A judge on Monday ordered Ford Motor Company to file court documents next week in an ongoing lawsuit against Bart Reagor and Rick Dykes.
Originally Ford sued Reagor Dykes along with Mr. Reagor and Mr. Dykes. Most of the Reagor Dykes companies have filed for bankruptcy after Ford accused them of fraud and default.
On Friday, Mr. Reagor and Mr. Dykes filed a motion that said Ford might have committed misconduct which would invalidate Ford’s claims.
At stake in the short run is a legal maneuver called summary judgment. Ford wants it, the two men do not.
Summary judgment would bring the case to a close without ever going to trial and without each side fully trading information about the evidence.
Ford’s argument in favor of summary judgment is simple: Mr. Reagor and Mr. Dykes personally guaranteed to pay back Ford if their business failed. The business failed, and so the men need to hand over the money, or so Ford claims.
But Mr. Reagor and Mr. Dykes point to previous court cases which say misconduct “voids the contract of guaranty…”
If there was misconduct by Ford, what would it be?
Mr. Reagor and Mr. Dykes claim that former Reagor Dykes CFO Shane Smith worked for their company for 11 years. Before that, he worked for Ford. While he was CFO he maintained a friendship with Ford Motor Credit employee Gary Byrd.
Byrd oversaw Ford’s account with Reagor Dykes, the court documents said.
“Ford Credit is also claiming that the Reagor-Dykes dealerships sold approximately 1,100 vehicles out of trust, totaling approximately $40 million. Inasmuch as Ford Credit was auditing the dealerships on a quarterly basis, it is highly unlikely that the dealerships, acting alone, would be able to cover up out of trust sales to that extent.”
In other words, Mr. Reagor and Mr. Dykes are entitled to know if the fraud was in part an inside job. Did a Ford employee “indulge” financing-fraud?
Roughly a month before the Reagor Dykes bankruptcy on August 1, Ford conducted an audit of the dealerships and praised the Reagor Dykes Auto Group, saying, “These results are fantastic, and your entire organization should be commended for their
hard work and their efforts‼”
Once Ford made allegations of fraud and default, Smith was fired.
Court records said in part:
“Moreover, based on the above-referenced facts, it is certainly plausible that Ford Credit (through Byrd) participated in the deepening insolvency of the Reagor-Dykes dealerships by lending more money when there was no hopes of the borrowing entities being able to repay. Ford Credit then protected itself by taking all of the assets of the dealerships as collateral, while Reagor and Dykes relied on the Ford Credit’s actions of lending more money as signifying the financial health of the Reagor-Dykes dealerships.Ford Credit thus profited by its continued dealing, but the dealerships failed, potentially leaving the loss on the guarantors [Bart Reagor and Rick Dykes].”
Mr. Reagor and Mr. Dykes are not yet asking that a judge throw out Ford’s claims. Instead, they are asking that the case not be cut short with a summary judgment.
Ford has been ordered to address the issue of summary judgment no later than February 4.
CLICK HERE to read the brief filed by attorneys for Bart Reagor and Rick Dykes.
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