Kia dealership floorplan lawsuits are civil cases, usually brought by Hyundai Capital America, alleging that a Kia dealer sold vehicles financed under a floorplan agreement without paying the lender back. The disputes range from recovery actions over a handful of cars to multimillion-dollar cases involving hundreds of vehicles, and the fallout often reaches regulators, criminal prosecutors, and the consumers who bought from the dealership.
What “Selling Out of Trust” Means
Most dealers don’t own their inventory. A floorplan lender finances each vehicle and keeps a security interest in it, treating the car as collateral. When the dealer sells the car, the agreement requires the proceeds to go straight back to the lender to retire that loan. The dealer holds the inventory “in trust” until that happens.
When a dealership is short on cash, those proceeds can get diverted to rent, payroll, or other bills. The industry calls that “selling out of trust.” The lender is left with an unsecured debt for a car that no longer exists as collateral. It can be sloppy bookkeeping, or it can be deliberate fraud. When prosecutors can show the dealer knew about the obligation and intentionally withheld the money, criminal charges follow, and the dealership can lose its license.1Investopedia. Selling Out of Trust
Kelly Grimsley Kia (Odessa, Texas)
In March 2025, Hyundai Capital America sued Kelly Grimsley Auto Group in the U.S. District Court for the Western District of Texas. HCA alleged the Odessa dealership had more than 400 vehicles with unpaid floorplan balances, that the total debt was nearly $15 million, and that checks the dealership wrote to cover past-due payments had bounced.2YourBasin. Kelly Grimsley Auto Kia Under Fire
HCA moved for emergency relief with an ex parte motion for a temporary restraining order on March 25, 2025. A federal judge in Midland granted the TRO in late April, blocking the dealership from selling or trading its remaining inventory, and the court extended that order into the summer.3PACER Monitor. Hyundai Capital America v. Kelly Grimsley Auto Group, Ltd. et al The dealership answered in May 2025 and admitted the material allegations.4Texas OCCC. Order L25-139 Final Order U.S. Bank intervened in August 2025 and obtained its own TRO, and a group of consumers filed a complaint in intervention in July 2025.
The federal case ended in a joint motion to dismiss on September 5, 2025, with Judge David Counts signing the dismissal on September 11, 2025. Settlement terms were not made public, though separate reporting indicated the dispute was resolved as the dealership was sold.5Automotive News. Kia Dealership Settles Hyundai Capital Lawsuit
Consumer Harm and License Revocation
The problems went beyond HCA’s floorplan claims. The Texas Office of Consumer Credit Commissioner received complaints in May and June 2025 that the dealership had failed to pay off trade-in vehicles, failed to deliver license plates, and failed to register cars in buyers’ names. An on-site OCCC investigation in June 2025 found 104 trade-ins that had not been paid off and 92 transactions with outstanding title transfers. The dealership attributed the failures to “cash flow issues.”4Texas OCCC. Order L25-139 Final Order
The OCCC issued a cease-and-desist order on September 25, 2025, requiring the dealership to pay off outstanding trade-in balances, properly title and register vehicles, and refund excess fees within 30 days. None of that happened. On December 10, 2025, the OCCC revoked all three of the dealership’s motor vehicle sales finance licenses and imposed a $20,000 administrative penalty.6Texas OCCC. Order of Revocation L26-026
Picon Auto (Cortlandt Manor, New York)
An earlier HCA case shows how quickly collateral can vanish. Hyundai Capital America sued Picon Auto, also referred to as Picon Motors LLC, in Westchester County Court, alleging the Kia dealership had sold six Kia vehicles without repaying the lender and had transferred eight more to a Chrysler dealership in Milton, New York. Picon held a $375,000 working capital loan and a $1.5 million inventory loan with HCA. The lender sought $1.9 million in unpaid principal and interest plus $380,000 in compensatory damages.7Auto Finance News. HCA Sues NY Dealership for Floorplan Fraud
On June 27, 2019, the court issued a temporary restraining order barring the dealership from moving the remaining eight vehicles out of New York. By a July 2019 filing, Picon Motors said it no longer had them. One had been sold to a private buyer and financed through U.S. Bank for about $31,000; seven had gone to Towne Auto Sales in Kearny, New Jersey, with proceeds routed to Santander Consumer USA rather than HCA.8Auto Finance News. NY Dealership Sells Cars in HCA Floorplan Fraud Suit
Owner Drew Picon said the sales were necessary to keep his one remaining dealership running. At the time of that filing, the dealership still owed HCA $388,940 of the original $1.9 million debt.8Auto Finance News. NY Dealership Sells Cars in HCA Floorplan Fraud Suit
Kia America v. Dan O’Brien Auto Group
Not every Kia dealership lawsuit is a floorplan case. In May 2024, Kia America itself sued six dealerships affiliated with the Dan O’Brien Auto Group in the U.S. District Court for the District of New Hampshire, along with CEO Dan O’Brien and COO Tom Kuhn. Kia alleges the dealerships ran a scheme to submit hundreds of fraudulent Retail Delivery Reports to collect manufacturer sales incentives they hadn’t earned.9Boston.com. Kia Lawsuit New England Dealerships Alleged Fake Car Sales
