SINCE 1940
June 2013
www.FIADA.com
A Publication of the Florida Independent Automobile Dealers Association
Information and Insight for Florida Used Car Dealers
Join us in Margaritaville for the 2013 FIADA Annual Convention and Trade Show, October 17-20, 2013 at Disney’s Coronado Springs Resort in Orlando. Preview the education and entertainment schedule and register to attend on Page 24.
14 KEEPING IT CLEAN? Clean titles aren’t as good as they sound. Find out why. FULTON, MO PERMIT NO. 38
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MAILING ADDRESS 1840 Fiddler Court Tallahassee, FL 32308 TELEPHONE (850) 385-2712 (800) 237-0448 FAX (850) 385-3251 WEBSITE www.FIADA.com EXECUTIVE COMMITTEE Christopher Leedom President Dino Mercurio Senior Vice President Brandi Noegel Chairman of the Board David Cox, CMD Secretary Paul Matton Treasurer Frank Fuzy Regional Vice President George Hickey Regional Vice President Steve Marbais, CMD Regional Vice President Jim Winterick, Sr. Regional Vice President Jim Winterick, Jr. Regional Vice President FIADA STAFF Lisette Mariner Executive Director Terry Myers Educational Instructor Sarah Langley Administrative Director Nicole Lee Development Administrator Amelia Tillman Administrative Assistant Christy Taylor Editorial/Advertising
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FIADA • 1840 Fiddler Court Tallahassee, FL 32308 (850) 385-2712 • Toll Free: (800) 237-0448 Fax (850) 385-3251 • www.FIADA.com The Independent Dealer is a publication of: Florida Independent Automobile Dealers Association, 1840 Fiddler Court, Tallahassee, FL 32308 The magazine is published every month in Tallahassee and distributed to Florida new, used, wholesale and lease/retail car dealers. Advertising rates are available upon request. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of Independent Dealer or the Association. Likewise, the appearance of advertisers, or their identification as members of FIADA, does not constitute an endorsement of the products or services featured.
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Contents June 2013
For members of the Florida Independent Automobile Dealers Association
C O L U M N S & F E AT U R E S 4
President’s Message Christopher Leedom
6
Executive Director’s Message Lisette Mariner
8
Membership News New, Renewing and Rejoining Members
9
The Benefits of Membership Why Florida’s top dealers choose to be FIADA members.
12
A Decision on Spot Deliveries A recent court decision brings clarification to the spot delivery issue.
14
Clean Title? Not So Fast! The “clean” title label may not be as good as you think it is. Find out the ways unscrupulous sellers are bringing rebuilt and salvaged vehicles into the market with what appears to be a “clean” title.
18
Flood Cars on the Rise Months after Superstorm Sandy, flood cars are washing up on dealerships around the country. Know the risks that may be hidden underneath.
22
FIADA Legislative Wrap-Up FIADA Lobbyist Sandra Mortham
24
Workin’ Away Again at the FIADA Annual Convention Make plans now to attend the premier event for Florida’s independent dealers. Get a head start by sending in your registration now.
26
“As-Is” Sales Under Attack Attorney Thomas Hudson shares recent legal claims against dealers who sold vehicles “as-is” only to have their customers question the sale.
29
Dealer Training & Town Hall Meeting Join us in Ponte Vedra Beach and get legal and legislative Q & A.
30
Industry News June 2013 — Independent Dealer — 3
FROM THE PRESIDENT
Help is Just Around the Corner . . . BY CHRISTOPHER LEEDOM, FIADA PRESIDENT
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his issue is a special one that it is being sent to each and every independent dealer across our great state. Four times a year we send the FIADA Independent Dealer magazine to all registered dealers so they can see what FIADA is all about. There is a lot of timely information and ideas in this issue so please peruse the articles, take a good look at the products and services our vendor-advertisers are offering and most importantly— make a decision to join FIADA.
FIADA and how we as dealers are stronger together. The best way to do this is to attend one of two upcoming events and then make your decision to join.
That is right, we want you! Many dealers are not active in our state association. Why? I don’t know — I have been trying to figure that out. Whether you sell 8 or 58 cars per month you should be a member. When issues come up in Tallahassee we all certainly are in the same boat. When our livelihood is under fire we all are certainly in the same boat. When it comes down to getting better at being a dealer-owner we all certainly are in the same boat. So why are we not all members of FIADA?
The “big event” of the year is our Annual FIADA Convention. This event provides a host of workshops (that count toward your CE requirements), top industry leaders, legal forums and an outstanding opportunity to network with your fellow dealers. I look forward to this event each year. This year it will be held on October 1720 at Disney’s Coronado Springs Resort in Orlando, FL. We sure hope to see you there.
I think the number one reason is that many dealers are not familiar with the efforts of the dealer-members of the Association and they are unaware of the many benefits of membership. If you are reading this and you are a nonmember I personally invite you to come learn more about
In July we have our next Town Hall meeting in Ponte Vedra Beach. We will cover topics like sales tax audits, technology that is helping dealers succeed and a host of other topics. This event will be held on Friday, July 26th at the Sawgrass Mariott Resort and Spa.
For all of our members that are reading this issue thanks for your support of FIADA. Without you we don’t have an association and we do not have a voice for our industry. We appreciate your support. Have a great month and see you at an FIADA event soon!
Register for the FIADA 2013 Annual Convention before August 31 and get a special Early Bird Discount! Get the details and registration form on pages 24-25.
