A Connecticut Kia dealership this week sued LMP Automotive Holdings Inc., alleging breach of contract and seeking $100,000 in deposits held in the failed acquisition. But a lawyer for the dealership said a resolution may already be in the works.
K & W Enterprises and Ash Street Holdings sued LMP and First American Title Insurance Co. in federal court in Connecticut on Monday. The dealership and real estate company allege LMP breached the purchase agreement to buy Kia of East Hartford and property when LMP failed to submit all needed information to Kia Motors America.
LMP needed to obtain manufacturer approval to close the deal. And because of that alleged breach of contract, the dealership and real estate company believe they are entitled to the deposits.
The dealership, owned by Joseph Klimas Jr., entered into a purchase and sales agreement with LMP in July for more than $9 million. Money was deposited in escrow with the title company. A closing was slated to happen by Feb. 28, according to the complaint, and the plaintiffs say they terminated the deal on March 1.
On Feb. 18, Kia of East Hartford received a letter from Kia Motors that it had been notified by LMP that the transaction had been terminated and that Kia would no longer evaluate LMP’s application, according to the complaint.
In February, publicly traded auto retailer LMP announced it was exploring strategic alternatives for the company, including selling its eight franchised dealerships and four used-vehicle stores, after it was unable to secure financing to close seven pending transactions. The Fort Lauderdale, Fla., company said it intended to terminate all of those transactions.
LMP, in a regulatory filing, said the acquisition of Kia of East Hartford and property was terminated on March 11 and that it didn’t expect any “material termination penalties” related to the canceled deal.
In some of LMP’s other canceled acquisitions, the seller kept deposits, some as large as $2 million.
Robert Feiner, a Hartford, Conn., lawyer for Kia of East Hartford, said in a late Thursday email to Automotive News that “the parties have agreed to resolve any disagreement between them subject to finalizing appropriate documentation.”
The dealership and real estate company had sought damages, plus costs, in addition to be awarded the $100,000 in deposits.
As of mid-Friday afternoon, there were no updated court filings for the case.
LMP executives did not respond to requests for comment on the lawsuit or possible resolution.
LMP was slated to share its fourth-quarter earnings on Thursday but in a news release said it would delay the release of its results. It did not give a new date.