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Automobile Fraud: 10.10.1.2 Proving Diminished Value of Vehicle

If the court uses an out-of-pocket measure, the consumer will have to establish the amount the consumer paid for the car. If the court uses a benefit of the bargain measure, the consumer will also have to show how much the car would have been worth at the time of purchase if the car had been as represented.575 In either case, the consumer will also have the burden of showing how much the car was actually worth at purchase, based on complete knowledge about the car’s history.576

Automobile Fraud: 10.10.1.3 When to Utilize Used Car Valuation Guides

Another method of proving the true value of an automobile is by reference to a used car valuation guide.597 These are published as guides for dealers and list the average retail or wholesale value of vehicles, according to make, model, year and mileage, for the month in which the car was purchased.598 These guides, which are available in most public libraries, also quote values for jeeps and trucks.

Automobile Fraud: 10.10.2.1 In General

As an alternative to actual damages, the consumer can seek cancellation of the transaction and restitution of the purchase price under a variety of theories: revocation of acceptance under the Uniform Commercial Code;610 common law rescission based on misrepresentation;611 rescission or cancellation under the federal odometer statute;612 and, in a number of states, rescission under the UDAP statute.613

Automobile Fraud: 10.10.2.2 Relation to Recovery for Diminished Value

Even though the buyer cannot recover both restitution and diminished value of the vehicle,616 a few states have statutes making a contract void or unenforceable if it violates the UDAP statute.617 It may be possible for a consumer to recover damages from the dealer under fraud, UDAP, breach of warranty, and other theories, and then defend any suit for the debt on the ground that the contract is unenforceable.

Automobile Fraud: 10.10.3.1 General

Regardless of the measure of direct actual damages used, and regardless of whether restitution is sought, the plaintiff is also entitled to incidental and consequential damages.620 Types of incidental and consequential damages that are recoverable under the federal odometer statute and common law fraud claims are discussed in earlier sections.621 Other NCLC treatises examine such damages in UDAP and breach of warranty claims.622

Automobile Fraud: 10.10.3.2 Emotional Distress Damages

Emotional distress damages can be appealing in automobile fraud cases. Emotional distress damages are available in a number of states for at least some of the causes of action that consumers assert in automobile fraud cases.

Automobile Fraud: 10.10.4.1 In General

The method of computing direct damages in a lease transaction depends on the status of the lease. The calculation will be different depending on whether the consumer has exercised a purchase option, has turned the vehicle in at scheduled termination, has turned the vehicle in early, or plans to continue leasing the vehicle until the scheduled end of the lease term.

Automobile Fraud: 10.10.4.2 Damages When the Consumer Cancels the Lease

Lease cancellation—via rejection, revocation of acceptance, or common law rescission—should result in the return of all lease payments and down payments and no liability for early termination. While official comment 3 to UCC section 2A-517 indicates that, in some circumstances, the consumer should compensate the lessor for the use of the vehicle, the comment goes on to require consideration of the lessee’s circumstances and the defective nature of the vehicle in deciding whether compensation for use of the vehicle is owed.

Automobile Fraud: 10.10.4.3 Incidental and Consequential Damages

Incidental and consequential damages in a lease transaction are generally computed in the same way as in a sales transaction. There is no reason for incidental and consequential damages to be treated differently. For example, UCC Article 2A on Leases has a virtually identical provision on incidental and consequential damages as UCC Article 2 on Sales.658 One difference is that consequential financing costs in a loan are called interest, while the same costs in a lease are labeled on the federal disclosure form as rent.

Automobile Fraud: 10.10.5 Statutory Damages

When actual direct and consequential damages are small, or when they are impossible to prove, one approach is to seek statutory minimum damages.659 The federal odometer statute provides for $10,000660 minimum damages. In addition, a number of state odometer laws661 and state deceptive practices (UDAP) statutes662 provide for statutory minimum damages in varying amounts.

Automobile Fraud: 10.11.1.1 Negotiation Strategy

Automobile fraud cases are usually an educational process for culpable defendants, and it takes some time for defendants and their counsel to become accustomed to the defendants’ real exposure. This process is often complicated by the fact that defendants who are guilty of fraudulent practices are frequently rather belligerent people, with no shortage of nerve. Once an attorney has won a substantial judgment or two at trial for consumers, dealers may be more willing to settle cases on reasonable terms.

