Equity Prime Mortgage (EPM) filed a counterclaim against Jesse Iwuji Motorsports (JIM) last week for allegedly breaching a sponsorship contract. The Atlanta-based mortgage lender is accusing the stock car racing team of breaking the agreement by changing the driver of the car starting in May 2022.
The counterclaim is a response to a lawsuit filed by JIM in December 2022. The stock car team is also accusing EPM of breaching the contract by failing to make more than $4 million in sponsorship payments following a “margin call” from its investors.
When Eddy Perez, EPM’s founder, was contacted for comment by HousingWire, he said to write what was in the claim. Jesse Iwuji asked us to contact his lawyer for comment.
Darren Heitner, JIM’s attorney and founder at Heitner Legal, P.L.L.C, said regarding the sponsorship agreement that “the deliverables were met and EPM will fail in its helpless effort to essentially create terms in a contract that were not present.”
Both sides in the dispute admit that the sponsorship was signed in November 2021 and that EPM made the required monthly payments of $187,500 from December 2021 through September 2022.
No payments were made after that, both parties said. The agreement stipulates two years of sponsorship, with the monthly payment increasing to $312,500 in the second year, starting in December 2022.
According to EPM, the “implicit” intent of the sponsorship was to support NFL Hall of Fame running back Emmitt Smith and professional stock car racing driver Jesse Iwuji. They founded JIM in 2021 to compete in the Nascar Xfinity Series.
Perez, who founded EPM in 2008, said he admired Jesse Iwuji’s personal story, according to the lawsuit. When the opportunity presented itself, he decided to sponsor a minority-owned and operated race car team.
When the sponsorship was first announced, Smith and Iwuji said they “loved EPM” because the company supported military and diversity initiatives.
EPM alleges that on May 11, a member of JIM flew to Atlanta, saying Jesse Iwuji was being “sabotaged” by JIM’s racing team and was being subjected to racism. The lawsuit does not provide further details on the claims.
According to the lawsuit, the representative stated that NASCAR is based on a point system, and since Jesse Iwuji “was not good enough as a driver, they were therefore forced to bring in another driver with more experience to get points.”
“At no time were there discussions of EPM agreeing to enter into a sponsorship agreement that provided for someone other than Jesse Iwuji driving the EPM sponsored race car,” attorneys for EPM wrote in the lawsuit.
EPM alleges it continued to work with JIM, but the value in the sponsorship agreement and the continuing mission of EPM were not being achieved.
“In October 2022, as EPM and the entire mortgage industry continued to suffer due to continued inflation and unprecedented interests rate hikes, Perez, after having fully paid and provided JIM multiple months to reach a solution to “make it right” advised JIM that EPM could no longer support the sponsorship to the same extent,” the lawsuit states.
JIM responded by sending a notice attempting to terminate the sponsorship agreement on November 3. EPM rejected it and sent its own notice to JIM terminating the agreement. The dispute led to a U.S. District Court in Florida in December.
Heitner, who said he’ll only speak to “the legal argument at this time and allow the facts to flesh themselves out throughout the litigation,” added that “EPM contracted with a corporate entity, not a specific driver.”
EPM, which has licenses in 50 states and provides an array of lending products, reached $1 billion in origination over the last 12 months, according to mortgage recruiting platform Modex. The company has 13 branches with 50 active loan officers, the data shows. It’s mostly known for wholesale lending.