A deal to sell one of the nation’s top 10 Audi dealerships, based in North Miami Beach, to one of the largest automotive retailers in the country has hit a roadblock and veered into court.
Prestige Imports allegedly is backing out of the $72 million deal to sell its Audi dealership and a nearby piece of land to Group 1 Automotive of Houston, according to a lawsuit filed by Group 1 in Miami-Dade Circuit Court last week.
The suit — against Prestige Motor Car Imports, its chief executive Brett A. David, and the trustee of his late father’s trust, which owns the dealership — seeks to complete the transaction.
“Group 1 has complied with every one of their obligations, and the other side hasn’t. They just refuse to complete the transaction,” said Abbey Kaplan, senior partner with Kluger, Kaplan, Silverman, Katzen & Levine, which represents Group 1 Automotive.
David referred comment to his attorney Robert Zarco, who disputes that the parties reached an agreement on the “material and essential terms” of the real estate contract and the lease agreement. Both documents were required to close the deal. Said Zarco, “In our opinion, there is no agreeement that was reached.”
Zarco, founding partner of Zarco Einhorn Salkowski & Brito, said the $72 million purchase price was a “mistake” because the net income figure used in calculating the sales price included an expense related to a new building without reflecting the corresponding revenue from operations. That understated income by more than $1 million, which translates into a $10 to $12 million purchase price differential.
In addition, Zarco alleges that Group 1 breached the confidentiality of the agreement, which caused distraught among employees.
“He is not simply peddling his business as if it was another vehicle,” Zarco said of David. “This is the source of his livelihood and identity, in which a lot of emotion, blood, sweat and tears have been invested.”
The saga began when Prestige, which also owns franchises for exotic brands Lamborghini, Lotus and Pagani, hired a business broker to market its Audi dealership. The dealership currently ranks in the top 10 in sales volume nationwide, said Brad Stertz, a spokesman for Audi of America.
According to the suit, in late April, Prestige signed an asset purchase agreement to sell the assets of its Audi dealership, plus a 4.5 acre parcel of land nearby, to publicly-traded Group 1, which owns and operates 152 auto dealerships and 193 franchises in the United States, United Kingdom and Brazil. Among Group 1’s dealerships are a few in the Panama City, Pensacola and New Port Richey areas of Florida.
Group 1 put up a total of $6 million in deposits for the deal, and alleges that Prestige failed to comply with various requirements, including providing requested documents, approving a lease for the dealership’s property and notifying the Audi manufacturers of the deal, according to the suit.
On June 5, Prestige notified Group 1 in writing that it had no intention of satisfying the obligations, the suit says. Group 1 sent a demand letter on June 9, and nine days later filed suit.
“In the last five years, [Group 1] has closed on over 50 or 60 transactions, and we haven’t once had to sue a seller,” Kaplan said.
“We want,” he said, “to complete the transaction.”