VOL. 122 | NO. 105 | Thursday, June 7, 2007
Price Ford Dealership Could Pay $60,000 Price If Lawsuit Is Successful
By Rebekah Hearn
When Ozella Hayes walked into the Price Ford dealership off U.S. 51 in Millington last May, she thought she was a winner.
Hayes, 51, brought a mailing she had received the previous week claiming she had won a "jackpot" and must come to the dealership in person to claim her prize, according to court documents. Hayes had bought her 2002 Ford Focus there.
On arriving at Price Ford and speaking to a salesman, Hayes learned the prize actually was a coupon for a stay in a Jamaican hotel, but Hayes would be responsible for travel and other costs. Hayes told the salesman she was not interested in the vacation offer, documents show.
Even though Hayes wasn't interested in the vacation offer, the salesman began showing her new cars around the lot. She claims in the U.S. District Court documents that she repeatedly said she did not want, nor could she afford, a new car, but she "agreed to look at a couple of cars to be polite." Hayes declined to comment for this article.
At one point, the salesman allegedly told Hayes she might need maintenance work on her Focus, and asked her for the keys to her vehicle. Court papers assert the salesman claimed his manager wanted to test her car and that, "Hayes eventually gave him the keys because ... she believed that he was offering to perform a maintenance checkup on the car."
Hayes regularly brought her Focus to Price Ford for oil changes, so she did not find a claim for a maintenance checkup to be unusual, said Craig Barnes, one of the attorneys handling her case at Memphis Area Legal Services (MALS).
Her other attorneys are Webb Brewer and Frank Cantrell. MALS is an organization that helps low-income individuals and families. Its attorneys do not accept fees for their services, nor do they prosecute criminal cases.
"When she handed the keys over, I think she thought, 'OK, this is about maintenance,'" Barnes said.
But when Hayes asked for the keys to her car, the salesman "refused, telling her that he would not let her leave the dealership in her old car," the court papers say.
Hayes then was led to the financing office, where, according to court documents, she was approached by two or three different salespeople who pitched deals to her for the purchase of a new car. She repeated that she was not interested and asked for her keys because it was getting late in the day, the documents assert.
Price Ford representatives still would not return her keys, Barnes said.
"She is not the kind of person who is going to get up and start swearing at them," Barnes said. "In fact, I asked her, 'Why didn't you just get up and say, 'Give me my (expletive) keys back?' She said, 'I am not that kind of person. I don't use that kind of language.'"
Signed in blood?
Court documents state that "based on (the sales staff's) actions, Ms. Hayes believed there was definitely a safety problem with her 2002 Ford Focus."
Sales representatives then presented her with two options: Walk away and leave her car with the dealer, or sign the paperwork she was presented to be able to drive away what she thought was a loaner car. Hayes' lawyers allege in the court documents that Price Ford "sold plaintiff a new car while leading her to believe she could return the new car and recover her car the next day."
The paperwork Hayes signed that day included a credit application.
The documents claim she intended to come back to the dealership and get her Focus as soon as possible. She returned the next day, Saturday, to no avail.
"They basically pushed her out the door," Barnes said.
Trust and confusion
The following Monday, Hayes returned a voicemail at her workplace from someone at Price Ford. A salesperson told her to come down to the dealership as soon as possible. Hayes returned that day, sure her car was repaired.
When she arrived, she was told her Focus had been sold and that the financing was rejected on the car she had "bought." Ford Motor Credit Co. is the credit company that rejected Hayes' credit application and is named as a defendant in the lawsuit.
At that point, Price Ford personnel presented Hayes with a lease agreement, which was on less favorable terms than a purchase agreement.
"In the industry, when they have the customer sign paperwork to purchase a vehicle, it's called a conditional sales agreement," said Brewer, who is litigation director at MALS. "What that purports to do is make it a deal that's contingent upon their obtaining financing for the customer."
Barnes said Hayes was confused about what she was signing, and she asked Price Ford employees to explain the agreement to her.
However, both Barnes and court documents claim she was spoken to like she was "a small child," and she left the dealership still confused about the terms of the lease agreement.
"She relied on their representations of what was in that contract, and we are not exactly sure what they told her word for word, obviously," said Barnes. "So I'm not sure she really understood what she was signing."
"A part of what we are looking at here is a lot of representations being made to her that were not true, apparently," said Brewer. "That caused her to sign on some agreement that she didn't fully understand."
Chris Price, owner and general manager of Price Ford, said in an e-mail that after Hayes purchased her vehicle on May 15, 2006, "she left as a satisfied customer." Price said the company received its first correspondence regarding the lawsuit on Jan. 12, 2007, "nearly eight months later."
"I have reviewed the file and all information," Price wrote in the e-mail. "I have found no indication to support her current concerns."
