Summary:
The Fourth Circuit’s recent unpublished opinion in Front Row Motorsports v. DiSeveria is, on the surface, a straightforward contract dispute arising from an indemnity agreement. But behind the curtain of corporate formalities is the long shadow of In re BK Racing, the bankruptcy case that has become the NASCAR equivalent of a Russian nesting doll—each layer revealing deeper dysfunction.
In 2016, Front Row purchased a NASCAR charter from BK Racing for $2 million. The contract promised a lien-free transfer. It wasn’t. BK Racing failed to disclose a $9 million Union Bank lien, and Front Row only discovered it after paying the first $1 million installment. When BK Racing’s principals—Michael DiSeveria and Ronald Devine—offered a personal indemnity agreement to close the second half of the deal, Front Row accepted.
Union Bank eventually sued, and Front Row settled for $2.1 million. It then sought indemnity from DiSeveria and Devine, who refused. The defense? That the indemnity wasn’t enforceable because a third BK principal (Wayne Press) didn’t sign it, that indemnification was against public policy because Union Bank had raised a civil conspiracy claim, and that there was no consideration because Front Row was already contractually obligated to pay.
The district court (WDNC) rejected these defenses on summary judgment and, after a bench trial, found the $2.1 million settlement was reasonable. The Fourth Circuit affirmed in full. It found that the indemnity was enforceable under North Carolina law, there was no bar under public policy, and the settlement was entirely reasonable given that Devine himself had proposed higher numbers to resolve the same debt.
Commentary:
It seems prophetic that the entity was named "BK Racing" as that certainly now stands for "Bankruptcy Racing".
Previous related cases include:
- Bankr. W.D.N.C.: In re BK Racing
- Smith v. Devine- Sanctions for Discovery Abuses and W.D.N.C.: Smith v. Payne: Temporary Withdrawal of Reference for Pre-Trial
- Bankr. W.D.N.C.: Smith v. DeSeveria- Repayment of Short-Term Loans to Insiders was not a Fraudulent Conveyance
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