. As co-conspirators, Gentry,
27
Parker, New GM, Dosanjh and California Automotive Retailing Group are jointly and severally
28
liable for all harm suffered by the Groth Plaintiffs pursuant to this cause of action.
47
1
2
151.
The conduct of Wrate, Ally, Gentry, Parker, New GM, Dosanjh and
3
California Automotive Retailing Group was fraudulent, malicious and oppressive such that the
4
Groth Plaintiffs are entitled to an award of punitive damages pursuant to California Civil Code
5
§ 3294, in an amount to be determined at trial.
6
7
SIXTH CAUSE OF ACTION
8
Fraud – Concealment
9
10
Against Defendant Ally Financial Inc., and Against General Motors, LLC,
11
Randy Parker, James Gentry, Kevin Wrate, Inder Dosanjh,
12
13
14
15
152.
153.
As detailed in in paragraphs 42 through 76 above, in October 2008,
herein.
16
17
18
Wrate, the Director of Sales for Ally, actively concealed an important fact from the Groth
19
Plaintiffs in relation to Ally’s commercial floorplan with Groth Bros. Chevrolet. Wrate and
20
Ally concealed the fact that they, along with Old GM, New Old, Parker, Gentry, Dosanjh and
21
California Automotive Retailing Group, had devised a conspiracy whereby they were going to
22
force Groth Bros. Chevrolet out of business, and that even if the Groth Plaintiffs undertook the
23
acts requested of them, that Ally would continue to apply undue financial pressure on them and
24
the dealership until it went out of business.
25
26
154.
In addition, between February and June 2009, Brian Lazer, also a
27
manager of Defendant Ally Financial, and Wrate actively concealed an important fact from the
28
Groth Plaintiffs in relation to Ally’s commercial floorplan with Groth Bros. Chevrolet. Wrate,
48
1
Lazar and Ally concealed the fact that Wrate and Ally, along with Old GM, New Old, Parker,
2
Gentry, Dosanjh and California Automotive Retailing Group, had devised a conspiracy whereby
3
they were going to force Groth Bros. out of business, and that even if the Groth Plaintiffs
4
undertook the acts requested of them, that Ally would continue to apply undue financial
5
pressure on them and the dealership until it went out of business.
6
7
8
155.
The Groth Plaintiffs did not know of the concealed facts, nor could they
have reasonably discovered them through the use of due diligence.
9
10
156.
Had the Groth Plaintiffs known of these concealed facts, they would not
11
have: i) signed personal guaranties in favor of Ally covering all of the dealership’s debt, ii)
12
given Ally a first position deed of trust on their newly acquired property, iii) agreed in writing
13
that the dealership was in default and that Ally had a right to terminate the floorplan, iv)
14
executed a release in favor of Ally, releasing it from all wrongful conduct, v) waived their right
15
to a jury trial, vi) sold the property they had just purchased for $3.1 million for $1.7 million, or
16
v) paid Ally $1,770,852.04, representing all of the proceeds from the sale of their property.
17
18
19
157.
Wrate, individually and as an authorized representative of Ally, intended
to deceive the Groth Plaintiffs by concealing these facts.
20
21
158.
The Groth Plaintiffs reasonably relied on Ally’s deception. Ally had
22
provided floorplan lending for the dealership since 1978, and the dealership had routinely been
23
given the Platinum award.
24
25
159.
The Groth Plaintiffs were harmed by Ally’s actions, in that they
26
personally guaranteed the dealership’s debts, granted Ally a first trust deed on the property, sold
27
their property at a significant loss and gave all of the proceeds from the sale to Ally.
28
49
1
2
160.
The Groth Plaintiffs’ justified reliance on Ally’s concealment was a
substantial factor in causing their harm.
3
4
161.
Gentry (the Regional Dealer Network Manager of Old GM and then new
5
GM), Parker (the Western Regional Director for Chevrolet of Old GM and then New GM), New
6
GM, Dosanjh and California Automotive Retailing Group are liable as co-conspirators for the
7
fraudulent concealment engaged in by Wrate and Ally. As detailed in Paragraphs 42 to 76
8
above, the mid-2000s a conspiracy was formed by Gentry, Parker, Wrate, Old GM, Ally,
9
Dosanjh and California Automotive Retailing Group for the purposes of closing certain GM
10
dealerships, and transferring others to Dosanjh and California Automotive Retailing Group.
11
12
162.
New GM, which was formed on May 29, 2009, joined this conspiracy
13
when it took over the operations from Old GM in mid-2009. New GM took over these
14
operations and joined the conspiracy before the Groth Plaintiffs had transferred the
15
$1,770,852.04 to Ally.
16
17
163.
By engaging in this conspiracy, Gentry, Parker, Old GM, New GM,
18
Dosanjh and California Automotive Retailing Group were able to control the San Francisco
19
East Bay market, and Gentry and Parker received personal financial rewards.
20
21
164.
Gentry, Parker, New GM, Dosanjh and California Automotive Retailing
22
Group aware that Wrate and Ally were fraudulent concealing materials facts from the Groth
23
Plaintiffs in their quest to financially weaken Groth Bros. Chevrolet and drive it out of business.
24
Gentry, Parker, New GM, Dosanjh and California Automotive Retailing Group agreed with
25
Wrate and Ally and intended that the fraudulent concealment be made.
26
27
28
165.
50
1
2
3
4
5
6
166.
7
Groth Plaintiffs were harmed in the amount of $3,100,000 paid for the Livermore property,
8
9
previously paid for land entitlements. The Groth Plaintiffs are also entitled to prejudgment
10
interest at the rate of 7% from June 1, 2009, to the date of judgment, pursuant to California
11
Civil Code § 3287(a) and California Constitution Article 15, § 1. As co-conspirators, Gentry,
12
Parker, New GM, Dosanjh and California Automotive Retailing Group are jointly and severally
13
liable for all harm suffered by the Groth Plaintiffs pursuant to this cause of action.
14
15
167.
The conduct of Wrate, Ally, Gentry, Parker, New GM, Dosanjh and
16
California Automotive Retailing Group was fraudulent, malicious and oppressive such that the
17
Groth Plaintiffs are entitled to an award of punitive damages pursuant to California Civil Code
18
§ 3294, in an amount to be determined at trial.
19
///
20
///
21
///
22
///
23
///
24
///
25
///
26
///
27
///
28
///
51
1
SEVENTH CAUSE OF ACTION
2
Racketeering
3
[18 U.S.C. § 1962(c) and 18 U.S.C. § 1962(d)]
4
5
Against Defendant Ally Financial Inc., and Against General Motors, LLC,
6
7
8
9
10
168.
169.
As discussed in greater detail in the proceeding paragraphs, in the 2000s,
herein.
11
12
13
with its market share continuing to decline, Old GM developed a plan to strengthen its position
14
in the San Francisco East Bay. In furtherance of this, the automaker assembled an association-
15
in-fact enterprise to focus on its marketing and distribution in the market. This enterprise was
16
comprised of Old GM (until its demise in 2009), Parker, Gentry, New GM (beginning in 2009),
17
Ally, Wrate, Dosanjh and California Automotive Retailing Group (hereinafter referred to
18
collectively as the “Enterprise”).
19
20
170.
This association-in-fact Enterprise had a definable structure. It had a
21
purpose, which was to gain control over the San Francisco East Bay market.
22
interpersonal relationships among its members and a common interest, in that Parker, Gentry,
23
Wrate, Ally, Dosanjh and California Automotive Retailing Group worked together to
24
accomplish its purpose, as did Old GM while it was in existence, and New GM after it was
25
created. It had longevity sufficient to permit its members to pursue the Enterprise’s purpose, in
26
that the aforementioned parties worked together for several years to gain control over the San
27
Francisco East Bay market.
28
52
It had
1
171.
The Enterprises is engaged in, and its activities affect interstate
2
commerce in that it was established to address the marketing and distribution of GM
3
automobiles in the San Francisco East Bay market. All such automobiles were shipped from
4
outside of California to dealerships within California.
5
6
172.
Ally and Wrate conducted the affairs of the Enterprise affairs through a
7
pattern of racketeering activity and for the unlawful purpose of intentionally defrauding and
8
injuring the Groth Plaintiffs.
9
10
173.
Pursuant to any in furtherance of their fraudulent scheme, Defendants
11
committed multiple related acts of mail fraud and wire fraud. As detailed in Paragraphs 42
12
through 76, over a two-and-a-half year period, the Defendants sent no less than 17 letters to
13
carry out their scheme to defraud. In addition, the Defendants sent no less than 24 emails over a
14
four-and-a-half year period to carry out their scheme to defraud.
15
16
17
174.
Specifically, with regard to the Groth Plaintiffs, Defendants sent the
following letters to carry out their scheme to defraud the Groth Plaintiffs:
18
19
Date
Letter
10/09/2008
Letter from Vince Harrington of GMAC to Robin Hill
01/12/2009
06/01/2009
Letter from C. Kemp of GMAC to Candy Gallegos
06/09/2009
12/01/2009
02/05/2010
25
04/15/2010
26
04/29/2010
27
04/29/2010
28
05/18/2010
20
21
22
23
24
53
1
2
3
4
08/02/2010
08/18/2010
Letter from Michele Smith of GMAC to GM
08/19/2010
09/30/2010
11/01/2010
5
6
7
8
9
10
175.
With regard to the Groth Plaintiffs, Defendants sent the following emails
to carry out their scheme to defraud the Groth Plaintiffs:
Date
Email
08/07/2007
11
12/03/2007
12
03/28/2008
13
03/20/2008
14
04/25/2008
15
04/28/2008
16
05/02/2009
17
05/31/2009
Email from Kevin Wrate of GMAC to Robin Hill
18
06/14/2010
06/14/2010
06/16/2010
06/16/2010
06/17/2010
07/10/2010
07/10/2010
07/14/2010
25
08/19/2010
Email from Christian Kemp of GMAC to Robin Hill
26
08/19/2010
Email from Rick Sitek of GM to Randy Parker
27
01/03/2011
28
01/03/2011
19
20
21
22
23
24
54
1
2
3
01/07/2011
Email from Rick Sitek of GM to Robin Hill
01/10/2011
11/02/2011
02/06/2012
4
5
176.
6
These letters constitute mail fraud under 18 U.S.C. § 1341, and the emails
7
constitute wire fraud under 18 U.S.C. § 1343, because they were part of a scheme to defraud the
8
Groth Plaintiffs, they were sent with the intent to defraud the Groth Plaintiffs, it was reasonably
9
foreseeable that the mail and wire systems would be used, and the mail and wire systems were
10
actually used.
11
12
13
177.
The acts of mail fraud and wire fraud set forth above constitute a pattern
of racketeering activity pursuant to 18 U.S.C. § 1961(5).
14
15
178.
At the time of sending these letters to the Groth Plaintiffs, Wrate actively
16
concealed from the Groth Plaintiffs the fact that the curtailments, the audits, the demand for
17
personal guarantees, and the demand for additional collateral were not legitimate business
18
requests from Ally, Old GM and New GM, but instead were designed solely to put substantial
19
financial pressure on the Groth Plaintiffs.
20
Plaintiffs so that they would be forced to sell or terminate the Groth Bros. Chevrolet franchise.
This financial pressure was put on the Groth
21
22
23
179.
Wrate and Ally directly and indirectly conducted the Enterprise’s affairs
through the pattern of racketeering activity described above, in violation of 18 U.S.C. § 1962(c).
24
25
180.
Gentry (the Regional Dealer Network Manager of Old GM and then new
26
GM), Parker (the Western Regional Director for Chevrolet of Old GM and then New GM), New
27
GM, Inder Dosanjh and California Automotive Retailing Group are liable as co-conspirators for
28
the pattern of racketeering engaged in by Wrate and Ally.
55
1
2
181.
As detailed in Paragraphs 42 to 76 above, in the mid-2000s Wrate, Ally,
3
Gentry, Parker, Old GM, New GM, Dosanjh and California Automotive Retailing Group
4
conspired to violate 18 U.S.C. § 1962(c) by conducting the affairs of the Enterprise through a
5
pattern of racketeering activities, thereby closing certain GM dealerships, and transferring
6
others to Dosanjh and California Automotive Retailing Group. By engaging in such conduct,
7
Gentry, Parker, Old GM, New GM, Dosanjh and California Automotive Retailing Group were
8
able to control the San Francisco East Bay market, and Gentry and Parker received personal
9
financial rewards.
10
11
182.
Wrate, Ally, Gentry, Parker, Old GM, New GM, Dosanjh and California
12
Automotive Retailing Group conducted and participated in the conduct of the affairs of the
13
enterprise through a pattern of racketeering activity, including the use of mail and wire fraud.
14
15
183.
Wrate, Ally, Gentry, Parker, Old GM, New GM, Dosanjh and California
16
Automotive Retailing Group intentionally conspired and agreed to directly and indirectly
17
conduct and participate in the conduct of the affairs of the Enterprise through a pattern of
18
racketeering activity. Wrate, Ally, Gentry, Parker, Old GM, New GM, Dosanjh and California
19
Automotive Retailing Group knew that their predicate acts were part of a pattern of racketeering
20
activity and agreed to the commission of those acts to further the schemes described above.
21
That conduct constitutes a conspiracy to violate 18 U.S.C. § 1962(c), in violation of 18 U.S.C. §
22
1962(d).
23
24
184.
As a direct and proximate result of the racketeering activities of Wrate,
25
Ally, Gentry, Parker, Old GM, New GM, Dosanjh and California Automotive Retailing Group,
26
the Groth Plantiffs have been injured in their business and property in that they were forced to
27
sell the property they had just purchased and give all the proceeds to Ally, in that they had to
28
56
1
borrow $415,497.26 from Robin Hill’s brother, and in that they previously paid approximately
2
$300,000 for land entitlements which were lost.
3
4
185.
5
6
7
8
9
10
11
186.
12
Groth Plaintiffs have been injured in the amount of $3,100,000 paid for the Livermore property,
13
14
previously paid for land entitlements. In addition, the Groth Plaintiffs are entitled to treble
15
damages and its reasonable attorneys’ fees pursuant to 18 U.S.C. § 1964(c). As co-conspirators,
16
Gentry, Parker, Old GM, New GM, Dosanjh and California Automotive Retailing Group are
17
jointly and severally liability for all harm suffered by the Groth Plaintiffs pursuant to this cause
18
of action.
19
20
EIGHTH CAUSE OF ACTION
21
Intentional Infliction of Emotional Distress
22
(By Plaintiff Robin Hill Against Defendants General Motors, LLC,
23
Ally Financial Inc., Randy Parker, James Gentry, Kevin Wrate, Inder Dosanjh,
24
and California Automotive Retailing Group, Inc.)
25
26
187.
Each of the preceding paragraphs are re-alleged as if fully set forth herein.
27
28
57
1
188.
Defendants Ally and Wrate engaged in outrageous conduct directed
2
toward Plaintiff Robin Hill by the following: i) participating in a conspiracy to shut down
3
Robin Hill’s family business, Groth Bros. Chevrolet, a dealership that had been in Robin Hill’s
4
family for 77 years; ii) participating in a conspiracy to defraud Robin Hill out of the real
5
property that she and her family had just purchased; iii) telling Robin Hill that Ally would not
6
terminate the Groth Bros. floorplan and would stop harassing the dealership, when they had no
7
intention of doing so; iv) implementing undue financial pressure on the dealership in late 2009
8
and early 2010, after having taken over $1.7 million from Robin Hill and her family; v)
9
engaging in direct conversations with Dosanjh about how Ally was going to apply financial
10
pressure on Groth Bros. to put it out of business; vi) secretly sending a copy of the April 15,
11
2010 letter (Exs. G & H) to Robin Hill’s elderly, knowing that they were medically infirm; and
12
vii) telling Robin Hill that Ally would keep the dealership’s floorplan in place through
13
December 31, 2010, and then later informing her that it was being terminated in mid-December,
14
before a replacement floorplan could be completed.
15
unwanted, pervasive and outrageous.
The conduct described herein was
16
17
189.
Defendant Gentry and New GM engaged in outrageous conduct directed
18
19
20
family for 77 years; ii) participating in a conspiracy to defraud Robin Hill out of the real
21
property that she and her family had just purchased; iii) telling Robin Hill that Groth Bros.
22
could have $750,000 in relocation assistance, while knowing that she would be making
23
investment decisions on this, and then refusing to provide the funding; and iv) telling Robin Hill
24
that she should sell or close her family business because GM only wanted one dealer on the I-
25
580, and that she would not be the one GM would support; v) telling Dosanjh of the private
26
conversations that Gentry had with Robin Hill, about the financial trouble her dealership was
27
experiencing; vi) shipping vehicles to Groth Bros. when it knew that the dealership not
28
expecting then, and then contacting US Bank (the new floorplan lender), and informing the
58
1
banker that US Bank was going to be on the hook for the cars that were not expected. The
2
conduct described herein was unwanted, pervasive and outrageous.
3
4
190.
Defendant Parker and New GM engaged in outrageous conduct directed
5
6
7
family for 77 years, and ii) participating in a conspiracy to defraud Robin Hill out of the real
8
property that she and her family had just purchased.
9
The conduct described herein was
10
11
191.
Defendants Dosanjh and California Automotive Retailing Group, Inc.
12
engaged in outrageous conduct directed toward Plaintiff Robin Hill by the following:
i)
13
participating in a conspiracy to shut down Robin Hill’s family business, Groth Bros. Chevrolet,
14
a dealership that had been in Robin Hill’s family for 77 years; ii) participating in a conspiracy to
15
defraud Robin Hill out of the real property that she and her family had just purchased; iii)
16
actively assisting Ally in applying severe financial pressure on Groth Bros., knowing that Robin
17
Hill would have to personally deal with the consequences thereof; and iv) telling employees of
18
California Automotive Retailing Group, Inc.’s dealership that Groth Bros. was experiencing
19
financial trouble and that “GM is shutting down” her dealership, while knowing that this would
20
create embarrassment and humiliation for Robin Hill; and v) publicly stating: “I’m going to put
21
that cunt out of business, and GM is going to help me do it.” The conduct described herein was
22
23
24
25
192.
Ally, Wrate, Gentry, Parker, New GM, Inder Dosanjh and California
Automotive Retailing Group, Inc. intended to cause Robin Hill emotional distress.
26
27
28
193.
As a direct and proximate result of the Defendants’ conduct, Robin Hill
has suffered emotional distress, and has been harmed in an amount to be proven at trial, but
59
1
which is in excess of the minimum jurisdictional limit of this Court. The severity of Robin
2
Hill’s emotional distress did not manifest itself until the last of these acts occurred, in
3
November 2011. The Defendants’ conduct was a substantial factor in causing this harm.
4
5
194.
The conduct of the Defendant was malicious and oppressive, such that it
6
justifies an award of punitive damages against them pursuant to Civil Code § 3294, in an amount
7
to be determined at trial.
8
9
NINTH CAUSE OF ACTION
10
Unfair Business Practices
11
[Cal. Bus. And Prof. Code § 17200]
12
13
Against Defendants General Motors, LLC, Ally Financial Inc.,
14
15
and California Automotive Retailing Group, Inc.)
16
17
195.
20
196.
The Groth Plaintiffs bring this cause of action solely in the public interest
21
and on behalf of the general public.
18
herein.
19
22
23
197.
This cause of action is brought under California Unfair Competition Law,
24
California Business and Professions Code § 17200, et. seq., which makes it unlawful for one to
25
engage in, “any unlawful, unfair or fraudulent business act or practice ….”
26
27
28
198.
Wrate, Ally, Gentry, Parker, New GM, Dosanjh and California
Automotive Retailing Group engaged in conduct that was “fraudulent” in that they agreed to a
60
1
form a conspiracy to fraudulently take property belonging to the Groth Plaintiffs. Wrate, Ally,
2
Gentry, Parker, New GM, Dosanjh and California Automotive Retailing Group also engaged in
3
“fraudulent” conduct as part of a larger scheme to gain control of the San Francisco East Bay
4
Marketplace by engaging in a pattern of racketeering activity.
5
6
199.
7
Automotive Retailing Group engaged in conduct that was “unlawful” in that they engaged in a
8
pattern of racketeering activity in violation of 18 U.S.C. §1962(c) and 18 U.S.C. §1962(d).
9
10
200.
11
Automotive Retailing Group engaged in conduct that was “unfair” in that they devised a scheme
12
to fraudulently take property belonging to the Groth Plaintiffs. Wrate, Ally, Gentry, Parker,
13
New GM, Dosanjh and California Automotive Retailing Group also engaged in “unfair”
14
conduct as part of a larger scheme to gain control of the San Francisco East Bay Marketplace by
15
engaging in a pattern of racketeering activity.
16
17
201.
As a direct and proximate result of Wrate, Ally, Gentry, Parker, New
18
GM, Dosanjh and California Automotive Retailing Group’s conduct, the Groth Plaintiffs
19
suffered an injury in fact and an economic injury as a result of the racketeering activity and
20
unfair competition in that they were forced to sell the property they had just purchased and give
21
all the proceeds to Ally, in that they had to borrow $415,497.26 from Robin Hill’s brother, and
22
in that they previously paid approximately $300,000 for land entitlements which were lost.
23
24
202.
The Groth Plaintiffs seek relief for the general public, and to enforce an
25
important right affecting the public interest, by having an injunction issued against Wrate, Ally,
26
Gentry, Parker, New GM, Dosanjh and California Automotive Retailing Group enjoining them
27
from engaging in any further unlawful, unfair or fraudulent activities, as discussed herein.