Automobile Fraud: 10.11.1.2 Settlement with Financially Shaky Defendants

The requirements for collection under the dealer’s bond should be kept in mind during settlement if the dealer is at all shaky financially. Is a finding of fraud or a violation of the motor vehicle laws necessary in order to recover against the bond?674 Will such a finding be more likely to be recognized by the bonding company if it is entered by the court after evidence has been presented?

Automobile Fraud: 10.11.1.3 Last-Minute Settlements

When defense counsel wants to discuss settlement right before trial, some consumer attorneys follow a practice of having another attorney in the firm handle negotiations, giving that attorney the parameters for settlement and the goal number. This approach allows the lead lawyer to continue concentrating on trial preparation.

Automobile Fraud: 10.11.1.4 Seeking Partial Summary Judgment to Speed Settlement

One tactic which is often successful is to seek partial summary judgment for a clear breach of warranty or when it can clearly be shown that the car is not as represented.677 Then the case can proceed to trial with some degree of victory assured. Similar partial summary judgment motions can seek a ruling on liability on a deceptive acts and practices (UDAP), Truth in Lending, or odometer act claim.

Home Foreclosures: 13.1 Introduction

Land installment sales contracts, sometimes called installment land contracts, land sale contracts, contracts for deed, bonds for deed, or long-term land contracts, are often abusive alternatives to mortgages or deeds of trust.1 This chapter focuses on the seller’s forfeiture after a buyer’s default under such a contract.

Home Foreclosures: 13.2.1 Legal Obligations of the Parties

It may at times be difficult to distinguish land installment contracts from their close cousins, the short-term executory contract for sale and lease with an option to buy. The characteristics of land installment contracts, as distinguished from these other transactions, are discussed in more detail elsewhere.17

Home Foreclosures: 13.2.2 Abuses Involving Installment Land Sales Contracts

Buyers often enter into installment land sales contracts because they could not obtain institutional financing or were unable to afford the closing costs and down payment associated with conventional mortgage financing.32 Land contracts are especially prevalent in communities of color historically excluded from the traditional mortgage market.33 For sellers, the possibility of a quick forfeiture remedy can be attractive.34 Many sellers expect

Home Foreclosures: 13.3.1 Introduction

Increasingly, states recognize that forfeiture, especially when the buyer has substantial equity in the property, is a harsh remedy. To provide more protection for contract buyers, some states regulate forfeiture by providing guidelines as to when forfeiture is permitted. Other states have enacted laws with protections that are akin to those given to mortgagors. This section focuses on state statutory protections, and the next section will address court decisions protecting contract buyers.

Home Foreclosures: 13.3.2 Notice and Right-to-Cure Requirements

States have enacted legislation which provides a contract buyer with advance notice and an opportunity to cure a default before the contract can be forfeited.48 The time allotted for buyers to cure the default varies from state to state, but can last as long as a year.

Home Foreclosures: 13.3.3 Statutes Treating Land Installment Sales Contracts Like Mortgage Loans

Buyers receive the strongest protections under statutes that require foreclosure of installment land sales contracts in the same way mortgages are foreclosed under the state’s laws. If the state statute requires only notice of intent to declare a forfeiture and a grace period to pay the arrearage, a seller may proceed with a forfeiture once it has complied with the notice requirement.

Home Foreclosures: 13.3.4 Other Statutory Protections for Buyers

Several states have adopted statutes that provide additional protections for land installment sales contract buyers. A few states regulate credit terms.71 Several states require certain disclosures before the transaction is consummated.72 Some states, like Texas, require sellers to provide buyers with annual statements disclosing current information such as the amount paid to date, the amount owed, the amounts paid for taxes and insurance, and the number of remaining payments.

Home Foreclosures: 13.3.5 Failure to Return a Surplus As an Unfair or Deceptive Practice

The Federal Trade Commission (FTC) has ruled that land installment sales contracts are unfair where the buyer’s default results in forfeiture of all payments made to date, even where the sale results in a surplus.79 While there is no private right of action under the FTC Act, unfair forfeiture practices should be actionable under a state unfair and deceptive practices statute—as long as the statute applies to real estate sales,80 and as long as the statute prohibits unfair or unconscionable