Cuesta v. Classic Car 358 N.J.Super 512 (App.Div 2003)
In Cuesta v. Classic Wheels, Inc., the Trial Court dismissed the plaintiff’s consumer fraud claims, alleging that the plaintiff had failed to establish an ascertainable loss. In Cuesta, the plaintiff made the allegations that the owner of the vehicle did not receive what he bargained for when the seller provided an odometer disclosure statement which was inaccurate. The seller of the automobile claimed that he had no knowledge of the inappropriate/incorrect odometer statement on the vehicle. This was a lease and not a purchase.
The Appellate Division held that the plaintiff sufficiently established the case for a revocation of acceptance. The defendant’s argument that the plaintiff’s continued use of the vehicle barred any recovery was not accepted by the Appellate Division. The Appellate Division established a five-part analysis to determine whether or not the plaintiff would be entitled to a return of his money, based on a decision by the jury.
The following are the questions that the Appellate Division wanted to ask:
- Upon Notice of Revocation, what instructions did the seller give the buyer concerning the goods?
- Did the buyer’s business needs or personal circumstances compel continued use?
- During the period of use by the buyer, did the seller assure the buyer that the defects would be cured and that the provision would be made to compensate the buyer for inconvenience resulting from the defects?
- Did the seller act in good faith?
- Was the seller unduly prejudiced by the buyer’s continued use?
In Cuesta, the Appellate Division held that the plaintiff sufficiently supported a case for revocation. The Appellate Division also affirmed the Trial Court’s decision that the seller of the automobile committed an act of consumer fraud and should have been awarded attorney’s fees. The important aspect of this case is that if you have collateral which has been detrimentally affected as a result of a claimed defect, you are entitled to a revocation of acceptance or return of monies paid on the contract.
This case is a very powerful case to any consumer who has been aggrieved. This case established that an odometer rollback constitutes consumer fraud even to an innocent seller of goods. This case also demonstrated that one need only produce an expert witness to demonstrate the nature and extent of the ascertainable loss with regard to an odometer rollback case. In essence, if an odometer has been rolled back or the odometer is improper, it is basically strict liability meaning the dealership is liable and less they can demonstrate that the consumer has not sustained an ascertainable loss associated with the improper, odometer rollback or improper odometer reading.
The same basic premise is a consumer must demonstrate an ascertainable loss. There are many defenses but they only tend to increase the attorney fees associated with these claims and it turns out to be bad news when these claims are fought by the dealer. So dealer beware if there is a car with a wrong odometer reading do not sell it.
This case about Consumer Fraud is a significant case in New Jersey consumer fraud laws. It is important because it is cited for the fact that affirmative, false, misrepresentations of fact provide a cause of action or claim against those who have relied upon those false, misrepresentations of fact. The New Jersey Supreme Court and the Consumer Fraud Act are clear. There is no intent required. A false statement of fact without intent is actionable. You can sue it somebody makes a false statement even if they honestly believed it to be true. New Jersey takes the position that a buyer of goods can rely upon the representations of the seller of goods. It is the duty and the obligation of the seller of the goods to assure, make sure or investigate representations made with the sale of goods. Representations can be in writing, representations can be verbally representations or anything to lead the customer to believe certain things about the vehicle, goods or products and/or services.
The prime ingredient of Consumer Fraud is the capacity to mislead. Not only must the statements be truthful but even if they are truthful, they cannot be stated related in a way that is potentially misleading. The literal truth is not always a complete defense. The underlying concept is a consumer is allowed to believe somebody was selling goods, can trust somebody was selling goods and does not have to worry about being taken advantage of or ripped off by the person selling the goods.
There are other provisions of the Consumer Fraud Act which are not addressed in this case. Knowing omissions or improper and provide a cause of action. False, knowing, affirmative misrepresentations of fact are also actionable. Regulation violations are also actionable. However, the basic underlying purpose of this remedial statute is to protect consumers and encourage businesses to comply with the law. The law under the Consumer Fraud Act is that a seller of goods, including a car salesman, car dealer or one who is selling expensive goods such as cars was make sure that their statements are truthful.
As a practical matter this means that a seller of goods and needs to make sure, inspect and apply the expertise to the inspection of goods before the goods are sold. A consumer lawyer must know the intricacies, the ins and outs and the various relations of the Consumer Fraud Act. This specific case, and this underlying concept addressed by the Consumer Fraud Act and the New Jersey Supreme Court a very basic to any consumer attorney that litigates consumer fraud cases. Affirmed, misrepresentations of fact or actionable, provide a cause of action and allow damages to be tripled in attorney’s fees to be awarded. You might see the term treble which is the same as treble damages.
So back to the case, in this case the seller of the goods affirmatively represented that the vehicle had certain amount of miles. This was on the odometer/odometer disclosure statement. It is the obligation of the seller to make sure that the odometer reading in the odometer disclosure statement are truthful and accurate. If the odometer reading and the odometer disclosure statement are not truthful or accurate is the problem of the seller, not the purchaser. The seller is in a better position to make sure that the odometer is correct, and the odometer disclosure statement is truthfully completed. If the mileage is unknown and the odometer disclosure statement cannot be completed the vehicle must be sold as Total Mileage Unknown, a term of art in the industry which evaporates approximately half of the market value of the vehicle. It is understood in the automotive industry that vehicle sold with Total Mileage Unknown is a significant issue in these vehicles are valued at approximately 50% of the market value of the normal vehicle of the type and kind.
Thus, the importance of accurate mileage disclosures is extraordinarily important. Their claims under both the state law and federal law pertaining to odometer rollback. Federal law for odometer rollback provides minimum damages plus attorney’s fees and costs. To knowingly rollback and odometer is a criminal offense. However, the point is that of Cuesta v. Classic that it is the obligation of the seller to make sure that the odometer reading is proper and correct.
One might ask the following: Why is it fair to hold the seller would be responsible if there is something wrong with the goods? This is an excellent question but the answer implies a policy decision by the Legislature and those who drafted the Consumer Fraud Act that is for his risk allocation, meaning who should be responsible, the Legislature in the implemented The Consumer Fraud Act placed the risk on the seller of the goods rather than on the purchaser of goods. The following can be reasoned that a seller of goods should be held responsible under the law of the goods they are not selling or as represented.
1. The sellers in the business of buying and selling the goods and they should know
2. The seller is an expert in selling the goods
3. The seller has the ability to hire somebody if they are ensured to confirm the nature and quality of the product
4. The seller has the ability to obtain insurance
5. The seller has access to resources that a buyer does not have access to
6. The seller of goods can prepare paperwork for full and complete disclosure.
7. The seller is a better position and every way to disperse the risk and make sure that the consumer gets what they are paying for, with full disclosure
This underlying concept in the Consumer Fraud Act is apparent in the interpretation by the courts, reading the applicable case law and understanding risk allocation and other relevant factors. A business is in a better position to allocate or disclose risk rather than consumer. The business it has access to significant resources to which a consumer does not have. The consumer fraud act purpose is to make transactions safer or affordable and cheaper, as a consumer who purchases a vehicle which is not as represented and cannot operate has significant effects on that individual persons/family which is a wider fact on the economy. There are significant policy decisions at stake is the seeing the forest form the trees is significant and the liberal policy has to be viewed in conjunction with each and every case. The CFA is remedial legislation remedial he construed for the benefit of the consumer.