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Major auto work botched then business sold before fixed...

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Kanati

Junior Member
What is the name of your state (only U.S. law)? IL

I took my 2006 Corvette to a local transmission shop to get a new ring and pinion put in. It was "elective" as I just wanted more performance. The owner of the shop was friendly and seemed pretty competent. He charged me 1317 dollars and some change for the swap and had the car for about 2 1/2 weeks. No problem as I had something else to drive in the meantime.

I took possession of the vehicle and was told that there was about a 500-1000 mile break in period. No problem again. I didn't want it to go beat up on the car. I just wanted to know it was there if I wanted it. So I drove it pretty conservatively for the first 500 miles and figured I would do the last 500 miles of "break in" on the way to Bowling Green for the Corvette Museum bash they have each year. I got about 250 miles down the road and started to hear a whine. Once I pinpointed that it was coming from the rear end, I cancelled my plans and returned home. By the time I got home the noise had gotten relatively bad, but the car still drove fine. I was about 90% convinced it was ring and pinion whine but FAR louder than it should have been.

I took the car back to the shop and told him it was all his again. I gave him all the pertinent info. He drug his feet for about a week and finally told me it was a rear countershaft bearing. I told him I didn't think it was but that I wasn't a mechanic so if that's what it was, then go ahead and fix it. He expressed concern that he wasn't going to be able to work on it as he was going in for knee surgery at the end of the week and wouldn't be able to work on it until after the 1st of June (about two weeks or so). I told him I had something else to drive and that was fine. Just put it up in the garage when he was out for medical leave. I waited and he didn't contact me on the 1st. I let it go a few more days and on Thursday the 4th, I called him and he assured me that it was in the shop on the lift and being worked on. It would "be done by Monday". Monday arrived and went. I contact him on Tuesday and he said (to paraphrase) "Yeah I can't work on your car. I've closed my shop permanently." I was.... a little peeved but he assured me someone would be there so I could pick up my car. I arranged to get a flatbed tow truck over to the shop and taken to another local shop, but was unable to contact anyone. Tuesday night I was contacted by someone who said they were the new owner of the business and would be there for me to get the car the next day.

When I arrived there the next day, the new owner said they signed the business over the day before. My car was sitting in the garage at that time and until I got the tow truck to pick it up on Wednesday.

The new shop got the work done in 2 weeks and it was NOT the rear countershaft bearing. It was the ring and pinion. He showed me the ring and it was obvious that the original job was done incorrectly, without a master rebuild kit (old parts used), and was not salvageable.

I have been unable at this point (multiple weeks) to contact the original business owner and have been going through the new owner in an attempt to get my 1317 dollars and change back.

The business... as far as I've been able to tell... was not an LLC or C-Corp or S-Corp.

My questions.... Does the new owner, using the same business name, have any liability to pay this back or do I have to go after the original owner? Does the ORIGINAL owner have any liability to pay me back given that he no longer owns the business? Is my only recourse, assuming either of them are liable, a small claims suit?

Thanks.
 


Zigner

Senior Member, Non-Attorney
How much damage did you do by continuing to drive the vehicle once you knew there was a problem?

Whether or not the new owner could be held liable really depends on the terms of the sale of the business. Did the new owner repair the vehicle?
 

Kanati

Junior Member
How much damage did you do by continuing to drive the vehicle once you knew there was a problem?

Whether or not the new owner could be held liable really depends on the terms of the sale of the business. Did the new owner repair the vehicle?

By the time the whine was noticeable it wasn't salvageable or so I'm told.

The new owner did not repair the vehicle. I had it taken to another shop who charged me 2000 dollars to do it right (new bearings, new crush sleeve, new shims, etc).
 

LdiJ

Senior Member
By the time the whine was noticeable it wasn't salvageable or so I'm told.

The new owner did not repair the vehicle. I had it taken to another shop who charged me 2000 dollars to do it right (new bearings, new crush sleeve, new shims, etc).
Who has liability depends on how the business was sold. If the business was a separate entity, LLC, S-Corp, C-Corp and was sold in its entirety, then the new owners would be liable IF they purchased it in its entirety. There is also a chance that a sole proprietorship could be sold in its entirety as well, but its less likely. I would certainly never advise a client to purchase a sole proprietorship in its entirety, unless conditions were just right.

If it was an asset only purchase (which is what most purchasers of a small business would do) then the old owners would be liable.

I will give you an example. Lets say that a mechanic's shop has assets of 150k, which would include building, equipment and some goodwill (goodwill meaning reputation in the community), but also had debts of 125k plus the potential for claims like yours. That business might only sell in its entirety for 10-20k and would be a bad bet for the person buying it. However, the person buying it might buy it for its assets only, at somewhere between 110 - 130k. They would be buying it for close to the FMV of its assets leaving a bit of room for potential surprises. However, they would absolutely not be responsible for its debts/liabilities in that scenario. The prior owner would remain responsible for its debts.

Unfortunately for you, the only way to find out who is actually responsible, is to sue everybody...the old owner, and the new owners, so that the details of the sale come out in the lawsuit.
 
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