Lied on Bill of Sale & Car Does Not Conform to Warranties

[CJ.pink]

What is the name of your state (only U.S. law)? California

Some family members recently purchased a motor home for $3500 from a private seller. They agreed to list the sale price as $500.00 in order to avoid paying sales tax. The seller sold "as is", but prior to that represented that the motor home was "in good condition and had passed smog with 'flying colors.'" Afterward, it was discovered that the catalytic converter needed to be replaced ($1400 and so could not have legally passed smog) and there were other issues with the engine needing to be fixed, totaling an additional $2200.

I am of the opinion that my family members would be able to introduce evidence of the misrepresentations made by the seller, because the "as is" disclaimer does not apply to misrepresentations made to induce the buyer to enter into the contract, and they would be able to recover the damages they incurred in fixing the motor home.

However, I don't know what effect their lying on the bill of sale would have. Would the judge reduce their recovery? Order them to pay the sales tax on the correct amount? Or would them going to court open them up to greater liability?

 

[tranquility]

The parol evidence rule would prevent prior or contemporaneous verbal evidence to contradict a writing intended to be the final agreement. "As is" would prevent your statement from getting into evidence. For the same reason, it would be hard to allow a greater amount in as evidence for a bill of sale with a lower amount.

That being said, there must be a smog test passed within a certain amount of time before a motor vehicle can change hands.

https://www.dmv.ca.gov/vr/smogfaq.htm

When a car is sold, who is responsible for the inspection?

The seller is required to provide the buyer with a valid smog inspection certification at the time of the sale or transfer. Smog certifications are good for 90 days from the date of issuance.

The inspection is not required on a transfer if a biennial smog certification was submitted to DMV within 90 days prior to the vehicle transfer date (a vehicle inspection report may be required for proof of certification).

NOTE: Smog certifications are not required for transfers that occur for a gasoline powered motor vehicle that is four or less model years old. (Determine the oldest-qualifying year model by subtracting three from the current year) the four or less model years old rule does not apply to diesel powered vehicles. A smog transfer fee will be collected from the new owner.

The fraud by both parties in submitting a false amount on the request for transfer is going to be a problem in getting back any money beyond the listed amount if there was, in fact, no smog certification on the vehicle. It is not insurmountable, but it is problematical.

 

[CJ.pink]

The parol evidence rule would prevent prior or contemporaneous verbal evidence to contradict a writing intended to be the final agreement. "As is" would prevent your statement from getting into evidence. For the same reason, it would be hard to allow a greater amount in as evidence for a bill of sale with a lower amount.

That being said, there must be a smog test passed within a certain amount of time before a motor vehicle can change hands.

https://www.dmv.ca.gov/vr/smogfaq.htm


The fraud by both parties in submitting a false amount on the request for transfer is going to be a problem in getting back any money beyond the listed amount if there was, in fact, no smog certification on the vehicle. It is not insurmountable, but it is problematical.

Thank you for your reply. Misrepresentations made to induce the party to enter into a contract can be introduced and are an exception to the parol evidence rule. Evidence of the true consideration paid is also an exception to the parol evidence rule. And an "as is" disclaimer does not disclaim express warranties made along with the sale.

I am more concerned about whether or not their wrongdoing would open them up to liability; possibly consequences for tax fraud or something like that.

 

[Zigner]

Thank you for your reply. Misrepresentations made to induce the party to enter into a contract can be introduced and are an exception to the parol evidence rule. Evidence of the true consideration paid is also an exception to the parol evidence rule. And an "as is" disclaimer does not disclaim express warranties made along with the sale.

There was no warranty made. What they were dealing with was puffery. Furthermore, what evidence do they have that the vehicle did NOT previously pass the SMOG check?

I am more concerned about whether or not their wrongdoing would open them up to liability; possibly consequences for tax fraud or something like that.

One can hope...

 

[CJ.pink]

There was no warranty made. What they were dealing with was puffery. Furthermore, what evidence do they have that the vehicle did NOT previously pass the SMOG check?

When a seller states that something runs in good condition, that is a statement of fact. It is not an opinion or an exaggeration, therefore it is not puffery. A false statement of fact made to induce the buyer to enter into a contract is a misrepresentation, and the seller will be liable. I only wrote earlier that the seller said it was in good condition, but I should have put that the seller said it was in good running condition.

I am waiting for more info from them on the circumstances of the smog check issue. For now, all I know is that the seller said it passed smog and when they took it to a mechanic after buying it, the catalytic converter was bad, and it could not have passed smog with a bad catalytic converter.

 

[Zigner]

When a seller states that something runs in good condition, that is a statement of fact. It is not an opinion or an exaggeration, therefore it is not puffery.

Actually, it is the very definition of opinion and puffery. My 2004 Yugo is running GREAT! Sure, it's a little rough at idle, but it's 11 freaking years old...a little bit of vibration in the motor is to be expected. (see how that works?)

A false statement of fact made to induce the buyer to enter into a contract is a misrepresentation, and the seller will be liable. I only wrote earlier that the seller said it was in good condition, but I should have put that the seller said it was in good running condition.

