An appeals court in Texas has tossed out a $30,000 verdict against a Dallas used-car dealership that repossessed a vehicle after its purchaser failed to maintain the required insurance coverage.
In a unanimous decision, the three-judge panel ruled that Price Auto Sales Inc. merely exercised its legal rights under an installment sales contract with Linda Evans.
In July 1994, Evans bought a 1988 Chrysler New Yorker from Price, which provided the financing. In April 1995, Price repossessed the car after Evans failed to maintain the comprehensive insurance coverage specified in the sales contract.
Although Evans wired a late payment to the insurance company the day after the repossession and made several additional car and insurance payments, Price refused to return the car unless she paid $295 in repossession costs.
Evans sued in Dallas County Court, where the jury ordered the dealership to pay $9,560 for breach of contract, $409 for conversion (wrongfully retaining the car) and $20,000 in punitive damages.
The Court of Appeals reversed the verdict, finding insufficient evidence to support the jury's determination that Price breached the contract and converted the New Yorker to its own use.
The installment contract authorized Price to hold Evans in default for failing to comply with the insurance requirement, the court said. The contract also authorized Price to repossess the car under such circumstances.
The court also said Price was entitled under the contract to reimbursement of its repossession expenses before returning the car to Evans. As a result, by failing to pay the $295 repossession fee, Evans failed to perform her obligations fully.
Finally, the court found no evidence that Price wrongfully converted the car.
Evans' lawyer could not be reached for comment.