Welcome! Spot Delivery Under Attack in Florida Alex Kurkin N.E. 29 th Ave., Suite 303 Aventura, FL

Goals of this meeting: Review recent Ohio and Florida lawsuits impacting dealer sales and financing with our lender partners Understand the specific impact of these lawsuits on our retail business model Discuss potential solutions Enlist your help

ANTI-TRUST STATEMENT As participants in this meeting, we need to be mindful of the constraints of antitrust laws. There shall be no discussions of agreements or concerted actions that may restrain competition. This prohibition includes the exchange of information concerning individual prices, rates, coverages, market practices, claims settlement practices, or any other competitive aspect of an individual company’s operation. Each participant is obligated to speak up immediately for the purpose of preventing any discussion falling outside these bounds.

Spot Delivery Process Credit application is taken Credit report is typically run Electronic submission may take place Decision to deliver is made Deal is closed Vehicle is delivered

Current 553 LAW Contract Merger / Integration Provision HOW THIS CONTRACT CAN BE CHANGED. This contract contains the entire agreement between you and us relating to this contract. Any change to this contract must be in writing and we must sign it.

Before Florida, there was OHIO: Patton v. Jeff Wyler Eastgate (Ohio, 2007) Salvagne v. Fairfield Ford (Ohio, 2010) Federal District Court – not appellate decisions. Plaintiffs sign a RISC containing a merger provision. Plaintiffs also sign independent spot delivery agreement which references the RISC and is to be part of the RISC.

In both cases the Ohio Court finds: Previously relied upon in pari materia doctrine (the rule that documents signed together be considered together) ruled to be inapplicable in light of integration clause & remedial nature of TILA. Since RISC is fully integrated contract, the Spot Delivery agreement renders the RISC “illusory” (Court recognizes that other courts disagree).

OHIO DECISIONS GET TRACTION IN FLORIDA Rogers case

Duval Ford v. Rogers (District Court of Appeals, Florida, 2011) Typical spot deal. Customer signs buyers order, spot delivery agreement and RISC. Buyers order contained arbitration provision. Dealer required $5K more down & customer refused. Dealer takes car. Customer sues and dealer moves to compel arbitration.

Rogers Case Holds Follows Patton and finds that integration provision is “highly persuasive” that the RISC was intended to be the only document in the deal Ignores prior FL cases by focusing on the integration clause, which had never before been argued So if not read together, the Buyers order cannot modify the RISC because it was executed before the RISC.

Rogers Case Concludes: “As a result, the [buyers order] is irrelevant to the disputes arising out of the transaction at issue.”

Impact of Rogers Case on: Lenders - RISC focuses on lender/borrower relationship and not seller/buyer issues. Examples: –Various disclosures, disclaimers & acknowledgements are arguably unavailable. –Warranties potentially not disclaimed.

Further impact of Rogers Case: Trade-in assignment and lien pay-off estimate obligations are outside of the RISC and now lost. No lease walk-away agreement. No vehicle inspection acknowledgment. No rebate assignment.

Potential solutions Changing the Florida Law contract to the Virginia Law contract format Legislation

Florida 553 – LAW Contract HOW THIS CONTRACT CAN BE CHANGED. This contract contains the entire agreement between you and us relating to this contract. Any change to this contract must be in writing and we must sign it.

Virginia 553 – LAW Contract along with all other documents signed by you in connection with the purchase of the vehicle HOW THIS CONTRACT CAN BE CHANGED. This contract, along with all other documents signed by you in connection with the purchase of the vehicle, comprise the entire agreement between you and us affecting this purchase.

BMW Financial Services Recognizes the problem and changes Contract

Legislated Alternative Requirements and prohibitions as to retail installment contracts. (12) Notwithstanding an integration or merger clause in a retail installment contract for the sale of a motor vehicle which indicates that the retail installment contract is the only agreement between seller and buyer, other contracts executed contemporaneously by the seller and buyer relating to the vehicle shall survive the execution of the retail installment contract and shall not be deemed merged into it or superseded by it. If the retail installment contract is assigned to a third party, unless otherwise expressly indicated, such assignment shall not include or cover the other contemporaneously executed contracts.

WHERE ARE WE NOW Banks accept the Virginia LAW contract. BMW Financial has now changed its contract to incorporate Virginia type language. Dealers need lenders that will better facilitate business.

WHAT ARE WE ASKING FROM YOU? We need your immediate cooperation Dealers are depending on you Immediate changes to your contract and/or legislation will help your dealers in Florida avoid potential lawsuits from process oriented claims

Please consider these very real concerns for the Florida dealer community After you meet and confer with your teams we would like to hear from you directly Please respond as soon as possible to Ted Smith at or call direct or Alex Kurkin at or call direct

The End Alex Kurkin