Vo v. Leo, No. 845-03 Cnsc ( Katz, J., Oct. 22, 2003)

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STATE OF VERMONT SUPERIOR COURT Chittenden County, ss.: Docket No. 845-03 CnSC

NGUYEN K. VO

v.

ROBERT LEO

FINDINGS OF FACT

CONCLUSIONS OF LAW

NOTICE OF DECISION

This matter came before the court for trial on pla intiff’s claim that the automobile he purchased from defendant had a se rious defect, known to defendant, which resulted in an engine fire effe ctively destroying the car. On the basis of the evidence presented, the f ollowing decision is

announced:FINDINGS OF FACT

1. Plaintiff purchased a 1996 Mitsubishi Eclipse from defendant for $6,000.

2. Within 24 days, after approximately 2,000 mile s of use, the engine compartment caught fire, apparently from the alternator, effectively destroying the vehicle.

3. Defendant buys used cars, fixes them up one at a time, and then sells them. That is apparently how he makes his li ving.

4. Defendant acquired this Mitsubishi from Eli Au to Sales, Lawrence, Massachusetts. The bill of sale accompan ying that transaction

noted:

sold as is engine not running parts only.

5. Seller Leo then proceeded to fix up the car, t o the point that it looked very shiny and attractive. He then parked i t outside the Winooski School, where it would be noticed, with a “For Sale ” sign including his telephone number. Purchaser saw the car, called se ller, and they met to discuss it. When they met, seller pointed out to p urchaser that one tire was quite deflated, and that therefore, although he could take the car out for a test drive, he would have to keep it under 50 miles per hour. Purchaser took the car out for a drive, liked it, a nd proceeded to purchase

it.6. Purchaser is a Vietnamese immigrant. He speak s only a few

words of English. Seller had purchaser “sign” the bill of sale he had received from Eli Auto Sales, although this purchas er did not buy the car from Eli. In fact, purchaser put his name on the l ine labeled “Print Name” immediately below the intended “Signature” line whe re seller had signed when he first acquired the auto. It is not clear t o the court whether purchaser printed his name because the line says “P rint Name,” or because that is the only way he can write in English. Ther e was no proof on the point, and we do not take it for granted that purch aser can read English.

7. The car shook when backed up, even before the engine compartment fire.

8. The engine wiring harness on this Mitsubishi w as not the original one. That original was not on the car when seller acquired it from Eli. Seller had been told that the proper harness was ov er $2,000, and must be obtained from Mitsubishi. This is a sports car, an d if the correct harness is not used, it will not run properly. The alternator fire is probably related to the incorrect harness problem.

9. Although the letter from Arthur Seoane is hear say, it is quite factual and quite specific. To the extent it quote s Fred from Fred’s Place, in Richmond, that person is making statements somew hat contrary to his pecuniary interest, in that he is severely criticiz ing the business ethics of a person with whom he regularly does business–the sel ler in this case. We

therefore are of the view that the Seoane letter sh ould be given considerable weight.10. We reach the decision to accord Seoane’s lett er such weight

because of the very suspicious circumstance at the time of the sale. This auto had just been fixed up be the seller. He is i n the business of doing just this. It was all shined up to attract custome rs, and was parked in Winooski. Yet one tire was low on air. For a pers on obviously familiar with cars to leave a tire low, just when he is tryi ng to make a good impression, and to also know that it is low, at a l ocation where several service stations with air pumps were within a five (probably two) minute drive, is highly suspicious. But we know that the seller here, Mr. Leo, used the fact of that under-inflation to tell his p urchaser not to drive the car above 50 miles per hour. Hence, the clear infe rence from the facts is that seller Leo deliberately deflated the tire, so as to have an excuse to keep the test drive speed down. Under these circum stances, the Seoane

letter receives substantial corroboration.

11. This car was destroyed by an engine fire clea rly electrical in origin, probably related to the wiring harness.

12. The incorrect wiring harness was known to be incorrect by the seller, Leo, (Seoane letter) who deliberately maske d the problem with the

deflated tire.

13. Purchasers have been harmed in excess of $6,0 00 by the acts of

defendant seller Leo.

CONCLUSIONS OF LAW

14. Fraud is defined as an intentional misreprese ntation of existing fact affecting the essence of the transaction. Sil va v. Stevens , 156 Vt. 94,102 (1991) (citing Union Bank v. Jones , 138 Vt. 115, 121 (1980). The

specific elements are “(1) concealment of facts, (2 ) affecting the essence of the transaction, (3) not open to the defrauded p arty's knowledge, (4) by one with knowledge and a duty to disclose, (5) with the intent to mislead, and (6) detrimental reliance by the defrauded party .” Fuller v. Banknorth Mortg. Co. , 173 Vt. 488, 490 (2001) (mem.).

15. By purposely deflating the tire at the time o f inspection, seller

concealed the fact that there were serious mechanic al/electrical problems with the car. Buyer did not know and had no way of knowing that the car was improperly repaired or that it had originally b een sold to the seller in such poor condition. Seller had a duty to disclose that the car was not running properly. This is particularly important b ecause the fatal flaw in the car was electrical, nascent, asymptomatic, and not apparent to buyer. Buyer relied on seller to sell him a working and sa fe automobile. Instead,

seller masked what was a clear defect in the car wi th the intent of passing

the car off as functional and safe.

16. Seller asserts that he is protected by the “B ill of Sale” which contains the magic words “sold as is.” Such words, however, do not automatically discharge seller from his obligations to buyer. Silva , 156

Vt. at 112–13. “The law does not favor such discla imers, very likely because they so often play a part in fraudulent or unconscionable transactions.” Lectro Management v. Freeman, Evere tt, & Co. , 135 Vt. 213, 216 (1977). The function of a disclaimer is l imited by both tort and commercial law. Tort law is loathe to recognize di sclaimer and arguably does not allow it. Restatement (Second) of Torts § 402A cmt. m (1965) (disallowing warranty disclaimers as a defense to f raudulent misrepresentation). While more accepting, the Uni form CommercialCode requires that the disclaimers be clear and ful ly understood as the

seller exclusion of implied warranty. 9A V.S.A. § 2-316(3)(a) cmt. 6.

17. In this case, the seller’s disclaimer is not his. It is part of the warranty disclaimer that he received when he purcha sed the car. As disclaimer language, the proximity of “sold as is” requires it to be read with the phrases “engine not running” and “parts on ly.” Since seller was not selling the car as parts and the engine ran at time of sale, it is difficult to understand how a fluent English speaking buyer w ould understand the disclaimer to apply, let alone a buyer of limited E nglish capacity. The disclaimer is simply not clear enough, and there is no evidence that seller made it clear that he was disclaiming his implied w arranties. Under either a tort or commercial law theory, the disclaimer is ineffective. Moreover, it is misleading and deceptive. Seller is forewarn ed that the law does not recognize “magic words” when seller’s behavior beli es their intent.

18. Because of jurisdiction limit of Small Claims Court, the maximum damages to be awarded are $3,500 plus $140 in interest accruing from the time the claim was asserted.

Dated at Burlington, Vermont, _________________, 2 003.

__________________________ Judge