CORY BENDER v. SOUTHTOWNE MOTORS OF NEWNAN II, INC. , 339 Ga. App. 439 ( 2016 )

THIRD DIVISION
MILLER, P. J.,
MCFADDEN and MCMILLIAN, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules
November 15, 2016
In the Court of Appeals of Georgia
A16A0784. BENDER et al. v. SOUTHTOWNE MOTORS OF
NEWNAN II, INC. et al.
MCMILLIAN, Judge.
This case involves issues of first impression concerning the application of the
Georgia Lemon Law, OCGA § 10-1-780 et seq., which is designed to protect certain
purchasers of “nonconforming”1 motor vehicles, sometimes referred to as “lemons”
or “lemon vehicles.” Alleging that Southtowne Motors of Newnan II, Inc.
(“Southtowne”) violated the Georgia Lemon Law when it sold them a 2010 Hyundai
Genesis without disclosing that it had been reacquired by the manufacturer because
1
Under the Georgia Lemon Law, a “‘[n]onconformity’ means a defect, a
serious safety defect, or a condition, any of which substantially impairs the use, value,
or safety of a new motor vehicle to the consumer or renders the new motor vehicle
nonconforming to a warranty. A nonconformity does not include a defect, a serious
safety defect, or a condition that is the result of abuse, neglect, or unauthorized
modification or alteration of the new motor vehicle.” OCGA § 10-1-782 (17).
of defects, plaintiffs/appellants Lindsey and Cory Bender (“plaintiffs” or “Benders”)
filed suit against Southtowne and Ally Financial (“Ally”)2 (collectively “defendants”
or “appellees”) stating claims for, among other things, rescission, revocation of
acceptance, fraud and deceit, and violation of the Georgia Fair Business Practices Act
of 1975 (“FBPA”), OCGA § 10-1-390 et seq. The trial court granted summary
judgment to the defendants on all the Benders’ claims, and the Benders filed this
appeal.3
Viewing the evidence in the light most favorable to the Benders as the
nonmoving party on summary judgment,4 the record shows that the Benders went to
Southtowne to look at cars on January 15, 2012, and became interested in a Hyundai
Genesis. They told the salesman, Buck Bush, that they liked a particular Genesis they
saw on the lot, but that it was out of their price range; they also were informed that
2
Ally financed the purchase of the vehicle.
3
The Benders also brought claims for breach of implied warranty of
merchantability; breach of warranty of title; and Ally’s violation of Federal Trade
Commission Rules. The Benders do not enumerate any error regarding the grant of
summary judgment on these claims and, accordingly, they are waived on appeal.
OCGA § 5-6-40; Smith v. Saulsbury, 286 Ga. App. 322, 323 (1) (a) (649 SE2d 344)
(2007); Dole v. State, 256 Ga. App. 146, 148 (2) (567 SE2d 756) (2002).
4
Vernon v. Assurance Forensic Accounting, LLC, 333 Ga. App. 377, 378 (774
SE2d 197) (2015).
2
someone else was already in the process of purchasing the vehicle. Bush told them
about another Genesis he thought might interest them that had recently been delivered
to the dealership, and he brought the vehicle from the back of the lot where it was
parked for the Benders to see. The Benders took the Genesis for a test drive, and after
they drove the vehicle, they looked under the hood and made a cursory examination
of the vehicle. The Benders did not detect any problems with the vehicle but asked
to see a Carfax report. Bush told them he had seen the Carfax and that it was clean,
but Bush did not provide them with the written report, and the Benders did not make
any further requests to see it. The Benders did, however, continue to express concern
that this Genesis was also out of their price range, and Buck assured them “he could
do a super deal” because it was a lease turn-in, telling them they were “very, very
lucky because this is a once in a lifetime [deal].”
The Benders decided to purchase the vehicle and were taken to another
Southtowne employee who was responsible for handling the financing and other
paperwork. Among the papers they were asked to sign was a form titled “Illinois
Resale Disclosure Statement” (“Illinois Disclosure Form”), which stated that the
Genesis had been repurchased by the manufacturer, Hyundai Motor America
(“HMA”) “pursuant to consumer warranty laws due to [certain listed]
3
defect(s)/nonconformit(ies).”5 The Benders testified they briefly reviewed the form
and admitted they knew when they signed it that the Genesis had been repurchased
by the manufacturer because of the stated defects.6 Lindsey also acknowledged that
she asked if the defects had been repaired, and the Benders accepted the assurances
that the defects had been remedied.
