WHAT DID TOYOTA KNOW ?
The USA Today has an interesting report that NHTSA was notified by an insurance company, State Farm, of possible defects.
State Farm told the governmental agency that it had seen an increase in the acceleration problems in some vehicles, Toyota and Lexus Models.
If you have an questions about the legal implication feel free to call Carton and Rudnick to have you questions answered
TOYOTA RECALL AND POSSIBLE LEGAL CLAIMS
The questions must be asked!!
What if the manufacturer and/or distributor Toyota Motor Sales was aware that the cars had these defects when distributed to the dealers?
What if the defects were not addressed quickly enough?
What roles did the dealers play and what of the Toyota dealers were aware that the cars had defects and failed to disclose this information to the consumers?
What if the Toyota dealers made misleading disclosures about the known defects to potential purchasers?
Is there a breach of warranty claim even if they fix the problem?
How long have they known about the defect?
Is there a consumer fraud claim under New Jersey law against the dealer the manufacturer or both?
What did the dealers really know about the issues with these cars since they were the ones doing the repair work?
ANSWERS SOON TO FOLLOW
TOYOTA STOPS SELLING CERTAIN CARS
The law firm of Carton & Rudnick is investigating claims that individuals and/or entities have against Toyota Motor Sales for allegations that the vehicle is working improperly. As it has been reported recently, there is a significant recall underway with regard to problems which are currently widely known with various models distributed by Toyota Motor Sales U.S.A.
There is breaking news that there has been political implications for this issue
House Energy and Commerce Committee Chairman Henry Waxman said he would hold a hearing next month to consider "how quickly and effectively" the car maker responded to complaints about sticking pedals and slipping floormats.
Feel free to call the law office of Carton & Rudnick if you have any questions pertaining to your rights or obligations under this recall and the status of any claims that you might have against any entities including the dealership.
On January 21, 2010 Toyota Motor Sales U.S.A. issued a press release indicating there would be a recall of approximately 2.3 million vehicles to fix/correct a sticking accelerator in various specific Toyota Division models.
This press release stated that this action was distinct from an ongoing recall of approximately 4.2 million vehicles, Toyota and Lexus, to reduce the risks of pedal entrapment.
The press release indicates that Toyota had been investigating isolated reports over a lengthy period of time to determine if there was a risk under certain circumstances of danger to the drivers and the public with regard to this pedal condition. This is according to the Toyota website.
According to the Los Angeles Times reported per the internet, ‘Toyota found to keep tight lid on potential safety problems’, and that the website indicated a Times investigation shows the world largest automaker had delayed recalls and attempted to blame human error in cases where owners claimed vehicle defects.
This is per the December 23, 2009 internet posting by Ken Bensinger and Ralph Vartabedian. Apparently, this was discovered in a routine test on a Sienna minivan in April 2003 where the engineers found a plastic pedal could come loose and gas pedal could stick potentially making a vehicle accelerate beyond control.
The article asserts/alleges that in January, six years after discovering the potential hazard, the automaker recalled 26,501 vans made with this old pedal. The article states, ‘The automaker knew of a dangerous steering defect in vehicles including the 4Runner sport utility vehicle for years before issuing a recall in Japan in 2004. But it told regulators no recall was necessary in the U.S., despite having received dozens of complaints from drivers. Toyota said a subsequent investigation led it to order a U.S. recall in 2005’.
The law firm of Carton & Rudnick handles breach of warranty and other various consumer claims against both dealers and manufacturers. If you feel that the dealer and/or the manufacturer made material omissions of fact pertaining to the Toyota that you purchased, contact his office and you will receive a consultation.
The National Highway Safety Administration did an investigation on this issue
This is scary stiff taken from a NHTSA report: Be carefull
Driving home from work, I experienced a sudden uncontrollable surge in
acceleration causing my speed to increase from about 60 mph to 80+ mph.
Immediately I began to brake hard as I was rapidly approaching traffic just
ahead of me. Fortunately the inside left lane was unoccupied and I was able to
make an immediate lane change. Initially I depressed the brake pedal as hard as I
could using both feet but only managed to slow the vehicle to 40-45 mph. With
my speed reduced, I alternated between pumping the accelerator pedal and
pulling up on it from the underside with my right foot as it became clear that the
throttle was stuck in an open position. The vehicle continued to speed back up to
over 65 mph with less pressure on the brake pedal.
