Front Line Motor Cars v. WebbAnnotate this Case
In two unrelated transactions, Front Line Motor Cars (Dealer), a used car dealer licensed by the California Department of Motor Vehicles (DMV), repossessed cars after the buyers failed to obtain financing. Dealer then refused to return the buyers’ down payments. The buyers complained to DMV. DMV instructed Dealer to refund the buyers’ down payments. Dealer refused, asserting its actions were proper under the Rees-Levering Motor Vehicles Sales and Finance Act and that DMV lacked the power to sanction Dealer. DMV then brought a disciplinary action against Dealer. DMV accused Dealer of violating Civil Code sections 2982.5, 2982.7, and 2982.9, which were the only sections of the Act which required a seller to refund a buyer’s down payment upon the buyer’s failure to obtain financing. After an administrative hearing, DMV adopted the administrative law judge’s proposed order that Dealer’s license be conditionally revoked for two years due to Dealer’s violation of the Act. Dealer petitioned the superior court for a writ of administrative mandate, which the superior court denied. On appeal Dealer repeated its earlier arguments. The Court of Appeal affirmed, finding the unique facts in this case (which revealed Dealer lacked a good faith intent to enter into bona fide credit sales with the buyers), revealed the transactions involved seller-assisted loans subject to section 2982.5 of the Act, which expressly required Dealer to return the buyers’ down payments.