Ask anyone who’s bought a car within the past couple of years and you are almost certain to hear about how difficult it is to find out just how much any vehicle is going to cost you. A typical example goes like this: you check out the inventory on a local dealership’s website, find a car that you like listed for sale. The advertised price says “MSRP $34,999 – Contact Dealer for Discount!” So you do just that. You email or call the dealership, and they tell you yes, that car is available, and yes that’s the MSRP but if you come to the dealership they can get you an even better deal. So you go to the dealership. Sure enough, the Manufacturer’s Suggested Retail Price is there on the window sticker. You test drive it, like it, and sit down to sign the purchase agreement. But when you look at the contract, they haven’t given you a discount at all. Instead, they’ve actually raised the price. Now, the car manufacturers don’t like this, because they have rules about how their dealerships are allowed to fiddle with MSRPs. But back when cars were in short supply due to COVID, the dealerships started a new scam: WORTHLESS ADD-ONS.

Now, worthless add-ons aren’t really new in the car business. But they have become ultra prevalent since 2020. What do these worthless addons look like? Well, if you look closely at the window sticker on any new vehicle, you may see an addendum added by the dealership. The vehicle may be completely stock with literally NO upgrades installed by the dealership. But they’ll list something like “Protection Package” or “Theft Prevention” or “Wheel Guard.” Theoretically, the dealership will explain away these charges by saying that they installed some sort of boost, like spraying the windshield with a coat of Rain-X, labeling it as “Weather Guard,” and charging $1,200 for that. Sure, maybe they did buy a bottle of Rain-X from their local AutoZone, and maybe they did send a shop boy with a rag to coat the windshield, costing them a grand total of $20. But realistically it is a worthless product. And this is just one of many, many examples. Some contracts will have over $5,000 of “enhancements” that have literally zero actual value to the customer. And like most fraudulent scams, the Courts tend not to care, as long as the dealership can get you to sign the papers, you will get blamed. Even if every dealership within 100 miles of your home is doing the exact same thing.

Well, the law has finally started to catch up. The Federal Trade Commission, acting under its authority to regulate consumer car sales pursuant to the Dodd-Frank Act of 2009, has issued a final Rule addressing this particular sort of scam. It is called, rather accurately, the “Combatting Auto Retail Scams” or “CARS Rule.” This Rule, which will become effective July 30, 2024, prohibits dealerships from advertising prices they have no intention of honoring. More importantly, it takes away some of the fine print loopholes that courts all over the country were using to let fraudulent car dealers off the hook. For instance, a dealer website advertising a car for sale for $24,999 might have some very tiny fine print at the bottom of their website saying something like “don’t trust our prices because they may not include all the stuff we’re going to add once we get you into our sales office” could switch the price of that same vehicle to $27,999 by adding some fake “upgrades.” After the CARS Rule comes into effect, that will be illegal. Finally.

If you want to see some great examples of big business hypocrisy, take a look at the comments that the auto dealer industry associations made when the FTC was considering the Rule. Like every big money special interest group does when faced with the consequences of their unfair behavior, they whined and complained and hollered about how unfair it was for this sort of big government intervention. “How are we supposed to make any money if we have to list our prices and stick to them? This is going to kill jobs!” Waaa..Waaa…Waaaaaaa.

If Wal-Mart can honor its price advertisements, then I don’t think it can be that damned hard.

You can read the Finalized Rule Publication HERE.

The Alabama Supreme Court continues to advance its’ anti-working people agenda with no signs of stopping. One of their classic hits is the case of Teer v. Johnston (Ala. 2010), where they said that it’s perfectly fine to defraud people out of hundreds of thousands of dollars, even in writing, as long as there’s an “AS-IS” clause somewhere in your sale contract.

I’m not exaggerating. Not at all. I know Teer v. Johnston very well, since what happened to the Teers is exactly what happened to me. The Teers were looking for a home. They bought a house from Judith Johnston for $149,500. Just like most every other real estate sale in Alabama, this one was prepared by a realtor. The sale contract was a form document, created by the realtors, and contained numerous pages and disclosures and things like that. One of them–the most important one of all, really–was a document labeled “SELLER’S DISCLOSURE.” The Seller’s disclosure is just what it sounds like: a disclosure form full of Yes/No questions that the seller fills out and provides to the buyer, presumably to let the buyer know the basic facts about the property they’re about to drop their life savings on. Johnston’s home had been flooded while she owned the property–she even complained to Mobile County about the flooding. But did she tell that very important truth in her SELLER’S DISCLOSURE? Of course not. She lied. In response to the question about whether the property had been flooded, she said “No.” So the Teers bought the property, only to find out later that they’d been cheated. The Alabama Supreme Court laughed the Teers out of court, even though they were innocent victims.

What can men do against such reckless hate?

