An Independence woman recently won a $1,198,512 court judgment, with jurors finding that a finance company had misled her into making car payments she wasn’t obligated legally to pay.
The case, her lawyers said, pointed to an abusive lending practice that cuts particularly deep during tough economic times.
Lawyer Bernard Brown, who represented the woman, said the Missouri Merchandising Practices Act protects consumers who are unable to obtain car titles when their dealers go out of business. The law views such sales as “fraudulent,” and purchasers are not required to keep making payments if they cannot obtain the titles, Brown said.
“Consumers don’t know that they don’t have to pay, and in fact are entitled to all their payments back and their credit cleaned up,” Brown said.
How many consumers get stuck with such cars after dealers go out of business is difficult to say, acknowledged Brown, whose law practice specializes in automotive issues. But Missouri Department of Revenue figures show a 9 percent decline in the number of car dealer licenses issued in Jackson County between 2006 and 2010.
The problems for Brown’s client, Carrie Peel, began in August 2008 after she purchased a 2005 Ford Taurus for $12,450 the previous month, paying $3,500 down and financing the rest. Her 30-day temporary license tag was expiring and she went to the Department of Revenue to license the car. Her dealer paperwork didn’t include the title, which she needed for the license. But she got a shock when she returned to the dealer.
“When I went back up there, they were closed for business,” Peel said recently. “I’m looking in the window, and they’ve closed.”
The dealership had, however, sold her installment contract to Credit Acceptance Corp., a Michigan lender that is one of its industry’s leaders.
In her suit, Peel contended that when she called Credit Acceptance officials to tell them that she never received the title, she was told that it was “not our problem.”
“I was told I had to pay on the car whether I had a title or not,” Peel said. If she didn’t, “they said it would reflect on my credit report,” she said.
The company did not return a call seeking comment.
Unwilling to take the credit hit if she defaulted and the finance company repossessed, Peel said she kept paying on an untitled car that quickly became more and more of a burden. She and her husband kept the expired temporary tag taped in the window and occasionally attached a license plate from another vehicle to avoid getting stopped.
But Peel was trapped in the vehicle, she said. Without a title, she couldn’t sell the car. She didn’t have the credit to buy another vehicle. And she was stopped by police officers for driving an unlicensed vehicle, an experience she found “embarrassing and humiliating.”
The couple kept the car insured, though they knew that trying to collect an accident claim on an unlicensed car probably would be difficult.
As the months progressed, Peel paid more than $7,200 to the finance company
State officials suggested that she try a lawsuit to get the title, but hiring a lawyer would cost at least $500 upfront, money that Peel said she didn’t have.
In January 2010, Peel lost her retail job and qualified for Legal Aid services. A lawyer there spotted the consumer law that should have protected her and filed suit.
Brown, who later joined the suit with colleague Dale Irwin, said they offered to settle the case for as little as $30,000, but the finance company pushed for a trial.
After a week in court, jurors voted Peel $11,007.81 in actual damages and more than $1.18 million in a punitive award.
Though the punitive award is handsome, it is likely to be trimmed to conform to a state cap of $500,000 for such damages, Brown said. And half of that will go into a state fund for tort victims.
Still, Peel said she felt vindicated by the jury’s decision and plans to speak out further on other consumer protection issues.
“I hate bullies,” Peel said. “They’re my pet peeve.”