McEwen v. Delong

• Court: District Court, D. Arizona
• Decided: June 25, 2021
• Docket: 2:19-cv-05192
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Brandon Charles McEwen, No. CV-19-05192-PHX-SMB

10 Plaintiff, ORDER

11 v.

12 William Edward Delong, Jr., et al.,

13 Defendants. 14 15 Pending before the Court is Defendant Henry Brown Buick GMC, LLC’s (“Henry 16 Brown Buick”) Motion for Summary Judgment, (Doc. 75), and Defendant Henry Brown 17 Buick’s Statement of Facts in Support of Motion for Summary Judgment. (Doc. 76.) 18 Defendants Jose Galvez and Perico’s Construction, LLC (“Perico’s Construction”) jointly 19 filed a response in which they joined Defendant Henry Brown Buick’s Motion for 20 Summary Judgment. (Doc. 80.) Plaintiff Brandon McEwan filed a response, (Doc. 81), and 21 Plaintiff’s Response in Opposition to Defendant’s Statement of Facts and Controverting 22 Statement of Facts. (Doc. 82.) Defendant Henry Brown Buick filed a reply, (Doc. 86), and 23 a response to Plaintiff’s Separate Statement of Facts. (Doc. 87.) The Court has declined to 24 hold oral argument, finding that it is unnecessary. See LRCiv 7.2(f). The Court has 25 considered the pleadings and relevant authority and now issues this order denying the 26 motion. 27 I. BACKGROUND 28 This action arose from the sale of a 2008 GMC 2500 Duramax diesel truck, VIN 1 1GTHK23688F109288 (the “GMC truck”) from Advantage Auto Motor Sports 2 (“Advantage Auto”) to Plaintiff on March 29, 2019. The relevant facts are as follows: 3 On March 29, 2019, Plaintiff bought the GMC truck from Defendant William 4 Edward Delong, Jr., doing business as Advantage Auto. (Doc. 76 ¶ 1.) Advantage Auto 5 represented that the GMC truck had a clean title with 160,438 miles. (Id. ¶ 2.) Plaintiff 6 subsequently obtained document which led him to believe that there were actually many 7 more miles on the GMC truck. (Id. ¶ 3.) 8 The title of the GMC truck shows that it was originally purchased by Defendant 9 Galvez, d.b.a. Perico’s General Construction, on October 16, 2007. (Id. ¶ 5.) At that time, 10 the GMC truck had only 15 miles. (Id.) On February 15, 2012, Defendant Galvez obtained 11 a new Arizona title to the GMC truck. (Id. ¶ 6.) At that time, the title reflected that the 12 GMC truck had 135,000 miles. (Id.) On October 27, 2018, Defendant Galvez sold the GMC 13 truck to Henry Brown Buick. (Id. ¶ 7.) Before taking the GMC truck in on trade from 14 Defendant Galvez, Henry Brown Buick acquired a CarFax Vehicle History Report on the 15 truck. (Doc. 82 ¶ 18.) A sales manager at Henry Brown Buick acquired the CarFax report 16 in order to determine whether the vehicle had been in an accident and how many owners it 17 had. (Doc. 82-1, Ex. H at 2.) The CarFax report acquired by Henry Brown Buick showed 18 that the GMC truck’s mileage was recorded at 275,292 miles when it was serviced on 19 January 14, 2018. (Doc. 82 ¶ 23.) The CarFax report showed five instances between 20 November 19, 2012 and January 14, 2018 where the mileage was recorded in excess of the 21 160,360 miles reflected on the GMC truck’s odometer. (Doc. 82 ¶ 25.) Nonetheless, Henry 22 Brown Buick noted that it had a clean “Box A title” and noted that Defendant Galvez had 23 signed the odometer reading form stating that the mileage reading on the GMC truck’s 24 odometer was accurate. (Doc. 82-1, Ex. H at 3.) Henry Brown Buick prepared the Arizona 25 Secure Power of Attorney which included the entry of 160,380 miles and gave to it to 26 Defendant Galvez to sign. (Doc. 82 ¶ 27.) Henry Brown Buick kept the October 29, 2018 27 CarFax report in the deal jacket for the GMC truck. (Doc. 82 ¶ 28.) At that time, the title 28 of the GMC truck said that truck had 160,360 actual miles. (Doc. 76 ¶ 7.) Further, 1 Defendant Galvez signed a Secure Odometer Disclosure certifying that the odometer 2 reading on the GMC truck was 160,360 actual miles. (Id. ¶ 8.) On November 3, 2018, 3 Henry Brown Buick obtained a new Arizona certificate of title to the GMC truck that 4 reflected that the truck had 160,360 actual miles. (Id. ¶ 11.) After acquiring the GMC truck, 5 Henry Brown Buick sent the truck to Manheim Auction to be sold. (Id. ¶ 14.) After it sent 6 the GMC truck to the auction, Henry Brown received notice from the auction that a 7 customer wanted to negotiate the sales amount due to a possible “TMU” or true mileage 8 unknown issue with the odometer on the GMC truck. (Doc. 82 ¶ 33.) 