Beam v. Domani Motor Cars, Inc.

Filing 19

ORDER granting in part and denying in part 9 Motion to Dismiss. Please see Order for details. Signed by Judge Robin S. Rosenbaum on 2/11/2013. (RSR)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 12-62221-CIV-ROSENBAUM/SELTZER

STEPHEN BEAM, an individual,
Plaintiff,
vs.
DOMANI MOTOR CARS, INC.,
a Florida corporation,
Defendant.
__________________________________________/

ORDER ON DEFENDANT’S MOTION TO DISMISS
Based on an advertisement representing the mileage of a 1970 Chevrolet Chevelle to be
56,537 miles, Plaintiff Stephen Beam purchased the advertised vehicle from Defendant Domani
Motor Cars, Inc. Shortly after procuring the car, however, Beam realized that the odometer was
stuck at 56,537 miles and attempted to return the Chevelle. Defendant refused to accept the return,
and this lawsuit followed. In it, Plaintiff alleges violations of state law and of the disclosure and
tampering provisions of the federal Odometer Act, 49 U.S.C. § 32701, et seq. In response,
Defendant invokes an exemption under the Odometer Act for cars older than ten years at the time
of sale and seeks dismissal of this case from federal court. See D.E. 9. For the reasons set forth
below, the Court now grants in part and denies in part Defendant’s Motion to Dismiss.
I. BACKGROUND
On November 12, 2012, Plaintiff filed a six-count Complaint against Defendant Domani
Motor Cars, Inc. (“Domani”). Plaintiff’s Complaint arises out of a series of events that began in

