Appeals court affirms for used car buyer in defaulted sales contract dispute

An auto dealer couldn’t sway an appellate court’s ruling for one of the dealer’s customers after the court found the man who immediately had problems with the vehicle hadn’t defaulted on his sales contract because payment was not due.

In Universal Auto, LLC, d/b/a James Myers v. Cory Murray, 19A-PL-1225, customer Cory Murray ran into some trouble with an auto just hours after driving it off the lot company.

Murray, who bought a vehicle “as is” from Universal Auto, LLC for $17,599.50, signed a financing agreement with third-party lender Credit Acceptance Corporation. The agreement was arranged by Universal’s James Myers, requiring that Murray pay $337.93 per month beginning on March 17, 2018.

But shortly after leaving with the vehicle, Murray experienced engine troubles and was instructed by Myers to have the car serviced at Indiana Auto Body & Service, where Universal would cover the expenses. Two days later, the engine completely died and the vehicle was towed and serviced again, with Universal claiming it would pay for the engine replacement.

More vehicle troubles came Murray’s way not long after, and he paid hundreds out of his own pocket to cover the repair costs. Meanwhile, Universal withdrew its payment to Indiana Auto for the initial engine repair and Murray was ultimately unable to get his car back because the vehicle was subject to a mechanic’s lien due to nonpayment.

Not even a month after his purchase, Universal informed Murray that it had repossessed his vehicle and would resell it if he did not exercise his right to redeem it by paying the full contract balance of $15,720 within 10 days.

Murray then filed a small claims action against Universal, seeking the return of his down payment, damages for the repair of his starter, towing charges, and pain and suffering in the form of lost wages. When Universal filed a counterclaim, the Marion Superior Court ruled for Murray, holding that Universal had “breached the service contract/warranty contract by failing to repair” the vehicle. After judgment was entered in Murray’s favor for $4,229 and the trial court denied Universal’s motion to correct error, the dealer appealed.

In affirming the trial court’s decision, the Indiana Court of Appeals found that Universal had failed to establish prima facie error concerning both its counterclaim and contract claim.

“… Murray had not defaulted on the sales contract when Universal repossessed his vehicle. One simply cannot be in default for nonpayment of a monthly bill that has not yet come due,” Judge Terry Crone wrote for the appellate court.

Next, it found that without a signature from a Universal representative, the service agreement contract could not have been formed. Moreover, it noted that Universal facilitated the collection of the $1,535 fee from Murray and played a key role in dictating where Murray obtained service under the contract.

“In short, Universal facilitated the formation, fee collection, and execution of the service contract, and its withdrawal of payment to the repair shop of its own choosing was the catalyst for the mechanic’s lien that ultimately resulted in the denial of the vehicle to Murray. This level of control, coupled with Myers’s signature, supports the trial court’s conclusion that Universal was a party to the service contract,” the appellate court wrote.

“Murray simply did what Myers instructed him to do, which included taking the vehicle to the repair shop with whom Universal ordinarily dealt. If anything, Universal induced any de minimis breaches that Murray may have committed,” it added.

There was also no error in the trial court’s inclusion of $150 for Murray’s lost wages in his damages award, the appellate court held, ultimately affirming the $4,229 judgment for Murray.

Please enable JavaScript to view this content.

{{ articles_remaining }}
Free {{ article_text }} Remaining
{{ articles_remaining }}
Free {{ article_text }} Remaining Article limit resets on
{{ count_down }}