9 On or about March 21, 2019, Advantage Auto bought the GMC truck from 10 Manheim Auction where it had been sent by Henry Brown Buick for sale. (Doc. 76 ¶ 14.) 11 At the time of the sale to Advantage Auto, the title of the GMC truck stated that it had 12 160,438 miles. (Id. ¶ 15.) Plaintiff then bought the GMC truck from Advantage Auto on 13 March 29, 2019. (Id. ¶ 1.) During Plaintiff’s purchase of the GMC truck from Advantage 14 Auto, Advantage Auto prepared and signed a Secure Odometer Statement on the truck 15 stating that the odometer reading was 160,480 miles. (Id. ¶ 16.) After purchasing the GMC 16 truck, Plaintiff attempted to trade in the truck at a different dealership. (Doc. 82 ¶ 37.) The 17 dealership showed Plaintiff the CarFax Vehicle History Report on the GMC truck showing 18 that the truck had more miles than were listed on the odometer. (Id. ¶ 39.) A different 19 dealership showed Plaintiff a Workbench report showing that the GMC truck was serviced 20 at a GMC dealership on December 29, 2017 with the odometer reading of 275,292 miles. 21 (Id. ¶ 42.) 22 Plaintiff has now brought this lawsuit against Defendants Delong Jr., Advantage 23 Auto, Henry Brown Buick, Galvez and Perico’s Construction alleging violations of 24 Odometer Act, 49 U.S.C. §§ 32701, et seq., breach of express warranty, and violation of 25 the Arizona Consumer Fraud Act, A.R.S. §§ 44-1521, et seq. (Doc. 1.) Only the Odometer 26 Act claim is alleged against Defendants Henry Brown Buick, Galvez, and Perico’s 27 Construction. (Doc. 1 ¶¶ 99-106.) 28 II. STANDARD OF REVIEW 1 Summary judgment is appropriate when “there is no genuine dispute as to any 2 material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 3 56(a). A material fact is any factual issue that might affect the outcome of the case under 4 the governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). 5 A dispute about a fact is “genuine” if the evidence is such that a reasonable jury could 6 return a verdict for the nonmoving party. Id. “A party asserting that a fact cannot be or is 7 genuinely disputed must support the assertion by . . . citing to particular parts of materials 8 in the record” or by “showing that materials cited do not establish the absence or presence 9 of a genuine dispute, or that an adverse party cannot produce admissible evidence to 10 support the fact.” Fed. R. Civ. P. 56(c)(1)(A), (B). The court need only consider the cited 11 materials, but it may also consider any other materials in the record. Id. 56(c)(3). Summary 12 judgment may also be entered “against a party who fails to make a showing sufficient to 13 establish the existence of an element essential to that party’s case, and on which that party 14 will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). 15 Initially, the movant bears the burden of demonstrating to the Court the basis for the 16 motion and “identifying those portions of [the record] which it believes demonstrate the 17 absence of a genuine issue of material fact.” Id. at 323. If the movant fails to carry its 18 initial burden, the nonmovant need not produce anything. Nissan Fire & Marine Ins. Co. 19 v. Fritz Cos., 210 F.3d 1099, 1102–03 (9th Cir. 2000). If the movant meets its initial 20 responsibility, the burden then shifts to the nonmovant to establish the existence of a 21 genuine issue of material fact. Id. at 1103. The nonmovant need not establish a material 22 issue of fact conclusively in its favor, but it “must do more than simply show that there is 23 some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith 24 Radio Corp., 475 U.S. 574, 586 (1986). The nonmovant’s bare assertions, standing alone, 25 are insufficient to create a material issue of fact and defeat a motion for summary judgment. 