With traffic just ahead of me, I moved over to the left shoulder next to the
center barrier and continued to try to release the open throttle. There were
clouds of smoke around the vehicle and the smell of burning materials from the
overheating brakes. After finally getting the vehicle slowed down to about 25-30
mph, I shifted into “Neutral” and depressed the start/stop push button a number
of times hoping to stop the engine but nothing happened. Instead the RPMs
moved up into the redline range on the tachometer. I quickly shifted back into
“Drive”; the vehicle jolted and rapidly accelerated to 60+ mph.
As the brakes were fading quickly, I was certain that I would need to shift
back into “Neutral” and let the engine blow up to stop the vehicle. Suddenly the
acceleration surge stopped and I was able to bring the vehicle to a stop about 1 ½
to 2 miles from where it had started. I quickly shifted into “Park” and depressed
the start/stop push button to turn off the engine. The vehicle seemed to shutter as
I did so. Upon restarting the car, I drove cautiously to Lexus of Wayzata a short
distance away fully prepared to shift into “Neutral” if the acceleration repeated.
The car remains there over 5 weeks later.
This news story indicates that repossessions and charge offs are way up:
There are very high tech methods to grab you car. Check out this video. They will find your car!!
More repo man
CONSUMER FRAUD CLAIMS AND MOVING COMPANIES
It is not uncommon that people make claims that a moving company has committed fraud or consumer fraud. These claims are usually in the context of improper or inaccurate estimates, improper or inappropriate moving practices and improper or inappropriate billing practices.
As an example, one person might claim that they were quoted one price and were required to pay a different price upon delivery of their goods. There are specific Administrative Code sections applicable to moving companies in the State of New Jersey. However, these regulations, would not be deemed the only avenue of potential standards against a moving company. The generalized New Jersey Consumer Fraud Act and deceptive and inappropriate conduct contained under the New Jersey Consumer Fraud would also be applicable to moving companies. As an example, if a moving company were to make an affirmative misrepresentation of fact as to a specific quote and then were to hold goods for ransom if additional monies were not paid, this could potentially be deemed a violation of the New Jersey Consumer Fraud Act, inappropriate conduct and actionable conduct under the New Jersey Consumer Fraud Act. What the ascertainable loss which is a requirement under the New Jersey Consumer Fraud Act would be an entirely different question.
Thus, when engaging a moving company, make sure that you get all representations in writing and also representations that this is a final and full quote. Many people have contacted my office while the moving companies are in possession of their goods and refusing to deliver the goods unless the consumer signs some additional documentation which indicates that additional charges are appropriate, additional card credit charges authorization are appropriate or a complete release from all liability is signed. Unless the moving company gets this documentation, generally they will not deliver the goods. This places the consumer in a very awkward and uncomfortable position dealing with a moving company that is in possession of their entire inventory of household goods.
If a moving company were to damage goods as opposed to making affirmative misrepresentations of fact, this would be a completely separate claim. There are various limitations against moving companies pertaining to the destruction of goods and the transportation process. This is also known as the Carmack Amendment.
Nonetheless, moving companies are subject to the reaches of the New Jersey Consumer Fraud Act and the liberal construction of the New Jersey Consumer Fraud Act to benefit consumers who have been duped or lied to by moving companies.
REPOSSESSION, CAUSES OF ACTION
Under New Jersey law, a company who is repossessing a consumer vehicle has an obligation to comply with all applicable laws. This means that if a repossession company breaches the peace in the context of repossession, the individual who has been aggrieved by this act would have a claim against both the repossession company and the finance company who hired this repossession company. The duty to make sure that there is no breach of the peace is a non-delegable duty. This means that the finance company who has owed the money is ultimately responsible for the actions of the repossession company to make sure that all of the laws are complied within the context of repossession.