4 — Independent Dealer — June 2013
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EXECUTIVE DIREC TOR’S MESSAGE
You Don’t Know What You’re Missing BY LISET TE MARINER, EXECUTIVE DIREC TOR
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his month marks my two-year anniversary with FIADA. During my tenure I’ve gotten to know many great dealers around the state and nationally. Without a doubt we have the most dedicated board, committed to the success of FIADA. Your board gives of their time, expertise and diligence, all as volunteers. Through their leadership and participation we will have one of the best annual conventions yet. We have an exciting two and half days planned at Disney’s Coronado Springs Resort in Orlando. Currently, we are accepting nominations for the next Quality Dealer. Are you a successful dealer that conducts business in an ethical manner and gives back to your community? Nominate yourself or someone you know for the FIADA Quality Dealer Award, the most prestigious dealer award in the state of Florida. The Florida Quality Dealer winner will be announced at FIADA’s 2013 Convention (Oct 18-19). The FIADA Quality Dealer award recipient will then compete with other state quality dealers for the national quality dealer award at NIADA’s Convention in June 2014.To be considered for the FIADA Quality Dealer Award, please submit your nomination form by June 30, 2013. Only FIADA members are eligible for this honor. We also have renowned speakers such as Joe Lescota and Paul Webb scheduled to speak, and of course other amazing educational sessions. There will also be an exhibit hall filled with exceptional vendors. Thank you to Auto Data Direct, Dealer Funding and Title Technologies for making the commitment to FIADA and being 2013 Annual Convention Bronze Sponsors. Williams & Stazzone will again sponsor
6 — Independent Dealer — June 2013
the Friday night hospitality. Other exhibitors include Autoraptor, Auto Star Solutions, Carmax, Mark One, Tax Refund Services, and United Acceptance. If you were fortunate enough to join us last year you probably stopped by the Welcome Reception Thursday evening. We heard that you’d like to continue the fun and networking this year. The Land Sharks will perform Saturday evening after the installation of officers and presentation of the coveted Quality Dealer Award. Be sure to stay and celebrate with us Saturday night. Wear your best parrot head outfit. Register by August 31st and save $50. See the registration form on page 24 or visit www.FIADA.com to reserve your space. Experience the education and networking next month at that Sawgrass Marriott during the July 27th Town Hall Meeting. Learn first-hand from our esteemed lobbyist Sandra Mortham what happened during the legislative session and what we need to do this summer to enhance our success during the next session. Rob Sickles, FIADA General Counsel, will answer your burning legal questions as well as highlight the questions we’ve received this quarter from dealers just like you. Register online to attend this complimentary event and enjoy lunch sponsored by Auto Data Direct. Everyone that I’ve talked to that has attended a Town Hall or convention always comments about how much they’ve learned at these events. If you’ve never attended, you don’t know what you’re missing. Take time out to rejuvenate your business and learn new ways to make a profit and stay compliant. Register for the upcoming July Town Hall and October Convention. www.fiada.com
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MEMBERSHIP NEWS
New Members BNM Enterprises, LLC Saint Augustine, FL Brent Morrison Sponsor: Terry Myers Car Surplus Inc. Mary Esther, FL DeOnna Shoffner Sponsor: FIADA Web Carmaxx Sarasota, FL Dave Polasky Sponsor: Chris Leedom Charles Wallace Gulf Breeze, FL Charles Wallace Sponsor: Terry Myers D & T Auto Sales Panama City, FL Alvin Bishop Sponsor: Kevin Scott Dixie Car Concept II Orlando, FL Ali ElAzzouzi Sponsor: Kevin Scott E & K’s Auto Sales LLC Gainesville, FL Eric Buigas Sponsor: FIADA Web GS Auto Center Orlando, FL Selma Ottone Sponsor: Nicole Lee
Renewing Members
M AY 2 0 1 3 Island Classic Automotive, Inc. Pompano Beach, FL Art Freiberg Sponsor: Amelia Tillman
Signature Motors USA LLC Orlando, FL Alamyhu Yesuf Sponsor: Amelia Tillman
L3 Motorsports, LLC Sarasota, FL Thomas Reutter Sponsor: Terry Myers
Southern Auto Exchange, LLC Longwood, FL Dan Haver Sponsor: WestLake
Max Thermo Sales Miami, FL Maximo Rodriguez Sponsor: FIADA
Stewart Collision Group LLC dba Bernie’s Bodyshop Lakeland, FL Paul Hawks Sponsor: Terry Myers
Michel Dresch Orlando, FL Michel Dresch Sponsor: Kevin Scott
The Auto Sheriff Clearwater, FL TheAuto Sheriff Sponsor: Terry Myers
P&H Auto Sales Punta Gorda, FL Paul Abreu Sponsor: FIADA Premier Auto Finance of South Florida, Inc Margate, FL Larry VanDeKerkhove Sponsor: FIADA Web Second Son Enterprises dba Victory Auto Sales Sarasota, FL Nick Kennedy Sponsor: Terry Myers
Used Car Megastore LLC Kissimmee, FL Omar Rodriguez Sponsor: Terry Myers Victory Lane Motorcars, Inc. Land O Lakes, FL Monica Lozada Sponsor: Nicole Lee Stephan Waldoch Tallahassee, FL Stephan Waldoch Sponsor: Kevin Scott
Get rewarded for sponsoring new FIADA members! PUT YOUR NAME ON THE ROSTER AT WWW.FIADA.COM
Rejoining Members Car Store of West Orange Inc Clermont, FL Garrett Paquette Sponsor: FIADA
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Carmax Auctions Richmond, VA Lauren Packett Sponsor: Sarah Langley
8 — Independent Dealer — June 2013
Foreman Motors, Inc. Melbourne, FL Daniel Foreman Sponsor: FIADA
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20+ Year Members Florida Auto Exchange Co. GTS Auto Sales Paragon Auto Sales, Inc. Tallahassee Auto Auction VIP Auto Sales 10+ Year Members Automax Buyer’s Zone, Inc. Fleet Lease Disposal Gallagher Promotional Products Ted’s Auto Sales, Inc. Tom’s Cars, Inc. Van’s Cars & Trucks
