Class Action Case against Automotive Finance Corporation (AFC) and Arkansas?
Class Action Case against Automotive Finance Corporation (AFC) and Arkansas? AFC obtained Arkansas vehicle titles by claiming to have repossessed as many as 50 cars. However, the cars were located in New Jersey and driven by the owners. The New Jersey Union County Prosecutor's Office opened a criminal investigation while an Arkansas motor vehicle official says he assumed AFC had possession of the cars when it filed for title there. The action in Arkansas, based on AFC's claims of possession of the vehicles, has frozen state buyers out of holding title, even though the cars were never in Arkansas and were fully paid for by New Jersey residents. AFC obtained title after the cars were sold and after Galaxy Motors closed. The New Jersey Motor Vehicle Commission has agreed to issue temporary plates to owners of cars purchased from Galaxy Motors. As many as 50 of the dealer's customers may have been entangled in an automotive title disputes that left them unable to operate bring their cars out on New Jersey's streets and highways. "It's not a permanent solution," said Michael Horan, a spokesman for the commission, "but it will give everyone time to resolve the problem and let the buyers use their cars." "That will be a great help," said Edward Alvarado of South Plainfield. "Finally, someone is doing something about this mess. All we want to do is drive the cars we're paying for." The car buyers have been unable to drive the vehicles since the end of June because they cannot obtain license plates. They need to have proof of title before the commission will grant plates, but the owners haven't been able to obtain title because the dealership shut down before transferring ownership papers. Meanwhile, at least one finance company that had extended credit to the owner of Galaxy Motors -- the Indiana-based Automotive Finance Corporation (AFC) -- filed for repossession of the cars in Arkansas and that state granted the firm title to the cars. "We're taking this extraordinary action because we recognize this is a serious matter that has to be resolved," said Horan. "We also recognize the hardship it has caused innocent New Jersey residents." Car buyers are usually able to obtain temporary plates for up to 30 days, with one automatic extension. For the victimized Galaxy Motors customers, those temporary tags began to expire in June. Although they could not drive their cars, the owners still had to pay back car loans -- many with PNC Financial Services -- that the owner of Galaxy Motors, Patrick Dunn, helped arrange. They also have had to pay for car insurance and, in some cases, warranties that Dunn sold them. "We're doing whatever we can to help our residents," said Horan. New Jersey's motor vehicle officials were criticized for failing to act in the light of AFC's actions in Arkansas. Horan says issuing New Jersey permanent certificates of ownership despite the claims in Arkansas "would only have created more problems." "It would have raised more questions about which title is legitimate," he said. Without some intervention by the state, the burden of taking legal action to resolve title problems would fall solely on individual owners. Some have already hired lawyers to help them out of the mess. One owner, Linda Brennan of Rahway, says she has run up nearly $2,000 in legal bills for a car she has paid for but been unable to drive since July. One lawyer, not involved in the case, suggested buyers join in a class action case against AFC and Arkansas -- and try to enlist PNC and other retail lenders on their side. Other lawyers have suggested PNC be joined, not as a co-plaintiff, but as a co-defendant because it enabled Galaxy Motors to sell so many cars on credit. No matter what the constellation of legal disputes, the car owners would still be stuck spending money on lawyers so they can use cars they already purchased. AFC representatives declined comment on the dispute. A PNC spokesman would only say the bank is working to resolve the problem. The lawyer for Dunn has said his client will not comment. The Union County Prosecutor's Office opened a criminal investigation of the Galaxy Motors closing but won't talk about the probe. An Arkansas motor vehicle official says he assumed AFC had possession of the cars when it filed for title there. Horan says any Galaxy customer seeking temporary plates should call this number in Trenton: (609) 984-**** or (609) 777-****. "We're ready to help," he said. Who is AFC? CARMEL, Ind --KAR Holdings, Inc., a leading provider of wholesale used vehicle and salvage auction services in North America, announced today that it has filed a registration statement with the Securities and Exchange Commission for a proposed initial public offering of its common stock. The Company intends to apply to list its common stock on the New York Stock Exchange. The timing of the initial public offering depends upon several factors, including market conditions. Goldman, Sachs & Co. will act as an underwriter of the proposed offering. The public offering will be made only by means of a prospectus which, when available, may be obtained by contacting Goldman, Sachs & Co., Prospectus Department, 85 Broad Street, New York, NY 10004. A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy these securities be accepted prior to the time the registration statement becomes effective. The number of shares to be offered and the price range for the offering have not been determined. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such state or jurisdiction. About KAR Holdings, Inc. KAR Holdings, Inc. is the holding company for ADESA, Inc., a leading provider of wholesale used vehicle auctions whose operations span North America with 62 used vehicle sites, Insurance Auto Auctions, Inc., a leading salvage auto auction company whose operations span North America with 152 sites and Automotive Finance Corporation, a leading provider of floorplan financing to independent and franchised used vehicle dealers with 87 sites across North America. Source: KAR Holdings Inc.
Los Angeles, California
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