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Summit Auto Sales, Inc. v. Draco, Inc.

United States District Court, N.D. Alabama, Southern Division

September 6, 2017

SUMMIT AUTO SALES, INC., Plaintiff,
v.
DRACO, INC., d/b/a YANKEE FORD SALES, Defendant.

          MEMORANDUM OPINION

          KARON OWEN BOWDRE CHIEF UNITED STATES DISTRICT JUDGE.

         The allegations in this matter arise out of the sale of seven used cars from one used car dealer to another. Plaintiff Summit Auto Sales, the purchaser, claims that Defendant Yankee Ford Sales, the seller, failed to inform Summit prior to the sale that the seven cars had been driven as taxis, making them less valuable and unmarketable in the country in which Summit intended to resell them.

         Summit brings claims of breach of contract, fraud, suppression, fraudulent deceit, and violations of Maine's Used Car Information Act (“UCIA”) and Maine's Unfair Trade Practices Act (“UTPA”). Summit moves for summary judgment only as to Count V of its Complaint, which alleges that Yankee Ford violated the Maine UCIA. (Doc. 37). Yankee Ford moves for summary judgment on all of Plaintiff's claims. (Doc. 39). The court finds that Summit's Motion is due to be GRANTED and that Yankee Ford's Motion is due to be GRANTED IN PART and DENIED IN PART.

         I. STANDARD OF REVIEW

         Summary judgment allows a trial court to decide cases when no genuine issues of material fact are present and the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a). When a district court reviews a motion for summary judgment it must determine two things: (1) whether any genuine issues of material fact exist; and if not, (2) whether the moving party is entitled to judgment as a matter of law. Id.

         In reviewing the evidence submitted, the court must view all evidence and factual inferences drawn from it in the light most favorable to the non-moving party. See Augusta Iron & Steel Works, Inc. v. Emp'rs Ins. of Wausau, 835 F.2d 855, 856 (11th Cir. 1988) (citation omitted). However, the non-moving party “need not be given the benefit of every inference but only of every reasonable inference.” Graham v. State Farm Mut. Ins. Co., 193 F.3d 1274, 1282 (11th Cir. 1999) (citation omitted).

         The filing of cross motions for summary judgment does not affect the applicable Rule 56 standard. See, e.g., United States v. Oakley, 744 F.2d 1553, at 1555-56 (11th Cir. 1984) (quoting Bricklayers Int'l Union, Local 15 v. Stuart Plastering Co., 512 F.2d 1017, 1023 (5th Cir. 1975)).[1]When parties file cross motions for summary judgment, “each side must still establish the lack of genuine issues of material fact and that it is entitled to judgment as a matter of law.” Busby v. JRHBW Realty, Inc., 642 F.Supp.2d 1283, 1288 (N.D. Ala. 2009) (citations omitted). “The fact that both parties simultaneously are arguing that there is no genuine issue of fact . . . does not establish that a trial is unnecessary thereby empowering the court to enter judgment as it sees fit.” Id. at 1289 (quoting 10A Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2720, at 327-28 (3d ed. 1998)).

         II. STATEMENT OF FACTS

         This case focuses on the purchase by Plaintiff Summit Auto Sales, Inc., an Alabama used car wholesaler, of seven used Mercury Marquis vehicles from Defendant Yankee Ford Sales, a Portland, Maine Ford dealership in October 2013.

         Raed Badier, who has worked in the used car wholesaling industry since at least 1991, owns Summit. Summit buys used vehicles and resells them, primarily to four clients in Saudi Arabia, Jordan, and the United Arab Emirates. His experience within the industry involves exporting used vehicles to the Middle East. Summit purchases approximately 150 vehicles during a “good month, ” with its purchases totaling around 1, 800 vehicles a year. (Doc. 37-1 at deposition 94:10-11).

         At all relevant times, Summit enlisted the services of five to twelve independent contractors who purchased vehicles for it. The contractors negotiated deals over the phone and received authority from Mr. Badier to make the final call regarding a vehicle's price. Jay Nyrabeah, one of Summit's contractors, negotiated the 2013 transaction with Yankee Ford that is the subject of this lawsuit. Mr. Nyrabeah testified that Summit instructed him to purchase specific makes, models, and years of vehicles and that Summit did not provide any written protocol for determining the prior use of vehicles he purchased. Those specific makes, models, and years of cars were tailored to include vehicles in high demand in Saudi Arabia, Jordan, and the United Arab Emirates, including Mercury Marquises and vehicles manufactured in 2008 or later.

         A. 2010 Summit-Yankee Ford Transaction

         In 2010, Mr. Nyrabeah negotiated Summit's purchase of five vehicles-four Mercury Marquises and one Ford Crown Victoria-from Yankee Ford for a total cost of $46, 500.00. Mr. Nyrabeah located those five vehicles online at either cars.com or autotrader.com. He then called Yankee Ford and offered to purchase them. Negotiations took place verbally and the first documents Mr. Nyrabeah received from Yankee Ford were the bill of sale and the title letter, which guaranteed that Yankee Ford would provide the cars' titles within ten days of the conclusion of the transaction.

