The South Carolina Supreme Court has reinstated a $19,963 judgment against a Nissan store for bad faith in its handling of the financing for a used 2005 Mazda6.
The unanimous decision reverses a 2012 appellate court ruling in favor of Dick Smith Nissan Inc. in Columbia, S.C.
Latoya Brown bought the Mazda in 2007 with the assistance of a college friend who was a longtime salesman there, the decision said. The buyer’s order conditioned the sale on obtaining third-party financing.
After seven lenders denied Brown credit, the dealership submitted a fraudulent bank application without her knowledge that falsely listed her as an employee’s relative, identified a 2004 Nissan Altima rather than the Mazda6 as collateral, and gave her monthly income as $2,800 rather than the $1,800 she actually earned, according to trial evidence.
The dealership contended that its finance manager had used the Altima as a “general type of collateral” to pre-qualify Brown for a loan and knew that a different vehicle could be substituted after obtaining preliminary approval.
In court papers, Dick Smith Nissan argued that the lender’s “blunder created the confusion in this case.”
When the bank notified Brown that financing was approved for an Altima, she unsuccessfully asked Dick Smith Nissan, which had accepted the bank’s payment for the Altima, to fix the paperwork or take any other corrective steps.
When the dealership refused, she voluntarily returned the Mazda6 less than a month after taking possession, against the store’s advice. The lender repossessed it and assessed a $3,843 deficiency but never tried to collect it.
At a nonjury trial, a Richland County Circuit Court judge ordered the dealership to pay damages, interest and attorney fees. However, the Court of Appeals reversed the award, saying the loan application inaccuracies were “puffing” and didn’t constitute fraud, bad faith or deceptive acts.
‘No effort’ to resolve
In the new ruling, the Supreme Court accepted with the trial judge’s finding that Dick Smith Nissan violated South Carolina’s dealer law.
The store “acted in bad faith when it made no effort to assist Brown in correcting the financing paperwork or transferring collateral on the loan,” the court said in an opinion written by Justice Donald Beatty, and it “failed to fulfill its obligation to timely arrange for substituting collateral or correcting Brown’s loan documents.”
Nor would the problem have been difficult to resolve, the court noted. It cited testimony by the store’s finance manager that a telephone call from Dick Smith Nissan would have been sufficient to transfer collateral from the Altima to the Mazda6.
Defense lawyer J. Gregory Studemeyer of Columbia, S.C., has filed a petition asking the state Supreme Court to rehear the case. The petition argues that the decision in Brown’s favor “overlooked or misapprehended a number of matters” and that errors by the lender were to blame.
But Brown’s lawyer, William Toal of Columbia, S.C., said: “The record was clear they got funding for a different automobile than the one Brown got. They thought nothing was amiss. At no point in the process has the dealership taken a close look at their employees’ conduct.
As for the store’s attempt to blame the lender, Toal described the lender as “perfectly innocent.” When Brown called the lender, “they tried to get it straightened out,” he said.
Toal said he will now seek additional attorney fees and costs from the dealership.