An auto financing company took a hit after the Indiana Court of Appeals reinstated a car dealer’s breach of contract and defamation complaints in a dispute over vehicles purchased at auction.
In 2013, NextGear Capital entered into a demand promissory note and loan and security agreement with SWL, LLC and its dealer, Scott Lollar. The parties’ contract maintained that NextGear would extend a revolving line of credit of up to $400,000, which SWL would use to purchase vehicles from auctions.
Lollar eventually took steps to liquidate SWL’s inventory and pay off its balance, and the terms of a newly proposed plan were sent to him by a NextGear account executive. NextGear assured that Lollar’s previous payments pursuant to the plan would be placed in an unapplied funds account so that he could make the next curtail payments. However, the funds were never placed in such an account.
As a result, Lollar couldn’t make the next scheduled payment for the remaining vehicles, which were ultimately repossessed by NextGear. Lollar’s additional vehicles were also repossessed by other lenders after NextGear informed them that he had defaulted on the loan documents. The financing company filed a complaint against Lollar, alleging he had not repaid the advanced funds and that SWL had breached the initial contract and guaranty.
Lollar asserted he didn’t breach the contract because the newly proposed plan had modified its terms, and that NextGear breached the contract when it failed to put the payments in his unapplied funds. He also argued the company committed defamation and tortious interference with a business relationship when it wrongfully informed other lenders that he had defaulted on the loan documents.
A trial court entered summary judgment in favor of NextGear on its complaint and on Lollar’s counterclaims in Scott William Lollar, et al. v. Nextgear Capital, Inc., 18A-CC-02955, but the Indiana Court of Appeals reversed parts of the lower court’s ruling.
An appellate panel found the Hamilton Superior Court court erred when it entered summary judgment in favor of NextGear on its breach of contract claim and on Lollar’s counterclaim for defamation. The appellate court found that a genuine issue of material fact exists as to whether the parties modified the contract through their conduct and as to its affirmative defense of detrimental reliance and promissory estoppel. Genuine issues of material fact were also discovered on Lollar’s defamation claim.
But the appellate panel concluded that even if Lollar prevailed on his defamation counterclaim, NextGear’s defamation of him would not support his claim for tortious interference with a business relationship.
“Because Dealer did not designate any evidence to demonstrate that NextGear committed any illegal conduct other than defamation, Dealer has not met its burden to demonstrate a genuine issue of material fact on this issue,” Judge Edward Najam wrote for the court.
The case was thus affirmed in part, reversed in part and remanded with instructions.