At Capital Auto Auction Dealers Carve Out Lucrative May/June 2008

May/June 2008
At Capital Auto Auction Dealers Carve Out Lucrative
Niche Market With Weekly Vehicle Auctions
by Jorgie Alfaro
On any Saturday morning, crowds begin arriving early to the two
large warehouses of Capital Auto Auction in the Nation’s Capital. Deal
hunters, contractors, parents with young drivers – anyone with cash,
a certified bank check or a credit card – are all eagerly awaiting the
beginning of the biggest regular auto auction in the area.
There’s a huge population of people that simply will not or cannot
pay for new cars, and auto auctions offer a way to get excellent
values on a vehicle, boat, motorcycle, trailer, van or other vehicle.
The company’s ad slogan says it all: “500 Cars, Under $1000 – Every
Week!” Live auctions are exciting and are free to attend. Bargains are
expected, and bids on some vehicles can be as low as $100.
One location is in Temple Hills, Maryland and the other is on Brentwood Road in Washington, DC. They both host auctions on Tuesdays,
Wednesdays and most Saturdays. The company also has Capital Auto
Auction of Philadelphia, right off of Route 95 at Cottman Avenue,
with two big auctions per week, as well as a Capital Auto Auction in
Manchester, New Hampshire, with auctions every Saturday that are
easily accessible for Bostonians.
Capital Auto Auction has sold tens of thousands of vehicles since the
company was founded in 1989. Each location offers a wide variety
of repossessions, seized vehicles, dealer consignments and trade-ins,
government and metro fleet vehicles, RVs, and donated vehicles. They
will also take vehicles on consignment. Selection varies from week to
week, but there are always good, clean, used cars at excellent prices.
All you need to buy a vehicle is a valid U.S. issued driver license and
you must be over 18.
People can donate their car, van, truck, SUV, boat or RV to a charity of their choice through Capital Auto Auction. Charities include
The Salvation Army, Goodwill, Purple Heart, Melwood, Volunteers of
America and more.
A recent look at vehicles to be auctioned included a 2000 Ford
Explorer, 1998 BMW 3-series, 2005 Buick Century, 1996 Ford commercial truck, 2001 Mitsubishi Galant, 1997 Audi A6… the list goes
on and on – from almost new and late model vehicles to older but
still practical vehicles that go for far less. They call auctions the
“live/drive sales” and through them, thousands of donated vehicles
change hands every week.
Professional independent auctioneers handle the events, and all locations have Spanish speakers to assist, if needed.
The company has a website ( that offers
everything a prospective buyer or person with a donation may need.
People can also bid in online, real-time Internet auctions, too.
Hundreds of people come to every auction, and many leave delighted
with their purchase, often on the same day.
For more information, contact Capital Auto Auction at 1905 Brentwood Road, NE in Washington, DC, 202-269-3361 or e-mail [email protected] You can find all four locations online at, as well.
As of January 1, 2008,
sales tax has
increased from
5% to 6%.
Please be advised that the information contained in this newsletter is, to the best of our knowledge, current and correct. However, we caution our membership not to use this publication as the final authority.
Its purpose is to be a guide.
The MIADA/DIADA is a publication of the Maryland/Delaware Independent Automobile Dealers Association, 12 Francis Street, Annapolis, Maryland 21401, which is published bi-monthly. The MIADA/DIADA
was established in 1948, a non-profit corporation affiliated with the National Independent Automobile
Dealers Association.
The appearance of advertisers or their identification as members of the MIADA/DIADA does not constitute
an endorsement of the products or services featured.
The statements and opinions expressed herein are those of the individual authors and do not necessarily
represent the views of the MIADA/DIADA.
For advertising information contact:
Advertising 1-800-639-0465
2008 District Directors
District I
District V
District II
Mr. Bill Feuerstein
Salem Avenue Auto Exchange
1433 Salem Avenue
Hagerstown, MD 21740
Phone: 301-791-1317
Fax: 301-791-0974
Email: [email protected]
District VI
District III
Mr. Wayne K. Avery, Sr.
