Shook Receives Full Summary Judgment in Redemptionist, Vapor Money Theory Case

Shook was granted full summary judgment for clients Arrow Truck Sales, Inc. and Transport Funding, LLC, defendants in a case pending in the United States District Court for the District of Kansas. The lawsuit involved “redemptionist,” “vapor money theory” claims.

In Mercado v. Arrow Truck Sales and Transport Funding, the U.S. District Court judge granted the defendants’ motion for summary judgment against the plaintiffs and further granted judgment in favor of Transport Funding on its counterclaims against the plaintiffs.

The plaintiffs were a married couple (the Mercados) who purchased a truck from Arrow Truck Sales, which the plaintiffs then financed through Transport Funding. Pursuant to the loan agreement with Transport Funding, the plaintiffs agreed to make 39 monthly payments to Transport Funding. After making 20 monthly payments, Mercado decided he no longer wanted to drive the truck and stopped making the monthly payments. The Mercados then filed a lawsuit alleging that when they signed the documents to purchase the truck from Arrow Truck and finance it through Transport Funding, this created a “credit” with the Federal Reserve Bank, and that credit could then be used by Transport Funding to pay off all indebtedness owed by the plaintiffs for the purchase of the truck. The Mercados claimed they were entitled to keep the truck without making any further payments under the loan documents and further sought damages for (i) the return of the $25,000 down payment made to Arrow Truck, (ii) recovery of all monthly payments previously made to Transport Funding, (iii) statutory damages and (iv) punitive damages.

The court found that the claims raised by the plaintiffs’ theory of debt discharge had “no basis in law” and that the plaintiffs’ redemptionist, vapor money theory was “legally groundless.”

Redemptionist and vapor money theory lawsuits have been filed across the country, with the vast majority of courts holding that they are baseless and frivolous. Transport Funding was recently sued in state court in Florida with a similar claim. In that case—Francis v. Transport Funding—Shook filed a motion to remove it to federal court and, after filing a motion to dismiss, the federal court granted the motion, finding the claims were “without merit” and “frivolous.” The plaintiff appealed the case to the 11th Circuit Court of Appeals, which recently entered an order dismissing it. 

The Shook trial teams were comprised of Justin Johl, Jessica McKinney and Charlie Rosebrough in Mercado v. Arrow Truck Sales and Transport Funding, and Justin Johl, Jessica McKinney and Delaney O’Neill in Francis v. Transport Funding.

The cases are Francis v. Transport Funding, No. 25-10668 (11th Cir., February 28, 2025) and Mercado v. Arrow Truck Sales and Transport Funding, No. 23-2052 (D. Kan., August 19, 2024).