Ultimately, the repossession company usually carries an extensive insurance company to cover any conduct with regard to improper repossession. Therefore, if the repossession company, the marketing company and/or the finance company are sued in the context of an improper or wrongful repossession, it is ultimately the insurance company from the repossession company who will be responsible for any and all losses. Many times there are agreements between the repossession company and the finance company with regard to repossession. This means the repossession company has agreed to be responsible, in writing, for any damages associated with the wrongful or inappropriate repossession of a vehicle. This is the way the finance companies protect themselves, with the signed agreement, with repossession company to make sure that there is insurance coverage to cover the finance company. As an example, if a repossession company were to get to a fight with the owner of the vehicle, break in to the owner’s house or conduct other illegal or inappropriate actions, the finance company could ultimately be responsible for any damages in this case since the duty is a non-delegable duty with regard to the repossession. There is also frequently an intermediary company which is hired by the finance company for form out the repossession to another party. Therefore, when investigating these claims, there are frequently additional parties which are not disclosed at the time of the repossession.
The Uniform Commercial Code contains most of the rights and remedies for those being aggrieved of a wrongful repossession. The New Jersey Consumer Fraud Act would also apply to the wrongful repossession of an automobile. The Uniform Commercial Code contains specific statutory damages if there were to be a wrongful repossession. Statutory damages are required damages to be awarded by the Court if the plaintiff were to prove a wrongful repossession. This is one of the benefits to making these claims. However, there is some dispute under the Uniform Commercial Code as to whether or not attorney’s fees would be recoverable under the Uniform Commercial Code for a wrongful repossession. Nonetheless, the statutory damages could potentially equal the amount of the finance charge with a 10% add-on pursuant to the Uniform Commercial Code. It is likely that any conduct which would violate the Uniform Commercial Code would also violate the New Jersey Consumer Fraud Act or the Truth in Contract and Warranty Act. As an example, if the repossession company were to lie to an individual who is having the vehicle repossessed stating that they were with the police or an official agency, they would probably be subject to violations of the New Jersey Consumer Fraud Act as well as the Uniform Commercial Code.
Thus, if a seller of an automobile says that the vehicle has not been in an accident, in fact it has been in an accident, that is an affirmative misrepresentation of fact which is false and inherently has the capacity to mislead a potential purchaser of the vehicle. This should be an actionable representation contemplated under the New Jersey Consumer Fraud Act for which the plaintiff would be entitled to damages if a case was proved. There are other ways to prove a consumer fraud under the New Jersey Consumer Fraud Act where good faith might be a defense. As an example, if a plaintiff is claiming a material omission of fact, the plaintiff would be required to prove intent to pursue a claim under the New Jersey Consumer Fraud Act. However, when the plaintiff is alleging an affirmative misrepresentation of fact, good faith is not a defense. As an example, if a dealer were to state that a vehicle was not in an accident and in fact was in an accident, even though they were relying upon a CARFAX or other industry accepted databases or documentation, they would not have a valid defense under the New Jersey Consumer Fraud Act.
As an example, there is a case under New Jersey law called Cuesta v. Classic Car. In this specific case, the seller of an automobile sold a vehicle with an inappropriate or improper odometer reading. The Court held that the improper odometer reading created a ‘misrepresentation of fact’ which was actionable under the New Jersey Consumer Fraud Act. Dealer claimed they were unaware of this rollback, however, this is not deemed a valid defense. This is consistent with the liberal interpretation of the New Jersey Consumer Fraud Act and the decision by the legislature to place the burden on a business to make sure that the product that they sell is in fact consistent with any representations set forth by the selling dealership or business.
A consumer should be able to rely upon the representations from the business since they are the experts in the field in which the consumer is dealing. It is an entirely separate post to quantify the amount of loss where the appropriate procedure or guidelines for pursuing a claim for consumer fraud under the New Jersey Consumer Fraud Act. However, this post just demonstrates types of claims which can be sued and the obligations upon a business when selling a vehicle product or other consumer goods.
DECEPTION AND THE NEW JERSEY CONSUMER FRAUD ACT
The New Jersey Courts have determined and held that the defendant’s acts of good faith are not necessarily a defense to a consumer fraud action. The Courts have held, as set forth in the Model Jury Civil Charges that it is the capacity to mislead that is the important aspect of consumer fraud. What exactly is the capacity to mislead in the context of a consumer transaction?
