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Gilroy
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November 23, 2020

New operators file to reopen Gilroy auto dealership

Former South County CDJR in court over fraud allegations

A Livermore-based automotive group is taking over operations of a shuttered Gilroy dealership mired in allegations of fraud, state and county documents show.

Gilroy Motors, Inc. filed its incorporation documents with the California Secretary of State on Oct. 2. A fictitious business name statement filed with the Santa Clara County Clerk on Oct. 21 shows the company plans to operate as Gilroy Chrysler Dodge Jeep RAM, at the former South County Chrysler Dodge Jeep RAM, which closed in March.

Gilroy Motors lists a Livermore address that is tied to Gill Automotive Group, which owns dealerships throughout the state, including Gilroy Chevrolet Cadillac.

A representative of the dealership group directed calls to the Gilroy dealership. A call to Gilroy Chevrolet Cadillac seeking comment was not returned as of press time. 

Calling the South County dealership’s phone number leads to a recording that mentions the business has closed due to the Covid-19 shelter-in-place order.

A temporary sign recently placed on the dealership building at 455 Automall Drive announcing the new name is draped over the former South County sign.

South County Chrysler Dodge Jeep RAM closed in March during the beginning of the shelter-in-place order, with its vehicle inventory removed from the premises shortly after.

South County Properties Gilroy LLC, which purchased the dealership in 2018, was issued a notice of default in June on a $1.2 million loan it received from Global Health Care Management LLC, the former owner of the property.

Global Health Care Management, meanwhile, filed a breach of contract and fraud claim against South County in Santa Clara County Superior Court in March.

According to the complaint filed by Farhad Novian, the attorney representing Global Health Care Management, South County received a loan of $1.2 million from the plaintiff in order to fund inventory for the dealership in August 2018, with an agreement to repay it by December 2023 with interest. The agreement also stated that Global Health Care Management would serve as lienholder on the dealership property, the complaint stated.

The complaint alleges that during that same time, and unbeknownst to Global Health Care Management, South County had already executed a deed of trust on the property with Capital One to secure another loan of $5.2 million.

In February, the complaint stated that South County was in discussions to sell the property without the consent of Global Health Care Management.

The complaint goes on to list various other allegations against South County that it claims was a breach of contract.

“South County anticipatorily breached the note by clearly and positively indicating, through its words and actions and through the words and actions of its principal [Kamran] Virani, that it had no intent to fulfill its obligation to repay the loan,” the complaint states.

A case management conference is set for Dec. 15 in Santa Clara County Superior Court.

Eleven other cases against the dealership have been filed by individuals over the past year. Some claim that South County would not honor warranties on purchased vehicles, while others allege the dealership failed to pay off the remaining balance on traded-in vehicles.

Another Gilroy dealership along Automall Drive has been hit hard by the ongoing pandemic. South County Hyundai closed its sales operations in March following the shelter-in-place order, but its service department remains open.

Gilroy European, which leases the property to the dealership, filed a complaint in court on July 31, claiming South County Hyundai has failed to make its monthly $24,000 rent payments since April.

A case management conference is scheduled for Dec. 1.

San Ramon-based Gilroy IM 2 LLC, which shares an address with automotive retail technology company Tekion, filed a fictitious business name statement on Oct. 1 with the Santa Clara County Clerk’s Office to operate under the name Hyundai of Gilroy.

The eventual reopening of the shuttered dealerships will be good news for the city, which relies heavily on vehicle sales tax to fund services. Gilroy financial reports list five dealerships among the 25 highest sales tax-generators in the city.

On Sept. 14, the Gilroy City Council approved a letter to Fiat Chrysler of America, urging the automaker to re-establish a franchise in the city.

Nissan of Gilroy’s new location that has been under construction for the past year is nearing completion. The dealership plans to move from its current location at 400 Automall Drive to 6807 Automall Parkway.

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