DMV Bars Car Sales at 2 Glendora Dealerships

The Department of Motor Vehicles has suspended the new car sales licenses of two Glendora dealerships, accusing them of improper business practices and failure to meet financial obligations, a DMV spokesman said Sunday.

An attorney for the dealerships protested the 30-day suspensions and said he thought the DMV’s allegations against both dealerships could be addressed. “We’re going to contact the DMV first thing (today) to try to resolve this amicably,” said Martin J. Brill, a partner of Robinson, Diamant, Brill & Klausner in Los Angeles.

DMV spokesman William N. Gengler said the department accused Grand Chevrolet of “fraud or deceit” in arranging loans for employees, who then handed back the cars to the dealership for resale without notifying the lender. Documents allege that employees continued to make monthly payments to San Diego-based Imperial Savings & Loan on the vehicles after they were sold by the dealership.

Imperial holds $172 million worth of Grand Motors and Grand Chevrolet auto loans, of which up to $20 million may be uncollectible because of unspecified “irregularities,” a senior thrift official said.

The DMV has also alleged that Grand Motors last month ordered eight cars valued at $68,159 from other dealers but failed to pay for them, Gengler said.

The DMV cited the companies’ “apparent financial difficulties and inability to meet ongoing financial responsibilities” as reasons for the suspensions. The dealerships’ parts and service departments are not affected, Gengler said.

Brill contended that suspending Grand Chevrolet’s license violates the U.S. Bankruptcy Code, under which Grand Chevrolet filed for protection from its creditors Friday. If necessary, he added, the dealership will go to court to overturn the 30-day suspension.

Grand Motors has not actually filed for bankruptcy yet, as a spokesman for the dealership had incorrectly said Friday, but a filing may be imminent, Brill said.

Grand Chevrolet had to file for bankruptcy quickly because other auto dealers were engaging in “self-help repossession” of cars from its lot late last week, he said.

In contrast, Grand Motors is a car broker and keeps very few cars on hand. Instead, it books orders of all makes and models through a network of Southern California sales offices, then buys the cars from dealers.