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Adeli v. Silverstar Automotive, Inc.

United States District Court, W.D. Arkansas, Fayetteville Division

September 13, 2018

SILVERSTAR AUTOMOTIVE, INC. d/b/a Mercedes-Benz of Northwest Arkansas DEFENDANT



         Before the Court are cross-motions for summary judgment. Defendant Silverstar Automotive, Inc. filed a motion (Doc. 22) for summary judgment on all claims, as well as a statement of facts (Doc. 23) and a brief (Doc. 24) in support of its motion. Plaintiff Hamid Adeli filed a response (Doc. 30) in opposition, and a statement of facts (Doc. 31) in support of his response. Defendant filed a reply (Doc. 40). Separately, Plaintiff filed a motion (Doc. 25) for partial summary judgment, a brief (Doc. 26) in support, and a statement of facts (Doc. 27) in support of his motion. Plaintiff's motion for partial summary judgment is limited to Defendant's liability under the Arkansas Deceptive Trade Practices Act (ADTPA), and only with respect to Defendant's failure to disclose a leaky exhaust manifold. Defendant filed a response (Doc. 32) in opposition, a response to Plaintiff's statement of undisputed facts (Doc. 33), a statement of facts (Doc. 34), and a brief (Doc. 35) in support of his response. Plaintiff filed a reply (Doc. 39). For the reasons set forth below, Defendant's motion for summary judgment will be granted in part and denied in part, and Plaintiff's motion for partial summary judgment will be denied.

         I. Background

         On November 7, 2016, Plaintiff Hamid Adeli contacted Defendant Mercedes-Benz of Northwest Arkansas to inquire about a used 2007 Ferrari F430. The parties engaged in back and forth discussions which ultimately culminated in Plaintiff's purchase of the Ferrari on November 17, 2016.

         Prior to the sale, Defendant engaged Boardwalk Ferrari (“Boardwalk”) to conduct a pre-purchase inspection (PPI) of the car. Boardwalk provided Defendant with a list of “recommended services.” Defendant approved some repairs, but declined others, including an “exhaust header” repair. On the list of “recommended services, ” Boardwalk marked that the “exhaust header” repair had been declined. Defendant's employee, Michael Slone, testified that Boardwalk personnel stated that the exhaust headers did not need immediate repair, and that he later drove the car from his house in Fayetteville, Arkansas to Defendant's sales lot in Bentonville, Arkansas without any issue. Boardwalk provided Defendant with an itemized receipt of the repairs it made to the Ferrari. The receipt did not mention any declined repairs. A Boardwalk employee testified that the only documentation generally provided to customers is the itemized receipt of services.

         After the inspection but before the sale to Plaintiff, a prospective customer from California inquired about the Ferrari. Defendant provided both Boardwalk's itemized receipt and list of “recommended services” to the prospective customer. The prospective customer did not purchase the Ferrari, stating he did not believe it would meet California's strict emissions requirements. Additionally, the prospective purchaser notified the Defendant that individuals on a Ferrari forum described the exhaust header issue as a potential safety problem.

         During phone and text message negotiations and discussions with Plaintiff, Defendant's employees described the Ferrari as being in “turnkey, excellent condition.” They also said a PPI had been performed, and all necessary repairs had been completed, except for an issue with the car's Tire Pressure Monitoring System. They did not mention the exhaust headers. In one text message negotiation with Plaintiff, Defendant's employee purportedly quoted the Ferrari's owner as having said, “[i]f all the service was not completed, I would do [$]90k but I did the service and pre buy because it was the right thing to do.” (Doc. 31-1, p. 2). As a part of that string of text message negotiations, Plaintiff ultimately decided to purchase the car and provided his bank account number and routing number. (Doc. 31-1, p. 2).

         Among the documents related to the transaction were an invoice (Doc. 22-2); an odometer disclosure statement (Doc. 22-3); a check (Doc. 22-4); a notice that Arkansas has no “cooling off” or cancellation period for used car purchases (Doc. 22-5); and a Buyer's Guide acknowledging the car was to be purchased “as is.” (Doc. 22-6). Given the car's price, Plaintiff was not surprised that the car was being sold “as is.” Plaintiff and his wife both signed the Buyer's Guide, the odometer disclosure statement, the invoice, and the notice. The invoice included a provision stating, “the dealership hereby expressly disclaims all warranties, either express or implied.” (Doc. 22-2, p. 1).

