Filter Results CategoriesCart
Highlight Updates

1.2.6 Undisclosed Damage to New Cars

Often new cars will undergo damage before they are sold to the consumer, either during delivery from the manufacturer or at the dealership. The cars may then be repaired and sold without disclosure of the prior damage.

  • • A brief discussion of this problem is found in § 2.1.9, infra.
  • • How to investigate fraud relating to prior damage to new cars is examined in §§ 2.2–2.5, infra.
  • • A number of state statutes require disclosure of prior damage to new cars, if that damage is over a specified monetary threshold. 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 § 7.2.3, infra. See also Appx. C, infra.
  • • Fraud relating to prior damage to new cars may involve common law fraud, which may lead to punitive damages. See Ch. 8, infra.
  • • Fraud relating to prior damage to new cars 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 damage. See § 9.2, infra.
  • • A breach of an implied or written warranty in a fraud relating to prior damage to a new car may also lead to a Magnuson-Moss Warranty Act claim, which would provide for attorney fees. See § 9.2, infra.
  • • Fraud relating to prior damage to a new car 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 damage to a new car 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.
  • • Fraud relating to prior damage to a new car 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 damage to a new car 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 a case relating to prior damage to a new car, damage issues, settlements, attorney fees, and collecting judgments against the defendant, the defendant’s surety, related lenders, and auction companies.