LEGAL FILE

Dealer appeals Hyundai ouster for sales and finance fraud

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A Brooklyn, N.Y., dealer who engaged in "widespread consumer fraud" in financing, sales and promotions is appealing termination of his franchise by Hyundai Motor America.

U.S. District Judge Jack Weinstein ruled May 10 that Hyundai doesn't have to restore the franchise.

He dismissed the suit in which Giuffre Hyundai accused the automaker of bad faith, breach of contract and failing to provide the store with an opportunity to take corrective action.

Giuffre Hyundai filed a notice of appeal on May 14.

Last year, a state court ordered owner John Giuffre and his Hyundai, Kia, Mitsubishi and Mazda dealerships in Brooklyn to pay about $510,000, including civil penalties and restitution, in a case brought by the New York attorney general.

The case alleged misrepresentation of financing and sales terms, deceptive promotions, adding unwanted aftermarket options in financing agreements and pressuring consumers to sign blank contracts.

The state judge cited "strong-arm sales methods and unethical conduct" and said many defrauded customers were "older persons, unsophisticated or unfamiliar with English, and each person wound up owning a car that they never intended to buy or paid a price that was dishonestly represented to them."

Based on the state court decision, Hyundai sent Giuffre a 90-day termination notice in December 2012, saying the dealer had breached the "high ethical standards" required by the franchise agreement. Giuffre, in turn, sued Hyundai.

Tossing out that suit, Weinstein ruled that Hyundai had ample basis for termination.

"The franchise agreement explicitly required Giuffre to maintain a high standard of ethical care. This was a fundamental expectation of both parties, a foundation of their agreement and the essence of their bargain," he said.

"Giuffre's widespread deceptive business practices were established as an egregious violation of this provision. This material breach fundamentally damages the parties' business relationship," he said.

Weinstein said negotiations are under way concerning whether Giuffre can sell or transfer "what remains of its ownership rights free and clear of the notice of termination."

A Hyundai spokesman said the company is buying back the store as an open point and John Giuffre is no longer an authorized dealer.

Giuffre's attorney, Eric Chase of Florham Park, N.J., said he was not authorized to talk about the case.

You can reach Eric Freedman at freedma5@msu.edu.

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