Dunedin, FL Ft Lauderdale, FL Interlachen, FL Tallahassee, FL Jacksonville, FL Palm Harbor, FL West Palm Beach, FL Delray Beach, FL Longwood, FL Saint Petersburg, FL Ocala, FL Brooksville, FL
Under 10 Year Members ABCOA/Deal Pack Software Jacksonville, FL Absolute Surety, LLC Orlando, FL AutoRaptor CRM Providence, RI C & L Motors Tampa, FL C Berman Assoc, Inc. Syracuse, NY CarBucks Greenville, SC Cars.Com Chicago, IL Carsforsale.com Tea, SD Central Florida Sales & Leasing Orlando, FL Checkered Flag Auto Sales Lakeland, FL Cliff Shuler Auctioneers Titusville, FL Creel Motors ST PETERSBURG, FL Dimension Motors Inc. Lauderhill, FL First Auto Sales Bradenton, FL First Florida Motor Sports, Inc. Miami, FL Florida Cars USA Miami, FL Fort Myers Auto Mall Fort Myers, FL Genuine Motorcars, Inc. Saint Petersburg, FL Godby Enterprises DBA Universal A/S of Plant City Plant City, FL Greenfield USA Wholesale LLC Hollywood, FL Hinshaw & Culbertson, LLP Tampa, FL Millennium Motors Winter Park, FL Ocean Auto Sales of Miami, Inc. Miami, FL South Side Kia Jacksonville, FL Spanos Imports Daytona Beach, FL Tallahassee AutoFinance dba Gary Moulton Auto Cent Tallahassee, FL Timeless Motors Lakeland, FL Title Technologies, Inc. Dallas, TX Trinity Motors Sarasota, FL Vets-Cars, LLC / Vets-Shield, Inc. East Haddam, CT Your Auction of Tampa Bay St Petersburg, FL Gateway Auto Sales, Inc. Jacksonville, FL Wayne Lewis Sponsor: Amelia Tillman
Just In Time Auto Sales Inc Auburndale, FL Cheryl Abbott Acres Sponsor: Amelia Tillman www.fiada.com
The top dealers in the state have discovered why they need FIADA and they believe it has helped them become more successful. The truth is, however, FIADA needs you as much as you need it. With your help FIADA can work harder and have a louder voice when it comes to protecting independent dealers on the issues important to the industry. With membership, you will also have unlimited access to FIADA’s Technical Assistance Line, ongoing legislative protection, member-only discounts, and continuing education opportunities that are essential for your business. On top of that, members enjoy networking at FIADA special events, idea sharing at town hall meetings and building friendships with fellow dealers that last a lifetime.
“FIADA provides an incredible support network of information, experience and seasoned dealers that help each and every dealer in the state succeed. We have been members for over 10 years and I believe as a dealer you can’t afford NOT to be a member.”
—Christopher Leedom, Automaxx, Sarasota
www.fiada.com
“I wish more dealers would realize the value of strength in numbers. FIADA’s lobbying efforts eliminated a state lemon law and implemented the ability to put a stop on delinquent customer’s vehicle registration. With more members we are capable of doing so much more.”
“Being a part of the FIADA is a strategic necessity. Having a voice in helping shape the legal, regulatory and competitive landscape of our industry gives me comfort knowing that a business that has been so good to my family will continue to flourish.”
“FIADA offers access to a number of invaluable resources including a community of independent dealers and vendors that support our industry, lobbying efforts on our behalf and legal advice from attorneys who specialize in dealer-related matters.”
—Michelle Graudins, Economy Motors, Live Oak
—Jim Kagilliery, JD Byrider, Jacksonville
—Lisa Compagno, Palm Tree Auto Sales, Stuart
June 2013 — Independent Dealer — 9
10 — Independent Dealer — June 2013
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June 2013 — Independent Dealer — 11
LEGAL BRIEFS
A Decision on Spot Deliveries A recent court decision answers questions about handling spot deliveries and the need for proper documentation if a dealer chooses to use them. By ROB SICKLES, FIADA GENERAL COUNSEL
A
recent decision rendered by the Third District Court of Appeal in the Bengal Motor Company v. Cuello case helps answer some uncertain questions about spot deliveries for Florida dealers. This was one of the cases that was causing a problem for spot deliveries in Florida. The Court’s decision is important for a few reasons. First, it holds that spot delivery is permissible under certain circumstances. Unfortunately, the Court found that the dealer’s use of conditional language in its Bailment Agreement and Retail Buyer’s Order violated the finality requirements of the Truth in Lending Act (TILA). The problem identified by the Court was that the Buyer’s Order and Bailment Agreement (sometimes called a Spot Delivery Agreement) were separate documents from the Retail Installment Sales Contract. Both the lower court and the appellate court found that because the RISC did not mirror the conditional
nature of the transaction outlined in the Buyer’s Order and Bailment Agreement and also failed to reference either the Buyer’s Order or Bailment Agreement , the dealer violated the Truth in Lending Act and Chapter 520 of the Florida Statutes. Importantly, the Court held that if the RISC had contained conditional language or referenced the other two documents, the Court would have held that the dealership’s conduct was permissible. Thus, spot delivery can be done legally, so long as the RISC indicates that the transaction is contingent on financing approval. Dealers should also make sure that they fill in the blanks that are located in some RISCs in the “dealer’s right to cancel” section. Too many times I have seen this space left blank or unsigned. Under this decision those spaces would need to be filled in and applied. For example, some RISCs give a time period for acceptance. This period would need to be held to by the dealership.
