The NASCAR team suing Equity Prime Mortgage over a broken sponsorship deal is doubling down on its claim the lender pulled back because of a margin call during last year’s escalating rate hikes.
Jesse Iwuji Motorsports is suing EPM for $4.1 million in a Florida federal court, claiming the firm stopped making six-figure monthly payments last September for commitments including stock car signage. The sides failed to reach an agreement in a mediation hearing last week, an attorney for JIM said Friday.
The Atlanta-based lender filed a countersuit in February to JIM’s complaint issued last December, placing the blame of the sponsorship breakdown on the racing team’s own alleged admission of liability. The NASCAR team fired back Monday, asking a federal judge to strike down EPM’s defenses.
Both EPM and an attorney for the lender didn’t respond to requests for comment Friday. JIM attorney Darren Heitner, of Fort Lauderdale, Florida-based Heitner Legal, said Friday in an email he would refrain from commenting further as the case progresses.
The dispute stems from a $6 million sponsorship agreement the parties signed in November 2021, according to court filings. EPM would pay JIM a total of $2,250,000 across monthly installments in the first year and $3,750,000 in the second year.
The lender’s logo was displayed on the team’s car during eight NASCAR Xfinity Series races, the sport’s second tier of competition, last year. EPM signage also appeared on JIM race suits, hats and content, while the lender in exchange received pit passes for races. The contract also allowed appearances at EPM from team owners Jesse Iwuji and NFL Hall of Fame running back Emmitt Smith.
An EPM executive last September, according to JIM, told the team it wouldn’t make further sponsorship payments because it received a “margin call” and was suffering financially from mortgage rate hikes. Around the time of the EPM’s alleged call, rates had hit a then-14 year peak.
“Though JIM sympathized with EPM’s predicament and proposed measures in good faith in order to benefit EPM and continue the parties’ relationship, EPM again reiterated in communications with JIM that the effect of the ‘margin call’ was the reason why future payments would not be made,” wrote Heitner.
EPM in its February response denied the margin call claim, and pinned blame on JIM co-owner Matthew Casto, who allegedly told the lender’s CEO it breached the deal in a meeting last May. The racing team has acknowledged the meeting took place, but Heitner did not comment on a question about what occurred in the meeting.
The lender has a May 15 to respond to JIM’s most recent argument. The case is scheduled to go to trial next February, according to court filings.
EPM, founded in 2008, originated $1.9 billion in mortgage volume through the first three quarters of last year, according to S&P Global data.
Iwuji raced without a major sponsor on his stock car in the first race of the 2023 Xfinity Series in February, recording a did not finish due to an electrical issue, in 30th place, according to race records.