The business, who sells a product, including a car, is charged with the knowledge of all the associated Administrative Code Regulations. The seller of an automobile or a product is assumed to be knowledgeable in the industry in which they sell a specific product such as a vehicle. Thus, the seller of a product or a vehicle in making certain representations pertaining to that product have a duty/obligation to make sure that those representations and warranties with the product are accurate, complete and not misleading in any way. As previously set forth, it is the capacity to mislead that is important in a consumer fraud claim. Thus, the defendant in a defense to a consumer fraud claim cannot say we did not know, we were not sure or we did the best we could. Again, good faith is not a defense to certain claims under the New Jersey Consumer Fraud Act. The seller of a product is better suited than the purchaser of a product to assure that the representations pertaining to the product are in fact accurate and thus the consumer is not misled.
Buying a car and consumer fraud, part 2
Many processes are used such as keeping people at the dealership for a long period of time, separating couples, confusing customers with various documentation and keeping them in the air. There are many, many dealership terms that characterized the types of process that are undertaken. If one were to think that negotiating a purchase of the car is simply speaking about the price and then getting the financing approved, they are mistaken. The dealership has various devices to ‘squeeze you’ for additional money and time. All of the squeezing that the dealership does ultimately breaks down your defenses and I have had many clients who have said I was there for so long, I just signed whatever documents that they put in front of me. This is exactly what a dealership is trying to do.
Therefore, if you are buying a vehicle, it is important that you go there when you are well-rested and taken aggressive attitude with the dealership and understand that nothing that they say can be trusted. If you take this approach and get aggressive with them and start asking questions of them to see what price they want and what financing they want and what interest rate they can provide, they will be on the defensive. Ultimately, the dealership knows that you can walk out of the dealership, go to another dealership across the street or down the road and get a better deal and cost them a sale. Dealerships count on certain percentage of all people entering the dealership to purchase vehicles. This is a known statistic by the dealerships.
Buying a Car and Consumer Fraud
Many consumers confide that buying a vehicle is one of the worst experiences of their life. Frequently, they come into my office and they are embarrassed and ashamed of the situation in which they have found themselves.
When one understands how a car dealership sells cars, there is a complete understanding of the circumstances leading to a vehicle purchased and there should be no reason to be embarrassed. Quite frankly, people do not understand the extensive processes at work when buying a car. Actually, the appropriate statement would be most people do not understand the processes at work used by a dealership to force the sale of vehicles. This process has been honed for many years for which the dealership employees at all levels have been trained. All levels of dealership employees including salesman, sales manager, finance and insurance managers, general managers and other owner representatives have been extensively trained in the process of selling cars.
The process starts in the advertisement. Nowadays, the internet, in my opinion, has overtaken the use of newspaper advertisements. This is step one to get interest in a vehicle whether it be through the internet or through newspaper advertisement or TV. The next step is to get the person into the dealership when they can use their training and skills to ‘convince’ a potential purchaser to purchase a vehicle. There are many tools that they use to gain a consumer’s confidence and trust the dealership representatives in the sales process. However, this is completely phony and consumers need to understand that they cannot trust these representatives in any way, shape or form. These representatives are using this trust as a coercion factor to get them to purchase vehicles.
The New Jersey Department of Banking and Insurance is an excellent resource for most consumers. The department’s main offices are located at Mary Roebling Building at 20 West State Street in Trenton, New Jersey. The mission of the Department of Banking and Insurance is regulation of banking and insurance in the real estate industries, to protect and educate consumers and promote growth and financial stability. The site provides a host of consumer information in the insurance industry, personal finance industry and real estate industry. There is an entire section for consumer inquiries and complaints. There are online forms for filing a formal banking complaint, online forms for filing formal insurance complaint and online forms for filing real estate complaints. The fax is 609-777-0508.
There is the Division of Banking which consists of two major units such as the Office of Consumer Finance and the Office of Depositories. This department has the ability to issue cease and decease orders as an example for the order issued against Taylor, Bean & Whitaker Mortgage Corporation. There is an entire insurance division which regulates insurance companies throughout the State of New Jersey. There is a list of hot topics on the site which indicate proposed acquisition of Health Net of New Jersey by Oxford Health Plans, limited benefits under New Jersey Health Plan Benefits, issues with regard to personal injury protection and various other items including Federal Stimulus for New Jersey Groups Not Subject to COBRA.
