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The closure of Tate’s Auto Group’s dealerships in Holbrook, Winslow, Show Low and Gallup have not only caused many people to be unemployed and affected sales tax revenues for those cities, it has also left the very apparent sign of going out of business: large empty lots. The dealerships closed its doors in the last week of April amidst legal struggles, which was when employees were told they no longer had a job.
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The owner, Rick Berry, who is also the manager of Tate’s Auto Group, and Linda Tate, the president of the company, are in court battling with lenders who are looking to recoup nearly $30 million in losses. The Federal Trade commission is also in court with Berry, accusing the company of taking advantage of its customers, specifically Native Americans.
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Fortunately for approximately the 100 employees left without work, they received their final paychecks last week, which were held up since closure of the dealerships.
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The dealership lots were emptied when the court ruled that Ford Credit and Nissan Motor Acceptance could collect vehicle inventory from the dealerships and liquidate the assets on their own terms. According to April 11 court filings, both lenders alleged that Tate’s Auto violated their contracts and security agreements and sold vehicles but failed to repay floorplan loans, which is known as being out of trust.
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Ford Credit is seeking $18.3 million from the group for floor planning and other associated costs, while Nissan Motor Acceptance is seeking approximately $10.7 million.
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It was noted that Ford Credit exclusively provided floorplan loans for three of the group’s locations, while Ford Credit and Nissan Motor Acceptance both provided floorplan loans at the Show Low location.
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The auto group has also been in court with the FTC for nearly a year over allegations that it falsified consumers’ income and down payment information and misrepresented financial terms in vehicle advertisements. Those allegations were primarily due to the treatment received from the dealerships to members of the Navajo Nation. The actions by the FTC is the first against a car dealership.
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In addition, lender Santander Consumer USA, Inc., sued Tate’s Auto in May 2017, claiming that customer’s information had been falsified to secure lending, citing $267,671 total in damages. Tate’s Auto countersued, claiming that the lender reneged on agreements to finalize previously approved customer sales, according to court filings. The two parties continue litigation in a Texas federal court.
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