ADMINISTRATIVE LICENSE SUSPENSION FOR ODOMETER ROLLBACK
keywords, odometer rollback, penalty, car dealer licensure, odometer tampering, fraud, deception, odometer rollback.
Ramirez v. Dep't of Motor Vehicles, No. B177243 (Cal.App. Dist.2 03/27/2006)
Plaintiff Vianey Ramirez, a licensed used car dealer, appeals from a judgment
denying her petition for administrative mandamus and upholding the decision of
the Department of Motor Vehicles (DMV) to suspend her license and her use of
special plates for 30 days as discipline for violating provisions of the Vehicle
Code which prohibit knowingly making a false statement in an application for
registration of a vehicle (Veh. Code, § 11705, subd. (a)(3)), causing a person
to suffer loss or damage by reason of a fraudulent representation (Veh. Code, §
11705, subd. (a)(14)), executing a conditional sale contract which was not
contained in a single document (Veh. Code, § 11705, subd. (a)(12); Civ. Code, §
2981.9), selling a vehicle without a valid smog certificate (Veh. Code, § 11713,
subd. (i)), and failing to submit a valid application for registration of a
vehicle within 50 days of the sale date (Veh. Code, §§ 11705, subd. (a)(8),
4456.1, subd. (d), and 4456, subd. (a)(6)).
[13] We affirm the judgment because it is supported by substantial evidence and
the penalty imposed by the DMV does not constitute an abuse of discretion.
[14] BACKGROUND*fn1
[15] Ramirez was licensed as a car dealer in July 2000 and conducted her
business as a sole proprietorship known as Autos Guadalajara. In January 2003,
the DMV filed an accusation against Ramirez seeking to suspend or revoke her
license because of Vehicle Code violations involving the sale of three used
cars: a 1995 Mustang, a 1995 Windstar, and a 1995 Lincoln Town Car. A hearing on
the accusation was held before an administrative law judge (ALJ) in September
2003. The evidence at the administrative hearing established the following:
[16] A. The Mustang
[17] In September 1999, when Pascual Chavira Armendariz and his son purchased a
1995 Mustang, a vehicle transfer form filed with the DMV listed the odometer as
reading over 107,000 miles. Armendariz testified that he drove the Mustang every
day and put a lot of mileage on it. But he admitted telling a DMV investigator
previously that he hardly drove the car. In December 2000, his wife took the
Mustang for a smog certification. A Car Fax report listed the odometer reading
at the time of the emissions inspection as 38,075 and noted a potential odometer
rollback. Armendariz had no explanation for the lower odometer reading on the
Car Fax report.
[18] In early 2001, Armendariz traded in the Mustang and purchased the Windstar
from Autos Guadalajara. Armendariz paid an additional $1,500 for the Windstar.
Armendariz testified that at the time he traded in the Mustang, its odometer
read over 130,000 miles. Carlos Cazelly, Ramirez's salesperson, told Armendariz
that the mileage on the Windstar (about 139,000) was close to the mileage on the
Mustang. In connection with the sale of the Mustang to Autos Guadalajara,
Armendariz filled out a Notice of Release of Liability in April 2001 listing the
Mustang's odometer reading as 142,834. On February 1, 2001, Autos Guadalajara
filed with the DMV a vehicle transfer form listing the odometer reading on the
Mustang as 142,892. Armendariz testified that a signature on the transfer form,
purporting to be his, was not his signature. Armendariz also denied that he
signed an application for transfer of the Mustang's title with duplicate title,
which Autos Guadalajara had filed with the DMV.
[19] In May 2001, Sandra Valencia, a first time car buyer, purchased the Mustang
from Autos Guadalajara for $6,208.80. She saw the car's odometer reading of
about 42,000 miles and was told by Cazelly that the car had low mileage because
it had been parked for a long time. Valencia's sale contract listed the odometer
reading as 42,892. When Valencia received from the DMV the registration
certificate listing the odometer reading as 142,892, she contacted an attorney
and spoke with a DMV investigator, Vince Rojas. After Rojas got involved in the
case, Valencia was able to return the Mustang for a refund of her purchase
price. Valencia testified that she bought the Mustang because it had low
mileage; she would not have bought it if she had known the true mileage was over
100,000. According to Valencia, her signature was falsified on the May 5, 2001
vehicle transfer form which listed the odometer reading of 142,892 and a sales
price of $2,200. Her falsified signature appeared on the transfer form under the
caption "Buyer Must Complete," which required that the buyer certify that the
information on the form was true and correct under penalty of perjury. No one at
Autos Guadalajara told her that they were submitting paperwork to the DMV
listing a lower purchase price.