Well I learned a few things through my own experience when I discovered after the sale that my home had been flooded, and that the seller had, in fact, lied to me. In writing. Here are a few lessons:

Lesson #1: Never Trust a Realtor

The seller’s realtor has one job: get the property sold at the highest price possible. Their secondary goal is to get the sale done (and their all-important commission) as quickly and easily as possible. This means that they have not only the opportunity, but the motive to help their client defraud you. They will tell you whatever you want to hear if it makes the property get sold. And they know that the law protects them from the consequences of their own dishonesty, so why would they deal with you honestly?

But what if you’ve got your own realtor? Then you’re in a little bit better position.

Lesson #2: If you have a Buyer’s Agent, get all the facts from them.

And do it in writing. Email all your important questions to the realtor. Ask if the facts in the Seller’s Disclosure, MLS Listing, and advertisements are all true. Ask if the Seller’s Disclosure can be relied upon. (Hint: if your realtor is honest, she’ll tell you straight up that the Seller’s Disclosure is legally as effective as used toilet paper). Ask if the contract gives you any remedy if the Seller turns out to be a big fat liar. If your realtor is a good one, she’ll fight for you and get the Seller to produce proof that their claims are true. If she’s exceptionally good, she’ll convince the Seller to incorporate the disclosure into the sale contract and specifically exclude it from the AS-IS disclaimer. If your own realtor is more normal, then she’ll probably just tell you whatever it takes to get you to sign the papers, pocket her quick commission, and then leave you hanging.

Lesson #3: Conduct a thorough Property Inspection

But Judson wait! If you’re so worried about not getting stuck with a damaged property, why not just put in the work to inspect the home properly? I know that question is coming, and so I’ll go ahead and explain why it is an asinine suggestion. First, very few home buyers are engineers, termite killers, or roofers. So the vast, vast majority of home buyers hire a professional home inspector. But unfortunately, home inspectors are very much like realtors in the sense that though they mostly want to do a good job, they are completely unwilling to accept the consequences if they turn out to be negligent. I’ve read several home inspector contracts, and they all are loaded with fine print designed by corporate lawyers to give you no rights at all. So while it is a good idea to hire an inspector (they usually find a handful of minor repairs that they’ll convince the seller to “fix” before the deal is done), don’t be under any illusion that if, for instance, your inspector doesn’t notice the signs of flood damage, you’ll be able to go after him for compensation. Much like your realtor, he also will shake his head in sadness and then tell you to piss off.

Final Verdict: You may have to sue your realtor.

Since the Alabama Supreme Court has worked so hard to give defrauded home buyers no rights whatsoever, one of the few avenues left to redress the harm caused by fraudulent seller disclosures is to go after your own realtor. Yes, the contract you sign with them is full of nasty fine print designed to promise nothing and demand everything, but they are licensed professionals, hired specifically for their expertise in a complex business. They do owe you some basic duties. For instance, their code of ethics states that “REALTORS shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or transaction.” That “AS-IS” disclaimer may protect deceitful sellers like Judith Johnston (or, in my case, Dave Cummans), but it doesn’t preclude all claims you may have against your realtor.

If your Buyer’s Agent betrays you in order to get a quick commission, call a lawyer.

If you’ve followed my blog or ever read anything about forced arbitration in the United States, you’ll be aware that the U.S. Supreme Court loves arbitration. After all, they’ve spent the past 40 years expanding the scope of the Federal Arbitration Act, and during that time they have recognized fewer and fewer limits to these nasty little contract provisions that have become ubiquitous in modern commerce. Arbitration is unavoidable nowadays. If you have internet, a cell phone, a credit card, a bank account, a termite bond, a car loan, or just about any other necessity of daily modern life, you’re bound by numerous arbitration clauses.

Most people don’t know they’ve signed an arbitration agreement until they’ve got a legal issue with a corporation who’s done them wrong. Then once they’ve taken their case to court, the corporation’s lawyers file a motion to compel them to arbitration. In the past, one of the few limits on arbitration was that once a party had participated meaningfully in the litigation process (meaning, they’ve let the case proceed for a while in real court), that party was deemed to have waived their right to arbitrate. It makes sense, right? If you get sued under a contract that requires arbitration, and you file motions with the court and conduct discovery and have the court issue subpoenas to witnesses, etc., it wouldn’t be fair to then try to move the case to arbitration out of the blue.

But over the past 20 years, state and federal courts have made it harder and harder to prove that sort of waiver. Since the U.S. Supreme Court was repeating over and over again that the FAA constituted a “strong policy” in favor of arbitration, the lower courts took that to mean that every doubt about arbitration should be resolved in favor of arbitration, including questions of waiver. Most notably, a party claiming that an arbitration provision had been waived was required to prove substantial prejudice in order to keep a case in real court. That was extremely difficult in practice, because not only did the party opposing arbitration have to show that the other side gave up their right to arbitrate, but also that they suffered some sort of demonstrable and significant harm as a result. That has been the law in most circuits for a long time.

