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Dealership Ordered to Stop Selling Cars in Dispute With Toyota

Finances: Court-issued writ stays in effect until $3.6-million debt is resolved. Simi property is under guard.

February 09, 1996|SCOTT HADLY | SPECIAL TO THE TIMES

SIMI VALLEY — A major Japanese auto manufacturer has received a court order to halt the sale or lease of any vehicles--new or used--off the lot of the Toyota of Simi Valley car dealership until a $3.6-million debt is repaid.

Toyota Motor Credit Corp.--the company's U. S. financing arm--asked for and received a ruling from a Ventura County Superior Court judge this week to ensure that no autos or parts are removed from the dealership until the corporation is paid, Toyota spokesman Robert Wade said.

This comes just two months after the Nesen Infiniti dealership in the Thousand Oaks Auto Center went out of business after its owners were sued for $5 million by its parent company--Nissan Motor Corp.--for failing to repay a loan.

At the Infiniti franchise, the manufacturer repossessed more than 170 luxury cars that remained on the lot. Owner Gary Nesen remains Ventura County's largest auto dealer, selling everything from Rolls-Royces to Land Rovers.

In the Simi Valley case, court documents said the Toyota dealership had allegedly written bad checks and missed payment deadlines to Toyota as well as secretly sold at cut-rate prices cars that secured the loans. So, on Tuesday, the court installed Sheriff's Department personnel to keep a 24-hour watch over the property on 1st Street.

"In a case like this where we can't seize the property and store it, we install 'keepers' to safeguard it," said Sgt. Noel Brown of the Sheriff's Department's civil affairs division.

In these types of cases, the plaintiff will eventually pay for the 24-hour security detail, usually making payment for the personnel a part of any settlement, Brown said.

"It can add up to a sizable amount of money," he said.

Robert Beck, an attorney for Toyota of Simi Valley, would not comment on the case, and telephone calls to the dealership's owners--brothers Samuel and Thomas Barooni--were not returned Thursday.

The security detail is at the dealership to ensure that no more cars are sold, Wade said.

"They're there to protect our interest," he said. "This is not something that our company looks forward to. We're in the business of selling cars, financing cars and satisfying customers. We don't like to litigate."

In court papers, Toyota alleges that late last week--after it was apparent that the dealership could not meet a Jan. 31 deadline to repay the loan--the dealer sold 32 cars to an unidentified dealership at below wholesale price. The wholesale value of the cars is estimated to be about $602,000, Wade said.

"The dealership has defaulted on its loans from TMCC and is dumping the vehicles that secure the loan," the company said in court papers.

Toyota also said in court papers that since taking out a loan early in 1995, the dealership had issued "inaccurate financial statements, made fictitious cash entries and carried a negative net worth of nearly $700,000."

In August, Toyota issued a 60-day notice to the dealership that it was collecting on the loan.

After promising that they were lining up alternative financing, the Baroonis were able to arrange an extension until Jan. 31. But in January, unable to get another loan, the dealership asked Toyota to again extend the repayment and provide new financing, court papers said.

Meanwhile, the dealership wrote about $260,000 in checks to Toyota with insufficient funds, according to court documents, and Toyota then decided to collect on the loan.

Last week, Toyota tried to do a complete audit of the dealership, but its auditors were twice thrown off the lot by dealership employees, court papers said.

Last weekend, the dealership allegedly sold at least 32 cars, but Toyota officials said that because its staff was not allowed to conduct an audit, they had no way of determining exactly how many cars were sold.

Toyota received a court ruling known as a "writ of possession" to ensure that no more of the collateral for its loans is sold. The order will stay in effect until the debt dispute is resolved.

At this stage, the company and the owners of the dealership are attempting to broker a deal to repay the debt, Wade said.

"We'll see what happens," he said.

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