         Shortly after taking possession of the car, Plaintiff began to smell gasoline emitting from the car. The odor was so strong that it seeped from Plaintiff's garage into his home. Plaintiff had the car towed to a mechanic to diagnose the issue. The mechanic made numerous repairs, including one to a leaky exhaust manifold. Plaintiff contacted Defendant after he discovered these issues, and Defendant assured Plaintiff that “anything that would be a concern to someone buying a 10 year old used vehicle” had been fixed. (Doc. 31-2). Plaintiff alleges that most of these issues, including the exhaust manifold, would have been discovered during a routine PPI. Plaintiff also alleges that the leaky exhaust manifold is an obvious safety issue that should have been disclosed prior to purchase.

         Plaintiff filed an action in Virginia district court alleging breach of warranty, fraud, and violations of Virginia and Arkansas consumer protection laws for damages he suffered as a result of repairs he claims he was forced to make. The Virginia action was dismissed on jurisdictional grounds, and Plaintiff subsequently filed suit in this Court.

         II. Standard of Review

         On a motion for summary judgment, the burden is on the movant to show that there is no genuine dispute of material fact and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56. The same standard applies to cross-motions for summary judgment, with each party's motion reviewed in its own right and the parties “entitled to the benefit of all inferences favorable to them which might reasonably be drawn from the record.” Wermager v. Cormorant Twp. Bd., 716 F.2d 1211, 1214 (8th Cir. 1983). Once the movant has met its burden, the nonmovant must present specific facts showing a genuine dispute of material fact exists for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). In order for there to be a genuine dispute of material fact, the evidence must be “such that a reasonable jury could return a verdict for the nonmoving party.” Allison v. Flexway Trucking, Inc., 28 F.3d 64, 66 (8th Cir. 1994) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).

         III. Analysis

         A. Defendant's Motion for Summary Judgment

         Defendant moves for summary judgment with respect to all of Plaintiff's claims. Defendant argues that only Arkansas law should apply to Plaintiff's fraud and consumer protection claims. Defendant's motion will be granted on the issue of the parties' choice of law dispute, and whether Plaintiff has a claim under the Virginia Consumer Protection Act. In light of Plaintiff's concession (Doc. 30, p. 11), judgment for Defendant will also be granted on Plaintiff's breach of implied warranty claims. Defendant's motion will be denied with respect to the breach of express warranty, fraud, and ADTPA claims.

         1. Choice of Law and Virginia Consumer Protection Act

         The parties disagree about what law should apply to Plaintiff's fraud and consumer protection claims. Plaintiff argues that Arkansas law should apply to any pre-purchase misrepresentations and Virginia law should apply to any post-purchase misrepresentations, and that pre-purchase and post-purchase misrepresentations give rise to separate claims. Defendant contends that only Arkansas law should apply, and Plaintiff's claims are limited to alleged misrepresentations occurring before the sale.

         To the extent Plaintiff attempts to assert separate fraud or consumer protection claims on the basis of post-purchase misrepresentations, no such claims can proceed. Whichever state's law applies, an essential element of fraud and consumer protection claims premised on misrepresentation is Plaintiff's reliance on the misrepresentation. See Apex Oil Co., Inc. v. Jones Stephens Corp., 881 F.3d 658, 662-63 (8th Cir. 2018) (holding Arkansas law would require reliance under ADTPA to show that misrepresentation was cause of Plaintiff's injury); Born v. Hosto & Buchan, PLLC, 372 S.W.3d 324, 333 (Ark. 2010) (listing justifiable reliance as an element of fraud); Owens v. DRS Automotive Fantomworks, Inc., 764 S.E.2d 256, 260-61 (Va. 2014) (explaining reliance on misrepresentation is necessary to prevail on common law fraud claims and to satisfy causation element under Virginia Consumer Protection Act). Plaintiff points to no instance of reliance on the alleged post-purchase misrepresentations. Rather, those representations are identical to the pre-purchase representations that Plaintiff argues induced him to buy the Ferrari. They are merely a continuation or ratification of ...

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