We usually have at any given time a number of cases on our firm’s docket in which our clients were sold previously-wrecked or salvaged vehicles after being told that the vehicles had never been wrecked or damaged.  In some cases, our clients were shown copies of Carfax reports.  We commonly see situations in which a vehicle had suffered prior damage not reported by Carfax.  Here is an interesting television news story about previously-wrecked and damaged cars and why you might not always be able to rely on vehicle history reports -

http://www.cbc.ca/marketplace/2009/vehicle_history_reports/main.html

We have handled a number of undisclosed damage / wreck cases recently.  These cases are not confined to any specific areas of Texas, though we tend to see more cases in the Dallas-Fort Worth and Houston areas (perhaps due simply to larger populations).

Generally, car dealers have told our clients that a car or truck had never been wrecked when the vehicles had prior damage and/or repairs.  We see situations in which car dealers purchase cars at auction, and are notified by the auction before purchase that the cars have frame damage or unibody damage.  This information at times appears on Carfax and/or Autocheck reports, and the timelines in those reports can assist in proving a car dealer’s knowledge of prior damage.  Under Texas law, a consumer might be able to recover diminished market value to the vehicle, cost of repairs, mental anguish, punitive damages, and attorneys’ fees.

Beware whenever a car dealer represents that a car or truck has never been wrecked.  Secure Carfax and Autocheck reports, and hire a mechanic or inspector to inspect the vehicle.

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We have seen a number of cases in which a dealer tells a consumer that a previously-wrecked vehicle has not been wrecked.  We have also seen situations in which a dealer tells a consumer that a car had experienced just minor damage from a prior wreck, when in fact the car had been “totalled” and had a salvage title.  However, there appear to be significantly fewer situations in which a dealer surreptitiously sells a “chopped car.”

A “chopped car” is a car that has been constructed by taking two badly damaged cars and joining them together.  This allows the dealer, or the “chop shop,” to take otherwise potentially near valueless vehicles and make a decent profit.  Stay away from chopped cars.  A chopped car is a “2-for-1″ deal that you can afford to pass up.

Photo Source: Wikipedia

What is “washing the title”  of a car or truck?  It is not a way to make a vehicle more saleable by giving it some type of special designation.  Instead, it is a way to hide salvage or other bad “brands” on a title.

When a car is wrecked so badly that it is declared a total loss by an insurance company, the title to the car might be designated, or “branded,” as salvage.  Very few consumers want to purchase a salvage vehicle.  Therefore, a dealer might attempt to “wash” the title to remove the brand.  The dealer might get the vehicle titled in a different state, hoping that the brand will not be on the new title.  The dealer might then use the non-branded out-of state title to obtain a new title in the dealer’s state.  The new title, if based on the out-of state title, might not have the salvage brand.

Be careful when purchasing a vehicle with an out-of-state title, or which appears to have been shipped to several states within a short period of time.  You might become the victim of a title-washing scam.

You purchase a car or truck from a car dealer.  The dealer tells you that that vehicle is in great shape.  It has never been wrecked.  You, like most people, are excited.  You can’t wait to show the car or truck to friends and family.  Your vehicle, whether new or new to you, looks great.  Then, things change.

You might take your vehicle to a mechanic for repairs, and he asks you about the prior wreck.  Or, your uncle Fred, a lifelong car buff, notes a discoloration in the paint on a portion of the car and asks when the car was wrecked.  Or, you begin to notice that a door on the truck does not close correctly.  You begin to believe that you have been defrauded.

Aside from the anger, shame, and mental anguish that arises, what are your economic damages?  You might need to pay to have certain things repaired as a result of the prior wreck.   However, even if the damage from the prior wreck has been fixed, your vehicle’s value might be less as a result of the wreck and repair.  This economic loss is known as “diminished value.”

You can probably perform some research on your own to get an idea as to the diminished value.  However, it is preferable to hire an expert.  Here are links to a few companies who purport be be experts on diminished value.  I don’t vouch for any of them.

http://www.autoloss.com/

http://www.collisionclaims.com/index.asp

http://www.mycarlostvalue.com/

An Oklahoma jury recently returned a verdict in favor of a consumer in a lawsuit against Jack Cooper Imports, LLC.  Oklahoma lawyers Luke Wallace and David Humphreys represented the consumer.  Our firm was not involved in the case.  It is our understanding that the consumer alleged the the car dealer sold the consumer a previously-wrecked car without disclosing the prior wreck.

