$1 dispute over car purchase price sparks 2-year legal battle between auto dealership

This is definitely one way to go about things… $1 Dispute

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$1 dispute over car purchase price sparks 2-year legal battle between auto dealership, Army solider

Maj. Edward Kim and Norm Reeves Honda Superstore are suing each other over financing contract on CR-V he bought for his mother

Army Maj. Edward Kim has braved mortars, rockets and ambushes from insurgents on some of the bloodiest battlefields of Iraq and Afghanistan.

Now safely back on U.S. soil, Kim is fighting a different kind of war in a staid Los Angeles County courtroom. His enemy is Norm Reeves Honda Superstore in Cerritos, a massive auto dealership that, according to the federal government, has a history of deceptive advertising practices.

At the heart of competing lawsuits between Norm Reeves and Kim is a dispute over a paltry $1 error in a purchase contract for a new car.

“The experiences I had in Iraq, Afghanistan and my service in the Army have made me more determined to defend myself against Norm Reeves Honda’s deceptive practices,” Kim, 41, of Anaheim wrote in an email. “Their actions are no different than the insurgents who bullied the Iraqi and Afghan people during my deployments. What I experienced with Norm Reeves Honda is not an isolated incident and I am confident it has happened to many other unsuspecting customers over the years.”

The Norm Reeves Honda Supercenter at the Cerritos Auto Square in Cerritos on Tuesday, Aug. 4, 2020.(Photo by Jeff Gritchen, Orange County Register/SCNG)
Aaron Jacoby, an attorney with the Los Angeles law firm Arent Fox who is representing Norm Reeves, blamed Kim and his brother, Joung Kim, who both signed the original car contract, for the legal wrangling.

“The crux of the lawsuit is that Joung and Edward Kim … have made no attempt to make their first payment or any additional payments for a 2018 Honda CR-V they purchased from Norm Reeves Honda,” he said in an email. “The Kims have had possession and enjoyed the use and value of the vehicle for over two years without having made a single payment. The matter could have been resolved had the Kims simply re-signed the retail installment sale contract correcting the discrepancy.”

Officials with Norm Reeves did not return phone calls and emails seeking comment.

A good deed gone bad
Kim’s ordeal began on June 8, 2018, while he was on leave in Anaheim from his duty station at Yongsan Garrison in Seoul, South Korea.

Flush with cash after selling a 2012 Touareg TDI back to Volkswagen under the terms of a massive diesel emission scandal settlement, he decided to buy new cars — a 2018 Civic EX and a 2018 CR-V — for his sister and 78-year-old mother.

Maj. Edward Kim is suing a Cerritos auto dealer for a $1 contract dispute for the purchase of a new car for his mom, Jun Kim (right). (Photo contributed by Edward Kim)
Kim, who said he has excellent credit, began checking out prices online and quickly came across Norm Reeves Honda, which bills itself as the “No. 1 Honda Dealer in the World.” That same day, Kim and his brother, a former Army officer, made the quick 11-mile trip from Anaheim to the dealership, where they found themselves in a sea of more than 3,000 vehicles, including virtually every Honda make and model.

Kim had planned to pay cash for the two cars that totaled about $51,000, but decided to finance the vehicles because he and his brother were each eligible for military discounts that trimmed $2,000 off the price. Kim’s brother readily agreed to be a signer on the loan.

“The process went smoothly until until we hit financing, which took forever,” said Kim, who was prepared to settle the balance for the cars with his first loan payment. “The financing alone took about two hours to complete.”

Relieved to have the deal finalized, Kim was excited to surprise his mom and sister with new cars. However, just two days after Kim gave his mother the keys to her vehicle, he received a phone call that changed everything.

The finance representative for Norm Reeves called to notify Kim that American Honda Finance had denied his financing of the CR-V because the purchase amount on the contract was off by a dollar — purportedly due to a clerical error by the dealership — raising the price from $27,824 to $27,825.

Purchase contract showing $1 price change for Edward Kim’s Honda CR-V.
However, the loan from Honda for the Civic EX went through without a hitch.

The finance representative asked Kim to return to Norm Reeves so he could sign a new contract and, in a subsequent text, even offered to drop off a revised agreement at his mother’s residence.

Kim rebuffed the requests, upset that the manager was also aggressively phoning and texting his relatives. “You need to stop contacting my family,” Kim replied in a text to the manager obtained by the Southern California News Group. “This is not professional and it needs to stop now.”

Still, the manager persisted. “I’m trying to help you finish your second loan process that’s all,” he told Kim in another text.

Another Norm Reeves employee texted Kim to say that without a new contact, the dealership would lose a $500 military discount for the CR-V.

Kim contacted American Honda Finance to determine how he could pay off the CR-V and was told Norm Reeves had never submitted his credit application for the vehicle. He also discovered the dealership had not signed the original contract.

Kim, who was making preparations to return to his base in South Korea when he received the texts, declined to sign a new contract because he believed Norm Reeves was possibly orchestrating a bait-and-switch scheme to get him get him back into the dealership and pressure him to pay more for the car.

“I didn’t think it was an honest mistake,” Kim said regarding the $1 error.

