Backed by the Ohio Automobile Dealers Association, a Dayton dealership is asking the Ohio Court of Appeals to overturn a triple-damages verdict that could change how and when sellers disclose to their customers that a new vehicle has been damaged and repaired.
Al Castrucci Inc. II wants to reverse a $17,383 verdict stemming from the sale of a 1993 Protege at its Mazda store.
In 1993, Kelly Birch visited the dealership's lot and looked at the Protege, which was described to her as a demonstrator with 5,991 miles on the odometer.
According to the suit, the salesman told her the car had been involved in a minor accident but did not disclose during the price negotiations that an employee had caused the accident and that it had cost the dealership $8,413 for the repairs. She claimed she was not shown the repair order until after agreeing to the purchase price.
The sales price was $13,089, excluding tax, fees and an extended-warranty contract. She received a $1,600 factory rebate plus a $1,400 trade-in allowance and financed $11,519.
Birch encountered no mechanical problems and had no repairs made other than routine maintenance.
She sued the dealership and the lender bank under the state consumer protection law and also sought punitive damages for fraud.
At trial, she testified that she would not have paid the negotiated price had she known of the prior damage, and her expert testified that the repairs were not completed satisfactorily.
The dealership contended that it had made all the required disclosures before the sale was finalized and that Birch could have walked away from the deal after she received the disclosure form and before signing a binding contract.
Montgomery County Common Pleas Judge James Gilvary held Castrucci and the bank liable for consumer law violations but rejected a fraud-related claim that Birch's signature had been forged on the repair disclosure document.
Finding misrepresentations and lack of full disclosure, he awarded triple damages based on the decreased value of the car.
Gilvary ruled that the dealership was obligated to tell Birch all about the damage before she signed any document, even the purchase offer, and before conducting price negotiations. 'With-holding the full extent of the damages and retail cost of repair until after she had signed the offer to purchase the vehicle was a deceptive and unfair act or practice.'
He also found it a violation to withhold such information 'to secure a higher selling price.'
Timothy Sullivan, a Cincinnati lawyer representing Castrucci, said, 'The evidence was clear she didn't agree on a price until after disclosure.
'The dealers' concern (if the decision stands) is that customers will always be able to say they had some sort of price discussion before they signed the repair disclosure document. Every customer who buys a previously damaged car is a potential plaintiff.'
The state dealer association's legal defense fund has agreed to file a friend-of-the-court brief with the appeals court.
In a letter to Castrucci, association staff counsel Kristen Hiestand said Gilvary's 'decision that a dealership must provide full disclosure of the nature and extent of pre-sale new-vehicle damage prior to nonbinding negotiations is an incorrect reading of Ohio law.'
Birch's lawyer, Ronald Burdge of Dayton, said, 'Ohio law requires that when a car dealer sells a vehicle that has been wrecked, the customer has to be given a document that specifies what has been repaired before the customer signs anything.'
Burdge said his client will cross-appeal to have the fraud claim reinstated to 'open up the possibility of punitive damages for the conduct of the dealership.' He also said Birch will ask the appeals court to review the amount of attorney fees.