Several large vehicles from Johnson Towing Service of Greenfield took numerous vehicles from the Jim True Ford lot recently.

Ford Credit sued Jim True Ford in October 2019 while Jim True, the owner of the Ford dealership, filed a countersuit against Ford Credit in late December 2019.

The suits were filed in Southern District of Indiana Federal Court.

According to documents available from the federal court website, Ford Credit is seeking $2.4 million. On his counterclaim, True is seeking an unspecified amount in damages: “Counterclaimant True prays for judgment against Counterclaim Defendant, Ford Credit(,) in the sum which will fully and fairly compensate him for his damages, for punitive damages, for costs and for all other relief proper in the premises.”

In the initial complaint, Ford Credit alleges True violated the Automotive Wholesale Plan Application for Wholesale Financing and Security Agreement which was entered into on March 7, 2007.

According to Investopedia, “Ford Motor Credit Company LLC, d/b/a Ford Credit, is the financial services arm of Ford Motor Company and is headquartered in Dearborn, Michigan. The predominant share of Ford Credit's business consists of financing Ford and Lincoln vehicles and supporting Ford and Lincoln dealers.”

True received three documents from Ford Credit in August 2019. All three carry the signature of Bryan Banks, the center operations manager at Ford Motor Credit Company out of Nashville, Tenn. They are marked as exhibits M, N and O, respectively, attached to the initial filing against True.

Exhibit M, a Letter of Demand, is dated Aug. 19, 2019.

“You are in default of the terms of the Notice of Immediate Limitation and Subsequent Cancellation of Wholesale Financing Accommodations delivered to you on July 10, 2019 by your failure to make arrangements for alternative wholesale financing and retire all of your obligations with Ford Credit,” the letter reads. “The letter served as notice to the dealership that wholesale financing accommodations provided under the Automotive Wholesale Plan Application for Wholesale financing and Security Agreement dated March 7, 2007 would be cancelled pursuant to Paragraph 11 of the Agreement effective August 18, 2019.”

At the time of the letter, the amount allegedly due to Ford Credit by True was $2.35 million. Also, Ford Credit attached a two-page document listing all the vehicles it deemed were covered by the 2007 agreement.

That document lists the 17-character vehicle number, make, model, year, principal balance and floor date. There are more than 60 vehicles listed on the two pages.

“Ford Credit hereby demands immediate payment of the Total Amount Due,” the letter reads. “If you fail to make payment as demanded, we may take further action to protect our interests by pursuing all remedies provided at law including, taking possession of all property securing the Total Amount Due.”

It then limits how True can use the 2007 agreement he signed with Ford Credit.

“Until further notice from Ford Credit, the Wholesale Agreement is now limited to the financing of vehicles for which you have a firm customer's order, provided such order is submitted to us for prior approval,” the letter reads. “All applicable manufacturer(s) will be notified of the foregoing and you remain responsible for any vehicles funded on your behalf by Ford Credit. Payment for all vehicles sold must be made by certified funds unless otherwise notified.”

A follow-up letter dated Aug. 24, 2019, terminates all wholesale financing commitments to Ford Credit. As in the initial letter, it stated True was in default of the 2007 agreement, and it added balances amounting to more than $118,000, moving the amount to $2.41 million.

It demands immediate payment. If that is not done, Banks stated there would be other actions taken by Ford Credit.

“Ford Credit hereby demands immediate payment of the Total Amount Due,” the letter reads. “If you fail to make payment as demanded, we may take further action to protect our interests by pursuing all remedies provided at law, including taking possession of all property securing the total amount due.”

Another paragraph talks about the total amount due does not include interest or other accruing charges as well as reimbursement for returned checks or other media of payment made after the date on the letter. And it states Ford Credit reserves the right to amend the total amount due.

Then, it suspends the wholesale financing commitments from Ford Credit.

“All wholesale financing commitments by Ford Credit are suspended,” the letter reads. “Until further notice from Ford Credit, the Wholesale Agreement is now limited to the financing of vehicles for which you have a firm customer's order provided such order is submitted to us for prior approval. All applicable manufacturer(s) have been notified of the foregoing and you remain responsible for any vehicles funded on your behalf by Ford Credit. Payment for all vehicles sold must be made by certified funds unless otherwise notified.”

The letter's last paragraph states True's interest rate was increased by four points 10 days from the date of the letter.

True is represented by Danford R. Due, an Indianapolis attorney with the law firm Due Doyle Fanning & Alderfer LLP.

In the counterclaim, it states the formalities of the automotive floor plan agreement True and Ford Credit entered into in 2007. When it started, it had a limit of $800,000 “even though Jim True Ford was financing approximately $2 million of new vehicle inventory.”