I addressed this above. Puffery/opinion.

I am waiting for more info from them on the circumstances of the smog check issue. For now, all I know is that the seller said it passed smog and when they took it to a mechanic after buying it, the catalytic converter was bad, and it could not have passed smog with a bad catalytic converter.

If a SMOG cert was provided, this is a non-starter.

 

[tranquility]

Let's look to the great legal scholar, Wikipedia, under the parol evidence rule under examples:

Auto sales agreements. You purchase a used car, and the salesperson tells you it is "good as new". But the contract provides that the sale is as is. Again, in most circumstances the written contract controls. However, this may constitute misrepresentation if it exceeds reasonably accepted "puffing" or "dealers' talk"

Here:

represented that the motor home was "in good condition and had passed smog with 'flying colors.'"

The only thing here that could be a misrepresentation is if it had not passed smog. True, he did not say when, but that is of no moment as it must pass before it can transfer.

 

[CJ.pink]

Actually, it is the very definition of opinion and puffery. My 2004 Yugo is running GREAT! Sure, it's a little rough at idle, but it's 11 freaking years old...a little bit of vibration in the motor is to be expected. (see how that works?)


UCC 2-313

A statement relating merely to the value of the goods or a statement purporting to be only the seller's opinion or commendation of the goods, does not create an express warrant. As such "Chevrolet cars are better" and "You will like this" are statements that do not create warranties.

However, a number of courts have held that statements such as, "This tractor is in A-1 condition" or "this automobile is in top mechanical condition" do create express warranties that are breached if the statement is not a proper characterization of the condition of the thing sold.

Stating that something is in good running condition is not a proper characterization of the thing sold if (as I just found out) the motor home could not go more than 10 mph on the freeway, couldn't make it up a small hill, and when turned in to a mechanic, resulted in $3600 in damages.

The line between express warranties and puffery is a fine one, but case law supports this statement being construed as an express warranty.

Besides that - I was looking more for someone who might have encountered a similar situation about lying on the bill of sale and how the judge would treat that in court.

 

[Zigner]

UCC 2-313

A statement relating merely to the value of the goods or a statement purporting to be only the seller's opinion or commendation of the goods, does not create an express warrant. As such "Chevrolet cars are better" and "You will like this" are statements that do not create warranties.

However, a number of courts have held that statements such as, "This tractor is in A-1 condition" or "this automobile is in top mechanical condition" do create express warranties that are breached if the statement is not a proper characterization of the condition of the thing sold.

Stating that something is in good running condition is not a proper characterization of the thing sold if (as I just found out) the motor home could not go more than 10 mph on the freeway, couldn't make it up a small hill, and when turned in to a mechanic, resulted in $3600 in damages.

The line between express warranties and puffery is a fine one, but case law supports this statement being construed as an express warranty.

Besides that - I was looking more for someone who might have encountered a similar situation about lying on the bill of sale and how the judge would treat that in court.

You're not going to listen because you've got it set in your mind that you are right. It's not worth wasting any more of the volunteers' time. Good day. Good luck.

 

[CJ.pink]

You're not going to listen because you've got it set in your mind that you are right. It's not worth wasting any more of the volunteers' time. Good day. Good luck.

Well, I do have my mind made up on the issue of warranty because I have case law to support my position, which is why I did not ask for advice on that topic.

I am asking for opinions in regards to the lying on the bill of sale.

 

[Zigner]

Well, I do have my mind made up on the issue of warranty because I have case law to support my position, which is why I did not ask for advice on that topic.

I am asking for opinions in regards to the lying on the bill of sale.

Right - you're not going to listen, not matter what.

 

[Ohiogal]

What is the name of your state (only U.S. law)? California

Some family members recently purchased a motor home for $3500 from a private seller. They agreed to list the sale price as $500.00 in order to avoid paying sales tax. The seller sold "as is", but prior to that represented that the motor home was "in good condition and had passed smog with 'flying colors.'" Afterward, it was discovered that the catalytic converter needed to be replaced ($1400 and so could not have legally passed smog) and there were other issues with the engine needing to be fixed, totaling an additional $2200.

I am of the opinion that my family members would be able to introduce evidence of the misrepresentations made by the seller, because the "as is" disclaimer does not apply to misrepresentations made to induce the buyer to enter into the contract, and they would be able to recover the damages they incurred in fixing the motor home.

However, I don't know what effect their lying on the bill of sale would have. Would the judge reduce their recovery? Order them to pay the sales tax on the correct amount? Or would them going to court open them up to greater liability?

They committed fraud. A court will not help them due to that. Google unclean hands. Your opinion matters not.

 

[Zigner]

They committed fraud. A court will not help them due to that. Google unclean hands. Your opinion matters not.

The OP is not going to agree with you.

 

[Ohiogal]

The OP is not going to agree with you.

Ask me if I care? Yeah, I don't care what he thinks. I am right, he is not.