28
61
1
2
203.
The relief sought herein, if successful, would confer a significant benefit
on the general public.
3
4
5
204.
The value of this injunctive relieve is in excess of the minimum
jurisdictional limit of this Court.
6
7
205.
As a private attorney general seeking to confer an important benefit to
8
upon the public at large, the Crown Plaintiffs seeks to recover its reasonable attorneys’ fees
9
pursuant to California Civil Procedure Code § 1021.5.
10
11
TENTH CAUSE OF ACTION
12
Declaratory Relief
13
14
Against Defendant Ally Financial Inc. and Kevin Wrate)
15
16
17
206.
207.
In undertaking fraudulent acts alleged herein, Defendant Ally Financial
herein.
18
19
20
required that the Groth Plaintiffs execute a series of agreements, as discussed herein.
21
22
23
208.
The following documents were obtained by fraud, undue influence,
economic duress, and through the unclean hands of Kevin Wrate an Ally:
24
25
a.
The November 4, 2008 Forbearance Agreement and Release,
26
which required that the Groth Plaintiffs release Ally from all of its wrongdoing (a copy
27
of which is attached hereto as Ex. E);
28
62
1
b.
The October 27, 2008 Secured Guaranty, which required that the
2
Groth Plaintiffs waive their right to a jury trial (a copy of which is attached hereto as Ex.
3
D);
4
5
c.
The February 13, 2009 First Amendment to Forbearance
6
Agreement and Release, which required that the Groth Plaintiffs release Ally from all of
7
its wrongdoing (a copy of which is attached hereto as Ex. F);
8
9
10
209.
In addition, the following documents were obtained by undue influence,
economic duress, and through the unclean hands of Kevin Wrate an Ally:
11
12
a.
The May 18, 2010 Workout Agreement, which required that the
13
Groth Plaintiffs release Ally from all of its wrongdoing (a copy of which is attached
14
hereto as Ex. I);
15
16
b.
The August 2, 2010 Modification of Workout Agreement, which
17
required that the Groth Plaintiffs release Ally from all of its wrongdoing (a copy of
18
which is attached hereto as Ex. J);
19
20
c.
The August 19, 2010 Second Modification of Workout
21
Agreement, which required that the Groth Plaintiffs release Ally from all of its
22
wrongdoing (an incomplete copy of which is attached as Ex. K, but which the Groth
23
Plaintiffs believe contains similar language to Exs. I and J);
24
25
d.
The September 30, 2010 Third Modification of Workout
26
27
wrongdoing (an incomplete copy of which is attached as Ex. L, but which the Groth
28
Plaintiffs believe contains similar language to Exs. I and J); and
63
1
2
e.
The November 1, 2010 Fourth Modification of Workout
3
4
wrongdoing (an incomplete copy of which is attached as Ex. M, but which the Groth
5
Plaintiffs believe contains similar language to Exs. I and J).
6
7
8
210.
The Groth Plaintiffs request an Order from this Court declaring the
following:
9
a.
Exhibits D, E, F be declared invalid and of no legal effect because
10
of the doctrine of fraudulent inducement, undue influence, economic duress, unclean
11
hands, waiver and estoppel.
12
13
b.
Exhibits I, J, K, L and M be declared invalid and of no legal effect
14
because of the doctrine of undue influence, economic duress, unclean hands, waiver and
15
estoppel.
16
17
18
WHEREFORE, the Plaintiffs pray for judgment against the Defendants as
follows:
19
20
First Cause of Action
21
1.
Compensatory damages.
22
2.
Punitive damages.
23
24
Second Cause of Action
25
1.
26
2.
Treble damages pursuant to 18 U.S.C. § 1964(c).
27
3.
Reasonable attorneys’ fees pursuant to 18 U.S.C. § 1964(c).
28
64
1
Third Cause of Action
2
1.
3
4
Fourth Cause of Action
5
1.
6
them from engaging in any further unlawful, unfair or fraudulent activities, as discussed herein.
7
8
An injunction issued against Parker, Gentry, Ally and Wrate enjoining
2.
Reasonable attorneys’ fees pursuant to California Civil Procedure Code §
1021.5.
9
10
Fifth Cause of Action
11
2.
12
3.
Interest at the rate of 7% from June 1, 2009 to the date of judgment.
13
2.
Punitive damages.
14
15
Sixth Cause of Action
16
4.
17
5.
Interest at the rate of 7% from June 1, 2009 to the date of judgment.
18
6.
Punitive damages.
19
20
Seventh Cause of Action
21
1.
22
2.
Treble damages pursuant to 18 U.S.C. § 1964(c).
23
3.
Reasonable attorneys’ fees pursuant to 18 U.S.C. § 1964(c).
24
25
Eighth Cause of Action
26
1.
27
2.
Punitive damages.
28
65
1
Ninth Cause of Action
2
1.
An injunction issued against Wrate, Ally, Gentry, Parker, New GM,
3
Dosanjh and California Automotive Retailing Group enjoining them from engaging in any
4
further unlawful, unfair or fraudulent activities, as discussed herein.
5
6
2.
Reasonable attorneys’ fees pursuant to California Civil Procedure Code §
1021.5.
7
8
Tenth Cause of Action
9
1.
An Order from this Court declaring Exhibits D, E and F invalid and of no
10
legal effect because of the doctrine of fraudulent inducement, undue influence, economic
11
duress, unclean hands, waiver and estoppel.
12
2.
An Order from this Court declaring Exhibits I, J, K, L and M invalid and
13
of no legal effect because of the doctrine of undue influence, economic duress, unclean hands,
14
waiver and estoppel.
15
16
17
18
All Causes of Action
1.
For costs of suit herein incurred.
2.
For such other and further relief as the Court may deem just and proper.
19
20
21
22
23
24
25
26
27
Dated: February 25, 2013
By:
__________________________
Jonathan A. Michaels, Esq.
Kathryn J. Harvey, Esq.
Lisa S. Inouye, Esq.
Groth-Hill Land Company, LLC,
Robin Groth-Hill, Joseph Hill
and Crown Chevrolet
28
66
DEMAND FOR JURY TRIAL
1
2
The Plaintiffs demand a trial by jury.
3
4
5
6
7
8
9
10
11
Dated: February 25, 2013
By:
__________________________
Jonathan A. Michaels, Esq.
Kathryn J. Harvey, Esq.
Lisa S. Inouye, Esq.
Groth-Hill Land Company, LLC,
Robin Groth-Hill, Joseph Hill
and Crown Chevrolet
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
67
EXHIBIT A
TABLE OF CONTENTS
Page
1. DefillitiollS ............................................................................ ;............................... ,................. 1
1.1 Acqllire(l Assets .... ,., .......................................... ~ ..... ,.. ~, ...................... :..................... ,. 1
1.2 CJoSillg ......................................................................................................................... 1
~~_~lL.3~Closill~at{L.. ..................... ~n
u· ....... 'nnnln..-u'Tu,lTUT.iTiiiii ••••••••••••••
1-~~~-~~-~-~--~l.+Fl~a)lCllise
....................
,-,
.....................................................................
;
.........................
1
.
1.5 Frallchiscr' .......................................................... ;.................................................. ;...... 1
1.6 Obsolete Parts ............................................................................................................. 1
.......-. ... n.H
i •••••••••••••••••••••••
~
2.
Acquired Assets; Plll'cllaSe Price ................................................................ ".................. ~ .... 1
2.1 Nelv Car Illventory .. ;................................................................................................... 1
2.2 Denlollstl'ators ............................................................................................................. 2
2.3 Used Cars ................................. ;................................................................................... 2
·2.4 Factory. Parts Illvelltory ..... ~ ................................................................ ~ ...................... 2
2.5 Dtlle1: Parts IllvelltolY ................................................................................................ 2
2.6 Gas, Oil and Grease; Work In Process ;.................................................... :............... 2
2.7 Furniture, Fixtures and Equipment ......................................................................... 2
2.B Goodwill, llranchise Rights and Other Intangibles ........................ ;......................... 2
2.9 Assets Not Acquired; Liabilities ................................................................................ 2
2.10 Costs .............................. ~ ............................................................................................. 2
>
3.
!
Payment of Purchase Price, Transfer Tax, Allocations ..................................................... 3
I
i
:
3.1 Payment of Purchase Price ....................-.................................................................... 3
3.2 Closing and Post-Closing Adjustments :................................................................... 3
3.3 Trallsfer Taxes .......................................................................................................... ~ 3
I
I
I
4. RepreselltatiollS an~ Warralltics of Seller ........................................................................... 3
4.1 Good Stalldillg ................................................................. :.......................................... 3
4.2 Title to Acquired Assets; Liens and Encumbrances .................................................. 3
4.3 Autllorizatioll .........................
~
I ............................................. .... I ......... ........................
3
I
4.4 Representations and Warranties on Closing Date ................................................... 4
4.5 Litigatioll ..................................................................................................................... 4
4.6 Defaults .....
~
4
4.7 COlllpliance "lvith LalV .................................................................................................. 4
4.8 Labor alld EJllpIoyulellt Matters .... ! .......................................................................... 4
u ........................................... .................................... .................................
I
4.9 Good Title to and Condition of Acquit'ed Assets ..................................................... 4
I
i
ORIGINAL
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I
,
···-i-
5. Representations and '\rYarranties of Purchaser ......................................................... 4
5.1 Good Standing ................................... ~ ........................................................ ".... 4
5.2 AutIlorizatioll ................................................................ ,.......... ~ ........................ -5
5.3 Due Diligellce by I)(Il'cIIHSer ...................................................................... ;.... 5
5.4 Representations and Warranties on Closing Date .................................... 5
6. Seller's Covell~nts ...............................................
~ u.u ........... ............................. 5
,~~_~~~__~~,6".;;1_07:I::'lgoillg O')era_tiol~~~...~"-"-.,.,~~u .. u ....................... .-... n'nu-.--.--.--.-nTli .. io.il •••••~5
_~~__~~__.._..~'~6".~2c.:ApIll~oXal-.....~0illTJ.~ .......... i.-........... ;.: ............................. ~ ... ~ ....... .-.~." .................. :5
I .......
: ~4
~--.. --~-
•••••
6.3 Covel~ant to COlllply ..................................................................... ,.................. :;
6.4 Elltry and Il1del~11ity ................................................................ ;...................... 6
6.5 Post Closillg Access .......................................................................................... 6
7.
Conditions to Purchaser's Obligations to Close ..................................................... 6
7.1 Agreeluellts 311d ConditiollS ............................................................................ 6
7.2 R.epresentations and Warranties ..................... :............................................. 6
7.3 No Legal Procecclillgs ...... ~ .............................................................. "............... 6
7.4 Due Diligellce ............................................. ~ ....................................................... 6
7.5 Determination of the Factory Parts Inventory, tile' Other Parts
Inventory, and the Oil and Grease Inventory, and Pm"chase Price ........ 7
7.6 Listing of FF&E Purcilase Price .................................................................... 7
7.7 Dealer Services Agreelllcllt ...............................................
'7
1.8 Tllir(l Party Consellts ....................... '.............................................................. 7
7.9 Lease of Premises .....................................................
7
7.10 List ofEnlployees .......................................................................... ,................. 7
0 ........................ , ....
00 . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . .
B.
Conditions ofBell el" s Obligations to Close :............................................................ 7
8.1 Agreelnellts and COllditions ........................................................................... 7
B.2 Representations and Warranties ....... ,........................................................... 7
8.3 No Legal Proceedillgs ......................... ,............................................................ 7
B.4 Determination of tile Factory PaJ'ts Inventory and Purchase Price
and tile Other Parts Inventory, and Purchase Price .................................. 8
8.5 Determination of FF&E and PurcIlasePrice ............................................... 8
8.6 Lease of Prelnises ............................................................................................. 8
9.
Deliveries of SelIc!' 011 the Closing Date........ ,................................................... " ........ " 8
9.1 Title to Acqllil'ed Assets ..................................................................................... 8
9.2 Leases ................................................................................................................. 8
9.3 Thircl Part.Jr COllsellts ..................................................................................
8
9.4 Certificate ofSecretalY ........................................................ ~ .................... ,....... ,.8
9.5 Certificate ................ ·........................................................
B
0& . . . : .
n ....................... " ........
10.
Deliveries ofPurcbaser on the Closing Date ................................................................ B
.,
.~
ii
10.1 Consideration ........................................................................... ,....................... 8
10.2 Certificate ofSeCl'etalY ............................................................................ t ........ 8
10.3 Certificate ... ,............................... ~ .........................................................••.......... 8
II.
Escro'v....................................................... ".....................................................
12.
Covenants Mter Closmg Datc ..................................................................................... B
00 . . . . . . . . . .
B
~~~~·~~~~--~~~--'li;l~TrallSferlJr-A"l'quiretlltsms 1.-.~._.... ~ ........... n~";~H"i"";""'"''''''''''''''''''''''-'''''''''
·~~~~~~~-----112:2'"CoOI)eratioll
13.
B
.................................................................................................·..... 9
hldemnification ................................. :......................................................................... 9
1~.1
Illdclllllification by SelIcI' ................................................................................. 9
13.2 Indcmllificatioll by l)urcllaser ........................ ;.. ;.............................................. 9
13.3 Defellse .............................................................................................................. 9
14.
No Bl'o]{cr ....................................................................-............................................. ,.. 9
15.
CIOSlllg; TCl'JnUlatioll .......... ,.................................................. ,........................ ,......... ,.10
16.
COllfidelltiaIiiJr ., .....................................:................................................ ,............ ,.. ,.. 10
17.
Notices ............. oo, ........................................................ ~ ....................... , ....................... 10
18.
MisccllallCous .........,................ ~ ..
OI.OI . . . . . . . ' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , • •
~
.......................... : ........
1~
IB.l Entire Agl'Cenlcllt ............................................... ,...... ,............... ,..................... 11
1B.2 GOVC111illg Lalv ..... ,.. ,.................................................................. ,......... ,............ 11
1B.3 Sevcrability ................. " .............. ' ............... ~' .................. " ........ ,...................... 11
18.4 BCJlcfit of Pal' ties .............................................................................................. 12
18.5 Necessary DocUlncl1ts .. ,........ ." ...... ,., ....... ,....... ,.. ,... '.. ,........ ,.., ..... ,........ ,.. ,...... '......... ,....12
1B.6 Headings ........ ,........ "........... ,.. "..•........ ,......... ,.........................;...... ,', ...... ,..... ,..... ,..... ,...... 12
IB.7 AttorJleys' Fecs............... ,.................... ,............... ,', .... ,., .... ,.,......... ,........... ,..... "... ,........ ,.12
18.8, COUJltell)arts .... ,.. "...... ,., ... ,... ".,., •... ,', ... ,..... ,.................. ".. ,...... "........... ,.. ,...... ,... ,...... ,... 12
18.9 Breach by I'urchaser ....... "............ "... ,., .. ,... ,......... ,... ,.... ,." ..... ,.... ,"', ..... ,....... ,.......... ,... 12
.'-'0"'•.
iii
ASSET PURCHASE AGREEMENT
£ffr oems
This Asset Purchase Agreement ("Agreement") is made aud eutered this
II
day of
_,----__ , 2008 (the "Contract Date"), by and among Inder Dosanjh or nominee ("Purcl1aser"),
and Crown Chevrolet, a Califoniia Corporation ("Seller") and is made,with reference to the following
facts:
· RECITALS
A. Seller owns and operates Cadillac automobile dealership (the "Dealerships") commonly
known as Crown Chevrolet. Seller desires to sell to Purchaser and Purchaser desires to purchase ii'om
Seller celiain of the assets, properties and business of Seller utilized in comlection with the Dublin
Dealership, 7544 Dublin Blvd, Dublin, CA (the "Property").
NOW, THEREFORE, in recognition of the foregoing represelltations, and in consideration of
the covenants set forth herein, the parties hereto agree as follows:
AGREEMENT
1.
Definitions. The capitalized terms as used in this Agreement shall be defined as
hereinafter set fOlih in this Sectionl, or as otherwise provided in this Agreement.
1.1. Acquired Assets. The term "Acquired Assets" shall be defmed as all ofthe assets
and propelty to be acquired by Purchaser hereunder, as described in Section 2 hereof.
1.2. Closing. The term "Closing" shall be defined as the cOnStlllmation of all of the
transactions provided for in tlus Agreement. The Closing 'shall occur at the offices of Purchaser, 011 the
Closing Date commencing at 10:00 a.m.
1.3. Closing Date. The "Closing Date" shall be defined as the date which falls five (5)
business days following the earliest date on which the conqitions specified in Sections 7 and 8 hereof
are satisfied subject, hqwever, to the provisions of Section 16 below.
1.4. Franchise. The term "Franchise" shall be defined as the Cadillac franchise
currently held by Seller.
1.5. Franchiser. The term "Franchiser" shall be defined as Cadillac.
1.6. Obsolete Parts. None
2. Acquired Assets; Purchase Price. The following desoribed assets owned by Seller (the
"Acquired Assets") will be conveyed to Purchast;r for the below described consideration, which shall
sometimes be hereinafter collectively referred to as the Purchase Price:
2.1. New Car Inventory. All of Seller's right, title ahd interest iu and to its 2007-2008 - 2009 inventory
of.umegistered and undamaged current model Cadillac CaI'S; trucks, VailS and SpOlt utility vehicles .
1
i
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!
I
I
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I
.:.;.~~...
with less than 1000 miles and notpreviously reported to the manufacturer as sold (''New Cal' InventOlY").
The purchase price for the New Car Inventory shall be the sum of the wholesale cost of each vehicle
qonstituting the New Car Inventory, which wholesale cost shall be based upon the factory invoice, plus the
wholesale cost of all optional pmts and accessories installed in each such vehicle, plus the cost of labor
(determined at the internal rate pursuant to the standard factory formula) for installation of the same, less·
holdbacks and less factory year-end final pay incentive pr()gram amounts.
2.2. Demonsitators. All of Seller's tight, title and interi:;st in and to not rilOre than four 4
es WIt I not more flUiD - ouithousand (4,000)
miles ("Demonstrators"). The Purchase Price for'Demonstrators shall be detenhined in 'accordance with
Section 2.1 hereof
,~. _~j).B:J.uu:egisteIed:l!ll~~lUmlgea:QjQnlac=aemonstratorveli1U
:~
2.3. Used Cars. None
,,
2.4. Factory Parts Inventory. None
2.5. Other Parts Illveiltory. None
·2.6. Gas, Oil and Grease; Work In Process. None
2.7. Furniture, Fixtures, Equipment and Leasehold Improvements. None
2.B. Goodwill, Franchise Rights and Other Intangibles. All 'intangible propelty rights
(including, but not limited to, custoiner lists and telephone numbers) aIid goodwill associated with the
business of Seller and all other intaIlgible property rights (the "Goodwill"). The Purchase Price of the
Goodwill is Three Hundred ThoUSaIld DollaI's ($300,000.00).
After Close of the escrow seller will not solicit or actively pursue any warranty or customer pay service
work and shall try to fully exit the warranty aIld customer pay service work within 120 days after close of
escrow (unless all emergency situation). Seller will provide the buyer the entire Cadillac customer name list.
2.9. Assets Not Acquired; Liabilities. The following assets shall be excluded from the
purchase of assets contemplated herein: cash, accounts receivable, prepaid expenses (except as hereinafter
set fOIih) and returned checks (the "Excluded Assets"). Purchaser shall have no obligation for any
liabilities of any kind whatsoever of Seller, including outstanding vacation, holiday aIld sick time of Seller's
employees, other thall those liabilities which Purchaser specifically agrees 'to assume, all of which shall be
set forth on Schedule 2.9 to be attached hereto two (2) days prior to the expiration of the Due Diligence
Period, setting fOlih tile contracts, agreements and cO!llmitments of Seller which Purchaser agrees to assume
(the "Assllmed Liabilities"). Seller shall be responsible for paying all outstanding vacation, holiday and
sick time of Seller's employees, Purchaser shall be responsible solely for that portion of any such obligations
which first accrues on or after the Closing, Purchaser shall have no obligation with respect to any liability
arising under any such contract, agreement or commitment prior to the Closing, all of which liability shall
remain the responsibility of Seller: provided, however, the Purchase Price shall be increased by the mnount of
prepaid expenses or deposits on aIlY Assumed Liabilities. The parties aclmowledge and agree that Purchaser
is not assuming any employment agreements, labor agreenients, collective bmgaining agreements or other
'
similar contracts.
2.10. Costs. Each PaIty shall bear the exp'enses associated with its own perso11llel in
cOlmection with the valuation of the Acquired Assets required by this Section 2 provided that (i) the·
patties shall jointly
2
employ an iridependent inventory service to take the inventory as required by this Agreement, the cost of which
shall be paid one-half by Purchaser and one-half by Seller.
3.
Payment of Purchase Price, Transfer Tax, Allocations.
3.1: Payment of Purchase Price. The p\U'chase price determined in accordance with Section 2
above to be paid by PlU'chaser pursuant to this Agreement shall be paid in cash on the Closing Date.
1
i.
i
I.
Ii
1\
I
3.2. Closing and Post-Closing Adjustments. All expenses of a nature which are customarily
subject to proration in a transaction involving the purchase and sale of assets of an ongoing business shall be
apportioned between Seller and Purchaser according to the number of days in the period covered thereby which
occurred prior to and including the Closing Date, and the number of such days subsequent to the Closing Date.
