The transferors cannot be protected by the absence of
privity between themselves and the actual purchaser, because
a consumer is entitled to recover damages under the Act from
each transferor in the chain of title who has made a false
mileage statement with the intent to defraud. Ryan v. Edwards,
592 F.2d 756 (4th Cir. 1979); Byrne v. Autohaus on Edens, Inc.
488 F. Supp. 276 (D.C.Ill. 1980). Therefore, plaintiff in the
instant case can recover from each of the named defendants if
they have made false odometer statements with the intent to
At issue is the standard for demonstrating "intent to
defraud" within the meaning of Section 1989. The question
raised is apparently one of first impression in this district,
and has been treated by only one other court in the Second
Circuit. Auto Sport Motors v. Bruno Auto Dealers, 721 F. Supp. 63
(S.D.N.Y. 1989). The majority view is that a seller of a
used car reporting that the mileage shown on the odometer is
true may be held liable in the absence of actual knowledge that
an odometer reading is false if he reasonably should have known
that the odometer reading was incorrect. See Auto Sport, 721
F. Supp. at 65; Tusa v. Omaha Auto Auction, Inc.,
712 F.2d 1248, 1253 (8th Cir. 1983) (intent to defraud can be inferred
"where the seller exhibited gross negligence or a reckless
disregard for the truth in preparing odometer disclosure
statements."); Ryan v. Edwards, 592 F.2d 756, 762 (4th Cir.
1979) ("Constructive knowledge, recklessness, or even gross
negligence in determining and disclosing the actual mileage
traveled by a vehicle have been held sufficient to support a
finding of intent to defraud under the statute."); Nieto v.
Pence, 578 F.2d 640, 642 (5th Cir. 1978) (liability may be
imposed when "a transferor reasonably should have known that a
vehicle's odometer reading was incorrect"); Oettinger v.
Lakeview Motors, Inc., 675 F. Supp. 1488, 1493 (E.D. Va. 1988)
("[A] dealer is subject to liability where he recklessly
disregards the truth as to a car's actual mileage.");
Kantorczyk v. New Stanton Auto Auction, Inc., 433 F. Supp. 889,
893 (W.D.Pa. 1977) (recklessness can rise to level of
fraudulent intent); Jones v. Fenton Ford, Inc., 427 F. Supp. 1328,
1335 (D.Conn. 1977) (something more than mere negligence
required). But see Mataya v. Behm Motors, Inc., 409 F. Supp. 65,
69 (E.D.Wis. 1976) (actual knowledge required).
In the instant case, the fact that defendant Orange Motors
had actual knowledge of the inaccuracy of the odometer
statement is not disputed. Defendant Meyers states in her
affidavit that she informed the salesman at Orange Motors that
the odometer had not been functioning. That statement of fact
stands uncontroverted by defendant Orange Motors. Thus, Orange
Motors exhibited, at the very least, gross negligence or a
reckless disregard for the truth in certifying that the
reading on the odometer was true when it transferred the car
to Brando Wholesale. An intent to defraud by defendant Orange
Motors can be inferred as a matter of law, and summary
judgment against Orange Motors is thereby granted. Orange
Motors' motion for summary judgment to dismiss the complaint
Turning to defendant Meyers, it is clear from her own
statements that, as asserted by plaintiff, she had actual
knowledge of the inaccuracy of the odometer reading. However,
the inference of an intent to defraud under Section 1989
created by actual knowledge can be dispelled by evidence that
there was no intent to defraud. Levine v. Ark-Les Switch Corp.,
451 F. Supp. 55 (W.D.Pa. 1978). The Levine case presented facts
similar to those presented here. A seller who traded in a used
automobile made known to the salesman who took the trade-in
that the odometer in the car had been replaced, and thus did
not reflect the true mileage on the car. The dealer which
purchased the car later sold it, representing that the mileage
reading on the odometer reflected the true mileage the car had
traveled. The court held that, while the dealer could be held
liable under Section 1989 for falsely representing lower
mileage to a subsequent buyer with intent to defraud, the
original seller could not be held liable since his disclosure
that the odometer had been replaced showed
that he had no intent to defraud the purchaser.
Levine, 451 F. Supp. at 58.
Defendant Meyers signed an odometer statement certifying
that the mileage shown on the odometer was correct. She did so
under what she describes in her affidavit as pressure by the
salesman, and she told the salesman for Orange Motors that the
odometer had not been working. These facts are not disputed by
Orange Motors. Defendant Meyers' signing of the false odometer
statement creates an inference of intent to defraud, although
her statements that she informed the salesman that the reading
was incorrect is evidence that she did not intend to defraud
a subsequent purchaser. This conflict raises issues of
material fact that should be reserved for trial.
Plaintiff's motion for summary judgment is granted against
defendant Orange Motors and denied against defendant Meyers.
Conversely, defendant Orange Motors' motion for summary
judgment dismissing the complaint as to it is denied, and
defendant Meyers' motion for summary judgment dismissing the
complaint as to her is also denied.
IT IS SO ORDERED.
© 1992-2003 VersusLaw Inc.