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IN THE SUPERIOR COURT OF COWETA COUNTY

STATE OF GEORGIA

LINDSEY M. BENDER and :

CORY N. BENDER, :

:

Plaintiffs, :

:

vs : CIVIL ACTION FILE NO:

:

SOUTHTOWNE MOTORS OF NEWNAN : 12-V-1440

II, INC and ALLY FINANCIAL, INC. :

:

Defendants. :

PLAINTIFF’S RESPONSE TO DEFENDANT’S MOTION FOR

SUMMARY JUDGMENT

Come now plaintiffs and file their response to Motion for Summary Judgment, and show

the court as follows:

In their response, plaintiffs rely upon the Deposition Testimony of Both Corey and

Lindsey Bender and on the Deposition of Charlie Simmons, all of which have been filed.

Plaintiffs further rely upon the certified business records of Manheim Inc. and ISG which have

been previously filed with this Court. Plaintiffs also rely upon the attached Affidavits of Eppes,

Leiva, Edel and Negaty and the attached Exhibits.

BRIEF STATEMENT OF THE CASE

Defendant’s Motion ignores the most important fact and law in this case: Plaintiffs were

the first consumer purchasers of this vehicle after it was repurchased by Hyundai under the

Texas Lemon Law and the manufacturer repurchase was not properly disclosed to the plaintiffs

PRIOR to the purchase as affirmatively required by BOTH the Texas1 and Georgia

2 lemon laws.

1 Texas Occupations Code Subchapter M Sec. 2301.610. DISCLOSURE

STATEMENT.

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This court should focus on defendant’s failure to disclose as mandated by law rather than

plaintiff’s alleged lack of reasonable reliance as claimed by Defendant. Defendant Southtowne

failed to inform plaintiffs of the mandatory 12 month 12,000 mile warranty applicable to the car

because it was a manufacturer buyback as required by both Texas3 and Georgia

4 law. Further,

the Defendant did not disclose the brand on the title in violation of the Federal Odometer Act 49

U.S.C. § 32705(a) (2000); 49 C.F.R. § 580.5 (2000) and OCGA §11-2-312.

Plaintiffs Lindsey M. Bender and Cory N. Bender bought this used 2010 Hyundai

Genesis from Defendant Southtowne Motors of Newnan II, Inc. (“Defendant”) on January 15,

2012. At the time of sale, Defendant knew that the vehicle was a lemon buyback vehicle, but it

failed to inform the Plaintiffs-the first consumer purchasers of the vehicle after manufacturer buy

back5- that it was a manufacturer buyback or that it had a branded title before their purchase. C.

Bender Depo, Page 10, lines 18-23; L Bender Depo Page 19, line 19; L. Bender page 27, lines 9-

25; L Bender Depo page 55, line 10; Simmons Depo, page 29, line 7; Simmons Depo page 30,

line 14; Simmons Depo page 32, line 9. Defendant violated not only the “Lemon” laws of Texas

and Georgia in the sale of the vehicle without prior disclosure of the manufacturer repurchase

history, but also the Hyundai resale rules designed to insure that consumers are told of the

history prior to sale.

The Texas Lemon law requires the title to be branded and a “hanger” to be posted in the

car identifying it as a lemon. Texas Administrative Code Title 43 §215.210(4) provides: “In

2 OCGA § 10-1-790.

3 Texas Adm. Code §215.210(4).

4 OCGA § 10-1-790(a)(2).

5 This fact alone differentiates this case from the Walker case primarily relied upon by

Defendant.

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addition, the manufacturer, converter, or distributor reacquiring the vehicle shall affix a

disclosure label provided by or approved by the department on an approved location in or on the

vehicle. Both the disclosure statement and the disclosure label shall accompany the vehicle

through the first retail purchase.”

Texas law requires that this hanger be placed on the vehicle windshield or rear view mirror.

ISG Documents pages 00031 and 00032. 6 This disclosure form required by Texas law was not

on the car as admitted by Simmons and as testified by the Benders.

The Georgia lemon law requires that notice be given on a prescribed form. Ga. Rules and

Reg. §122-23-.01. Ga. Rules and Reg. § 122-23-.02.(1)(a) prescribes:

At the time of each transfer of the reacquired vehicle, the transferor shall provide the

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transferee the form required by Rule 122-23.01.

(b) The ultimate consumer must be provided the opportunity to read the form in its

entirety before purchasing or leasing the reacquired vehicle.

The Georgia Notice on Non Conformity form was not submitted to the Bender’s prior to

purchase as required by this law and when it was later submitted only to Mr. Bender, it was

submitted and explained as a form needed for financing only. The Regulations require that the

form be given to the consumer at the time of sale. “The original of the form shall be provided to

the ultimate consumer.” Ga. Rules and Reg. §122-23-.02. (c).

The Hyundai resale rules of auction require:

Simmons signed this acknowledgment. ISG Letter to Dealer dated December 9, 2011, ISG Docs

page 0002. These rules were not complied with.

The dealer’s agreement with Ally Financial requires that cars which have been

manufacturer buybacks or which have branded lemon titles are NOT to be financed. Specifically,

Section 6 of the Ally Retail Plan agreement governing the retail instalment sales contracts

6 Texas Administrative Code Rule 215.210(4)

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between Ally and Southtowne provides:

So the dealer’s conduct not only defrauded the Benders but also Ally. See attached Exhibit E

Ally Master Dealer Agreement.

The affidavit of Eppes attached hereto as Exhibit A explains how unscrupulous dealers

use title delays and withholding information to sell lemon buy back cars at a significant profit.

The Walker case cited by Defendant is inapposite because in Walker, the plaintiff was

not the first purchaser after the manufacturer buy back and the case did not involve the

affirmative obligations cited above. In Walker, Southtowne claimed it did not know the car had

a branded title. Here, Southtowne was affirmatively informed that the car did have a branded

title and the salesman did affirmatively misrepresent the history of the car.

Other purchasers have similar complaints to those of plaintiffs. See Affidavit of Jason

Leiva (Exhibit B), Affidavit of Matthew Edel (Exhibit C), Affidavit of Altai Negaty (Exhibit D)

and attached.

STATEMENT OF FACTS

The vehicle was sold to Southtowne at a Manhiem auction in Illinois on January 10,

2012. This was a closed auction for Hyundai dealers only at which manufacturer buyback

vehicles were sold. Manheim Documents page 0006. At the time of this sale, the car had a

Texas manufacturer’s buyback title.

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Auction Invoice, Manhiem Documents 0001. This auction invoice shows that the lemon branded

title is present. The Rules for the Auction require the dealer to disclose to the consumer the

repurchase history of the vehicle:

Manhiem Documents 0012.

Southtowne manager Simmons testified:

Q And does Manheim announce any rules about how you

must disclose to your subsequent purchasers, retail purchasers

of the car, that it was a manufacture buyback?

A You have to have the disclosure form signed.

Q Which disclosure form?

A The one on the car, which would be that one -- this

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one (indicating)7. And then you would get a state specific one

from -- after the car's purchased.

Q So, Hyundai gives you a state specific form after

you purchase the car?

A There's a company called I-S-G that handles the

buybacks for Hyundai. And once you purchase the cars, they

will forward to you, your state specific disclosure.

Q Do they send you the state specific disclosure for

the state where the car was repurchased?

A No, sir.

Simmons Depo, page 18. The Texas title carries the manufacturer buyback brand.