Those items subject to proration hereunder shall include, without limitation, personal property taxes, and
customer prepayments. The aggregate amO\ult of any adjustment shall be determined and paid as of the Closing
Date.
3.3. Transfer Taxes. PlU'chaser agrees to pay any and all sales, transfer or other similar taxes
which may be imposed or payable on or in cOllllection with the transfer of-the Acquired Assets.
4.
'Representations and Warranties .of Seller. Except as set forth on the sch~dules attached
hereto (the "Disclosure Schedules"). Seller hereby warrants and agrees with Purchaser as follows:
4.1. Good Standing. Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of California and is entitled to and has the corporate power and authority to
own 01' lease its property and to carryon its business in the matmer and in the places where such propClty are
now owned, leased 01' operated and such business is now conducted.
4.2. Title to Acquired Assets; Liens and Encumbrances. Seller will convey to Purchaser
good and marketable title to the Acquired Assets, free and clear of all security interests, liens, claims,
restrictions, equities and encumbrances whatsoever, othet· thatlliens for taxes not yet due and payable.
4.3. Authorization. The execution and delivery of this Agreement and each other document,
agreement and instrument contemplated hereby, and the cOllSlmunation of the tratlsactions contemplated
hereby has been duly authorized by the Board of Directors of the Seller and all other corporate actio11,
hlcluding all shareholders' approvals necessaiy t6 authorize the execution and delivery of this Agreement and'
each other document, agreement and instrument contemplated hereby, and the consummation of the
transactions contemplated hereby, have also been taken. Except for the consent of the Franchiser, no consent of
any lender, trustee, security holder, lessor or any other person or entity is required to be obtained by Seller in
connection with the execution, delivery and performance of this Agreement by Seller and the consummation of
the transactions contemplated hereby. TIllS Agreement constitutes the valid and binding obligation of Seller
enforceable in accordance with its terms, oxcept as may be limited as applicable bankruptcy law and equity.
Except as to the terms of the Franchise, the execution, delivery atld performance of this Agreement and the
consUlmnation of the transactions contemplated hereby (a) do not violate or constitute a breach of or default
under any contract, agreement or commitment to which Seller is a patty, under which they are obligated or to
which any of the Acquired Assets are subject, (b) do not violate any judgment, ot:der, statute, rule or regulation
to which Seller 01' ally of the Acquired Assets are subject or 'the atiicles of incorporation or bylaws of the
Seller, atld (c) wilInot result in the creation of any lien, chat'ge or encumbrance on atly of the Acquired Assets.
3
4.4. Representations and Warranties on Closing Date. The i"epresentations and warranties of
Seller contained in this Agreement shall be true and correct in all inaterial respects on and as of the Closing
Date with the same force' and effect as though such representations and warranties have been made on and as of
the Closing Date.
'
~~~-~~~~,4.5.-.bitigatiolb--8elIel~has-not-received-servic"ufllroceslSfor;-and'RnliebesroISelle?s
~"Jt--~kn()wJedg@-ther8'-i6-n0-pending-or-threaterred-suir,actlon,
arl5ffiaIiQn, or legal, administrative, or other
proceeding, or govel'1nnental investigation against or affecting any of the Acquired Assets. To the best
knowledge of Seller, Seller is not in default wi!h respect to any order, writteli, iJ~unction, or decree of any
federal, state, or local court.
'j
4.6. Defaults. Seller is not in default, and to the best of Seller's Imowledge, no event has
occurred which, with the passage of time will constitute a default, with respect to any obligation or liability to
be assumed by Purchaser hereunder, 'which are listed 011 Schedule 2.9 attached hereto, To the best knowledge
of Seller, no other pmiy to any obligation or liability set f01ih in Schedule 2.9 is in default with respect to any
provision thereof.
4.7. Compliance With Law. To the best of Seller's lmowledge, Seller has complied with, and is
not in violation of, applicable federal, state or local statutes, laws or regulations the violation of which would
have a material adverse effect on the financial condition ofthe Dealerships.
4.3. Labor and Employment Matters. There is not now, and there has not been prior to the
date hereof, any actual or, to the Imowledge of the Seller, tlueatened labor dispute, strike or work stoppage
which affects 01' which may affect the business of Seller or which may interfere with continued operations.
Seller has not connnitted allY unfair labor practice as defined in the National Labor Relations Act, as amended,
and there is no pending or, to the knowledge of the Seller, threatened charge or complaint against any Seller or
with the National Labor Relations Board or any representative thereof. There has been no strike, walkout or
work stoppage involving any of the employees of Seller prior to the date hereof.
4.9. Good Title to and Condition of Acquired Assets
(a)
Upon tl1(i consummation of the trmlsactions contemplated hereby, Purchaser
will have acquired and own all of the Acquired ,Assets. Seller has good and marketable title to all of the
Acquired Assets free and clear of any liens and encumbrances of any kind.
(b)
The Acquired Assets are in good operating condition, normal wear and tear
excepted, and have been, maintained substantially in accordance with all applicable manumcturer's
specifications and wal'l'anties.
5.
Representations 'and Warranties of Purchaser. Purchaser represents, warrants and agrees
with Seller and Owner as follows:
5.1. Good Standing., Purchaser is a corporation duly organized, validly existing and in good
standing lUlder the laws of the State of Califol'llia and is entitled to and has the corporate power and authority to
own or lease its property and to canyon its business in the manner and in the places where such property are
4
now owned, leased or operated and such business is now conducted.
5.2. Authorization. The execution and delivery of this Agreement and the consummation of
transactions contemplated hereby has been, duly authorized by the Board of Directors o{the Purchaser and all
other COl]lOrate action, including all shareilolders' approvals necessary to authorize the execution and delivery
of this Agreement and the transactions contemplated hereby, have also been taken. This Agreement is a valid
and binding obligation of'Purchaser enforceable against ,Purchaser in accordance with its terms. Excep.Lfu~
-'--_~, consell~0t't11g..IlranGhi{ler-and-P.nrchaser's-E&!lder;:::UO:CllIlS!lITt-efallJi"tlustee;"secunty holaer o'r ailJ other person
~=--~-01'entityilIT&llijrea1OlJe
obtained by Purchaser in cOllllection with the execution, delivery andperformance of
_; --::'1:
~
this Agreement by Purchaser and the consummation of the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation of the transactions contemplated hereby (a)
do not violate or constitute a breach of .or default nnder any contract, agreement or conunitment to which
Purchaser is a party or under which it is obligated, and (b) do not violate any judgment, order, statute, rule or
regulation to which Purchaser is snbject.
5.3. Due Diligence by Purchaser. Purchaser is a Cadillac Dealer, understands the nature of
the automobile business and will undertake its own due diligence regarding the Acquired Assets, to be
completed by not later than, August 30 t", 2008.
'
5.4. Representations and Warranties on Closing Date. The representations and warranties of
Purchaser contained in this Agreement shall betrne and correct in all material respects on and as of the Closing
Date with the same force and effect as though such representations and warranties had beenlllade on and as of
the Closing Date.
6.
Seller's Covenants..
6.1. Ongoing Operations. From the date hereof to the Closing, Seller will use its best effort to
preserve intact the Acquired Assets and to continue to operate the Dealership as a going concern, including, but
not limited to, lilaintaining commercially reasonable inventories and receivables. Seller will not dispose of any
of the Acquired Assets except in the ordinary course of business consistent with past practices, and will not,
, without limiting the foregoing, hold a "going-out-of-business" or "liquidation" sale: provided that Seller shall
11ave the right to exercise normal and customary selling and marketing activities consistent with customary
practices of an ongoing dealership.
6.2. Approval. The Purchaser and Seller will use its best efforts to obtain all permits,
approvals, authorizations and consents of thil'd parties necessary or desirable for the consummation of the
transactions contemplated by this Agreement and for the ownership and operation by Purchaser of Acquired
Assets. Purchaser and Seller shall proceed as promptly as practicable after the date hereof to prepare all
materials necessary to obtain the cOlisent of the Franchiser as is necessary for Purchaser to acquire the
Acquired Assets and for consull'unation ofthe transactions contemplated hereby.
6.3. Covcllailt to Comply. Seller shall not talee any action or fail to talee any action wllich will
make an), of their representations aud warranties not true and correct in .all material respects on the Closing
Date. Seller shall use its best efforts to satisfY or ca\Jse to be sa.tisfied all of the conditions precedent to
Purchaser's obligations hereunder. Seller shall give Purchaser prompt written notice of any material change in
5
any of the information contained in the representations and warrmlties' made in Section 4 hereof or the
schedules referred to herein which occur prior to the Closing Date.'
6.4. Entry and Indemnity. In cOlmection with any entry by Purchaser, or its agents, employees
or contractors onto the Premises. Purchaser shall give Seller reasonable advance notice of such entry and shall
conduct such entry and My inspections in connection therewith so as to minimize, to the greatest extent
possible, interference to Seller's Dealership operation. Purchaser' shall inaintain, and shall assure that its
.~.,~_c.QutracJru:s..Jnaintain,~public~liability~and~prgp'lfty-damage ·insul'ance-in amounts-and--ilriornraml-substarlCe
. =i . __ adeqllilicU!Litlsure_agaillst-a!l-liaBiIity-of~P(l1'chaserarRlit1ragents, employees,or contractors, arising out of My .
.
entry or inspections of the Premises prior to Closing; and Purchaser shall provide Seller with evidence of such
insurance coverage upon request by Seller. Purchaser shall indemnifY and hold Seller harmless from and
against any costs, damages, liabilities, losses, expenses, liens or claims (including without limitations
reasonable attomeys' fees) arising out of or relating to any entry on the Premises by Purchaser, its agents,
employees 01' contractors in the course of performing its due diligence provided for in this Agreement. The
foregoing indemnity shall survive beyond the Closing, or, if the sale is. not consummated, beyond the
termination of this Agreement.
6.5. Post Closing Access. Following the Closing, Seller shall, upon twenty four (24) hours
prior written notice, grant Purchaser access during normal business hours to Seller's books mld records relating
to customer files (e.g., dealjackets and service repair orders). Any copies of such materials shall be provided at
Purchaser's expense.
7.
Conditions to Purcliaser's Obligations to Close. The obligations of Purchaser under this
Agreement are subject to fulfillment of the conditions set forUl below. Purchaser shall have the right to waive
in writing all or part of anyone or more of the following conditions and upon such waiver may proceed with
the trmlsactions contemplated by this Agreement, and hereby releases Seller from any and all loss, damage,
costs (including attorney's fees), causes of action andlor claims with respect to such failure of condition.
7.1. Agreements and Conditions. On or before the Closing Date, Seller shall have complied
with and duly performed in all material respects all agreements aild conditions on their part to be complied
with and performed pursumlt to or in connection with this Agreement on or before the Closing Date.
7.2. Representations and Warranties. The representations and warranties of Seller contained
in this Agreement, 01' othelwise made in writing in c01l11ection with the transactions contemplated hereby, shall
be true Md correct in all material respects on and as of the Closing Date with the same force and effect as
though such representations and warranties had been made on and as of the Closing Date and Purcliaser shall
have received a certificate to that effect dated the Closing Date Md executed by the President of Seller.
7.3. No Legal Proceedings. No action or proceeding shall have been instituted 01' threatened to
restrain 01' prohibit the acquisition by 'Purchaser or the conveyance by Seller of the Acquired Assets or which
might result in any material adverse change in the business, prospects 01' financial or other condition of the
Acquired Assets.
7.4. Due Diligence. Purchaser shall have until 5:00 p.m. (PST) on August 301h, 2008 (the
"Due Diligence Period") to (i) examine mld approve of all liabilities Md contracts which relate to the
operation of the Dealership or the Acquired Assets, which liabilities and contracts shall be listed and attached
as Schedule 2.9 to this Agreemeilt and (ii) review and approve of any appraisals inspections investigations
6
studies, tests, surveys, and reports concerning the Acquired Assets, Franchise, or the Premises. Purchaser shall
deliver written notice to Seller on or before the expiration of the Due Diligence Period that it liaS completed its
due diligence of the- above referenced items and will complete the purchase of the Acquired Assets. If
Purchaser fails to deliver such notice on or before the expiration of the Due Diligence Period, this Agreement
and Pmchaser's obJigation to purchase the Acqufred-Assets from SelieI' shall terminate.
7.S. Determination of the Factory Parts Inventory, None. _
7.6. Listing of FF&E. None
7.7. Dealer Services Agreement. Purchaser shall have received approval ii'om Franchiser or
its divisions, for operation of the Dealership. Seller shall deliver into escrow a "Terinillatioll Letter," and
such other documents reasonably required _by Franchiser to terminate the Franchise. Purchaser shall have
received Franchiser's OL 124.
ii
11
, ,
7.8. Third Party Consents. Prior to the end of the Due Diligence Period, Purchaser shall have
obtained any and all necessary consents of any third parties to the pmchase of the Acquired Assets
contemplated herein, including without limitation, the entry into a nondistlU'bance agreement in form
satisfactory to Purchaser with any lenders with existing financing secured by the Premises or any portion
thereof.
7.9. Lease of Premises. None.
7.10. List of Employees. None.
8. Conditions of Seller's Obligations to Close. The obligations of Seller under this Agreement are
subject to fulfillment of the cond,itions set forth below. Seller shall have the right to waive in writing all or part
of anyone or more of the following conditions and upon such waiver hereby releases Purchaser from any
liability for any loss or damage sustained by Selle!" by rellson of the breach by Purchaser of any covenant,
obligation or agreement contained herein, or by reason of any misrepresentation made by Purchaser and upon
such waiver shall proceed with the h'ansactions contemplated by this Agreement.
8.1. Agreements and Conditions. On or before the Closing Date, Purchaser shall have
complied with and duly performed in all material respects all of the agreements and conditions on its patt
required to be complied with or performed pursuant to this Agreement on or before the Closing Date.
8.2. RelJrescntations and Warranties of PurchaseI'. The representations and warranties of
Purchaser contained in this Agreement shall be true and correct in all material respects on and as of the Closing
Date with the same force and effect as though such representations and warranties had been made on and as of
the Closing Date and Seller shall have received a celtificate to that effect dated the Closing Date and executed
by the President or a Vice President of PurchaseI'.
8.3. No Legal Proceedings. No action or proceeding shall have been instituted or threatened to
restrain or prohibit the acquisition by Purchaser or the conveyance by Seller of the Acquired Assets or which
might result in any material adverse change in the business, prospects or financial or other condition of the
Acquired Assets.
7
8.4. Determination of the Factory Parts None
8.S. Determination ofFF&E and Purchase Price. NONE
8.6. Lease of Premises None
9.
,
Deliveries of SelicI' 011 the Closing Date. Seller agrees on the Closing Date to deliver to
~PUi'Cliasel':
1--
9.1. Title to Acquired Assets. All conveyances, covenants, warranties, deeds, assigmnents,
biIIs of sale, motor vehicle titles, confirmations, powers of att01'lley, approvals, consents and any and all further
instruments as may be reasonably necessary, expedient 01' proper in order to complete any and all conveyances, '
transfers and assiglllnents herein provided for and to convey to Pl1I'chaser such title to the Acquired Assets as
Seller is obligated hereunder to convey;'The parties agree that title to the Acquired Assets shall be conveyed on
the Closing Date by bilI of sale in the forJ1l of Exhibit B to be attached hel:eto prior to the expiration of the Due
Diligence Period (the "Bill of Sale").
.
9.2. Leases. The duly executed, and aclmowledged if required, documents or instlUlIIents
required for the Assignment of the Lease, including, without limitation, duly executed, and acknowledged if
recruired documents or instruments of third parties related to such Assiglllnent.
9.3. Third Party Consents. Duly executed and acknowledged ifrequired, consents of third
parties required to be delivered under this Agreement.
9.4. Certificate of Secretary. Certificate of the' Secretary of the Seller setting forth a copy of
the reSolutions adopted by Seller's Board of Directors and shareholders authorizing and approving the execution
and delivery of this Agreement and the consummation of the transactions contemplated hereby. '
,
9.5.
10.
Certificate. Certificate of the President of Seller referred to in Section 7.2.
Deliveries of Purchaser on the Closing Date. Pl1I'chaser agrees on the Closing Date to
deliver or cause to be delivered.
'
10.1. Consideration. The Purchase Price determined in' accordance with Section 3 hereof
10.2. Certificate of Secretary. Certificate of the Secretary of the Purchaser setting forth a copy
of the resolutions adopted by Purchaser's Board' of Directors alld shareholders authorizing and approving the
execution and delivery of this Agreement and the cOllsunnnation of the transactions contemplated hereby.
10.3. Certificate. The Certificate, of the President or a Vice President of the Purchaser referred
to in Section B.2.
11. Escrow. The parties have agreed to handle the transaction without an escrow.
12. Covenants After Closing Date.
12.1. Transfer of Acquired Assets. Seller agrees from and after the Closing Date, upon
8
tlie request of Purchaser, to do, execute, aclmowledge and deliver, or to cause to be done, executed,
acImowledged and delivered, all such ftuther acts, deeds, assignments, transfers, conveyances, powers of
attomey and assurances as may be required for the assigning, transferring, conveying, and confilwing to
Purchaser, or to its successors and assigns, or for the aiding, assisting, collecting and reducing to possession
of, any or all of the Acquired Assets as provided herein.
12.2. Cooperation. Seller will cooperate and use its reasonable efforts to have its officers and
employees cooperate with Purcliaser at Purchaser's request, oil alid after the Closing Date, in fumishing
~
• ~'~~information;-evidence,testimonTalldlJ1ffi;n!lmtmlITlc:e::n:l-CQllileGfion-wlflrahy actlolls, proceedings,
. ;;;;~':-a!Tangenrents Or 1Iisputes involving Purchaser and based upon contracts, arraJlgements, conunitments ot acts
'1
of Seller which were in effect or occurred on or prior to the Closing Date. From and after the Closing Date,
Purchaser will pelwit Seller and its representatives to have access to the books and records relating to the
Acquired Assets for periods priO!' to the Closing Date upon notice and during normal business hours.
13.
Indemnification.
13.1. Indemnification by Seller. Seller agrees to indemnifY and hold harmless Purchaser from
and against any and all losses, costs, damages, claims and expenses (including reasonable attomeys' fees) wllich
Purchaser may sustain at any time by reason of (a) any.debt, liability or obligation of Seller.except Assumed
Liabilities, including, but not limited to any employment related liabilities or liabilities relating to pension,
retirement or profit sharing benefits (b) any liability or obligation of any kind relatiJig to the operations of the
Acquired Assets, the Dealership prior to the Closing Date not expressly assumed by Purchaser hereunder,
iJlcluding, without limitation (i) claims arising from Seller's failure to comply with bulk sales laws, and (ii)
failure to obtain VCC telwination statements fi'om creditors other than creditors of the Assumed Liabilities, or
(c) the breach or inaccuracy of or faiIlU'e to comply with, 01' the existence of any facts resulting in the
inacclU'acy of, any of the warranties, representations, covenants or agreements of Seller contained in this
Agreement. The paJiies acknowledge and agree that PlU'chaser shaH repair automobiles sold andlor serviced by
SeHer to correct miscellaneous customer coniplaints that ai'e aJl obligation 'of SeHer and that Seller shall pay for
such repairs. Prior to undeliaking such repair, PlU'chaser shall obtain the approval of Seller for the amount of the
repairs, which approval shall not be u11l'easonably withheld.
13.2. Indemnification .by Purchaser. Purchaser agrees to indemnify and hold harmless Seller
fi'om and against any and all losses, cost, damages, claims and expenses (including reasonable attorneys' fees)
which Seller may sustain at any time by reason of (a) any debt, liability 01' obligation of Purchaser, (b) any
liability or obligation of any kind relating to the operations of the Acquiied Assets or Dealership after the
Closing Date, or (c) the breach or inaccuracy of 01' failure to comply with, or the existence of any facts resulting
in the inaccuracy of, aJlY of the wa11'aJlties, representations, covenants or agreements of Purchaser contained in .
this Agreement.
. 13.3. Defense. Any paliy who receives notice of a claim for which it wiII seek indelIUlification
shall promptly notify the indemnifYing party in writing of such claim. The indemuifYing pmty shall have the
right to assume the defense of such action' arits cost with counsel reasonably satisfactory to the indenUlified
party. The indemnified pmty shall have the right to participate in such defense witli its own counsel at its cost.
14.
No Broker. Purchaser on the one hand, and Seller on the other, represent to the other that'
no broker or finder has been cOlUlected with the transactions coiltemplated by this Agreement. In the
event of a claim by ally broker or finder based upon his representing being retained by Seller 011 the
one hand, or by Purchaser on the other, Seller or Purchaser, as the case may be, agrees to indeJ1l1lify and'
save harmless the
.
or
9
other in respect of such claim.
15.
Closing; Termination. The Closing shall occur on the Closing Date set forth in Section 1.3;
provided, 11Owever, if the Closing Date shall not have occurred on or prior to, September 30 th, 2008 (the
"Termination Date") because any of Ptirchaser's Conditions Precedent have not been satisfied; Purchaser 01'
Seller may terminate this Agreement by giving written notice to the other.
~"'---~-~----
-.
'iI
-=l
16.