[20] Cazelly told Rojas that any information he relayed to Valencia would have
come from "higher-ups" in the dealership or from documents. Cazelly told Rojas
that he did not fill out any of the registration documents for the Mustang.
Paulina Diaz, who worked for Autos Guadalajara, told Rojas that she had general
authorization to sign Ramirez's name on vehicle transfer forms and to transmit
them to the DMV; the registration documents were normally prepared by the
salesperson. The transfer form for the sale to Valencia originally listed an
odometer reading of 42,892. Diaz admitted changing the odometer reading on the
form to 142,892, because the company usually sold cars with higher mileage and
she believed the lower number was a mistake and 142,892 more accurately
reflected the car's mileage.
[21] Ramirez told Rojas that the Mustang had fewer than 100,000 miles on it, but
Ramirez had no explanation for the discrepancy between the odometer reading
listed on Valencia's sale contract (42,892) and the odometer reading on the
vehicle transfer form (142,892). Ramirez denied rolling back the odometer on the
Mustang and denied instructing anyone to do so. Ramirez denied that she signed
Valencia's name on any transfer documents. The sale to Valencia occurred on May
5, 2001, but the car was not registered until July 2, 2001.
[22] B. The Windstar
[23] The DMV had no Notice of Sale reflecting the sale of the Windstar from
Autos Guadalajara to Armendariz. Ramirez told Rojas that she did not prepare a
Notice of Sale because she believed that an even trade did not require a Notice
of Sale. Ramirez denied that Armendariz paid $1,500 to purchase the Windstar.
According to Rojas, the dealer was responsible for obtaining a smog certificate
for the cars it sells. Armendariz told him that he had to obtain the smog
certificate for the Windstar.
[24] C. The Lincoln Town Car
[25] In 2002, Ricky Marshall complained to the DMV that Autos Guadalajara, which
had sold him a Lincoln Town Car in June 2001, was holding his car "hostage"
after he took it to Autos Guadalajara for repairs and it claimed that Marshall
owed it money. Rojas investigated Marshall's complaint and discovered that
Marshall's installment sale contract listed a total sales price of about
$10,500, a cash down payment of $2,000, and an amount financed of about $8,500.
But the parties had agreed that Marshall could defer paying $1,000 of the down
payment for three weeks and Marshall executed a separate promissory note for
$1,000 in favor of Autos Guadalajara. Marshall purchased the Lincoln Town Car on
June 29, 2001, but it was not registered until April 3, 2002.
[26] Ramirez testified that she took a used vehicle dealer continuing education
course in June 2002. After the incident with Ricky Marshall, and after Rojas
explained how to handle installment sale contracts, she has handled such
transactions more carefully. Rojas admitted that from the time of his
conversation with Ramirez in March 2002 to the time he retired from the DMV in
November 2002, he did not cite Ramirez for violations similar to those involving
the failure to report Armendariz's purchase of the Windstar and Marshall's
installment sale contract.
