DB Mediation Settles Fraud Claim

Originally published in the Verdicts & Settlements section of the Los Angeles and San Francisco Daily Journals on July 12, 2002. ©Copyright 2002, Daily Journal Corporation. Reprinted with permission.

Settlement: $286,000
L.A. Superior Central - Mar. 21, 2002, Hon. Richard L. Fruin Jr. Topics: Torts, Fraud, Failure to Disclose

Facts: The plaintiffs’ lawsuit against the defendant stems from four separate cases, which they contend showed fraud, illegal repossession and "switch and bait" tactics on the part of the defendant, a car dealership. On April 13, 2001, plaintiff Jose Farias, a 43-year-old Mexican immigrant, read an ad in "La Opinion" that offered a used 2001 Chevrolet extended cab pickup for $16,388.

Upon inquiring at the defendant dealership, plaintiff Farias was told that there were two left in stock and, after he examined them, decided to purchase one of them. Plaintiff Farias returned the next day with his sister, plaintiff Blanco, who spoke no English, and proceeded to purchase the vehicle and make an $8,500 down payment, even though no Spanish language contract was presented to them. Later that evening, after plaintiff Farias’ wife read the contract, it was discovered that the plaintiffs had leased the vehicle with a "cost" of instead of purchasing it as they had attended, according to the plaintiffs.

On April 15, the three returned to the dealership to ask that the contract be rewritten to conform with what they thought they had agreed upon. The dealer refused. On April 16, plaintiff Blanco forwarded a notice under the Consumer Legal Remedy Act to the dealership, asking that the contract be rescinded. There was no response. On April 16, the defendant submitted a lease agreement to a finance company and was rejected. On April 26, the defendant submitted a new lease, containing a signature attributed to plaintiff Blanco, to the finance company and obtained approval. On June 1, 2001, the vehicle was repossessed without notification and resold, seven days later, to another plaintiff. On June 8, 2001, plaintiff Amezcua called his son, who was looking for a new truck, about an ad he saw in La Opinion that offered a used 2001 Chevrolet extended cab for $16,388, the same truck that was repossessed from plaintiff Blanco.

After negotiations during which the defendant attempted to convince the plaintiffs to lease the vehicle, the vehicle was again purchased. That evening, while rereading the contract, the plaintiffs discovered that the price had been raised to $28,999. The plaintiffs returned to the dealership the next day and had the contract re-written to a seven-year loan. The plaintiffs obtained counsel after they discovered that the vehicle was a prior rental and a CLRA letter was sent to the defendant with no response. On Feb. 22, 2001, plaintiff Ochoa went to the defendant to purchase a new GMC Yukon. The plaintiff had already found that the dealer invoice on the truck was $31,283, but, over a period of seven hours at the dealership, was convinced to execute a lease agreement for $37,745. Plaintiff Ochoa retained counsel after he tried to contact the general manager and CEO of the defendant for four months with regard to the plaintiff’s claim that he was promised he could refinance the vehicle after two payments and received no response.

On October 29, 2001, plaintiff Gariepy, went to the defendant to purchase a new Chevrolet truck. The plaintiff agreed to the lease after he was informed that the defendant could offer a good price for a used vehicle. The defendant told the plaintiff that many of the used trucks offered had been prior rental vehicles from Enterprise Rentals, but the plaintiff said he was not interested in a prior rental. The plaintiff decided upon a vehicle but told the dealership that he would like to "sleep on it." Before leaving the dealership, the plaintiff claimed he was told that he should "sign the contract and if he decided in the morning that he did not want the truck, he could bring it back." The plaintiff agreed, signed the contract, and drove the vehicle home, where he found a "Buyers Guide" stuffed inside the glove box with a notation on it that said the vehicle was a prior rental.

Contentions: The plaintiffs contend that the defendant acted fraudulently and in violation of the California Consumer Legal Remedies Act. The plaintiffs contended that plaintiffs Farias and Blanco believed they were purchasing the vehicle when they signed the defendant’s contract to lease. They also contended that the defendant forged plaintiff Blanco’s signature on the contract submitted on April 26th and that they were never told where to make payments on the truck. Plaintiff Amezcua contended that the defendant never disclosed that the vehicles was previously leased and repossessed and that no Spanish language version of the contract was provided to him. Plaintiff Ochoa contended that the defendant advised him that the price of the truck would stay at $31,000 regardless of what the contract said.

Plaintiff Gariepy contended that the vehicle’s prior rental status was never disclosed to him and that he was promised he could change his mind over the course of the evening if he wished. The defendants denied acting fraudulently and forging plaintiff Blanco’s signature on the April 26 lease agreement. Defendant expert Lew Linet testified that it was wrong to forge a client’s name on documents, but that it is something done in the industry and "acceptable if it is done to accomplish the buyer’s intent in the transaction."

The defendant also contended that a Spanish language contract was supplied to plaintiff Amezcua and that the plaintiff was notified of the prior rental status of the vehicle. The defendant contended that plaintiff Ochoa was fully aware of the circumstances and events surrounding the purchase of the vehicle and was "too intelligent" to be snookered by them. The defendant denied that any promise was ever made to plaintiff Gariepy that allowed him to change his mind the next day. The defendant also contended that it notified the plaintiff of the prior rental status of the vehicle.

Result: cont. of FACTS
: The plaintiff attempted to return the vehicle the next day, but was informed that a binding contract existed.

RESOLUTION BY AGREEMENT: Settled pre-trial, after two days of mediation with Daniel Ben-Zvi. The first plaintiff received a total of $85,000; $25,000 in general and $60,000 in attorney fees. The second plaintiff received $70,000; $38,000 in specials and $32,000 in attorney fees. The third plaintiff received $68,000; $33,000 in specials and $35,000 in attorney fees. The fourth plaintiff received a total of $63,000; $27,100 in specials and $35,900 in attorney fees.


© 2003 Daniel Ben-Zvi.



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