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Raatz v. Dealer Trade Inc.

United States District Court, D. Arizona

January 6, 2017

Tom Raatz, et al., Plaintiffs,
v.
Dealer Trade Incorporated, et al., Defendants.

          ORDER

          David G. Campbell United States District Judge

         Defendant Pinnacle Nissan, LLC moves for summary judgment against Plaintiffs Tom Raatz, Marcine Raatz, and TMR, LLC pursuant to Federal Rule of Civil Procedure 56. Doc. 66. The motion is fully briefed (Docs. 82, 84), and no party requests oral argument. The Court will grant the motion.

         I. Background.

         The facts are undisputed. On May 28, 2015, Pinnacle purchased a 2010 Infinity QX56, VIN 5N3ZA0NEXAN900968 (the “Vehicle”), at the Manheim automobile auction for $26, 500.00. Doc. 67, ¶ 1; Doc. 83 at 2.[1] Pinnacle, an automobile retailer, purchased the Vehicle with the intent to resell it. Doc. 67, ¶ 2. The Vehicle was placed in the Manheim auction by True Credit Auto Wholesale. Id., ¶ 3. At the time Pinnacle purchased the Vehicle, its odometer registered 35, 497 miles, as reflected on the secured odometer statement Pinnacle received. Id., ¶ 4. In addition to the Vehicle, Pinnacle purchased “Deal Shield” from Manheim for an extra $150. Id., ¶ 5. Under “Deal Shield, ” Pinnacle retained the right to return the Vehicle for any reason within 21 days of purchase for a full refund, provided the Vehicle's mileage did not exceed 35, 747 miles. Id., ¶ 6; Doc. 67-1 at 11.

         On June 9, 2015, Pinnacle exercised its right under Deal Shield and returned the Vehicle. Doc. 67, ¶ 7. Manheim issued Pinnacle a full refund, and Pinnacle supplied a secured odometer statement registering 35, 578 miles to Meridian Remarketing, an affiliate of Manheim that took title to the Vehicle. Id., ¶¶ 8-9. On June 25, 2015, Meridian sold the Vehicle to Dealer Trade, Inc. d/b/a Luxury Motorsports (“Dealer Trade”). Id., ¶ 10. At that time, the Vehicle's odometer registered 35, 580 miles according to the secure odometer statement provided by Meridian to Dealer Trade. Id. In late August or early September 2015, Dealer Trade sold the Vehicle to Plaintiffs and supplied a secured odometer statement showing the Vehicle's odometer registered 35, 648 miles. Id., ¶¶ 11-12. After completing the purchase, Plaintiffs took the Vehicle to Willis Infinity Dealership in Iowa, where they allegedly learned that the Vehicle actually had more than 46, 731 miles. Id., ¶ 13; Doc. 1 at 3; Doc. 83-1 at 2, ¶¶ 4-5.[2]

         On January 25, 2016, Plaintiffs filed this action against Dealer Trade and Pinnacle, alleging violations of the Federal Motor Vehicle Information and Cost Savings Act, 49 U.S.C. § 32701 et seq., also known as the Federal Odometer Act (“FOA”). Doc. 1 at 4.

         II. Legal Standard.

         A party seeking summary judgment “bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Summary judgment is appropriate if the evidence, viewed in the light most favorable to the nonmoving party, shows “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Summary judgment is also appropriate against a party who “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322. Only disputes over facts that might affect the outcome of the suit will preclude the entry of summary judgment, and the disputed evidence must be “such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         III. Analysis.

         The FOA's purposes, as set out by Congress, are “(1) to prohibit tampering with motor vehicle odometers; and (2) to provide safeguards to protect purchasers in the sale of motor vehicles with altered or reset odometers.” 49 U.S.C. § 32701(b). The FOA prohibits odometer tampering with intent to change the mileage registered by the odometer, as well as sale of devices intended to make the odometer register mileage different from the actual mileage driven. Id. § 32702 (1)-(2). The FOA also imposes disclosure requirements. Id. § 32705(a). Under regulations that implement the statute, “each transferor shall disclose the mileage in writing on the title” or “on the document being used to reassign the title, ” and the transferor must certify that “to the best of his knowledge the odometer reading reflects the actual mileage.” Id.; 49 C.F.R. § 580.5 (c), (e). If the transferor knows the odometer to have a calibration error, or to be unreliable, it must also include a statement to that effect. Id.

         The FOA creates a private right of action. “A person that violates this chapter or a regulation prescribed or order issued under this chapter, with intent to defraud, is liable for 3 times the actual damages or $10, 000, whichever is greater.” Id. § 32710(a) (emphasis added); see also Bodine v. Graco, Inc., 533 F.3d 1145, 1147 (9th Cir. 2008) (“[A]n [FOA] claim that is brought by a private party . . . requires proof that the vehicle's transferor intended to defraud a transferee with respect to mileage.”).

         The key question in this motion is whether Plaintiffs have enough evidence to create a question of fact on whether Pinnacle acted with an “intent to defraud” as required by the statute. The parties cite no decision from the Ninth Circuit on the meaning of “intent to defraud, ” but, as Plaintiffs note, courts applying the FOA have not read the statute as requiring a specific intent to defraud the transferee of a vehicle. Instead, cases generally have held that a sufficient intent to defraud may be inferred if the defendant acted with reckless disregard for the truth. As one circuit explained:

The approach taken by the great majority of courts is sensible. If a person violates an odometer disclosure requirement with actual knowledge that he is committing a violation, a fact finder can reasonably infer that the violation was committed with an intent to defraud a purchaser. Likewise, if a person lacks knowledge that an odometer disclosure statement is false only because he displays a reckless disregard for the truth, a fact finder can reasonably infer that the violation was committed with an intent to defraud a purchaser. The inference of an intent to defraud is no less compelling when a person lacks actual knowledge of a false odometer statement only by closing his eyes to the truth.

Tusa v. Omaha Auto. Auction Inc., 712 F.2d 1248, 1253-54 (8th Cir. 1983) (quotation marks, brackets, and ...


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