[27] In January 2004, the ALJ issued a proposed decision which, on February 9,
2004, was adopted by the Director of the DMV as its decision. The decision
concluded that cause existed to discipline Ramirez under the following
provisions of the Vehicle Code:*fn2 (1) Section 11705, subdivision (a)(3), based
on vehicle transfer documents submitted to the DMV in connection with
Armendariz's sale of the Mustang to Autos Guadalajara and the dealership's sale
to Valencia.*fn3 (2) Section 11713, subdivision (i), and section 11705,
subdivisions (a)(10), based on the failure to obtain a smog certificate for the
Windstar.*fn4 (3) Section 11705, subdivision (a)(14), based on the loss or
damage suffered by Valencia as a result of fraud or deceit.*fn5 (4) Section
11705, subdivision (a)(12), and Civil Code section 2981.9, based on the failure
of Marshall's conditional sale contract to be contained in a single
document.*fn6 (5) Section 11705, subdivision (a)(8), section 4456, subdivision
(a)(6), and section 4456.1, subdivision (d), based on the late registrations of
the sales of the Mustang to Valencia and the Lincoln Town Car to Marshall.*fn7
[28] The decision ordered that Ramirez's license and use of special plates be
revoked, with the revocation stayed for a three-year period under certain terms
and conditions, including the condition that her license and use of special
plates be suspended for 30 days. Ramirez's petition to the DMV for
reconsideration was denied in February 2004.
[29] In March 2004, Ramirez filed a petition for a writ of administrative
mandamus, contending that the findings were not supported by the evidence and
that the discipline (penalty) was excessive. On March 8, 2004, the trial court
granted Ramirez's ex parte application for a stay of the DMV decision and order.
After a hearing and in the exercise of its independent judgment, the trial court
denied Ramirez's petition. The trial court found that Ramirez committed the same
violations found by the DMV and upheld the penalty, stating that "[h]ere, there
were ongoing, repeated violations of law of various types, including fraud.
Consumer protection is an important purpose for the laws at issue here, and the
fraud violations were clearly more than mere `technicalities.'" Ramirez appealed
from the judgment denying her petition.*fn8
[30] DISCUSSION
[31] Ramirez challenges the sufficiency of the evidence supporting the findings
of the more serious violations - fraud in the Valencia transaction (§ 11705,
subd. (a)(14); fn. 5, ante) and false statements in the Armendariz and Valencia
transfer documents (§ 11705, subd. (a)(3); fn. 3, ante).
[32] When, as here, the trial court exercised its independent judgment in
reviewing the evidence in the administrative record, we must affirm the trial
court's findings if they are supported by substantial evidence. (Mann v.
Department of Motor Vehicles (1999) 76 Cal.App.4th 312, 321.) We must resolve
all evidentiary conflicts and draw all legitimate and reasonable inferences in
favor of the trial court's decision. (Valiyee v. Department of Motor Vehicles
(1999) 74 Cal.App.4th 1026, 1031 (Valiyee).) We may overturn the trial court's
findings of fact only if the evidence is insufficient to support those findings
as a matter of law. (Ibid.)
[33] Under the appropriate standard of review, we conclude that substantial
evidence supports the trial court's findings. In analyzing the issue, we deem
Ramirez to be responsible for the actions of Cazelly and Diaz because "the
statutory duties of a licensed dealer are non-delegable." (Valiyee, supra, 74
Cal.App.4th at p. 1034.) In other words, "the licensee is always responsible for
the conduct of the dealership business, whether it is conducted with the
assistance of employees or independent contractors." (Ibid.)
[34] The most serious violation, involving the fraud committed in the
transaction with Valencia, is supported by substantial evidence. For purposes of
section 11705, subdivision (a)(14), "`fraud' includes any act or omission which
is included within the definition of either `actual fraud' or `constructive
fraud' as defined in Sections 1572 and 1573 of the Civil Code, and `deceit' has
the same meaning as defined in Section 1710 of the Civil Code. In addition,
`fraud' and `deceit' include, but are not limited to, a misrepresentation in any
manner, whether intentionally false or due to gross negligence, of a material
fact; a promise or representation not made honestly and in good faith; an
intentional failure to disclose a material fact; and any act within Section 484
of the Penal Code [defining the crime of theft]." (Veh. Code, § 11705, subd.
(a)(14).)
[35] The trial court reasonably inferred that either Cazelly, Diaz, or Ramirez,
or all three, were aware that the Mustang's odometer had been rolled back, even
if none had been the one to roll it back. Just several months before the sale to
Valencia, Autos Guadalajara had purchased the Mustang from Armendariz and had
filed with the DMV a transfer form stating that the odometer reading was then
142,892. In May 2001, Valencia observed the odometer reading to be about 42,000
miles and entered into a sale contract in which Autos Guadalajara listed the
odometer reading as 42,892. But after the sale, Diaz changed the transfer
documents to list the odometer reading as 142,892. Under these circumstances,
there is substantial evidence of a material misrepresentation to Valencia,
whether "intentionally false or due to gross negligence" within the meaning of
section 11705, subdivision (a)(14).