According to the complaint, between January 2019 and December 2021 the dealerships submitted at least 282 fraudulent RDRs, netting nearly $600,000 in unearned incentive payments. Cars were reported as sold while still on the lot, transferred between O’Brien dealerships, or wholesaled to brokers. One RDR listed the “purchaser” as “Abraham Lincoln.” Dealership employees and entities within the auto group were listed as fake buyers on others. When Kia audited the Concord and Norwood locations in June 2021, it found 56 vehicles sitting on the lots that had already been reported as sold, and at points the gap between actual inventory and what the dealerships had reported to Kia approached 350 vehicles.10U.S. District Court, District of New Hampshire. Kia America, Inc. v. DMO Auto Acquisitions, LLC, Opinion No. 2025 DNH 046 P
Kia brought eight counts including civil RICO, RICO conspiracy, fraud, conversion, and breach of contract, seeking compensatory, treble, and punitive damages. An attorney for the O’Brien group said the accusations were false, and Kuhn testified in a related Massachusetts case that the discrepancies were “simply errors and oversights” by personnel.9Boston.com. Kia Lawsuit New England Dealerships Alleged Fake Car Sales
On March 31, 2025, Chief Judge Landya McCafferty denied most of the defendants’ motion to dismiss, finding Kia had plausibly alleged a RICO enterprise with centralized control by O’Brien and Kuhn, and rejecting the statute-of-limitations defense based on the discovery rule and fraudulent concealment. One defendant, DMO Norwood, was dismissed on res judicata grounds because Kia’s claims against that entity had been resolved in a prior federal case in Massachusetts that ended in a stipulated dismissal with prejudice in December 2023.10U.S. District Court, District of New Hampshire. Kia America, Inc. v. DMO Auto Acquisitions, LLC, Opinion No. 2025 DNH 046 P As of May 2026, the case remains active with discovery disputes pending; no trial date has been set.11CourtListener. Kia America, Inc. v. DMO Auto Acquisitions, LLC
Separate New Hampshire Attorney General Settlement
The O’Brien Kia dealership in Concord also drew a regulatory action. In December 2022, DMO Auto Acquisitions agreed to a $1.25 million settlement with the New Hampshire Attorney General’s Office over unfair and deceptive sales practices. Investigators found a salesperson had forged a customer’s signature on loan paperwork and added unwanted protection products. Employees also inflated borrowers’ incomes on financing applications; in one case, a customer’s monthly income was raised from $2,832 to $6,200 on paper. The consent decree required an independent compliance monitor for five years and audio and video recording of substantive financing discussions. The company made no admission of wrongdoing. By late 2022, Kia had issued franchise termination notices, and all O’Brien Kia dealerships were closed, sold, or listed for sale.12Union Leader. Dan O’Brien Kia Agrees to Settlement in Deceptive Acts in Selling Cars
How Bad Floorplan Fraud Gets at Scale
The Kia dealership cases sit inside a wider pattern. The largest floorplan fraud on record involved the Reagor Dykes Auto Group, a $700-million-a-year chain based in Lubbock, Texas, which used “double-flooring” (financing the same vehicle with multiple lenders) and check kiting. The scheme unraveled in 2018 when Ford Motor Credit Company sued. Owner Bart Reagor was convicted of making false statements to a bank and sentenced to 14 years in federal prison with more than $9.3 million in restitution.13U.S. Department of Justice. Reagor Dykes Owner Sentenced to 14 Years in Federal Prison Former CFO Shane Smith received seven years and was ordered to pay more than $59 million in restitution.14KCBD. Former Reagor Dykes CFO Shane Smith to Be Sentenced In total, 15 employees pleaded guilty to charges including conspiracy to commit wire fraud and bank fraud.15U.S. Department of Justice. Thirteenth Reagor Dykes Employee Sentenced
A more recent example is Sky Auto Mall in Center Point and Newhall, Iowa. In early 2026, Stellantis Financial Services filed a civil suit alleging double-flooring and dual accounting records. A 6th Judicial District judge granted a writ of replevin allowing Stellantis to seize $12.3 million in vehicle collateral, and in late March 2026 the Linn County Sheriff’s Office began removing dozens of vehicles from the lots.16KCRG. Vehicles Seized at Sky Auto Mall Part of Lawsuit Ford Credit obtained its own seizure order against the same dealership.17DealershipGuy News. Sky Auto Case Highlights Risks of Floorplan Missteps as Lenders Move to Seize Vehicles The dealership laid off 76 workers; no criminal charges had been reported as of early 2026.18Business Record. Eastern Iowa Auto Dealer Lays Off 76 Workers After Lender Alleges Fraud in Lawsuit
If You Bought From a Dealership in One of These Cases
When a dealer sells vehicles out of trust, buyers can get caught in the middle. If the dealer never paid off the floorplan lender, that lender may still hold a lien on the title. The buyer can be unable to get a clean title, unable to register the car, or facing a claim from a creditor they never dealt with. In the Kelly Grimsley case, the OCCC documented 92 transactions where vehicles hadn’t been properly titled or registered, and consumers complained about never receiving license plates.4Texas OCCC. Order L25-139 Final Order
Trade-ins are a parallel problem. If the dealership took your trade-in but didn’t pay off the loan on it, you can remain on the hook with your original lender even though you no longer have the car. Buyers in that situation generally document the transaction, file a complaint with the state agency that licenses motor vehicle dealers or sales finance companies (the Texas OCCC in the Kelly Grimsley matter), and watch for consumer intervention opportunities in the underlying civil case, as happened in the Western District of Texas action in July 2025.3PACER Monitor. Hyundai Capital America v. Kelly Grimsley Auto Group, Ltd. et al The pattern across these cases is consistent: a dealership under financial stress diverts sale proceeds, the lender detects the shortfall through audits or bounced checks, and the restraining orders and lawsuits arrive after real harm has already landed on both the lender and ordinary buyers.