26 Liberty Lobby, 477 U.S. at 247–48. “If the evidence is merely colorable, or is not 27 significantly probative, summary judgment may be granted.” Id. at 249–50 (citations 28 omitted). However, in the summary judgment context, the Court believes the nonmovant’s 1 evidence, id. at 255, and construes all disputed facts in the light most favorable to the 2 nonmoving party. Ellison v. Robertson, 357 F.3d 1072, 1075 (9th Cir. 2004). If “the 3 evidence yields conflicting inferences [regarding material facts], summary judgment is 4 improper, and the action must proceed to trial.” O’Connor v. Boeing N. Am., Inc., 311 F.3d 5 1139, 1150 (9th Cir. 2002). 6 III. ANALYSIS 7 Defendant Henry Brown Buick advances two arguments in its Motion for Summary 8 Judgment. First, it argues that 49 C.F.R. 580.17(a)(3) of the Odometer Act exempts from 9 the disclosure requirement vehicles manufactured in or before the 2010 model year that are 10 transferred at least 10 years after January 1 of the calendar year corresponding to its 11 designated model year. 49 C.F.R. § 580.17(a)(3)(i). Because the GMC truck was 12 manufactured in 2007 as a model year 2008 and sold to Henry Brown Buick in October 13 2018, Henry Brown Buick argues that it was exempt from the disclosure requirement and 14 that it cannot be held liable under the Act. In the alternative, if the Court determines that 15 the GMC truck was not exempt from the Odometer Act, Henry Brown Buick argues that it 16 is not liable under the Act because there is no evidence that it intended to make any false 17 statement or defraud any transferee as required by the Act. Thus, it argues that it is entitled 18 to summary judgment. 19 Defendants Galvez and Perico’s Construction join in Defendant Henry Brown 20 Buick’s Motion for Summary Judgment. Additionally, Defendant Perico’s Construction 21 argues that “Plaintiff has submitted no evidence that Defendant Galvez did business as 22 Perico’s Construction, L.L.C.” (Doc. 80 at 5.) Therefore, they argue that summary 23 judgment is appropriate for both Defendants Galvez and Perico’s Construction on the 24 Odometer Act claim. 25 A. Exemption Under 49 C.F.R. § 580.17(a)(3) 26 The Odometer Act requires a person transferring ownership of a motor vehicle to 27 give the transferee a written disclosure stating the cumulative mileage registered on the 28 odometer. 49 U.S.C. § 32705(a)(1)(A). A person transferring ownership of a motor vehicle 1 may not give a false statement to the transferee in making this disclosure. 49 U.S.C. § 2 32705(2). Disclosure of the vehicle’s cumulative mileage must be made to the transferee 3 in writing on the title. 49 C.F.R. § 580.5(c). Exempted from this disclosure requirement are 4 vehicles “manufactured in or before the 2010 model year that [are] transferred at least 10 5 years after January 1 of the calendar year corresponding to its designated model year.” 49 6 C.F.R. § 580.17(a)(3)(i). “The net effect of these provisions and regulations is that a person 7 or entity transferring ownership of a motor vehicle must disclose the odometer mileage in 8 writing on the title, but ‘need not’ make such a disclosure if the vehicle was manufactured 9 at least ten years before the calendar year of the transfer.” Moxey v. Jimmy Auto Sale LLC, 10 No. CV174731ESJAD, 2019 WL 1399556, at *4 (D.N.J. Mar. 28, 2019) (citing 49 U.S.C. 11 § 32705(a)(2) & quoting 49 C.F.R. § 580.17(a)(3)). 12 Certain district courts have concluded that the disclosure exemption can be waived 13 if a transferor falsely discloses the mileage of the motor vehicle on the title when making 14 a transfer. Moxey, 2019 WL 1399556, at *5 (finding that a defendant waived the exemption 15 to the disclosure requirement by making a disclosure that falsely represented a Subaru’s 16 mileage); Tirtel v. Sunset Auto & Truck, LLC, No. 218CV481FTM99MRM, 2019 WL 17 186650, at (M.D. Fla. Jan. 14, 2019) (“[O]nce a transferor elects to disclose odometer 18 information it must do so truthfully.”); Extra Mile, LLC v. Don Baskin Truck Sales, LLC, 19 No. 06-2589-P, 2007 WL 9706253, at *4 (W.D. Tenn. Nov. 6, 2007) (“A party may waive 20 an exemption to the Odometer Act by voluntarily disclosing the odometer reading of an 21 otherwise exempt vehicle.”); Coleman v. Lazy Days RV Ctr., Inc., No. 22 805CV930T17TBM, 2006 WL 889736, at *4 (M.D. Fla. Mar. 31, 2006) (“[W]hen a seller 23 does nevertheless voluntarily disclose, the statement must be accurate and truthful.”). I 24 However, other courts have reached the opposite