[36] And, contrary to Ramirez's arguments, substantial evidence supports the
finding that Valencia suffered loss or damage by reason of the fraud even though
Valencia was able to return the Mustang for a refund of the purchase price. The
trial court reasonably inferred that Valencia had to expend time and resources
and experienced frustration and aggravation as a result of the fraud. Valencia
consulted an attorney about the matter, contacted the DMV, spoke with a DMV
investigator, and had to spend additional time and effort to purchase another
car.
[37] The loss of time in seeking redress and compensation has been held to be
sufficient loss or damage under section 11705, subdivision (a)(14). (Provenzano
v. Department of Motor Vehicles (2001) 93 Cal.App.4th 1315, 1321 (Provenzano).)
In Provenzano, the trial and appellate courts upheld the revocation of a car
salesman's license for selling a car without disclosing that he did not have
valid title. The salesman argued that the buyer suffered no loss or damage
because the salesman reimbursed the buyer for $3,500 spent to obtain title and
was also paying the buyer's attorney fees in settlement of a lawsuit brought by
the buyer. The court reasoned: "The fact that the lawsuit was settled and
Provenzano is now making installment payments on [the buyer's] attorney fees
does not mean that [the buyer] suffered no loss or damage. In addition to
attorney fees, [the buyer] made many telephone calls, sent letters, including
two certified letters, and traveled to the DMV to obtain temporary registration.
In addition, he experienced frustration and aggravation in spending more than a
year to obtain title and having to sue Provenzano to obtain a settlement on the
issue of his attorney's fees. [The buyer's] damages constitute a basis of
revocation under section 11705, subdivision (a)(14)." (Provenzano, supra, 93
Cal.App.4th at p. 1321.) We conclude that substantial evidence supports the
conclusion that Valencia suffered loss or damage within the meaning of section
11705, subdivision (a)(14).
[38] There is also substantial evidence of violations of section 11705,
subdivision (a)(3), based on the falsification of the signatures of Valencia and
Armendariz on transfer documents and on false statements in a transfer document
about the mileage and sale price of the Mustang to Valencia. The only reasonable
inference on this record is that Ramirez or her agents were the ones to falsify
the signatures and to fill out the false information concerning the sale price
and odometer reading with respect to the Mustang. Ramirez and her agents had
access to Valencia's sale contract listing the sale price and the odometer
reading with respect to the Mustang. Yet Ramirez or her agent filed a document
with the DMV with information different than that in the sale contract. And
either Ramirez or her agent signed a document with Armendariz's signature.
Accordingly, there was substantial evidence that Ramirez, through her agent,
knowingly made a false statement on the transfer documents.
[39] We also conclude that Ramirez's challenges to the 30-day suspension are
without merit.
[40] The propriety of a penalty imposed by an administrative agency is a matter
vested in the discretion of the agency, and its decision may not be disturbed
unless there has been a manifest abuse of discretion. (Williamson v. Board of
Medical Quality Assurance (1990) 217 Cal.App.3d 1343, 1347.)
[41] Because Ramirez was absolved of the serious allegation of rolling back the
Mustang's odometer, she argues that the penalty was excessive "for more minor
matters that came up during the investigation. These included paperwork
violations of having a contract in two documents instead of one and of filing
registrations late, none of which, even if true, harmed anyone. The claims
regarding signatures concerned transactions that all parties wished at the time
to proceed with. The customer who complained about what she thought was an
odometer discrepancy had her money refunded in full as soon as she went back to
the dealer." Ramirez also argues that because the violations occurred over four
years ago when her business was relatively new and before she completed a
continuing education course, the violations were not likely to recur.