Approximately a week to a week and a half later, Bush called Lindsey and told
her that they needed to execute an additional “loan document.” Cory went to the
dealership, where Bush met him in the parking lot with a form he said was needed to
complete the loan. Cory testified that Bush told him that he had filled in the form
because he knew Cory was in a rush, and that Bush never took his hand off the form
while he was signing it. Cory testified that he signed the form without reading it, and
it was not until later that he learned the form he signed was the “Georgia Lemon Law
5
The form listed an inoperative front window and an inoperative back up
camera as the nonconformities that precipitated the buyback by HMA.
6
Lindsey testified that the documents were signed in a hurry because it was
past the normal closing time for the dealership, but no evidence was presented that
they were prevented from taking more time to read the form.
4
Notice for Reacquired Vehicles” (“Georgia Lemon Law Form”), which had been
backdated to the date of purchase of the Genesis.7
Almost eight months later, over Labor Day weekend, Cory Bender went to a
Lexus dealership to look at a vehicle he was interested in buying. He told the Lexus
salesman he wanted to trade in the Genesis to buy the Lexus, but after making an
inquiry, a Lexus manager told him that the Genesis had a “branded”8 title and that the
Lexus dealership did not accept trades of branded title vehicles. Cory said this was
the first time he knew that the title to the Genesis was branded and the first time
anyone had explained to him the meaning of a branded title.
Cory left the Lexus dealership, and both Lindsey and he went immediately to
Southtowne to inquire about the branded title. Lindsey testified that she first spoke
7
Although the Georgia Lemon Law disclosure form states that “I understand
that ... if I purchase or lease [the reacquired vehicle], I will be given this original
Notice, and not a copy,” Cory was not given the original or a copy of the form at the
time he signed it.
8
The manager apparently was referring to the original Texas title for the
vehicle, which contained the notation “Manufacturer Buyback.” The Georgia
certificate of title did not contain any notation that the vehicle had been repurchased
by the manufacturer, and neither the Georgia Lemon Law nor the Georgia Motor
Vehicle Certificate of Title Act (“Title Act”), OCGA § 40-3-1, et seq., require motor
vehicle titles issued in Georgia to denote that a vehicle has been repurchased by the
manufacturer, although the Title Act does require titles to be branded in instances of
“salvage” or “rebuilt” vehicles. See OCGA § 40-3-36 (d).
5
to Bush, who told her he did not know the title was branded. The paperwork
pertaining to the sale of the vehicle was shown to the Benders, including the Illinois
Disclosure Form they signed at the time of purchase and the Georgia Lemon Law
Notice Cory signed a few weeks later, but Southtowne did not produce the title to the
vehicle.9 The Benders subsequently retained an attorney, and on October 24, 2012,
their attorney sent a letter to Southtowne seeking rescission of the purchase and a
refund of the purchase price, following which they would return the vehicle to the
dealer. Southtowne did not agree to the terms stated in the letter, and the Benders
filed this lawsuit.
1. We turn first to the Benders’ claims that Southtowne violated the Georgia
Lemon Law and the Georgia FBPA by failing to make the disclosures required by
OCGA § 10-1-790 (a) of the Georgia Lemon Law statute. Because there is a dearth
of authority on the Georgia Lemon Law, we start by setting out the statutory
framework.
9
The Benders testified that the first time they actually saw the Texas title was
after this lawsuit was filed.
6
The Georgia Lemon Law, which became effective January 1, 2009,10 was
passed by the General Assembly “to create a procedure for expeditious resolution of
complaints and disputes concerning nonconforming new motor vehicles, to provide
a method for notifying consumers of their rights under this article, . . . to ensure that
consumers receive information, documents, and service necessary to enable them to
exercise their rights under this article[,] to encourage manufacturers to take all steps
necessary to correct nonconformities in new motor vehicles and to create the proper
blend of private and public remedies necessary to enforce this article.” OCGA § 10-1-
781. In addition to the statutory provisions enacted to effectuate these goals, OCGA
§ 10-1-795 authorizes the “Attorney General11 to promulgate rules and regulations
and establish procedures necessary to carry into effect, implement, and enforce the
provisions of this article,” and the pertinent rules and regulatory provisions are
compiled at Ga. Comp. R. & Regs., r. 122-23-.01 et seq.