ISG Documents page 33. The Manhiem auction documents establish the title eas present at th

auction at time of sale. The records also show the title was shipped to the dealer on January 13,

2012. Manhiem Documents pages 5-7. The Texas Lemon Law Hanger together with the Texas

7 Mr. Simmons was referring here to the Illinois disclosure form and NOT the Georgia or

Texas form nor the Texas “hanger”. Simmons Depo. Page 19, line 11. The Georgia and Illinois

forms are materially different.

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branded title were included in the auction documents at the Illinois auction:

ISG Documents page 29. The Hanger (pasted above) was not presented to the plaintiffs nor was

it on the car. L Bender page 27, line 17. The Texas Lemon Law Disclosure form was never

presented to plaintiff. ISG Documents page 35.

Plaintiff’s visited Southtowne on January 15, 2012. They were shown the subject

Genesis by salesman Buck Brown. Lindsey Bender testified:

That he could do a super deal; it's a

·7·lease turn-in; due to the economy that was happening

·8· ·at that present time; it's probably some woman who

·9· ·couldn't pay her car note, turns in her keys and

10· ·that's how it ends up being a used vehicle and we

11· were going to be very, very lucky because this is a

12· ·once in a lifetime.

L Bender page 25

Q.· · Okay.· At any time did Buck tell you that

10· ·it was a manufacturer buy-back vehicle?

11· · · · A.· · No, sir.

12· · · · Q.· · Did he ever tell your husband that?

13· · · · A.· · No, sir.

14· · · · Q.· · Did anyone else at the dealership, any

15· employee or anyone else at the dealership, tell you

16· ·that it was a manufacturer buy-back vehicle?

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17· · · · A.· · No, sir.

18· · · · Q.· · When you looked at this vehicle, were

19· there any documents or papers either affixed to the

20· ·windshield, inside the vehicle that you recall?

21· · · · A.· · No, sir.8

22· · · · Q.· · So you don't remember anything being

23· ·attached or stuck to the windshield?

24· · · ·A.· · I am positive there was nothing attached

25· ·or stuck to the windshield.

L Bender page 27. No Carfax was shown to the plaintiffs.

16· · · · Q.· · What was Buck's answer to that request?

17· · · ·A.· · Oh.· Buck's answer to that request was I

18· just saw it, it's clean, it's fine, I'll get you

one.

19· · · · Q.· · Was one ever provided to you?

20· · · · A.· · No, sir.

L Bender Depo page 34.

Plaintiffs were shown an Illinois Disclosure Form signed January 15, 2012. L Bender page 39.

Plaintiffs were told the form related to the car being a lease turn in.

15· · · · A.· · He said this is what Buck talked to you

16· ·about, the lease -- and we said the lease turn-in.

L Bender page 42

24· · · · · · · I believe I quote Buck in saying it's a

25··lease turn-in.· We asked how can he get in this car YVer1f

·1· ·when the sticker on this car is so high.· He said,

·2·well, this is a lease turn-in, people do this all

the

·3·time, they make up issues on the vehicle and they'll

·4· ·turn the vehicle back in to the dealer.

·5· · · Q.· · Okay.· Had you ever had any business with

·6· ·Buck before this purchase?

·7· · · · A.· · No, sir.

8 This is in direct contradiction to Simmons testimony at page 19, line 14 and page 27,

line 10 that the form was on the car.

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·8· · · · Q.· · Did Buck at any time tell you that the

·9· ·vehicle was a manufacturer buy-back?

10· · · · A.· · No, he did not.

11· · · Q.· · Okay.· Did anyone at SouthTowne ever tell

12·you on the day you purchased the vehicle that it was

13· ·a manufacturer buy-back?

14· · · · A.· · No, they did not.

15· · · Q.· · Did Buck or anyone at the dealership ever

16· ·tell you that the vehicle had a branded title?

17· · · · A.· · No, sir.

C Bender page 17 and 18.

The plaintiffs were NOT shown the Georgia Lemon Law Notice of Resale form at any

time prior to the sale. Simmons acknowledges that the dealer did not even receive the form from

ISG until after the sale to the Benders. Simmons depo page page 32, line 9.9 The plaintiffs first

saw the Georgia Lemon Law Notice Resale disclosure form near the end of summer 2012.

15· · Q.· · When is the first time you've seen Exhibit

16· ·No. 4?

17· · A.· · The fall of 2012, August, end of August,

18· beginning of September, upon my entry to SouthTowne

19· ·about my concerns and confusion.

L Bender page 44. This Georgia Resale Notice of Nonconfomity form was never signed by Ms.

Bender and it was signed by Mr. Bender a week or more after the actual purchase of the Genesis.

L Bender page 45-46. Buck Bush called Ms. Bender and told her they needed the Benders to

return and sign a loan document. L Bender page 46.

Simmons testified as follows:

Q Alright. I notice in your deal file there's no

Texas manufacturer's notice of buyback form, is that correct?

9 Simmons goes on to claim that a “lady” at the state told him they understand the forms

are sometimes signed after the sale. Simmons Deposition page 33. The Governor’s Office of

Consumer Protection’s position is that all sellers must comply with the lemon law statute. See

Attached Exhibit G.

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A Yes, sir.

Q And there's no Texas form that would be required to

be affixed to the rear view mirror of the vehicle?

A No, I'm not sure.

Q Have you looked through the deal file? Did you find

one?

A I did not see one, no, sir.

Q Do you acknowledge, sir, that the Georgia form was

not signed until after the purchase?

A Yes, sir.

Q Is there a reason why it was not signed at the day

of the purchase?

A It was forwarded to us after.

Q By I-S-G?

A Yes, sir.

Q So the Georgia form wasn't part of the package that

you received from Manheim?

A No, sir.

Simmons Depo page 28-29. The Georgia Resale form was not presented to plaintiffs until well

after the sale. It was not shipped to the dealer by ISG until January 20, 2012. The form was

improperly and illegally back dated to the date that the plaintiff’s purchased this vehicle. ISG

Documents pages 7-8. The form is produced below:

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This form was not signed by the manufacturer until January 20, 2012. This form was Fedexed to

the dealer by Hyundai on January 20, 2012. ISG Documents 0007. The Benders were never

provided with the warranty document required by Texas and Georgia law. ISG Documents page

9. The Georgia and Texas (ISG Documents 0005) lemon law disclosure forms are materially

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different from the Illinois form which defendant provided to plaintiff. The Georgia and Texas

forms both refer to the lemon law prominently on the page. The Illinois form does not. ISG

Documents pages 0001, 0003, 0005.

The affidavit of Bob Eppes atatched hereto as Exhibit A explains in detail how the lemon

laundering process may be adminsitered by unscrupulous dealer. He testifies:

Background Information on Deceptive Sales Practices of Certain Dealers Failing to

Disclose Manufacturer or Lemon Buybacks

30. Some unscrupulous dealers seek out Manufacturer or Lemon Buyback vehicles as they

can gain excessive and unfair profits by purchasing “lemon buybacks” at auctions at

significantly lower prices than like make, model mileage and equipment vehicles without

defects and selling the defective or non-conforming vehicle without required disclosure.

Often the deceptive dealer will intentionally purchase non-conforming vehicles out of state

relying upon titling loopholes or improper transfer of documents thus enabling the dealer to

not disclose the material facts of the vehicle.

31. Once purchased at auction by an unscrupulous dealer, it is common for the dealer to offer

the vehicle for sale and intentionally fail to disclose the vehicle’s past ownership history, its

defects and/or repairs and its “branded” title. The dealer will intentionally fail to tell the

purchaser the ramifications of having a vehicle with a “branded” title.

32. It is common for deceptive dealers to fail to inform prospective buyers that the vehicle’s

price is likely inflated; that the vehicle information to be submitted to the prospective

buyer’s financial lending institution at the onset of applying for a financing will be false and

misleading thus causing the lending institution to accept a contract that they would not

normally fund and often causing the contract to be under collateralized.

