Consumers v Dealer and Previous Owner: Who Wins?

Car (and other vehicle) buyers beware.  Do your homework before buying and be thoughtful of the claims you bring and entities you sue if something goes wrong.  In a recent North Carolina Court of Appeals case, Sain v. Adams Auto Group, husband and wife consumers sued the dealership from which they purchased a vehicle after learning the vehicle had been involved in a wreck and had Case report--Court of Appealssustained frame damage.  The consumers also sued the previous owner of the vehicle, Capital One Auto Finance, who sold the vehicle to the dealership at an auction.  Claims asserted in the lawsuit included fraud, tortious breach of contract, civil conspiracy, unfair and deceptive trade practices, and negligence.

After exchange of discovery requests and responses both Capital One and Adams Auto Group moved to dismiss the consumers’ lawsuit.  Capital One sought dismissal from the case because it had no direct relationship with the consumers and thus made no representations to them regarding the vehicle’s condition.  The Court agreed and dismissed Capital One from the case.

Adams Auto Group, as most defendants do, sought dismissal from the case.  The Court of Appeals dismissed all the consumers’ claims against Adams Auto Group except for the one claim that could result in the most financial exposure for the dealership.  Interestingly enough (and of good fortune for the consumers) the Court of Appeals held that the consumers had stated enough evidence for them to continue their claims that Adams Auto Group committed unfair and deceptive trade practices in violation of N.C.G.S. § 20-75.1.  The Court’s basis for this was its finding that there was evidence that an Adams Auto Group representative made a statement to the consumers leading them to believe the vehicle had not been involved in a collision when the dealership knew otherwise.  The Court’s refusal to dismiss this claim is quite good for the consumers because a finding that Adams Auto Group violated N.C.G.S. § 20-75.1 could lead to treble damages and recovery of attorney’s fees.

In fairness, I have received more than one call from consumers who have purchased vehicles from Adams Auto Group and it appears to be safe to say that this dealership, like many used vehicle dealerships, obtain vehicles from auctions and then sell them to consumers.  There is nothing illegal about this practice and you really cannot fault a dealer or any businessperson who seeks to make a profit.  The problems arise where the dealership makes specific representations about a vehicle’s history or condition when the dealership either knows the representation is untrue or fails to check its sources before making said representation.  In other words, if a dealership tells a consumer a vehicle has a brand new engine or has never been involved in a collision but it turns out these things are untrue the consumer may have a cause of action against the dealership.

In full disclosure, the Court of Appeals was not making any final decision on whether the Sains or Adams Auto Group is the winner in this case.  The Court was hearing the case on the issue of whether the trial court was correct in dismissing all of the consumers’ claims.  In the end, the Court decided that all claims were properly dismissed except the unfair and deceptive trade practices and acts claim against Adams Auto Group.  This claim has been sent back to the Catawba County Superior Court for the parties and their attorneys to resume hashing out.

Moral of the story:  if you find yourself in a position such as the Sains where you purchase a vehicle (or other valuable consumer product) and learn something you were told about the product is not true, consult an experienced attorney.  Do not be led astray by the oft dismissive musings of a dealership or the well-meaning yet sometimes incorrect opinions of friends and family.  Pull together all of your documents and figure out what options, if any, you may possess.  And I close with best wishes to my colleague and friend, Jason Taylor.


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