LMP Automotive sues over deposits held in discontinued acquisitions

LMP Automotive Holdings Inc. has sued two dealership owners, who are jointly demanding a $3 million deposit the auto dealer made to acquire retail stores and real estate in New York and Texas. The lawsuits follow the termination of the deals by LMP Automotive this year.

A Fort Lauderdale, Florida affiliate of the retailer filed a lawsuit in federal court in Albany, NY, on May 27 against James Zappone, Zappone Chrysler-Jeep-Dodge-Ram of Clifton Park, NY, Zappone Property Management and a escrow agent seeking return of the $1 million deposit LMP 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 $2 million refund. deposits asked to buy the dealers and real estate.

The lawsuits are the latest in a series of challenges for the fledgling car dealer and publicly traded company. LMP acquired its first franchise dealers last year, but in early 2022 it said it plans to end seven pending acquisitions due to the inability to secure the necessary financing. It also said it is 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 the first quarter of this year, has said it will review financial results for the first three quarters of 2021. The company and its executives were also sued last month by a shareholder seeking class action status.

LMP said in July 2021 that it planned to spend $141 million to buy Peacock and Paret’s Cadillac and Nissan dealerships and that it would spend $19.2 million to buy New York brand dealer Stellantis. Both deals would involve real estate.

In the New York lawsuit, LMP alleges that after the transaction was not completed On February 28, the seller told the escrow agent that the buyer had not closed on the agreed date, demanded that the deposit be paid to Zappone, and objected to LMP’s efforts to get the deposit back after the March 21 contract termination.

LMP argues that it was unable to obtain financing and manufacturer approval to purchase the dealership and property.

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

LMP also demands that it be awarded attorneys’ fees, expenses and costs in both lawsuits, as well as interest in the New York case.

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

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