April 2012 when Plaintiff “came upon the website of Domani Motors . . . .” D.E. 1 at ¶ 6. Plaintiff,
an enthusiast of “muscle cars” from the late 1960s and ‘70s, asserts that Domani’s website offered
for sale a 1970 Chevrolet Chevelle SS 454 (“Chevelle”). Id. at ¶ 7. According to Plaintiff, the
advertisement stated that the Chevelle’s mileage was 56,537. Id. at ¶ 8.
After Plaintiff reviewed the online advertisement and contacted Domani for more
information, he alleges, Domani “affirmatively and repeatedly represented that the [Chevelle’s]
mileage was 56,537.” Id. at ¶ 13. The parties then negotiated the Chevelle’s price, and Plaintiff
agreed to purchase the car for $26,000. Id. at ¶ 14. Domani faxed Plaintiff a purchase order dated
May 7, 2012, which specified that the Chevelle’s mileage was 56,537. Id. at ¶¶ 15-16; see also id.
at 17.1 Plaintiff contends that he executed the purchase order and faxed it back to Domani because
he believed that “he was purchasing a low-mileage Chevelle at a fair value . . . .” Id. at ¶ 17.
After receiving the first purchase order, Plaintiff alleges, Domani then informed Plaintiff that
he “would need to sign a second contract that was dated [] May 8, 2012—the supposed date of sale.”
Id. at ¶ 19. Plaintiff executed the second contract—another purchase order that was nearly the same
in substance to the first —and returned it to Domani. Id. at ¶ 20. Because he did not “suspect[] that
[Domani] was attempting to defraud him,” Plaintiff contends, he did not realize that Domani “had
removed the mileage representation that was contained in the initial [purchase order] and inserted
at the place designated for ‘mileage’ the word ‘exempt.’” Id. at ¶¶ 20, 22; see also id. at 18.
Plaintiff later picked up the Chevelle at Domani’s dealership. Id. at ¶ 23. After driving a few
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“On a motion to dismiss, the Court may consider documents attached to the Complaint
or directly referred to in the Complaint. Exhibits attached to a Complaint are properly considered
part of the pleadings for all purposes, including a Rule 12(b)(6) motion.” Jordan v. Miami-Dade
Cnty., 439 F. Supp. 2d 1237, 1240 (S.D. Fla. 2006) (citing Solis-Ramirez v. United States Dep't
of Justice, 758 F.2d 1426, 1430 (11th Cir. 1985)); see also Rule 10(c), Fed. R. Civ. P.
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miles, however, Plaintiff alleges that he “discovered for the first time that the odometer was stuck
at 56,537 miles.” Id. Plaintiff asserts that he questioned Domani about the odometer discrepancy,
at which time Domani acknowledged that it “had knowingly sold [Plaintiff] the Chevelle with an
inoperable odometer.” Id. at ¶¶ 24-25. Although Plaintiff asked to return the Chevelle and receive
a full refund, Domani refused to issue a refund “based on the erroneous belief that the Chevelle—a
vehicle more than ten (10) years old—was exempt from the requirements of the [Federal Motor
Vehicle Information and Cost Savings Act.]” Id. at ¶¶ 26-28. Plaintiff then filed his Complaint
against Defendant.
In Count I of his Complaint, Plaintiff alleges various violations of the Federal Motor Vehicle
Information and Cost Savings Act (“Odometer Act” or “Act”), 49 U.S.C. § 32701, et. seq. First, he
contends that Defendant violated 49 U.S.C. § 32703, which prohibits tampering with an odometer
and operating a vehicle with a disconnected or inoperable odometer with the intent to defraud. See
D.E. 1 at ¶¶ 32-36. In addition, he claims that Defendant may have failed to comply with 49 U.S.C.
§ 32704, which governs the procedures that a vehicle owner must follow when service or
replacement of an odometer results in a change in the odometer’s reading. See id. Plaintiff also
asserts that Defendant violated 49 U.S.C. § 32705 by making a false statement to the transferee of
a motor vehicle. Id. at ¶ 36. Finally, Plaintiff sets forth state-law causes of action for violation of
the Florida Deceptive and Unfair Trade Practices Act; fraud; negligent misrepresentation; fraudulent
inducement; and breach of express warranty.
In response to Plaintiff’s Complaint, Defendant filed the pending Motion to Dismiss. In
support of its Motion, Defendant asserts that the provisions of the Odometer Act “expressly do not
apply to vehicles manufactured in a model ten years before the date of sale.” D.E. 9 at ¶ 3. Because
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the Chevelle was made in 1970, Defendant argues that the Act is inapplicable to the vehicle and
Plaintiff cannot bring an action under the Odometer Act against Defendant. Furthermore, since the
Odometer Act “was the only basis for federal jurisdiction set forth in the Complaint,” Defendant
concludes that the rest of Plaintiff’s claims must be dismissed pursuant to Rule 12(b)(1), Fed. R. Civ.
P.1
In response, Plaintiff argues that its federal claims against Defendant “are based on Domani
Motors’ violation of the Act’s anti-tampering requirements of 49 U.S.C. § 32703, not on a claim of
non-disclosure under 49 U.S.C. § 32705.” D.E. 11 at 3. Plaintiff contends that only the latter
contains an exemption for vehicles ten years old or older. Id. at 7.
II. DISCUSSION
A. Standard on a Motion to Dismiss
Defendant brings its Motion to Dismiss pursuant to Rule 12(b)(1), Fed. R. Civ. P. Its
argument against Plaintiff’s Odometer Act claim, however, appears to arise out of Rule 12(b)(6),
which governs motions to dismiss for failure to state a claim. Rule 12(b)(6) provides, in relevant
part,
(b)

How to Present Defenses. Every defense to a claim for relief
in any pleading must be asserted in the responsive pleading if
one is required. But a party may assert the following defenses
by motion:
(6)
failure to state a claim upon which relief can be
granted; . . . .

Id. Thus, the Court considers the Federal Rules of Civil Procedure as they set forth the requirements
for stating a claim.