10
A slight, non-substantive amendment was made to the law in 2015 but does
not effect our analysis in this case. See Ga. L. 2015, p. 1088, § 8/SB 148.
11
“Attorney General” was substituted for “administrator” in a 2015
amendment. Although this change occurred after the purchase of the Genesis, for ease
of reference we will use “Attorney General.”
7
The statute protects two distinct classes of motor vehicle purchasers: (1)
consumers12 who buy new motor vehicles in this state13 that are discovered to be
nonconforming, see OCGA §§ 10-1-782 (15), (17); 10-1-784; 10-1-785; 10-1-787,
and (2) purchasers of vehicles that have been reacquired by the manufacturer under
the provisions of the Georgia Lemon Law or a similar statute of another state and are
being re-sold in Georgia by the manufacturer, a new car dealer, or other transferor.
OCGA § 10-1-790 (a).
The Georgia Lemon Law’s general enforcement provisions are contained in
OCGA § 10-1-793, which makes violations of the Georgia Lemon Law “an unfair and
deceptive act or practice in the conduct of consumer transactions under . . . the
12
As used in the Georgia Lemon Law, “‘consumer’ means . . . : (A) A person
who purchases or leases a new motor vehicle for personal, family, or household use
and not for the purpose of selling or leasing the new motor vehicle to another person;
and (B) A person who purchases or leases ten or fewer new motor vehicles a year for
business purposes other than limousine rental services.” OCGA § 10-1-782 (5).
13
A “new motor vehicle” is defined in OCGA § 10-1-782 (15) as “any self-
propelled vehicle primarily designed for the transportation of persons or property
over the public highways that was . . . purchased . . . in this state by the consumer or
lessor to whom the original motor vehicle title was issued.” Pursuant to OCGA §10-
1-784 (3), purchasers or lessors of nonconforming new motor vehicles that have not
been repaired after a reasonable number of attempts have the option of requiring the
manufacturer to repurchase or replace the vehicle. The Georgia Lemon Law does not
require manufacturers to buy back a vehicle that has changed hands from the original,
first-title purchaser.
8
[FBPA].” Importantly, however, the Attorney General is tasked with primary
responsibility for enforcement of the statute, and except as provided in subsection (a)
of Code Section 10-1-790, [the Georgia Lemon Law] shall not be enforceable through
private action under Code Section 10-1-399 [of the FBPA].” In other words, under
the plain language of the statute, only violators of OCGA § 10-1-790 (a) are subject
to a private claim under the FBPA. Accordingly, to maintain their FBPA claim under
the Georgia Lemon Law, the Benders must show that Southtowne failed to comply
with OCGA § 10-1-790 (a) when it sold them the Genesis. OCGA § 10-1-790 (a)
provides:
(a) No manufacturer, its authorized agent, new motor vehicle
dealer, or other transferor shall knowingly resell, either at wholesale or
retail, lease, transfer a title, or otherwise transfer a reacquired vehicle,
including a vehicle reacquired under a similar statute of any other
9
state,[14] unless the vehicle is being sold for scrap and the manufacturer
has notified the Attorney General of the proposed sale or:
(1) The fact of the reacquisition and nature of any alleged
nonconformity are clearly and conspicuously disclosed in writing to the
prospective transferee, lessee, or buyer; and
(2) The manufacturer warrants to correct such nonconformity for a term
of one year or 12,000 miles, whichever occurs first.
A knowing violation of this subsection shall constitute an unfair
or deceptive act or practice in the conduct of consumer transactions
under Part 2 of Article 15 of Chapter 1 of Title 10 and will subject the
violator to an action by a consumer under Code Section 10-1-399.