33. It is common for deceptive dealers to fail to inform financial institutions in the

application process for funding should the vehicle be repossessed and sold, the vehicle’s

sale price will likely be considerably less than a vehicle without a “branded” title, thus

causing additional financial harm to the vehicle’s owner and possibly to the financial

institution.

34. It is common for deceptive dealers to fail to inform prospective buyers that many third

party service contract providers may not provide coverage for Manufacturer or Lemon

Buyback vehicles.

35. It is common for deceptive dealers to fail to inform service contract administrators that

the vehicle is a “Manufacturer or Lemon Buyback, thus failing to disclose material facts that

may cause the provider to decline or void the contract.

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36. It is common for dishonest dealers to not have the purchaser sign the “branded” title,

instead have the buyer sign a “secured power of attorney form” which allows the dealership

to sign the title and odometer disclosure on the owner’s behalf and keeps the buyer from

viewing the “branded” title. The owner may not view the “branded” title until the vehicle is

paid off, sold or retitled.

37. Deceptive dealerships often deceptively compartmentalize and restrict access to titles and

related detrimental information from sales personnel. In some instances, dealerships will

deceptively tell their sales personnel the vehicles come from a variety of sources such as

special trade-ins, wholesalers, auctions, lease companies or fleet operations and represent

the vehicle have no serious defects.

38. It is common to find dealership titling personnel as participants in the processing of

fraudulent sales of Manufacturer or Lemon Buybacks. Dealer title clerks routinely view the

branded titles and reassign and transfer the titles. They are often the custodian of record and

typically know the place of purchase, price, method of payment, title brand, title arrival,

POA forms used, sale price and documents retention practices.

39. It is common to find sales personnel are participants in the deceptiveness of not

disclosing the defects and branded title to prospective buyers. Often special codes are often

used on inventory tags, inventory files and service records and sales documents to identify

to the dealership the vehicle is a “lemon buyback”. Often the sales personnel often knows

the source of the vehicle and its related defects and is rewarded with high commissions or

with perks for the sale of the unit due to the high profit margin accomplished by not

disclosing the true facts.

Affidavit of Robert Eppes.

Defendant purchased the subject Genesis for $18,185.00. Manhiem Documents page 1.

Defendant sold this vehicle to plaintiffs for $34,995.00. This is a huge profit for a used vehicle

sale. Carmax offered plaintiffs $11,000.00 for the car on September 5, 2012. See attached

Exhibit F. C Bender Depo, page 46 line 10. Robert Eppes, an immensley qualified expert

formerly employed by United States Department of Transportation, National Highway Traffic

Safety Administration - Odometer Fraud Unit located in Kansas City, Missouri and a certified

vehicle appraiser opines:

50. In this case, the vehicle was purchased on 12/21/2011 by Southtowne Motors of Newnan

II Inc., Newnan, GA for $18,000. On or about January 15, 2012, the vehicle was purchased

by the Benders for $34,995. This is an extremely high mark-up when one considers typical

vehicles of this class are typically marked up $3-5K depending on condition.

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51. Based upon my education, training and experience as an appraiser and a former federal

investigator specializing in automotive industry related cases, it is my opinion that on

01/15/2012, a like kind make, model, mileage and equipped vehicle, without defects or non-

conformities of warranty, without a “branded title, in clean condition, had a Fair Market

Retail Value of $34,995.

52. Based upon my education, training and experience as an appraiser, and my prior law

enforcement experience in purchase and sale of motor vehicles, it is my opinion that on

01/15/2012, the fair market retail value of the subject vehicle with branded “Manufacturer

or Lemon Buyback” title and all material facts disclosed had a Fair Market Retail Value of

$21,950.

Affidavit of Robert Eppes attached Hereto as Exhibit A. Clearly the value of the vehicle is

substantially diminished/impaired as a result of the manufacturer buyback/lemon history.

ARGUMENT AND CITATION OF AUTHORITY

LEGAL STANDARD FOR SUMMARY JUDGMENT:

Summary judgment is proper only when no issue of material fact exists and the moving

party is entitled to judgment as a matter of law. Preferred Real Estate Equities v. Housing

Systems, 248 Ga. App. 745, 548 S.E.2d 646 (2001). Further, when ruling on a motion for

summary judgment, a court must give the opposing party the benefit of all reasonable doubt, and

the evidence and all inferences and conclusions therefrom must be construed most favorably

toward the party opposing the motion. Moore v. Goldome Credit Corp., 187 Ga. App. 594, 595-

596, 370 S.E.2d 843 (1988). On motions for summary judgment, however, courts cannot resolve

the facts or reconcile the issues. Fletcher v. Amax, Inc., 160 Ga. App. 692, 695, 288 S.E.2d 49

(1981). Courts throughout the country have repeatedly recognized that summary judgment is a

harsh remedy that should be granted only when a moving party has established its right to

judgment with such clarity as not to give rise to controversy. See e.g., New England Mutual Life

Insurance Co. v. Null, 554 F.2d 896, 901 (8th

Cir. 1977). As will be shown below,

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Defendant has not even come close to meeting its burden so as to prevail on its Motion for

Summary Judgment.

I. THE SALE WAS MADE IN VIOLATION OF THE GEORGIA LEMON LAW

AND THE TEXAS LEMON LAW

The Georgia Lemon Law, OCGA 10-1-790 provides:

(a) No manufacturer, its authorized agent, new motor vehicle dealer, or other

transferor shall knowingly resell, either at wholesale or retail, lease, transfer a title, or

otherwise transfer a reacquired vehicle, including a vehicle reacquired under a similar

statute of any other state, unless the vehicle is being sold for scrap and the manufacturer

has notified the administrator of the proposed sale or:

(1) The fact of the reacquisition and nature of any alleged nonconformity are

clearly and conspicuously disclosed in writing to the prospective transferee, lessee, or

buyer; and

(2) The manufacturer warrants to correct such nonconformity for a term of one year or

12,000 miles, whichever occurs first.

A knowing violation of this subsection shall constitute an unfair or deceptive act or

practice in the conduct of consumer transactions under Part 2 of Article 15 of Chapter 1 of

Title 10 and will subject the violator to an action by a consumer under Code Section 10-1-

399.

.

GA. COMP. R. & REGS. §122-23-.02. Return, Transfer and Resale of a Reacquired Vehicle

provides:

(1) A reacquired vehicle shall not be transferred, leased, or sold, either at wholesale or

retail, unless the following conditions are met:

(a) At the time of each transfer of the reacquired vehicle, the transferor shall provide

the transferee the form required by Rule 122-23.01.

(b) The ultimate consumer must be provided the opportunity to read the form in its

entirety before purchasing or leasing the reacquired vehicle.

(c) Both the transferor of the reacquired vehicle and the ultimate consumer must sign

the form at the time of the sale or lease to the ultimate consumer. The original of the

form shall be provided to the ultimate consumer. The transferor of the reacquired

vehicle must send a copy of the completed and dated form to the Administrator within

thirty (30) days from the date of the sale or lease.

(2) The manufacturer shall activate the warranty required pursuant to O.C.G.A. § 10-1-

790(a)(2) at the time of the sale or lease of the reacquired vehicle to the ultimate consumer.

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The manufacturer shall also notify the Administrator that the warranty has been activated

within ninety (90) days of the sale or lease.

