2

If person A is a criminal man and changes the odometer of a used car then sells it to person B, then after some time person B who doesn't know about the truth advertises the car with the fake mileage and sells it to person C, if person C understands the truth can s/he sue against person B or person A?

Also who must pay the person C's lost? Considering the real car value with 50K miles(the fake mileage) is $25K but the value with 100K(real mileage) is 15K. Who should pay this $10k loss to the person C?

PS: Consider the person B has got the car with the same but fake mileage in the odometer and title and represents the car with this mileage.

For example, the real mileage is 100K. Person A who is the first owner, changes it to 50K and writes the fake mileage in title and sells to person B. Then person B after a short time wants to sell it without the knowledge of real mileage. So he advertises the car with the fake mileage he bought recently and sells it to person C.

Is person B still guilty of misrepresenting?

14
  • I added a PS part.
    – GoodMan
    Oct 25, 2021 at 15:39
  • "So he advertises the car with the fake mileage" Do you mean that the fake mileage is actually stated in the advertisement?
    – Nemo
    Oct 25, 2021 at 16:49
  • @Nemo: Consider you buy a car with 50K on odometer. Also seller writes 50K in title. Also DMV will send you the new title also with 50K actual mileage. How can you guess this mileage is wrong? So you advertise it on marketplace or Craiglist and sell it to other person with this mileage. But the new buyer calls you and says I found that the car mileage is not correct! Get it back!
    – GoodMan
    Oct 25, 2021 at 17:01
  • @Goodman Can you explain what a car title is? This many be specific to California and/or the USA generally.
    – Nemo
    Oct 25, 2021 at 17:10
  • @Nemo: I mean California pink slip by car title.
    – GoodMan
    Oct 25, 2021 at 17:24

2 Answers 2

1

Another answer mostly addresses C's claims against B (which, if successful would give rise to a claim by B against A for breach of warranty and fraud). This answer mostly examines direct claims by C against A (e.g. if B cannot be found, or is insolvent), with some brief observations about claims against B.

Claims Against The Fraudulent Remote Seller "A"

If person A is a criminal man and changes the odometer of a used car then sells it to person B, then after some time person B who doesn't know about the truth advertises the car with the fake mileage and sells it to person C, if person C understands the truth can s/he sue against . . . person A?

Probably. There are several legal theories that could be available to overcome to problems that person C would face when suing person A.

One problem is that person C is not directly a party to a contract with person A. This problem is often called legally "lack of privity".

The other problem is that person A did not (obviously) make a representation directly to person C upon which person C relied, which is usually required in a common law action for fraud.

A Third-Party Beneficiary Of Warranty Claim

When A sold to B, A made (as a matter of bureaucratic reality, in a signed representation, but even if he hadn't under the implied warranty rules of the Uniform Commercial Code) that constitutes an express warranty that the odometer reading is correct. So, B has a claim against A not just for fraud in the inducement of the sale, but also for breach of a contractual warranty arising under the Uniform Commercial Code.

To overcome the first objection, Person C could argue that he is a foreseeable third-party beneficiary of the warranty between A and B regarding the accuracy of the odometer reading at the time of the sale from A to B and is entitled to sue A for beach of warranty as a result.

Statutory and Tort Claims

Person C could also look for a tort or statutory claim directly against A that does not require the existence of a contract between them. A tort claim such as fraud would be desirable since punitive damages are likely to be available on that claim, but not on the breach of warranty claim. Many statutory claims also include a right to attorney fees and/or statutory damages that are not available in a claim for breach of warranty or common law fraud.

A Direct Common Law Fraud Claim

One way that Person C could overcome the lack of his direct dealings with Person A to bring a non-contractually based lawsuit against A, which is the second problem in the case of a common law fraud lawsuit, is to argue that the odometer itself is a "record" (a term that is a generalization of the concept of a writing in the post dead tree paper age), that Person A made not just to Person B, but to everyone who reads the odometer for the car that Person A tampered with.

A Statutory Odometer Law Claim

Another way that Person C could overcome this problem is to argue (with or without case law and statutory support depending upon the jurisdiction) that the law that prohibits tampering with odometers gives rise to a private cause of action for money damages by anyone who relies upon the inaccurate odometer reading.

There is a statutory private cause of action for odometer fraud under federal law, specifically, thge Motor Vehicle Information and Cost Savings Act, 15 U.S.C. section 1981 et seq., in some circumstances. This provides for minimum statutory damages of $1,500 and an award of attorney fees.

It appears that any defendant who was directly in the chain of title of the vehicle can be held personally liable on the federal cause of action. Evans v. Paradise Motors, Inc., 721 F. Supp. 250 (1989). So, this remedy should be available to C if C is seeking to sue A. And C could bring the suit in either state or federal court, although if C brought suit in federal court, A would have a right to remove the case to federal court since it involves a complaint arising under a federal law.

Realistically, this remedy is likely to be more attractive than any of the common law claims, although it does require proof of more than a third-party beneficiary of breach of warranty claim to establish.

(I'll revisit this issue later under California state law if time permits. Some possible state law statutory causes of action are discussed here.)

An Injurious Falsehood Tort Claim

A third way that Person C could overcome this problem is to sue Person A under a common law tort legal theory other than common law fraud based upon a direct representation made to the person bringing suit. One particularly plausible cause of action in California would be the tort of injurious falsehood described in the Second Restatement of Torts which the California Supreme Court discussed, for example, in this 2014 opinion stating:

Under the definition of an injurious falsehood, ―[o]ne who publishes a false statement harmful to the interests of another is subject to liability for pecuniary loss resulting to the other if ¶ (a) he intends for publication of the statement to result in harm to interests of the other having a pecuniary value, or either recognizes or should recognize that it is likely to do so, and ¶ (b) he knows that the statement is false or acts in reckless disregard of its truth or falsity.‖ (Rest.2d Torts, § 623A.) . . .

