Prestige Motor Car Imports (Google Earth)
A multinational auto dealer filed suit to enforce a $72 million contract for the sale of the nation’s top-selling Audi dealership in North Miami Beach.
The would-be buyer, Houston-based Group 1 Automotive Inc., owns 152 auto dealerships in the United States, United Kingdom and Brazil.
Group 1 entered a written agreement to buy Prestige Audi of Miami at 14780 Biscayne Blvd. on March 29. On April 28, Group 1 inked an asset purchase agreement with Prestige Motor Car Imports Inc. and Cecile Jacome, the trustee of the Irvin David Irrevocable Trust, the sole shareholder, according to the lawsuit filed in Miami-Dade Circuit Court.
The two agreements contained many binding terms to ensure completion of the transaction, the complaint said.
Plaintiffs attorney Abbey Kaplan of Kluger Kaplan Silverman Katzen & Levine in Miami said in the complaint that Group 1 performed its obligations, which included submitting a $6 million earnest money deposit and negotiating and delivering a real estate contract.
However, Prestige did not do its part to execute the real estate contract and did not provide a list of assumed contracts or any of the financial data. Prestige didn’t file the requisite paperwork with the Federal Trade Commission and didn’t notify Audi USA to obtain transaction approval, the complaint states.
“In fact, on June 5, defendants notified Group 1 in writing that they have no intention of satisfying any of the above listed obligations … which have never been amended,” the complaint asserts.
However, Prestige attorney Robert Zarco of Zarco Einhorn Salkowski & Brito in Miami said the agreements aren’t enforceable. He also said Group 1 is trying to compel the sale because of a mutual error in pricing the dealership that is to the buyer’s advantage.
“The price should have been ten to twelve million dollars more,” Zarco said.
On June 9, Group 1 issued a demand letter, giving Prestige 24 hours to comply. The lawsuit was filed Wednesday.
The lawsuit names Brett A. David individually as a defendant for alleged breach of the letter agreement. David is chief executive officer of Prestige and son of the company founder. He is also a manager of 142 Realty LLC, the landowner.
Kaplan said it appears David got cold feet.
“I believe he believes all essential terms to the deal were not agreed to, which of course just is inaccurate,” Kaplan said.
The complaint and jury trial demand also names as defendants Prestige and Jacome, David’s aunt, for breach of the asset purchase agreement.
Kaplan described the breaches as unique in the experience of Group 1, a Fortune 500 company.
“In the last five years, they’ve acquired 67 dealerships and 89 franchises, and they’ve never once had to file a lawsuit against a seller,” Kaplan said.
Contrary to Kaplan’s version, Zarco said the validity of the asset purchase agreement was dependent on the signing of the real estate and lease agreements. Without them, he said there is no transaction.
“There were over a dozen material and essential terms the parties were unable to agree to. As such, Brett David would not sign,” Zarco said.
He said Group 1 also breached the asset purchase agreement by disclosing confidential terms of the deal to the public and other dealers.
“That created a ripple effect in terms of misinformation reaching employees of Prestige Audi. This created some havoc,” Zarco said.
David became responsible for the company at a young age after his father died. He considers the employees family and has emotional ties to the dealership and its employees, Zarco explained.
David believes Group 1 is getting a much better price than it should and refuses to let go of an important part of his father’s legacy under the current terms, Zarco said.