whitney v. auto source direct

CourtVermont Superior Court
DecidedJanuary 11, 2024
Docket21-cv-2521
StatusPublished

This text of whitney v. auto source direct (whitney v. auto source direct) is published on Counsel Stack Legal Research, covering Vermont Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
whitney v. auto source direct, (Vt. Ct. App. 2024).

Opinion

Vermont Superior Court Filed 1_1 29 2_3 Iamo e mt

VERMONT SUPERIOR COURT CIVIL DIVISION Lamoille Unit Case N0. 21-CV—02521 154 Main Street f1 Hyde Park VT 05655 802-888-3887 www.vermontjudiciary.org

Krystal Whitney v. Auto Source Direct, LLC, et a1

FINDINGS, CONCLUSIONS, AND JUDGMENT

The present matter concerns the trade-in and purchase of a used car gone wrong. Plaintiff

Krystal Whitney has brought twelve clams against Defendant Auto Source Direct, LLC alleging consumer fraud, common law fraud, breach of warranty, breach of state auto sale contract law, breach

of federal regulations around used cars, and breach of the uniform commercial code. This matter came before the Court for a bench trial on May 31, 2023 and post-hearing briefing extended into June 2023.

Based on the findings and conclusions that follow, the Court finds that Defendant Auto Source Direct violated the consumer fraud law and breached warranties, and as a result of these breaches, Defendant

Whitney suffered an unintended increase in her debt load, lost a functioning car for one that did not work, and she is entitled to monetary damages and attorney’s fees.

Findings

In July of 2020, Krystal Whitney was living in Eden, Vermont and owned a 2018 Mazda CX5

hatchback. Whitney had purchased the car with financing and was still making monthly payments. Due to a downturn in her economic situation, Whitney needed to reduce her monthly payments and overall debt load. With that purpose, Whitney approached Auto Source Direct, LLC a small, used car dealer located in Colchester, Vermont.

Whitney had gone to Auto Source Direct because they had a 2013 Dodge Dart on the lot listed for $7,000. The price of this vehicle fit with Whitney budget. Following a test drive, Whitney found no issues with the vehicle, apart from a missing seatbelt clasp on the passenger’s side (this was later

found tucked into the crevasse of the seat, but once found, it would not latch). Whitney also credibly testified that she smelled a slight burning smell but was assured by Auto Source Direct’s

representatives that it was normal and that Dart engines run hot when not driven regularly. Following this test drive, Whitney explained her parameters to the Auto Source Direct’s representatives and Order Page 1 of 12 21—CV—02521 Krystal Whitney v. Auto Source Direct, LLC, et al salespeople. She wanted to trade in her Mazda, use those proceeds to pay off the outstanding debt on the Mazda, and apply any further proceeds from the trade-in against the price of the Dart. Whitney needed to finance the remainder of the purchase price, but she had calculated and expected that the less expensive car would bring down her monthly payments between $250 and $220. Auto Source Direct admits in its proposed findings that its representatives had this exact discussion with Whitney and that this was her stated purpose of taking the somewhat unusual step of trading in a newer, nicer automobile for an older one.

During this discussion where Whitney expressed her budgetary needs and purpose, Auto Source Direct’s representatives made several representations to Whtiney that were later contradicted by the actual paperwork. First, Auto Source Direct offered Whitney a Vehicle Service Contract, a Maintenance Contract, and a GAP contract. Whitney testified that the representative told her that these additions were free and part of the package that Auto Source Direct offered as part of the sale. Whitney agreed to these additional contracts. Far from free, these contracts were value-added products that carried additional charges of $4,590 to the price of the car. Out of these policies, approximately 50% went to Auto Source Direct as a commission.

Second, Whitney had the understanding that the trade-in of her Mazda would satisfy the outstanding balance on that vehicle. In fact, the dealer trade-in left Whitney with a $2,510 “negative balance,” and was eventually added to the financing with her new purchase. In these two steps, the price of Whitney’s purchase doubled from $7,000 to $14,000. With other closing costs attached, the total sale price that Whitney financed ended up being $15,693.93.

Whitney testified that she was not aware of these facts at the time of her purchase. After waiting 24 hours, she went back to Auto Source Direct and agreed to purchase the Dart and trade-in her Mazda, but she re-emphasized the need to keep her monthly payments to $220. Whitney credibly testified that she was then taken back into the office at Auto Source Direct and given papers to sign. According to Whitney Auto Source Direct’s finance person did not review the documents with her. He simply directed her where to sign. Auto Source Direct did not give Whitney a copy of the paperwork, and she left without an understanding of the costs or a breakdown of her expenses.

While Auto Source Direct disputes Whitney’s versions of events, the Court does not find this denial credible for two reasons.

Order Page 2 of 12 21-CV-02521 Krystal Whitney v. Auto Source Direct, LLC, et al First, the nature of the deal was, as Auto Source Direct admits, unusual. Buyers do not usually trade in a nicer car for an older lesser one, but in this case, Whitney had stated a specific purpose. She wanted to reduce her monthly payments and overall debt-load. If these costs and payments were, in fact, adequately explained, it would have been obvious to everyone that this transaction was raising Whitney’s monthly payment and increasing her debt load. Instead of making a deal that switched a more expensive but nicer car for a lesser but cheaper car, Whitney was getting a lesser but more expensive car. In effect, the paperwork shows that Whitney was not getting any benefit from the bargain but was taking on increased debt for a car that was in objectively lesser condition and quality to her prior car. This transaction makes no sense—unless Whitney was unaware of the added costs and negative balances that were effectively doubling her transaction.

Second, there is a fundamental disconnect in this case between what Auto Source Direct states it understood about the transaction, namely that Whitney was looking to lower her costs, and the valued-added pieces that Auto Source Direct sought to sell her. The Court does not find the offering or even the selling of such value-added pieces to be per se illegal or even uncommon for a retailer to offer, but in the context of this transaction, it created a disconnect between what Whitney wanted (lower payments) and what Auto Source Direct wanted (the benefit of the sale and the 50% commission from the value-added contracts). Whitney’s contemporaneous statements to her family and others support this understanding. She walked away from the transaction with the belief that she had made a deal to lower her debt and monthly payments. Auto Source Direct, which proposed the additions, drafted the contracts, and oversaw the entire contracting process, was pushing—despite its knowledge of what Whitney wanted—for a different deal.

As a final note, the Court finds Whitney’s testimony regarding the forms to be credible as to who filed out the forms. Whitney notes that one of the forms used to determine her eligibility for a specific loan rate names an “Uncle Charles Whtiney” as a veteran. The problem is that Whitney does not have an “Uncle Charles” or any uncle that served in the armed forces, and the form is not in her handwriting. The Court finds this to be further evidence that Auto Source Direct or one of its agents filled out the form, using incorrect information and did not review it with Whitney in any substantial way.

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