'Fraud as usual'
Barnes said that from his discussions with lawyers around the country, this type of yo-yo sales strategy is considered just how business operates.
The motor vehicle lease agreement Hayes signed indicates she made a $4,000 cash down payment, although no such payment was made.
Hayes' lawyers claim that she did not authorize Ford to sell her old car, and that she never gave Price Ford $4,000 cash for a new one.
Barnes said the dealership stated in a letter to MALS that nothing was fraudulent about recording the sale of Hayes' Focus as a $4,000 cash down payment rather than as a trade-in - that it is a common sales practice.
"What we're trying to point out is that, no, this isn't business as usual; it's fraud as usual," Barnes said.
In addition, Brewer said Hayes never received written or oral notification from Price Ford as to why her credit initially was denied or why she only qualified for a lease. These actions are why her lawyers are claiming Price Ford and Ford Motor Credit Co. violated the Equal Credit Opportunity Act of 1968 (ECOA).
A representative from Ford Motor Credit Co. said she has no knowledge of the specific lawsuit, but she pointed out that neither the dealership nor the consumer is required to obtain financing through Ford Motor Credit. Consumers may choose to be financed through a bank, a credit union or another financing company.
For the record
Price Ford has been a member of the Better Business Bureau (BBB) of the Mid-South since March 2002.
The BBB's Web site states that the dealership has a "satisfactory record," with two complaints filed in the past three years, both of which are listed as resolved.
The first complaint concerned "sales practice issues," which the BBB defines as "claims of alleged sales presentations made in person or by telephone that contain misrepresentations of the product or service, high-pressure sales tactics, failure to disclose key conditions of the offer and verbal representations not consistent with written contractual terms or agreements."
The second complaint concerned "service or repair issues," mostly defined as inferior, delayed or incomplete repairs.
Beyond mutual consent
The ECOA states that consumers are entitled to an explanation of why their credit is denied. In the case of a car dealership, a "conditional" sales agreement means exactly that - it is conditional on the financing terms agreed upon by both parties.
"If they could not obtain financing on the terms that were initially proposed, then sure, (Hayes) should be able to totally undo the deal," Brewer said. "That's not what happened. There wasn't mutuality here."
As for Hayes, she is making the $223 monthly payments on her leased car - but barely.
"She's on a very fixed income," Barnes said. "She is employed, but she's on a small income, and she's having a hard time keeping up with it."
Barnes said Hayes' income is somewhere between $500 and $1,000 a month.
Brewer said the fact that Hayes is making the payments would not be a viable defense for Price Ford should the case make it to trial.
"I don't think that's a good argument, because it's a deal that was forced on a person," Brewer said. "If I don't want a new car and someone imposes a deal on me that's not my free choice, then it's irrelevant if I can afford that payment or not."
To the doghouse
Hayes' lawyers are charging Price Ford and Ford Motor Credit Co. with violating the ECOA, fraud, breach of contract and violating the Tennessee Consumer Protection Act (TCPA) of 1992. The allegation of ECOA violations is a federal charge; the rest are state claims, but can be heard in a federal court.
"At this point, we would certainly be willing to entertain discussions about settlement," Brewer said. "Assuming we go to trial, we'll certainly be seeking damages, statutory damages, actual out-of-pocket damages (and) punitive damages. Just from what we see at this point, there is a basis for the courts awarding damages, not only to compensate for her, but to punish the other side."
Price said in his e-mail that his company has an arbitration option that was included in the agreement Hayes signed, but that "as of today she has not utilized that option." In a later e-mail, Price said he re-sent the arbitration agreement to Hayes' attorneys.
"We try our best to keep everyone happy," said Price in the e-mail. "We are a very customer-oriented business with no prior suits."
Regarding the arbitration agreement, Barnes said he and the other attorneys did receive it, and that the arbitration route is a possibility.
"There are certain legal attacks that you can make in an arbitration agreement," Barnes said. "If you think it was something called fraudulent inducement, or possibly if it was an unconscionable agreement, we may challenge it."
Hayes and her lawyers are asking for $10,000 in actual damages each for the violation of the ECOA, fraud and breach of contract, according to court documents. For the violation of the TCPA, actual damages requested are $10,000, but that amount is trebled to $30,000 if the violation is willful, which Brewer suggests is the case.
Punitive damages for ECOA violations and fraud are being requested as well, and those would be established at trial.
All told, Hayes and her lawyers are requesting $60,000 in actual damages plus punitive damages and court costs, which will be determined if the case goes to trial.
"People don't realize their rights are being stripped by these agreements," Barnes said.
Price Ford has until Monday to reply officially to MALS and name its attorney. Once the attorneys are in contact with each other, the negotiations will begin.
"At this point, there's nothing for us to do other than wait for them to get back to us," Barnes said.