Mayor Lyons responds to civil suitPublished 10:17am Monday, December 28, 2009
Mayor Don Lyons on Sunday responded to the recently-filed lawsuit in which he and his wife Joan are named among 10 defendants.
The suit was filed by James Scott, of Virginia, who was the winning bidder on a 1929 Duesenberg at a September auction held by the Auburn Cord Duesenberg Museum.
Scott won the bidding with an offer of $2.9 million.
“Because the matter is proceeding in court, I have been advised not to speak about it publicly. I do want to let the legal process play out, but it’s essential to point out a few facts,” Lyons said. “First, this is a civil lawsuit, not a criminal case. I engaged in no illegal behavior.”
Second, “The lawsuit alleges that we secretly owned the vehicle and that we bid on it to artificially drive up the price. That’s not true. We never owned the vehicle. We never made a bid with the intent of driving up the price. We bid at the auction because we wanted to buy the vehicle,” Mayor Lyons explained.
Confusion arose, Lyons explained, because he signed an agreement before the auction with Diamond Auto Sales, an Indianapolis company that owned the vehicle.
“The owner agreed to sell us the vehicle at the fixed price of $1 million. But they had already made a commitment to the Auburn Cord Duesenberg Museum to sell it in their Labor Day auction. We were told that the museum had already distributed advertising with the vehicle listed, and the owner did not want to disappoint the museum. Nobody expected that anyone would bid much more than $1 million for the vehicle, so we signed an agreement that Diamond Auto Sales would sell the car to us at the fixed price of $1 million, so long as we were the winning bidder at the auction. A representative of the museum knew all about this. We thought we were being nice and doing a favor to the museum to agree to do it this way.”
“I attended the auction with the intent of winning the bidding and driving the car home.”
As it turned out, Scott valued the car at a much higher price than anyone anticipated.
Lyons was working with an agent, Mark Hyman, who helped negotiate the deal and who bid at the auction on behalf of the Lyonses.
“Each time we bid higher, we did so with the intention of winning the auction,” Lyons said. “Nobody expected the bidding to go much higher than $1 million. But the bidding quickly approached and surpassed $2 million. For a while I wasn’t sure that the museum wasn’t playing a joke, or just making it more dramatic, by pretending that someone on the phone wanted to pay that much for the car.”
After making a bid of $2.8 million, Lyons stopped bidding.
“A museum representative walked up to us at that point and said that there was no joke, and the other bidder was a man from Virginia. He also said that, regardless of our agreement to buy the vehicle at a fixed price, we would still be responsible for paying the buyer’s premium of eight percent of the winning bid price. That was news to us.”
Faced with what would be nearly $250,000 in extra cost, together with his discomfort over the bidding being so high, he refused to bid higher.
After the auction, Lyons and Hyman talked with the owner of Diamond Auto Sales, who agreed that, if Lyons paid Diamond Auto Sales the agreed-upon price within a week, then Diamond Auto Sales would transfer title to the Duesenberg directly to Scott, and Lyons and Hyman could share the remainder of the proceeds.
Lyons did pay Diamond Auto Sales the agreed-upon price, and Lyons and Hyman did receive and share the remaining proceeds – part of which they donated back to the museum.
What the Lyonses did not know until just a few weeks ago was that Diamond Auto Sales never transferred title to the vehicle to Scott.
The museum was responsible for transferring title and did not do so – nor did it advise Lyons or Hyman of any problem.
Apparently, Diamond Auto Sales allowed its bank – Webster Business Credit Corp. – to hold title to the vehicle as security for a loan it extended to Diamond Auto Sales.
After selling the car, Diamond Auto Sales failed to transfer the proceeds to the bank to satisfy the lien and to obtain clear title.
The bank – which Scott also named as a defendant in the lawsuit – has refused to release the title to the car until its loan with Diamond Auto Sales is satisfied.
“It is a complicated set of events. But, fundamentally, what is important to understand is that I never owned the vehicle,” Lyons said. “It passed directly from the owner to Mr. Scott. I wasn’t a seller. I was a would-be buyer.”
The lawsuit is proceeding in federal court in Ft. Wayne, Ind.
Lyons stated he has already offered to pay into the court the proceeds he received, so the court can determine who is legally entitled to the money.
He is hopeful the parties can work out a compromise rather than spend months in litigation.
“We have expressed our desire to cooperate and find a solution. We hope and expect that the matter will be resolved soon,” Lyons said.
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