A New Jersey dealer prevailed when a customer brought a lawsuit seeking damages relating to the purchase of an undisclosed salvage title.
September 2017, Auto Dealer Today - Feature
You see cases like this one, occasionally. A car buyer buys a car, decides there’s something wrong with it and demands his money back. Nothing unusual there — except when the buyer has kept the car for two years and rolled up 43,000 miles on the odometer.
How much nerve does it take to claim that you’re entitled to all your purchase price back after that much mileage? What’s a court supposed to do with a case like this?
This Is a Salvage
Essa Lee bought a used Toyota Highlander from Hudson Toyota (no relation to the author) for $21,641. Lee obtained a “clean” title to the Highlander from the New York State Department of Motor Vehicles.
Lee drove the Highlander 43,000 miles during the two years he owned it. When Lee tried to renew the Highlander’s registration, the DMV told Lee that it could not renew the registration due to a salvage notation in the vehicle history.
The DMV issued Lee a salvage title. Lee told Hudson about the salvage title and traded in the used Highlander for a new one. Hudson assessed the trade-in value of the used Highlander at $14,700.
Lee sued Hudson for damages of $18,355, the amount that he had paid Hudson to date. Lee claimed that Hudson hid the fact that the old Highlander was a salvage vehicle.
The court construed Lee’s complaint to allege breach of contract, common law fraud, and violations of New Jersey’s Consumer Fraud Act. Hudson moved for summary judgment.
The trial court granted Hudson’s motion. In rendering its decision, the court addressed the responsibility of a plaintiff in a lawsuit to prove his case. According to the trial court, Lee presented no evidence that Hudson was aware of the salvage notation when it sold Lee the used Highlander. The trial court also found that Lee presented no evidence of damages. No evidence? No case. Lee appealed to the Superior Court of New Jersey’s appellate division.
The appellate court affirmed the trial court’s grant of summary judgment to Hudson. The appellate court agreed with the trial court’s finding that Lee failed to show evidence of damages. Under the CFA, a plaintiff must show that he suffered either an out-of-pocket loss or a loss in value due to the defendant’s unlawful conduct.
As the appellate court explained in a decision that could serve as a law school primer, Lee sought a full refund of the old Highlander’s purchase price, which was not the correct measure of damages. The correct measure of damages was the difference in value between the vehicle as Hudson represented it to Lee and the vehicle as it was in fact. However, the appellate court continued, Lee did not demonstrate that the old Highlander was worth less when Hudson sold it to him than what he paid for it.
According to the appellate court, Lee also did not demonstrate that Hudson valued the old Highlander incorrectly as a trade-in, especially because Lee drove it 43,000 miles. Because Lee did not demonstrate that he suffered any loss either when he bought the old Highlander or when he traded it in, his CFA claim failed, as did his breach of contract and common law fraud claims.
Every rare now and again, the law, and the judges who interpret it, make some sense.
Thomas B. Hudson is a partner in the firm of Hudson Cook LLP, publisher of Spot Delivery, and the author of several widely read compliance manuals. Contact him at [email protected].