Hyundai Motor America is suing Napleton Automotive Group and current and former employees of the dealership group in federal court over an alleged scheme by the retailer to fraudulently collect warranty payments for unnecessary engine repairs.
The automaker filed the lawsuit Tuesday in U.S. District Court in West Palm Beach, Fla. Hyundai said in a statement provided to Automotive News that it first learned of the alleged fraudulent engine warranty claims in April when it was provided with a complaint in another lawsuit filed by a former Napleton Automotive Group general manager against the dealership group and its owners.
Hyundai seeks more than $75,000 in damages. The lawsuit names as defendants the dealership group itself, plus Napleton's West Palm Beach Hyundai store; Gene Khaytin, former general manager of that store; Ernie Revuelta, the store's service director; and Ed Napleton Jr., director of operations for Napleton Automotive. A lawyer representing Napleton Automotive, in a statement to Automotive News, denied any wrongdoing by the retailer.
From 2015 through 2019, Hyundai issued recalls on certain model years of the Sonata, Santa Fe Sport, Tucson and Veloster for possible engine failure, and the automaker extended its powertrain warranty coverage beyond the original owners of the vehicles.
In the lawsuit, Hyundai alleged that since at least 2016, the defendants bought certain Sonata and Santa Fe vehicles from auctions and would present fraudulent warranty claims about the vehicles to the automaker. Hyundai would then reimburse the dealership for the fraudulent repair. In some cases, Hyundai would repurchase the vehicles.