14
In this particular case, the manufacturer bought back the vehicle in Texas,
and Southtowne purchased the vehicle on January 10, 2012, at a “closed” auction, in
which only franchised Hyundai dealers or their agents were permitted to buy the
vehicles offered for sale, which included “Lemon Law and vehicles voluntarily
repurchased by HMA.” Pursuant to the written “Auction Sales Policies and
Procedures,” Hyundai dealers who purchased vehicles at the auction were required
to acknowledge they were purchasing a buyback vehicle by signing a notice of
nonconformity and had to agree that only they, the dealer, would sell the vehicle to
the “ultimate consumer.” Further, the Auction Policies required the dealer to “bear[]
sole responsibility for providing full disclosure to the ultimate consumer and securing
purchaser’s acknowledgment by signing the Notice of Nonconformity Statement
provided,” which in this case was the Illinois Disclosure Form. The Illinois
Disclosure Form also provided that “[t]he signature of the dealer representative
constitutes agreement by the dealer that disclosure of the above information will be
made to the retail customer at the time of sale of this vehicle as provided by law in
the state in which it is resold.”
10
(Emphasis supplied.)
Relying on this Court’s opinion in Walker v. Southtowne Motors of Newnan II,
Inc., 330 Ga. App. XXVIII (Case No. A14A0964, decided Nov. 21, 2014)
(unpublished), the trial court found that Southtowne was not required to comply with
OCGA § 10-1-790 (a) when it sold the car to the Benders because it was sold as a
used car and thus did not fit the definition of a “reacquired” vehicle within the
meaning of the Georgia Lemon Law.15 At the outset, we note that the trial court’s
reliance on our unpublished opinion was misplaced. Such an “unreported opinion is
lacking in value as precedent and is not binding on lower courts. . . .” (Citation and
punctuation omitted.) Dept. of Transp. v. Metts, 208 Ga. App. 401, 401 (1) (430 SE2d
622) (1993). Georgia Court of Appeals Rule 33 (b) (“An unreported opinion is neither
a physical or binding precedent but establishes the law of the case as provided by
OCGA § 9-11-60 (h).”). Additionally, there are significant differences between the
facts of Walker and this case. In Walker, the plaintiff was not the first purchaser of
the vehicle following the manufacturer’s reacquisition, the dealer had acquired the
15
A “reacquired vehicle” is defined as “a new motor vehicle with an alleged
nonconformity that has been replaced or repurchased by the manufacturer[.]” OCGA
§ 10-1-782 (21). A “‘new motor vehicle’ does not include any vehicle on which the
title and other transfer documents show a used, rather than new, vehicle.” OCGA §
10-1-782 (15).
11
vehicle after the first purchaser traded it in almost three years after the purchase, and
there was a question concerning whether the dealer even knew the vehicle had been
reacquired by the manufacturer. Thus, Walker is factually inapposite to this case.
Georgia’s Attorney General has filed an amicus brief in this case, asserting that
the General Assembly may have used the term “reacquired” in OCGA § 10-1-790 to
denote that only vehicles that were new when they were repurchased by the
manufacturer are covered by the Georgia Lemon Law disclosure requirements since
in Georgia manufacturers can only be forced to reacquire new motor vehicles, which
may not be the case in other states. We need not parse that argument here since the
parties do not dispute that the Genesis was new when it was repurchased by HMA in
Texas, and thus under the facts of this case, it is clear that the Genesis falls within the
definition of a “reacquired vehicle” as used in OCGA § 10-1-790 (a), even though it
was classified as a “used” vehicle on the subsequently issued Georgia title.
Having determined the Georgia Lemon Law disclosure requirements contained
in OCGA § 101-790 (a) applied to the sale of the Genesis, we must then answer the
question of whether the notice given on the Illinois Disclosure Form16 was sufficient
16
The trial court found that the notice given on the Illinois Disclosure Form
complied with the “purpose” of the disclosure requirements. We note that the notice
given on the Georgia Lemon Law Disclosure Form was sufficient, but this notice was
12
under OCGA § 10-1-790 (a). That section, on its face, mandates only that a seller of
a reacquired vehicle provide clear and conspicuous written notice of the “fact of the
reacquisition and nature of any alleged nonconformity . . . to the prospective
transferree, lessee, or buyer.” Reviewing the Illinois Disclosure Form, we have little
hesitancy in concluding that the Benders were clearly and conspicuously informed
in writing that the Genesis had been reacquired by the manufacturer and of the nature
of the defects which precipitated the reacquisition. Moreover, the Benders testified
they read the form, albeit hurriedly, and sought confirmation that the defects had been
repaired,17 leaving no question that the Benders had actual notice at the time of sale
that the vehicle they were purchasing had been reacquired by the manufacturer
because it was defective.