The jury provided the following amounts for damages:

• $5,300.00 in diminished value to the car
• $275,000.00 in damages as a result of fraud
• $52,500.00 in punitive damages

The jury also found, by clear and convincing evidence, that the car dealer acted intentionally and with malice towards others.  Portions of the jury’s verdict forms are here (the jurors’ names have been removed) -

Verdict Forms

Here is a link to the docket sheet for the case -

http://www.oscn.net/applications/ocisweb/GetCaseInformation.asp?submitted=true&viewtype=caseGeneral&casemasterID=2209810&db=Oklahoma

There are a lot of rebuilt salvage vehicles on the road, and many people are unaware when they purchase a rebuilt wreck  Here is a good ABC News story on rebuilt salvage vehicles. Twentyfive people were shown five cars, one of which was a rebuilt salvage vehicle.  Only five of the twenty-five were able to spot the rebuilt wreck.

httpv://abcnews.go.com/video/playerIndex?id=8666173

We are seeing a signification number of cases in which dealers represent to consumers that a car or truck was not previously wrecked.  The consumer then buys the vehicle based on the representation.  Typically, mechanical problems occur, and the consumer takes the car in for repairs.  Only then does the consumer learn of the prior wreck.

Sometimes, dealers are unaware of the prior damage to the vehicle.  However, several things might indicate that, even if the dealer denies knowledge, it might have known of the prior wreck -

Carfax or Autocheck Reports – Many dealers run reports from Carfax (www.carfax.com) and/or Autocheck (www.autocheck.com) to determine whether either of those databases lists any prior wreck of or damage to a vehicle they intend to sell.  An honest dealer would pass on the reports if they indicate prior damage.  Some dealers even advertise the availability of Carfax reports.  A consumer attorney can usually subpoena records to determine whether a car dealer secured such a report and failed to pass it on the the consumer.

Certified Preowned Vehicles – Consumers feel good about buying what car dealers call “certified preowned vehicles,” because consumers believe that the vehicles have been thoroughly inspected by one or more mechanics.  If the inspections actually occurred, the inspecting mechanics were competent, and the car dealer passes on to a consumer all learned information, then the inspection process should be a consumer benefit.  However, if there was serious damage to the certified preowned vehicle, and such damage is not disclosed to the consumer, it is likely that the dealer knew about the damage (as a result of the inspection process) and did not disclose it to the consumer.

Superior Dealer Expertise – A car dealer should know, much better than the vast majority of consumers, how to look at a vehicle and determine whether it has been wrecked.  A car dealer can usually do so without the extensive inspection underlying a certified preowned vehicle.  Therefore, if prior damage and/or shoddy repairs would be apparent to a typical car dealer, such could indicate that a car dealer knew of the damage or repairs prior to sale.

Prior Auction Sale – It amazes me how many cases we review which involve a car dealer buying a damaged car at auction, repairing damage to the car, and then selling the car to a consumer without disclosing the repairs.  Is is usually a fairly easy task to obtain documents from the auction, and repair orders from the dealer’s body shop, and thereby show the dealer knew about the damage and/or repairs.

Before you buy a car, have it inspected by a competent person.  This will hopefully help you avoid finding out later information that would have caused you to pass on the car.

A car dealer can make a lot of money selling a car that has been severely damaged and then rebuilt.  People are familiar with the term “totalled” when referring to a car or truck that has been damaged significantly as a result of a wreck.  People generally refer to a vehicle as being totalled when the cost to repair the damage to the wrecked vehicle is close to, equals, or exceeds the pre-wreck market value of the vehicle.  The title to the vehicle might then be noted as “salvage” or “junk” depending on state law and the condition of the vehicle.  A “rebuilt” vehicle is generally a “totalled” or “salvage” vehicle that has been rebuilt for sale or use.

If a vehicle is rebuilt or has a “branded” title (indicating that it is salvage, junk, or something similar), its value is likely significantly less than it would otherwise be.  Also, the vehicle might not be safe to operate.

It is surprising how often we hear of a case in which someone makes all payments on their car or truck loan, only to receive a title indicating that the vehicle is salvage.  Ask to see the title to any car or truck that you intend to buy.  While there are still ways for dishonest people to “wash” the title to avoid disclosure of the condition of the vehicle, it might make them think twice about defrauding you if you ask to see the title.