         Mr. Nyrabeah could not recall whether he discussed the five vehicles' prior use or whether those vehicles were former taxis with Yankee Ford during negotiations, but stated that “[t]hey looked fine to me. I didn't think they were taxis.” (Doc. 37-45 at deposition 114:8-9). The transaction concluded smoothly and caused Summit to trust Yankee Ford. Summit successfully resold and delivered those five cars to its client in Saudi Arabia, the same client to whom it would later attempt to sell the seven Mercury Marquises at issue in this suit.

         B. 2013 Summit-Yankee Ford Transaction

         Around October 2013, Mr. Nyrabeah contacted Yankee Ford about purchasing one or more Mercury Marquises. He spoke to Marty Darling, with whom he had dealt during the previous transaction with Yankee Ford. On or about October 23, 2013, the parties reached an agreement for Summit to purchase seven Marquises from Yankee Ford for $69, 800.00 total. As with the previous transaction, the parties negotiated the sale via telephone and a written agreement, in the form of a bill of sale, followed.

         Mr. Nyrabeah noted the sale was rushed: “[t]he reason these specific cars was done in a rush is because once I called on them and spoke to Marty, he told me there are multiple . . . dealerships trying to buy these cars, so there was massive rush to get this deal done.” (Doc. 37-45 at deposition 60:10-16). He stated that Mr. Darling told him, “I'm having a lot of people interested, I'm going to take the highest bidder.” (Id. at deposition 61: 12-14). Mr. Darling confirmed that he told Mr. Nyrabeah (1) that other people were looking at the cars; (2) that he had been receiving phone calls regarding the cars from other shippers; and (3) that he would sell the cars to the highest bidder.

         Mr. Darling testified that he faxed Mr. Nyrabeah the vehicles' titles prior to closing the sale. Both Mr. Badier and Mr. Nyrabeah testified that, though they were unsure when Summit received the titles for this transaction, normally Summit did not receive titles until after its payments cleared. Mr. Badier explained that no dealer releases titles until after a buyer's payment clears. The titles for the vehicles reflected that their previous owner was East Bemis Corporation, d/b/a Elite Taxi. Marty Darling and Robert Esposito of Yankee Ford testified that a title's purpose is to demonstrate ownership, and Mr. Darling admitted that a vehicle's title is not used to prove prior use.

         Mr. Nyrabeah testified that he specifically remembered asking Mr. Darling during negotiations whether the vehicles had any problems and how they had previously been used. Mr. Nyrabeah maintained that in response, Mr. Darling told him that the vehicles had no issues or problems. Mr. Nyrabeah further stated that he could not remember specifically inquiring whether the vehicles had been used as taxis, but believed he asked where the vehicles were from, and that Mr. Darling told him in reply that they had no problems. Mr. Nyrabeah also testified that Yankee Ford did not disclose anything to him that would have revealed the vehicles' prior use as taxis; that it is customary in the trade to disclose prior use; and that the vehicles' prior use as taxis should have been, but was not, reflected in their pricing, as “[t]axis are worth, in my opinion, probably less than fifty percent of the normal price car.” (Doc. 37-45 at deposition 160:23-161:1-2).

         Mr. Darling testified that he did not believe Mr. Nyrabeah specifically asked about the vehicles' prior use as taxis but that he told Mr. Nyrabeah that the cars had been taxis, explaining that the holes in the vehicles' roof were from the taxi lights. According to Mr. Darling, Mr. Nyrabeah did ask about the vehicles' condition, and in response Mr. Darling told him they had previously been cabs. Mr. Darling also stated that Mr. Nyrabeah did not ask whether the vehicles had any problems.

         Mr. Darling testified that, prior to the purchase, he sent photographs of the vehicles to Mr. Nyrabeah via his cell phone and that those photographs showed the holes in the roofs of the vehicles left from the taxi light assemblies, which Mr. Nyrabeah requested he have repaired. However, Mr. Darling also testified that, based on service records and repair orders, Yankee Ford removed some of the vehicles' taxi equipment prior to the negotiations between it and Summit. Those service records and repair orders do not conclusively demonstrate that all the taxi equipment-related repairs for all seven vehicles were made prior to Yankee Ford's negotiations with Summit. Mr. Darling testified that, prior to the sale's completion, he sent photographs to Summit showing that requested repair work-both taxi equipment-related repairs and separate body work-had been completed.

         Mr. Nyrabeah testified that he requested detailed photos prior to the sale but that he did not receive any pictures until after the sale was finalized. Two weeks after the sale, Yankee Ford provided pictures of the vehicles to Summit via email. The pictures do not indicate the vehicles' prior use as taxis.

