LUBBOCK, TX (KCBD) - In court documents filed on Feb. 4 in civil court, Ford Motor Credit wants Bart Reagor and Rick Dykes to pay $109,091,460.95 following a “massive fraud” which happened on Reagor and Dykes' watch.
Both Reagor and Dykes signed “absolute and unconditional” guarantees for the dealerships, saying “each of the undersigned Guarantors hereby, jointly and severally, and unconditionally, guarantees to you, your successor or assigns that the Dealer will fully, promptly, and faithfully perform, pay and discharge all Dealer’s present and future obligations to you; and agrees, without your first having to proceed against Dealer or to liquidate paper or any security therefor, to pay on demand all sums due and to become due to you from Dealer and all losses, costs, attorney’s fees or expenses which you may suffer by reason of Dealer’s default.”
Although Ford can liquidate the collateral, the money raised in doing so would “merely result in a credit against the judgement entered against Defendants.”
The documents go on to say:
Lurking behind Defendants’ motion is this important reality: a delay in proceeding on Ford Credit’s Motion for Summary Judgment would benefit Defendants and potentially prejudice Ford Credit. Defendants Reagor and Dykes stood at the helm of the Dealerships, reaping the reward in good times. They admittedly personally guaranteed the Dealerships’ obligations to Ford Credit and face receiving a joint-and-several judgment in this case exceeding $100 million. Although they placed the Dealerships in bankruptcy and subjected the Dealerships’ assets to the bankruptcy proceedings and the judgments of the Chief Restructuring Officer, they did not subject themselves to the bankruptcy process. Their own, personal assets—necessary to pay a judgment in this case—are not subject to those proceedings. Accordingly, Reagor and Dykes may believe that they are free to liquidate or dissipate assets which otherwise would be used to satisfy a judgment in favor of Ford Credit. Any further delay in the summary judgment proceedings would give Defendants additional time to potentially liquidate assets and place associated proceeds beyond the reach of Ford Credit and jeopardize the utility of a judgment in Ford Credit’s favor.
Background according to Ford Motor Credit:
On July 31, 2018, Ford Credit filed this breach of contract lawsuit against Defendants and the Dealerships. Doc. 1. Ford Credit sued after discovering that the Dealerships: (1) sold over 1,100 vehicles without repaying $41 million dollars that Ford Credit advanced to finance the acquisition of those vehicles; (2) falsely reported sales dates to Ford Credit to delay repaying amounts owed to it; (3) requested financing on the same vehicle, multiple times (double-floored); and (4) floored vehicles which had already been sold. See id.
On August 1, 2018, the Dealerships filed for Chapter 11 relief (the “Bankruptcy Proceedings”). See Bankruptcy Case 18-50214, Doc. 1 and Doc. 159 at ¶ 4. On August 8, 2018, the Court severed Ford Credit’s claims against the Dealerships. Doc. 10.
On August 17, 2018, Ford Credit amended its Complaint against Defendants. Doc. 11. On September 13, 2018, the non-bankrupt Defendants answered. Doc. 21.
On September 20, 2018, Ford Credit served its First Set of Interrogatories and First Request for Production of Documents upon Defendants. App. Ex. A. On November 2, 2018, without responding to those requests, three of the remaining non-bankrupt defendants—Reagor Auto Mall I, L.L.C., Reagor-Dykes II, L.L.C., and Reagor-Dykes III, L.L.C.—filed for Chapter 11 relief. See Bankruptcy Cases 18-50322, 18-50323, and 18-50325. On November 7, 2018, the only remaining defendants—Bart Reagor and Rick Dykes—responded to Ford Credit’s discovery demands. App. Ex. B. On December 27, 2018, the Court granted Ford Credit’s motion to sever the remaining entities (Doc. 26), thereby leaving only Mr. Reagor and Mr. Dykes as defendants in this action. Doc. 27.
From September 14, 2018 to the present—a four-month period—Defendants have failed to serve a single discovery demand or request any discovery from Ford Credit. On January 7, 2019, Ford Credit moved for summary judgment. Docs. 28–30. Ford Credit filed that motion almost four months after the Court issued its Scheduling Order. See id.
That motion demonstrates Ford Credit’s entitlement to summary judgment on: (1) Defendants’ liability under their absolute and unconditional guarantees; and (2) damages. See Doc. 29 at 17–25.
Defendants needed to respond to that motion by January 28, 2019. On January 25, 2019, Defendants contacted Ford Credit to seek, for the first time, consent to a Rule 56(d) motion. Ford Credit asked what discovery Defendants needed to respond to the motion. Defendants: (1) stated a desire for unspecified discovery, generally; (2) could not explain the relevance of any discovery to the motion; and (3) could not estimate how long Defendants would need to complete discovery.
On January 25, 2019, Ford Credit declined consent, in writing, to Defendants’ requests for:
(1) more time to respond to its motion; and (2) unspecified discovery. App. Ex. C. Counsel for Defendants then filed their motion pursuant to Rule 56(d). Doc. 33. Defendants did not serve any discovery demands upon, or seek any discovery from, Ford Credit.