Court Rules Vehicle Seller Not Liable for Prior Owner’s Tampering With Odometer
2008-1451. State ex rel. Cordray v. Midway Motor Sales, Inc., Slip Opinion No. 2009-Ohio-2610.
Franklin App. No. 07AP-744, 2008-Ohio-2799. Judgment reversed, and cause remanded to the trial court.
Moyer, C.J., and Pfeifer, Lundberg Stratton, O'Connor, O'Donnell, Lanzinger, and Cupp, JJ., concur.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2009/2009-Ohio-2610.pdf 
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(June 10, 2009) The Supreme Court of Ohio ruled today that the state law requiring the seller of a motor vehicle to provide the buyer with a statement certifying the accuracy of the odometer reading is not a “strict liability” statute, and therefore does not impose liability on a seller of a vehicle unless the seller knowingly provided an inaccurate odometer statement.
In today’s 7-0 decision, authored by Justice Maureen O’Connor, the Court also held that an exception to liability in the odometer statement statute applies to odometer tampering by a previous owner of a vehicle regardless of whether that tampering took place before or after the previous owner signed over title to the vehicle to a new owner. As a result of those rulings, the Court reversed trial and appellate court judgments holding that General Motors Acceptance Corporation (GMAC) violated the odometer statement law based on undetected mileage rollbacks that had been performed by the previous owner of vehicles that GMAC subsequently resold.
The case involved a Youngstown auto dealership, Midway Motors, which purchased vehicles from General Motors for sale or lease through its dealership and subsequently leased a large number of those vehicles to Modern Builders Supply. The terms of those leases specified a maximum mileage allowance of 30,000 miles. Pursuant to a dealer agreement with General Motors, Midway subsequently assigned the lease agreements and signed over the titles to the leased vehicles to GMAC, however Midway continued to administer the leases. Unbeknownst to GMAC, Midway entered into secret agreements with Modern that that included significantly higher mileage limits than the stated 30,000 mile allowance. When Modern turned in the vehicles to Midway at the end of the lease period, Midway illegally rolled back the odometers in an apparent effort to conceal the excess mileage from GMAC.
Without knowing that the odometers had been tampered with, GMAC sold the vehicles through a dealers-only auction. In transferring title to the purchaser of each vehicle sold at auction, GMAC was required to complete an odometer disclosure affidavit to certify the amount of mileage on the vehicle. GMAC completed the required odometer disclosure affidavits for the vehicles by using the mileage amounts disclosed on the lessee’s written odometer disclosure statements. After many of the leased vehicles had been sold at auction, GMAC discovered that Midway had tampered with the odometers. GMAC reported this information to the attorney general. GMAC complied with the attorney general’s requests for information and assisted in the investigation into Midway’s conduct. GMAC also implemented a remediation plan and compensated the owners of the affected vehicles by either buying each vehicle back or paying a monetary adjustment for the mileage discrepancy.
The attorney general’s office subsequently filed suit against both Midway and GMAC in the Franklin County Court of Common Pleas. The attorney general alleged that GMAC had violated R.C. 4549.46 by failing to provide the true odometer disclosures required by R.C. 4505.06. GMAC denied the allegations and filed a counterclaim alleging abuse of process and seeking a declaratory judgment regarding the rights and obligations of GMAC and the attorney general under R.C. 4549.46.
The state moved for summary judgment in its favor. The trial court granted summary judgment in favor of the state, citing multiple previous court decisions holding that the odometer rollback and disclosure statute imposes “strict liability” on any vehicle seller who provides a buyer with an inaccurate odometer statement regardless of the knowledge or intent of the seller. The trial court held that R.C. 4549.46 is a strict-liability statute and that GMAC’s lack of knowledge of the odometer tampering was therefore irrelevant. The trial court further held that an exception to strict liability based on unknown tampering with a vehicle’s odometer by a previous owner relieves a transferor (in this case, GMAC) from strict liability only if the tampering occurred before the transferor’s ownership. Since GMAC was already the titled owner of the altered vehicles at the time the tampering took place, the court held that the “previous owner” exception did not apply.
GMAC appealed the trial court’s finding that it violated the rollback statute. On review, the 10th District Court of Appeals affirmed the judgment of the trial court that R.C. 4549.46 is a “strict liability” statute, and that despite the “to the best of my knowledge” language in the official disclosure statement prescribed by the Registrar of Motor Vehicles, the state is not required to show that the seller knew about odometer tampering at the time it signed a mileage affidavit in order to prove that the seller “failed to provide a true and accurate statement” of the vehicle’s actual mileage. GMAC sought and was granted Supreme Court review of the 10th District’s decision.
Writing for a unanimous Court in today’s decision, Justice O’Connor said R.C. 4549.46 requires a vehicle seller to provide the buyer with a “true and complete odometer disclosure required by R.C. 4505.06,” and noted that the latter statute empowers the Registrar of Motor Vehicles to prescribe the language of the required mileage affidavit.
She wrote: “The affidavit prescribed by the registrar contains the following language: ‘I (we) certify to the best of my (our) knowledge that the odometer now reads , miles and is the actual mileage of the vehicle unless one of the following statements is checked. The mileage stated is in excess of the mechanical limits. The odometer reading is not the actual mileage.’ Thus, the affidavit calls for a knowledge-based certification of the odometer reading. ... The odometer disclosure affidavit was created in accordance with the statutory authority bestowed upon the registrar by R.C. 4505.06. ... The affidavit complies with the statutory directive. ... In construing R.C. 4549.46(A) and the registrar’s affidavit promulgated pursuant to R.C. 4505.06(C)(1), we find that the harmonious construction of the provisions is that the legislature intended for transferors to be liable only for knowing violations of the odometer disclosure statute. ... We therefore hold ... that R.C. 4549.46(A) is not a strict-liability statute and that liability can be imposed only for a knowing odometer disclosure violation.”
With regard to the statutory exception from liability granted to subsequent sellers of a vehicle who unwittingly attest to an inaccurate odometer reading because of undetected tampering by a previous owner, Justice O’Connor rejected the analysis of the trial court and 10th District that the exception applies only in cases where a previous owner altered the odometer reading while it was the legal owner of the vehicle.
“The language employed in the previous-owner exception is plain and unambiguous,” wrote Justice O’Connor. “There is no temporal requirement for a transferor to qualify for the previous-owner exception. ... This court would invade the province of the legislature and violate separation of powers if it rewrote the statute to include a requirement that the previous owner be the owner of the vehicle at the time of the odometer tampering. ... We therefore hold that the previous-owner exception found in R.C. 4549.46(A) applies to a transferor regardless of when a previous owner tampered with the odometer.”
Contacts
Michael H. Carpenter, 614.365.4100, for General Motors Acceptance Corp. LLC.
Benjamin C. Mizer, 614.466.8980, for the Attorney General of Ohio.