In an important ruling for dealers, the Court found that Chapter 520’s award of the finance charge as damages for violating its provisions is not a penalty as is provided for in TILA. Instead, the Court reversed the award of the finance charge to the customer, because the customer did not pay anything toward the finance charges in this transaction. The vehicle had been repossessed before any payments were made. Thus, it seems that a customer will need to begin paying back a loan before a technical violation of Chapter 520 results in an award of the finance charge. The Court did say that the practice at issue was a violation of TILA and would have triggered its automatic award of $1,000 and the potential for attorneys’ fees, however the Plaintiff in this case did not seek damages under Cuello. Please join us at the FIADA Town Hall meeting next month in Ponte Vedra Beach where we will discuss the impact of the decision as well as other legal questions and issues that are important for used car dealers right now. Find more information about the Town Hall on page 29 or head to www.fiada.com for an online registration. Robert E. Sickles is a partner in the Tampa office of Hinshaw & Culbertson LLP. He is the outside general counsel to the Florida Independent Automobile Dealers Association and can be reached at (800) 237-0448.
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COMPLIANCE ISSUES
Clean Title? Not So Fast! A “clean” title is not as innocent as it sounds. Make sure you are aware of what may be hiding under this misleading label. By Les Cravens
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he title issue surrounding salvage vehicles entering Florida with “clean,” unbranded titles has been one faced by used car dealers, retail consumers, law enforcement and the Department of Highway Safety and Motor Vehicles (DHSMV) for some years. This problem has escalated as it has become much easier for dealers to purchase salvage vehicles by bidding in auctions over the internet. Most recently, sellers intentionally avoiding the branding of salvage vehicles in order to sell the vehicles for a higher
price has made the problem worse. The bottom line is that a purchasing dealer is responsible for disclosing any prior salvage condition to a buyer, and needs to be able to protect his interest by disclosing the historical condition of a vehicle when he resells it. Florida law and DHSMV procedures are in place to protect buyers by making sure salvage vehicles are correctly branded. Florida statute 319.30 defines a “salvage” as a motor vehicle which is a total loss and then defines a “total loss” as either a
wrecked, damaged, or stolen insured vehicle that an insurance company has paid the vehicle owner to replace, or an uninsured motor vehicle or mobile home that is wrecked or damaged to the point where it would cost 80% or more to replace or rebuild the vehicle. Simply put, when an insurance company declares a vehicle a total loss and pays their insured to replace the vehicle, it becomes a salvage motor vehicle under Florida law. Any total loss salvage vehicle in Florida or vehicle brought into Florida from another state with a salvage certificate of title or a “clean” title either in the insurance company’s name or endorsed over to the insurance company, is a total loss salvage vehicle. Used car dealers should take this into consideration when making purchases of wrecked or damaged vehicles being sold through salvage Continued on Page 16.
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1.866.923.3123 Visit ADD123.com to see all available dealer services. June 2013 — Independent Dealer — 15
CLEAN TITLES continued from Page 14.
auctions with “clean” titles. If the seller of the wrecked or damaged vehicle is listed as an insurance company, the chances are very good that the “clean” title advertised is either in the insurance company’s name or has been endorsed over to the insurance company as the result of a total loss payout – meaning that neither the purchasing dealer or the consumer will be able to get a “clean” Florida title on the vehicle. If the used car dealer who has purchased a wrecked or damaged vehicle from an insurance company resells the vehicle in the wrecked or damaged condition, the Florida title issued as a result would be a Rebuildable Salvage Certificate of Title or a Certificate of Destruction, depending on the amount of damage. If the vehicle is repaired by the used
car dealer, the Florida Rebuilt Statute (319.14) that prohibits offering for sale, selling, or exchanging a rebuilt vehicle until proper application for a Rebuilt Certificate of Title is made and a physical examination of the vehicle is completed would apply. The rebuilt vehicle would have to be processed through the DHSMV Rebuilt Procedure, and would receive a “Rebuilt” Florida title. Dealers are urged to be cautious when buying and reselling these wrecked or damaged vehicles sold by insurance companies with “clean” title designations. A simple check of the vehicle in the National Motor Vehicle Title Information System (NMVTIS) may reveal that an insurance company and/or auction have reported the vehicle as a total loss or salvage designation to
NMVTIS. The Florida DHSMV is fully connected to NMVTIS, and that salvage designation will be revealed when the first title transfer in Florida occurs. Additionally, it is advisable for Florida dealers to familiarize themselves with the Florida titling and rebuilding statutes and DHSMV procedures (TL 36 and TL 37), which can be found on the DHSMV website (http://www3.flhsmv.gov/dmv/Proc/ TL/TLContents.html). Les Cravens is currently Director of Law Enforcement and Compliance Policy for Auto Data Direct and has extensive experience as a police officer with auto theft prevention including vehicle title and registration fraud, salvage vehicle enforcement and salvage title fraud, export of stolen vehicles, cargo theft, VIN alteration, and odometer fraud.
