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Ohio Ford Dealer Sues OEM, Captive Lender

February 18, 2009

LIMA, Ohio — Lucas Ford filed $2 million a lawsuit Friday against Ford Motor Co. and Ford Motor Credit Co., charging that both enticed it into buying a failing dealership by providing exaggerated projected sales numbers, reported The Lima News.

The lawsuit filed in Allen County Common Pleas Court also said the Ford defendants were in danger of losing a substantial amount of money until Lucas Ford purchased the dealership, which was in jeopardy of closing.

"Defendants knew these projections were grossly inflated, exaggerated, unrealistic and unattainable," the lawsuit said. "Defendants knew or should have known (Lucas Ford) would suffer significant losses if" if entered into an agreement.

Lucas Ford said it paid the Ford defendants $1 million to satisfy the debt of the previous owner, Lima Ford. That was money the companies likely would have lost, the lawsuit said.

Ford Motor Credit Co. spokeswoman Meredith Libbey said the company hasn't received a copy of the lawsuit so she couldn't answer specific allegations. She did say her company works hard with dealerships to be profitable and thrive.

"The reason we're in business is to help our dealership and Ford Motor Co. to sell vehicles," Libbey said.

A representative for Ford Motor Co. could not be reached for comment.

Along the way, Ford Motor Co. chose not to renew its agreement with Lucas Ford to avoid losses. Between December 2007 and July 2008, Lucas Ford fell into default status under agreement with Ford Credit but Ford Credit kept loaning money, the lawsuit said.

In July 2008, Ford Credit suspended credit to Lucas Ford and demanded $900,000 in money owed. Lucas Ford paid it, with an understanding the line of credit will be reinstated, the lawsuit said.

Ford Credit did not reinstate the credit. Instead, it demanded Lucas Ford surrender all new and used vehicles, the lawsuit said.

Lucas Ford then attempted to sell the dealership to try to reduce its debts while keeping the business open and saving the jobs of employees at the dealership, the lawsuit said.

Lucas Ford was negotiating a sale of the dealership when Ford Credit interfered and caused the prospective buyer to back away, the lawsuit said.

The lawsuit also alleges Ford Motor Co. failed to provide Lucas Ford with quality products to meet the public's desires and failed to provide adequate support to the dealership. The action also alleges Ford Motor Co. pushed Lucas Ford into paying for local and national advertising and has failed to pay for warranty work Lucas Ford performed.

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