The Georgia Court of Appeals has held a used-car buyer liable to a bank for the unpaid balance owed on the vehicle, despite her claim that the salesman falsely told her it had never been wrecked.
The court rejected the argument that Marjorie Cotton had made a valid attempt to revoke her acceptance of the 1993 Mitsubishi Mirage she bought in 1994 from Phil Hughes Honda in Athens, Ga. Her promissory note had been assigned to Georgia-based Bank South, which later merged into Nationsbank.
Nine months after the deal, the interior of the Mirage became flooded with water. At that point, Cotton learned severe damage from a prior accident had allowed the leakage. She notified the bank of the car's condition and her potential misrepresentation claim against the dealership, saying she would discontinue payments on the loan.
The bank offered to resolve the matter and excuse the remaining balance if she returned the car. She refused, however, because that settlement would have resulted in the loss of the value of her trade-in. Instead, she unsuccessfully offered to return the car in exchange for a refund of all her payments, plus the down payment, including the value of the trade.
Bank South sued to collect, and Cotton counterclaimed for damages but not rescission. At that point, she owed about $12,000 on the loan plus interest, according to the bank's appeals lawyer, Joseph Carragher of Atlanta.
When she moved to Florida while the suit was pending, the bank complied with her request to transfer title to that state. She continued to use the Mirage, putting on about 20,000 miles between the purchase and when title was transferred.
The appeals court unanimously upheld judgment in favor of the bank without trial, saying Cotton failed to properly rescind the contract. 'The undisputed evidence shows that Cotton continued to drive the car approximately two years after her discussions with Bank South about possibly returning it,' Judge John Ruffin Jr. said. 'Moreover, Cotton requested and Bank South agreed to allow her to obtain title to the car after she moved to Florida. These actions are consistent with affirmation of the contract and could not in any manner be construed a rescission of the contract.'
Carragher, who argued the appeal for the bank, said Cotton had affirmed the contract by keeping and driving the car. 'Under Georgia law, for a claim of rescission she had to bring the car back to the dealer and hand over the keys.'
Cotton's lawyer, Stephen Smith of Athens, said the appeals court decision was wrong because 'the question of fact whether or not there was a rescission should be decided by a jury.' He will ask the Georgia Supreme Court to review the case.
He also said Cotton's separate lawsuit against the dealership remains pending. No trial date is set in that case.