In March 2014, the North Carolina Court of Appeals issued an opinion in Patterson v. University Ford, Inc. The court affirmed a jury verdict on an auto fraud case involving a NC yoyo car sale. This article analyzes the decision and its implications for NC consumers.
The Facts of Patterson v. University Ford
The plaintiff attempted to buy a 2010 Mustang from University Ford. The general manager told her she had been approved for financing. She filled out the purchase paperwork, including a Retail Installment Sales Contract (RISC). The RISC named the defendant as the Seller-Creditor. It also stated the defendant had assigned the RISC to C&F Finance Company.
She also signed a conditional delivery agreement (CDA). The CDA stated the terms of the RISC were not binding until a designated lender accepted them. It further stated the contract would cancel if a lender rejected the terms. The defendant’s controller testified that the dealership never accepts deals on a buy-here-pay-here basis. The controller also testified the dealership never intended to accept payments directly from the plaintiff.
One critical fact emerged at trial. The defendant kept the car insured on its own policy after the plaintiff drove off the lot. The defendant also never completed any title transfer paperwork. After the defendant could not verify the plaintiff’s additional income, it told her the deal would not go through. The defendant then repossessed the vehicle.
The jury returned a verdict for the defendant. The trial court denied the plaintiff’s motion for a new trial. The plaintiff appealed.
The Jury Instruction Issue on Appeal
The plaintiff raised several arguments on appeal. Her main argument focused on improper jury instructions. The trial court instructed the jury that title to — and therefore ownership of — a vehicle passes only when a certificate of title issues.
Specifically, NCGS 20-72(b) states that in automobile sales, new title shall not pass until the owner executes an assignment and warranty of title on the reverse of the certificate of title.
The plaintiff argued the Uniform Commercial Code should have governed when ownership passed. Specifically, she argued N.C.G.S. (UCC) 25-2-401(2) should have controlled. That statute states that title passes to the buyer at the time and place the seller completes physical delivery of the goods. This applies despite any reservation of a security interest, even if a title document delivers at a different time or place.
However, the plaintiff’s proposed instruction left out critical opening language. The statute actually begins: “[u]nless otherwise explicitly agreed….” The Court of Appeals found the plaintiff’s requested instruction was not a complete statement of the law. As a result, the trial court properly instructed the jury under NCGS 20-72(b).
Why the Plaintiff Lost on Appeal
The plaintiff did not object to the jury instructions during trial. That failure prevented her from raising the issue effectively on appeal. Had she objected and requested a UCC instruction at trial, the Court of Appeals would have conducted a more substantive analysis.
As it stands, the question of when the UCC controls ownership in a motor vehicle sale remains open in North Carolina. The Court did not resolve that question here. Some nuances in NC case law suggest the UCC may control in certain circumstances. However, this decision did not settle that issue — and that ambiguity remains available to consumers in future cases.
What This Means for NC Consumers
The NC yoyo car sale problem — where a dealer spot-delivers a vehicle and later attempts to unwind the deal — remains one of the more difficult areas of NC auto fraud law. This decision shows how procedural missteps at trial can prevent a consumer from getting a fair result on appeal. It also highlights the importance of raising legal objections at the right time and in the right way.
If a dealer has yo-yo’d you or refused to return your down payment or trade-in, contact us. Visit the NC Attorney General’s Consumer Protection Division for additional resources. Read our auto dealer fraud page to learn more about your rights. Call 919.981.4475 or contact us for a free case review.