         Mr. Nyrabeah ran CARFAX reports on at least six of the seven vehicles, pulling three on October 21, 2013, before the sale was finalized, and three on October 24, 2013, after the sale was finalized. CARFAX reports usually include vehicles' prior use. Mr. Nyrabeah testified that he relies upon CARFAX reports to confirm dealers' statements about vehicles and, in this case, “to check if there was any problems with the cars, if there was anything that he didn't tell me.” (Doc. 37-45 at deposition 130:14-16). All of the cars for which Mr. Nyrabeah pulled CARFAX reports on October 21, 2013 had a prior use designation of “Commercial” in their reports. On some reports, CARFAX specifically designates a prior use of “Taxi.” None of the six CARFAX reports included prior use designation as a taxi.

         Summit paid Yankee Ford for the vehicles via seven separate checks dated October 29, 2013. Yankee Ford sent Summit the vehicles' titles via mail after the sale was completed. Summit resold the seven vehicles to its client in Saudi Arabia for a total of $109, 000.00 on October 30, 2013. Summit arranged for the vehicles to be transported from the Yankee Ford lot to a shipyard in Delaware to be exported to Saudi Arabia. The cars cleared U.S. Customs around November 14, 2013. The vehicles were held at Saudi customs and were denied entry because they were taxis. Summit's Saudi Arabian client called Mr. Badier and “cussed [him] out first, ” then sent a letter to Summit, dated December 10, 2013, explaining that the vehicles could not enter the country because of their designation as taxis. (Doc. 37-1 at deposition 35:9-10). Summit representatives initially believed the designation was a mistake.

         Summit provided written notice of the issues with the vehicles to Yankee Ford via letter dated December 19, 2014. Yankee Ford received the letter on December 22, 2014. The subject line of that letter reads, “Violation of Maine's Used Car Information Act” and includes the VIN numbers for the seven vehicles. The letter claims that Yankee Ford violated Maine statutory law by failing to disclose the prior use of the vehicles and requests that Yankee Ford “correct the records, ” with its failure to do so subjecting Yankee Ford to certain damages, including the price of the vehicles, shipping costs, and profit loss. (Doc. 41-3 at 1).

         Mr. Badier testified that before Summit sent that letter, Mr. Nyrabeah called Yankee Ford “plenty” of times to discuss the vehicles' prior usage issues and that he, Mr. Badier, left messages that Yankee Ford's manager did not return. (Doc. 37-1 at deposition 91:13). Mr. Nyrabeah also testified that he called Yankee Ford multiple times to attempt to have the taxi designation corrected. Mr. Darling confirmed that he received a call from Summit “substantially after the fact” about changing the vehicles' titles, but did not recollect how many calls he had received. (Doc. 37-12 at deposition 35:15).

         On June 7, 2015, Summit sold the seven Mercury Marquis vehicles to a purchaser in Bahrain at a discounted value based on their prior use as taxis; the total price received for the vehicles was $47, 978.00.

         C. Identifying and Valuing Former Taxis

         Stephen Proto, Summit's appraisal expert, testified that a commercial designation, while not conclusive as to taxi usage, could possibly indicate that the vehicle was driven as a taxi. He also testified that, as a sophisticated purchaser, he would have inspected the vehicles personally before purchasing them, given their commercial designation and 100, 000-plus mileages during two years of use. He stated that typically, dealers supply to the buyer the history of vehicles they sell; that he might not undertake further investigation if he had a level of trust with a dealer; and that he might not personally inspect vehicles if he had previously purchased from their dealer.

         Mr. Proto testified that vehicles previously used as taxis are worth 43% less than similar make and model vehicles that have not been driven as taxis. He also opined that had these seven vehicles' prior taxi usage been disclosed properly, the price negotiated for them would have been “different.”

         Mousa Hassan, the owner of a used car dealership in Alabama, communicated with Yankee Ford in 2012, seeking to purchase three Marquises. Plaintiff offered Mr. Hassan's affidavit, in which he attested: “It is well known that vehicles with a prior use as taxis do not have a high resell value. In many countries taxis are not allowed to be imported. Because of this, I would not purchase vehicles with a prior use as taxis.” (Doc. 7-2 at ¶ 6).

         Riad Alabsi, the wholesale vehicle buyer at Oxmoor Cars in Birmingham, Alabama, communicated with Yankee Ford in late 2013 in his own bid to purchase the vehicles at issue in this suit. He similarly testified in his affidavit: “Grand Marquis have a greatly reduced value if they have a prior use as taxis. It is expected and well known in the industry that dealers will disclose any prior use of vehicles as taxis due to the difference in value. . . . I do not purchase vehicles with a prior use as taxis as they are not allowed in many countries.” (Doc. 7-3 at ¶¶ 8, 10).[2]

         D. Buyer's Guides

         Under the Maine UCIA, all dealers must provide a disclosure statement, or “Buyer's Guide, ” for each used vehicle they sell, negotiate the sale of, offer for sale, or transfer.[3]See Me. Rev. Stat. Ann. tit. 10, § 1475; 29-250 C.M.R. ch. 104, § 1(C)(2). That statement must contain, among other information, the principal use to which the motor vehicle was put by that prior owner and the dealer's duty to disclose promptly, upon the request of any person, the name and address of the previous owner of the motor vehicle. See § 1475(2-A); 29-250 C.M.R. ch. 104, § 1(C)(2) (setting out directions for filling out a ...


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