A Massachusetts dealer has sued Textron Financial Corp., accusing the St. Louis, Mo.-based lender of breach of contract, unfair and deceptive trade practices, fraud and deceit.
Mehdi Hosseini, owner of Cross Roads RV Center Inc. in Middleboro, Mass., sued Textron on Nov. 26 in Plymouth County (Mass.) Superior Court alleging that the company tried to change the terms of a wholesale finance contract, then canceled the dealer when he would not agree to the new terms.
Hosseini, who has owned the RV dealership for four years, claims Textron caused him to lose at least 16 new unit sales valued at more than $2 million between March and November, not counting the sale of used RVs. He is asking for damages and a jury trial to decide the case.
Since the credit freeze overtook the nation earlier in the fall, Hosseini says he has been unable to secure other financing. His sales operation has been curtailed, leaving just his service department as a source of revenue. “We have a very strong service department, but we don’t know how long this will last,” he said.
Mike Carson, senior vice president and general manager at Textron, had no comment on the suit when contacted by RV Business.
Cross Roads began its relationship with Textron in November of 2006 with a $5 million line of credit to floorplan new RVs, according to the suit. From that date until the spring of 2008, Textron financed virtually every new RV requested by Cross Roads.
In March of 2008, Hosseini’s suit maintains, Cross Roads negotiated a more favorable financing arrangement with GE Capital Corp. for both new and used RVs. It intended to maintain Textron as a secondary source of financing and add GE as its primary floorplan financier.
A Textron representative, when he learned of the development, asked Cross Roads to delay signing the agreement because his firm would match GE’s offer within a few weeks, the suit states.
Cross Roads complied, but when Textron returned with its new offer on June 12, it did not match the terms offered by GE, according to the suit. The Textron offer declined financing for RVs that were more than a year old, thus ruling out most sales involving trade-ins. Cross Roads’ credit line also was lowered.
The effect of the Textron proposal, Hosseini contends, was to essentially force Cross Roads to sell only new RVs since it could not take trade-ins for resale.
Hosseini met with Textron’s Carson to seek reinstatement of the floorplan for new RVs and to negotiate financing of used RVs. However, he adds in the suit, the lender agreed to reinstate new RV floorplanning but not to finance trade-ins.
Textron conditioned reinstating the floorplan financing for new RVs and trade-ins upon the manufacturer’s agreement to extend its buy-back provision from 360 days to 18 months, thus mitigating Textron’s exposure for any RV not sold by Cross Roads within 360 days. Textron reinstated the new floorplanning, the suit states, but did not live up to its agreement to finance trade-ins, the suit alleges.
In November, Textron notified Cross Roads that it was in default of the financing agreement and that all financing would be terminated – a turn of events that Hosseini, again, claims cost him $2 million in lost sales from mid-June to early November. These losses, the suit alleges, have resulted “in the financial ruin of Cross Roads.”
Cross Roads contends that Textron decided “to get out of the RV financing business and to implement any ruse or excuse to force retailers to sell only those RVs to which Textron had buy-back exposure.”
Hosseini’s dealership carries Tiffin, Holiday Rambler, Country Coach, Four Winds and Forest River lines.