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1.2.5 Other Undisclosed Wreck Damage to Used Cars

Often cars will undergo severe wreck damage, though short of enough damage to be declared salvage vehicles, either because the damage is not quite a total loss, or because a state’s salvage law definitions are stricter than insurance company standards for a total loss. Challenging misrepresentation and nondisclosure of this serious wreck history is very similar to challenging sale of a salvage vehicle except that, by definition, the state salvage law will not apply. If the salvage law does apply, then see § 1.2.3, supra.

  • • How to investigate fraud relating to prior wreck damage is examined in §§ 2.2–2.5, infra.
  • • Fraud relating to prior wreck damage may involve common law fraud, which may lead to punitive damages. See Ch. 8, infra.
  • • Fraud relating to prior wreck damage may involve a breach of implied or express warranties, which may lead to revocation of acceptance, withholding of installment payments, and a claim for damages, even if the seller had no knowledge of the prior wreck damage. See § 9.2, infra.
  • • A breach of an implied or written warranty in a fraud relating to prior wreck damage may also lead to a Magnuson-Moss Warranty Act claim, which would provide for attorney fees. See § 9.2, infra.
  • • Fraud relating to prior wreck damage also will violate a state UDAP statute, which will often provide attorney fees, minimum, multiple, or punitive damages, and which may not require proof of the defendant’s intent or knowledge. See § 9.4, infra.
  • • Fraud relating to prior wreck damage may violate a state’s automobile dealer licensing statute or regulations, which will either provide a cause of action, leverage with the dealer, or an indirect cause of action under a UDAP, warranty, or fraud claim. See § 7.7, infra.
  • • A number of state statutes require disclosure of wreck damage for certain used cars. Such a statute will either provide a private cause of action, or indirectly provide a cause of action under a UDAP, warranty, or fraud claim. See § 7.2.2, infra. See also Appx. C, infra.
  • • Fraud relating to prior wreck damage may also violate the federal or state RICO statute. The federal statute provides federal jurisdiction, attorney fees, and treble damages. See § 9.5, infra. The state RICO statute may provide similar remedies in state court. See § 9.6, infra.
  • • If the seller claims ignorance of the prior damage, rescission on the grounds of mistake may be available. See § 9.3, infra.
  • • How to litigate a fraud case relating to prior wreck damage is examined in Chapter 10, infra, including: advising the client, who to sue, what claims to plead, jurisdictional issues, res judicata, class actions, evidentiary issues (such as how to introduce evidence of the defendant’s misconduct against other consumers), trial of fraud relating to prior wreck damage cases, damage issues, settlements, attorney fees, and collecting judgments against the defendant, the defendant’s surety, related lenders, and auction companies. See also various sample pleadings found in the online version of this treatise, and summarized in Appendix G, infra, including, among others: an undisclosed wreck damage complaint, sample discovery in an undisclosed wreck case, a sample voir dire outline, a sample outline for questioning an expert witness about the condition of a vehicle, jury instructions, and a special verdict form.