In California, these requirements guided the reasoning of our decision in Blatty v. New York Times Co. (1986) 42 Cal.3d 1033 (Blatty), where we held under the First Amendment that all injurious falsehoods ―must specifically refer to, or be 'of and concerning,‘ the plaintiff in some way.‖ (Id. at p. 1042.)

The arguments that these facts support a claim for the common law tort of injurious falsehood that California has recognized is significantly stronger than the claim of trade disparagement without expressly mentioning the name of the disparaged competitor in advertising that is at issue in the linked case. This case is basically just a common law fraud case with an arguably indirect representation to the person harmed, rather than a direct representation.

Indirect Remedies Against The Remote Seller

Modifying an odometer is a crime.

A California prosecutor could prosecute A for the crime of modifying an odometer and would not need to show privity or a representation made to C to bring a criminal case for this crime against A, even if C was the person who alerted law enforcement or the prosecutor to the existence of the crime.

Mostly, this wouldn't do C much good. Person A might go to jail or prison, might be ordered to pay a fine, or might face some other punishment. This would be handled at public expense (since the prosecutor is paid by the state to bring the case), however, so it also wouldn't cost C anything.

Critically, however, if A was convicted of this crime, the court could order A to pay restitution. While it might be a bit of a stretch to argue that C's $10,000 loss is within the scope of harms for which a restitution award is available in a criminal case, it certainly wouldn't be frivolous to argue.

Federal or state government civil and criminal enforcement of odometer laws for your benefit may be possible.

Caveat

This Is Not A Comprehensive List Of Possible Claims

I am sure with more thought that I could imagine other legal theories to support a direct claim from C against A for this conduct under California or federal law, or other non-lawsuit against A or B remedies for C in this situation.

But these theories were the first that came to mind.

Practical Difficulties

Of course, there are also practical problems with C trying to sue or otherwise get relief from A.

First, C has to figure out who A is and how to find him and serve him with process or provide law enforcement with the information they need to arrest A if A is charged criminally.

Second, A has to be collectible for a lawsuit to be worthwhile. If A has no assets that are not exempt from creditor's claims and only irregular income, collecting a judgment if C prevails may be impossible.

Third, C may have a challenging time getting proof that it is A who tampered with the odometer, and A, being a criminal who has engaged in fraud, is likely to lie to attempt to avoid civil liability.

Fourth, neither the breach of warranty claim, nor the common law fraud claim, nor the injurious falsehood claim would include a right to an award of attorneys fees against A. So, making it cost effective to sue A for $10,000 plus possible punitive damages could be challenging, and the facts of this case make it very challenging for a non-attorney to argue legally.

Claims Against Direct Seller "B"

Under California and federal law, if the bill of sale doesn't contain a disclosure indicating either “not actual miles,” or “true miles unknown,” the buyer will usually have grounds for a lawsuit against the direct seller of the car with a modified odometer, even if the direct seller didn't modify the odometer. This isn't quite strict liability, but it is close and there is some duty on the part of a car dealer, if the dealer is the seller, to engage in due diligence. See, e.g., here.

1

Yes

Person B is guilty of innocent misrepresentation.

If C can prove that they entered into the contract in reliance on the misrepresentation can either:

  1. rescind the contract: return the car and get their money back, or
  2. Seek damages, if the facts are as you describe, they would be entitled to $10,000.

C’s case is against B; they have no cause of action against A. B has the same options against A, except this misrepresentation is fraudulent so the damages can also be punitive. A is also a criminal but that is a matter for the state.

9
  • Whether the B is guilty of misrepresentation would depend on what they said (or implied). For example. If they were asked "Is this mileage correct? and they reply "Yes" then that is a misrepresentation. If they reply No then no misrepresentation. If they say "Yes, as far as I know" then it is more complicated but that is probably a representation that they know of no reason to doubt the accuracy of the mileage shown on the odometer (which may or may not be a misrepresentation depending what they actually know and, possibly, if they are a regular dealer in cars, what they should have surmised).
    – Nemo
    Oct 25, 2021 at 9:07
  • 1
    @Nemo: The California title transfer form requires the seller to sign a statement saying "The odometer now reads ____ and to the best of my knowledge reflects the actual mileage unless one of the following is checked. [...] I certify (or declare) under penalty of perjury under the laws of the State of California that the foregoing is true and correct." wheelzy.com/how-to-sign-your-title/california/ca So the seller must have made an explicit representation to that effect. Oct 25, 2021 at 12:43
  • @Nemo, in the USA, every sale of a vehicle includes a statement about the odometer. It isn't possible here to sell a car without saying "yes" as part of the sale.
    – Tiger Guy
    Oct 25, 2021 at 12:43
  • @NateEldredge If that statement ("to the best of my knowledge...") is the only statement made by B then whether that is a misrepresentation depends on what B's knowledge was at the time of sale - what B knew or should have surmised about the mileage on the odometer.
    – Nemo
    Oct 25, 2021 at 12:48
  • @TigerGuy Does the form just say Yes or does it say "Yes to the best of my knowledge"
    – Nemo
    Oct 25, 2021 at 14:02

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.