Confidentiality. In the event this Agreement is terminated for any reason other than the
default of Seller, Purchaser shall deliver to the Seller, at no expense to Purchaser or Seller, without
representation 01' warranty of any kind, all of the documents and papers which were supplied by the Seller to
Purchaser 01' its agents, including, without limitation, financial statements, tax retul'11s, appraisals, inspections,
investigations, studies, tests, surveys, and repOlis concel'11ing the Acquired Assets, but excluding any
documents or other papers which are proprietary property 01' trade secrets of Purchaser. Unless and until the
Closing occurs, none of the parties to this Agreement shall disclose, publish 01' comlllunicate either directly or
indirectly, the fact of the pending transaction 01' any of the terllls, conditions or the subject 01' content of the
paliies' negotiations concerning purchase of the Dealership, except (a) in response to any lawful process
requiring disclosure of the Sa!lle as reasonably required by law or public reporting requirements, or (b) to
prospective sources of financing, to mortgage brokers, franchisers, investment bankers, investors or
purchasers, attoilleys, accountants, consultants, experts and professionals engaged by Purchaser in cO!1l1ection
with its due diligence investigation any of the terms hereof, or any of the paliies' negotiations. The parties each
agree that it shall at all times keep the contents of the negotiations confidential (subject to the exceptions
stated in the preceding sentence) a1ld that no publicity or press rele!!se with respect to any proposed transaction
shall be made by either party without the prior written consent of either party.
17. Notices.· All notices, requests or demallds to a party hereunder shall be in writing and shall be
given or served upon the other Palty by personal service, by certified return receipt requested or registered
mail, postage prepaid, or by Federal Express or other nationally recognized c01l1lnercial courier, charges
prepaid, addressed as set forth below. Any such notice, demand; request or other c01l1lllUnication shall be
deemed to have been given upon the earlier of personal delivery thereof, tlu-ee (3) business days after having
been mailed as provided above, or one (1) business day aftei· delivery through a commercial courier, as the case
may be. Notices may be given by facsimile and shall be effective upon the transmission of such facsimile
notice provided that the facsimile notice is transmitted on a business day a1ld a copy of the facsimile notice
together with evidence of its successful transmission is sent oil the day of transmission by recognized the
immediately succeeding business day. Each party shall be notice given in accordance with tills Sectioll19.
10
To Purclmser:
Inder Dosmuh
4200 John Monego Ct.
Dublin, CA 94568
,~_~~'With-a-copy-tu:-
Mike Sebree
Fitzgerald Abbott & Beardsley
1221 Broadway st.
Oakland, CA 94611
I
I
i
I
To Seller:
Pat Costello
7544 Dublin Blvd.
Dublin, CA 94568
I
I
With a copy to:
New Tech Law Group, Inc.
AnN: Mark Hirsch
40931 Fremont Blvd.
Fremont, CA 94538
18.
Miscellaneous.
18.1. Entire Agreement. This Agreement, including the exhibits and schedules hereto, sets
forth the entire agreement and undeistanding between the parties as to the subject matter hereof and merges
and supersedes all prior discussions, agreements and understandings of every kind and nature between them
and no party hereto shall be bound by any condition, definition, wm'l'anty or representation other than as
expressly provided for in this Agreement or as may be on a date subsequent to the date hereof duly set forth in
writing signed by the party hereto which is to be bound thereby. This Agreement shall not be changed,
modified or amended except by a writing signed by the party to be chmged and this Agreement may not be
disclmrged except by performance in accordance with its terms or by a writing signed by the party to be
charged.
18.2. Govel'lling Law. This Agreement and its validity, construction and performance shall be
gove1'lled in all respects by the laws of the State of California, without giving effect to principles of conflict of
laws.
18.3. Severability. If any provision of this Agreement or the application of any provision
hereof to any person or circumstance is held invalid, the reinainder of this Agreement and the application of
such provision to other persons or circulllstances shall not be affected unless the provision held invalid shall
substantially impair the benefits of the remaining portions of this Agreement.
11
18.4. Benefit of Pal'ties. From and after the Contract.Date, this Agreement shall be binding
upon and inure to the benefit of the.parties hereto and their respective successors, heirs, legal representatives
and assigns. Purchaser shall not assign this Agreement to any IUJaffiliated entity which is not controlled by, in
control of, or under common control with Purchaser.
18.5. Necessary Documents. Each of the parties does hereby agree to do any act and to
execute any other or further documents reasonably necessary or convenient to the calTying ,ou! of t~
~~.previ8ionlrofthiri\grecment.
..
18.6. Headings. The headings in the sections of this Agreement are inselted for convenience of
reference only and shall not constitute a part hei·eof.
IB.7. Attol'lleys' Fees. In the event that any action or proceeding is brought to enforce or
interpret any provision, covenant or condition contained in this Agreement on the part of Purchaser or Seller,
the prevailing party in such action or proceeding (whether after trial or appeal) shall be entitled to recover fi'om
the party not prevailing its expenses therein, including reasonable atto1'1leys' fees and allowable costs.
18.8. Counterpal'ts. This Agreement may be executed in any number of countelpmts, each of
which shall be deemed an original, but all such counterparts together shall cOlistitute but one and the same
instrument. Tllis Agreement shall become effective upon the execution of a cOlUltelpmt hereof by each of the
patties hereto.
!
'.
18.9. Breach by Purchaser. If Purchaser fails to Close for any reason other than a failure of a
condition set foIth in Section 7 hereof, Seller shall be entitled to terminate this Agreement and retain the sum
of twenty five thousand from Purchaser as liquidated damages for Purchaser's default ("Pul'chaser's
Liquidated Damages") .. SELLER AND PURCHASER ACKNOWLEDGE THAT PURCHASER'S
LIQUIDATED DAMAGES ARE A REASONABLE ESTIMATE OF SELLER'S DAMAGES. SELLER
AND PURCHASER FURTHER AGREE THAT THIS SECTION 20.9 INTENDED TO AND DOES
LIQUIDATE THE AMOUNT OF DAMAGES DUE SELLER, AND SHALL BE SELLER'S
EXCLUSIVE REMEDY AGAINST PURCHASER, BOTH AT LAW AND IN EQUITY ARISING
FROM OR RELATED TO A BREACH BY PURCHASER OF ITS OBLIGATIONS TO
CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
Purchaser
'~Seller+ t ' - - - - - - -
12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the
day and year first above written.
SELLER:
~ ~~
1
PURCHASER:
, osanjh
13
LIST Olr SCHEDULES
SCHEDULE 2.9,
Asswned Liabilities
~~_____~
___~~--iS~CefH!!E:l!DL!UL!L""E;L7!~.~5_~~~_ _~Em'!s.fuv.elltQl:Y
- -SCHEDULE 7.6
FF & E Inventory
EXHIBIT A
_Assigmnent of Lease
EXHIBIT B
Bill of Sale
14
EXHIBIT A
Assignment of Lease
I',,
,
I
15
SCHEDULE 2.9 ASSUMED LIABILITIES
To be attached prlor to the expiration of Due Diligence Period .
. ;~.
~
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I I
16
SCHEDULE 7.5
FACTORY PARTS INVENTORY To be
attached within 5 days priOI' to the Closing
17
SCHEDULE 7,6 FF&E
To be attached within thitiy (30) days fro111 the Contract Date
18
EXHIBIT B FORM OF BILL OF SALE
To be attached prior to the expiration of the Due Diligimce Period
=
================::::========================~~~-=~--------~~~~~~~~================--::-
~. ~~--
~:--~-.-
;~
.,
1!
G;\Shmd D.x\IOmCOO7 Costello, Patrlck\039 Sale ofCro\\n CediJIac\CadiIJac APA 8.1.08k
EXHIBIT B
5208 Tennyson Parkway. Suite 120. Plano. TX·75024
Telephone: 972-649-2062
September 26, 2008
Pat Costello
Crown Chevrolet
7544 Dublin Blvd.
Dublin, CA
Re: Sale of Crown Chevrolet's Cadillac Assets
Mr. Costello:
This letter is about Crown Chevrolet's recent sale of all of its assets related to its Cadillac franchise,
including Cadillac inventory, the goodwill, franchise rights, and other intangibles, ("Cadillac Assets")
to 'Inder Dosanjh, pursuant to the Asset Purchase Agreement dated Augut 7, 2008 ("APA"). Under
the APA, the purchase price of the goodwill alone is $1,7500,000.00.
As you know, GMAC has a security interest in all assets of Crown Chevrolet (including the Cadillac
Assets) and all proceeds thereof - including the $1,750,000.00 due under the APA - as provided in
Crown Chevrolet's Wholesale Security Agreement and General Security Agreement. Both of these
agreements prohibit the transfer of such assets other than in the ordinary course of business. The
sale of the Cadillac Assets was not in the ordinary course of business, and GMAC did not consent
to the sale of the Cadillac Assets. Therefore, this sale constitutes clear and undeniable violations of
''Yholesale Security Agreement and General Security Agreement. GMAC hereby declares Crown
lrolet in default under the Wholesale Security Agreement and General Security Agreement and
,liand" full payment of all proceeds of the Cadillac Assets. including the $1.750.000.00
,ferenced above. by 5:00 p.m. (PST) on September 30. 2008.
If these proceeds are not remitted to GMAC by September 30, 2008, Crown Chevrolet's wholesale
credit line will be terminated and all obligations owed by Crown Chevrolet to GMAC will be due and
payable at that time. As of the date of this letter, these obligations include:
(A)
Principal Amount of Vehicles Financed by GMAC
$8.279.824.95
TOTAL
$8.279.824.95
This demand for payment is made without prejudice to any other amounts now or hereafter owing
by Crown Chevrolet to GMAC, including but not limited to, interest accruing after the date set forth
=====::J!'a,)i')D'Jme;e;::au1:bJ:blt(f<!ttm)s..a1:tsilTg:rrt1tf=tbe=d~ke::Wlrotesals::E'Ian================o==~
If you fail to make payment as demanded, GMAC may take possession of all dealership property in
which it has a security interest, including but not limited to, all of the motor vehicles financed by
GMAC for Crown Chevrolet. In this respect, you may be asked to assemble and present for
retaking by GMAC such collateral. Of course, GMAC reserves the right to exercise any other
remedy it may have pursuant to law or contract. In the meantime, GMAC has suspended Crown
Chevrolet's wholesale credit line, and it will remain suspended until further written notice from
GMAC.
J'IJ /&.- J. /J-
I. a,
EXHIBIT C
.·GMAC· PINANCIAt'SERVICES
"""...._ ...."""2"'73,;,,·"·
:' . .
.
·1620 East Rosevnie Park~lay, Suite 200, Roseville,. CA 95661
Mailing Address: P,O. 130)( 989043, West Sacramento, CA 95798
.Telephone: 916-787-2704
.
February 15 i 2007 .
Pat Costello, President
Vicki Hayes, Business Managei
Crown Chevrolet
. P.O. Box 2010
Dublin, CA 94668
Re: Wholesale Credit Lines
Dear Pat ami Vicki,
As follow,up to our dlscusslo~ with Vicki Hays; on· February 14, 2007., concerning GMAC'~
granting of a n.ew wholesale crediHine to Crowh Ch·evrolet, Jllease acknowledge receipt of this
letter and your agreement to each of the·action~ outlined below: .
.
CroYIn Chevrolet will.payoff ali amounts owed to U.S. Bank by February 22,2007.
Crown Chevrolet agrees to payoff all amounts owed to GMAC on sold vehicles within its five
day wholesale release period as expl~lned In.our letter, dated January 19, 2007.
.
o Crown Chevrolet Is current on the payment qf liers·on all used vehicles .In its inventory.
o GMAC will floor plan used vehicles at 75% of wholesale value after receipt of a copy 9f a lienfree titJe on e.ach vehicle.
.
..
. _
. .
. ..
. 0 Crown Chevrolet will furnish to GMAC by February 22, 2007 a true copy of its lease with
Betty Woolverton for the dealership property.
.
.
0: Crown Chevrolet. acknoWledges that it will be assesseda $2;000 audit fee for any au·dits in
which payment delays exceed 20% of total sold vehicles.
.
o
o
NotWithstanding the foregoing, the wholesale credit line Is subJect'to the terms of the wholesale
financing arrangements under which it is being e~tended. GMAC wholesille financing is demand
financing of a discretionary nature and l1)ay be modified, suspended, or terminated at GMAC's
election, In jts seile, absolute. dlscretio~:
. . .
Please call me If you have any questions.
Very truiy yours, ..
MichaelF. Nestor
Operations Manager·
._~
I
___ ._____-J,
i
!
Dated
Dated
EXHIBITD
SECURED GUARANTY
I. TD induce GMAC tD cDntinue tD extend financing tQ GrDth BrDS. OldsmDbile, Inc., a CalifDrnia cDrpDratiDn
("BDrrDwer") pursuant tD that certain WhQlesale Security Agreement dated OctDber 6, 1978, Equipment LDan
PromissDry NDte and Security Agreement dated as of May 17, 2006, and Equipment LDan PromissDry NDte
and Security Agreement dated as Qf OctDber I, 2003, between BDrrDwer and GMAC and Qther related
agreements (collectively, the "LQans"), JDseph M. Hill and RDbin A. Hill, husband and wife; and GrDth-HiII
Land CDmpany, LLC, a CalifDrnia limited liability cQmpany ("GuarantDr," whether Qne Dr mDre than Qne)
hereby absQlutely and uncDnditiDnally guarantees the payment and perfQrmance Qf the fQlIDwing (cQllectively,
"ObligatiDns"):
a. BQrrower's QbligatiQns Dwed tD GMAC under and/Qr in cOimectiDn with the LOl!1ls, including, withDut
limitatiDn, the fDllowing:
1.
An)' and all renewals, extensiDns, andlDr modificatiDns Dfthe Loans;
ii. Any and all agreements related tD the Loans;
iii. All Df GMAC's CDsts, expenses, and attDrney and Dther legal fees incnrred by GMAC in cQl11lectiDn
with the Loans;
b. Borrower's DbligatiDns owed tD GMAC under andlDr in COl11lectiDn with any and all other IDan Dr
financing accQmmDdatiQns provided by GMAC tD BorrQwer, including, without limitatiDn, all Df GMAC's
CDStS, expenses, and attDrney and Qther legal fees incl.lrred by GMAC in COl11lectiDn with such
accommDdatiDns;
c. Any voluntary andlor invQluntary credit extensions that GMAC makes to BQrrower in any bankruptcy
proceeding.
2. TillS GUARANTY IS AN ABSOLUTE, UNLIMITED, UNCONDITIONAL, IRREVOCABLE,
CONTINUING GUARANTY OF PAYMENT AND PERFORMANCE Df Borrower's Obligations, and
Gnarantor's liability under this Guaranty will not be affected by any change in circumstance, including without
limitation:
a. Any settlement or variation of terms Qf any Obligation of Borrower; any I'elated agreements between
GMAC and Borrower; or any Qbligation of any guarantor or other interested person, by operation of law or
Dtherwise;
b. The failure to file, record, or register any security document;
c. The unenforceability of any Obligation;
d. Partial or total release, sale, Dr foreclDsure of any real or personal property securing any Obligation
("Collateral") or any nonperfection or other impairment of GMAC's security interest in Collateral;
e. GMAC obtains new or additional Collateral;
f. Release or substitutiDn of any other guarantors of any Obligation or any others providing any Dther
security enhancement (e.g., letter of credit);
g. BorrQwer's assignment or Qther transfer of any Obligation, whether by Dperation of law or otherwise (e.g.,
merger);
h. Change in BOfl'Qwer's entity structure;
i. Discharge of any Obligation, or other relief obtained by BorrDwer, in any bankruptcy or insolvency
proceeding.
j. Any actiQn or forbearance by GMAC in exercising its rights and remedies against BorrQwer in cOl11lection
with allY Obligation, regardless of any resulting prejudice to Guarantor 1.11' increase in the likelihoDd that
Guarantor will have to payor perform nnder this Guaranty Qr Qtherwise.
3. Guarantor acknowledges and expressly agrees that GMAC may utilize various meaus to attempt to verify
Borrower's compliance with the LQan tenns, including periodic checks on the CQlIateral and examinatiQns of
bDoks and records and that:
a. Such steps are for the sole benefit Qf GMAC; and
16000/6046/691246.1
1
GMAC Commercial Lending GUaratliy (Real Estate and Wholesale) 8-29-05
b. The adequacy of performance of such Collateral checks and examinations will not be considered as a
defense to, or mitigation of, Guarantor's !lability under this Guaranty.
4. Guarantor continuously and nnconditionally promises, represents, and wan-ants that:
a. Immediately upon demand by GMAC, Guarantor will pay to GMAC:
i. AllY and all amounts Borrower owes to GMAC in cOilllection with the Obligations;
ii. All of GMAC's costs and expenses, including withont limitation, attorney and other legal fees, arising
in cOilllection with enforcement of its rights under this Guaranty, even after payment and performance
of the Obligations and/or Guarantor's ternlination of this Guaranty;
b.· Guarantor is solvent, the fair market value of its assets exceeds its liabilities, and it is paying its current
debts as they fall due;
o. Guarantor's [mancial statements submitted to GMAC in connection with this Guaranty are correct and
complete and fairly represent Guarantor's [maneial condition as of the submission date ("Financial
Statements");
d. As ofthe date ofthis Guaranty, there has been no material adverse change in Guarantor's financial
condition as reflected in the Financial Statements;
e. Guarantor has no:
i. Presently pending or threatened goverl1Il1ental or private court or administrative proceedings;
ii. Undischarged judgments;
iii. Filed or threatened federal or state tax, statutory, or other liens;
against it, either alone or as a co-party;
f. GUarantor is not in default or clainled default under any loan, credit, or other agreement (e.g., real property
lease) with any other creditor or third party;
g. Upon GMAC's request, Guarantor will provide GMAC with Guarantor's financial statements and any
other information, documents, andlor records requested;
h. If Guarantor is an entity, Guarantor's execution of, and payment and perfonnance under, this Guaranty:
i. Have been duly authorized;
ii. Constitute valid obligations enforceable according to the terms ofthis Guaranty;
iii. Does not violate any of Guarantor's entity documents (e.g., by-laws, partnership agreement, etc.) or
any law, regulation, or judgment;
iv. Does not require any approval that was not given;
j. Guarantor has a close business nexus to Borrower and will obtain a fmancial or other benefit from
GMAC's Loans and other [mancial accommodations to Borrower;
k. Guarantor will not assign this Guaranty without GMAC's prior written consent;
I. Guarantor's statements, promises, representations, and warranties in this Guaranty or ill1y other documents
or information submitted to GMAC do not contain any untrue, inaccurate, or incomplete statements;
m. Guarantor wiII immediately notifY GMAC if any of the foregoing promises, representations, or warrill1ties
become untrue or misleading.
5. The occurrence of any ofthe following constitutes a default under this Guaranty ("Default"):
a. Guarantor's failure to pay, perfonn nnder, or meet the tenns of this Guaranty;
b. Guarantor's misrepresentation or breach of any provision, promise, warranty contained ill this Guaranty;
c. GMAC believes, in good faith, that the prospect of Guarantor's payment or perfonnance nnder this
Guaranty is inlpaired;
d. Material adverse change in Guarantor's [mancial condition;
e. Ally bankruptcy proceeding filed by or against Guarantor;
f. Appointment of trustee or receiver for Guarantor or any of Guarantor's property;
g. Gnarantor's insolvency or causing general assigmnent for the benefit of creditors;
h. Liquidation, sale, transfer, or other disposition of all or substantially all of Guarantor's assets.
i. Dissolution or change of Gnarantor's entity structure or capitalization, if Guarantor is an entity;
j. Death of Guarantor, if Guarantor is an individual;
k. Material adverse change in the Collateral;
16000/6046/691246.1
2
GMAC Commercial Lending Guaranty (Real Estate and Wholesale) 8-29.05
I. Material adverse change in property securing this Guaranty ("Guaranty-Collateral"), if any; and
m. Guarantor's voluntruy or involuntary transfer or encumbrance of any Guaranty-Collateral.
6. If a Default occurs, GMAC has all rights and remedies provided by law, and Guarantor:
a. Unconditionally and irrevocably consents to GMAC's entering the premises where any
Guaranty-Collateral is situated and removing the Guaranty-Collateral and,
b. Will segregate and account for any and all Guaranty-Collateral and the proceeds thereof upon GMAC's
demand.
7. Any forbearance; delay, or failure by GMAC in exercising its rights or remedies under or in comlection witlt
this Guaranty or otherwise does not constitute a waiver of such rights or remedies or of any existing or future
default by Guarantor or Borrower under or in connection with this Guaranty, any Obligation, or otherwise.
8. Guarantor authorizes GMAC to file financing statements and take all other steps that GMAC deems necessary
and appropriate to perfect and protect its security interest and priority thereof in any Guaranty-Collateral.
9. Guarantor subordinates any and all debts and obligations that Borrower owes it ("Subordinated Debt"), and all
of Guarantor's claims related to the Subordinated Debt (e.g., bankmptcy-related), to all Obligations, and:
a. Guarantor will not:
i. Accept any payment on account of the Subordinated Debt in cash, securities, or property, by set-off,
accommodations, realization upon collateral, or in any other manner;
ii. Sell, transfer, assign, 01' pledge, except to GMAC:
A. Any of the Subordinated Debt;
B. Any writing evidencing any of the Subordinated Debt;
C. Any claim against Borrower related to the Subordinated Debt.
b. If Guarantor receives, or has a right to receive, by operation of law or otherwise, (including, without
limitation, any distribution of Borrower's assets or property under any liquidation, receivership,
assigmnent for the benefit of creditors, voluntary or involuntaty bankruptcy, arrangement or reorganization
proceedings, any smn of money, security, property, or collateral related to the Subordinated Debt
("Payments"), Guarantor will:
i. Hold such Payments in trust for the benefit of GMAC;
ii. Immediately transfer such Payments to GMAC, along with any rights in connection therewith;
iii. Execute any documents and/or take any other action that GMAC deems necessary or appropriate to
effectuate such transfer.
