LMP Automotive sues over held deposits in terminated acquisitions

LMP Automotive sues over held deposits in terminated acquisitions

LMP Automotive Holdings Inc. has sued two dealership owners, seeking a combined $3 million in deposits the auto retailer made to acquire stores and property in New York and Texas. The lawsuits follow LMP Automotive terminating the deals this year.

An affiliate of the Fort Lauderdale, Fla., retailer filed a lawsuit May 27 in federal court in Albany, N.Y., against James Zappone, Zappone Chrysler-Jeep-Dodge-Ram in Clifton Park, N.Y., Zappone Property Management and an escrow agent seeking return of the $1 million deposit LMP had made for the acquisition.

On Friday, just two weeks later, LMP filed a lawsuit in federal court in Houston against Houston dealerships Tom Peacock Nissan and Tom Peacock Cadillac, partners David Peacock and Aldo Paret, and affiliated real estate companies seeking the return of $2 million in deposits it made to buy the dealerships and real estate.

The lawsuits are the latest in a string of challenges for the fledging auto retailer and publicly traded company. LMP acquired its first franchised dealerships last year, but in early 2022 it said it planned to terminate seven pending acquisitions because of inability to obtain needed financing. It also said it was exploring strategic alternatives for the retailer, including a possible sale of the company.

LMP, which has yet to report financial results for the fourth quarter of 2021 and first quarter of this year, has said it will restate financial results for the first three quarters of 2021. The company and executives also were sued last month by a shareholder seeking class-action status.

LMP said in July 2021 that it planned to spend $141 million to buy the Cadillac and Nissan dealerships from Peacock and Paret and that it would spend $19.2 million to buy the Stellantis brand dealership in New York. Both deals were to have included real estate.

In the New York lawsuit, LMP alleges that after its transaction didn’t close by Feb. 28, the seller “improperly” told the escrow agent that the buyer failed to close by the agreed upon date, demanded the deposit be paid to Zappone and objected to LMP’s efforts to have the deposit returned following the March 21 contract termination.

LMP contends that it was unable to obtain financing and manufacturer approval to buy the dealership and real estate.

In the Texas lawsuit, LMP said it also was unable to obtain automaker approval and the transaction did not close as planned by Feb. 28. LMP said it sent the sellers a notice of termination on March 29, when it also demanded the title company return the deposit.

LMP also is seeking it be awarded lawyer fees, expenses and costs in both lawsuits and also interest in the New York case.

LMP CEO Samer Tawfik and LMP’s lawyers in the cases did not immediately respond to requests for comment.

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