A partner with Equity Prime Mortgage LLC (EPM) on Thursday denied an allegation in a recently dismissed lawsuit that his company stopped paying a race car sponsorship because of a "margin call."
Phil Mancuso, a partner and chief investment officer for EPM, said in a telephone interview, "There was no margin call."
The lawsuit was filed Monday by Jesse Iwuji Motorsports LLC (JIM), an American stock car racing team founded in 2021 by Iwuji and NFL Hall of Fame running back Emmitt Smith that competes in the NASCAR Xfinity Series. The suit named mortgage lender EPM as the lone defendant.
It claimed that in September, EPM had halted payments on a $6 million, two-year sponsorship.
The lawsuit was subsequently dismissed by a federal judge on Wednesday. Judge Beth Bloom in the U.S. District Court for Southern Florida, Fort Lauderdale Division, signed an order dismissing the lawsuit, stating the plaintiffs had failed to establish the court’s jurisdiction. The suit was dismissed without prejudice, which means it can be refiled later in the proper venue.
According to the complaint, EPM signed a sponsorship agreement with JIM on Nov. 30, 2021, in which it agreed to pay the motorsports company a total of $6 million in monthly installments over a two-year period beginning Dec. 1, 2021.
The complaint states that on or about Sept. 27, 2022, or less than a week before EPM was required to make another monthly installment, “an executive at EPM told an executive at JIM that EPM got ‘margin called’ and was suffering due to mortgage rate hikes, and thus EPM could not make any additional compensation payments to JIM” under the agreement.
JIM subsequently received a text message on Sept. 29 from an EPM executive confirming that neither the Oct.1 payment nor any subsequent payments would be made, the complaint states.
After EPM failed to make its payments on both Oct. 1 and Nov. 1, JIM sent the lender a notice stating it intended to terminate the sponsorship for a “material breach” of the agreement, and offered EPM 30 days to remedy the breach.
According to the complaint, under the agreement EPM remains “responsible for paying JIM the entirety of the compensation” set forth in the contract, and that it is still owed $4.125 million. JIM also sought damages, as well as attorney’s fees and court costs.
Mancuso did not state why EPM halted its payments on the sponsorship, saying he would not comment on the lawsuit since it is still possible his firm could still face a legal battle. But he vehemently and unequivocally denied JIM's claim that EPM halted payments due to a "margin call."
"Not only was there no margin call — there were no margin calls at all — in fact, we had positive settlements with our brokers," he said. "Our brokers owed us millions of dollars. We wholly and completely refute the idea that there was a margin call."
According to Mobility Market Intelligence (MMI), EPM had posted an overall loan volume of $1.5 billion as of Oct. 1, down 20.6% year over year, primarily due to a 36.3% decline in refinanced mortgages.
Equity Prime Mortgage, based in Atlanta, is a wholesale and retail mortgage lender licensed to operate in all 50 U.S. states, the District of Columbia and Puerto Rico. According to the Nationwide Mortgage Licensing System (NMLS), it sponsors 119 mortgage loan originators and operates 15 branch locations in 12 states.