10. Guarantor:
a. Subordinates any and all of its present and future security interests in, liens against, and encumbrances on
Borrower's property and assets, however arisiog ("Guarantor Liens"), to any and all of GMAC's security
interests io, liens against, and encumbrances on Borrower's property and assets, howsoever arising;
b. Will not exercise any rights it has to enforce the Guarantor Liens against Borrower without GMAC's prior
written consent.
11. Guarantor expressly waives and releases GMAC from any and all past and present claims, defenses, causes of
action, or damages arising fi'om any and all dealiogs or relationships between Guarantor and GMAC.
12. Guarantor expressly waives and dispenses with:
a. Notices of any kind, including without limitation:
i.
Acceptance of this Guaranty;
ii.
Borrower's default under any of the Obligations;
iii.
Amount of Borrower's indebtedness to GMAC outstanding at any time;
iv.
Further advances under, and renewals, extensions, or modifications of, any of the Obligations and/or
any related agreements;
16000/6046/691246.1
3
GMAC Conunercial Lending Guaranty (Real Estate and Wholesale) 8-29-05
v.
Complete or partial sale or foreclosure of the Collateral and of posting of related advertisements;
b. Any and all rights of subrogation, reimbursement, contribution, indemnity, and recourse to, or with respect
to, any Collateral or any of Borrower's assets or property;
c. Protests, demands and prosecution of collection, foreclosure, and possessory remedies;
d. Any right to require GMAC to:
i. Proceed against Borrower or other persons for payment or performance of any oftha Obligations;
ii. Advise Guarantor of the results of any Collateral checks or examinations;
iii. Require Borrower to comply with any agreement with GMAC;
iv. Proceed against or exhaust any Collateral;
e. Assignment of any of the Obligations or this Guaranty;
f. Any defense based on any statute of limitations or laches;
g. Any defense based on ultra vires or unauthorized activity;
h. THE RIGHT TO TRl;ALBY JURy AS TO ANY AND ALL MATTERS RELATING IN ANYWAY
TO TIDS GUARANTY, TO THE EXTENT PERMITTED BY LAW.
13. hI addition to the waivers in Paragraph 12 above, in California and/or to the extent that California law applies,
Guarantor waives and dispenses with:
a. Any and all other rights and defenses that are or may become available to Gnarantor under Sections 2787
through 2856 inclusive, and 3433 of the California Civil Code;
b. All rights and defenses arising out of 8n election of remedies by GMAC, even though that election of
remedies, such as nonjudicial foreclosure with respect to the Collateral or any property securing this
Guaranty, has destroyed Guarantor's rights of subrogation and reimbursement against the principal by
operation of Section 580d of the California Code of Civil Procedure or otherwise;
c., All rights and defenses that Guarantor may have because Borrower's debt is secured by real property. This
meaus among other things:
.
i.
GMAC may collect from Guarantor without first foreclosing on the Collateral;
ii.
If GMAC forecloses on any real property Collateral pledged by Borrower:
A. The amoUllt of the debt may be reduced only by the price for which that Collateral is sold at the
foreclosure sale, even ifthe Collateral is worth more than the sale price;
B. GMAC may collect from th!) Guarantor even if GMAC, by foreclosing on th!) real pl'operty
Collateral, has destroyed any right th!) Guarantor may have to collect from Borrower.
This is an Ullconditional and irrevocable waiver of any rights and defenses that Guarantor may have because
Bon'Ower's debt is secured by real property. These rights and defenses include, but are not limited to, any
rights and defenses based upon Sections 580a, 580b, 580d, or 726 of the California Code of Civil Procedure.
14. Guarantol' may not assign this Guaranty without GMAC's prior written consent, but GMAC may assign any of
the Obligations and/or this Guaranty, and if it does so, this Guaranty continues without interruption and
remains valid, in full force and effect, and enforceable against Guarantor by the party to whom it is assigned.
15. Guarantor unconditionally and irrevocably consents to GMAC's entering the premises where any
Guaranty-Collateral andlor Guarantor's books and records are kept at any time, with or without prior notic!),
and:
a.Acressing, inspecting, auditing, and copying Guarantor's books and records;
b.Examining and inspecting any Guaranty-Collateral.
16. If Guarantor makes payment(s) to GMAC under this Guaranty such that the Obligations are fully or partially
paid and Guarantor is partially or fully discharged Ullder this Guaranty, and later such payment is invalidated,
fOUlld to be fraudulent or preferential, set aside, and/or required to be disgorged by GMAC, then this Guaranty
will be automatically re-instated and will remain in full forc!) and effect as if Guarantor waS never discharged
uutil all Obligations have been fully and finally paid.
16000/6046/691246.1
4
GMAC Commercial Lending Guaranty (Real Estate and Wholesale) 8-29·05
17. Guarantor continuously and irrevocably authorizes GMAC to obtain from and provide to third persons any and
all types and kinds of information concerning Guarantor, whether from GMAC's direct actual experience or
obtained from other sources.
18. This Guaranty is in addition to, and does not supercede or in any way affect, any other Gnaranty or surety-type
agreement executed by Guarantor, whether singly or as a co-party to such agreement.
19. This Guaranty will remain in full force and effect including in the event of, and after, Guarantor's death (if
guarantor is an individual), until forty-eight hours after GMAC receives written notice of termination or
modification from Guarantor or Guarantor's estate. Such notice:
a. Must be sent to snch offices as GMAC may designate from time to time;
b. Will not operate to release Guarantor or his estate from liability under this Guaranty with respect to any
Obligations incurred prior to the effective date of such notice.
20. Except as noted above, GMAC has made no promises to Borrower or Guarantor to induce execution of this
Guaranty, and there are no other agreements or llilderstandings, either oral or in writing, between GMAC and
Guarantor affecting this Guaranty.
21. Any and all amendments to this Guaranty must be in writing and signed by Guarantor and GMAC.
22. This Guaranty binds and inures to the benefit of the successors and assigns of Guarantor and GMAC,
respectively.
23. If any part of this Guaranty is not valid or enforceable according to applicable law, all other parts will remain
valid and enforceable.
24. This Guaranty will be governed by and construed under the laws of the state in which the real property
collateral is located.
25. The liability of all parties siguing this Guaranty, where more than one, is joint and several.
26. GUARANTOR HAS READ ALL OF THE TERMS AND CONDITIONS OF THIS GUARANTY, HAS
CONSULTED WITH LEGAL OR OTHER ADVISORS OR HAS BEEN GIVEN AN OPPORTUNITY TO
DO SO, AND FREELY AND VOLUNTARILY GIVES THIS GUARANTY TO GMAC.
27. This Guaranty is secured, in part, by that certain Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Filing, dated as of even date herewith, executed by Guarantor for the benefit of
GMAC, as beneficiary.
[SIGNATURES ON FOLLOWING PAGE]
16000160461691246.1
5
'GMAC Commercial Lending Guaranty (Real Estate and Wholesale) 8-29-05
Guarantor:
Groth-Hill Land Company, LLC, a
California limited liability company
By:~j~h:- Jv~d~
,
Name:
r
-\\:loi" l~ "H;\\
Title: Member
Name:
/)/tIlO
!L (;.ftJTJ!-
Title: Member
Dated: OctoberQ1 ,2008
Date: October
<91 , 2008
Accepted:
GMAC
Signature: _ _ _ _ _ _ _ _ _ _ _ _ _ __
By (print): _ _ _ _ _ _ _ _ _ _ _ __
Title:
Date: October
Assistant Secretary
, 2008
16000/6046/691246.1
6
GMAC Commercial Lending Guaranty (Real Estate and Wholesale) 8-29-05
Member Name and Address
Robin Groth-Hill
2061 Pleasant View Lane
Livermore, California 94550
David R. Groth
9989 Tesla Road
Livermore, CA 94550
Richard G. Groth and
Rosalie Barbara Groth,
as Trustees of the Richard
G. Groth 1989 Fam.ilyTrust
4420 Mines Road
Livermore, CA 94550
IJlitial Capital Contributions
rair Market Value
EXHIBITE
FORBEARANCE AGREEMENT AND RELEASE
This Forbearance Agreement and Release ("Agreement") is entered into by
GROTH BROS. OLDSMOBILE, INC., a Califol11ia cOlporation ("Dealer" or
"Borrower"), and GROTH-HILL LAND COMPANY, LLC, a California limited liability
company, JOSEPH M. IDLL and ROBIN A. IDLL, also known as ROBIN GROTHIDLL (collectively, "Guarantor"), and DAVID R. GROTH, on the one hand, and GMAC
LLC, fIkIa GENERAL MOTORS ACCEPTANCE CORPORATION ("Lender"), on the
other, effective as of November 4, 2008.
RECITALS
J.
A.
LO"ans to Dealer. Dealer owns and operates an automobile dealership ;\)
with a Chevrolet franchise located at 59 S. "L" Street, Livermore, California 94550 (the "
"Dealership"). Dealer is owned by Robin Groth-Hill, David R. Groth and Joseph M. Iffil:-\\tchar d c.
(the "Dealer Principals"). Dealer is currently indebted to Lender pursuant to the
RO'Sttlie 6~-\tfollowing loans (the "Dealer Loans"):
\N:n~ ~
1.
Wholesale Security Agreement dated October 6, 1978, as amended
and supplemented ("Wholesale Agreemenf').
2.
Equipment Loan Promissory Note and Security Agreement dated
3.
October 1,2003.
Equipment Loan Promissory Note and Security Agreement dated
May 17, 2006.
B.
Collateral. As security for the Dealer Loans, the Dealer granted Lender a
security interest in its inventory of vehicles, Palts and accessories, equipment, furniture
. and fixtures, accounts, general intangibles and other personal property as set forth in the
Wholesale Agreement and the General Security Agreement (the "Collateral") identified
in Exhibit A.
C.
Loan Documents. The loan documents for the Dealer Loans and
documents executed in connection with those loans are identified on Exhibit A to this
Agreement and are referred to as the "Loan Documents."
D.
Capitalization Requirements. Dealer has not maintained sufficient
capital investment to meet Lender's working capital requirements, effective net wOlth
requirements, cash and vehicle equity requirements and other lending requirements
(collectively, "Lending Requirements"). Dealer's fmancial operations and profitability
have deteriorated.
E.
Events of Default. Dealer has defaulted on its obligations owing to
Lender under the Wholesale Agreement. Lender has discovered that Dealer has sold
vehicle inventory and failed to repay Lender creating a sold out of trust or "SOT"
16000/60461695373.3
November 5, 2008 Third Draft
1
condition. As of October 29, 2008, the amount of the SOT is $588,331.73 (the "Default
Amount") for the 20 vehicles identified on the attached Exhibit B. Lender has suspended
Dealer's credit lines under the Wholesale Agreement.
F.
Dealer's Request to Forbear. Pursuant to the Loan Documents, Lender
has the right to terminate the Dealer's credit lines at any time, to accelerate the baJance
dne under the Loan Doclunents, and to enforce its rights including taking possession of
the Collateral. Dealer has asked Lender to forbear from exercising its rights and
remedies (i) arising out of the SOT and (ii) for failure to comply with the Loan
Documents. Dealer has asked for a period of ninety (90) days (the "Forbearance Period")
fi'om the effective date of this Agreement to allow Dealer and Guarantor additional time
to cure the SOT, come into compliance under the Loan Documents and satisfY the
Lending Requirements. Dealer has further asked that Lender reopen Dealer's credit lines
during the Forbearance Period. In exchange, Guarantor will provide Lender with
additional security in certain real property collateral more particularly described below.
NOW THEREFORE for good and valuabJe consideration, the receipt and
sufficiency of which are hereby acknowledged, the pat1ies agree as follows:
AGREEMENT
1.
Incorporation of Recitals. Each of the above recitals is incorporated
herein and deemed to be the agreement of Lender, Dealer and Guarantor and is relied
upon by each patiy to this Agreement in agreeing to the terms of this Agreement.
2.
Terms of Forbearance. During the Forbearance Period, Lender will
forbear from exercising its rights and remedies against Dealer and Guarantor due to the
events described above on the following terms and conditions:
(a)
Dealer and Guarantor shall execute and deliver this Agreement by
5:00 p.m. Pacific Time on November 7, 2008.
~
(b)
Guarantor shall execute and deliver to Lender a signed and
notarized deed oftmst (the "Deed ofTrnst") in a form satisfactory to Lender,
encumbering that certain unimproved real property located in the unincorporated area of
the County of Alameda, State of California, identified as Assessor's Parcel Number 9020008-010-04 (the "Real Property Collateral") and a guaranty secured by the Deed of
Tmst (the "Guaranty"), and such other documentation as Lender reasonably request to
evidence and record deed oftmst against the Real Property Collateral. Lender hereby
acknowledges receipt of the Deed of Tmst and Guaranty as of the Effective Date.
(c)
By Febmary j, 2009, at 5:00 p.m. Pacific Time, Dealer shall pay
the Default Amount in full.
~a
16000/6046/695373.3
November 5, 200811lird Draft
2
,.
1'--11'
(d)
By February;£, 2009, Dealer will have adequately capitalized the
Dealership in compliance with the Lending Requirements, as determined by Lender, in its
sole discretion.
(e)
Lender will forbear collection of curtailment payments during the
Forbearance Period. At the termination of the Forbearance Period, curtailment payments
will resume as provided in the Loan Documents and by Lender.
(f)
As of November 1,2008, the interest rate under the Wholesale
Agreement is increased to a rate of Prime plus 200 basis points.
(g)
Lender will make Dealer's credit lines under the Wholesale
Agreement open and available to Dealer provided there is no further default by Dealer
and/or Guarantor under this Agreement or under any Loan Document.
Dealer Principals shall by December 1, 2008, provide Lender with
CUlTent fmancial statements and documentation supporting and evidencing any material
asset listed on such fmancial statements.
(h)
(i)
Lender shall have at all times, upon reasonable notice, the right to
enter into and upon the Dealer's premises or where any of Lender's Collateral or records
with respect to such Collateral are located for the purpose of inspecting the same, making
copies of records, observing the use of any part .of said Collateral, physically auditing the
Collateral or otherwise protecting Lender's security interest in its Collateral. In addition,
Dealer shall provide Lender with all information Lender requests regarding trade
payables, taxes, and other expenses.
G)
Lender is authorized to make demand of General Motors for direct
payment to Lender pursuant to the Joint Notice of Assigunlent and Demand for Payment
dated October 5, 2001, between. Dealership and Lender and that monies received by
Lender may be applied to the amounts owing Lender as Lender shall determine.
(k)
Dealer shall provide Lender (if it has not already done so) with an
assigrunent of proceeds from retail contracts ("Assignment"). No motor vehicle sold or
leased may be delivered until the lender financing such sale or lease has received
Lender's notice of the Assigrunent.
(1)
Dealer and Guarantor shall strictly observe and perform each and
every one of the terms, conditions, and promises contained in this Agreement and in the
Loan Documents such that each loan is paid current and paid timely throughout the term
ofthe Forbearance Period.
3.
Other Representations, Warranties and Covenants. During the
Forbearance Period, in addition to the conditions set forth in Section 2, above, Dealer
will;
16000/6046/695373.3
3
(a)
Pay all wholesale charges invoiced under the Wholesale
Agreement by the fifteenth (15th) day of the month following the month in which such
wholesale charges are incurred.
(b)
Provide Lender access to all the books and records of the
Dealership's business, including all bank records and bank accounts, for the purpose of
verifying application of vehicle proceeds and protecting its secured interests.
(c)
Permit one or more representatives of Lender ("On-Site
Representative") to be on the premises of the Dealership's place of business and pay
Lender a fee of $750.00 per day per On-Site Representative for each day the On-Site
Representative is stationed at Dealer's premises.
(d)
Upon Lender's request, give Lender possession of all original and
duplicate keys to all vehicles and all Certificates of Title and Manufacturer Certificates of
Original for all vehicles, whether acquired by Dealer before or after the date of this
Agreement.
(e)
Not sell or lease any motor vehicle for less than the amount owed
to Lender under the Wholesale Agreement for such motor vehicle, without the prior
written approval of Lender.
(f)
Dealer shall be liable for and shall pay when due all amounts
owing to third parties as a result of any sale or lease of a vehicle, including, but not
limited to, Department of Motor Vehicle fees, sales taxes and credit life, disability and
service contract premiums. Dealer acknowledges that all amounts owing to Lender for
sale or lease of a vehicle for which wholesale financing was provided by Lender may be
retained by Lender to pay such amounts owing for such vehicle.
. . (g) . Not deliver any-motor vehicle to a retail customer purchased in an
"all cash" transaction until certified funds have been collected from the retail customer.
However, Dealer may accept a down payment of up to $2,500.00 in non-certified funds.
(h)
Not "spot" deliver any motor vehicle to a retail customer until
approval of financing for that motor vehicle has been confirmed.
(i)
Notify Lender of each and every sale, lease, dealer trade or other
transaction involving a motor vehicle before it occurs and confum its occurrence
immediately thereafter and provide for payment of the proceeds thereof as set forth
herein.
G)
Endorse over to Lender all checks collected from any retail
customer or any retail customer's lender in connection with the sale of motor vehicles in
"all cash" transactions and deliver such endorsed checks via overnight mail, at Lender's
expense, to GMAC Financial Services, Dallas Regional Business Center, 5208 Tennyson
Parkway, Suite 120, Plano, Texas 75024, to the attention ofBl'ian Lazar, for manual
processing.
16000/60461695373.3
4
(k)
Any nominal down payments collected by Dealer in connection
with motor vehicle sales for which Lender will provide contract financing may be
retained by Dealer if the amount financed is sufficient to pay in full the amount of
wholesale financing.
(I)
Pay timely all Department of Motor Vehicle fees in connection
with or arising out of the sale of or registration of motor vehicles, when due, and shall
snbnrit proof of payment to Lender npon request.
(m) Pay timely all taxes due on the sale or lease of any motor vehicle,
when due, and shall submit proof of payment to Lender upon request.
(n)
Pay any and all liens on "trade-in vehicles" within ten (10) days of
receipt of possession of a ''trade-in vehicle" and submit proof of payment to Lender upon
request.
(0)
If a trade-in allowance is negotiated, which represents proceeds
from the sale of Lender's collateral, Dealer must demonstrate that the average wholesale
value of that vehicle suppOlis the negotiated trade-in allowance.
(P)
Notify Lender immediately, in detail, in writing of any fact or
occurrence, which by its happening, or with the passage of time, may affect the continued
solvency or viability of the Dealership.
Waive all rights under Division 9 of the California Uniform
Commercial Code including, but not linrited to, notice of acceleration, redemption and
notice of disposition of collateral and fuliher agrees that the sale or return of Collateral at
public or private sale by agreement or bid to car dealers or the general public shall
constitute a commercially reasonable disposition of the Collateral.
(q)
(r)
Pay to Lender its reasonable costs and expenses including
reasonable attorney fees related to this Agreement and the other Loan Documents.
(s)
Not withdraw, or allow anyone else to withdraw, without Lender's
consent, funds from the Dealership except for payment of routine operating costs and
expenses.
(t)
Reduce the number of new demonstrator model vehicles to no
greater than three (3) vehicles, to be used solely by the Dealer Principals or their spouses.
Any such demonstrator model vehicle shall be replaced only with a vehicle from Dealer's
used vehicle inventOlY.
(u)
Within forty-five (45) days from the effective date of this
Agreement, reduce Dealer's new vehicle inventory to ninety (90) new velricles or less.
By the end of the Forbearance Period, reduce Dealer's new vehicle inventory to eighty
(80) new vehicles or less.
16000/60461695373.3
5
(v)
Within forth-five (45) days from the effective date of this
Agreement, reduce Dealer's used vehicle inventory for which Lender provides wholesale
financing to forty (40) used vehicles or less. By the end of the Forbearance Period,
reduce Dealer's used vehicle inventory for which Lender provides wholesale financing to
thirty (30) used vehicles or less.
(w)
Cease all payments to Dealer Principals, except for Dealer
PI1ncipals' ordinary and customary salaries that are in effect for each Dealer Principal on
the effective date of this Agreement.
(x)
Voluntarily surrender at the reasonable request of Lender, after the
termination of the Forbearance Period by its own terms or otherwise, the inventory of
new and used vehicles and all other Collateral.
(y)
Execute any and all documents Lender reasonably deems
necessary in connection with the assignment of the proceeds of retail installment sales
contracts and leases the Dealership enters into with retail customers and the amounts
payable reSUlting from the sale of those sales contracts andlor leases to finance sources;
Lender may present such documenta to any finance source purchasing such sales
contracts and leases, demand that payment be made directly to Lender and apply amounts
received to amounts owed to Lender, in Lender's discretion.
(z)
If Dealer enters into dealer trades, it will do so subject to the
following conditions:
(1)
All trades must be processed via the Automated Dealer
Trade system when trading with another GMAC wholesale dealer;
(2)
For trades where a dealer does not floor plan with Lender,
funds must be collected by certified check from that dealer;
(3)
For two-way trades, the floored amount of the incoming
vehicle may exceed the floored amount of the outgoing vehicle if a customer has
been identified to purchase the incoming vehicle. For all other incoming vehicles,
the floored amount of the incoming vehicle may exceed the floored amount of the
outgoing vehicle by no more than ten percent (10%); and
(4)
A vehicle may not be traded for a vehicle from a prior
model year, irrespective of the floored amount.