Surrender not an option
He also refused a demand in a strongly worded Aug. 28, 2018, letter from the Arent Fox law firm to voluntarily surrender the CR-V, fearing the repossession would damage his credit, adversely impact his military security clearance and affect his ability to receive future job promotions.

Despite Norm Reeves’ contention that the deal for the CR-V had not gone through, Kim received a state registration and license plate for the vehicle

“It proves that financing was not denied — otherwise why would they send in the registration?” Kim said. “They would not let us take the car if something was wrong. That’s why I believe it’s not an honest mistake.”

Jacoby countered that Norm Reeves submitted registration and title transfer paperwork to the state Department of Motor Vehicles following delivery of the CR-V to the Kims, as required by law.

On Feb. 8, 2019, Norm Reeves filed a lawsuit against Kim and his brother alleging breach of contract and misrepresentation. The complaint seeks at least $29,500 in compensatory damages to cover the cost of the CR-V as well as attorney fees, and demands transfer of the car back to Norm Reeves.

The lawsuit alleges Kim’s brother falsely stated on the credit application that he resided in Anaheim when he actually lives in Oklahoma. Joung Kim also told Norm Reeves’ finance manager the CR-V could be retrieved from the Anaheim address listed on the original contract to “unwind” and cancel the transaction, but the car was not parked in front of the residence, according to the suit.

Furthermore, the two brothers have not made any payments on the CR-V and their refusal to sign papers to correct the $1 error has prevented Norm Reeves from submitting a contract to finance the vehicle, the complaint contends.

Eric M. Sasahara, a Rosemead attorney representing Kim, said his client has tried to make payments, but Norm Reeves refuses to accept them until a new contract is signed.

“Any reasonable person, after understanding the basic merits of this case, or the lack of such merit, would conclude that it is a case that should never have been filed,” Sasahara said.

Kim has filed a cross-complaint against Norm Reeves for breach of contract and violation of various protections for those in the military, including the federal Servicemembers Civil Relief Act. The act prohibits creditors from repossessing vehicles from active duty military personnel without a court order.

Predatory lending and the military
Kim seems to be embroiled in a particularly aggressive “yo-yo” financing scam sometimes used by dealerships to target those in the military, said Rosemary Shahan, president of Consumers for Auto Reliability and Safety, a watchdog organization based in Sacramento.

“It’s unusual (for a dealership) to actually sue and intimidate a consumer,” Shahan said.

A yo-yo scam occurs when a car buyer who finances a vehicle through a dealership believes the financing is final or as good as final, according to the Federal Trade Commission. The dealer then lures the consumer back to the dealership, claims the financing is not final, and pressures the consumer to sign a new financing contract with a higher interest rate or other less favorable terms.

Those with poor credit scores are prime targets for the scam.

Jacoby denied that Norm Reeves orchestrated a yo-yo scheme or used other bait-and-switch tactics in an attempt to swindle the Kims.

FTC order
Kim’s lawsuit, which seeks at least $50,000 in damages and an additional $29,500 for the cost of the CR-V, alleges Norm Reeves has “continuously engaged in unfair, deceptive and unlawful practices” in selling cars to California consumers.

The Norm Reeves dealership group, comprised of a dozen Southern California auto businesses, including the Honda dealership in Cerritos, agreed to pay $1.4 million in 2017 to settle a Federal Trade Commission administrative order prohibiting it from misrepresenting how much consumers could pay to finance or lease a vehicle.

Specifically, the FTC charged Norm Reeves with deceptively advertising that consumers could pay $0 up front to lease a vehicle when, in fact, the advertised price excluded substantial fees and other costs.

Norm Reeves settled the FTC case solely for “defense costs” and did not admit guilt or liability, Jacoby said. “It has nothing to do with the Kim matter or any consumer action,” he said.

Unlike the Kims, many customers have had positive experiences at Norm Reeves Honda and offered glowing reviews on the dealership’s Facebook page. “The salespeople are very courteous and attentive,” one customer said in a post. “Finance department goes beyond to help you get the vehicle you want. Love their attitude.”

“I love this dealership,” wrote another satisfied customer. “I have purchased three cars through them and they are by far the best.”

However, like Kim, others complained about Norm Reeves’ sales tactics. “My mother is 79 years old, she purchased a vehicle here at 2.5%, only to get a message they “made a mistake” and it’s 6.5%,” the individual posted on Facebook. “That’s bait and switch which is illegal.”

Meanwhile, the lawsuit and countersuit over the CVR-R has been delayed because of the COVID-19 pandemic and the car, which only has about 3,000 miles on the odometer, usually remains parked because Kim’s mother is fearful that if she drives it will be repossessed.

Kim said he plans to solider on not only for himself but for other Norm Reeves customers who have been victimized. To him, his experience is a cautionary tale.

“Many of these people were most likely saving money for a long time to have an opportunity at owning a new car — only to be deceived,” he said. “They probably did not have the resources to defend themselves against Norm Reeves Honda deception and their large law firm’s legal threats to gain additional money after a sale has been completed.This is why I continue to fight.”