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Rule 12(b)(1) allows a party to move for dismissal of a claim based on lack of subjectmatter jurisdiction.
4

Rule 8(a)(2), Fed. R. Civ. P., demands that a pleading contain “a short and plain statement
of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). While a
complaint need not provide detailed factual allegations, the standard “requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Wilchombe
v. TeeVee Toons, Inc., 555 F.3d 949, 958 (11th Cir. 2009) (citing Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007)). Similarly, “naked assertion[s] bereft of “further factual enhancement” do not
suffice. Twombly, 550 U.S. at 555, 557. As the Supreme Court has explained, a complaint’s
“[f]actual allegations must be enough to raise a right to relief above the speculative level.” Id. at
555. “Moreover, the facts supporting the claim must be ‘consistent with the allegations in the
complaint.’” Wilchombe, 555 F.3d at 958 (quoting Twombly, 550 U.S. at 562).
When reviewing a motion to dismiss, a court, as a general rule, must accept the plaintiff’s
allegations as true. Bell v. J.B. Hunt Transp., Inc., 427 F. App’x 705, 707 (11th Cir. 2011) (citing
Hishon v. King & Spalding, 467 U.S. 69, 72 (1984)). The Court must also draw all reasonable
inferences in the plaintiff’s favor. Griffin Indus., Inc. v. Irvin, 496 F.3d 1189, 1194 (11th Cir. 2007).
But “[c]onclusory allegations, unwarranted deductions of facts or legal conclusions masquerading
as facts will not prevent dismissal.” Bell, 427 F. App’x at 707 (quoting Jackson v. BellSouth
Telecomm’ns, 372 F.3d 1250, 1263 (11th Cir. 2004) (internal quotation marks omitted)); see also
Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949-51 (2009). In short, the allegations in a
complaint “must . . . contain sufficient factual matter, accepted as true, to ‘state a claim to relief that
is plausible on its face.’” Am. Dental Ass’n v. Cigna Corp., 605 F.3d 1283, 1289 (11th Cir. 2010)
(quoting Twombly, 550 U.S. at 570). With these standards in mind, the Court now considers
Plaintiff’s claim.
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B. The Odometer Act
The Odometer Act “imposes on car dealers various requirements intended to ensure that
automobile consumers are provided with accurate statements of a car’s mileage.” Coleman v. Lazy
Days RV Ctr., Inc., 2006 WL 2131303, at *3 (M.D. Fla. July 28, 2006). Finding that consumers
“rely heavily on the odometer reading as an index of the condition and value of a vehicle” and “are
entitled to rely on the odometer reading as an accurate indication of the mileage of the vehicle,”
Congress enacted the Odometer Act “to prohibit tampering with motor vehicle odometers” and “to
provide safeguards to protect purchasers in the sale of motor vehicles with altered or reset
odometers.” 49 U.S.C. § 32701.
Plaintiff asserts two categories of violations of the Odometer Act: (1) false disclosure of
mileage and (2) tampering with the odometer. The Court discusses each in turn.
1. 49 U.S.C. § 32705
First, with regard to its disclosure provisions, the Odometer Act generally requires the
accurate disclosure of a vehicle’s mileage. See 49 U.S.C. § 32701. In relevant part, 49 U.S.C. §
32705(a) states,
(1)

(2)

Disclosure Requirements.— Under regulations prescribed by
the Secretary of Transportation that include the way in which
information is disclosed and retained under this section, a
person transferring ownership of a motor vehicle shall give
the transferee the following written disclosure:
(A)
Disclosure of the cumulative mileage registered on the
odometer.
(B)
Disclosure that the actual mileage is unknown, if the
transferor knows that the odometer reading is different
from the number of miles the vehicle has actually
traveled.
A person transferring ownership of a motor vehicle may not
violate a regulation prescribed under this section or give a
false statement to the transferee in making the disclosure
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required by such a regulation.
***
(4)

***
(5)

(A)

This subsection shall apply to all transfers of motor
vehicles (unless otherwise exempted by the Secretary
by regulation) . . . .

The Secretary may exempt such classes or categories of
vehicles as the Secretary deems appropriate from these
requirements . . . .

