Defense attorney John Fetten of Montgomery Chapin & Fetten in Bridgewater, N.J., says the case “demonstrates the problem of identity theft” for dealerships.
Plaintiff Edward Giaccio's case began when, upon advice from co-worker Erwin Melendez, he decided to buy a used car for his girlfriend at Hudson. When Giaccio arrived to fill out the paperwork, Melendez was already there with a salesman drawing up a contract, according to the decision.
At about the same time, the decision said, Melendez began driving the S500, although his initial attempt to secure a loan had been denied.
Giaccio was unaware that his signature had been forged on Melendez's loan documents for the S500 until Toyota Credit began dunning him for missed payments.
When Giaccio discovered the forgery, he sued Hudson and Toyota Credit for alleged fraud, consumer fraud and breach of good faith and fair dealing.
Toyota Credit repossessed the S500 with $35,988 due on the loan. Several months later, the lender canceled the loan and released Giaccio from any liability. Toyota Credit also arranged for the loan to be deleted from Giaccio's credit history. Hudson paid Toyota Credit an undisclosed amount to satisfy the loan and keep the car.
A lower court judge dismissed Giaccio's suit without trial.
The appellate ruling
A two-judge appeals panel upheld that decision, noting there was only “supposition and speculation” -- but no proof -- that the defendants were parties to the forgery or knowingly allowed Melendez to commit the forgery.
Moreover, the court said, Giaccio suffered no loss from the fraud. “He never made any payments, Hudson satisfied the debt, and Toyota Credit rectified his credit history, essentially erasing any trace of the initial obligation” on the loan, the court said.
Giaccio's attorney, Jonathan Rudnick of Carton & Rudnick in Red Bank, says there will be no further appeals.
Fetten, the defense lawyer, says the situation highlights the need for dealerships to be “very attentive to make sure people are present while doing the paperwork.”
Even a dealership that ultimately wins a lawsuit stemming from identity theft can incur significant legal expenses, he says. In some situations, it may be unable to recover the vehicle, while in other situations the value of the repossessed vehicle will be lower.
As for Melendez, the court said he “completely disappeared off the face of the earth.” Fetten says Melendez failed to respond to counterclaims filed by Hudson and Toyota Credit.