[42] Ramirez's arguments are premised on findings which are contrary to those
found by the trial court and which ignore the fraud violation and the violations
for knowingly making false statements on transfer documents. The latter two
types of violations are more than "minor matters." Valencia was fraudulently
induced to buy a car whose mileage was misrepresented to her. And her signature
was falsified on a vehicle transfer form which contained false information
regarding the odometer reading and the sale price of the Mustang and which
purported to contain Valencia's certification to the DMV that the information
provided was true and correct under penalty of perjury. The falsity thus had the
potential to expose Valencia to liability for perjury. Armendariz was similarly
exposed to liability for perjury because his signature was also falsified on the
February 1, 2001 transfer form. Because the dominant purpose of the statutory
scheme is to protect purchasers from various harms which can be visited upon
them by an irresponsible or unscrupulous dealer (Valiyee, supra, 74 Cal.App.4th
at p. 1032), the public has an interest in the accuracy of information contained
in the DMV records. Fraud and false information with respect to the DMV records
cannot be considered minor matters.
[43] And Rob-Mac, Inc. v. Department of Motor Vehicles (1983) 148 Cal.App.3d 793
(Rob-Mac) does not support Ramirez's claim that her 30- day suspension is overly
harsh. In Rob-Mac, a salesperson purchased seven vehicles and discovered that
their odometers had been reset but did not immediately tell the dealer, Rob-Mac,
Inc., under whose license the salesperson acted. The dealer sold the vehicles
wholesale to other dealers, but one of them was sold at retail. After the
salesperson told the dealer about the odometers, the dealer ordered that the
purchasers be put on notice that the odometers were not correct and also ordered
that the retail purchaser's money be returned. The dealer's license was
suspended for 15 days, but the suspension was stayed on certain conditions. The
issue before the court on appeal concerned whether the dealer was subject to
discipline under section 11705, subdivision (a)(14) for the conduct of the
dealer's agent, an independent contractor. There was no issue with respect to
the severity of the penalty, but in dicta the court noted that "the relative
culpability of the dealer in a given situation will undoubtedly affect the
nature of the discipline imposed, as is apparent from the comparatively mild
sanctions suffered by Rob-Mac in this case." (Rob-Mac, supra, 148 Cal.App.3d at
p. 799.) That a 15-day stayed suspension was characterized in dicta as a
"comparatively mild" sanction in Rob-Mac does not support Ramirez's claim that a
30-day suspension under the circumstances here constitutes an abuse of
discretion.
[44] We also reject Ramirez's proposition that an abuse of discretion with
respect to the penalty is shown by a purported delay by the DMV in seeking to
implement the 30-day suspension. Ramirez asks us to consider matters outside the
administrative record and which occurred after the DMV's decision determining
the penalty. But in reviewing the excessiveness of the penalty, we are limited
to a consideration of the evidence before the agency when it imposed the
penalty. (Toyota of Visalia, Inc. v. New Motor Vehicle Bd. (1987) 188 Cal.App.3d
872, 880.)
[45] Ramirez contends that "[t]he DMV abused its discretion when it acted
without any guidelines so that the penalty it imposed might be sensibly reviewed
by the courts." We construe this contention to be a challenge to the
constitutionality of section 11705 as an unlawful delegation of legislative
power to the DMV to select the penalty. Ramirez's failure to cite any authority
is sufficient grounds to reject this contention. (See Berger v. California Ins.
Guarantee Assn. (2005) 128 Cal.App.4th 989, 1007.) And in Beamon v. Dept. of
Motor Vehicles (1960) 180 Cal.App.2d 200 (Beamon), the court rejected a similar
contention by a person whose driver's license had been revoked that the 1957
provisions of the Vehicle Code delegated judicial and legislative power to the
DMV in violation of the state Constitution. The court in Beamon stated, "`The
delegation of an absolute legislative discretion to an administrative body is
not proper, but if the delegating statute establishes an ascertainable standard
to guide the administrative agents no objection can properly be made to it.'
[Citation.] The carefully detailed provisions of the Vehicle Code under which
the department acted refute any implication of unlawful delegation of
legislative power to the department. . . . The applicable sections provided a
complete and comprehensive guide for departmental action." (Beamon, supra, 180
Cal.App.2d at pp. 205-206.)