Authority O.C.G.A. §§ 10-1-790 and 10-1-795

The Texas Lemon Law Tex. Occ. Code Ann. §2301.61010

provides:

Sec. 2301.610. DISCLOSURE STATEMENT. (a) A manufacturer, distributor, or

converter that has been ordered to repurchase or replace a vehicle shall, through its

franchised dealer, issue a disclosure statement stating that the vehicle was

repurchased or replaced by the manufacturer, distributor, or converter under this

subchapter. The statement must accompany the vehicle through the first retail

purchase following the issuance of the statement and must include the toll-free

telephone number described by Subsection (d) that will enable the purchaser to

obtain information about the condition or defect that was the basis of the order for

repurchase or replacement.

(b) The manufacturer, distributor, or converter must restore the cause of the

repurchase or replacement to factory specifications and issue a new 12-month,

12,000-mile warranty on the vehicle.

Texas Administrative Code Rule 43 § 215.210(4) provides:

If a manufacturer, converter, or distributor replaces or repurchases a vehicle

pursuant to an order issued by the final order authority, reacquires a vehicle to

settle a complaint filed under Occupations Code, Chapter 2301, Subchapter M or

Occupations Code, §2301.204, or brings a vehicle into the state of Texas which has

been reacquired to resolve a warranty claim in another jurisdiction, the manufacturer,

converter, or distributor shall, prior to resale of such vehicle, re-title the vehicle in

Texas and issue a disclosure statement on a form provided by or approved by the

department. In addition, the manufacturer, converter, or distributor reacquiring the

vehicle shall affix a disclosure label provided by or approved by the department on

an approved location in or on the vehicle. Both the disclosure statement and the

disclosure label shall accompany the vehicle through the first retail purchase.

No person or entity holding a license or general distinguishing number issued by the

department under Occupations Code, Chapter 2301 or Transportation Code, Chapter

503 shall remove or cause the removal of the disclosure label until delivery of the

vehicle to the first retail purchaser… Any manufacturer, converter, or distributor or

holder of a general distinguishing number who violates this section is liable for a

civil penalty or other sanctions prescribed by the Occupations Code. In addition, the

manufacturer, converter, or distributor must repair the defect or condition in the

vehicle that resulted in the vehicle being reacquired and issue, at a minimum, a basic

warranty (12 months/12,000 mile, whichever comes first), except for non-original

equipment manufacturer items or accessories, which warranty shall be provided to

10

http://www.statutes.legis.state.tx.us/Docs/OC/htm/OC.2301.htm#2301.601

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the first retail purchaser of the vehicle.11

Neither the Georgia Lemon Law nor the Texas Lemon Law were complied with in this

case. The required Georgia form was not presented to the consumer plaintiff Bender’s at the

time of sale of the car. Southtowne Response to Plaintiffs’ Interrogatories Number 17. The

required Georgia form was not signed by plaintiff consumer Lindsey Bender. The form was not

provided to the Benders at closing. The Texas Resale Form was ever presented to the plaintiffs

and the Texas Hanger Form was not present on the car. Plaintiffs were never informed about the

warranty available with the reacquired vehicle because the defendant Southtowne did not want

them to know it was a lemon vehicle. L Bender, page 77, line 4. See National Consumer Law

Center, Automobile Fraud (4th

ed. 2011, §7.6.1)(“In order to hide the car’s history, the selling

dealer may conceal the existence of this warranty.”)

As stated by the Georgia Lemon Law, the failure to comply with the lemon law with

respect to the resale of a repurchased motor vehicle is a violation of the Georgia Fair Business

Practices Act.12

11

http://info.sos.state.tx.us/pls/pub/readtac$ext.TacPage?sl=R&app=9&p_dir=&p_rloc=

&p_tloc=&p_ploc=&pg=1&p_tac=&ti=43&pt=10&ch=215&rl=210

12

This is also arguably a violation of O.C.G.A. § 43-47-10 which prohibits used car

dealers from:

(B) Willful and intentional failure to comply with any provisions of this chapter or an

lawful rule or regulation issued by the board under this chapter;

(C ) Making any substantial misrepresentation;

(D) Making any false promises of a character likely to influence, persuade,

or influence; (E) Pursuing a continued and flagrant course of misrepresentation or the making of false promises through agents, salespersons, advertising, or otherwise; (H) Fraud or fraudulent practice, unfair and deceptive acts or practices,

misleading act or practices, or untrustworthiness or incompetency to act as a

licensee, including, but not limited to, the failure to provide the appropriate

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O.C.G.A. § 10-1-390 et seq contains Georgia’s Fair Business Practices Act. Unfair or

deceptive acts or practices in the conduct of consumer transactions and consumer acts or

practices in trade or commerce are declared unlawful. The purpose of Fair Business Practices

Act is to protect consumers and legitimate business enterprises from unfair an' deceptive

practices in the conduct of any trade or commerce in part or in this State. It is the intent of the

General Assembly of Georgia that such practices be stopped swiftly and that this statute be

liberally construed and applied to promote the purposes and policies. O.C.G.A.§ 10-1-

391(a).(emphasis added) A consumer transaction means the sale, purchase, lease or rental of

goods services, or property, real or person, primarily for personal family or household purposes

Consumer acts and practices means acts or practices intended to encourage consumer

transactions. O.C.G.A.§ 10-1-392(a)(2), O.C.G.A.§ 10-1-392(a)(3). Any person who suffers

injury or damages as a result of a consumer acts or practices in violation of this part may bring

action against the person or persons engaged in such unlawful consume acts or practices to

recover his general and exemplary damages sustained in the consequence thereof. A violation of

the act requires no knowledge of the deception or intent to deceive b the defendant. Crown Ford

v. Crawford, 221 Ga. App. 881 (1996); O.C.G.A. § 10-1399.

It is deceptive to say half the truth and omit the rest, to omit qualifying information

odometer disclosure forms required by law or knowingly selling or offering for

sale any used car on which the odometer has been tampered with to reflect lower

than the actual mileage the car has been driven;

(I) the intentional use of any false, fraudulent, or forged statement or document or the use

of any fraudulent, deceitful, dishonest, or immoral practice in connection with any of the

licensing requirements as provided for in this chapter;

(L) The performance of any dishonorable or unethical conduct likely to deceive, defraud,

mislead, unfairly treat, or harm the public;

Any person damaged as a result of a violation of these provisions by a used car dealer may bring

an action for damages to recover damages and punitive damages.

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necessary to prevent the statement from creating a misleading impression or to remain silent if

under the circumstances there is a false implied representation. Criteria for determining

unfairness are whether there is substantial consumer injury, not outweighed by the benefits to

competition, and where the consumer could not reasonably have avoided the practice. A pure

omission of information is unfair if the consumer benefit from disclosure of information

outweigh disclosure costs. See N.C.L.C. Autofraud, Sheldon, § 4.2.14.3. O.C.G.A. §10-1-393.

This broad definition recognizes that deception "is infinite in variety. The fertility of man's

invention in devising new schemes of fraud is so great' and unfair business practices acts allow

proscription of new forms of deception. National Consumer Law Center, Unfair and Deceptive

Acts and Practices (7th

Ed. 2008).

The FBPA proscribes practices that "caus[e] actual confusion or actual misunderstanding

as to the source, sponsorship, approval, or certification of goods or services," O.C.G.A. § 10-

1393 (b) (A). "To prevail on a private claim under the [Act]," a plaintiff must establish three

elements "violation of the Act, causation, and injury." Campbell v. Beak, 256 Ga. App. at 497-

498. Furthermore, "[a]t least 30 days prior to the filing of any such action, a written demand or

relief, identifying the claimant and reasonably describing the unfair or deceptive act or practice

relied upon and the injury suffered, shall be delivered to any prospective respondent." O.C.G.A.

