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Oregon car dealership to pay $100K in debt collection dispute

| Jan 29, 2013 | Civil Appeals |

An Oregon car dealership is considering whether to appeal a decision ordering to pay $100,000 the way it handled a debt collection case. The complex matter divided the civil appeals court that most recently heard the case; the court approved $100,000 in punitive damage with a 5-4 judgment, while the dissenting judges thought this was excessive and argued for a $25,000 award.

The case centered around a former used-car salesman who purchased a vehicle from the store for just under $14,000 in 2000. When the buyer’s sales contract was purchased by a third-party lender, it was found that his credit application was falsified. He reportedly represented his income as higher than it really was and rolled back the vehicle’s odometer by over 25,000 miles.

The store eventually asked the buyer to return the vehicle for its trade-in value plus a deposit, but the man refused. At this point, a store manager allegedly became aggressive and threatened to press criminal charges against the buyer. The store then reportedly asked a collections agent to repossess the vehicle for nonpayment even they no longer owned the associated sales contract.

The store later repurchased the contract from the third-part lender and again offered to buy back the vehicle. When the man again refused, the store’s parent company sued him in effort to rescind the sales agreement. The buyer responded with a counterclaim. After finding that the store had made a number of false claims and intentionally mislead the purchaser’s attorney, a jury awarded the man $100,000 in punitive damages and emotional harm.

A trial judge found the award excessive and reduced it to $2,000, a decision that was initially upheld by an appellate court. However, the Court of Appeals reviewed the case and upheld the original award, ruling that the store engaged in a pattern of intimidation and deceit in its efforts to reclaim the vehicle.

Source: Automotive News, “Store faces $100,000 in punitive damages,” Eric Freedman, Jan. 16, 2013