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MAD Investment Co. Alton Toyota/Dodge (not in evidence) David Mungenast
(prior to 1991) (not in evidence)
DAR, Inc. Alton Toyota/Dodge Subchapter S corp. David Mungenast
(beginning 1991) (50%), Rameau
Johnson (33%),
Thomas Herring (17%)
During the years at issue, the four Dealerships offered
VSC's under a common program in conjunction with the sale of new
and used motor vehicles. Before October 1991 the program was
administered by Mechanical Breakdown, Inc. (MBP), a corporation
unrelated to petitioners. From October 1991 through March 1992,
the program was administered by Automotive Professionals, Inc.
(API), also unrelated to petitioners, but the structure and
operation of the program remained, in all material respects,
substantially unchanged.3 A standard form of VSC recites that it
is a contract between the issuing dealer and the motor vehicle
purchaser (referred to in some contracts as the "contract
holder"). Under the terms of the VSC, the dealer agrees, for a
fixed price, to
make repairs or replace any of the below listed parts
or components of the Contract Holder's Vehicle covered
hereunder or cause such repairs or replacement to be
made by an authorized repair facility at no cost for
parts or labor to the Contract Holder (but subject to
applicable deductible, if any) whenever covered
components or parts in the Contract Holder's said
Vehicle experience a Mechanical Breakdown.
3 MBP continued to administer contracts sold before October
1991. All contracts sold thereafter were administered by API.
Where a distinction is appropriate, we will refer to “the program
administered by MBP” and “the program administered by API.”
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Last modified: May 25, 2011