A lender was within its rights in demanding that a dealership repurchase a contract after discovering that the buyer's daughter would pay for and use the vehicle, the California Court of Appeal ruled last month.
The decision upheld a $45,800 judgment against Champion Chrysler-Jeep-Dodge in Downey, Calif. The court also let stand an award of $260,005 in attorney fees.
In September 2011, Wendy Ruiz negotiated the purchase and financing of a new 2012 Dodge Charger, but her father signed the sales and loan documents as the owner and borrower. The dealership sold the contract to Bank of the West without disclosing that it was a third-party transaction because Ruiz would drive the car and make payments.
The bank had a policy under which "without exception, upon discovering that a dealership had knowingly sold it a loan containing a third-party transaction, it would require the dealership to buy back the loan," the court said.
After discovering errors in the payment coupon book her father received, including the absence of her name, Ruiz contacted the bank and the dealership.
Eventually, Ruiz and her father failed to make payments. The loan went into default, and the bank repossessed the Charger in September 2012. The bank reinstated the contract when Ruiz made a redemption payment and provided proof of insurance, but she and her father again fell behind after a single monthly payment.