Dang that buyer is a jackass who saw an opportunity to lawyer up and make a quick buck. I hope he loses in court and has to pay the dealer’s legal fees.

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Without knowing all the facts of course, I would say the buyer is in the wrong here. Shame on him.

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Yeah, I really don’t understand the point of this whole legal battle. At the end of the day, the customer is in the wrong and will lose the case. I SMH at the whole bait and switch excuse he used. Take the car back, ask them to discount the car an additional dollar in the new contract, and if anything is different (term, interest rate, payment, DAS), then just give them back the car. It’s not rocket science. I wonder how much he spent on lawyers (probably not much if anything, I think people in the military get access to legal services, but I don’t know how much they cover).

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Yeah he is claiming that the re-signing was a ploy to get him back into the dealership to run up his numbers but there is also a mention about the dealership going to him to get the paperwork done.

I think he is hoping the 2017 FTC settlement reflects poorly on the dealership group. But if they let it drag on for two years and haven’t made an attempt to make it go away… they’re moving full steam ahead.

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I can’t decide if I hate the Defendant or the author of this more.

Defendant got a TDI settlement, financed to keep an extra $2k, had his contract returned over a $1 error, and has been driving this car for 2 years without payments.

Meanwhile the author used 2/3-3/4 of the article to make it about being an active duty servicemember, which doesn’t excuse any of this. All while ignoring all the questions I have (who has the title? Is it registered and insured? Why wasn’t it repossessed?).

Here’s hoping someone who tries to beat the system over $1 ends up with a judgement 2-3 times the size of what they originally owed.

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OC loves that editorial tone.

The defendant claims to have received his registration and plates from the DMV. It’s been two years so one would assume there have been renewals as well.

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The Salt of the earth was done spreading democracy and freedom for humankind, now he is back home making sure justice is being served in his homeland. :face_vomiting:

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You wonder if there is more to this…a lot more. Maybe a history of grossly inappropriate behavior by the dealership being investigated by some AG or a pending class action law suit.

Mr. Jacoby is a managing partner at Arent Fox’s large LA office. Car dealerships normally employ low cost small firm attorneys for this sort of matters. It defies believe they would hire a $1k an hour (no hyperbole, dude definitely bills out at $1k an hour, probably more) for a simple contract dispute. Sure maybe most of the work is done by cheaper associates ($500-$700 an hour) but car dealership do not use big law for contract disputes because…math.

Buyer might be terrible but I’d bet dollars to donuts this story is missing the punch line. It just doesn’t add up.

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I don’t miss living there: 1 year was plenty

If his contract wasn’t funded, the dealer would not have processed his tag and title. And the title was never released, so he’s registering a car he doesn’t own.

It’s possible this is the shadiest dealership on Earth. And: two wrongs don’t make a right (but 3 rights do make a left).

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The dispute is not over a $1 but the principal and the story behind the principal. We don’t know the full story and the article was poorly written. I doubt someone would go through all this trouble for a $1 in disputed contract dues, this is something much more and the dealership will likely pay more in legal fees than the MSRP of the CR-V; not to mention the PR nightmare this is for the dealership. Would like to revisit this in a year to see what happened.

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Why the guy just didn’t look at the new contract first before refusing to re-sign? Just because the dealership has bad reputation? Why did he go there to buy 2 cars in the first place then?

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Link to actual story, just in case others missed the link like I did at first glance

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I call this hack of the month. 29k CRV for 0 down and 0 payments and some computer generated “cease and desist” forms. Sign me up!!! I would say if anybody knows the value of the dollar, it is Major Kim. And he fought for it in Iraq and Afghanistan to give us our freedom to sue…

I ran the VIN and with 4k miles, it shows up at 22k on Carvana. Major Kim can make a 22k profit right there …

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We don’t know the full story. My most recent deal I’m negotiating the manager gave me a huge discount in writing, since its gone back to sales and finance that number has changed by $15,000, back up and down again twice. If I was a regular customer I likely would not have had the patience or trust to continue; back to our VET with the CR-V who knows what the XX amount of people from that dealer had sent him in texts, calls or emails and what they said. I’m just saying, lets see how it unfolds before making a decision.

Of course we don’t. Yet, what I said is pretty straight forward, no matter what really happened there, no? Wouldn’t you want to see new contract first before starting shit storm? :slight_smile:

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Maybe. Depends what they said in those calls or messages. If someone threatened your 78-yr old mother with jail time (not saying that happened here, just listing an example) then I don’t care what they would say after that and what the “new” contract said, I would sue them for a penny and stick to it for principal.

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Sure - who is buying it without a title?

I have no doubt there are shady dealers.

I have several good friends who work in F&I: people refuse to resign contracts with absolutely no financial impact, and plenty refuse for a couple dollars. The assumption is often “I’m being screwed” when the contract was returned over pocket change or something in the wrong box/column on the form. We’ve seen plenty of examples here.

In many (most?) states, you sign a promissory note that says if (for any reason) the contract doesn’t fund, you’re on the hook or you have to return the car.

The biggest detail missing here: the two tow trucks that should have picked this Civic and CRV up when Game of Thrones still had a much anticipated season that had not aired.

That’s a good question. Where is/ who has the title?

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