But this past week, the Supreme Court issued its ruling in the case of Morgan v. Sundance, Inc. and shocked the lawyer world by–gasp!–saying the old view was wrong. Waiver, of course, is a common defense to contractual liability. And since arbitration is itself a creature of contract, then waiver of an arbitration clause should be treated like every other sort of waiver. Normal contract law doesn’t require prejudice as a prerequisite to show waiver. All that is required is that you know you have a certain right and act in a manner indicating that you have relinquished that right.

Whether this will have a far-reaching impact on real cases remains to be seen. Most defense lawyers riddle their answers with dozens of defenses, including a disclaimer that they “reserve the right” to arbitrate a case. Plaintiffs who want to avoid arbitration should not simply proceed with a case hoping that the defense forgets about that arbitration clause. Consider a letter to defense counsel asking them to explicitly state their intentions on arbitration, or even a motion to strike such a reservation as an improper affirmative defense under state rules of civil procedure.

Important legal rights for Alabama’s disabled folks.

You don’t often hear me say this, but Alabama’s legislature has done a good thing for our working people. The New Assistive Device Warranty Act (Ala. Code Title 8, Chapter 39) provides important legal rights for purchasers of assistive devices

The Act applies to assistive devices for people with impaired mobility or sight. It does NOT include hearing devices and therefore, unfortunately, does not help the deaf and mute. It should go without saying, but assisted devices are tremendously important for people who have limited mobility and vision. Without them, you simply cannot go about daily life and do the work you need to do to survive. That’s why existing warranty law is insufficient to meet the needs of people who purchase these devices when they are defective. Under traditional warranty law, which is governed by the Uniform Commercial Code (Ala. Code Title 7, Article 2) and the Magnuson-Moss Warranty Act (15 U.S.C. 2301), a purchaser is required to give the seller of a defective product reasonable opportunity to cure the defect, which usually means multiple repair attempts. More importantly, the UCC specifically allows sellers to disclaim warranties and limit them to such a degree that they are basically useless. The most common warranty limitation is the exclusion of consequential and incidental damages. If sellers are allowed to slip limitation-of-damages clauses into their contracts or warranty booklets, then they can only be held liable for the price of the product when it fails, even if that product causes you a hundred times more financial harm (i.e. lost wages, substitute transportation, etc.) And if one seller is allowed to limit your rights, then every seller in the market will do so. This is an economic phenomenon I call the “race to the bottom.”

The New Assisted Device Warranty Act addresses this problem by prohibiting sellers of assistive devices from requiring a consumer to waive any rights under the Act. What rights are those? Here’s how it works:

How the Assisted Device Warranty Act Works

1. You (or someone on your behalf) purchases a new “assistive device” with a purchase price of $5,000 or more.
2. If it fails to perform as warranted, then you must notify the seller and the manufacturer of the problem, request a repair, AND make the device available to them for repair.
3. The seller or manufacturer must make an attempt to repair the device.
4. If they fail to repair it, then they must either A) send you a replacement within 30 days or B) give you a refund of the purchase price PLUS taxes and finance charges PLUS all “Collateral Costs” incurred in connection with the repair, including the cost of a substitute device. This means that if they’ve tried and failed to repair it, you can purchase another similar device and ask them to pay the costs associated with obtaining the replacement device.
5. If they refuse to give you a refund or replacement, then you can take them to court. If you take them to court and win, then they can be ordered to pay up to three times your damages, plus court costs and lawyer’s fees. This last part is huge.

The fee-shifting provision (they pay your lawyer if you win) is very important in cases like this because even though many of these devices are expensive, they’re not expensive enough to make it worth hiring a lawyer unless you can recover your attorneys’ fees at the end of the case. This, added to the treble damages provision, is a powerful incentive for the makers of these devices to do the right thing.

The Big Bad Exceptions.

Unfortunately, the Legislature couldn’t resist the temptation of industry lobbyists completely, so they wrote a few exceptions into the Act that can, in some cases, keep you from enforcing your rights under this law. First, the definition of “Assisted Device” only applies to mobility aids and devices for vision-impaired, so it doesn’t include hearing aids. It also only applies to devices that “cost $5,000 or more.” This excludes a lot of motor scooters, which can be as cheap as $1500.

Second, there’s a big carveout for anything purchased from or installed by a licensed physician (the American Medical Association is a powerful industry lobby in Montgomery, as in Washington. Ala. Code 8-39-5.

Third, the seller is allowed to deduct from your rightful refund a “reasonable allowance for use.”

Even though the law contains these exceptions, it will be helpful for many disable people. If you or someone you care for has a defective wheelchair that the manufacturer won’t fix or replace, then call our office.