(aa) Not permit any overnight test drives of any motor vehicle and all
permitted test drives shall be accompanied by a Dealership employee.
4.
Forbearance Period Termination. This Forbearance Period shall
terminate upon the earlier to occur of:
(a)
16000/60461695373.3
FeblUary 6, 2009;
6
(b)
A further default by Borrower under any Loan Docmnent;
(c)
Bon'ower's or Guarantor's failure to comply with any term or
condition of this Agreement;
(d)
Any banlauptcy, insolvency or receivership proceeding is filed by
or against Borrower, Guarantor or any Dealer Principal, or if any of them makes
an assignment for the benefit of creditors; or
(e)
Lender, in the exercise of its reasonable business judgment based
upon adequate justification, deems itself insecure concerning either impaitment to
its Collateral or the timely full payment or performance due in connection with
any Loan Document.
At the tennination of the Forbearance Pel'iod, even if Dealer has paid the Default
Amount in full, Dealer and Guarantor understand and acknowledge that Lender is not
obligated to continue extending financing to Dealer under the Loan Documents unless
Dealer is adequately capitalized in compliance with the Lending Requirements, as
determined by Lender, in its sole discretion.
5.
Provisional Remedies. Borrower and Guarantor expressly acknowledge
that due to Borrower's default under the Loan Documents, Lender has the right to file a
complaint and to seek an order for writ of possession of the Collateral and a prelitninary
injunction, which right Lender is forbearing from exercising undel'the terms of this
Agreement. By this Agreement, Borrower and Guarantor each expressly consent to and
waive any right to oppose Lender's application for writ of possession or its recovery or
realization on property of Borrower subject to Lender's security interest or any additional
default of Bon-ower under the Loan Docmnents or this Agreement, and Borrower and
Guarantor each agree to surrender the Co llateral and othelwise cooperate in Lender's
exercise of rights to recover and realize on such propetty if Borrower and Guarantor fail
to perform under this Agreement or the Loan Documents.
Bankntptcy. In the event Borrower seeks relief under Title 11 of the
United States Code, Borrower agrees that it will not oppose a motion for relief from stay
by Lender pursuant to 11 U.S.C. § 362 unless it continues to make the payments required
under this Agreement. Borrower acknowledges and agrees that such payments made in a
titnely manner represent adequate protection of Lender's interest in the Collateral.
6.
7.
Effect of Prior Documents. The Loan Documents remain in full force
and effect, and except as specifically modified by this Agreement, shall not be construed
to:
(a)
Impair the validity, perfection or priority or any lien or security
interest securing Borrower's obligations to Lender;
(b)
Waive or impair any rights, powers or remedies of Lender under
the Loan Docmnents;
16000/60461695373.3
7
(c)
Constitute an agreement by Lender or require Lender to extend any
period offorbearance or grant additional forbearance or extend the term of the Wholesale
Agreement or the time for payment of any of Borrower's obligations to Lender.
BOltower specifically acknowledges that Lender has not agreed to any further extensions
of forbearance and that to the extent that Lender elects to grant any further extensions of
forbearance that it will be at Lender's sole and absolute discretion and without obligation
of any kind; or
(d)
Make any loans or other extensions of credit to BOll'ower at the
termination of the Forbearance Period set f01ih in this Agreement.
8.
Non Waiver. Lender by this Agreement is not waiving any default or
failure to comply with the lending requirements and such defaults shall remain until full
compliance with this Agreement.
9.
Confirmation of Collateral. BOll'ower hereby grants and confirms that
all of its obligations to Lender are secured by a perfected first priority security interest in
the Collateral described in the Loan Documents.
10.
Release. By this Agreement, Groth Bros. Oldsmobile, Inc., a California
corporation, Groth-Hill Land Company, LLC, a California limited liability company,
Joseph M. Hill, Robin A. Hill, a/kIa Robin Groth-Hill, and David R. Groth, each for
themselves, their successors and assigns (collectively refelted to as "Releasors"), release,
acquit and forever discharge Lender, its agents, servants, successors, officers, directors,
shareholders, employees, attorneys, parents, subsidiaries, or affiliate entities, past, present
or future, from any and all rights, claims, demands, losses, debts, damages, obligations,
costs, including attorneys' fees, liabilities, rights of action, causes of action, suits, liens,
expenses, compensation, indemnities, responsibilities or damage of every kind and
. nature, whether in law or in equity, or known or unknown, or suspected or unsuspected,
which Releasors ever had or now has against Lender of any type, nature or description
arising out of relating to, or in any way connected with the Loan Documents or the credit
relationships between Lender and Dealer, andlor Lender and the Guarantor.
It is the intention ofReleasors that this Agreement shall be effective as a full and final
release of each and every claim, obligation and matter included within the claims released
herein. In furtherance of this intention, Releasors hereby expressly waive the provisions
of California Civil Code section 1542 or any similar state or federal law, which provides
that:
A general release does not extend to claims which the
creditor does not know or suspect to exist in his or her
favor at the time of executing the release, which if known
by him or her must have materially affected his or her
settlement with the debtor.
16000/60461695313.3
8
Releasors acknowledge, warrant and represent that the effective impOlt of this provision
has been fully explained to them by their attorneys, and specifically waive and relinquish
any right or benefit which they may have under any law similar to California Civil Code
section 1542 to the full extent they may lawfully waive such right or benefit. In
connection with such waiver and relinquishment Releasors acknowledge that they fully
understand that they may hereafter discover facts in addition to or different from those
which they now know or believe to be true with respect to the subject matter of this
Agreement, but that it is their intention hereby to fully, fmally and forever release the
claims, released herein, known or unknown, suspected or unsuspected, which now exist,
may exist in the future and heretofore have existed, and that in furtherance of such
intention, the release given herein shall be and remain in effect as a full and complete
release of the matters released herein, notwithstanding the discovery or existence of any
such additional or different facts.
11.
Miscellaneous.
(a)
Agreement to Cooperate. All parties agree to and will cooperate
fully with each other in the performance of this Agreement and the Loan Documents,
including, without limitation, executing any additional documents and instruments
reasonable or necessary to the full performance of this Agreement.
(b)
Integration. This Agreement incorporates all the negotiations of
the parties hereto and is the fmal expression and agreement of the parties as of the
effective date. Borrower acknowledges that he is relying on no written or oral agreement,
representation, warranty or understanding of any kind made by Lender or any employee
or agent of Lender, except for the agreements of Lender set forth herein or in the other
Loan Documents. Except as expressly set forth in this Agreement, the other Loan
Documents remain unchanged and in full force and effect.
(c)
Severability. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, such provision shall be severable from the remainder of
this Agreement and the validity, legality and enforceability of the remaining shall not in
any way be affected or impaired thereby.
(d)
Modification. This Agreement may not be amended, waived or
modified in any manner without the written consent of all the parties hereto.
(e)
Binding Effect; No Third Party Beneficiaries. This Agreement
shall be binding upon and inure to the benefit of and be enforceable by the patties hereto,
their respective successors and assigns. No other person or entity shall be entitled to
claim any right or benefit hereunder, including, without limitation, the status of a third
party beneficiary hereunder, except the parties receiving the release in Section 9 above.
Debtor-Creditor Relationship. This Agreement and the other
Loan Documents shall not be deemed or construed to create a partuership, tenancy in
common, joint tenancy, joint venture, co-ownership or any other relationship aside from a
(f)
16000/60461695373.3
November 5, 2008 Third Dmft
9
continuing debtor-creditor relationship between the Borrower and Guarantor on the one
hand, and Lender on the other.
(g)
Reimbursement of Attorneys' Fees and Costs. Borrower and
Guarantor shall reimburse Lender for all costs and expenses, including without limitation,
reasonable attorneys' fees and disbursements (and fees and disbursements of Lender's inhouse counsel) expended or incurred by Lender in any arbitration, mediation, judicial
reference, legal action or otherwise in counection with (a) the negotiation or preparation
of this Agreement, (b) the amendment, interpretation, and enforcement of this Agreement
or the Loan Documents, including without limitation, during any workout, attempted
workout, and/or in connection with the rendering of legal advise as to Lender's rights,
remedies and obligations under the Loan Documents, (c) collecting any sum which
becomes due Lender under any Loan Document, (d) any proceeding for declaratol'Y
relief, any counterclaim to any proceeding, or any appeal, 01' (e) the protection,
preservation or enforcement of any rights of Lender. For purposes of this Section,
attomeys' fees shall inclUde without limitation, fees incurred in cOllllection with the
following: (1) contempt proceedings; (2) discovery; (3) any motion, proceeding or other
activity of any kind in connection with a bankruptcy proceeding or case arising out of or
relating to any petition under Title 11 of the United States Code, as the same shall be in
effect from time to time, or any similar law; (4) garnishment, levy and debtor and third
party examination; and (5) post-judgment motions and proceedings of any kind, including
without limitation, any activity taken to collect to collect or enforce any judgment. All of
such costs and expenses shall bear interest from the time of demand at the rate then in
effect under the Loan Documents.
Governing Law. Except as otherwise provided herein, this
A&1'eement and all other Loan Documents and the rights and obligations of the parties
alising out of or cOll11ected with this Agreement and the Loan Documents shall be
governed by the laws of the State of California without regard to principles concelning
choice of law. In any action arising out of or cOll11ected with this Agreement, Borrower
and Guarantor hereby expressly consent to the personal jurisdiction of any state and
federal cOUlt located in the State of California and also consents to service of process by
any means authorized by federal or governing state law.
(h)
(i)
Conflict. To the extent any provision of this dispute resolution
clause is different than the terms of any Loan Document, then the terms of this dispute
resolution clause shall prevail.
G)
Notice. If Borrower or Guarantor fails to perform or satisfy any
obligation under this Agreement, Lender will provide it written notice that it has two (2)
days to cure the default from Lender's delivery of the notice by facsimile or overnight
mail service to the address provided in this Agreement.
(k)
Warranties. The parties executing this Agreement warrant that
they have the authority of the corporation Q1'limited liability company for whom they are
executing this agreement to bind that corporation or limited to the terms of this
16000/6046/695373.3
November 5. 2008 Third Draft
10
Agreement and that each signatory has complied with all requirements of his or her
respective company By-laws or Operating Agreement to obtain such authority.
(1)
Counterparts. This Agreement may be executed in any number
of counterparts which, when taken together, shall constitute the one Agreement.
12.
Interpretation. In the event of any inconsistency between the terms of
this Agreement and any other Loan Document, this Agreement shall govern. Bon-ower
and Guarantor acknowledge that they have consulted with counsel and with such other
experts and advisors as they have deemed necessary in connection with the negotiation,
execution and delivery ofthis Agreement, 01' have had an opportunity to so consult and
have knowingly chosen not to do so. This Agreement shall be construed without regard
to any presumption Or rule requiring that it be construed against the party causing this
Agreement or any part hereof to be drafted. The headings used in this Agreement are for
convenience only and shall be disregarded in interpreting the substantive provisions of
this Agreement.
IN WI1NESS WHEREOF, Lender, Dealer and Guarantor have executed this
Agreement as of the date set forth above.
GROTH BROS. OLDSMOBILE,
corporation
"Dealer"
Address for Notice to Dealer:
59 S. "L" Street
Livermore, CA 94550
Telephone: (92500-:71'12>
Facsimile: (925)lH.'L-1d't?>
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
16000/6046/695373.3
11
C., a California
"Lender"
GMAC
By: _ _ _ _ _ _ _ _ _ _ _ __
Name:
Title:
Address for Notice to Lender:
5208 Tennyson Parkway, Suite 120
Plano, TX 75024
Attn: Brian Lazar
Telephone: (972) 649-2062
Facsimile: (972) 649-Olal&
"Guarantor"
California limited liabili
P~J
By:
Narne;"J;)avid R. Groth
Tit1tt,~/Member
ob' A',HiIl
___
~-I-_ __
11m ~L
David R. Groth
Address for Notice to Guarantor:
59 S. "L" Street
Livermore, CA 94550
Telephone: (925) m-~
Facsimile: (925~-.3M3
16000/60461695373.3
Novembor 5, 2008 Third Draft
12
EXHIBIT A
Loan Documents
Wholesale Security Agreement dated October 6, 1978.
Equipment Loan Proruissory Note and Security Agreement dated May 16, 2006.
Equipment Loan Promissory Note and Security Agreement dated October 1, 2003.
Joint Notice of Assignment and Demand for Payment dated October 5, 2001, between
Dealer and Lender.
General Security Agreement dated April 25, 2004, between Dealer and Lender.
DCC-! FInancing Statement by Dealer as debtor filed with the Office of the Secretary of
State for the State ofCaliforuia on January 3, 1966, File No. 66003790, as amended.
DCC-! Financing Statement by Dealer as debtor filed with the Office of the Secretary of
State for the State ofCaliforuia on June 24,2003, File No. 0318160142, as amended.
DCC-1 Financing Statement by Dealer as debtor filed with the Office of the Secretary of
State for the State of California on October 3, 2003, File No. 0328860040, as amended.
Debt Subordination Agreement between Dealer, Robin Groth-Hill and Lender.
Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing
dated October 27, 2008, between Lender, Groth-Hill Land Company, LLC, Joseph M.
Hill and Robin A. Hill.
Secured Guaranty dated October 27, 2008, executed by Groth-Hill Land Company, LLC,
Joseph M. Hill and Robin A. Hill.
.
16000/60461695373.3
!3
EXHIBITF
FIRST AMENDMENT TO FORBEARANCE
AGREEMENT AND RELEASE
This First Amendment to Forbearance Agreemel1t and Release ("Amendment") is
entered into by GROTH BROS. OLDSMOBILE, INC., a California corporation
("Dealer" or "Borrower"), GROTH-HILL LAND COMPANY, LLC, a California limited
liability company, JOSEPH M. HILL and ROBIN A HILL, also known as ROBIN
GROTH-HILL (collectively, "Guarantor"), and DAVID R GROTH, on the one hand,
and GMAC LLC, f/lda GENERAL MOTORS ACCEPTANCE CORPORATION
("Lender"), on the other, effective as of February 13, 2009. Capitalized tenns used in
this Amendment shall, unless specifically indicated to the contrary, have the meanings
given" to them iiI the Forbearance Agreement, as defined herein.
RECITALS"
A
Forbearance Agreement. Dealer, Guarantor, David R. Groth and Lendel'
entered into that celiain Forbearance Agreement and Release effective November 4, 2008
(the "Forbearance Agreement").
B.
DeaIel' Pl'incipals. Dealer is owned by Robin Groth-Hill and David R.
Groth. Robin Groth-Hill and David R. Groth are the Dealer Principals, as defined in the
Forbearance Agreement. The Richard and Rosalee Groth Living Trust is not a Dealer
J'tincipal.
....-¥.
C.
Failure to Perform Forbearance Agreement. Pursuant to Sections 2(c)
and (d) of the Forbearance Agreement, Dealer, by Febmary 6,2009, was to pay the
Default Amount in full and adequately capitalize the Dealership. Dealer has not satisfied
these Sections of the Forbearance Agreement.
D.
Additional Time to Perform Forbearance Agreement. Dealer now
seeks additional time to complete the performance agreed to in the Forbearance
Agreement. Dealer has asked Lender to forbear from exercising its rights and remedies
for failure to comply with the Forbearance Agreement. Lender is willing to forbear from
exercising its rights and remedies on the terms and conditions set fOlih in this
Amendment, and by this Amendment, Lender gives Dealer notice to pay Lender in fnil.
NOW THEREFORE for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
AGREEMENT
1.
Incorporation of Recitals. Each of the above recitals is incorporated
herein and deemed to be the agreement of Dealer, Guarantor, David R. Groth and Lender
and is relied upon by each pruty to this Amendment in agreeing to the M'1Ils of this
Amendment.
16000/6046/7 J2325.3
I
2.
Amended Conditions ofForbearllnce. Lender will forbear from
exercising its rights and'rymedies against Dealer and Guarantor due to the events
described above and in the Forbearance Agreement with the following additional
conditions:
(a)
Deale!', Guarantor and David R. Groth shall execute and deliver
this Amendment to Lender by 3:00 p.m. Pacific Time on February 20, 2009.
(b)
As a condition of an extension of the Forbearance Period, Dealer
shall pay to Lender an extension fee in the amount of $50,000 (the "Extension Fee") 011
March 13, 2009, subject to reduction as follows: For each new vehicle listed on Exhibit
"A" attached hereto that is sold by D(;)al(;)r and for which floor plan fmancing is paid in
full, the Extension Fee will be reduced by the amount of$4,000. For each used vehicle
listed on Exhibit "B" attached hereto that is sold by Dealer and for which floor plan
financing is paid in full, the Extension fee will be reduced by the amount of $2,000.
(c)
By March 13,2009, Dealer shall comply with Section2(c) of the
Forbearance Agreement and pay the Default Amount, all of Lender's costs associated
with enforcing the Forbeatance Agreement and this Amendment, and the Extension Fee
as may be reduced pursuant to subparagraph (b) above.
(d)
By March 13, 2009, Dealer shall comply with Sectio1l2(d) oHhe
Forbearance Agreement by adequately capitalizing the Dealership in compliance with the
Lending Requirements, as determined by Lender, in its sole discretion.
(e)
Within 72 hours from the date of execution ofthis Amendment,
each Guarantor shall deliver to Lender current financial statements and documentation
supporting and evidencing any material asset listed on such fmandal statements.
(:I')
As of February 1,2009, the interest rate under the Wholesale
Agreement is increased to a rate of Prime plus 300 basis points. The telm "Prime" is
described in the letter attached hereto as Exhibit "e" that Lender recently sent to Dealer
regarding Lender's establishment of a 4.00% per annum "Prime Floor" for its wholesale
intetest rate calculations.
(g)
Dealer's credit Jines under th", Wholesale Agreement financing
Deale1"s new vehicle inventory shall remain open, subject to the following: As of March
13,2009, Dealer shall have reduced its new vehicle inventory, as determined by Lender,
to 93 vehicles or Jess (excluding twelve new vehicles sold out of trust, as identified on
Exhibit "D" attached hereto) outstanding on Lender's floorplan. If Dealer fails to reduce
its new vehicle inventory, as determined by Lender, to 93 vehicles or less, Dealer shall
pay to Lender the alllount of $2,000 for each new vehicle in Dealer's inventory that
exceeds the 93 Ilew vehicle threshold set forth herein.
16000160161712325.3
2
(h)
Dealer's credit lines under the Wholesale Agreement financing
Dealer's used vehicle inventory shall be suspended, except vehicles accepted fer trade-in,
which exception shall be determined by Lender, hi its discretion, 011 a case-by-case basis.
(i)
If Dealer pays the Default AmolUlt, Lender's costs and the
Extension Pee by March 13,2009, Lender will discontinue assessment of a $750 per day
monitoring fee for an On-Site Representative. Lender will, however, continue to conduct
audits of Dealer, in its sole discretion.
(j)
On a daily basis, Dealer shaH provide Lender with a report of each
and every sale,.1ease, dealer trade or other transaction involving a motor vehicle by
delivering a daily operational log listing every transaction for the preceding day. Such
daily operational log shall be delivered to Brian Lazar either via facsimile to (972) 649'2218 or via e-mail [email protected].
(k)
Until Dealer has repaid the Dealer Loans and all accrued interest in
full, Lender shall not release or subordinate the Deed of Trust.
Dealer's compliance with Sections 3(u) and (v) ofthe PorbeiU'ance
Agreement is hereby waived.
(I)
(m)
Dealer and Guarantor shall strictly observe and perform each and
everyone of the terms, conditions, and promises contained in the Loan Documents and
the PorbeiU'ance Agreement, as amended herein, such that each Dealer Loan is paid
current and paid timely throughout the term of this Amendment and under the Loan
Documents.
3.
Notice to Pay AU Dealer Loans Owing to Lender. On or before May
13,2009, Dealer shall repay all Dealer Loans in full, including all accrued interest
tln'ough date of payoff. lfDealer fails to repay the Dealer Loans, including all accrued
interest, in full by May 13, 2009, Dealer shall pay to Lender anon-compliance fee in the
amount of$50,OOO, which shaH be due and payable on May 14, 2009.
4.
Forbeal'ance Period Termination. Lender will forbear from pursuing its
rights and remedies under the Loan Documents, the Porbearance Agreement and this
Amendment arising solely out of Dealer's failure to comply with the Forbearance
Agreement, as desClibed in the Recitals, but in no event will such term of forbearance
extelld past March 13,2009. If Dealer or Guarantor fail to titnely perfOlm or satisfy any
of tile other terms or conditiolJs of tllis Amendment, the Forbearance Agreement 01' the
Loan Documents, then Lender may immediately notify Dealer to obtain 8nother finance
source and to pay off the Dealer Loans and may pursue all other rights and remedies
under the Loan Documents and applicable law.
5.
Other Tenus of Forbearance Agreement Restated. All other tel111S and
provisions of the ForbeiU'ance Agreement not specifically modified or amended herein
are restated. Without lhniting the generality ofthe foregoing, the parties restate Sections
16IJOO/6046f712325.3
3
2 and 3, except as modified or amended herein, and Sections 4 through 12, inclusive, of
the Fol'beru:ance Agreement as if fully set f01th herein with respect to this Amendment.
6.