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SMART SELLING
Flood Cars on the Rise In the aftermath of Superstorm Sandy flood-damaged vehicles are washing up at auctions and dealerships around the country. By KEVIN O’CONNOR, CIC, CRM
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he end of October 2012 witnessed what has become the 2nd costliest hurricane in US history. Superstorm Sandy spared the normal “danger zones” of the Southeast and instead caught the citizens of New York and New Jersey by surprise with an estimated $50 billion in damage. In comparison Hurricane Katrina had $128 billion in damage (adjusted for 2012 dollars). After Sandy, more than 650,000 homes in the US were damaged or destroyed and 8,000,000 people were without power. In addition to the homes and businesses that were devastated by the storm, current estimates total over 500,000 vehicles that had flood damage. Most of the damage was from storm surge salt water which, even at minimal amounts, almost always causes vehicle damage beyond reasonable repairs. While the vehicle may be able to be cleaned up and even run well for a period of time, its rapid deterioration is inevitable. Electrical issues, frame and engine corrosion, failing brakes and even mold will start to surface. The car eventually becomes unsafe to drive, if it even continues to run at all. The National Insurance Crime Bureau (NICB) currently estimates that there have been approximately 250,000 insurance claims on vehicles as a result of Sandy. The NICB is a notfor-profit organization that receives data from nearly 1,100 property and casualty insurance companies. These numbers came out in late February, so
18 — Independent Dealer — June 2013
it is very possible they will be revised to a higher number in the future. The majority of these cars have been deemed total losses by the insurance carriers. Determining the amount of damage on a flood car can be very tricky to an insurance claims adjuster who may be unable to evaluate the extent of the damage without disassembling components such as door panels and engine parts them to inspect for water and corrosion damage. While rust and water are the obvious issues, the electrical systems create the real problem for insurance companies. When electrical components have failed, the components have to be removed individually and substituted on a trial and error basis to determine which are failing. The suspected components would then be replaced and a system test using manufacturer supplied test equipment would be needed in order to determine if the system is again functioning. This process would need to be completed by the franchised dealer and is far beyond the scope of what an independent, insurance company approved body shop has the capability of doing. The tedious troubleshooting that is required makes it almost impossible for an insurance company to estimate the cost of repair forcing them to treat the vehicle as a total loss. Once an insurance company “totals” a flood damaged vehicle and the claim settlement occurs, the various
state agencies require that the vehicle’s title be “branded” telling any future buyers the status of the vehicle. This “branded” title is then reported to the National Motor Vehicle Title Information System (NMVTIS), the national database of vehicle histories. If everything is working according to plan, a buyer of a vehicle in Florida should easily be able to determine if that vehicle had been totaled by an insurance company. With this knowledge, that buyer could then make an informed decision on whether they want to purchase it or not. While NMVTIS is a good start at managing the problem, the system isn’t perfect. There are current reports of insurance carriers not “branding” the title as required or reporting it prior to its sale at salvage auctions allowing the vehicle to be sold with a clean title and into other states with the buyers having no knowledge of its history. Even if the title is branded, the vehicle may be moved to a different state and retitled under that state’s laws as a clean title through a process called title “washing.” Finally, there is no standardized branding system across the different states making it difficult to identify the vehicle’s flood history. In addition to the issues the NMVTIS project has, it doesn’t address any of the estimated 250,000 uninsured vehicles. The sad truth is that many of these vehicles are making their way back into the marketplace and being sold to unsuspecting buyers as well. Continued on Page 20. www.fiada.com
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June 2013 — Independent Dealer — 19
FLOOD CARS continued from Page 18.
These vehicles come from a number of sources including but not limited to: • Self insured commercial fleets— Companies send the damaged vehicles to salvage auctions under the original clean title paperwork. Most of the salvage auctions report these sales to NMVTIS, however the paperwork will still show as clean. • Privately owned vehicles—These are often sold on sites such as Craig’s List or Ebay or sent to out-of-state auctions. In most cases, the owner of the vehicle has no legal duty to disclose the damage so a less than scrupulous rebuilder could repair it and sell it as a clean vehicle. This sale could take place privately or through an auction placing the retail dealer at risk. Not knowing about the damage, the dealer sells the car to a customer only to have them return with their attorney months or years later.
So what can be done to avoid ending up with one of these cars as either a consumer or a dealer? First, check the NMVTIS database. The vast majority of vehicles being totaled by insurance companies will show up there. If the vehicle is not in the database, it’s up to the buyer to do whatever investigative work they can to track down a problem. The second process would be an extensive inspection. Most dealers have the experience to spot flood damage on the surface, but the lack of any signs of water doesn’t guarantee the vehicle is safe. For example, a large used car dealer noticed he had been doing an unusual amount of brake jobs on low mileage cars and decided to take a closer look to see why. To his surprise, once the door panels had been removed there were signs of corrosion caused by salt water. This damage was not visible at the time of purchase. Not wanting the liability of selling a damaged car, this particular dealer ran the vehicles back through
the auction under a “Red Light” and took a large loss. Unfortunately, these vehicles will still end up being sold to retail buyers by dealers willing to “roll the dice.” Another way to protect against unknowingly buying a flood damaged car, is by getting a Post-Sale inspection (PSI) when offered at the auction. A PSI, can range between $75 and $100 and includes a rigorous check of the vehicle for numerous items including flood damage. At the end of the day, many of these vehicles will make it back out onto the highways of the country and there is very little that can be done to stop it. Be vigilant in your investigations before buying your inventory and avoid taking any chances. Kevin O’Connor and Dealers Insurance Services have been helping dealers with insurance needs for 27 years. He may be reached at (321) 285-9678 or online at www.dealersinsurance.com.
