Houston Independent Automobile Dealers Association November Issue: Harvey's Still at Play | Page 17

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. ________ 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