Nevertheless, the Benders argue the disclosure made on the Illinois Disclosure
Form was insufficient under Georgia law because our Lemon Law rules and
regulations, promulgated pursuant to the authority contained in OCGA § 10-1-795,
impose additional requirements not contained in the statute, including that the
not timely provided to the Benders.
17
There does not appear to be any issue here concerning whether the repairs
had actually been made, and the Benders apparently never experienced any problems
attributable to the “defects” in the vehicle.
13
disclosure be made on a particular “form.” The applicable regulations provide as
follows:
(1) A reacquired vehicle shall not be subject to transfer, lease, or
sale, either at wholesale or retail, by any person having knowledge of
such fact, unless the following conditions are met:
(a) At the time of each transfer of the reacquired vehicle, the transferor
shall ensure the transferee receives [the form];18
(b) If a reacquired vehicle is transferred to a dealer or lessor for re-sale,
the signature of the dealer or lessor to whom the vehicle is transferred
shall constitute an agreement to disclose all information contained on
the form to the ultimate consumer before the sale or lease of the
reacquired vehicle; and
(c) Prior to selling or leasing a reacquired vehicle, the selling dealer or
lessor shall give the ultimate consumer the opportunity to read the form
in its entirety. The ultimate consumer shall sign and date the form. The
selling dealer or lessor shall provide the ultimate consumer with a copy
of the completed and signed form.
18
The Benders incorrectly quote the version of the regulation currently in
effect, which makes reference to the form specified in Ga. Comp. R & Regs., r. 122-
23-.01. Although the prior version omitted this specific reference, it is clear that this
is also the “form” referred to the regulation in effect at the time the Benders
purchased the Genesis.
14
(2) When the reacquired vehicle is sold or leased to the ultimate
consumer, the manufacturer shall activate the warranty required
pursuant to OCGA § 10-1-790 (a) (2). The manufacturer or its
authorized agent shall provide a copy of the form to the Administrator
within thirty days (3) days from the date or fo the sale or lease.
Ga. Comp. R. & Regs., r. 122-23-.02. (2011)
The “ultimate consumer” is defined in Ga. Comp. R. & Regs., r. 122-17-
.01 (17) as “the first person who purchases or leases a reacquired vehicle
for purposes other than resale or sublease.”
Here, there is no question that the Benders were the “ultimate consumer[s]” of
the Genesis. Thus, reading the statute and regulations together, the Benders argue that
Southtowne was required to give notice on a Georgia form prior to19 the sale of the
vehicle, and to give them the form at the time it was signed.20 Further, they argue that
pursuant to OCGA § 10-1-790 (a), Southtowne’s failure to comply with these rules
constituted a per se violation of the FBPA enforceable by them in this private lawsuit.
19
The Benders and the Attorney General in his Amicus brief seem to suggest
that notice be given prior to the time the sale has been agreed to and the paperwork
is being signed, not contemporaneous with the signing of the purchase papers.
20
Without elaborating, the Benders also assert that failure to notify them of the
branded Texas Title violated certain federal odometer laws and OCGA § 11-2-312
respecting title warranties. Pretermitting whether these arguments were raised below,
the text of these statutes do not support their argument.
15
We agree with the Benders that the rules and regulations do in fact impose
these additional requirements on Southtowne, and it is clear that violators may be
subject to an enforcement action by the Attorney General. We cannot agree, however,
that the failure to follow the regulations authorizes a private party to bring a cause of
action asserting a FBPA claim against the violator. Under the plain language of the
Georgia Lemon Law, the only violation of the Georgia Lemon Law that authorizes
a private party to bring a FBPA claim is the failure to give the disclosures required
by 10-1-790 (a).21 And OCGA § 10-1-790 (a) (1) requires only plain and conspicuous
written notice; there is no requirement that the notices required by subsection (a) be
given on a particular form.22 Likewise, there is no requirement that the form be given
to the purchaser, and no particular timing requirement, as long as notice is provided
before the sale of the vehicle is complete. Further, the fact that the statute specifically
21
We note that while OCGA § 10-1-792 (a) provides that “[e]xcept as provided
in subsection (a) of Code Section 10-1-790, this article shall not create or give rise
to any cause of action by . . . consumers against new motor vehicle dealers,” that
section specifically carves out violations of OCGA § 10-1-790 (a), which subjects
violators to consumer actions.
