Car buyer: dealership didn’t disclose prior accident damage – $125,000 Settlement

Plaintiff purchased a vehicle from the defendant dealership. The plaintiff alleged that during the negotiations for the vehicle, she explained her need for reliable and safe transportation for her family. She asked the salesman why the vehicle was being sold as a used car when it only had 284 miles on it, and specifically asked him to describe its history and any problems it might have. The salesman responded that the previous purchaser had changed his or her mind after the sale and returned the vehicle the next day; but since it had already been titled, the dealership had to sell it as a “used” vehicle. He also told her that the vehicle had no problems and if anything went wrong, it would be covered by the balance of the manufacturer’s warranty on the vehicle, bumper to bumper.

In reliance on the salesman’s statements, the plaintiff agreed to purchase the vehicle. Plaintiff arranged to finance the vehicle purchase through the dealership, but declined to purchase a service contract, GAP Insurance and credit life insurance. The plaintiff was advised by the defendant’s finance manager that a loan for her vehicle purchase had been approved at the lowest interest rate he could find. Plaintiff agreed to the loan. However, the loan terms, including the interest rate and monthly payment, were not the lowest interest rate or monthly payment offered to the finance manager in response to the plaintiff’s loan application he sent to several other potential lenders.

Several days after the plaintiff had signed everything and accepted delivery of the car, the finance manager told the plaintiff he found a lower interest rate. However, in order to get a loan for the vehicle, the lender required that she purchase GAP insurance for $895, a service contract for $2,060 and an anti-theft etching contract for $999, but there would be a slight increase in the monthly loan payment. These products or “add ons” are sometimes called “back-end” products, since they are not added until the back end of the deal once the vehicle price has already been agreed to. The act of adding these back-end products into the deal, without the consumer knowing that they are not required for the purchase of the vehicle, is called “loan packing.” Trusting the finance manager, the plaintiff agreed and signed a new, backdated contract of purchase. Had the back-end products not been included in the loan, the plaintiff’s monthly loan payments would have been less. The purchase of these back-end products was not a requirement of the lender in order for the new loan to be approved. Plaintiff would not have purchased the back-end products had she not been told they were required to get her the loan.

Shortly after purchase, plaintiff noticed that the vehicle was not handling properly, and there was a knocking in the rear. She took it to the defendant, who had it for three weeks, claiming it needed to order an especially long screw for new shocks. The dealership refused to give her a repair order for this repair.

After driving the vehicle for a couple of months, the plaintiff never felt safe in it and determined it was not a practical family car. She attempted to trade it in, at which time that dealer showed her a Carfax Vehicle History Report it obtained and advised her that the vehicle had been previously wrecked. Further investigation revealed the identity of the prior owner, who was contacted. The prior owner stated that the car was new when she bought it, but was returned for repairs by the defendant and was in an accident while being driven by one of its employees. The prior owner had refused to take the vehicle back, so the dealer took it back and put her in an identical new one.

Defendant violated Virginia and federal law since, despite having the title in its possession, it failed to use the title to disclose the mileage since it would have revealed the prior owner’s name and address. Instead, it used a Dealer Reassignment of Title form, which is not to be used unless the title has no space for an assignment, or the tile is unavailable at the time of transfer. This title had an open space for assignment and was in the possession of the defendant.

[15-T-081]

Type of action: Fraud – Virginia Consumer Protection Act
Injuries alleged: Diminished value due to prior wreck damage, punitive damages, legal fees
Name of case: Albertson v. Greenbriar Volkswagen, Inc.
Court: Chesapeake Circuit Court
Case no.: CL14002576-00
Date resolved: May 14, 2015
Special damages: Diminished value to the vehicle that an expert appraiser said was $8,000, due to the prior accident damage
Demand: $125,000
Offer: Initial offer was a buy back for full purchase price plus interest
Verdict or settlement: Settlement
Amount: $125,000
Attorney for plaintiff: John Cole Gayle Jr., Richmond
Attorney for defendant: Robert S. Reverski Jr., Richmond
Plaintiff’s experts: Jeffrey Locke, International Appraiser Network; Charles Moore, London Bridge Motor Co.
Insurance carrier: Penn National