True talked to Ford Credit about the $1.2 million discrepancy “and was told by Ford Credit to 'don't worry about it, the discrepancy will (sic: be) taken care of.'”

It states from the beginning of the agreement, True has carried $2 million worth of new vehicles with Ford Credit.

Since entering into the agreement, Ford Credit and True have met regularly with Ford Credit, and Ford Credit “has been directly involved in the dealership's management decisions and capitalization decisions offering both financial and business advice.

“Because of its relationship with Jim True Ford and True, Ford Credit's conduct created a relationship of trust and dependence,” the counterclaim continues.

The counterclaim states in 2019, Ford Credit advised True the dealership was under capitalized and needed to reduce the size of its floor plan. However, True received a “commitment for infusion of capital from FCN Bank.”

The letter from Thomas D. Horninger, president and chief executive officer for FCN Bank, N.A., to Banks is attached to the counterclaim.

“FCN Bank, N.A. is prepared to provide additional financing to Mr. True to be used for additional paid in capital to Jim True Ford Mercury, Inc,” the letter reads. “The extension of additional credit will be contingent upon a discussion with Ford Motor Credit to arrive at a mutual understanding on how to support his dealership in the future. I will make myself available to meet with you or any other representative(s) from your Company so that we all can move forward to support Mr. True.”

The counterclaim alleges in August 2019, Ford Credit insisted on having an onsite presence at Jim True Ford.

Then, there was a problem with a vehicle from Castrucci Ford, according to the counterclaim.

“An incorrect COS (Cost of Sales) was provided by Castrucci Ford which resulted in the transaction being delayed,” the counterclaim states. “The delay of the Castrucci Ford vehicle sale resulted in a financing failure which technically placed Jim True Ford out of trust with Ford Credit. From March 7, 2007 until the Castrucci vehicle sale, Jim True Ford had always paid Ford Credit on time. Rather than having an onsite presence to 'observe operations' Ford Credit took over the operation of the dealership, interfered with Jim True Ford's banking relationship with FCN Bank, seized checks, truck keys and titles, caused the payroll to bounce and essentially took over control of the dealership.

“Ford Credit's actions were intentional, unnecessary and put the dealership out of business,” the counterclaim continues. Also, “Ford Credit was aware of used car sales to customers and was aware that FCN Bank held the titles to those vehicles and claimed a first priority interest in that collateral.”

It lists several allegations concerning Ford Credit including: “Ford Credit failed to pay sales tax and other charges associated with the sale of vehicles; Ford Credit had access to confidential customer information which it was unauthorized to have access to; prior to and at the time of Ford Credit's onsite presence, Bryan Banks accused True of double floor planning which would constitute dishonest and fraudulent activity; While onsite, Brian (sic) Banks told employees of Jim True Ford that the only way the dealership would survive would be if it had another owner; Ford Credit has continued its onsite presence and continues to hold the keys and certificates of origin for the dealership’s new vehicle inventory; Ford Credit's automotive wholesale plan is ambiguous, does not contain capitalization requirements nor define Net Cash Deficits; Ford Credit failed and refused to cooperate with Jim True Ford and True to complete bank-approved recapitalization; Ford Credit has not acted in a commercially reasonable manner to recover the collateral's full market value; Ford Credit has wrongfully prevented True from recovery of the collateral's fair-market value; Ford Credit has interfered with True's efforts to sell collateral at fairmarket (sic) value; Ford Credit has defamed True; by reason of Ford Credit's conduct, True has resigned his dealership with Ford Motor Company and has lost the resale value of his dealership; Ford Credit has grossly mismanaged the dealership since it began its onsite presence; the Jim True Ford inventory has depreciated as a result of Ford Credit's delay in selling the new vehicle inventory; by reason of Ford Credit's conduct, True has lost his source of income and lost his ability to support himself and his family; by reason of Ford Credit's defamatory conduct, True's reputation, character, esteem, respect, good will and confidence have been damaged; and because of Ford Credit's conduct, True's ability to be gainfully employed in the automotive industry has been diminished.”

The counterclaim lists two counts: Count I Breach of implied, good faith and dealing and Count 2 Breach of fiduciary duty.

On the first, the counterclaim alleges Ford Credit has not exercised good faith and fair dealing with Jim True Ford and True and according to UCC 1-203, “the parties to a commercial transaction are required to exercise good faith and fair dealing.

“Due to the lack of good faith and fair dealing, Jim True Ford and True have been damaged.”

And on the second, the counterclaim alleges through Ford Credit's conduct, it breached its fiduciary duties to Jim True Ford and True, and because of that “Jim True Ford and True have been damaged.”