22
This is in contrast to subsection (c) and (d) of that section, which impose
additional requirements on a manufacturer who sells a vehicle after reacquisition,
including the use of “forms approved by the Attorney General.” OCGA § 10-1-790
(d). If the legislature had intended disclosures by parties other than the manufacturer
to be made on a particular form, clearly it could have said so.
16
authorizes the enactment of the rules and regulations to implement and enforce the
provisions of the statute does not mean this language can be read more expansively
than the plain terms allow. Even where a rule is authorized, it must not exceed the
scope of or be inconsistent with the authority of the statute upon which it is
predicated. Ga. Dept. of Community Health v. Dillard, 313 Ga. App. 782, 785 (1)
(723 SE2d 23) (2012). Reading the statutory provisions together, it does not appear
that the legislature intended to authorize retail purchasers to bring private causes of
action under the FBPA against transferors who clearly and conspicuously disclose at
the time of sale that they are selling a manufacturer buyback vehicle, but simply fail
to do so on a particular form or fail to give the form to the purchaser once they have
signed it.
Apart from Southtowne’s failure to use the proper form, the Benders also
contend that Southtowne violated OCGA § 10-1-790 (a) by failing to give them
notice of the one-year, 12,000 mile warranty to cover the nonconformities. We first
note that the statute does not specify what notice must be given about the warranty,
and the Benders do not dispute that upon inquiry, they were correctly told that HMA
had already corrected the defects listed in the Illinois Disclosure Form. Nor have the
17
Benders produced any evidence to support a claim that the warranty was not in effect
had they experienced any problems with the defective parts of the vehicle.
Accordingly, for the foregoing reasons, the trial court’s grant of summary
judgment on the Benders’ claims under the Georgia Lemon Law and the FBPA must
be affirmed.
2. Next, the Benders contend that the trial court erred by granting summary
judgment on their claim for fraud and deceit “where the dealer not only provided false
information but also was under an affirmative statutory obligation to provide full
information,” pointing to Bush’s claim that he had seen the Carfax report and it was
clean in response to their specific inquiry, and other “affirmative statements”
presumably referring to Bush’s statement that the car was a great deal because it was
a lease turn-in.
To prevail on a claim for fraud and deceit, a plaintiff must show: (1) a false
representation by the defendant; (2) scienter; (3) intention to induce the plaintiff to
act or to refrain from acting; (4) justifiable or reasonable reliance; and (5) damage.
Paulk v. Thomasville Ford Lincoln Mercury, 317 Ga. App. 780, 782 (1) (732 SE2d
297) (2012); see also Raysoni v. Payless Auto Deals, LLC, 296 Ga. 156 (766 SE2d
24) (2014). Thus, to make out a claim of fraud, a plaintiff generally must show both
18
reliance upon a misrepresentation, and the reliance was reasonable and not the
product of a lack of due diligence. Id.; Edel v. Southtowne Motors of Newnan II, Inc.,
338 Ga. App. 376, 380 (3) (789 SE2d 224) (2016).
The Benders argue that because this case involves the breach of an affirmative
statutory duty to disclose, not just a “simple misrepresentation,” justifiable reliance
may be shown simply by demonstrating a failure to disclose those matters required
by law to be disclosed. However, as set forth in Division 1, Southtowne made the
disclosures required by OCGA § 10-1-790 that the vehicle had been repurchased by
the manufacturer because of certain defects. And the Benders have not pointed to any
Georgia law that requires disclosure of a “branded” certificate of title issued in
another state, which is presumably the additional information which would have been
disclosed in the Carfax report.23 Accordingly, even assuming the salesperson may
have misrepresented that he had seen the Carfax report and it was “clean,” the
23
The Benders have not pointed us to the page in the record where the Carfax
report noting the Texas branded title can be found, and we have not found it upon our
review. We note, however, their expert submitted an affidavit stating that the Carfax
report included information that the Texas title carried the warning “Manufacturer
Buyback or Lemon Reported[,]” and the appellees do not appear to dispute that the
Carfax would have noted that the Texas title was so branded. In any event, we will
assume for the sake of this appeal that the Carfax would have disclosed the branded
Texas title.