There is an entire real estate commission in the Division of Banking and Insurance to enforce New Jersey’s real estate licensing law. There is an entire section to research and find banking insurance and real estate licenses. There is an entire section for rules, orders and bulletins, and the applications and forms for those including motor vehicle installment sellers. According to the consumer inquiries and complaints section on the website, you may contact the unit in several ways by telephone, web, mail, fax or in person. Then, a tracking number is assigned for inquiries or assistance of filing a complaint. The phone number is 609-292-7272 or hotline of 18004467467. The mailing address is NJ DOBI, P.O. Box 471, Trenton, New Jersey 08625-0471.
NEW JERSEY DIVISION OF CONSUMER AFFAIRS
The New Jersey Division of Consumer Affairs, a subdivision of the Department of Law and Public Safety, provides an excellent website with links to all of the relevant New Jersey departments, links to all of the relevant inquiries pertaining to the Division of Consumer Affairs and current headlines or investigations undergoing or undertaken by representatives of the Division of Consumer Affairs. As an example, there are headlines on the site and the current headlines as of the writing of this blog indicate that there are various ticket sellers which agree to stop speculative ticket sales, a Hudson County Senior Fraud Education and Protection Program, a notice on chimney repair scams and an announcement that the state through Governor Corzine and Attorney General Milgram are going to provide consumers with titles when the dealerships have gone out of business. The Division of Consumer Affairs also has links to Division of Criminal Justice, Division of Civil Rights, Division of Gaming and Enforcement, Division of Highway Traffic Safety, Division of Law, Juvenile Justice Commission, New Jersey Racing Commission, State of Athletic Control Board, Division of State Police and Victims of Crime Compensation Office. There are also numerous consumer briefs which is public information which is extensive ranging from county office on aging to travel scams.
Consumer Fraud and the Uniform Arbitration Act
As previously stated in many of these posts, the dealers frequently use arbitration agreements as a method by which they bypass the court system. There are numerous organizations including JAMS, NAF and American Arbitration Association. All of these organizations ordinarily have consumer due process protocols for these arbitrations. The question is what happens when you win an arbitration and the dealership refuses to pay the arbitration award. Unfortunately, this is not an easy process but there is a provision in the Uniform Arbitration Act for the Superior Court to confirm an arbitration award entered by an arbitrator. Basically, the petitioner must file an order to show cause (fancy words for a court action) to confirm the arbitration award so as it can be entered into the docket system and be docketed against the dealer’s property. There is an entire provision under the court rules for a filing of an order to show cause and is relatively complicated. Nonetheless, the Court is permitted to confirm this arbitration award so long as there is not a basis to vacate the arbitration award filed by the loser of the arbitration. Once the arbitration award is confirmed by the Superior Court, it becomes a judgment docketed and the petitioner or plaintiff may use this docketed judgment or award as any other docketed judgment or award. Moreover, the Uniform Arbitration Act provides for the payment of counsel fees and costs associated with domesticating or confirming an arbitration award. The New Jersey Consumer Fraud Act also provides for the payment of counsel fees with the collection of a consumer fraud judgment. This was decided in the case of Tankersley wherein the Appellate Division held that an attorney who was attempting to collect judgment on a consumer fraud award would be entitled to counsel fees and costs. The Tankersley case involved the collection of a judgment against a car dealership.
Appearance Package, Wheel Well Molding, Door Edge Guards
Some dealerships use the sale or attempted sale of door edge guards, wheel well molding or pin striping commonly known as appearance packages to increase the costs of the vehicles. Frequently, these pre-delivery services are not included anywhere in the buyer’s order but only on a price addendum placed on the automobile. New Jersey law is relatively straightforward and requires a consumer to sign off and acknowledge the purchase of any pre-delivery services on the sale of an automobile. Dealership uses the guise of these expensive products. These products increase the “sticker” price of a vehicle. When the customer sits downs and looks all the paperwork, it is not apparent that these items are included the price anywhere. This is the intention behind the New Jersey Consumer Fraud Act and the associated Administrative Code regulations requiring consumers to acknowledge purchase of pre-delivery services. Even if these were considered aftermarket items or different types of products, it would still be appropriate for the dealer to disclose the nature and extent of these products, any warranties that were associated with these products and the costs thereof. Best advice would be to be very careful in the injunction of negotiating a purchase price on a new vehicle and demand for an itemization of any and all products and/or services that you are acquiring or think you are acquiring as part of the automobile purchase. The dealership is required to disclose this to you fully and honestly and the best way to do this would be to bring a piece of paper where the dealership would sign off on the specific products which you are purchasing. This would forego any potential confusion and document exactly what you are and are not purchasing.
