Houston Independent Automobile Dealers Association December Issue: Tax Selling Season is Soon Upon Us | Page 21
Case of the Month
Dealer's Fraudulent Misrepresentations Regarding Condition of Used Vehicle
Invalidated Implied Warranty Disclaimer: A buyer bought a truck with a salvage title
from a dealership. During the test drive, the check-engine light was on, and the truck
smoked. The dealership's salesperson explained that the truck smoked because it was a
diesel and that the check-engine light was due to a faulty oxygen sensor that would be easy
to fix. The dealership sold the truck "as is" and provided the buyer with a third-party vehicle
protection plan at no cost. Within days of purchase, the truck lacked power and continued to
smoke. The dealership refused to diagnose or repair the truck. The buyer sued, alleging
fraud and breach of the implied warranty of merchantability and seeking attorneys' fees
under the Magnuson-Moss Warranty Act. The trial court granted judgment for the buyer,
and the appellate court affirmed, finding that the dealership's failure to disclose known
engine problems, as well as its representations that the truck was in working condition and
the check-engine light was merely an oxygen sensor problem, misled the buyer. The
appellate court agreed with the trial court that the dealership's fraudulent
misrepresentations rendered the warranty disclaimer ineffective because the buyer would
not have bought the truck or agreed to the warranty disclaimer if she knew the truck had
severe engine problems. See Sorchaga v. Ride Auto, LLC, 2017 Minn. App. LEXIS 39
(Minn. App. March 20, 2017).
So there’s this month’s roundup! Stay legal, and we’ll see you next month.
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Tom ([email protected]) is Of Counsel and Nikki ([email protected]) is a partner in the law firm of Hudson Cook, LLP. Tom has written
several books and is the publisher of Spot Delivery®, a monthly legal newsletter for auto dealers. He is Editor in Chief of CARLAW®, a monthly
report of legal developments for the auto finance and leasing industry. Nikki is a contributing author to the F&I Legal Desk Book and frequently
writes for Spot Delivery. For information, visit www.counselorlibrary.com. © CounselorLibrary.com 2017, all rights reserved. Single publication
rights only, to the Association. (5/17). HC# 4836-5777-0311