OKLAHOMA CITY – A well-worn axiom cautions, “caveat emptor” – buyer beware, because without a warranty you assume the risk. That warning is commonly applied to the purchase of used (a/k/a “pre-owned”) vehicles.
Nonetheless, there are exceptions to every rule.
As an illustration, an Oklahoma man who bought an apparent ‘lemon’ prevailed against a dealership in a recent court case.
Darwin Ortiz of Moore successfully sued Car Gallery in Oklahoma County District Court, Small Claims Division, alleging the Oklahoma City dealership sold him a “defective” car. Car Gallery appealed to the Oklahoma Court of Civil Appeals but lost in a 2-1 decision announced earlier this month.
Ortiz testified that in October 2020 he was shopping for a car for his brother, and they settled on a 2012 Chrysler 300 at Car Gallery. “Although they wanted to test drive the vehicle,” they couldn’t “because the vehicle had a flat tire,” the court record reflects.
Two days later they returned to the dealership and took a test drive in the vehicle, which had 93,360 miles on the odometer, “but only for a few miles.” Furthermore, Ortiz testified that he and his brother “were unable to have anyone examine the car because Car Gallery did not give them sufficient time,” and Car Gallery did not dispute that testimony.
Ortiz bought the car for $9,000 on Oct. 14, 2020. The Retail Purchase Agreement provided, in part, “The above described motor vehicle is being sold ‘as is’ and ‘with all faults’, and the selling dealer expressly disclaims all warranties … including any implied warranties of merchantability or fitness for a particular purpose…”
Afterward, Ortiz drove the vehicle to his apartment. The next morning – less than 20 hours after the purchase – Ortiz’s brother tried to start the car. Smoke billowed from beneath the hood and the engine caught fire.
The Moore Fire Department was summoned to extinguish the flames, but the vehicle was a total loss.
During a small-claims court hearing in March 2021, Ortiz testified that while he was looking at the vehicle the Car Gallery salesman told him the car “was well-inspected, that it had no issues, and it was good to go.”
A Car Gallery employee testified that the vehicle was “fine” when Ortiz left the dealership, and that Ortiz bought the car “as is / no warranty.”
The court hearing was suspended while Ortiz had the car inspected at Bob Howard Chrysler Jeep Dodge. The engine bay was checked for possible causes for the engine fire “but the high heat from fire makes it impossible to find the point of ignition. The engine compartment is badly burnt… All the wiring shielding is burnt off and all other items are burned beyond recognition. Was not able to find ignition source.”
When the court case resumed, Car Gallery introduced the retail purchase agreement and the test drive agreement between Ortiz and the dealership. Car Gallery also introduced a report from Gabriel Alexander of U.S. Forensic, who was hired by the dealership’s insurance company to inspect the car and “determine the origin and cause of the fire.”
Alexander opined that the cause of the fire was intentional but acknowledged that he was “unable to determine if an accelerant was used to start this fire.” He wrote that the burn pattern was “directly centered on top of the engine” and that the block was “cracked and split open on the passenger side of the engine.” Alexander also concluded that the engine “was not functional at the time of the fire” and “suffered catastrophic internal engine failure that caused the engine block crack.”
The Moore Fire Department report concluded that no human factors contributed to the fire, that the heat source was undetermined, and that the cause of ignition was “unintentional.”
Trial judge awarded
plaintiff $9K + $269
After weighing the evidence and arguments presented by both parties, Judge Catherine M. Burton ruled for Ortiz and against Car Gallery, awarding $9,000 for the cost of the car and $269 for costs and service fees.
The judge said Alexander’s credentials “did not show he had experience, training, or education in fire analysis,” and the Bob Howard service report concluded “it was impossible to find the point of ignition.” Moreover, Burton continued, “It seems a far stretch for Defendant’s analyst to conclude the fire was intentional when the Fire Department and Bob Howard Service do not report this in their analyses.”
The judge also noted that Ortiz testified that on several occasions the Car Gallery salesman told him “this car ran well and was a good car” – and Car Gallery did not dispute that testimony.
While Car Gallery defended its position by pointing to the “as is” language in the purchase agreement, Judge Burton wrote, “However, when, in less than 24 hours of purchase, a ‘good car that runs well’ caught fire” in Ortiz’s driveway, “there is no conclusion but that” Car Gallery sold Ortiz a car “that was, in fact, dangerous and not good at all.” That changed Car Gallery’s “disclaimer of liability” and “did not refute” what Ortiz said he was told by the car salesman.
Car Gallery focused on the “as is” and “with all faults” language in the retail purchase agreement.
Those phrases are “commonly used by sellers of used automobiles” and are “commonly understood to relieve the seller of any liability on a claim for breach of warranty due to defects in a motor vehicle,” the appellate court noted.
Nevertheless, “an effective disclaimer of warranties does not necessarily prevent recovery of damages caused by the seller’s fraudulent or other deceptive conduct,” the judges wrote.
Car Gallery did not dispute Ortiz’s testimony that employees told him the vehicle “ran well and was a good car,” nor the “characterization of the fitness of the vehicle,” coupled with the fact that the car caught fire while sitting in a driveway less than 24 hours after Ortiz bought it.
Car Gallery’s “misrepresentations about the vehicle’s condition” rendered the warranty disclaimer “ineffective,” Presiding Judge Jane Wiseman and Judge Deborah Barnes ruled.
Judge Gregory C. Blackwell dissented. “It is an unfortunate reality of life that a good car can become a bad car in an instant,” he wrote, adding that he could not detect “clear evidence of fraud” in the court record.