Houston Independent Automobile Dealers Association October 2015 Issue: Sales Training | Page 10

sent them notices that their cars would be sold at public auction. After the sale of the cars, the creditors sent them notices that the cars were sold and that they owed deficiency balances. In response, the individuals sued the creditors, alleging violation of the CGCEC Provisions, among other claims. The trial court granted summary judgment for the creditors, finding that the individuals did not sustain any damages because they had unpaid principal balances remaining and the creditors had abandoned their claims for deficiency judgments. The federal appeals court affirmed. A creditor that violates the CGCEC Provisions may collect only the principal amount of the loan and not any interest, costs, fees, or other charges. In addition, a creditor that violates the repossession section, including the requirement to furnish a notice following repossession, is not entitled to a deficiency judgment. Relying on 2013 precedent, the appellate court recharacterized all of the individuals' payments as payments toward principal and then subtracted that total and the sale proceeds from the original principal amount owed. The appellate court concluded that the individuals each still owed approximately $11,000 in principal and, thus, did not sustain any damages. See Gardner v. GMAC, Inc., 2015 U.S. App. LEXIS 13737 (4th Cir. (D. Md.) August 6, 2015). Awarding Buyer Cost of Repairs for Defective Truck Sold "As Is" Contravened Dealer's Right to Exclude Warranty: A couple bought a used truck. Deal documents provided that the truck was sold "as is - no warranty." On their way home from the dealership, the buyers discovered that the truck was damaged and not roadworthy. They sued the seller under "civil tort law." The trial court found that the seller committed a tort in selling the buyers a truck that was not roadworthy and that placed them, and other drivers, in danger. The court awarded the buyers damages in the amount of the costs they incurred to repair the truck, as well as their attorney's fees. The Court of Appeals of Indiana reversed the trial court's judgment. The appellate court determined that the buyers were not entitled to relief under a tort theory because the "economic loss rule" precludes tort liability for "pecuniary loss unaccompanied by any property damage or personal injury (other than damage to the product or service provided by the defendant)." Because the buyers failed to provide evidence of any personal injury or damage to any property other than the truck they bought, the appellate court determined that the economic loss rule applied and barred their recovery under a civil tort theory. The appellate court noted that Indiana law permits a dealer to expressly exclude implied warranties. The appellate court found that the seller had sold the truck "as is," with no implied warranties, and therefore the buyers were not entitled to relief under a warranty claim. The appellate court determined that the trial court had effectively contravened the seller's right to sell the truck "as is" by awarding the buyers the same relief in tort that was excluded by the agreement. See Griffin v. Martin, 2015 Ind. App. Unpub. LEXIS 787 (Ind. App. July 15, 2015). So there’s this month’s roundup! Stay legal, and we’ll see you next month. ___ Tom ([email protected]) and Nikki ([email protected]) are partners 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. Copyright CounselorLibrary.com 2015, all rights reserved. Single publication rights only, to the Association. (9/15). HC# 4850-2079-6456.