An Alaska Supreme Court decision spells potential trouble for RV dealers across the nation because of the precedent setting nature of the case, declaring an RV dealership has the responsibility to verify the work of a state motor vehicle’s department (Borgen vs A&M-Alaska).
“The court basically ruled that if a dealership receives a title that indicates an RV is a 2003 model when, in fact, it is a 2002 model, then the company has the onus to verify the title.”
A quick summary
The originating RV dealership sold a motorhome as a 2003 model, when it was actually a 2002 model. The DMV created a title reflecting it as a 2003. The RV was sold three additional times. Borgen purchased the RV, believing it to be a 2003. Upon finding it to be a 2002, he asked for compensation from the dealership. The dealership made an offer that Borgen refused. Then, Borgen sued in State court.
During the trial, the dealership argued that it acted in good-faith that the company relied upon the state-issued title which incorrectly reflected the motorhome’s model year. An expert witness testified that it was reasonable for a dealership to rely on the vehicle’s title to determine the model year, and thus, its value. A DMV witness testified that the department erred when the title was entered into the state’s computer system because the agency had relied upon the application rather than looking at the official certificate of origin when entering the model year.
The jury ruled in Borgen’s favor and awarded him $3,097.50 in damages. Borgen objected to that ruling and appealed to the Alaska Supreme Court still alleging that A&M was in violation of the Unfair Trade Practices and Consumer Protection Act.
The Alaska Supreme Court ruled that A&M Motors could not rely upon the state-issued title as a defense and, therefore, the dealership misrepresented the model year in violation of the Unfair Trade Practices and Consumer Protection Act.
The court modified the original award as follows:
- $117,000 judgment for twice the value of the motorhome.
- $80,000 in plaintiff attorney fees.
- $27,000 in appeal fees.
Combined with the more than $50,000 A&M incurred in legal fees itself, the judgment amounted to a $274,000 hit to the dealership. At this point, A&M’s only option is to appeal to the U.S. Supreme Court, a move Palmer estimates could cost more than $100,000.
“It seems that any error in a transaction, no matter who committed it or how trivial the error may be, a dealer is going to lose under the UTPA,” said Palmer. A&M’s legal counsel. “The RV industry needs to lobby to get some verbiage in legislation that addresses some of these issues.
“It is not a matter of what is right or moral, it is a matter of interpretation of the law and the buck stops at the dealer, no matter who made the errors” Palmer added.
As ridiculous as this lawsuit, and its final results were, it can happen again! What should a dealership do to insure it does not find itself in a similar lawsuit?
The F&I Manager and/or Title Clerk MUST insure that the VIN matches the model year.
Most dealership Document Management Software (DMS) has safety measures built in which provides an alert when a VIN and a year model do not match.
However, this DMS safety measure is useless if it is overidden without solid verification.
If a VIN is not matching up correctly, then it should be corrected.
Let’s take a few minutes for a quick overview of the VIN, and how to insure the proper year is presented, and sold, to a customer. A few minutes to validate a model year is worth the effort.
How to read a VIN
1st character – Identifies the country in which the vehicle was manufactured.
For example: U.S.A.(1or 4), Canada(2), etc.
2nd character – Identifies the manufacturer. For example; General Motors(G),
3rd character – Identifies vehicle type or manufacturing division
4th to 8th characters – VDS – Vehicle Descriptor Section. These 5 characters occupy positions 4 through 8 of the VIN and may be used by the manufacturer to identify attributes of the vehicle. Identifies vehicle features such as body style, engine type, model, series, etc.
9th Character – The check digit “character or digit 9” in the sequence of a vehicle identification number (VIN) built beginning with model year 1981 (when the 17 character digit format was established) can best be described as identifying the VIN accuracy.
10th character (THE MOST IMPORTANT OF ALL) – Identifies the model year. For example: 1988(J), 1989(K), 1990(L), 1991(M), 1992(N), 1993(P), 1994(R), 1995(S), 1996(T),1997(V), 1998(W), 1999(X), 2000(Y)——2001(1), 2002(2), 2003(3)
11th character – Identifies the assembly plant for the vehicle.
12th to 17th characters – Vehicle Identifier Section (VIS). The last 8 characters of the VIN are used for the identification a of specific vehicle. The last four characters shall always be numeric. Identifies the sequence of the vehicle for production as it rolled off the manufacturers assembly line.
Prior to 1980 there was not an accepted standard for these numbers, so different manufacturers used different formats. Modern day VINs consist of 17 characters that do not include the letters I, O or Q.