TruAuto MC, LLC v. Textron Specialized Vehicles, Inc.
| Decision Date | 28 September 2021 |
| Docket Number | Civil Action 2:19-cv-1381-RMG |
| Parties | TruAuto MC, LLC and TDMC Property Holdings, LLC, Plaintiffs, v. Textron Specialized Vehicles, Inc., White River Marine Group, LLC, and Wells Fargo Commercial Distribution Finance, LLC, Defendants. |
| Court | U.S. District Court — District of South Carolina |
Before the Court is Defendant Wells Fargo Commercial Distribution Finance (“Wells Fargo”)'s motion for summary judgment. (Dkt. No. 103). Also before the Court is Wells Fargo's motion to exclude the expert report and testimony of W. Ellison Thomas. (Dkt. No. 104). For the reasons set forth below, the Court grants Wells Fargo's motion for summary judgment and denies as moot the motion to exclude.
This action concerns Plaintiff TruAuto MC, LLC (“Plaintiff” or “TruAuto”)'s efforts to become an authorized dealer of Defendant Textron Specialized Vehicles, Inc. (“TSV”)'s E-Z-Go branded golf carts.[1] Doug McElveen and Todd Smith own TruAuto. (Dkt. No. 49 ¶ 11).
Around October 2018, McElveen and Smith had a discussion with Cohen Gaskins, the owner of Sportsman Truck & Auto Sales, LLC (“Sportsman”), an E-Z-Go Authorized Dealership and Franchise. (Id. ¶ 11). McElveen and Smith expressed their interest in purchasing Sportsman's building and becoming an E-Z-Go authorized dealer and franchise owner. (Id. ¶ 11).
Around November 21, 2018, Smith texted John Creech, an E-Z-Go representative, to introduce himself and sent Creech a business plan Smith had created. (Id. ¶ 16). Around November 28, 2018, Creech travelled to South Carolina to meet and have dinner with Smith and to discuss the potential business plan. (Id. ¶ 18). Creech advised Smith that all E-Z-Go dealers finance their franchise floorplans with Wells Fargo. (Id. ¶ 19).
After informing Creech that he had reached an agreement on the terms for the purchase of Sportsman, Smith asked Creech for an update on obtaining financing from Wells Fargo. Ex. 4 (Dkt. No. 49-1 at 5). Creech advised that “the credit application gets the ball rolling with [Wells Fargo].” (Id.). On December 21, 2018, Sean Leahy, a Field Sales Representative with Wells Fargo, reached out to Smith to discuss TruAuto's application for floor plan financing. (Dkt. No. 103-2 at 2). Throughout January 2019, Leahy communicated with Tonya Ambrose (“Ambrose”), a TruAuto employee, regarding TruAuto's application. See (Dkt. No. 103-3 at 2-7). On January 8, 2019, TruAuto submitted its Dealer Application to Wells Fargo. See (Dkt. No. 103-4 at 2-6).
After TruAuto submitted its Dealer Application, Kevel Purcell, a Credit Analyst with Wells Fargo, emailed Ambrose with questions regarding the transaction and TruAuto's application. (Dkt. No. 103-5). Purcell was the underwriter assigned to the transaction and was involved in obtaining the necessary documents and information needed from TruAuto. Kevel Purcell Deposition, (Dkt. No. 103-6 at 13:5-14:25). On January 29, 2019, Purcell notified Ambrose that TruAuto was conditionally approved for the line of credit. (Dkt. No. 103-7 at 2). Purcell's email to Ambrose stated: (Id.). Following Purcell's email, in a Conditional Approval letter dated January 31, 2019, Wells Fargo informed TruAuto that Wells Fargo had “conditionally approved [TruAuto for] a credit facility for [TSV] product lines.” (Dkt. No. 103-8 at 2-3). The Conditional Approval Letter stated that “the activation of the above credit facility is contingent upon completion of all of the conditions” listed in the letter and required TruAuto to submit additional documents and information. (Id.). The Conditional Approval Letter also stated, in bold font, that (Id.) (emphasis removed).
The same day Wells Fargo conditionally approved TruAuto, Smith contacted Creech after a discussion with a friend who owned Berkeley Outdoors, another golf cart dealership in the area. Ex. 21, (Dkt. No. 49-1 at 31-33). Smith expressed concern after learning that Berkeley Outdoors had been offered exclusive rights to sell certain golf carts, effectively preventing TruAuto from becoming a TSV authorized dealer. (Id.). Creech responded, stating he was “trying to get more details” and that he would report back once he got “answers from the top.” (Id.).