DAMAGED AND FRAME-DAMAGED CARS
It is a common question that is asked frequently. Is a seller of a motor vehicle or an automobile have the obligation to disclose that the vehicle was damaged even slightly, less than frame damage? Is there a separate obligation based on the nature and extent of the damage? Is it relevant that there was frame damage? The New Jersey law in the subject is mostly a matter of common sense. If the seller of an automobile or vehicle knows that a vehicle was damaged, he has the obligation to make material disclosures to the person to whom he is selling the car if he thinks that the disclosure of the information would make a difference in the purchasing decision. This is what makes a material disclosure relevant.
There are certain exceptions to this rule for the disclosure of damages on damaged cars where the legislator has promulgated or passed various laws requiring certain disclosures. As an example, New Jersey law requires disclosure of advertised automobiles where there is damage in excess of $1,000. This number varies by state. Nonetheless, the New Jersey Consumer Fraud Act has taken the more ethical approach and applied it to the sale of goods. The law in the State of New Jersey is no longer buyer beware but rather seller beware. Therefore, the seller of an automobile has the obligation to make sure that all representations pertaining to the sale of specific automobile are correct. As an example, if the seller tells a buyer that a vehicle has not been damaged, has not been in an accident, is in good shape or makes certain representation as to the condition of the vehicle, he has an obligation to make sure that this representation is true and accurate. The New Jersey Consumer Fraud Act does not have any intent requirement for affirmative misrepresentations. This means that if a seller of an automobile says the vehicle has not been damaged or has not been in an accident and ultimately it turns out that the vehicle was in an accident despite the seller of the automobile not being aware of same, there is liability under the New Jersey Consumer Fraud Act which applies triple damages, attorney fees and costs.
It is safe to assume that if you are not sure do not state what the condition of the vehicle is, but if you do know you are obligated to make such disclosures. It would not be appropriate to intentionally look away from various portions of the car so as to hide relevant condition from the seller’s own knowledge.
Is Best Buy required to honor their advertisement selling TVs for $9.99?
Stories on the internet indicate that Best Buy probably made a mistake in placing a very expensive television for sale for $9.99.
If you have purchased or attempted to purchase one of these TVs and Best Buy refuses to honor the advertisement please call this office for a free consultation.
Carton and Rudnick
732-842-2070
Goods to be merchantable must be at least such as (a) pass without objection in the trade under the contract description; and (b) in the case of fungible goods, are of fair average quality within the description; and (c) are fit for the ordinary purposes for which such goods are used; and (d) run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; and (e) are adequately contained, packaged, and labeled as the agreement may require; and (f) conform to the promises or affirmations of fact made on the container or label if any.
The issue whether a defect existing at the time of sale substantially affecting the value of the collateral creates a breach the implied warrant of merchantability? See 26 Am Jur Proof of Fact 1 Section § 7. Elements of merchantable quality—"Fair average". The issue is not whether the car can be driven but whether the reduced value has a remedy under the UCC. The answer must be yes? Why would the Code leave those purchasing defective goods without a remedy? The Code reflects the intent that warranties can be created in many ways, both express and implied. N.J.S.A. 12A:2-313. The Uniform Commercial Code should be liberally construed and applied to promulgate its underlying purposes and policies. Matter of Maple Contractors, Inc., 172 N.J.Super. 348, 411 A.2d 1186 (L.1979). The codes basic concept of damages is based on reduction of value. D'Ercole Sales, Inc. v. Fruehauf Corp., 206 N.J.Super. 11, 21, 501 A.2d 990, 995 (App.Div.1985). Does it make sense that the code measures damages analyzing value then leaves a consumer without remedy for purchasing collateral with a defect where the value is reduced by the cost to repair the goods? In Spring Motors v. Ford Trucks 98 N.J. 555, 590 (1985) the claim was that the goods had a reduced value and there were also expenses for repairs as in the current case.