conclusion. See, e.g., Midwestern 25 Motor Coach Co. v. Gen. Elec. Co., 289 F. App’x 958, 959 (8th Cir. 2008) (upholding the 26 district court’s ruling that a bus seller could not be held liable for a false disclosure under 27 The Odometer Act because it was an exempt vehicle). Regarding the Midwestern case, the 28 court in Moxey wrote: 1 Midwestern Motor Coach and similar cases ignore, however, that the 2 Odometer Act is a remedial statute aimed at preventing odometer tampering 3 and fraud. See 49 C.F.R. § 580.2 (“The purpose of this part is to provide 4 purchasers of motor vehicles with odometer information to assist them in determining a vehicle's condition and value....”). As a remedial statute, the 5 Odometer Act's provisions “should be broadly construed to effectuate its 6 purpose.” Owens v. Samkle Automotive, Inc., 425 F.3d 1318, 1322 (11th Cir. 2005). The Court, thus, finds cases like Midwestern Motor Coach 7 unpersuasive. See Tirtel, 2019 WL 186650, at *3. 8 Moxey, 2019 WL 1399556, at *4 n.4. 9 The Court agrees with Moxey and the line of cases holding that the exemption for 10 vehicles 10 years and older is waived when a transferor voluntarily discloses the mileage. 11 Specifically, the Court finds persuasive that the language of the exemption states that a 12 transferor “need not” make the disclosure if a vehicle is manufactured before the 2010 13 model year and is at least 10 years old. 49 C.F.R. § 580.17(a)(3)(i) (emphasis added). This 14 language clearly only excuses transferors from disclosing the mileage and does not give 15 them permission to make false disclosures. This is especially true in light of the Odometer 16 Act’s purposes of preventing odometer tampering and odometer fraud. See Owens, 425 17 F.3d at 1322 (citing 49 U.S.C. § 32701 (2000)). The exemption provided by 49 C.F.R. § 18 580.17(a)(3) does not provide a license to make false statements. 19 Here, it is undisputed that the GMC truck fell within the exemption in 49 C.F.R. § 20 580.17(a)(3) because it was a model year 2008 and manufactured over ten years before the 21 transfers from Defendant Galvez to Henry Brown Buick and from Henry Brown Buick to 22 Advantage Auto. Nonetheless, both Defendants Galvez and Henry Brown Buick 23 voluntarily disclosed mileage for the GMC truck that was later proven to be false. 24 Accordingly, the Court finds that Defendants Galvez and Henry Brown Buick waived the 25 exemption under the Odometer Act and can still be subject to liability under the Act. 26 B. Evidence of Intent to Defraud Under Odometer Act 27 Henry Brown Buick argues in the alternative that Plaintiff has not shown evidence 28 1 of intent to defraud under the Odometer Act. Defendant Galvez joins in this argument. 2 The Odometer Act provides, “A person who violates this chapter or a regulation 3 prescribed or order issued under this chapter, with intent to defraud, is liable for 3 times 4 the actual damages or $10,000, whichever is greater.” 49 U.S.C. § 32710(a). “[T]he plain 5 and ordinary meaning of the phrase ‘intent to defraud’ envisions misconduct more 6 invidious than mere negligence.” Jones v. Hanley Dawson Cadillac Co., 848 F.2d 803, 807 7 (7th Cir. 1988). “[A] transferor need not have actual knowledge that the odometer 8 statement was false before liability may be imposed” under the Odometer Act. Suiter v. 9 Mitchell Motor Coach Sales, Inc., 151 F.3d 1275, 1282 (10th Cir. 1998). Intent to defraud 10 may be inferred if a transferor lacks knowledge only because he or she recklessly disregards 11 the truth or closes his or her eyes to the truth. Suiter, 151 F.3d at 1282; Haynes v. Manning, 12 917 F.2d 450, 453 (10th Cir. 1990) (holding that “intent to defraud” should be defined to 13 include “reckless disregard”); Alexander v. Se. Wholesale Corp., No. 2:13CV213, 2014 14 WL 1165844, at *4 (E.D. Va. Mar. 21, 2014) (“A transferor need not have actual 15 knowledge of an odometer discrepancy to have intent to defraud: it is enough if the 16 transferor had constructive knowledge of or recklessly disregarded an inaccurate odometer 17 reading and did not disclose it.”). Courts in the Tenth Circuit have previously concluded 18 that “an automobile dealer cannot escape liability under the Odometer Act by relying solely 19 on the odometer reading and the assertions of the previous owner.” Suiter, 151 F.3d at 20 1284 (“dealers have an affirmative duty to discover odometer defects.”); Haynes, 917 F.2d 21 at 453 (“The federal odometer law imposes an affirmative duty on automobile dealers to 22 discover defects.”). A plaintiff must prove intent to defraud under the Odometer Act by a 23 preponderance of the evidence. Landrum v. Goddard, 921 F.2d 61, 62 (5th Cir. 1991). 