On Tuesday, CNH Industrial Capital America LLC filed a complaint in the Eastern District of Arkansas against Venture Equipment, LLC and Steve Merrit alleging breach of contract and fraud.
According to the complaint, CNH is a Delaware limited liability company with a principal place of business in Racine, Wisconsin and is owned by Case New Holland Industrial, Inc. The complaint states that CNH serves as New Holland’s captive finance company and finances the acquisition of agricultural and construction equipment fleets for sale or rental by New Holland dealerships throughout North America.
Additionally, the complaint states that Venture Equipment is an Arkansas limited liability company and an agricultural equipment dealership. Further, Steve Merritt is an Arkansas resident and the member-manager of Venture Equipment.
The plaintiff alleges that on February 10, 2011, Venture and CNH entered into a Wholesale Financing and Security Agreement (WFSA) which granted CNH a security interest in all of Ventures’ inventory, equipment and other movable property obtained from or financed by CNH in exchange for an extension of credit and other advances to purchase such property. Further, the complaint states that the WFSA provided that any proceeds Venture received from the sale of a secured asset would either be held in express trust with CNH holding first priority or immediately remitted to CNH to satisfy any outstanding balance.
Additionally, CNH purports that on February 10, 2011, Venture and CNH also entered into a Retail Financing Agreement (RFA) in which Venture would offer customers equipment financing, and if accepted, Venture would sell and assign all of its rights, title, interest and proceeds from the contract to CNH. The complaint states that Steve Merritt, as member-manager of Venture, personally guaranteed the terms and payment of both the WFSA and RFA.
CNH alleges that on March 7, 2022, it conducted an onsite inventory audit of its collateral under the WFSA and found that 225 of the secured assets under the agreement were unaccounted for. The complaint further alleges that the majority of the assets were sold out of trust by Venture and the sale proceeds converted with the other being purely fictitious trade-ins causing CNH to advance funds with those proceeds also being converted to Venture. CNH argues that this fraudulent action resulted in Venture converting $5,109,514.24 of proceeds that should have been paid to CNH.
CNH further alleges that Merrit admitted to concealing the sale of secured assets by misrepresenting the financial condition of Venture. Additionally, the complaint purports that Merritt further admitted to assigning 151 retail financing contracts to CNH with a value of $9,241,724.29, that were forgeries, fraudulent and/or violated the RFA resulting in $5,895,268.08 outstanding balance to CNH. CNH argues that the defendants intentionally misrepresented its assets and liabilities to appear as if it was fulfilling its obligations and not in breach of its contracts with CNH.
Accordingly, the plaintiffs bring the present suit to recover actual and punitive damages, pre- and post-judgment interest, attorney’s fees and costs alleging breach of contract and personal guaranty, fraud, conversion and unjust enrichment. The plaintiff is represented by Wright, Lindsey & Jennings LLP.