[46] In section 11705, the Legislature authorized the DMV to revoke or suspend a
dealer's license if the dealer has done any of the acts described in
subdivisions (a)(1) through (a)(16). Because the statute sets out specific
grounds which authorize the revocation or suspension of a dealer's license,
there is no merit to the claim that there is an unconstitutional delegation to
the DMV to designate what acts constitute grounds for revocation or suspension.
[47] For all of the foregoing reasons, we conclude that Ramirez fails to
establish that the penalty imposed in this case constitutes an abuse of
discretion.
[48] DISPOSITION
[49] The judgment is affirmed. The parties are to bear their own costs on
appeal.
[50] I concur: ROTHSCHILD, J.
[51] I concur in the judgment only.
[52] VOGEL, J.
--------------------------------------------------------------------------------
Opinion Footnotes
--------------------------------------------------------------------------------
[53] *fn1 We grant Ramirez's November 1, 2005 motion for judicial notice of the
DMV's August 5, 2005 Order Implementing Decision, the DMV certification of the
record, and proofs of service of the administrative record and exhibits to the
reporter's transcript of the administrative hearing.
[54] *fn2 Unless designated otherwise, statutory references are to the Vehicle
Code.
[55] *fn3 Section 11705, subdivision (a) provides in pertinent part: "The
department, after notice and hearing, may suspend or revoke the license issued
to a dealer . . . upon determining that the person to whom the license was
issued is not lawfully entitled thereto, or has done any of the following:
[¶] . . . [¶]
(3) . . . knowingly made any false statement, or knowingly concealed any
material fact, in any application for the registration of a vehicle, or
otherwise committed a fraud in the application.
[56] *fn4 Section 11705, subdivision (a)(10) permits the DMV to suspend or
revoke a dealer's license if the dealer has "[v]iolated any provision of Article
1 (commencing with Section 11700) of Chapter 4 of Division 5 . . . ."
Section 11713, subdivision (i) makes it unlawful to "[d]eliver, following the
sale, a vehicle for operation on California highways, if the vehicle does not
meet all of the equipment requirements of Division 12 . . . ."
[57] *fn5 Section 11705, subdivision (a)(14) permits the DMV to suspend or
revoke the dealer's license if the dealer "[h]as caused any person to suffer any
loss or damage by reason of any fraud or deceit practiced on that person or
fraudulent representations made to that person in the course of the licensed
activity."
[58] *fn6 Section 11705, subdivision (a)(12) permits the DMV to suspend or
revoke the dealer's license if the dealer has "[v]iolated any provision of
Chapter 2b (commencing with Section 2981) of Title 14 of Part 4 of Division 3 of
the Civil Code . . . ."
Civil Code section 2981.9 provides in pertinent part: "Every conditional sale
contract subject to this chapter . . . shall contain in a single document all of
the agreements of the buyer and seller with respect to the total cost and the
terms of payment for the motor vehicle, including any promissory notes or any
other evidences of indebtedness. . . ."
[59] *fn7 Section 11705, subdivision (a)(8) permits the DMV to suspend or revoke
the dealer's license if the dealer has "[v]iolated any provision of Division 3
(commencing with Section 4000) . . . ."
Section 4456, subdivision (a)(6) subjects the dealer to a $25 administrative
service fee if an application for registration or transfer of a used vehicle is
"first received by the department more than 50 days from the date of sale."
Section 4456.1, subdivision (d) provides in part that a violation of section
4456, subdivision (a) "is a cause for disciplinary action pursuant to Section
11613 or 11705 only if the initial application is submitted 50 days or more
following the date of sale of the vehicle if the vehicle is a used vehicle . . .
."
[60] *fn8 Pending this appeal (on August 31, 2005) we issued an order
temporarily staying the DMV decision, the DMV's implementing order of August 10,
2005, and the trial court judgment. On September 30, 2005, we granted Ramirez's
petition for a writ of supersedeas, continuing the stay until a remittitur is
issued.
keywords, odometer rollback, penalty, car dealer licensure,
odometer tampering, fraud, deception, odometer rollback.
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