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L E G I S L AT I V E U P D AT E
• Low speed vehicle conversion to golf cart title cancellation. • The authorization for biennial renewals for motor vehicle, mobile home & RV dealers, manufacturers, distributors and importers.
Looking Ahead By Sandra Mortham, FIADA lobbyist
A
t the time of this article, the DMV legislative package is with the Governor’s Office awaiting his signature to become law, or waiting the 15-day time period to become law without a signature. Among the items of interest in HB7125 are changes related to driver license, specialty plates, voluntary contributions and some new traffic laws. Of interest to dealers are the following: • A Pilot project for the rebuilt inspection program in Miami-
Dade & Hillsborough County. The program ends July 1, 2015 unless the legislature extends. • Language cleaned up for IRP and certificates of repossession. It is still a two-step process, but according to the DMV, that is due to the process for federal requirements for odometer declarations. •
Establishes identification necessary to complete title and registration applications.
It is never too early to look ahead. Please take the time to contribute to the FIADA PAC fund so we can hit the ground running in 2014. Also, be sure to attend the next Town Hall meeting July 26 in Ponte Vedra Beach. We will be discussing what happened during this year’s session and strategy for next year to ensure the business interests of Florida used car dealers are protected.
WANT TO MAKE A DIFFERENCE? Join the FIADA Legislative Committee, or any of the other member-driven Committees, and get involved with your Association. Go online to www.FIADA.com and find out how!
Use this form to make your contribution, and mail to the FIADA office at 1840 Fiddler Court, Tallahassee, FL, 32808
Make your check payable to FIADA-PAC and mail your contribution to: FIADA • 1840 Fidler Court • Tallahassee, FL 32808
22 — Independent Dealer —June 2013
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June 2013 — Independent Dealer — 23
Thursday, October 17, 2013
6:30-9:30pm Welcome Reception
Friday, October 18, 2013
9-10am Opening Keynote 10-10:30am Member Meeting/Elections 10:45-11:45am General Workshop 12-1:15pm Networking Lunch 1:15-2:15pm General Workshop 2:30-3:30pm General Workshop 3:45-5pm Legal Workshop 6-9pm Exhibit Hall Opening/Family Fun Night
8-9:30am 9:30-10:30am 10:45-11:45am 12-2:30pm 2:30-3:30pm 3:45-5pm 6:30-9pm
Saturday, October 19, 2013
Breakfast with Exhibitors General Workshop Legislative Keynote Lunch with Exhibitors General Workshop DMV Keynote Awards Banquet
HOTEL ACCOMMODATIONS:
Disney’s Coronado Springs Resort
Room Rate is $139 per night/plus tax. Reservations must be made by 9/17/13 to receive group rate. Space is limited. Call (407) 939-4686 to book your room.
REGISTRATION is now open for the 2013 event! Use this registration form or go online to WWW.FIADA.COM and click on Events.
24— —Independent IndependentDealer Dealer— —June May 2013 2013 24
www.fiada.com www.fiada.com
2013 FIADA ANNUAL CONVENTION REGISTRATION FORM COMPANY INFORMATION Company:_____________________________________________________________________________________________________ Address:__________________________________________________ City, State, Zip:_______________________________________ Phone:____________________________________________________ Fax:_______________________________________________ E-mail:___________________________________________________ Website:____________________________________________
REGISTRATION INFORMATION FIADA MEMBER DISCOUNTED REGISTRATION RATES
EARLY BIRD REGULAR ON-SITE (2/1 - 8/31) (9/1 - 10/11) (10/12 - 10/20)
FULL ACCESS PASS Badge Name:__________________________________________________________
[
] $249 [
] $299 [
] $349
ADDITIONAL FULL ACCESS PASS Badge Name:__________________________________________________________
[
] $195 [
] $195 [
] $195
Badge Name:__________________________________________________________
[
] $195 [
] $195 [
] $195
SPOUSE FULL ACCESS PASS Badge Name:__________________________________________________________
[
] $100 [
] $100 [
] $100
EDUCATION PASS Badge Name:__________________________________________________________
[
] $99
[
] $124 [
] $149
FULL ACCESS PASS Badge Name:__________________________________________________________
[
] $299 [
] $349 [
] $399
Badge Name:__________________________________________________________
[
] $195 [
] $195 [
] $195
Badge Name:__________________________________________________________
[
] $195 [
] $195 [
] $195
SPOUSE FULL ACCESS PASS Badge Name:__________________________________________________________
[
] $100 [
] $100 [
] $100
EDUCATION PASS Badge Name:__________________________________________________________
[
] $124 [
] $149 [
] $175
MEMBER
NON-MEMBER REGISTRATION RATES
NON MEMBER ADDITIONAL FULL ACCESS PASS
F_ ULL ACCESS AND SPOUSE FULL ACCESS PASSES includes all meal functions, seminars and exhibit hall access and is eligible for continuing education credit. Additional Full Access passes and Spouse pass are only available with a Full Access registration. Valid FIADA membership required for FIADA member registration rates.
TOTAL:
$
PAYMENT METHOD [
] I have enclosed a check made payable to FIADA
[
] I will be using a credit card
Name (as it appears on card):_______________________________________ Company:_______________________________________ Credit Card Billing Address:________________________________________________________________________________________ Credit Card Number:_____________________________________________ Exp Date:_______________________________________ Authorized Signature:_________________________________________________________________ CC Security Code:_____________ CANCELLATION POLICY: If cancellations are received in writing before 5pm on Tuesday, September 17, 2013, we will refund your registration fee. If cancellation is received between 9/18/13 and 9/30/13, we will refund your registration fee less a $25 processing fee. Fees cannot be refunded for registrations cancelled after 10/1/13 or for no-shows. Photo/Video Release: By registering for the 2013 FIADA Annual Convention, I hereby grant permission to use any and all photographic imagery and video footage taken of me at this event and activities pertaining to this event, without payment or any other consideration. I understand that such materials may be published electronically or in print, or used in presentations or exhibitions.
