Consumers can't rely on the federal odometer law and its triple-damages provision to sue dealerships over fraud claims unrelated to mileage, a unanimous appeals court panel has ruled.
The court said Congress meant to limit the law to cases where a dealership or other seller intended to defraud the buyer about the vehicle's mileage.
As a result, the Seventh Circuit U.S. Court of Appeals in Chicago held that Garry Ioffe's federal claims against Sherman Dodge in Skokie, Ill., were properly dismissed without trial.
The lawsuit alleges that the dealership fraudulently failed to disclose that Ioffe's used 1993 Toyota Tercel had been rebuilt and didn't show him the title, which was marked "rebuilt," at the time of the purchase.
The dealership had given the previous owner a $500 trade-in allowance because the title certificate stated the Tercel had been rebuilt. A few weeks later, the dealership sold it to Ioffe for $2,637 without telling him it had been rebuilt, the court said.
Dealership lawyer Ira Levin of Chicago said his client didn't intend to deceive Ioffe and had let him take the car to his own mechanic before the sale was completed. He also said the sale took place in the evening when the title was inaccessible in the dealership's vault.
Ioffe rejected the dealership's offer to settle the case for a full refund and attorney fees, Levin said.
In court, Ioffe didn't dispute the accuracy of the odometer disclosure statement or the mileage listed on the title he later received. Instead, he unsuccessfully argued that all he had to prove was that the dealership intended to defraud him about something related to the car - here, its rebuilt status.
That's not good enough, appeals Judge Joel Flaum said. Congress "created a private claim for odometer or mileage fraud," and the law "extends only to cases where the transferor intended to defraud a transferee about the vehicle's mileage."
Levin said the decision makes it harder for plaintiffs to seek triple damages and attorney fees in federal courts.
Ioffe's lawyer, Lance Raphael, of Chicago, said the ruling "has repercussions for consumers and car dealers across the country" and could lead to a "lack of uniformity" in how states resolve disputes.
Raphael said his client is pursuing related claims against Sherman Dodge in an Illinois state court.
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