West Palm Beach Hyundai’s counterclaims allege fraud and violations of Florida dealership law by Hyundai and seek injunctions, plus damages, lawyer fees and costs. The countersuit says that Hyundai’s Accelerate dealership image program, incentive programs and Genesis vehicle distribution requirements violate Florida law and accuses Hyundai of price discrimination.
The dealership claims that Hyundai ties dealer margin to sales performance objectives and facility requirements and gives different per-vehicle incentives to Florida Hyundai dealers. That lowers wholesale vehicle prices by thousands of dollars for some Hyundai dealers in Florida, giving some an unfair advantage, according to the counterclaims. They also allege Hyundai gives extra co-op advertising funds to favored dealers, “which has the same effect and purpose of a secret discount.”
The dealership also claims that Hyundai paid it less than its “established statutory reimbursement rates” for warranty work.
Two counterclaims specifically accuse Muñoz of civil conspiracy and tortious interference with a contract.
“The recent countersuits from Napleton are frivolous,” a Hyundai spokesman said in a statement to Automotive News. “This case is about a massive engine warranty fraud scheme. We look forward to proving the case in front of a jury when the trial begins in early November.”
Napleton, in a statement to Automotive News, asserts Hyundai aims to put its West Palm Hyundai dealership out of business and that it “looks forward to its day in court.”
Hyundai began investigating Napleton for warranty fraud after Mark Eddleman, former general manager at Napleton’s Hyundai-Genesis store in Lake Park, Fla., filed a lawsuit in April 2020 in Palm Beach County, Fla., circuit court against Napleton President Ed Napleton Sr., Napleton Jr. and the dealership group. That lawsuit, which claims Eddleman was fired after refusing to participate in “unlawful conduct” including cooperating in a cover-up of an alleged sexual assault of a female employee by Napleton Jr., included allegations of warranty fraud with regard to the Hyundai engines.
The defendants named in the Eddleman case sought to dismiss it. A judge agreed to dismiss some but not all claims, and the case continues.
In February 2019, Napleton Jr. was arrested and charged in an alleged sexual assault of an unconscious woman who worked for the dealership group. Napleton Jr. pleaded not guilty and awaits a trial, scheduled to start Jan. 10. The woman who prosecutors say was assaulted sued Napleton Jr. in June 2019 in a civil case that also continues.
In its counterclaims to the Hyundai lawsuit, Napleton’s West Palm Beach Hyundai said that Robert Grafton, Hyundai Motor America executive director of dealer development and strategy, emailed Muñoz on July 14, 2020, and said he had “no doubt there is a HMC agenda in play and there is a race to judgment on the Napleton decision before all the investigative facts have been secured.” The email also said, “We have 1 shot at Napleton and if not managed correctly Napleton survives with all his stores,” according to the counterclaims.
Muñoz, in a response to Grafton, requested an “extraordinary meeting” and wrote, “They won’t be able to [e]scape,” according to counterclaims, which assert that “they” refers to Napleton.
The dealership, in counterclaims, said Grafton on Nov. 20, 2020, sent a notice of intention to terminate West Palm Beach Hyundai’s dealer agreement. The dealership claims Muñoz “acted maliciously and with conspiratorial motives against West Palm and the Napleton organization” and that he wanted to take away all of Napleton’s stores.
The counterclaims said that Brian Napleton, a former member of the Hyundai National Dealer Council, had expressed concerns with Hyundai’s image program and was “kicked off” the dealer council by Muñoz after Hyundai filed its lawsuit. Brian Napleton, son of Napleton Sr. and brother to Napleton Jr., is the group’s director of operations.