§ 10-1-399 (b). Johnson v. Gapvt Motors, 292 Ga. App. 79 (2008); Neal Pope, Inc. v.

Garlington, 245 Ga. App. 49 (2000)(summary judgment granted to Plaintiff on FBPA claims for

violation of O.C.G.A. §40-1-5.13

13

William Rothschild, A Guide to Georgia’s Fair Business Practices Act of 1975, 10 Ga.

L, Rev. 917, 918 (1976) (“The FBPA’s prohibition against “unfair and deceptive acts or

practices”... represents an expansion of consumer protection beyond that provided by state law

-21-

It is clear in this case that defendant failed to make statutorily required disclosures. It is

further clear that defendant failed to make required disclosures and made representations that the

car had specific existing qualities or conditions which the car did not have and which the

defendants knew to be false. O.C.G.A. § 10-1-393(b)(7).

Per Se Violation of Fair Business Practices Act

The Lemon Law specifically states that a failure to comply with the statute is a Fair

Business Practices Act violation. OCGA § 10-1-790. Where the underlying consumer protection

statute explicitly states that a violation is deemed to be an unfair trade practice this results in a

per se violation. See, e.g., McClelland v. Hyundai Motor Company America, 851 F. Supp. 680

(E.D. Pa. 1994) (Pennsylvania’s Lemon Law explicitly states that a violation of it is a UTPCPL

violation). The per se cases are significant because many, if not all, of the claims arising under the

primary, substantive statutes do not contain common law elements such as reliance and scienter.

Instead, many impose affirmative disclosure duties on sellers, the violation of which constitute a per

se violation of the FBPA. Engrafting additional elements for a private claim onto these statutes

would, for all practical purposes, obliterate the ability to enforce the substantive statutes and result

in either increased regulation of the subject industries, wide-ranging regulatory oversight, or

numerous and redundant private rights of action under each of the substantive statutes.

Accordingly, the FBPA should not be interpreted to codify the reliance elements of common law

fraud where there is a per se violation.

Reliance is a Fact Question

This is not a case of simple misrepresentation. This is a case of breach of an affirmative

legal obligation to disclose. Therefore reliance issues are not applicable. Here, justifiable

prior to the Act.”)

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reliance may be that the consumer relied on the dealer’s failure to disclose what he was legally

obligated to disclose. Basic, Inc. v. Levinson, 485 U.S. 224 (1988) (“There is, however, more

than one way to prove a causal connection. Indeed, we have previously dispensed with a

requirement of positive proof of reliance where a positive duty of disclosure had been breached,

concluding that the necessary nexus between the plaintiff’s injury and the defendant’s wrongful

conduct had been established.”). Stated another way, causation may be demonstrated by

presuming reliance upon the other party to disclose the allegedly concealed facts. 37 Am. Jur.3d,

Fraud and Deceit § 228 (1964). This mode of proof has long been judicially recognized under

the common law, which provides an “assumption of reliance” where the omitted facts are

material or are required to be disclosed by statute, regulation or the circumstances of the

transaction. See Adams v. Little Missouri Minerals, 143 N.W.2d 659, 683 (N.D. 1966) (“As the

facts suppressed in the instant case were material, inducement and reliance are inferred from the

circumstances.”).

Nevertheless, Defendant claims that the Benders were not entitled to rely on their

statements about the quality or condition of the car. The Georgia and Texas Lemon laws require

that disclosures be made and that they be made in a specific fashion. O.C.G.A. § 43-47-10

precludes used car dealers from making false representations. Plaintiffs are entitled to rely on

the defendants following the prescribed legal requirements in the sale of the used car and the

statements being true. There is no issue of diligence in this case.

Even assuming arguendo that the plaintiffs are required to expect the dealer to break the

law, the issue of diligence is a matter for jury determination. Raysoni v. Payless, Georgia

Supreme Court, Case Number S13G1826, November 17, 2014, page two. (Whether it was

reasonable for one to rely upon a certain misrepresentation is generally a question for a jury,

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although in some cases, the answer may appear so clearly that the question can be decided by a

court as a matter of law.); Campbell v. Beak, 256 Ga. App. 493 (2002) (Evidence was presented

that Beak viewed the car himself and test drove it. Beak inquired three times as to its condition

and history, and the jury obviously believed that Campbell lied in response. Although the vehicle

was sold "as is," that language does not require a different result.) See Johnson v. GAPVT

Motors, 292 Ga. App. 79 (2008)(Although the conclusion that Johnson should have realized the

car was not an authentic Saleen was authorized by the evidence, this conclusion was not

demanded by the evidence. Indeed, whether a buyer could ascertain the falsity of a seller's

representations by proper diligence, or whether the buyer was as diligent as the circumstances

warranted, is a matter for a jury to determine.); Catrett v. Landmark Dodge, 253 Ga. App. 639,

641 (1) (560 SE2d 101) (2002); Home v. Claude Ray Ford Sales, 162 Ga. App. 329, 330 (2) (290

SE2d 497) (1982).

The defendant relies upon the Raysoni case to argue that plaintiffs’ claims cannot go to

the jury. The Raysoni case involved a dealer lying to the consumer about the then existing

quality or condition of the car but then “disclosing” the lie in the micro fine print of the contract.

The Georgia Supreme Court reversed the Court of Appeals in Raysoni v. Payless Auto Deals,

LLC, S13G1826 (Ga. 11-17-2014) where the court specifically addressed the seller using a

Carfax report as a means of supporting a salesman’s claims.

II. PLAINTIFF HAS STATED A CLAIM FOR FRAUD AND FACT QUESTION

REMAIN FOR JURY DETERMINATION ON THIS CLAIM

To establish fraud, a plaintiff must produce evidence showing a "[w]illful

misrepresentation of a material fact, made to induce [the plaintiff] to act, upon which [the

plaintiff] acts to his injury." Although knowledge that the representation is false is an essential

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element of fraud, a reckless representation of facts as true when they are not, if intended to

deceive, is equivalent to a knowledge of their falsehood even if the party making the

representation does not know that such facts are false. A misrepresentation is intended to deceive

where there is intent that the representation be acted upon by the other party. And, because fraud

is inherently subtle, slight circumstances of fraud may be sufficient to establish a proper case.

Proof of fraud is seldom if ever susceptible of direct proof, thus recourse to circumstantial

evidence usually is required. Moreover, it is peculiarly the province of the jury to pass on these

circumstances showing fraud. Except in plain and indisputable cases, scienter in actions based

on fraud is an issue of fact for jury determination. Petzelt v. Tewes, 260 Ga. App. 802 (2003).

Stated another way:

In all cases of deceit, knowledge of the falsehood constitutes an essential element.

A fraudulent or reckless representation of facts as true, which the party may not

know to be false, if intended to deceive, is equivalent to a knowledge of the

falsehood." Code 105-302; Lively v. Garnick, 160 Ga. App. 591 (287 S.E.2d

553) (1981). To be actionable the misrepresentations must be made with the

intention of deceiving another, and the defendant at the time must either know

they were false or what the law regards as the equivalent of knowledge.

McLendon v. Galloway, 216 Ga. 261 (2) (116 S.E.2d 208) (1960). What one may

not do is to turn his head away and blind himself to the truth or falsity of a

condition which he recklessly represents to his own advantage. Such refusal to

know, like admitted knowledge, involves actual, moral guilt. Wooten v. Calahan,

32 Ga. 382, 386 (1961); Penn Mut. Life Ins. Co. v. Taggart, 38 Ga. App. 509, 511

(1-b) (144 S.E.2d 400) (1928); Dundee Land Co. v. Simmons, 204 Ga. 248 (1)

(49 S.E.2d 488) (1948). Knowledge is an essential element, but "the reference . . .

to fraudulent or reckless statements represented as true, which the party may not

know to be false, if intended to deceive, is intended to declare what may amount

to knowledge." Camp v. Carithers, 6 Ga. App. 608 (4) (65 S.E. 583) (1909). "The

intention to deceive and the immoral element are supplied by knowledge of the

falsity of the representations when they were made." Bagley v. Firestone Tire &c.