 

[Ohiogal]

Actual case law -- not his bull:

Kendall-Jackson Winery, Ltd. v. Superior Court, 76 Cal.App.4th 970, 90 Cal.Rptr.2d 743
California Court of Appeals, Fifth District
December 3, 1999
76 Cal.App.4th 970
90 Cal.Rptr.2d 743

The defense of unclean hands arises from the maxim, " ' "He who comes into Equity must come with clean hands." ' " (Blain v. Doctor's Co. (1990) 222 Cal.App.3d 1048, 1059 [272 Cal.Rptr. 250] (Blain).) The doctrine demands that a plaintiff act fairly in the matter for which he seeks a remedy. He must come into court with clean hands, and keep them clean, or he will be denied relief, regardless of the merits of his claim. (Precision Co. v. Automotive Co. (1945) 324 U.S. 806, 814-815 [65 S.Ct. 993, 997-998, 89 L.Ed. 1381]; Hall v. Wright (9th Cir. 1957) 240 F.2d 787, 794-795.) The defense is available in legal as well as equitable actions. (Fibreboard Paper Products Corp. v. East Bay Union of Machinists (1964) 227 Cal.App.2d 675, 728 [39 Cal.Rptr. 64] (Fibreboard); Burton v. Sosinsky (1988) 203 Cal.App.3d 562, 574 [250 Cal.Rptr. 33].) Whether the doctrine of unclean hands applies is a question of fact. (CrossTalk Productions, Inc. v. Jacobson (1998) 65 Cal.App.4th 631, 639 [76 Cal.Rptr.2d 615].)

The unclean hands doctrine protects judicial integrity and promotes justice. It protects judicial integrity because allowing a plaintiff with unclean hands to recover in an action creates doubts as to the justice provided by the judicial system. Thus, precluding recovery to the unclean plaintiff protects the court's, rather than the opposing party's, interests. (Fibreboard, supra, 227 Cal.App.2d at p. 727; Gaudiosi v. Mellon (3d Cir. 1959) 269 F.2d 873, 881.) The doctrine promotes justice by making a plaintiff answer for his own misconduct in the action. It prevents "a wrongdoer from enjoying the fruits of his transgression." (Precision Co. v. Automotive Co., supra, 324 U.S. at p. 815 [65 S.Ct. at p. 998]; Keystone Co. v. Excavator Co. (1933) 290 U.S. 240, 245 [54 S.Ct. 146, 147-148, 78 L.Ed. 293].)

Not every wrongful act constitutes unclean hands. But, the misconduct need not be a crime or an actionable tort. Any conduct that violates conscience, or good faith, or other equitable standards of conduct is sufficient cause to invoke the doctrine. (DeRosa v. Transamerica Title Ins. Co. (1989) 213 Cal.App.3d 1390, 1395-1396 [262 Cal.Rptr. 370]; Precision Co. v. Automotive Co., supra, 324 U.S. at pp. 814-815 [65 S.Ct. at pp. 997-998].)

The misconduct that brings the unclean hands doctrine into play must relate directly to the cause at issue. Past improper conduct or prior misconduct that only indirectly affects the problem before the court does not suffice. The determination of the unclean hands defense cannot be distorted into a proceeding to try the general morals of the parties. (Fibreboard, supra, 227 Cal.App.2d at pp. 728-729.) Courts have expressed this relationship requirement in various ways. The misconduct "must relate directly to the transaction concerning which the complaint is made, i.e., it must pertain to the very subject matter involved and affect the equitable relations between the litigants." (Id. at p. 728.) "[T]here must be a direct relationship between the misconduct and the claimed injuries ... ' "so that it would be inequitable to grant [the requested] relief." ' " (Mattco Forge, Inc. v. Arthur Young & Co. (1997) 52 Cal.App.4th 820, 846 [60 Cal.Rptr.2d 780].) "The issue is not that the plaintiff's hands are dirty, but rather ' " 'that the manner of dirtying renders inequitable the assertion of such rights against the defendant.' " ' " (Ibid.) The misconduct must " ' "prejudicially affect ... the rights of the person against whom the relief is sought so that it would be inequitable to grant such relief." ' " (Ibid.)

From these general principles, the Blain court gleaned a three-pronged test to determine the effect to be given to the plaintiff's unclean hands conduct. Whether the particular misconduct is a bar to the alleged claim for relief depends on (1) analogous case law, (2) the nature of the misconduct, and (3) the relationship of the misconduct to the claimed injuries. (Blain, supra, 222 Cal.App.3d at p. 1060; accord, Unilogic, Inc. v. Burroughs Corp. (1992) 10 Cal.App.4th 612, 618-621 [12 Cal.Rptr.2d 741]; CrossTalk Productions, Inc. v. Jacobson, supra, 65 Cal.App.4th at pp. 641-643.)

Based on the above -- all good case law -- unclean hands will preclude help. Why? Because the OP's family entered into a contract for the vehicle with the purpose of defrauding the state of sales tax. They colluded with the car seller in order to get off the hook on paying the sales tax. They received the benefit of the fraud. That works against them. OP can whine, cry, stomp his feet, and further carry on but quite frankly, it won't get him or his family anywhere because his family have no claim that doesn't arise from their fraudulent conduct.