Texas Suzuki store loses appeal of $13,203 verdict in finance case

The Texas Court of Appeals has upheld a $13,203 verdict against a Fort Worth dealership that overcharged customers who financed their purchase.

Neal Suzuki charged Lonnie and Lisa Franklin $4,401 more than sticker price for their new Forenza in violation of the state's finance law, the court said.

The dealership's lawyer, Julie Camacho of Fort Worth, says the corporation has no assets but that its former principal, who wasn't sued, offered a settlement that the Franklins rejected. She has filed a motion asking the court to rehear the appeal, saying it miscalculated any overcharge.

According to the decision, in June 2008 the Franklins agreed to purchase the Forenza for $16,464, the price listed on the car's window sticker. The agreement also included a provision that the Franklins' monthly payments would not exceed $400.

When the Franklins received their copy of the retail installment sales contract, however, the "cash price" was given as $20,865, and the monthly payments were listed as $418. Under the Texas Finance Code, the cash price of a vehicle is the price at which the retailer offers to sell it for cash in the ordinary course of business.

The Franklins contacted the dealership about the increase in price and were told that their third-party lender, Santander U.S.A., had charged the dealership a $6,087 fee to purchase the contract.

The Franklins sued the store for violation of the Texas finance and deceptive practices laws, fraud, negligence and misrepresentation.

The dealership denied liability. The dealer testified that the store would have sold the same car to a cash customer for sticker price. He also said the Franklins likely could have purchased the Forenza for a price lower than sticker if they had bargained well but that they "didn't negotiate the best deal."

At a nonjury trial, the judge upheld the dealership's liability for violating the finance law but rejected the Franklins' other claims.

In addition to the damage award of three times the $4,041 overcharge, the judge ordered the store to pay $22,525 in attorney fees.

In a unanimous decision, the three-judge appeals panel rejected the dealership's argument that there was insufficient evidence of a cash price violation under Texas law.

The purpose of the law is to prevent dealerships from charging a finance customer a higher price than a cash customer would pay for the same vehicle, the court said in an opinion by Judge Ann McClure.

Even if the plaintiffs had been fully aware of the higher price and agreed to it, the cash price is what the store "offered to all customers in the ordinary course of business," the court said. And it said the dealership offered no evidence that it charged more than the sticker price to consumers in the ordinary course of business.

Says plaintiff's lawyer, T. Dean Malone of Dallas: "The law is fairly unambiguous and the facts are fairly straightforward. From a consumer's perspective, I think it protects their rights under Texas law."

But dealership lawyer Camacho, who was not involved in the case at the trial level, says: "There could very well have been extras and additions to the sticker price that resulted in the cash price, but since the salesman was not available to testify for trial and the dealership was no longer a going concern, the defense of the case probably suffered."

You can reach Eric Freedman at freedma5@msu.edu

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