Co., 104 Ga. App. 736, 740 (123 S.E.2d 179) (1961).

The intent which constitutes an essential element of fraud is an intent that the

representation be acted upon by the other party. Daugert v. Holland Furnace Co.,

107 Ga. App. 566 (130 S.E.2d 763) (1963). It is a jury question except in plain

and palpable cases. Brown v. Techdata Corp., 238 Ga. 622 (234 S.E.2d 787)

(1977). Likewise, whether the misrepresentation is fraudulent is a jury question.

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Ga. International Life Ins. Co. v. King, 120 Ga. App. 682 (172 S.E.2d 167)

(1969).

Bill Spreen Toyota v. Jenquin, 163 Ga. App. 855 (1982)(emphasis in original) See also

Evans Toyota v. Cronic, 233 Ga. App. 318 (1998)(dealer knows that car has been wrecked and

that it is not subject to warranty but its salesman (who did not know the vehicle had been

wrecked) affirmatively tells plaintiff that the vehicle had a warranty).

Here there is ample evidence from which a jury may find fraud on the part of the

defendants. The plaintiff specifically inquired of defendant about the car on several occasions.

They asked how the car be sold for less than the other car they were reviewing. The salesman

specifically stated the car was a lease turn in.

A. The Contract Language Does Not Protect Defendants from Antecedent Fraud.

Defendants cite to cases which appear to hold that language in a contract document may

absolve the seller of its antecedent false representations. However, the 1974 case that should

govern cases like this one that have the same operative facts, City Dodge, Inc. v. Gardner, 232

Ga. 766 (1974), the Court noted two lines of Georgia cases on this subject, one holding “that a is

claimer clause in the contract prevents the buyer from asserting reliance,”14

and the other holding

that when the contract is “void because of antecedent fraud, the disclaimer therein is void and

offers no protection to the seller.”15

The Court rejected one argument that the contractual

disclaimer should control by finding that the enactment of the U.C.C. preserved the right of a

14

Id. at 769–770, citing Floyd v. Woods, 110 Ga. 850 (1900), and Holbrook v. Capital

Automobile Co., 111 Ga. App. 601 (1965). Arguably, the Holbrook case cited by defendant as

specifically overruled by this case. 15 Id. at 770, citing Brown v. Ragsdale Motor Co., 65 Ga. App. 727 (1941), Eastern

Motor Co. v. Lavender, 69 Ga. App. 48 (1943), and Annot., Liability for representations and

express warranties in connection with sale of used motor vehicle, 36 ALR3d 125, 151–172

(1971).

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buyer “to rescind the contract and sue in tort for alleged fraud and deceit.”16

The Court then

considered the two lines of authority and concluded:

We believe the better view is that the question of reliance on the alleged

fraudulent misrepresentation in tort cases cannot be determined by the provisions

of the contract sought to be rescinded but must be determined as a question of fact

by the jury. It is inconsistent to apply a disclaimer provision of a contract in a tort

action brought to determine whether the entire contract is invalid because of

alleged prior fraud which induced the execution of the contract. If the contract is

invalid because of the antecedent fraud, then the disclaimer provision therein is

ineffectual since, in legal contemplation, there is no contract between the parties.

… We hold … that such a tort action cannot be controlled by the terms of the

contract itself.

Id. at 770. At least 27 cases follow City Dodge in recognizing that antecedent fraud about the

quality of the goods would justify rescinding the contract, despite disclaimers in the contract.17

16 Id. at 767–769, relying upon the specific terms of what is now OCGA § 11-1-103

(stating that unless displaced, common law principles supplement the U.C.C.) and § 11-2-721

(recognizing a rescission remedy for fraud). 17 Cases applying the rule allowing rescission despite a contractual dis-claimer: Brown v.

Techdata Corp., 238 Ga. 622, 627–628 (1977); Catrett v. Landmark Dodge, Inc., 253 Ga. App.

639, 641 & n.12 (2002); Jones v. Cartee, 227 Ga. App. 401, 402–403, 405 (1997) (finding that

disclaimers did not preclude rescission, but ruling for defendant due to lack of evidence of intent

to deceive); McNatt v. Colonial Pac. Leasing Corp., 221 Ga. App. 768, 770–771 (1996) (rev’d

on other grounds, 268 Ga. 265); Rivers v. BMW of North America, Inc., 214 Ga. App. 880, 881–

883 (1994); Crews v. Cisco Bros. Ford-Mercury, Inc., 201 Ga. App. 589, 591–592 (1991); Del

Mazo v. Sanchez, 186 Ga. App. 120, 124–129 (1988) (whole court, deciding that contrary cases

would not be followed); Potomac Leasing Co. v. Thrasher, 181 Ga. App. 883, 885–887 (2)

(1987); Massey v. Stembridge, 177 Ga. App. 791, 793–794 (1986); Krawagna v. H & S Liquor,

Inc., 176 Ga. App. 816, 818 (1985); Reilly v. Mosley, 165 Ga. App. 479, 481–482 (1983). See

also M&M Mortg. Co. v. Grantville Mill, LLC, 302 Ga. App. 46, 48 (2010) (applying rule to

fraud concerning future events the defendant knows will not take place).

The following cases recognize the rule, but find that the plaintiff failed to rescind the

contract and was, for that reason, bound by disclaimers. Dyer v. Honea, 252 Ga. App. 735, 739

n.13 (2001); GCA Strategic Inv. Fund, Ltd. v. Joseph Charles & Assocs., Inc., 245 Ga. App. 460,

462–463 (2000); Estate of Sam Farkas v. Clark, 238 Ga. App. 115, 117, 118–119 (1999); Cotton

v. Bank South, 231 Ga. App. 812, 814–815 (1998); Dews v. Roadway Package System, Inc., 227

Ga. App. 9, 10 (1997); Orion Capital Partners, L.P. v. Westinghouse Elec. Corp., 223 Ga. App.

539, 542–543 (1996); Nexus Servs., Inc. v. Manning Tronics, Inc., 201 Ga. App. 255, 255–256

(1991); Owens v. Union City Chrysler-Plymouth, Inc., 210 Ga. App. 378, 379–380 (1993);

Roller-Ice, Inc. v. Skating Clubs of Ga., Inc., 192 Ga. App. 140, 141–142 (1989); Jain v. Carload

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Under these cases, the contractual disclaimer does not defeat rescission as a matter of law;

instead, the disclaimer is part of the overall evidence that the jury considers in determining

whether the plaintiff justifiably relied on the antecedent fraudulent statement. City Dodge at 770.

In Del Mazo v. Sanchez, 186 Ga. App. 120,129 (1988), Judge Deen’s opinion suggested

that the cases in which rescission should be allowed despite disclaimers “involve actual

fraudulent concealment of present or past facts which were not readily discernible through the

use of reasonable diligence.” Id. at 129–130. That makes intuitive sense because the truth about

the consumer good or other subject of the transaction is not created by contract, it is independent

of contract, and a party with the truth should not be able to lie about it to another party who is at

the mercy of the first party. The best statement of the underlying morality of this rule can be

found in Daugert v. Holland Furnace Co., 107 Ga. App. 566, 569–570(1963)

This court should find that the affirmative statements attributed to defendants by

plaintiffs created material facts for jury determination.