Release. By this Amendment, Groth Bros. Oldsmobile, Inc., a California
corporation, Grotit-Hill Land Compal1Y, LLC, a California limited liability compruty,
Joseph M. Hill, Robin A. Hill, alkla Robin Groth-Hill, and David R. Groth, each for
themselves, their successors al1d assigns (collectively referred to as "Releasors"), restate
and reaffirm their agreement to release, acquit and forever discharge Lender, its agents,
servants, successors, officers, directors, shareholders, employees, attorneys, parents,
subsidiaries, OJ' affiliate el1tities, past, present 01' future, from any and all rights, claims,
demands, losses, debts, damages, obligations, costs, including attorneys' fees, liabilities,
rights of action, causes of action, suits, liens, expenses, compensation, indenmities,
responsibilities or damage of every kind and nature, whether in law or in equity, or
known 01' unknown, 01' suspected or uususpected, which Releasors ever had 01' now has
against Lender of any type, nature or desc1'iption arising ont of relating to, 01' in any way
COIDlected with the Loan Docnments; the Forbearance Agreement or the credit
relationships between Lender and Dealer, andlor Lender and Guarantor.
. It is the intel1tion of Releasors that the Forbearance Agreement and this
Amendment shall be effective as a full and final release of each and every claim,
obligation andmat!er included within the claims released herein. In fmtherance of this
intention, Releasors hereby expressly waive the provisions of California Civil Code
section 1542 or any similar state or federal Jaw, which provides that:
A generall'elease does not extend to claims which the
creditor does not know or suspect to exist in his 01' her
favor at the time of executing the release, which if known
by him or her must have materially affected his or her
settlement with the debtor.
Releasors acknowledge, wan'llnt and represent that the effective impolt of this
pl'ovision has been fully explained to them by their attomeys, and specifically waive and
relinquish any right 01' benefit which they may have under any law similar to California
Civil Code section 1542 to the full extent they may lawfully waive snch right or benefit.
In counection with such waiver and relinquishment, Releasors acknowledge that they
fully understand that they may hereafter discover facts ill addition to or different from
those which they now know or believe to be true with respect to the subject matter of this
Amendment, but that it is their intention hereby to fully, finally and forever release the
claims, released herein, known or unknown, suspected or unsuspected, which now exist,
may exist in the future and heretofore have existed, and thal in furtherance of such
intention, the release given herein shall be and remain in effect as a full and complete
release of the matter& released herein, notwithstanding the discovety 01' existence of any
such additional or different facts.
7.
-Due Authority of Dealer. Dealer, pursuant to resolution of its board of
directors, has authorized and empowered Robin Groth-l-IiIl, acting in her capacity as
1600016046nt232S.3
4
President of Dealer, to act for and on behalf of and in the name of DealeI' and as its
corporate act and deed, to enter into and execute this Amendment. The performance of
'this Amendment by Dealer has been duly authorized by all necessary corporate action
and does not and will not reqtlit'e any further consent or approval of its directors or
shareholders.
8.
Due Authority of Guarantor. Groth-Hill Land Company, LLC, the
entity Guarantor, plU'suant to the unanimous written consent of all of its members, has
authorized and empowered Robin Groth-Hill and David R. Groth, acting in their capacity
as members of the entity Guarantor, to act for and on behalf of and in the name of the
entity Guarantor and as its limited liability company act and deed, to enter into and
execute this Amendment. The pelformance of this Amendment by the entity Guarantor
has been duly authorized by all necessary limited liability company action and does not
and will not require any further consent or approval ofits members.
9.
Counterparts. This Amendment may be executed in any number of
counterparts which, when taken together, shall constitute the one document.
IN WITNESS WHEREOF, Dealer, Guarantor, David R. Groth and Lender have
executed tilis Amendment as ofthe date set forth above.
~~Dealer'~
GROTH BROS, OLDSMOBILE, INC., a Califol'llia
corporatio~2
/t_~
By:
,;
/ /
Name: /.. obin 1'0000Hln
Title: Presid nt
(/)
L/
Address for Notice to Dealer:
59 S. "L" Street
Livennore, CA 94550
Telephone: (925) 447-3190
Facsimile: (925) 449-9243
[Signatures Colltillue 011 Followillg Page]
J6000l6M617l232S,3
5
"Guarantor"
California limited liability co
Address for Notice to Guarantor:
59 S. "L" Street
Livermore, CA 94550
TeJephone: (925) 447-3190
"David R. Groth"
F,~imile, (9?~.• _ -_ _
~41~
David R. Groth
Address fol' Notice:
59 S. "L" Street
Livermore, CA 94550
Telephone: (925) 447-3190
Facsimile: (925) 449-9243
{Signatures Continue On Following Pagel
16000/6046m:!325.3
6
"Lender"
GMAC
By: _ _ _ _ _ _ _ _ _ _ _ _ __
Nanle: ~~------__-----------------Title: Assistant Secretary
Address for Notice to Lender:
5208 Temlyson Parkway, Suite 120
Plano, TX 75024
Attn: Brian Lazar
Telephone: (972) 649-2062
Facsimile: (972) 649-2218
16000160461112325.3
7
Exhibit "A"
New Veludes List
[Attached]
16000160461712325.3
Exhibit "A"
EXHIBIT A
NEW VEHICLES
Model
VIN
Model Year
1GNFK13007J112234
2007
TAHOE K1500
1GNF013J17J14()074
2007
TAHOE 01500
Da)ls OS Total Orig OSS lotal Curr ass
44,s11.(i3
42,285,03
823
1,025
39,861.53
37,868,53
37,708,13
1GBFG16T461161098
2006
EXPRESSRV
790
46,277.13
1GBFG15T271195140
2007
EXPRESS RV
648
51,480,80
4(),775,60
35,378,4()
3GNFC18027G242669
2007
01500
788
37,240,48
1GNFK13097J292409
2007
TAHOEK1500
538
47,681,4()
43,152,45
37,610.45
1GNFK13087R342668
2007
TAHOEK1500
719
39,589.45
2GCEC19C081107257 '
200B
SILVERADO
580
26.433.93
26,433,93
1GCCS14EX88108559
2008
COLORADO
552
17,526.48
17,526.48
Exhibit "B"
Used Vehicles List
[Attached]
16000/6046n 12325.3
Exhibit "B"
EXHIBITB
USED VEHICLES
VIN
iGAHG39U671103197
lGYFK66637R364109
Model Year
Model
2007
EXPRESS VAN
2007
ESCALADE
Days OS Total Orig OSB Total Curr OSE
567
21.500.00
20,425.00
427
46,976.00
381 966.00
3GNeK123X7Gl10161
2007
AVALANCHE
257
27,795,00
27,795.00
1G2ZH17N984164970
2006
G6
158
15,195.00
.15,195,00
1Gl AK55F467844754
2006
COBALT
117
7,800.00
7,80[}.OO
2G1WD58C3B9218C65
200$
IMPALA
315
20,065.00
19,IOS.00
1C3LC46K37N621 562
2007
SEBRING
133
10,200,00
10,200.00
Exhibit "c"
Letter to Dealer
[Attached]
16000160461712325.3
Exhibit "C"
'0. ••. ' •
..J'~~.
" • •• 1-.~
.....
....:..
.. ,
'-:'
:;.'. ,
Exhibit "D"
Vehicles Sold Out of Trust
VINNtunber
lGNFK16308J 101564 ....
lGCHK23648F 106601
IGCHK29668E 172192
KL1TD66658B 156977
3GCEK13M78G 190567
1GCHK23668F 192462
3GCEK13J08G 227576
1GNFK16358J 229363
1GNFK13028R 244804
1GNFK13038R 260557
lGNES13H982261304
lGNFK13508R 274749
-- --
.-
-
.
.
Amount
$18,025.00
$39,392.34
$41,716.50
$10,528.93
$32,792.78
$49,135.30
.. $26,202.95
$50,601.20
$47,486.85
$48,777.10
$32,337.03
$52,986.75
16000/604617 12325.3
Exhibit "D"
EXHIBITG
GMAC
,
q.."m.
FINANCIAL SERVICES
5208 Tennyson Parkway. Suite 120. Plano, TX 75024
fX"'ECUIWF. OffICF.S
V[,fROn'
aRANCHES lHROVCHOtJf
TItE.WQRT,.O
April 15, 2010
Ms. Robin Groth-Hill
.Groth Bros, Chevrolet
59 South L Street
Livermore, CA 94550
Re: Notice orpefault and Demand for Payment
Dear Ms. Groth-Hill:
You are hereby notified that Groth Bros. Che\70let ("Dealership") is in default under the terms of its
Wholesale Security Agreement with GMA C, IlS amended from time to time, ("Agreement") as the result of-the
:Qealership's failure to pay GMAC faithfully and promptly.as each floor planned vellicle is sold. On April 13,
20Hl,GMAC received noti·fication of a returned ACH payment in the amount of$141,740.51. You have paid
GMAC $3,172.91 howeyer· $138,,567.60 remains outstanding to satisfy the returned ACH default.
GMAC previously demanded from the Dealership, by letter dated December I, 2009, payment iil full of all
ftm9tlnts d\1e, including principal) unpaid accrued interest; appUcable fees 'and any other charges) in c{>nnection
wjth the Dealership's wholesale credit line under the terms of the Dealership's Wholesale Security' Agreement
(c.ol\ectively, the "Wholesale Obligations").llo later than March 31.2010 {the "Due Date") if certain condItions
were not met. The Dealership failed to meet the conditions set forth ill the letter and failed to remit the
''Wholesale Obligations as demanded by the Due Date. This constitute,9 a default of'the Agreement, and as set
.fo$ fn the December letter, such default results in the imposition of the non-compli.ance fee of $43,500.00,
which is immediately due and payable.
Although there have been discussions of entering into a. Forbearance Agreement to provide the Dealership
additional time to satisfy tbe tenns of the December letter, as a result of the returned AcH defuult, GMAC is
withdra\ving any considerf!tio!lof such at this time.
GMAC hereby demands immediate payment for the returned ACH transaction and all other amounts owiilg
under the Dealership'S agreements with GMAC, in the amount of $2,715,)25.09 as of the date of this letter,
and.hereliy suspends the Dealership's credit lines effective immediately: In addition, GMAC Will exercise Iq
rights under the Assignment of Accounts Due or to Become Due and invoke the ussignment of the "Opel)
Account" between the Dealership and GM.
This demand for payment is made v.:ithout prejudice to any other amounts now or hereafter owing by the
Dealership to GMA~ including but not limited tO aecruing interest) additional collateral monitoring fees) and
any obligations arising under any other financing arrangements, including attbrneys' fees, if necessary.
I
If.you fail to make payment as demanded, GMAC has the right under the Agreement to take possessio!! of all
Dealership property in which GMA C has a security interest, including but not limited to, al1 of the motor
vehicles financed by GMAC for the Dealership. In this respect, you may be asked to assemble and present for
retaklng by GMAC SUeIl collateral. Of course, GMAC reserves the right to exercise any other remedies it may
have pursUi:U11 to law or contract.
Nothing in this letter constitutes or should be construed as a waiver of any of GMAC's rights or remedies
under applicabk law and the Dealership's agreements with GMAC, aU of which are expressly reserved.
As"always, the Dealership'!) credit line -is expressly subject to the tenns ofthe agreements under which it WaS
extended. It is a discretionary line of credit and may be modified, suspended, or terminated at GMAC's
election, in its sole, absolute discretion.
'-Sineerely,
d~tA4~ol
T.L. Linkfield .
Operations Manager
EXHIBITH
.GMAC FINANCIAL SERVICES
5208 Tennyson Parkway, Suite 120, Plano, TX 75024
DRANCHESTHROUGHOUT
THE WORLD
EXECUIIVE OFFICES
DETROIT
April 15, 2010
Ms. Robin Groth-Hill
Groth Bros. Chevrolet
59 South L Street
Livermore, CA 94550
Re: Notice of Default and Demand for Payment
You are hereby notified that Groth Bros. Chevrolet ("Dealership") is in default under the terms of its
Wholesale Security Agreement with GMAC, as amended from time to time, ("Agreement") as the result of the
Dealership's failure to pay GMAC faithfully and promptly as each floor planned vehicle is sold. On April 13,
2010, GMAC received notification ofa returned ACH payment in the amount of$141,740.51. You have paid
GMAC $3,172.91 however $138,567.60 remains outstanding to satisfy the returned ACH default.
GMAC previously demanded from the Dealership, by letter dated December 1, 2009, payment in full of all
amounts due, including principal, unpaid accrued interest, applicable fees and any other charges, in connection
with the Dealership's wholesale credit line under the terms of the Dealership's Wholesale Security Agreement
(collectively, the "Wholesale Obligations") no later than March 31, 2010 (the "Due Date") if certain conditions
were not met. The Dealership failed to meet the conditions set forth in the letter and failed to remit the
Wholesale Obligations as demanded by the Due Date. This constitutes a default oflhe Agreement, and as set
forth in the December letter, such default results in the imposition of the non-compliance fee of $23,500.00,
which is immediately due and payable.
Although there have been discussions of entering into a Forbearance Agreement to provide the Dealership
additional time to satisfY the terms of the December letter, as a result of the returned ACH default, GMAC is
withdrawing any consideration of such at this time.
GMAC hereby demands immediate payment for the returned ACH transaction and all other amounts owing
under the Dealership's agreements with GMAC, in the amount of $2,715,125.09 as of the date of this letter,
and hereby suspends the Dealership's credit lines effective immediately. In addition, GMAC will exercise its
rights under the Assignment of Accounts Due or to Become Due and invoke the assignment of the "Open
Account" between the Dealership and GM.
This demand for payment is made without prejudice to any other amounts now or hereafter owing by the
Dealership to GMAC, including but not limited to, accruing interest, additional collateral monitoring fees, and
any obligations arising under any other financing arrangements, including attorneys' fees, ifnecessmy.
If you fail to make payment as demanded, GMAC has the right under the Agreement to take possession of all
Dealership property in which GMAC has a security interest, including but not limited to, all of the motor
vehicles financed by GMAC for the Dealership. In this respect, you may be asked to assemble and present for
retaking by GMAC such collateral. Of course, GMAC reserves the right to exercise any other remedies it may
have pursuant to law or contract.
l"othing in this letter constitutes or should be construed as a waiver of any of GMAC's rights or remedies
ulder applicable law and the Dealership's agreements with GMAC, all of which are expressly reserved.
As always, the Dealership's credit line is expressly subject to the terms of the agreements under which it was
e,tended. It is a discretionary line of credit and may be modified, suspended, or terminated at GMAC's
election, in its sole, absolute discretion.
Sincerely,
dt?(~JMcI
T.L. Linkfield
Operations Manager
cc: David R. Groth
Richard G. Groth and Rosalie Barbara Groth, as Trustees oflhe Richard G. Groth 1989 Family Trust
EXHIBIT I
., "
'.,
Case4:10-cv-01669-PJH Document26
FiledOS/03/10 PageSof 19
May 18,2010
Groth Bros, Oldsmobile, Inc,
59 S. "L" Street,
Livermore, CA 94550
Attn: Robin Groth-Hill
Re: Workout Agrccment by Groth Bros, Oldsmobile and GMAC
Dear Ms, Groth-Hill:
The purpose of this letter is to document in writing agreed upon terms working out the
disputes between Groth Bros. Oldsmobile, Inc, ("Dealership") and GMAC, GMAC has
filed a complaint against the Dealership in the U,S. District Court for the Northern
District of California because of the defaults by the Dealership under its wholesale
lending agreements with GMAC. The Dealership has asked GMAC for time and
accommodations so that it can pursue alternative lenders with the intention of paying off
the wholesale loans and related debts that it owes to GMAC,
GMAC will reFrain From enforcing its rights and remedies under its agreements with the
Dealership (the "Agreements") and will not proceed with the lawsuit so long as the
Dealership agrees to the terms in this letter and signs this letter by May U, 2010, Upon
signing this letter, the Dealership and GMAC agree to the Following tenus:
,X-~400.cm- 'j\\ON
Lt\\r\
Ii()t
I \\eLlA
~t\
-k
rk.
ti.ut ;~
-retcJ
I, GMAC will apply up to $300,OOO,Qg of the money pledged by the Dealership
pursuant to the Credit Balance Agreement dated October 16,2009 (the "CAP
Account") to cure the outstanding deFaults for sold and unpaid vehicles ("SOT")
and pay past due wholesale charges, As of May 18, 20 I0, the SOT for 20
vehicles and past due wholesale charges to be paid and applied from the CAP
Account total $513,661,11 as detailed on the attached Exhibit A, GMAC will
apply $400,000,00 from the CAP Account which will reduce the CAP Account
balanct'tfrom $600,000 to~O,OOO,OO, The Dealership must pay all other SOT
amounts and,past due whO'fe'tale charges pursuant to the Agreements and this
letter,
2, So long as there is no other SOT or event of default under the Agreements and
provided that the Dealership pays GMAC pursuant to this workout letter and the
Agreements, then GMAC will refrain from enforcing its rights and remedies
against the Dealership through close of business on Monday, August 2, 20 I 0 (the
HPeriod
ll
).
3, If the Dealership does not pay in full the loans and related obligations under the
Agreements by close of business on August 2, 2010, then GMAC may pursue any
and all rights and remedies under the Agreements and the law, including but not
limited to pursuing all remedies available to it in the lawsuit.
16000/h04M807J 88.3
FiledOS/03/10 Page9 of 19
4. In return for GMAC applying the CAP Account money to the SOT and past due
wholesale charges and refraining from enforcement of its rights and remedies
during the Period, the Dealership agrees to sign a stipulation or other agreement
which will rcsult in the issuance of an order for writ of possession by the U. S
District Court in the pending lawsuit ("Stipulation") and to deliver that Stipulation
to GMAC by noon on May 21, 2010. The Stipulation will provide that if the
Dealership does not pay in full its loans and related debts owed to GMAC by
August 2, 2010, or ifit defaults on its obligations to GMAC during the Period,
then GMAC may file the Stipulation and obtain an Order from the U. S. District
Court for issuance of a writ of possession to repossess the vehicles and other
collateral securing the obligations under the Agreements.
5. During the Period, and provided that there is no new event of default or SOT,
GMAC will:
a. GMAC will maintain its assignmcnt of open account, but GMAC will
endorse and deliver to Dealership upon receipt payments received from
the assignment of open accounts. Promptly after the Dealership's delivery
of the Stipulation, GMAC will send a letter to purchasers of retail
contracts withdrawing its notice to deliver retail proceeds to GMAC.
b. Perform audits of the Dealership on a weekly basis, but GMAC may
conduct audits more often than weekly if GMAC determines, in its sole
discretion, that such audits are needed.
c. Provide, at its sole discretion, advances under the Agreements for sold
vehicles. GMAC has advanced funds for the Equinox, VIN
2CNFLEEY3A6357304, recently requested by the Dealership. GMAC
will provide, at its sole discretion, advances under the Agreements for
trade-in vehicles received by the Dealership as partial payment for sold
vehicles.
d. Allow the Dealership to use SmartCash in GMAC's sole discretion.
e. Waive curtailment obligations under the Agreements.
f.
Allow the 3 day release period on cash transactions.
6. During the Period, the Dealership will:
a. Perform in accordance with the Agreements and pay its obligations to
GMAC in a timely manner.
\;f~~~~~~~'~~en~t~o~f~s~~~~~~~~~
commercial sale and Ie
nsactions.
160{JW6046180778 .
2
<
·
1,<
~.r
Filed08/03/10 Page10 of 19
c. Pay GMAC immediately on all "check trades."
d. Provide GMAC daily notice of all sales and lease transactions and include
a seq uential copy of the report of sale log.
.
e. Provide GMAC daily notice of all "dealer trade" and wholesale and
auction sales activity.
Provide GMAC copies of daily bank statements for all its bank accounts.
~ 1:-\*
g. Pay the non-compliance fee of m;;soo by August 2, 20 I O.
f.
h. Provide GMAC with information concerning the progress of the
alternative financing including but not limited to any letter of intent,
commitment letter, and an estimated timeline. Provide GMAC with
infonnation concerning the progress of any potential buy/sale agreements
regarding the Dealership. In the event Dealership has a bona fide asset
purchase agreement (as determined in GMAC's sole discretion) submitted
to General Motors Corporation ("GM") and awaiting approval by August
2,2010, then OMAC wiII extend the Period up to Wednesday, September
1,20 I0 to obtain approval of OM to such sale of the Dealership.
7. If the Dealership fails to perform its obligations under this workout letter or
defaults under the Agreements during the Period, then OMAC's forbearance
immediately· ends without further notice to the Dealership and GMAC may
exercise all rights and remedies provided by this letter, the Agreements and law.
8. Nothing in this workout letter constitutes a waiver ofany of the existing events of
default, and any forbearance or delay by GMAC in exercising any of its rights and
remedies does not constitute a waiver of such rights or remedies under the
Agreements or law.
9. The Dealership hereby constitutes and appoints GMAC the true and lawful
attorney, for the purpose of signing necessary documents and accepting,
endorsing, negotiating, and receipting any medium of payment received by
GMAC in connection with this workout letter or any of the Agreements.
10. The Dealership, its owners and all guarantors agree to release GMAC from any
and all past and present claims as set forth in Attachment A which is incorporated
into this workout letter.
11. This workout letter constitutes the entire agreement between GMAC and the
Dealership and may be modified only by a writing signed by GMAC and the
Dealership. This workout letter may be signed in counterparts, each of which is
16000160461807188 J
3
Filed08/03/10 Page11 of 19
deemed to be an original and all of which taken together constitute one and the
same agreement.
