Lenders, landlord sue closed Green Eyed Motors
FREDERICK — Green Eyed Motors LLC, an auto dealer that sold used electric vehicles, has closed. Its lenders and landlord all are seeking court orders to force payment of loans or unpaid rent.
Further, one lender is suing another lender for theft related to the case, and Flatirons Bank of Boulder has asked the court to appoint a receiver and take actions quickly and quietly, fearing that the dealership’s owners will leave the country.
Skitzo Genesee LLC, the Wheat Ridge-based landlord for the dealership property at 4040 Salazar Way in Frederick, filed a lawsuit March 16 in which it sought return of the premises because of a default — nonpayment of rent — in the amount of $47,481. Skitzo’s filing also alleged that the owner of Green Eyed Motors, Luke V. Walch, signed a personal guarantee.
The lease was signed Nov. 6, 2020 and amended twice.
On March 20, Floorplan Xpress LLC of Moore, Oklahoma, filed a lawsuit against the dealership, its owners and Flatirons Bank. In its lawsuit, it claimed that Green Eyed Motors established a line of credit eventually totalling $1.6 million in order to buy vehicles for resale. The practice is called floorplanning in which a lender provides the upfront cash for dealers to buy vehicles. The lender holds onto the titles of vehicles and, when they are resold to consumers, the dealership repays the lender and keeps any profit.
Floorplan Xpress alleged that Green Eyed sold 14 vehicles between December 2022 and January 2023 “out of trust,” meaning that the vehicles were sold to consumers but the dealer didn’t forward the cash to the lender. Those vehicles were valued at $315,332, the lawsuit said.
Floorplan repossessed any vehicles it had financed that were still on the Green Eyed lot, but the dealership still owed $700,000, according to the lawsuit.
Floorplan also alleged that the dealership deposited some of the money from sales of Floorplan-financed vehicles at Flatirons Bank, and Flatirons refused to remit the money to Floorplan. Flatirons Bank, according to Floorplan’s lawsuit, also assisted Green Eyed with a floorplanning arrangement of its own.
Floorplan seeks return of its collateral and triple damages. It alleged that the actions of the dealership and the bank constituted theft.
Then on March 21, Flatirons Bank filed a lawsuit against the dealership and Luke and Janine Walch as owners, asking for an ex parte order authorizing a writ of attachment and writs of garnishment seeking to lock down property of the dealership and its owners, who the bank said had indicated they may move out of the country. The bank asked the court to keep secret from the defendants any orders that it would issue.
The lawsuit alleged that the Walchs recently sold real estate in Tabernash, Colorado, and had listed their home in Erie for sale. The lawsuit also alleged that Luke Walch removed property from the dealership that was subject to the bank’s lien in order to compensate unsecured creditors.
Green Eyed Motors signed a $2 million promissory note with the bank, guaranteed by the Walchs. The money was floorplan financing, the bank alleged.
The bank said that Luke Walch on Jan. 17 met with the bank and reported cash-flow issues related to auto market volatility and impacts from COVID-19. He admitted, the bank alleged, that he had sold vehicles out of trust and kept proceeds to cover operating losses and expenses. Walch “failed to obtain vehicle titles from the bank and delivered vehicles to retail buyers without titles to conceal the out of trust sales from the bank,” the lawsuit alleged.
The dealership closed in January of this year.
“The bank is entitled to the appointment of a receiver,” the lawsuit said.
The Walchs were not able to be reached for comment on these lawsuits. Luke Walch was a member of the Colorado Motor Vehicle Dealer Board until July 2022.
Flatirons Bank president Kyle Heckman said in response to a BizWest question: “It’s an unfortunate situation for both the bank and the other creditor, but the bank is confident its proper exercise of its legal rights will be upheld by the court.”
The cases are:
In Weld County District Court, Skitzo Genesee LLC v. Green Eyed Motors LLC and Luke Van Walch, case number 2023cv30189.
Also in Weld County District Court, Floorplan Xpress LLC-OK v. Green Eyed Motors LLC, Luke Van Walch, Janine R. Walch, and Flatirons Bank, case number 2023cv30196.
In Boulder County District Court, Flatirons Bank v. Green Eyed Motors LLC, Luke V. Walch and Janine R. Walch, case number 2023cv30195.
Source: BizWest