B. There Is No Absolute Tender Rule for Fraud Claims

Defendant claims that Plaintiffs are not entitled to rescind because they failed to tender

the vehicle or continued to use the vehicle. “One seeking to rescind a contract for fraud must

restore or tender back the benefits received under the contract, or show a sufficient reason for not

doing so; he need not tender back what he is entitled to keep, and need not offer to restore

where the defrauding party has made restoration impossible.” Crews v. Cisco Bros. Ford-

Delivery Serv., Inc., 189 Ga. App. 95, 96–97 (1988); Guernsey Petroleum Corp. v. Data General

Corp., 183 Ga. App. 790, 791–792 (1987); Joseph Charles Parrish, Inc. v. Hill, 173 Ga. App.

97, 99–100 (1984); Nixon v. Sandy Springs Fitness Center, Inc., 167 Ga. App. 272, 273 (1983);

Roth v. Bill Heard Chevrolet, Inc., 166 Ga. App. 583, 583–584 (1983); Kot v. Richard P. Rita

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Mercury, 201 Ga. App. 589 at 590 (1991). “The rule requiring return or tender of the goods can

be applied only where it is equitable; it was not meant to give the defrauding party an

advantage at the expense of the defrauded party.” Id. at 591; Neal Pope, Inc. v. Garlington, 245

Ga. App. 49 (2000). The rescinding party must derive no unconscionable advantage from the

rescission. Wender & Roberta, Inc. v. Winder, 238 Ga. App. 355, 360 (1999). In this case,

Plaintiffs are out the value of their trade in plus a number of payments made on the subject

vehicle. The Benders need transportation and cannot obtain a refund from defendant and Ally.

Plaintiffs asked Ally to cancel the loan and were rebuffed. Of course, initially, plaintiffs simply

sought cancellation and refund on their own. Stymied in this request, the plaintiff required the

services of an attorney. The demand letter sent on behalf of Plaintiffs demands a rescission and

revocation and refund. Defendant has not accepted the rescission or the revocation. Plaintiffs

cannot force the defendant to accept the car back and the only way to force defendant to return

their money is this lawsuit. The use of the vehicle in these circumstances should not be held to

prevent claims of fraud.

C. There is Corporate Knowledge of the Lemon Law Buy Back and Branded Title

History of the Vehicle.

Defendant’s argument that because the salesman did not know about the history of the car

or the branded title, Southtowne is not responsible for his misrepresentations is specious. A

business entity like the defendant acts only through its officers and employees. Eckles v. Atlanta

Tech. Group, Inc., 267 Ga. 801, 803 (1997). It has the composite knowledge of those

individuals. Gem City Motors, Inc. v. Minton, 109 Ga. App. 842, 845 (1964). The evidence

Personnel System International, Inc., 134 Ga. App. 438, 438–440 (1975).

-29-

establishes without question that Simmons was informed of the manufacturer buy back history

and the branded title at the auction in Illinois. Simmons signed off on the disclosure.

Southtowne cannot escape responsibility of the salesman’s misrepresentations simply by not

telling the salesman. Martin v. Chatham County Tax, 258 Ga. App. 349, 350 (2002)(A

corporation is bound by knowledge of an officer or agent when the knowledge pertains to

matters within the scope of the officer's or agent's duties.); Graphic Arts, Etc. v. Pritchett, 220

Ga. App. 430, 431 (1995)( "[A corporation] cannot escape liability on the ground that the agent

who actually performed the forbidden act on behalf of the corporation was entirely innocent, in

that such agent lacked knowledge which was possessed by other agents of the corporation, or

which is attributable to it as being a part of its documents and records. A company is chargeable

with the composite knowledge acquired by its officers and agents acting within the scope of their

duties [Cits.]"); Evans Toyota v. Cronic, 233 Ga. App. 318, 320 (1998)(The evidence showed

that Davis himself was not told of this, preventing him from disclosing it to Cronic; the evidence

also showed that Davis was encouraged to use this complete warranty coverage, and did

intentionally use it, as a selling feature. We must conclude that this was intentional

misrepresentation by Evans. Under these circumstances, whether Cronic's reliance upon Davis's

repeated statements about "full" warranty coverage was reasonable was a question for the jury.)

Here, there is evidence from which a jury may conclude that Southtowne’s manager

Simmons knew the cars history (Simmons Depo page 12, page 15; ISG Docs 00002; Manheim

Docs 0001) and that Southtowne’s salesman misrepresented that history to the plaintiffs.

IV. JURY QUESTIONS REMAIN ON PLAINTIFF’S REVOCATION OF

ACCEPTANCE CLAIM

A buyer who has accepted goods may revoke his acceptance of goods where those goods

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have a nonconformity which substantially impair their value to him, and he either (a ) accepted

the goods on the reasonable assumption that their nonconformity would be cured and it has not

been cured, or he (b) accepted the goods without discovery of the nonconformity if his

acceptance was reasonably induced either by the difficulty of discovery before acceptance or by

the seller's assurance of conformity or repair.

In order to be effective, revocation of acceptance must occur within a reasonable time

after the buyer discovers or should have discovered the grounds for revocation and before any

substantia change in condition of the goods which is not caused by their own defects.

Revocation is not effective until the buyer notifies the seller of it.

O.C.G.A. § 11-2-608.

An as is clause does not prevent a claim for revocation of acceptance. Advanced

Computer Sales v. Sizemore, 186 Ga. App. 10 (1988); Esquire Mobile Homes v. Arrendale, 182

Ga. App. 528, 529 (356 S.E.2d 250)(as is clause does not prevent revocation of acceptance).

Here, the plaintiff has established:

1) Non-conformities in the Vehicle substantially impairs its value to Plaintiffs, who did

not know of these non-conformities prior to purchase and were misled by Southtowne’s

salesman assurances and by failure to disclose as required by law;

2) Although Plaintiffs revoked their acceptance of the vehicle by written letter on

October 24, 2012, and Defendants have failed and refused to honor Plaintiffs’ revocation of

acceptance;

3) As a result of Defendants’ failure to honor Plaintiffs’ revocation of acceptance,

Plaintiffs sustained the losses and damages set forth above.

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Comment 3 to the Uniform Commercial Code 2-60818

explains that assurances can rest

on the circumstances of the contract and explicit language used at the time of delivery. Such

assurance may induce the buyer to delay discovery. See Reeb v. Daniels Lincoln-Mercury Co.,

193 Ga. App. 817 (1989)(failed promise to repair provided extended time to revoke).

Issues of the reasonableness of time for revocation and use of the car are not susceptible

of summary adjudication. Indeed, the Courts of Georgia have held that "issues such as whether

an effective revocation of acceptance was made . . . are ordinarily matters for determination by

the trior of fact, even where the buyer has continued to use nonconforming goods after an alleged

revocation of acceptance."[fn8] This is so because "[a]voidance of an absolute rule against

continued use is counseled by the overriding requirement of reasonableness which permeates the

[UCC]." Franklin v. Augusta Dodge, 287 Ga. App 818, 821 (2007). Cf. Trailmobile Div. of

Pullman, Inc. v. Jones, 164 SE2d 346 (1968) This is not such a case that would justify summary

adjudication.

In Mauk v. Pioneer Ford Mercury, 308 Ga. App. 864 (2011), the court stated:

Pioneer and SunTrust argue that, regardless of whether

Scott's[sic] attempted revocation was proper, evidence the car had

more than 12, 000 miles on it when tendered and was driven more

than 4,000 miles after the tender constitutes reacceptance as

a matter of law. We agree with the trial court that whether

Mauk's revocation was timely, whether she reaccepted the car,

and whether the alleged defects substantially impaired the

car's value to her were questions of fact for the jury to

decide.

