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



[The text of this Vermont trial court opinion is unofficial. It has been
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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 plaintiff’s claim that
the automobile he purchased from defendant had a serious defect, known
to defendant, which resulted in an engine fire effectively destroying the
car. On the basis of the evidence presented, the following 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 miles 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 living.

4.     Defendant acquired this Mitsubishi from Eli Auto Sales,
Lawrence, Massachusetts. The bill of sale accompanying that transaction
noted:
                                sold as is
                          engine not running
                               parts only.

5.       Seller Leo then proceeded to fix up the car, to the point that it
looked very shiny and attractive. He then parked it outside the Winooski
School, where it would be noticed, with a “For Sale” sign including his
telephone number. Purchaser saw the car, called seller, and they met to
discuss it. When they met, seller pointed out to purchaser 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, and proceeded to purchase
it.
6.        Purchaser is a Vietnamese immigrant. He speaks only a few
words of English. Seller had purchaser “sign” the bill of sale he had
received from Eli Auto Sales, although this purchaser did not buy the car
from Eli. In fact, purchaser put his name on the line labeled “Print Name”
immediately below the intended “Signature” line where seller had signed
when he first acquired the auto. It is not clear to the court whether
purchaser printed his name because the line says “Print Name,” or because
that is the only way he can write in English. There was no proof on the
point, and we do not take it for granted that purchaser can read English.

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

8.      The engine wiring harness on this Mitsubishi was 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 over $2,000, and must be
obtained from Mitsubishi. This is a sports car, and 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 hearsay, it is quite
factual and quite specific. To the extent it quotes Fred from Fred’s Place,
in Richmond, that person is making statements somewhat contrary to his
pecuniary interest, in that he is severely criticizing the business ethics of a
person with whom he regularly does business–the seller in this case. We
therefore are of the view that the Seoane letter should be given
considerable weight.
10.       We reach the decision to accord Seoane’s letter 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 in the business of doing
just this. It was all shined up to attract customers, and was parked in
Winooski. Yet one tire was low on air. For a person obviously familiar
with cars to leave a tire low, just when he is trying to make a good
impression, and to also know that it is low, at a location 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 purchaser not to drive the
car above 50 miles per hour. Hence, the clear inference 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 circumstances, the Seoane
letter receives substantial corroboration.

11.      This car was destroyed by an engine fire clearly 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 masked the problem with the
deflated tire.

13.    Purchasers have been harmed in excess of $6,000 by the acts of
defendant seller Leo.

                         CONCLUSIONS OF LAW

14.      Fraud is defined as an intentional misrepresentation of existing
fact affecting the essence of the transaction. Silva 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 party'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 of inspection, seller
concealed the fact that there were serious mechanical/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 been 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 because 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 safe automobile. Instead,
seller masked what was a clear defect in the car with the intent of passing
the car off as functional and safe.

16.      Seller asserts that he is protected by the “Bill 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 disclaimers, very likely
because they so often play a part in fraudulent or unconscionable
transactions.” Lectro Management v. Freeman, Everett, & Co., 135 Vt.
213, 216 (1977). The function of a disclaimer is limited by both tort and
commercial law. Tort law is loathe to recognize disclaimer and arguably
does not allow it. Restatement (Second) of Torts § 402A cmt. m (1965)
(disallowing warranty disclaimers as a defense to fraudulent
misrepresentation). While more accepting, the Uniform Commercial
Code requires that the disclaimers be clear and fully 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 purchased the car. As
disclaimer language, the proximity of “sold as is” requires it to be read
with the phrases “engine not running” and “parts only.” 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 would understand the
disclaimer to apply, let alone a buyer of limited English capacity. The
disclaimer is simply not clear enough, and there is no evidence that seller
made it clear that he was disclaiming his implied warranties. Under either
a tort or commercial law theory, the disclaimer is ineffective. Moreover,
it is misleading and deceptive. Seller is forewarned that the law does not
recognize “magic words” when seller’s behavior belies 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, _________________, 2003.




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