(emphasis added). As pertinent to this case, the regulations implementing the disclosure parts of the
Act, in turn, state, “A transferor or a lessee of any of the following motor vehicles need not disclose
the vehicle’s odometer mileage: . . . A vehicle that was manufactured in a model year beginning at
least ten years before January 1 of the calendar year in which the transfer occurs . . . .” 49 C.F.R. §
580.17(a)(3).
Here, the vehicle in question was manufactured in 1970, so Defendant asserts that it qualifies
for an exemption from the Act’s disclosure requirements. Therefore, the Court examines the
statutory and regulatory provisions.
“The starting point for all statutory interpretation is the language of the statute itself.” United
States v. DBB, Inc., 180 F.3d 1277, 1281 (11th Cir. 1999). If the statutory language is clear and
unambiguous, the Court must end its inquiry. Carpenters Dist. Council of New Orleans & Vicinity
v. Dillard Dep't Stores, Inc., 15 F.3d 1275, 1283 (5th Cir.1994), cert. denied, 513 U.S. 1126 (1995).
Section 32705(a)(2) provides, “A person transferring ownership of a motor vehicle may not violate
a regulation prescribed under this section or give a false statement to the transferee in making the
disclosure required by such a regulation.” This language prohibits only the violation of a regulation
promulgated under the section or the making of a false statement in a disclosure required by a
regulation adopted under the section — nothing more. Therefore, in order for Plaintiff to set forth
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a claim for a violation of this part of the Odometer Act, Plaintiff must point to a regulation that
Defendant’s conduct violated or to a false statement in a “required” disclosure.
Plaintiff can do neither here because the regulations of the Secretary of the National Highway
Traffic Safety Administration (“NHTSA”), upon which the Act relies entirely for establishing
prohibited conduct, expressly exempts vehicles older than ten years at the time of sale from the
disclosure requirements of the Act. While the Court is troubled that this result appears to run
contrary to the stated purposes of the Odometer Act and to public policy, the Court cannot ignore
the legislative history that resulted in the current version of Section 32705.
When Congress enacted Section 32705, the statute did not contain subsection (5), which
authorizes the Secretary to exempt vehicles from the Act’s disclosure requirements. Nonetheless,
the Secretary promulgated regulations purporting to exempt certain categories of vehicles from the
disclosure provisions. Courts evaluating these regulations struck them down as invalid exercises of
the Secretary’s authority under the Odometer Act. See, e.g., Diersen v. Chicago Car Exch. 110 F.3d
481, 485 (7th Cir.), cert. denied, 522 U.S. 868 (1997); Lee v. Gallup Auto Sales, Inc., 135 F.3d 1359
(10th Cir. 1998); Orca Bay Seafoods v. Nw. Truck Sales, Inc., 32 F.3d 433 (9th Cir. 1994); Suiter v.
Mitchell Motor Coach Sales, Inc., 151 F.3d 1275 (10th Cir. 1998); Davis v. Dils Motor Co., 566 F.
Supp. 1360, 1362-63 (S.D. W. Va. 1983); Lair v. Lewis Serv. Ctr., Inc., 428 F. Supp. 778 (D. Neb.
1977). In so doing, the Diersen Court explained,
Our holding that the older-car exemption is invalid also comports
with the broad purposes of the Act, which are “to prohibit tampering
with motor vehicle odometers; and to provide safeguards to protect
purchasers in the sale of motor vehicles with altered or reset
odometers.” . . . There is nothing in this statement of purpose to
suggest that the purchasers of older vehicles are less deserving of
protection than consumers who buy newer vehicles. The statutory
statement of purpose, read concomitantly with the language of the Act
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(which, to reiterate, does not specify any exemptions) establishes that
Congress intended to protect all purchasers of motor vehicles from
odometer tampering.
Diersen, 110 F.3d at 486 (emphasis in original).
Despite this reasoning, Congress responded to the decisions declaring invalid the Secretary’s
exemption regulations by enacting 49 U.S.C. § 32705(a)(5) and expressly authorizing the Secretary
of NHTSA to promulgate regulations exempting categories of vehicles from the disclosure
requirements of the Odometer Act. See Pub. L. 105-178 (1998); H.R. Conf. Rep. 105-550 at 197
(“Subsection (b) responds to several recent Federal District Court decisions holding the NHTSA
