Dealership resells car with brake problems: Lemon law violation: Lost use of car: Repair costs: Verdict: Punitive damages

Law Reporter, Nov 2001

CONSUMER PROTECTION

Dealership resells car with brake problems: Lemon law violation: Lost use of car: Repair costs: Verdict: Punitive damages.

Pearn v. Chrysler Corp., Ohio, Summit County C.C.P., No. CV99-07-2761, Dec. 20, 2000.

Pearn attempted to purchase a pickup truck from a dealership. A salesman told her that her application for the truck had been denied, but that she could purchase a demonstration car that would retain its value for a year, at which time she could trade it in for the truck she wanted. Pearn signed the purchase contract and other documents without reading them because the salesman rushed her through the process. Concealed among the documents was a statement that the car had been repurchased by the manufacturer from its first owner due to "brake vibration" and that it had been repaired. The purchase price was $14,000.

Pearn drove the car for 10 months. She experienced several mechanical problems and spent more than $500 on repairs. When she tried to trade the car back, the dealership refused to accept it. Another local dealer informed her that the car was a repurchased lemon. It had originally been owned by a consumer in Michigan and had a history of serious brake problems. A mechanic examined the car and found that it still posed a risk of serious injury or death. When the manufacturer bought the car back it was designated as "not to be sold in Ohio," because the "lemon law" provisions of the state Consumer Sales Practices Act (CSPA), Ohio Rev. Code 1345.01 et seq., forbid the resale of cars that have safety-related defects. The manufacturer reportedly had notice that the car had been purchased at auction by an Ohio dealership but did nothing to stop the resale.

Pearn sued the manufacturer and dealership, alleging fraud, breach of warranty, and violation of the Ohio statute. Plaintiff's counsel was able to obtain from the manufacturer the vehicle identification numbers of 974 other lemons that had been resold in Ohio and conducted title searches to find the names of the owners. They attempted to call some of these consumers as witnesses at trial. The trial court granted the manufacturer's motion to exclude these witnesses, but the jury was told of this pattern of conduct by the manufacturer.

The jury awarded $319,000, including treble damages under the CSPA-$57,500 from the manufacturer, and $36,500 from the dealer-$150,000 punitive damages against the manufacturer, and $75,000 punitive damages against the dealership. Plaintiff was also awarded $225,000 in attorney fees and costs.

Plaintiff's experts were Craig Jenkins, automobile repair, Akron, Ohio, and David Stivers, automobile industry practices, Wellington, Fla.

Defendant's expert was Ronald Sy, automobile industry practices, Auburn Hills, Mich.

Plaintiffs Counsel

*Dean A. Young, Akron, Ohio

Rocco Yeargin, Akron, Ohio

Comment: Plaintiff's counsel have filed a class action lawsuit on behalf of many of the other consumers who unknowingly bought the repurchased lemons.