An Ohio dealership must pay more than $12,000 in damages for failing to tell a customer that a car was flood-damaged, even though a wholesaler had failed to disclose that fact to the dealer, the state Court of Appeals has ruled.
The unanimous decision upheld a $12,104 award, plus interest, against Jackshaw Pontiac Inc. of Lakewood.
The car involved, a 1991 Pontiac Firebird, had an unusual history, according to the court.
In May 1993, a wholesaler bought it from an insurance company with knowledge it had been damaged in a flood. Eleven days later, that wholesaler resold it to wholesaler National Car Mart and disclosed the flood damage. Na-tional sold it to a third wholesaler without disclosing its history.
That third wholesaler then sold the Firebird to Jackshaw, which inspected the vehicle, made repairs and sold it to Florence Sito, again without disclosure.
There was no violation of Ohio's title branding law in effect at the time, according to Jackshaw's lawyer, James Gray of Warren. The law was later toughened, he said.
The car was stolen, stripped and recovered. While it was being repaired, a mechanic told Sito it had been involved in a flood. Worried about her safety, she refused to drive the car, stopped making payments on her bank loan and unsuccessfully asked Jackshaw to take it back.
She sued the previous owners in Cuyahoga County Common Pleas Court, alleging conspiracy, breach of warranty, negligent misrepresentation and violation of the state consumer protection law. The trial judge dismissed the claims against all defendants except Jackshaw.
At trial, Sito testified that a Jackshaw salesman led her to believe that there had been only one previous owner, and that the Firebird was a trade-in. A friend who accompanied Sito to the lot corroborated her account, although the salesman denied making these statements.
The appeals court affirmed Jackshaw's liability, finding sufficient evidence that Jackshaw's salesman had negligently misrepresented the car's history by falsely telling Sito it was a trade-in. In addition, it said the term 'trade-in' implies only one previous owner, while this car had several.
The court also rejected Jack-shaw's attempt to reinstate its own negligent misrepresentation cross-claim against National.
Although National had an obliga- tion to inform the third wholesaler that the car was flood-damaged, Jackshaw inspected the car for three days at the dealership before purchasing it, then made repairs before selling it, the court said. As 'an automotive expert, Jackshaw knew or should have known the car was flood-damaged.'
Gray, Jackshaw's lawyer, said he will recommend that his client appeal further.
Sito's lawyer was not available for comment.