does not have authority to exempt vehicles from the odometer disclosure requirements . . . . This
subsection specifically grants NHTSA such authority.”). Thus, the language and the legislative
history of Section 32705(a)(5) demonstrate beyond doubt that Congress knew that the Secretary was
exempting categories of vehicles — including vehicles older than ten years — from the Odometer
Act’s disclosure requirements and approved of the Secretary’s regulations, even in light of the stated
purposes the Odometer Act to protect vehicle purchasers from odometer fraud.
Because the car at issue in this case was older than ten years at the time of sale, the
Secretary’s regulation exempts Defendant from the disclosure requirements, and the portion of Count
I alleging a violation of Section 32705 must be dismissed. While the Court finds this result troubling
— particularly in light of the facts alleged in this case, it nonetheless notes that Plaintiff is not
without legal recourse. In addition to his other Odometer Act claims discussed below, Plaintiff may
and does pursue various state statutory and common-law claims.
2. 49 U.S.C. §§ 32703-32704
As for the other aspects of Count I — those asserting violations of the tampering provisions
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of the Odometer Act — Plaintiff alleges that the Chevelle “was operated on streets, roads, or
highways by Defendant with a disconnected or inoperable odometer with the intent to defraud” in
violation of 49 U.S.C. § 32703 and that “the odometer of the Chevelle was either tampered with or
replaced without compliance under the Act by Defendant” in violation of 49 U.S.C. §§ 32703-32704.
Unlike Section 32705, Sections 32703 and 32704 contain no provision allowing the Secretary
of Transportation to exempt certain classes of vehicles by regulation. Thus, as Plaintiff observes,
“the other provisions of the Odometer Act, such as [those] prohibiting odometer tampering and using
a vehicle with an inoperable odometer, still apply to Domani Motors.” D.E. 11 at 3.
Indeed, the language of the regulation exempting cars older than ten years from the disclosure
requirements clearly limits the applicability of the regulation to the disclosure requirements. See 49
C.F.R. § 580.17(a)(3). Thus, it is not surprising that federal courts have recognized that the ten-year
exemption applies only to the Act’s disclosure provisions. See, e.g., Katz v. Orlick, 1993 WL
149021, at *3 (M.D. Ill. 1993), aff’d, 89 F.3d 838 (7th Cir. 1996)2; see also Coleman v. Lazy Days
RV Ctr., Inc., 2006 WL 2131303, at *3 (M.D. Fla. July 28, 2006). Nor does Defendant point to any
regulation or statute similarly exempting older vehicles from the Act’s other provisions.
Finally, “the Odometer Act is remedial legislation that should be ‘broadly construed to
effectuate its [consumer-protection] purpose.’” Owens v. Samkle Auto. Inc., 425 F.3d 1318, 1322
(11th Cir. 2005) (per curiam) (quoting Ryan v. Edwards, 592 F.2d 756, 760 (4th Cir.1979)). For all
of these reasons, the Court declines to find an exemption where Congress has not already provided
one. Accordingly, Defendant’s Motion to Dismiss is denied as it relates to the tampering parts of

2

Katz addressed an earlier version of the Odometer Act; however, the provisions at issue
in the case are substantially similar to those cited in Plaintiff’s Complaint.
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Count I. Because Plaintiff has stated a claim under §§ 32703-32704 of the federal Odometer Act,
the Court may continue to exercise supplemental jurisdiction over Plaintiff’s related state-law claims
and elects to do so, as all of the claims arise from the same set of facts. See Owens v. Samkle Auto.
Inc., 425 F.3d 1318, 1320 n.1 (11th Cir. 2005) (per curiam).
III. CONCLUSION
For the foregoing reasons, it is ORDERED and ADJUDGED that Defendant Domani Motor
Cars, Inc.’s Motion to Dismiss [D.E. 9] is GRANTED IN PART and DENIED IN PART as
follows:
1.

Count I is dismissed only to the extent that it seeks to state a cause of action under
49 U.S.C. § 32705;

2.

Defendant’s Motion to Dismiss is denied in all other regards.

DONE and ORDERED at Fort Lauderdale, Florida this 11th day of February 2013.

___________________________________
ROBIN S. ROSENBAUM
United States District Judge
copies:
The Honorable Barry S. Seltzer
Counsel of Record

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