First Interstate Bank of California v. Fred Gledhill Chevrolet, Inc.
Case type: Lender liability
Attorney: Jack I. Samet
Law Firm: Baker & Hostetler
Venue: California Superior Court, Long Beach,
Side:  Cross-Defendant
Trier of fact: Jury
Testimony Issue: Lost profits and lost business value
Testimony Date: February 1991 
Case Summary: Fred Gledhill Chevrolet, a car dealership located in Wilmington, California, claimed that the bank’s poor handling of vehicle loans hurt the dealership’s sales and ultimately forced it out of business. Before the problems with the vehicle loans, the dealership’s sales of new and used vehicles had been increasing.  Subsequently sales declined, and the dealership blamed the decline on the bank.  The bank admitted that some loans were mishandled, but the problems were resolved quickly.  The bank contended that its mishandling of a few loans could not have caused the extensive, long-term damage claimed by the dealership.
Testimony summary: The dealership’s damages expert testified that lost profits and lost business value totaled nearly $6,000,000. To rebut this damage claim, Mr. Neches first reviewed the sales records of the dealership.  He observed that the seasonal sales trends each year were unchanged before, during and after the period in which problems with the bank occurred.  This was compelling evidence that the bank’s actions did not affect the car dealership’s sales. When Mr. Neches analyzed the accounting and operational records of the dealership he uncovered operational factors such as increased turnover of experienced sales personnel, management changes and revised sales strategies that helped to explain the decline in sales. Mr. Neches also examined the business environment of the car dealership.  In addition to gathering industry statistics, he interviewed other car dealerships in the same neighborhood.  All dealerships in that neighborhood reported experiencing a decline in sales similar to the decline at Gledhill Chevrolet.  The other dealerships attributed the decline to the overall deterioration of the neighborhood due to increased crime and drug activity. Mr. Neches testified that the dealership’s own business decisions, combined with the general deterioration of the car business in the neighborhood, caused sales to decline.  He testified further that the bank’s actions had no measurable impact on the dealership’s sales and profits.
Result: The jury found no liability on the part of the bank.

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