On February 4, 2019, two days before TruAuto was set to close on Sportsman, Smith texted Creech again saying, (Dkt. No. 103-9 at 2). The next day, Ambrose emailed Purcell asking “Do you have anything from Textron stating that we have been approved as a dealer?” Ex. 23, (Dkt. No. 49-1 at 37). Minutes later, Purcell responded, “No.” (Id.). Later that day, Smith texted Creech saying he was “in the dark and confused, ” concerned that TSV had not responded to his questions, and that the “deal [was] starting to be very sketchy.” Ex. 24, (Id. at 39). When deposed, Smith conceded that on February 5, 2019, he was not sure if TruAuto would be approved as a dealer. (Dkt. No. 103-1 at 157:4-10).
On February 6, 2019, Wells Fargo sent a revised loan package to TruAuto, which included a Revised Conditional Approval Letter. (Dkt. No. 103-10 at 2-3). Like the prior Conditional Approval Letter, the Revised Conditional Approval Letter indicated that TruAuto was “conditionally approved” for a line of credit to be used for floor plan financing of TSV products, included a list of documents and information which need to be submitted prior to final approval, stated that final approval was contingent upon Wells Fargo being notified by TSV that TruAuto had been approved as an authorized E-Z-Go dealer, and stated that if TruAuto did “not meet the above-conditions within thirty (30) days of the date of this letter, or if a material adverse change in [TruAuto's] business occurs at any time, ” Wells Fargo could deny TruAuto's request for financing. (Id.). In addition to the Revised Conditional Approval Letter, the documents sent to TruAuto on February 6, 2019 included, among other things, an Inventory Financing Agreement (“IFA”) and a Transfer and Assumption Agreement. (Dkt. Nos. 103-11 and -12). Neither document had been executed by Wells Fargo when they were sent to TruAuto. (Id.).
On February 6, 2019, TruAuto closed on the purchase of Sportsman. Ex. 26, (Dkt. No. 49-1 at 61 et seq.). As part of the purchase, Plaintiff assumed nearly $500, 000.00 in inventory and purchased real estate and a building for approximately $2, 350, 000.00. (Id.). Following the closing, Smith sought clarification from TSV regarding TruAuto's approval as an authorized dealer but alleges he did not receive a response. (Dkt. No. 103-13 at 3-4). On February 19, 2019, TSV voided the Dealer Agreement which it had sent the day before to TruAuto. Ex. 29, (Dkt. No. 49-1 at 90). During his deposition, Smith admitted that no one from TruAuto contacted Wells Fargo upon receiving notification that the Dealer Agreement had been voided. (Dkt. No. 103-1 at 283:3-10).
Wells Fargo first learned that TruAuto would not be approved as an authorized dealer on February 21, 2019. That morning, Ryne Drummonds from TSV emailed Leahy stating (Dkt. No. 103-16 at 2). One minute later, Robert White, a TSV employee, responded to Drummonds' email stating “[TSV] will not be moving forward with this dealer at this time.” (Id.). During his deposition, White testified that no one from TSV informed Wells Fargo of TSV's decision not to approve TruAuto prior to his email on the morning of February 21, 2019. (Dkt. No. 103-17 at 120:7-22). Addressing the fact that Wells Fargo was not notified, on February 28, White wrote Leahy stating: (Dkt. No. 103-18 at 2). During his deposition, White confirmed that Wells Fargo played no role in TSV's decision not to approve TruAuto as an authorized dealer. (Dkt. No. 103-17 at 118:16-119:7). Smith admitted that TruAuto had no evidence showing that Wells Fargo was informed prior to February 21, 2019 and no evidence that Wells Fargo played a role in TSV's decision. (Dkt. No. 103-1 at 279:21-25; 284:7- 11).
In May 2021, after this litigation had been pending roughly two years, Wells Fargo states it discovered an IFA containing the electronic signature of Michele Cohan. The IFA had been uploaded onto Wells Fargo's Seibel system, a document repository. Cohan is an Operations Analyst with Wells Fargo and works within Wells Fargo's Deal Closing department. Deposition of Michele Cohan, (Dkt. No. 103-24 at 9:21-25). Cohan, along with others, monitors a shared email inbox where potential dealers submit documents as part of the application and approval process. (Id. at 10:2-9; 15:10-13). As documents are received, the Operations Analysts upload them into Wells Fargo's Siebel system and notate when certain conditions for approval are satisfied. (Id. at 13:10-21). Cohan testified that it is Wells Fargo's policy to have Operations Analyst countersign documents as they are received, regardless of whether all the conditions for final approval of the financing have been...
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