LEGAL FILE

N. Carolina Ford store faces trial in case alleging finance fraud

A North Carolina Ford dealership that won dismissal of a lawsuit arising from the sale and financing of a used 2007 Jeep Wrangler is now facing a trial in the case.

The lawsuit, filed by Joann Hester, alleges Hubert Vester Ford Inc. in Clinton, N.C., contracted to sell the Wrangler under certain terms but later forced Hester to sign a second, less-favorable contract under the threat of repossession.

Hester sued the dealership and one of its salesmen for unfair and deceptive trade practices, fraud and extortion.

Last month, the state Court of Appeals, while upholding dismissal of some claims under those laws, reinstated others.

“The next step is to go to trial,” according to the plaintiff’s lawyer, Chris Livingston of White Oak, N.C. The suit asks for compensatory and triple damages and attorney fees, he said.

No copy

According to the lawsuit, Hester and her son visited Vester Ford around Labor Day 2009, at which time her son signed, and she co-signed, a purchase contract for the Jeep providing for monthly payments of $300 to $350. After the signing, the license plate from their trade-in vehicle was transferred to the Jeep, and they left with it.

Hester has been unable to find a copy of that “original” purchase contract, and the dealership denies it existed. Instead, the store contends it sold the Wrangler to plaintiff on Sept. 30, 2009.

However, the suit asserts the dealership sent a credit application to a third-party lender dated Sept. 24, six days before the dealership claims it sold the vehicle. Also, the Wrangler was transferred to Hester’s insurance on Sept. 28, two days before the purported sales date, a move that the appeals court noted is supposed to happen only after financing is finalized and the customer has taken title.

‘Greatly exaggerated’

Hester alleges the credit application submitted to the third-party lender had “greatly exaggerated” her finances.

She claims the dealership notified her in early October the loan had been rejected and that a store employee came to her home and threatened to repossess the Wrangler if she didn’t sign a new purchase contract with new financing.

The employee allegedly told her and her husband that the terms were the same as those in the “original” contract. The document listed monthly payments of $615, with financing by Ford Motor Credit Co. Hester and her husband signed the document, which was backdated to Sept. 30, without reading it.

Hester’s lawsuit asserts Ford Credit financed the loan based on an application that had “inflated Hester’s financial data even more.” The son made only a couple of payments, and the vehicle was repossessed.

A lower-court dismissed Hester’s case without trial.

Trial is necessary

But in a unanimous opinion written by Chief Judge Linda Magee, the three-judge appeals panel reinstated some of her claims.

It ruled that a trial is necessary to determine whether the store violated North Carolina’s unfair and deceptive trade practices law and whether Hester signed the “second” contract only under duress and based on the employee’s allegedly fraudulent statements about financing terms.

Similarly, the court said Vester Ford would be liable for fraud if it had intentionally and fraudulently told Hester that the Wrangler would be repossessed “in order to induce her to sign” the “second” contract.

But the panel declined to reinstate allegations that the store violated the unfair trade law and committed fraud by “enhancing” Hester’s credit applications, and it found no legal basis for her extortion claim.

Finally, the appeals court said there were no grounds to hold the salesman who purportedly negotiated the “original” contract personally liable for his actions in connection with the transaction.

The dealership’s lawyer didn’t return phone calls seeking comment.

You can reach Eric Freedman at freedma5@msu.edu

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