HOTEL INFORMATION: Disney’s Coronado Springs Resort. Hotel stay is separate from convention registration. Reservations must be made BEFORE SEPTEMBER 17, 2013 to qualify for group discount of $139 per night (plus tax) For reservations call (407) 939-4686.
Mail/Fax/ONLINE registration: FIADA, 1840 Fiddler Court, Tallahassee, FL 32308 FAX 850.385.3251 www.FIADA.com www.fiada.com
June 2013 — Independent Dealer — 25
LEGAL ISSUES
verdict in favor of Ernie’s, and the appellate court rejected Castro’s appeal.
“As-Is” Sales Under Attack
Castro, unhappy with this result, appealed further, all the way to the Supreme Court of Montana. That court wasn’t buying what Castro was selling either, however, and affirmed the appellate court’s decision. The high court stated that, under the Montana Uniform Commercial Code, Castro could revoke acceptance of the car if she proved that the purchased vehicle was nonconforming and that the nonconformity substantially impaired its value. According to the high court, the fact that the car broke down was not sufficient evidence to prove nonconformity when the car was 16 years old and was purchased as is. The high court also noted that Castro did not have the car checked by a mechanic for proof of nonconformity or to determine the actual condition of the vehicle. The high court stated that she should have expected that the car needed repairs. The high court went on to determine that Castro provided no evidence to support her remaining claims. Whaddya know? “As-is” means “as-is.”
Recent court cases have tried to question the finality of “as-is” sales but so far they still hold up under the pressure. Make sure your dealership is prepared if faced with such a claim. by Thomas B. HudsoN
H
ow long do you think “as-is” sales have been around? I’d be willing to bet that the concept dates to the earliest commercial exchanges in history. “Here’s my stone ax. You want it? You pay me and you’ve got it. As is.” Over the ages, the doctrine has been modified a bit. As-is sales can be made, at least in most states, but the Uniform Commercial Code and some state laws require that you jump through a few hoops to do so. Under the UCC, a sale of goods, like a car, gives rise to certain “implied” warranties – warranties that are deemed to apply to the goods whether they are stated or not. These are the so-called warranties of merchantability and warranty of fitness for use. But, says the UCC, these implied warranties can be “disclaimed” by the seller by using certain magic words in the contract of sale. If you use those magic words and do not make any other warranties, presto, you have an as-is sale. When a car buyer is unhappy with his purchase, he will sometimes visit his friendly local lawyer. The lawyer, looking over his client’s paperwork, will be distressed if he sees that his client has engaged in an as-is sale. After all, “as-is” means “as-is,” correct? You’d think so. But lawyers are creative sorts, and even when faced
26 — Independent Dealer — June 2013
with an established doctrine like the one that applies to as-is sales, the lawyer has a secret weapon. You see, there are a fair number of pro-consumer judges presiding in courts around the country who are willing to listen to any harebrained theory to avoid ruling against a consumer. Give one of these judges an argument that a doctrine– even one as ancient as the as-is sale doctrine – shouldn’t apply to protect a business, and he’ll jump on it like a banty rooster going after cornbread scraps. A couple of recent cases illustrate attacks on the as-is sale doctrine and, at least in these cases, the sellers’ successful defense to those attacks. Here’s what happened in the two cases. Lola Castro bought a car from Ernie’s Auto. The contract stated that the car was sold “as is.” The car broke down on the way home from the dealership, and, after replacing the battery, Castro drove it back to the dealer and demanded her money back. Ernie’s, pointing to the as-is clause, refused. Castro sued Ernie’s for breaching an express warranty, violating the Montana Consumer Protection Act, and negligence. She claimed that she could revoke her acceptance of the car. The trial court, evidently of the view that “as-is” means “as-is,” granted a directed
The second case began when Evan Roberts bought a car from Lanigan Auto Sales. Again, the purchase contract stated that the vehicle was to be sold “as is.” Through an independent report, Roberts found that the vehicle had been in a previous accident. Roberts sued, claiming Lanigan violated the Kentucky Consumer Protection Act and committed fraud by omitting, suppressing, and concealing the vehicle’s prior damage and accident history. The trial court found that the as is clause in the purchase contract precluded the claim of fraud and dismissed his claims. Roberts appealed. The Court of Appeals of Kentucky affirmed the trial court’s dismissal of Roberts’s www.fiada.com
The appellate court noted that the effect of the “sold as is” clause was to shift the assumption of risk regarding the value or condition of the vehicle to Roberts, despite any express or implied warranties made by Lanigan. In other words, Roberts agreed to rely on his own assessment of the condition of the vehicle in spite of Lanigan’s representations. Therefore, if a consumer’s alleged injury is only that that car is worth less than anticipated, the consumer will be unable to show that the seller’s representations caused the injury. The appellate court added that an as is clause does not bar all fraud claims. As stated in the Kentucky UCC, when “circumstances indicate otherwise,” express or implied warranties may not be disclaimed by a written contract. According to the court, different circumstances could support an action for fraud despite an “as is” clause when the injury results in consequential damages, i.e., injury to a person or property as a result of a breach of warranty, rather than an injury as a result of decreased value of goods. Tom (thudson@hudco.com) is a partner in the law firm of Hudson Cook, LLC. For information, call 410865-5411, 410-865-5430, or visit www. counselorlibrary.com. www.fiada.com
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fraud claim. Kentucky’s Uniform Commercial Code provides that “unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like ‘as is,’ ‘with all faults’ or other language which in common understanding calls the buyer’s attention to the exclusion of warranties[.]” An official comment to the statute provides that an “as is” clause in a sales contract is “understood to mean that the buyer takes the entire risk as to the quality of the goods involved.”