If you would like to discuss this matter further, please contact Michele Smith at 972649-2086.
Very tndy Y'1rs,
GMAC
/,
By:
,
~
))/(
The terms and conditions of this workout letter are accepted and agreed to by the
Dealership.
Groth Bros. Oldsmobile, Inc.,
A California corporatio,n
~)
BY:~~~
Name:
Title:
Date:
'&fl~ ~\~{
11\..-'!?llil;dD
5. ~ 5. It)
1600Uf6tH6IIl077S8.3
4
Ma~
, '
26 10 06:06r
FiledOS/03/10 Page120 19
r· e
Attachment A
Groth Bros. Oldsmobile, Inc., Robin A. Hill, also known as Robin Groth-Hill. Joseph M. Hilf.
and David R. Groth (collectively. "Releasers") each expressly and affirmatively wive and
release GMAC and all of its djre~tors, officers, agents, employees, and" direct and indirect
subsidiaries, parents, owners, and affiliates (collectively "GMAC Parties") from any an all past
and present claims, defenses. causes ()f action, or damages arising from any and all de lings or
relationships involving) GMAC and any GMAC Parties on one hand and Releasers on e other
hand. By this Agreement, Releasers for themselves, their heJrs, succeSSors and assigns, release l
acquit and forever discharge the GMAC Parties and their agents, servants, successor~, fftcc.rs l
directors, shareholders, employees, a~omeys) parents. subsidiaries, or affiliate entiti 5, past,
present or future, from any and all rights, claims, demands, losses, debts, damages, obI gationS,1
costs, including attomeys' fees, liabilities, rights of action, causes' of action, suits, liens, e pcnses.
compcns"'tion. indemnities, responsibilities or damage of every kind and nature, whether J law or
in equity. or known or unknown, or suspected or unsuspected. which Releasers ever he or now
h.vc against the GMAC Parties of any type. nature or description arising out of relating o. or in
nny way connected with the Loan Documents or the credit relationships between G
C and
Releasers.
It is the Jnlention of R91easers thatthis release shall be effective as a full and final teleas
and every <:Iaim, obligation and matter included within the claims released herein. Tn fu hera nee
of this intention, Releasers hereby expressly waive the provisions of Cali fomi a Civil Cod stXtlon
1542 or allY similar state or fedcrallaw, which provides 'that:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN IDS
OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR,"
Releasers acknowledge, warrant and represent that the effective import of this provision as been
[u,lly explained to tbem by their attorneys, and specifically waive and relinquish any ight or
benefit which they may have under any law similar to California Civil Code secti.ofl 15 10 tne
full extent they may lawfully waive such right or benefit In connection with such wa vcr and
relinquishment Releasers acknowledge that they fullY understand that they may hereafter, iscovcr
facts in addition to or different from those which they noW know or believe to be true wi r.espect
LO the subject matter of Ihis Agreement, put thai it is their intention hereby to fully. fin lIyand
forever release Ihe claims 1 rf;:leascd herein, known or unknown J ~uspected or unsuspecte I which
now exist, may exist in the future and heretofore have existed. and that in furtherance of such
intention. the release given herein shall be and remain in effect as a full and complete. c
of
the matters released herein, notwithstanding the discovery or existence of an
ch addi onal r
dirferent facts.
Groth Bros. Oldsmobile, [nc.•
A California corporati
By: ~~~Y.Q~~~~,
Name:
Title:
Date:
16000i6046,180718fU
5
05/2612010 WED 19: 38 [TX/RX NO 7782J 10008
EXHIBIT J
August 2,2010
Groth Bros. Oldsmobile, Inc.
59 S. "L" Street,
Livermore, CA 94550
Re: Modification of Workout Agreement by Groth Bros. Oldsmobile and GMAC
The purpose of this modification letter ("Modification") is to document in writing a
modification of the workout letter dated May 18,2010 signed by Groth Bros.
Oldsmobile, Inc. ("Dealership") and GMAC (the "Workout Agreement").
By its telms, the Workout Agreement expires August-2, 2010. The Dealership has asked
GMAC for additional time so that it can pursue alternative lenders with the intention of
paying offthe wholesale loans and related debts that it owes to GMAC. GMAC is
willing to extend the terms of the Workout Agreement on the following conditions:
1. By close of business on August 17; 2010, the Dealership will provide GMAC
with satisfactory documentation verifying an injection of capital into the
Dealership of $300,000. The Dealership agrees that neither this capital nor any
other capital will be removed from the Dealership for the benefit of the owners of
the Dealership during the duration of this Workout Agreement as modified and
will be used only for ordinary and reasonable expenses of the Dealership.
2. By close of business on August 3, 2010, the Dealership will provide GMAC with
a letter signed by a lender confirming that such lender is performing due diligence
for a credit facility sufficient to permit the Dealership to pay its obligations in full
owed to GMAC and a timeline to process, complete and fund the credit facility.
3. By close of business on August 3, 2010, the Dealership will provide GMAC with
- a verification of assets which will support the collateralized escrow account
required by the proposed lender.
4. By close of business on August 3, 2010, the Dealership will pay GMAC an
extension fee of $40,000. The Dealership agrees that this extension fee may be
paid from GM Open Account funds received by GMAC on August 2, 2010
5. So long as the Dealership timely performs conditions 1,2,3 and 4, above, and so
long as there is no SOT or event of default under the Agreements and the
Workout Agreement, and provided that the Dealership pays GMAC pursuant to
this Modification, the Workout Agreement and the Agreements, then GMAC will
retrain £i'om enforcing its rights and remedies against the Dealership through the
close of business on Friday, October I, 2010 (the "Extended Period").
1900110018/831920.2
I
I
I
Ii
6. As further consideration for the Extended Period, the Dealership consents to and
agrees that GMAC will file the Stipulation with the U.S. District Court and
submit the proposed Order for Writ of Possession and Injunctive Relief
contemplated by the Stipulation ("Order") and accompanying Writ of Possession.
GMAC agrees that so long as the Dealership performs under this Modifieation it
will not take steps to enforce the Order or the Writ during the Extended Period.
7.. If the Dealership does not pay in full the loans and related obligations under the
Agreements by close of business on October 1,2010, then GMAC may pursue
any and all rights and remedies under the Agreements and the law, including but
not limited to pursuing all remedies available to it in the lawsuit and as described
and agreed in the Workout Agreement including enforcement ofthe Order.
8. All other terms and conditions ofthe Workout Agreement remain in full force and
effect during the Extended Period and are confirmed by this Modification.
9. If the Dealership fails to perform its obligations under the Workout Agreement or
this Modification 0\' defaults under the Agreements during the Extended Period,
then GMAC's forbearance immediately ends without further notice to the
Dealership and GMAC may exercise all rights and remedies provided by the
Workout Agreement, this Modification, the Agreements, the Order and law.
10. Nothing in this Modification constitutes a waiver of any existing events of
default, and any forbearance or delay by GMAC in exercising'any of its rights and
Agreements or law.
11. The Dealership, its owners and all guarantors agree to release GMAC from any
and all past and present claims through the date of this Modification as set forth in
Attachment A which is incorporated into this Modification.
12. This Modification constitutes the entire agreement between GMAC and the
Dealership. This Modification may be signed in counterparts, each of which is
sarrie agreement.
If you would like to discuss this matter fmiher, please contact Michele Smith at 972649-2086.
Very truly yours,
GMAC
By: ~~~~~_____________
19001/00181831920.2
2
"
The terms and conditions of this Modification are accepted and agreed to by the
Dealership.
A californiacorporation)
'J
BY(~Jit
Name: Robin Groth-Hill
Title: Dealer - President
Date:
j).'}.(0
!,
•
190011001111831920,2
3
I
!
Attachment A
Groth Bros. Oldsmobile, Inc., Robin A. Hill, also known as Robin Groth-Hill, Joseph M. Hill,
and David R. Groth (collectively, "Releasers") each expressly and affirmatively waive and
. release GMAC and all of its directors, officers, agents, employees, and direct and indirect
subsidiaries, parents, owners, and affiliates (collectively "GMAC Parties") from any and all past
and present claims, defenses, causes of action, or damages arising from any and all dealings or
relationships involving, GMAC and any GMAC Parties on one hand and Releasers on the other
hand. By this Agreement, Releasers for themselves, their heirs, successors and assigns, release,
acquit and forever discharge the GMAC Parties and their agents, servants, successors, officers,
directors, shareholders, employees, attorneys, parents, subsidiaries,or affiliate entities, past,
present or future, from any and all rights, claims, demands, losses, debts, damages, obligations,
costs, including attorneys' fees, liabilities, rights of action, causes of action, suits, liens, expenses,
compensation, indemnities, responsibilities or damage of every kind and nature, whether in law or
in equity, or known or unknown, or suspected or unsuspected, which Releasers ever had or now
have against the GMAC Palties of any type, nature or description arising out of relating to, or in
any way connected with the Loan Documents or the credit relationships between GMAC and
Releasers.
It is the intention of Releasers that this release shall be effective as a full and final release of each
and every claim, obligation and matter included within the claims released herein. In furtherance
of this intention, Releasers hereby expressly waive the provisions of California Civil Code section
1542 or any similar state or federal law, which provides that:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS
OR HER FAVOR AT THE TIME OF EXECUTlNG THE RELEASE,
WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR."
Releasers acknowledge, warrant and represent that the effective import of this provision has been
fully explained to them by their attorneys, and specifically waive and relinquish any right or
bencfit which they may have under any law similar to California Civil Code section 1542 to the
full extent they may lawfully waive such right or benefit. In connection with such w~iver and
relinquishment Releasers acknowledge that they fully understand that they may hereafter discover
facts in addition to or different from those which they now know or believe to be true with respect
to the subject matter of this Agreement, but that it is their intention hereby to fully, finally and
forever release the claims, released herein, known or unknown, suspected or unsuspected, which
now exist, may exist in the future and heretofore have existed, and that in fJJ~h9nce of such
intention, the release given herein shall be and remain in effect as a full and campi te release of .
the matters released herein, notwithstanding the discovery or existence of any such additional or
different facts.
' .
C', /
("'I-'~"",,><..O=-';-".1.-'j"¥:,"-:,-:---=:----:--::::::;
Groth Bros. 0 ldsmobile, Inc.,
A calif~rni~ corporr;ion.~
0
By: _
~ -i-:u
Name:
~
Title:
Date: ---,~c.:c::=--~_ __
in A. H1, ak Robin Groth-Hill
..:::....?
1900 1100 181831920.2
4
EXHIBITK
August 19,2010
59 S. "L" Street,
Livermore, CA 94550
Re: Second Modification of Workout Agreement by Groth Bros. Oldsmobile and GMAC
second modification ofthe workout letter dated May 18, 2010 signed by Groth Bros.
Oldsmobile, Inc. ("Dealership") and GMAC which was first modified by letter dated
August 2, 2010 (collectively, the "Workout Agreement").
The Dealership has asked GMAC to open the wholesale credit line for the purpose of
ordering new vehicle inventory from the manufacturer. GMAC is willing to open the
wholesale credit line on the following conditions:
I. Before GMAC will open the wholesale credit line the Dealership must perform
and satisfy the following terms:
a. The Dealership must deposit an additional $100,000 in to the CAP
Account so that the amount on deposit in the CAP Account will be no less
than $300,000 at all times during the Extended Period. The Dealership
will timely execute any documentation required by GMAC in connection
with the CAP Account and the Credit Balance Agreement to complete the
deposit; and
b. The Dealership must permit GMAC to place an on-site representative on
the Dealership premises and deliver all original and duplicate keys to all
vehicle inventory to the on-site GMAC representative who will ho Id the
keys each day. The GMAC on-site representative will make the keys
reasonably available to the Dealership so that vehicles may be taken for
test drives and sold.
2. After the Dealership satisfies paragraph I, above, GMAC will open the wholesale
credit lines for consensus new vehicle ordering with the following terms and
restrictions:
a. The Dealership must provide detail to GMAC in writing two business
days in advance of any order concerning the new vehicles to be ordered,
which detail shall be satisfactory to GMAC;
b. The new vehicle credit limit will be fifty (50) units. Ifvehicles on the
credit line exceed 50 units, then GMAC will immediately suspend the
wholesale credit lines without further notice;
19001100181&37174.1
I
c. The new vehicles must be disclosed to GMAC in advance as provided in
paragraph 2.a., above, and if the Dealership orders any vehicle not
disclosed in advance or, if disclosed, objected to by GMAC, then GMAC
may immediately suspend the wholesale credit lines without further
notice; and
d. The Dealership may enter into two-way dealer trades, meaning any trade
by the Dealership must result in one vehicle exchanged for another
vehicle.
3. The estimated cost of the on-site GMAC representative is $700 per day. So long
as the Dealership performs under the terms of the Workout Agreement, GMAC
will consent to the Dealership paying one-half of the cost of the on-site
representative. Such payment will be due by August 31, 2010 and September 30,
20 I O. If thc Dealership defaults under the Workout Agreement or the
Agreements, then the Dealership agrees that it is obligated to pay in full for the
on-site representative and will pay the full co~t ofthe on-site representative.
4. So long as the Dealership timely performs conditions 1,2 and 3, above, and so
Workout Agreement, and provided that the Dealership pays GMAC pursuant to
this Modification, the Workout Agreement and the Agreements, then GMAC will
refrain from enforcing its rights and remedies against the Dealership through the
close of business on Friday, October 1,2010 (the "Extended Period").
,
5. All other terms and conditions ofthe Workout Agreement remain in full force and
this Modification or defaults under the Agreements during the Extended Period,
then GMAC's forbearance immediately ends without further notice to the
Dealership and GMAC may exercise all rights and remedies provided by the
Workout Agreement, this Modification, the Agreements, the Order and law.
default, and any forbearance or delay by GMAC in exercising any of its rights and
Agreements or law.
8. This Modification constitutes the entire agreement between GMAC and the
same agreement.
19001/00181837174.1
2
Very truly yours,
GMAC
By: -------------------------
The terms and conditions of this Modification are accepted and agreed to by the
Dealership.
A California corporation
By: __________________
Name: Robin Groth-Hill
Date: ___________________
19001/0018/837114.1
3
EXHIBITL
September 30, 2010
59 S. "L" Street,
Livermore, CA 94550
Re: Third Modification of Workout Agreement by Groth Bros. Oldsmobile and GMAC
(now known as Ally Financial Inc. ("Ally"))
The purpose of this modification letter ("Modification") is to document in writing a third
modification of the workout letter dated May 18,2010 signed by Groth Bros.
Oldsmobile, Inc. ("Dealership") and Ally which was first modified by letter dated August
2,2010 and modified a second time by a letter dated August 19,2010 (collectively, the
"Workout Agreement").
The Dealership has asked Ally to extend the Extended Period to payoff the wholesale
credit line from the current Extended Period termination date of October 1,2010, to a
revised Extended Period date of November 1,2010. Ally is willing to continue the
Extended Period and the payment in full due date a second time on the following
conditions:
1. The Dealership currently has $300,000 in the "restricted" CAP Account and
$100,000 in the "unrestricted" CAP Account. The Dealership must transfer the
$100,000 of "unrestricted" CAP Account money into the "restricted" CAP
Account so that the amount on deposit in the "unrestricted" CAP Account will be
no less than $400,000 at all times during the Extended Period. The Dealership
will timely execute any documentation required by GMAC in connection with the
CAP Account and the Credit Balance Agreement to complete the deposit.
2. The Dealership agrees that the maximum net exposure to Ally will not exceed
$400,000. "Maximum Net Exposure" means the total principal balance on the
Wholesale Agreement less the restricted CAP Account balance. The Dealership
agrees that the principal balance on the Wholesale Agreement as of September 30,
20 lOis $699,908.94 for 21 vehicles. The Dealership agrees that as of September
30,2010, the Maximum Net Exposure to Ally is $399,908.94 ($699,908.94 minus
$300,000 because the restricted CAP Account is $300,000 as of September 30,
2010). By this condition, the Dealership agrees that by the close of business each
day, the Dealership's Maximum Net Exposure will not exceed $400,000. To
satisfy the Maximum Net Exposure requirement, Ally will accept additional
payments into the restricted CAP Account. It is the Dealership's obligation to
manage the Maximum Net Exposure, whether by reducing inventory and paying
down the Wholesale Agreement, providing additional payment into the CAP
Account, or otherwise as acceptable to Ally.
19001100181847156.2
1
3. By close of business on September 30, 2010, the Dealership will pay Ally an
.
extcnsion fee of$IO,OOO.
4. By close of business on October 25,2010, the Dealership will provide Ally with a
written update regarding the progress and status of the Dealership obtaining a
lender committed to providing a credit facility sufficient to permit the Dealership
to pay its obligations in full owed to Ally and a timeline to close the credit facility
and pay Ally in full by November 1,2010.
5. So long as the Dealership timely performs conditions 1,2,3 and 4, above, and so
Workout Agreement, and provided that the Dealership pays Ally pursuant to this
Modification,. the Workout Agreement and the Agreements, then Ally will refrain
from enforcing its rights and remedies against the Dealership through the close of
business on Monday, November 1,2010 (the "Extended Period").
6. All other terms and conditions of the Workout Agreement remain in full force and
this Modification 01' defaults under the Agreements during the Extended Period,
then Ally's forbearance immediately ends without further notice to the Dealership
and Ally may exercise all rights and remedies provided by the Workout
Agreement, this Modification, the Agreements, the Order and law.
8. The Dealership agrees to enter promptly into a stipulation to modify the Order to
update the exhibit list identifying the vehicle collateral by VIN and model as new
vehicle inventory is acquired by the Dealership when such stipUlation is requested
by Ally.
default, and any forbearance or delay by Ally in exercising any of its rights and
Agreements or law.
10. This Modification constitutes the entire agreement between Ally and the
Dealership and may be modified only by a writing signed by Ally and the
same agreement.
19001/00181847156.2
2
Very truly yours,
Ally Financial Inc., formerly known as GMAC
By:
The terms and conditions of this Modification and the Workout Agreement are
accepted and agreed to by the Dealership and Guarantors.
Robin A. Hill also known as Robin
Groth Hill
By: ____~------__
Name: Robin Groth Hill
Date: _ _ _ _ _ _ __
Joseph M. Hill
David R. Groth
19001/0018/847156.2
3
EXHIBITM
November 1,.2010
59 S. "L" Street,
Livermore, CA 94550
Re: Fourth Modification of Workout Agreement by Groth Bros. Oldsmobile and GMAC
(now known as Ally Financial Inc. ("Ally"»
fourth modification of the workout letter dated May 18,2010 signed by Groth Bros.
Oldsmobile, Inc. ("Dealership") and Ally which was first modified by letter dated August
2,20 I0, modified a second time by a letter dated August 19,2010, and modified a third
time by a letter dated September 30, 20 I0 (collectively, the "Workout Agreement").
The Dealership has asked Ally to extend the Extended Period to payoff the wholesale
credit line from the current Extended Period termination date of November 1, 2010, to a
revised Extended Period date of December 1,2010. Ally is willing to continue the
Extended Period and the payment in full due date a second time on the conditions set
forth in the Third Modification letter and as follows.
I. So long as the Dealership timely performs the conditions of the Third
Modification letter and so long as there is no SOT or event of default under the
Agreements and the Workout Agreement, and provided that the Dealership pays
Ally pursuant to this Modification, the Workout Agreement and the Agreements,
then Ally will refrain from enforcing its rights and remedies against the
Dealership through the close of business on Wednesday, December I, 2010 (the
"Extended Period").
2. The Dealership agrees and acknowledges that this is the final extension of the
Workout Agreement and that Ally will not and has no obligation or commitment
to extend the Extended Period any further. The Extended Period deadline of
December 1, 2010 is not conditioned upon the Dealership obtaining financing or
receiving any funds. Ally and the Dealership agree that December I, 2010 is the'
last and final date for payment of the Dealership's obligation owed to Ally.
3. All other terms and conditions of the Workout Agreement remain in full force and
this Modification or defaults under the Agreements during the Extended Period,
then Ally's forbearance immediately ends without further notice to the Dealership .
1900IioOI8/8S7228.2
and Ally may exercise all rights and remedies provided by the Workout
Agreement, this Modification, the Agreements, the Order and law.
5. The Dealership agrees to enter promptly into a stipulation to modify the Order to
update the exhibit list identifying the vehicle collateral by VIN and model as new
vehicle inventory is acquired by the Dealership when such stipulation is requested
by Ally.
6: Nothing in this Modification constitutes a waiver of any existing events of
default, and any forbearance or delay by Ally in exercising any of its rights and
Agreements or law.
7. This Modification constitutes the entire agreement between Ally and the
Dealership and may be modified only by a writing signed by Ally and the
same agreement.
Very truly yours,
Ally Finan . lIne., formerly known as GMAC
By:
,'s.~ ----
-
The terms and conditions of this Modification and the Workout Agreement are
accepted and agreed to by the Dealership and Guarantors. . ~.
.•.. -Groth Bros. 0 Idsmo bile, Inc.,
i""-..
f'fv,-'f' ' '-iJ.-",,::'
' ' ...-7:-"--:-<.f-""------..--...-,,,..-;,.,...-
~i11
als known as Robin
Groth '11
/-'1rL, 0/ 1 seph M. Hi!
rgttirf~
l'IOOIIOOI8/S)7Z2S.2

viewed here - Don Signer

Transcription

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