In fact, in Mauk, allowed the case to go to the jury where there was argument that the

18

In order to determine the meaning and purpose behind the enactment of a Georgia

Commercial Code provision that is taken verbatim from the UCC, courts look to the UCC

Official Comments for assistance. Gerber & Gerber, P.C. v. Regions Bank, 266 Ga. App. 8,11

(2), n. 1 (596 SE2d 174) (2004).

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consumer had put 4000 miles on the car after revocation. 203 Ga. App. 858

IV. WARRANTY OF TITLE

Every contract for sale carries a statutory warranty of title by the seller that the title

conveyed is “good” and its transfer rightful, and that the goods will be delivered free from any

security interest or other lien or encumbrance of which the buyer at the time of contracting has

no knowledge. OCGA 11-2-312(1). A warranty will be excluded or modified only by specific

language or by circumstances which give the buyer reason to know that the person selling does

not claim title in himself or that he is purporting to sell only such right or title as he or a third

person may have." OCGA § 11-2-312 (2). Nothing in the documentation advises the Benders

that the title is branded.

This warranty is breached not only when a superior title exists, but also when there is any

colorable challenge to the title, regardless of outcome, and when there is any flaw which

disturbs market value. Jefferson v. Jones, 286 Md. 544, 408 A.2d 1036 (1979) [law

enforcement seizure of motorcycle for VIN discrepancy was colorable claim and thus seller

breached UCC 2-312 warranty of title, even though police returned motorcycle and buyer had a

valid title, the Court saying: “An undisputed aspect of possessing good title is that a purchaser be

‘[enabled] . . . to hold the [property] in peace and, if he wishes to sell it, to be reasonably certain

that no flaw will appear to disturb its market value.’” (Emphasis added)]; American Container

Corp. v. Hanley Trucking Corp., 111 N.J.Super. 322, 268 A.2d 313 (1970) (law enforcement

seizure of semi-trailer as stolen sufficient to cast substantial shadow thus violating warranty of

good title under UCC 2-312); Sumner v. Fel-Air, Inc., 680 P.2d 1109 (Alas. 1984) (warranty of

title breached by seller who was only lessor with option to purchase at time of sales contract,

even though seller eventually obtained title documents placed in escrow prior to filing of suit but

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after revocation of acceptance; “substantial shadow” enough); Frank Arnold Contractors, Inc. v.

Vilsmeier Auction Co., 806 F.2d 462 (3rd

Cir., 1986) (mere cloud on title, regardless of outcome,

is a breach of UCC 2-312 warranty of title).

Another illustrative case is Colton v. Decker, 540 N.W.2d 172 (S.D. 1995), which like

many auto warranty of title cases involved a VIN discrepancy. Colton purchased a truck from

Decker in South Dakota. While Colton was driving through Wyoming, the truck was seized by

law enforcement officials for having multiple VINs on various parts of the truck. After a 9-

month investigation, Wyoming officials determined Colton was indeed the true owner and

Colton retrieved the truck. Colton had hired a Wyoming attorney who obtained a Wyoming

court order that a Wyoming title be issued clarifying the conflicting VINs. Colton was unable to

obtain the new title in Wyoming because his bank refused to surrender the South Dakota title---

its collateral---to Wyoming authorities. When Colton sued his seller, Decker, for breach of

warranty of title because the truck had different VINs engraved on various parts, the Court held

warranty of title under UCC 2-312 had been breached. The Court said:

“Good title” typically means “the title which the seller gives to the

buyer is ‘free from reasonable doubt, that is, not only a valid title

in fact, but [also] one that can again be sold to a reasonable

purchaser. . .”. (Emphasis added). (Citations omitted). * * *

* * *

[A] purchaser can recover for a breach of warranty of title by

merely showing the existence of a cloud on the title. (Citation

omitted). Once breach of good title is established, good faith is not

a defense, nor is a lack of knowledge of the defect. (Citations

omitted).

Colton, supra., 540 N.W.2d at 176.

Therefore, case law firmly establishes that if there is some problem with the title-----even

one which disturbs the market value of the goods-----and regardless of the outcome of the

problem, warranty of title may be held to have been breached.

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A. Interplay with the National Motor Vehicle Information and Cost Saving Act

42 USC 32701-32711.

The odometer law also regulates the transfer of titles and requires that certain information

be disclosed on the titles. Federal law requires that the transferee of a used vehicle sign the

certificate of title being transferred. 49 C.F.R. § 580.5(h). Congress also mandated standardized

disclosure requirements and record-keeping procedures formulated to provide consumers with

transparent information about a vehicle’s background, to ease investigation and prosecution of

violators, and to prevent would-be violators from taking advantage of titling and registration

loopholes to perpetrate odometer fraud. See, e.g., 49 U.S.C. § 32705 (2000) (setting forth

disclosure requirements for transferring ownership of a motor vehicle); 49 C.F.R. § 580.1 et seq.

(2004) (specifying, among other things, the content of odometer information disclosures and

record keeping procedures, and requiring titles and power of attorney forms to be printed using a

secure printing process); see also 49 U.S.C. § 32706 (2000) (conferring investigatory authority

and the power to require car dealers or distributors to keep records of motor vehicle sales

available for inspection by the Secretary of Transportation). There are important practical

implications to this requirement. The identity of former owners, of critical import to the

consumer, is also critical to law enforcement, who rely on the chain of title to ascertain the true

ownership and mileage of a vehicle. See Odometer Disclosure Requirements, 53 Fed. Reg. at

29468-69 (“Congress noted that ‘[o]ne of the major barriers to decreasing odometer fraud is the

lack of evidence or “paper trail” showing incidence of rollbacks[.]’ … Under [the title disclosure

requirements], the integrity of the paper trail has been maintained since the disclosure will be on

the title and consumers will be able to see the disclosures and examine the titles for alterations,

erasures, or other marks. Furthermore, consumers will learn the names of previous owners that

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appear on the title.”) (quoting H.R. Rep. No. 99-833, at 18 (1986) (committee report for the

Truth in Mileage Act of 1986, Pub. L. No. 99-579, 100 Stat. 3309 (1986), which modified the

original federal odometer laws in the Motor Vehicle Information and Cost Savings Act of 1972,

Pub. L. No. 92-513, §§ 401-13, 86 Stat. 947, 961-63)).

Signing the title gives people like the Benders the opportunity to review the title and see

how it compares with the seller’s representations. Key information includes the name and

numbers of previous owners of the title, mileage information, salvage and other title

brands. In enacting regulations in this area the National Highway Traffic Safety Administration

stated that “the disclosure will be on the title and consumers will be able to see the disclosures

and examine the title for alternations, erasures or other remarks. Furthermore, consumers will

learn the names of previous owners that appear on the title.” National Highway Traffic Safety

Administration supplementary information to final rule, 53 Fed. Reg. 29,464. This signature

requirement was specifically designed to prevent the dealer from transferring the title without the

consumer ever seeing the old title or the new title. Of course, in this instance, Southtowne never

allowed the Benders to see the title, in violation of the Federal Odometer Law This is and act in

furtherance of the perpetration of the fraud for which we complain of in this case. The

importance here is that Manheim shipped the dealer the title on January 13, 2012 via UPS.

Manheim Documents pages 6 and 7. At the time of sale, the title would likely have been present

at the dealer and the title transfer should have occurred on the title. The dealer could not do this

because to do so would disclose the branded title to the Benders. See Affidavit of Robert Eppes,

attached, at paragraphs 23-39.

Michael

Rectangle