"Joe” wanted to get into the collector car hobby. After kicking a lot of tires and spending many hours on the Internet, he came across a Southern California dealer offering a car that he had always wanted — a 1962 Corvette Roadster. The car was a matching-numbers example with 48,000 miles, a 327-ci, 360-hp engine, factory fuel injection and a 4-speed. It also looked great in Tuxedo Black. He went to the dealer, test-drove the car, and thought it fit the bill perfectly.
Joe didn’t want to overpay. Being no fool, he hired a well-known appraiser to value the Corvette. The appraisal came back at $83,500, which was somewhat less than the dealer was asking. Joe provided the appraisal to the dealer, and the deal was quickly struck. Joe drove the Corvette home and thought he was in seventh heaven.
After driving the car for a while, he started noticing a number of mechanical imperfections in the car that had not bothered him previously (sound familiar?). So he fixed them, one by one, and now he was into the car over $100,000. That didn’t bother him, as he loved the Corvette and it looked fantastic and drove so well that it was money well spent (sound more familiar?).
Eventually, Joe decided it was time to get the fuel-injection system sorted out, which the dealer had told him was probably going to be necessary. He scouted around about where to take the car, and settled on a shop owned by an NCRS judge.
Numbers lie
That’s where things started to go downhill quickly. The shop owner fixed the FI well enough, but he told Joe that he had noticed some grinding marks on the engine that looked suspicious. Upon closer inspection, he determined that the engine was a restamp. Alarmed by that, he kept looking and determined that the transmission was also a restamped replacement. Finally, he searched Chevrolet records and determined that this car was not an original Fuelie.
Joe contacted the dealer to complain about the mismatched numbers. After several attempts to reach him, the dealer’s response was, “What’s the problem? The numbers are all the same.” Now, that is.
Joe also contacted the appraiser. The appraiser was quick to apologize, and admitted to having been fooled by a good-looking forgery.
A world of difference
Joe contacted us for representation and became a Legal File. His first option — return the Corvette for a full refund — wasn’t very attractive because of his increased investment in the car. His second option was to sue for damages.
To set up that claim, we asked the same appraiser to redo his appraisal with the correct facts about the mismatched numbers. The second appraisal came back with a value of $57,500, a difference of $26,000, or about 30%.
We sent both appraisals to the dealer, along with a well-written demand letter explaining why he should write a check for $26,000 to solve the problem. The dealer’s response was nothing. Just pure silence.
Efficiency is the key
It’s really difficult today to litigate a $26,000 claim and come out ahead. We were lucky that California law gave Joe the ability to collect interest and attorney fees on top of his damages, but even that can turn out to be difficult to actually accomplish, and the California court system can be extremely slow.
Your best hope is to not waste a lot of attorney time (which is money) trying to negotiate a settlement. Instead, get a lawsuit filed as quickly and economically as possible, and keep driving toward your goal.
To do that, I referred Joe to the “Legal Files” go-to lawyer in Southern California, Justin Daily. The instructions to Daily were to not screw around — just get the case filed right away without wasting a lot of time, which was exactly what he did.
The filing prompted a quick reply from the dealer, who asked for time to get his attorney involved. We’re speculating here, but the attorney must have advised that defending the case was going to be difficult and expensive. The attorney also must have asked for a sizeable retainer to get involved. We think that because, after some prompting from Daily, the response was a phone call from the dealer asking, “Before we get all carried away with litigation expenses, can’t we just work something out?”
Saving face
They did — payment in full of all damages, plus another $8,000 to cover Joe’s legal fees. Frustrated with the extra expense, the dealer complained, “I don’t know why you guys had to go sue me over this. If you had just called me up and told me about the problem, I would have fixed it without anyone having to get all carried away.”
Daily got quite a kick out of that, but he just let it go. He was laughing the hardest about what the dealer didn’t say. He never denied that the engine was a restamped replacement, or that the fuel injection was added. He never blamed the previous owner for having cheated him when he bought the Corvette. He just acted like he had gotten caught with his hand in the cookie jar and wanted to get it over with as quickly as he could.
So what was the point? It’s hard to say, but denial can often be a strong motivator. If he didn’t respond, maybe Joe would not want to spend money on lawyers and just go away. But the dealer misjudged Joe’s resolve even after all the clear signs that trouble was coming. All that denial accomplished for the dealer was to add another $8,000 to the tab.
Still, Joe was pretty lucky here to come out whole. Litigation stories usually don’t have happy endings like this one. But they can, especially when the lawyers are careful to avoid unnecessary effort.
What about the appraiser?
Readers might have noticed that the appraiser slipped through the cracks here. He dodged the bullet with his humility and quick, sincere apology. But still, the question does come to mind: Could he have been legally liable for not catching this?
The other day, I was the guest speaker at a meeting of the top automotive appraisers in the country. I told the group about this Corvette, and asked them that very question. The group uniformly and emphatically responded, “No way. We’re appraisers, not authenticators.”
So I approached it from a different angle and asked, “So tell me, how many matching-numbers Corvettes would you say really aren’t matching numbers?” The responses fell into two camps. Half the group just laughed out loud. The other half responded in unison, “All of them!”
Okay, “all of them” is a bit of an exaggeration, but it does acknowledge that altered engine numbers are a notorious and widespread problem in Corvettes — and many other cars. Shouldn’t an appraiser be tuned into that, and advise the client that confirmation that the car is really matching-numbers is critical to the valuation?
Appraisers are professionals, and are expected by the law to know more about things within their area of expertise than the common person. They are also expected to perform to the standard of their peers within the community in which they practice. When they fail to meet those burdens, they can be held liable for their client’s losses.
It is reasonable to expect appraisers to advise the client about the significance of verification of the numbers — and whether they are capable of doing that. It may also be reasonable to expect them to be able to spot the more obviously suspicious situations and advise that further professional inquiry is needed.
Fortunately for this appraiser, we were able to force the dealer to make good on the problem, and no one had to ask those questions. There haven’t been any notable lawsuits filed against automotive appraisers. However, as collector car prices continue to escalate, more and more forgeries will find their way into the market, and more and more buyers will be cheated. It’s probably just a matter of time. ♦
John Draneas is an attorney in Oregon. His comments are general in nature and are not intended to substitute for consultation with an attorney. He can be reached through www.draneaslaw.com.