24 In this case, the Court finds that there is sufficient evidence on which a jury could 25 find that Henry Brown Buick acted with the intent to defraud when it transferred the GMC 26 truck with false mileage readout. First, a sales manager at Henry Brown Buick pulled the 27 CarFax report which clearly lists that the GMC truck was serviced less than a year earlier 28 1 with 115,000 more miles than was listed on the odometer.1 The CarFax report should have 2 at least prompted Henry Brown Buick to investigate further. Instead, as Henry Brown 3 Buick admitted in a discovery response, it simply relied on the clean “Box A” title. After 4 Henry Brown Buick sent the GMC truck to be auctioned, it received notice from the auction 5 that a customer wanted to negotiate the price based on a possible “TMU” (true mileage 6 unknown). This also should have at minimum prompted Henry Brown Buick to investigate 7 further. Nonetheless, Henry Brown Buick sold the truck with the mileage listed on the 8 odometer and the title. These facts amount to constructive knowledge on the part of Henry 9 Brown Buick or reckless disregard of an inaccurate odometer reading. See Suiter, 151 F.3d 10 at 1284. Thus, the Court finds that there is a dispute of material fact as to whether Henry 11 Brown Buick intended to defraud when it falsely represented the GMC truck’s mileage 12 during the transfer of the truck to Advantage Auto via auction. 13 Likewise, there is a dispute of material fact as to whether Defendant Galvez intended 14 to defraud when he traded in the GMC truck to Henry Brown Buick with a false mileage 15 reading on the odometer, title, and disclosure. Specifically, Defendant Galvez was the only 16 owner of the truck when he bought it new in 2007 and when he sold it to Henry Brown 17 Buick in October of 2018. (Doc. 76 ¶¶ 5-7.) The CarFax report showed that the most recent 18 mileage of the GMC truck was 275,292 miles in January 2018, and it included five 19 instances between November 19, 2012 and January 14, 2018 when the GMC truck was 20 serviced with more than 160,360. (Doc. 82 ¶¶ 23, 25.) The Workbench report obtained by 21 Plaintiff also showed that the GMC truck was serviced on December 29, 2017 with 275,292 22 miles. (Doc. 82-1 Ex. L.) Therefore, the Court finds that there is a dispute of material fact 23 as to whether Defendant Galvez intended to defraud when he transferred the GMC truck 24 to Henry Brown Buick. Accordingly, the Court denies summary judgment both for 25 Defendant Henry Brown Buick and Defendant Galvez. 26 C. Defendant Perico’s Construction

27 1 What’s more, even though the dealer stated that it was looking to see if the GMC truck had been in an accident, the CarFax report lists an accident immediately above and below 28 listings which show the vehicle was serviced with more than 160,360 miles. (Doc. 82-1 Ex. G.) 1 The Court will deny Defendant Perico’s Construction’s motion for summary 2 || judgment. Perico’s Construction was listed as a d.b.a. for Defendant Galvez on the title of || the truck while he owned it, (Doc. 76 45, Exs. A, B), and Perico’s Construction provides no other authority or facts to show why it should be dismissed from the case. Thus, its 5 || request for summary judgment on its behalf is denied. 6|| IV. CONCLUSION 7 Accordingly, 8 IT IS ORDERED denying Defendant Henry Brown Buick’s Motion for Summary Judgment. (Doc. 75.) 10 IT IS FURTHER ORDERED denying Defendants Galvez and Perico’s 11 |} Construction’s response/joinder in Defendant Henry Brown Buick’s Motion for Summary 12 || Judgment. (Doc. 80.) 13 Dated this 25th day of June, 2021. 14 — > I 16 Aonorable Susan M, Brnovich United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28

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