A FORMER Nissan dealer in the United States has been awarded $US256.5 million ($A342 million) in compensation for being forced out of business by Nissan’s finance company during the 2008-09 global financial crisis-induced recession.

The court case was between Michael Kahn, former owner of Superior Automotive Group as well as other dealerships, and Nissan Motor Acceptance Corporation (NMAC), the finance division of the Japanese car-maker.

Mr Kahn has argued since 2010 that Nissan’s finance unit defrauded him by terminating his dealership financing, including floorplan and customer financing, despite giving him assurances that it would not.

He was awarded compensatory damages of $US121.9 million ($A162.5 million) and a further $US134.6 ($A179.5 million) in punitive damages.

“This is vindication,” said Skip Miller, senior partner at Mr Kahn’s law firm Miller Barondess.

“We are disappointed with the jury’s decision,” Nissan said in a statement. “A prior trial based on similar facts led to a substantial, multimillion-dollar jury verdict and judgment in NMAC’s favour. We plan to appeal and are confident that justice will ultimately prevail.”

According to Mr Kahn’s lawyers he had been a leading Nissan dealer but, when the recession took hold and car sales plummeted, NMAC “pulled the plug” on Superior Automotive in 2009 without Kahn’s prior knowledge because “Nissan was in cash-conservation mode”.

Car sales in the US in 2009 plummeted 21.2 per cent from the year before down to 10.4 million, the lowest amount sold since 1970.

“They circled the wagons — it was a corporate decision — and cut back,” Mr Miller alleged. He also alleged that terminating their biggest dealer was an easy way out for Nissan rather than getting rid of 10 smaller dealers one by one.

As the US car industry declined in the recession, major manufacturers collectively shut down thousands of dealerships across the country, many of them eliminated intentionally as part of their bankruptcy reorganisations, often by not renewing contracts with independent dealers.

Kahn’s lawyers alleged that NMAC had a deliberate plan to cancel Superior Automotive’s financing without telling Mr Kahn.

They also alleged that NMAC required that Mr Kahn put up his home, along with business and other personal assets, as collateral to keep his line of credit open. He also sold a toyota dealership for $US28 million ($A37.3 million) with the money going to NMAC.

NMAC subsequently declared Kahn in default for late payment of about $US1.6 million ($US2.1 million) in floorplan financing and, according to Mr Kahn’s lawyers, NMAC then cross-defaulted all of Superior and Kahn’s real estate, capital and other loans, totaling over $US100 million ($A133.3 million) despite none being in default.

That is alleged to have caused the demise of all Mr Kahn’s dealerships and the loss of over 800 jobs.

“Mike owed them $US40 million ($A53.3 million) at the time, and that was never in question,” Mr Miller said. “He knew he owed them that and he was attempting to repay it.

“The question was whether fraud took place, and this $256 million verdict was an award for fraud,” he said.

By Daniel Cotterill