Does a dealership have a special duty to the consumer with a disability? That question arose in a case where I served as a consulting expert for the dealer (a trial actually commenced, but a mistrial was quickly declared over an issue unrelated to me, and the case was not retried). The consumer was a 38-year-old African-American who was totally deaf from birth, could verbalize only grunts, who had not gone beyond grade school, and whose ability to read and write was marginal. However, this individual had, prior to the transactions complained of, bought four vehicles, one from the defendant dealership, and had always made timely monthly payments.
In 1993, he was driving the 1991 pickup truck he'd purchased from the defendant, on which he still owed almost $7,000; it had over 50,000 miles and a stick shift. His girlfriend (whom he later married) was pregnant and couldn't drive a stick shift. Based on ads she had seen, she wanted a sport-utility vehicle with an automatic, so the two of them went to the dealership from which he had bought the pickup. He still had the business card of the salesman who had sold it to him, and she called and arranged to see him.
Since the girlfriend had made the telephone call, the salesman assumed she would interpret for the deaf man, which she did. They were allowed to take home a vehicle to try it out, following which they decided to buy it the next day. The dealership not only explained all the paperwork to the buyer, but also explained it to the girlfriend over the phone, even though she was not to be a co-signer. She agreed to the deal (she later testified in a deposition that it was "stupid" of her to have done so).
To be sure the buyer -- who had returned to the dealership alone -- understood everything, the salesman summarized the deal in block letters on a sheet of dealership stationery, showing the cash down, indicating that the deal included life and disability insurance, and showing the total monthly payment. The customer signed twice, indicating his understanding and acceptance of the terms. He had in his wallet a card he could have used to call for a deaf interpreter. Later, when he received the payment book, he claimed not to have understood that he ratified the deal.
A major bank readily accepted the deal based on the buyer's credit record and indicated income. He had made timely payments on the pickup truck and on previous vehicles; the lending officer testified that his credit was so good that the bank did not need to verify employment. Later, the customer claimed the dealership should have done this!
The couple had apparently disagreed about what vehicle to buy and how much per month they could afford. They then tried to return the vehicle; three months later, the dealership traded them out of it into a van at $100 a month less.
After keeping the second vehicle a year and making timely payments, they turned it back to the dealership (which lost nearly $10,000 in disposing of it), hired a lawyer, and sued. They claimed fraud, because the dealership was in a "vastly superior bargaining position;" "predatory selling" (whatever that was); deceptive and unfair trade practices; and violation of the state sales finance and retail installment acts. The plaintiff engaged two experts, whose total practices consist of testifying for allegedly cheated auto buyers. My role as a dealer expert was to examine, and testify if needed, about the dealer's sales and customer relations practices.
A principal contention of the plaintiff's experts was that the dealership should have sold the customer what he could afford. I disagreed, feeling that the customer -- and the bank -- should decide what he can or cannot afford. The customer eventually contacted an agency for the deaf and hearing-impaired when the lawsuit was filed, but chose not to use their services in his two transactions.
The plaintiff's claims of damages were bizarre, to say the least. I analyzed these claimed damages and concluded that they did not accurately represent any actual damages the plaintiff might have suffered (if in fact he suffered any). The calculations included double counting and compensation not related to actual damages.
All the vehicles involved -- the pickup truck, the SUV, and the van, had negative equity when traded in or returned. The dealership lost money on the van transaction by paying off the bank loan, yet the dealership also took steps to protect the plaintiff's credit rating.
I felt that the plaintiff's maximum damages should be based on the following: initial down payment, plus the value of monthly payments actually made, less the portion of the payments related to insurance, less a reasonable value for use of the vehicles, less the initial negative equity on the pickup truck, less the residual value of the van.
The plaintiff's damages claims conveniently omitted any credit for use of the vehicles: the plaintiff drove the SUV almost 8,000 miles in three months, and the van almost 15,000 in a year. The damages estimate also didn't take account of the beat-up condition of the pickup traded in -- it was two years old, yet had almost 55,000 miles on it, and had been used in a construction trade. The figures also contained a computation error on accrued interest.
What can dealers and their attorneys learn from this case?
Work with the sales staff to identify the types of situations that could give rise to lawsuits or arbitration claims. I have seen claims that a buyer had "lack of sophistication" or "lack of worldly experience." I have also seen a claim that a buyer was too young to have understood the deal. Be especially careful in handling such transactions.
Be sure the written record is clear on factors such as condition of trade-in, negative equity, overallowance, and the like. I sometimes find it difficult to figure out just what happened when reviewing such documents after the fact -- handwritten scribbling is hard to decipher when reading a fourth-generation photocopy.
Allowance (the amount the customer is credited for a trade-in) should be distinguished from appraisal, the actual cash value. They are often confused.
Beware of asking buyers to sign blank forms, such as a credit application or a manu facturer's rebate form. Even if it is properly filled in later, the signing of a blank form could be negatively construed.
While there is nothing wrong with "spot delivery," in my opinion, the buyer should be informed that it takes time, up to an hour or more, to complete all the paperwork for a sale or lease transaction. Otherwise a claim of having been "rushed" through signing may later arise.