An appeals court in St. Paul, Minn., has upheld a $30,170 judgment against a wholesale auction that failed to disclose that a vehicle had a salvage title.
The court ruled that the Anoka, Minn., dealership that bought the 1992 Saturn at auction can receive triple damages under Minnesota's consumer protection law.
In early 1997, Holiday Recreational Industries Inc., which is mainly an RV dealership, bought the Saturn for a customer who wanted a car to tow behind an RV. It paid $4,665 at the auction held by Manheim Services Corp., which does business as Minneapolis Auto Auction in Maple Grove.
At the auction, Manheim announced that the vehicle, then owned by Olympic Financial, was absent title, according to the court.
After the auction, Holiday spent $1,105 on repairs while it made repeated requests to Manheim for the title. In April 1997, Manheim learned that the vehicle had a salvage title and notified Holiday of the title defect.
Once Manheim received the salvage title from Olympic, it cashed Holiday's check without surrendering the title, the court said.
After unsuccessful efforts to resolve the dispute, Holiday sued the auction firm in Hennepin County District Court for failure to disclose the branded title before the sale and for breach of contract.
At a nonjury trial, Holiday won $5,770 for the purchase price and repair costs, tripled to $17,310 under the consumer protection law, plus attorney fees.
The Minnesota Court of Appeals rebuffed a series of objections to the judgment.
First, the court ruled that Man-heim violated the title branding law, which explicitly requires oral disclosure of a title defect, and said that law covers vehicle auctions.
The court also rejected Man-heim's argument that the legislature did not intend to protect licensed dealers who buy vehicles in the same way as ordinary consumers.
In addition, the appeals court ordered Holiday to return the Saturn to Manheim.
Holiday's lawyer, James Sticha of Minneapolis, said Holiday now will seek additional attorney fees for successfully fighting the appeal.
Eric Magnuson, a Minneapolis lawyer for Manheim, said his client gets a $65 fee for each vehicle it auctions and does not vouch for the title.
He said that the auction rules specify that buyers should not put money into repairs until the title is transferred and allow buyers to request a refund if the title is not available within 21 days. Holiday did incur repair expenses and did not seek a refund within that period.
Magnuson said he does not know whether there will be a further appeal.