19
Benders have not supported their contention that there was an affirmative duty to
disclose that the title was branded. Nor is there any merit to the Bender’s argument
that the dealer placed himself in a confidential relationship with them by agreeing to
act on their behalf in transferring the title of the vehicle. See Phillips v. Atlantic Bank
& Trust Co., 168 Ga. App. 590, 591-92 (1983) (“Creditors deal with debtors at arm’s
length, and do not stand in a fiduciary capacity in relationship to the debtor.”).
But the Benders can still make out a claim for fraud if they show they
reasonably relied on the salesperson’s misrepresentations that the Carfax report was
“clean” and the vehicle was a lease turn-in, when in fact the vehicle was a
manufacturer buyback and the Texas title was branded. The Benders are correct that
generally reasonable reliance must be determined by the factfinder, as our appellate
courts have had occasion to reiterate in three recent cases which also involved alleged
misrepresentations made during the sale of an automobile. Raysoni, 296 Ga. at 156-
57; Edel, 338 Ga. App. at 381 (3); Alvear v. Sandy Springs Toyota, Inc., 332 Ga. App.
798, 799 (775 SE2d 172) (2015) (physical precedent only). For example, in Raysoni,
the buyer questioned the dealer concerning whether the minivan he wanted to buy had
ever been in an accident and was assured by the salesperson that it had not. The
plaintiff then asked to see a Carfax report, which confirmed what he had been told.
20
Raysoni, 296 Ga. at 158. Similarly, in Edel, a representative of the car dealer told the
buyers that the vehicle had not been in an accident and showed them a Carfax report
which revealed no accidents. 338 Ga. App. at 376. And in Alvear, the buyer was
provided with an odometer disclosure statement that misstated the mileage on the car
he purchased, and when he asked the salesperson about the car’s low mileage, she
emphasized that feature of the car. 332 Ga. App. at 801-02 (1).
Here, the salesperson told the Benders that he had seen the Carfax report and
it was clean and that the vehicle was a lease turn-in, which for the purposes of
summary judgment we construe against Southtowne. Under the Georgia fraud statute,
a “reckless representation of facts as true when they are not, if intended to deceive,
is equivalent to a knowledge of their falsehood even if the party making the
representation does not know such facts are false.” OCGA § 51-6-2 (b); Alvear, 332
Ga. App. at 801 (1).24 And Lindsey Bender explained that when she was confronted
with the Illinois Disclosure Form, she thought it confirmed Bush’s statement that the
car was a great deal because it was a lease turn-in, and her understanding that “[w]ith
a lease turn-in you hand back the keys and it goes back to the company.” Further,
24
For this reason, a jury must decide whether the representations were false and
made with knowledge they were false. Alvear, 332 Ga. App. at 801-02 (1).
21
although the Benders signed certain documents disclaiming “verbal promises,” the
statements made to them were not “promises” but rather misrepresentations about the
condition of the vehicle. And the “merger clause” stating “This contract contains the
entire agreement . . . relating to this contract” was preceded in bold caps with the
heading “HOW THIS CONTRACT CAN BE CHANGED” and simply required
changes to the terms of the sale of the vehicle to be in writing.25 The contract said
nothing about the status or history of the vehicle. See Edel, 338 Ga. App. at 381 (3);
Campbell v. Beak, 256 Ga. App. 493 (568 SE2d 801) (2002) (vehicle being sold “as
is” does not require different result on question of diligence when nothing placed
plaintiff on notice he was being deceived). Under these facts, we cannot say that
reliance on the salesperson’s misrepresentations were rendered unreasonable as a
matter of law by the merger clause or disclaimer. See Raysoni, 296 Ga. at 159; Edel,
338 Ga. App. at 381 (3); Alvear, 332 Ga. App. at 801-02 (1). Whether the Benders
could have by proper diligence discovered that the salesperson was not telling the
truth, or whether they were as diligent as the circumstances warranted, must be
determined by a jury. Johnson v. GAPVT Motors, Inc., 292 Ga. App. 79, 82-83 (1)
(663 SE2d 779) (2008); see also Catrett v. Landmark Dodge, Inc., 253 Ga. App. 639,
25
We note that the “AS IS” clause on the sales agreement was not initialed.
