Court: Customer not required to indemnify dealership

Indemnity dilemma
The issue: Customer's indemnification of Florida dealership for crash involving Buick used with permission before sale

Where it stands: Judgment against customer reversed on appeal; dealership requests new hearing.

A customer who was allowed to drive a car off a dealership's lot before final sale does not have to indemnify the dealership for a settlement fee it paid to victims of an accident, the Florida Court of Appeal has ruled.

The court reversed a judgment of almost $1.3 million in favor of Boniface Hiers Buick Inc. of Merritt Beach, Fla., and its insurer, Universal Underwriters Insurance Co.

The customer, Susan McDowell, is not required to indemnify, or be financially responsible for, Boniface in its settlement with the accident victims because the dealership wrongfully affixed her signature to purchase documents submitted to a bank for financing and because she did not cause the accident, the three-judge panel held.

According to the decision, in 1993 McDowell went to Boniface to trade her 1988 Cadillac for a 1993 Buick. After she signed a lease application, the dealership allowed her to use the car while awaiting bank approval on financing. The next day, the bank rejected the application for financing.

Instead of asking McDowell to return the car, the dealership forged her signature on a purchase agreement and submitted it to the same bank, which again denied financing, the court said.

A few days later, a woman who was driving the car with McDowell's permission was involved in an accident. The accident victims sued Boniface, which agreed to an $838,000 settlement and then sued McDowell to recover the money. A Brevard County Circuit judge ordered McDowell to pay $1,279,480, representing the settlement amount plus interest.

But the Court of Appeal disagreed, finding no legal basis to hold McDowell financially responsible.

"If Boniface had contacted McDowell on July 14 and told her to return the Buick because the lease financing had been denied, the July 17 accident could have been avoided," appellate Judge Robert Pleus Jr. said.

The court noted that Boniface claims it unsuccessfully tried to contact her.

The court further said that McDowell was not at fault in the accident.

McDowell's lawyer, David Knapp of Orlando, said his client had not been notified before the crash that financing had been denied and said there was expert testimony that signatures on the purchase agreement were not McDowell's.

Knapp said the decision means that, in Florida, a party seeking indemnification must be without fault and the party being sued must be at fault for the loss. Boniface's claim didn't pass that two-part test, he said, because the court found that "the dealership was not without fault and McDowell was without fault."

Boniface has asked the court for a new hearing. Its lawyer, R. Matthews Miles Jr. of Daytona Beach, said the decision conflicts with Florida law and the dealership will appeal to the state Supreme Court if necessary.

He also said, "The dealership had no intent to forge her signature."

You can send e-mail to Eric Freedman at

You can reach Eric Freedman at freedma5@msu.edu

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