One of the owners of the Motor Werks Auto Group has parked an internal power struggle with his business partners in Cook County court, asking a judge to place the northwest suburban collection of luxury car dealerships into receivership to force the other two owners, including Motor Werks’ founder, to sell the dealerships and split the proceeds according to the terms of a purported deal struck a decade ago.
On Oct. 28, James Hub, former Motor Werks general manager and one of the partners at the auto dealership group since 1997, filed suit in Cook County Circuit Court against Motor Werks and the auto group’s two other ownership partners, dealership founder Paul Tamraz and partner Nicholas Pontikes, alleging they have improperly gone back on an agreement among the three men to sell the dealerships as a way of ensuring the value of their interests in the business.
The complaint does not specify how much Hub believes either Motor Werks businesses or his ownership stake may be worth.
According to the lawsuit, Hub and his partners signed the agreement in 2006, as they were concerned about what might happen to the value of their ownership interests should one of the partners die or become disabled. To maintain that value, the men agreed to only sell their ownership interests as part of a sale of the entire auto group.
Further, the partners agreed to require a sale of the entire auto group should either Hub or Tamraz die or become incapacitated, or after an “operating period” of five years, whichever came first.
Hub’s lawsuit said that operating period ended in 2011.
However, in the years since, Hub alleged Tamraz and Pontikes have refused to sell. Further, Hub alleged Tamraz has actively sabotaged sales negotiations. At one point, the lawsuit alleges talks with a prospective buyer failed after Tamraz demanded, as a condition of the sale, that Hub and Pontikes agree to each pay him $10 million from their share of the proceeds.
Hub further alleged Tamraz has blocked Hub’s attempts to market the Motor Werks companies, despite interest expressed by various buyers over the past five years, including as recently as May 2016.
Hub also has alleged Tamraz has now begun to refuse to pay Hub his share of Motor Werks’ profits, and “is creating a hostile environment in the workplace and disparaging Hub to customers and to others in the business community.”
“All of this is designed to force Hub to sell his interest in the Motor Werks entities to Tamraz … at a price dramatically lower than what Hub would receive if the Motor Werks entities were sold pursuant to the Sale Agreement,” said Hub’s lawsuit.
To force the sale at a “fair price,” Hub asked the court to “appoint a receiver for the purpose of marketing, negotiating and contracting to sell and dispose of the Motor Werks entities as required by the agreement.”
Short of that, he asked the court to order Tamraz and Pantikes to pay him “damages in such amount that Hub would have ultimately received” from a complete sale of Motor Werks.
Hub is represented in the action by attorneys with the firm of Freeborn & Peters, of Chicago.