22
641 (1) (560 SE2d 101) (2002) (jury must decide whether buyer justifiably relied on
salesperson’s statement that the vehicle was a “demonstrator” and thus considered a
“new” car, when the documentation he saw was conflicting and he could have
believed the used language simply referred to the use by the dealership). As issues of
fact remain, summary judgment on this claim must be reversed.
3. Lastly, the Benders contend the trial court erred by granting summary
judgment on their claim for revocation of acceptance under OCGA § 11-2-608. That
section provides:
(1) The buyer may revoke his acceptance of a lot or commercial unit
whose nonconformity substantially impairs its value to him if he has
accepted it:
(a) On the reasonable assumption that its nonconformity would be cured
and it has not been seasonably cured; or
(b) Without discovery of such nonconformity if his acceptance was
reasonably induced either by the difficulty of discovery before
acceptance or by the seller’s assurances.
(2) Revocation of acceptance must occur within a reasonable time after
the buyer discovers or should have discovered the ground for it and
before any substantial change in condition of the goods which is not
23
caused by their own defects. It is not effective until the buyer notifies
the seller of it.
(3) A buyer who so revokes has the same rights and duties with regard
to the goods involved as if he had rejected them.
As to the timeliness of their revocation, the Benders point to their letter dated
October 24, 2012, which was sent to Southtowne approximately six weeks after Cory
became aware of the branded Texas title during his visit to the Lexus dealership, and
argue that a jury should determine if their revocation occurred within a reasonable
time. Further, because Southtowne rejected their revocation, they assert that a jury
must also determine whether their continued use of the vehicle constituted a
“reacceptance” after revocation. Edel, 338 Ga. App. at 378 (1) (“revocation of
acceptance must occur within a reasonable time after the buyer discovers or should
have discovered the ground for it and before any substantial change in condition of
the goods.”) (citation and punctuation omitted); Mauk v. Pioneer Ford Mercury, 308
Ga. App. 864, 867 (2) (709 SE2d 353) (2011) (factfinder must decide whether
revocation was timely and whether buyer reaccepted goods after revocation).
Pretermitting these issues, the record shows that Southtowne disclosed the vehicle’s
“nonconformity” to the Benders, the Benders purchased the car with actual
24
knowledge of the listed defects, the defects had been successfully repaired prior to
purchase, and the Benders did not notice any performance issues attributable to the
defects even though Cory Bender drove the car on a regular basis. Although the
Benders later learned the Texas title also contained a notation that the Genesis was
a manufacturer buyback, their discovery does not change these facts, and nothing
changed about the condition of the vehicle after their acceptance that would warrant
revocation based on any alleged “nonconformity.” The only assurance that the dealer
apparently gave the Benders about these defects was that the repairs had been made,
which appears to have been true. Accordingly, the trial court did not err by granting
summary judgment to the appellees on this claim. Edel, 338 Ga App. at 378-79 (1)
(summary judgment proper where buyers should have known about the vehicle’s
buyback status when they signed disclosures day after the vehicle was purchased but
waited over a year to revoke acceptance); Paulk, 317 Ga. App. at 785 (4) (summary
judgment proper where plaintiffs noticed defects prior to purchasing the vehicle but
drove car thousands of miles before attempting to revoke acceptance); Bicknell v. B
& S Enterprises, Inc., 160 Ga. App. 307, 309 (2) (287 SE2d 310) (1981) (“[g]iven the
ease with which the plaintiff could have discovered the alleged nonconformance, . .
. she had no grounds to revoke her acceptance of the automobile.”).
25
Judgment affirmed in part and reversed in part. McFadden, J., concurs. Miller,
P. J., concurs fully in Divisions 1 and 3 and in judgment only as to Division 2.
26