When the economy crashed in 2008 many previously viable car dealerships went bankrupt due to the huge decrease in sales. Deuce McAllister Nissan in South Jackson was one of the dealerships that went out of business. The dealership was owned by Deuce McAllister, the former star running back for Ole Miss and the New Orleans Saints.
In December the Clarion-Ledger reported under the headline “McAllister files suit against Nissan” that Deuce and Nissan are in a $1.5 million lawsuit stemming from Deuce’s personal guaranty of the dealership’s operations. Deuce filed a counterclaim in response to Nissan’s Complaint. A more accurate news headline would have been “Deuce on the Hook for $1.5 Million Owed by Failed Nissan Dealership.”
On Thursday Kingfish posted links to the Complaint, Answer and Counterclaim, Nissan’s Motion to Dismiss Counterclaim and Deuce’s Amended Counterclaim. Nissan’s claims are primarily based on its Financing and Security Agreement with Deuce’s dealership and Deuce’s personal guaranty of the dealership’s obligations. You might think that Deuce has the home field advantage in the case, since it is pending in Jackson and everyone loves Deuce. You would be wrong.
Franchise and dealership agreements are drafted by the franchisor’s or manufacturer’s lawyers based on a company’s collective knowledge gained from many years of experience. The terms of the agreement are rarely negotiated and are heavily stacked in favor of the manufacturer/ franchisor. Nissan and other companies like it have been in many lawsuits seeking to collect under personal guarantees against individuals such as Deuce, and they almost always win.
Deuce claims that Nissan "was guilty of negligence in the performance of its obligations under the contracts.." and concealed information from Deuce. The counterclaim does not provide specific details of Nissan’s alleged misconduct, nor does it cite any contractual provisions that Nissan breached.
I do not see a negligence theory working in this case. There were contracts between the parties and the contracts controlled. Either Nissan breached its obligations under the contracts or it didn’t, and I suspect that it didn’t.
It is common for individuals in a similar position as Deuce to file a counterclaim against the manufacturer or even sue first in a preemptive strike in an attempt to gain leverage in negotiating a decent settlement. But it almost never works. It usually ends up being this simple: (1) the dealership, which is now in bankruptcy, owes Nissan the money; (2) Deuce is personally liable for the dealership’s obligations; so (3) Deuce has to pay Nissan the $1.5 million. If this was a football game, Deuce would be at least a two touchdown underdog to win the game.
Nissan’s attorneys are Jeff Barber and Chad Hammons at Watkins Ludlam. Deuce’s lawyer is Joe Roberts of Jackson.