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Another FREE opportunity for first-class education specific to independent dealers is coming your way in July. Make plans now to join FIADA in Ponte Verde Beach, FL and attend the Dealer Training & Town Hall Meeting. Get a legislative update and preview of 2014 with Lobbyist Sandra Mortham as well as a informational Q & A with FIADA Attorney Rob Sickles. It is your chance to get answers to all the legal and regulatory issues you are concerned about.
THIS NG IS L MEETI L A H N W
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Stay for the FIADA Board of Directors Meeting Saturday, July 27, 2013 Sawgrass Marriott Resort & Spa 1000 PGA Tour Boulevard Ponte Vedra Beach, FL 32082 Reserve a room at the Sawgrass Marriott before July 12 and get the FIADA rate of $149 per night. For reservations call (800) 457-4653 or go to FIADA.com
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June 2013 — Independent Dealer — 29
INDUSTRY NEWS FIADA’s Cars For Kids Continues to Make a Difference Special thanks to AutoMaxx, Palm Tree Auto Sales, and Cox Motors for participating in the Cars for Kids program benefitting the Florida Sheriffs Youth Ranches. If you would like to host a Cars for Kids event at your dealership, or to donate a vehicle, contact the FIADA office at (800) 237-0448 or FSYR’s Lisa Mills at (800)765-3797. AutoMaxx on March
22
Palm Tree Au to
The Trouble With CarFax Used car dealers around the country have been voicing complaints about the unfair business practices of vehicle history report giant CarFax for years now, but recently the owners of over 120 dealerships united together to file a federal lawsuit against the company alleging it engages in anti-competitive practices and violates antitrust laws. The suit, which was filed on April 23, 2013 in U.S. District Court for the Southern District of New York, seeks damages of more than $50 million. It also alleges that Carfax, through exclusive agreements with auto manufacturers and popular classified auto Web sites, is “monopolist in the sale of vehicle history reports” because it forces dealers to buy its vehicle history reports. The current lawsuit seems to also be effecting the potential sale of CarFax’s parent company R.L. Polk & Co. according to a recent article in the Wall Street Journal. The story said Polk has attracted interest from some potential corporate buyers as well as a host of private-equity firms, including buyout giants Carlyle Group LP and KKR & Co. Sources close to potential buyers say the lawsuit isn’t necessarily a deal-breaker for them, but that they are awaiting more information before moving forward. Dealers have a limited period of time to join the lawsuit. To find out how or for more information, go to www.DealerLaw.com. 30 — Independent Dealer — June 2013
-18
Sales on Apri
l 26-27
17 Cox Motors on May
NIADA Endorses New Partner Security Key Systems has been an industry leader in the key management, security and control services for the past ten years and a new partnership with NIADA could save members thousands of dollars in eliminating lost keys, surprise vehicle damage, and theft. The Security Key System solutions are very easy to implement, and cost effective with very robust reporting on vehicle key history, employee key access, vehicle inventory location, and key movement. Find out more about this partner at www.NIADA.com.
Happy Dealer Walks Away With $10,000 from CAA With over 1100 vehicles, 600 dealers, free breakfast, multiple TV giveaways and cash drawings the May 10th Charleston Auto Auction proved exciting for one lucky dealer. At the conclusion of every sale, Charleston Auto Auction holds a “$10,000 Late Bird Drawing” where the winning name can only win if still present at the end of the sale. Trae Hodson with Fanellis Auto walked away on May 10 as the $10,000 Winner. “It was just another great day here at Charleston Auto Auction. We had a vehicle for every type of buyer and sold most of them. Giving away the $10,000 Late Bird to one of our loyal dealers was just icing on the cake!” said Laura Taylor, General Manager, Charleston Auto Auction. www.fiada.com
2012-2013 FIADA EXECUTIVE COMMITTEE:
CHRISTOPHER LEEDOM DINO MERCURIO BRANDI NOEGEL President Senior Vice President Chairman of the Board AutoMaxx Independent Credit, Inc. Noegel’s Auto Sales Sarasota, FL West Palm Beach, FL Starke, FL (941) 309-1111 (561) 686-8673 (904) 964-6461
FRANK FUZY Regional Vice President Century Motors of S. FL Pompano Beach, FL (954) 785-0369
DAVID COX, CMD Secretary Cox Motors, L.L.C. Lakeland, FL (863) 686-9300
PAUL MATTON Treasurer Park Auto Mall Pinellas Park, FL (727) 639-1112
JIM WINTERICK, JR. STEVE MARBAIS GEORGE HICKEY JIM WINTERICK, SR. Regional Vice President Regional Vice President Regional Vice President Regional Vice President Marbais Enterprises, Inc. Gulfstream Motor Credit Gulfstream Motor Credit Bond Auto Sales Ocoee, FL Miami, FL Miami, FL Tampa, FL (407) 877-7422 (305) 253-2335 (305) 253-2335 (813) 238-7478
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June 2013 — Independent Dealer — 31
Manheim Florida Locations Present
CARGARITAVILLE As if you needed Ten more reasons to come To Florida this summer...
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32 — Independent Dealer — June 2013
Regular Sale Thursday, July 11 | 3:00 PM
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