Tommy’s Auto Sales
P.O. Box 359
Upper Marlboro, MD 20773
Phone: 301-627-4700
Fax: 301-627-8526
Email: [email protected]
District VII
Mr. Anthony Trout
Delaware Auto Sales
319 West Division Street
Dover, DE 19901
Phone: 302-678-1800
Fax: 302-678-8151
Email : [email protected]
Maryland/Delaware Independent
Automobile Dealers Association
2008 Board of Directors
Mr. Mark Frostrom
Frostrom & Sons, Inc.
1727 Market Street
Pocomoke City, MD 21851
Phone: 410-957-1414
Fax: 410-957-1426
Email: [email protected]
Mr. Joe Eikenberg, Jr.
Aero Motors, Inc.
50 Eastern Blvd.
Baltimore, MD 21221
Phone: 410-686-3444
Fax: 410-686-8168
Email: [email protected]
Ms. Irene Turnage
M&M Auto Sales of Waldorf
3188 Crain Highway
Waldorf, MD 20603
Phone: 301-843-7660
Fax: 301-843-5916
Email: [email protected]
Mr. Jody Palmisano
Jody Palmisano, Auto Broker
416-B Benninghaus Road
Baltimore, MD 21212
Phone: 410-532-5639
Fax: 410-433-6904
Email: [email protected]
Mr. Bob Lawrence
Mr. Wayne K. Avery, Sr.
Bob Lawrence Pre-Owned Cars & Trucks
Tommy’s Auto Sales
1610 North Salisbury Blvd.
P.O. Box 359
Salisbury, MD 21801
Upper Marlboro, MD 20773
Phone: 410-543-2277
Phone: 301-627-4700
Fax: 410-546-3346
Fax: 301-627-8526
Email: [email protected]
Email: [email protected]
Mr. Brian Puckett
Oldtown Motorcars
4614 Baltimore Avenue
Hyattsville, MD 20781
Phone: 301-864-4578
Fax: 301-864-1012
Email : [email protected]
Silver Star Service Center, Inc.
240 West Street
Annapolis, MD 21401
Phone: 410-263-7444
Fax: 410-263-7827
Email: [email protected]
Auto Wholesale Supermarket
14800-B Old Gunpowder Road
Laurel, MD 20707
Phone: 301-604-5500
Fax : 301-604-0176
Email : [email protected]
Sports and Imports, Inc.
8890 Ft. Smallwood Road
dena, MD 21122
Phone: 410-360-8600
Fax: 410-360-8686
Email: [email protected]
Accurate Auto Service, Inc.
400 Chinquapin Round RoadPasaAnnapolis, MD 21401
Phone: 410-268-2228
Fax: 410-267-1310
Email: [email protected]
District IV
Mr. Joe Eikenberg, Jr.
Aero Motors, Inc.
50 Eastern Blvd.
Baltimore, MD 21221
Phone: 410-686-3444
Fax: 410-686-8168
Email: [email protected]
Executive Director – George N. Manis, Esquire
Deputy Director – Nicholas G. Manis
12 Francis Street
Annapolis, MD 21401
Phone: 410-263-7882
Fax: 410-269-7523
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to a creditor in connection with an existing debt are permissible
as calls made with the prior express consent of the called party.
Although the Ruling makes clear that calls made by collectors
on behalf of creditors are treated the same as calls made by
creditors who obtained prior express consent, the Ruling fails
to address the issue of whether a buyer of defaulted debt, collecting on its own behalf, can rely on the above clarification
when making collection calls..
Yes, It Does Get Cold in Winter!
When the FTC Freezes Over! The Federal Trade Commission staff is
seeking comments on the impact and effectiveness of state credit
freeze laws, as well as the credit freeze options offered by the nationwide consumer reporting agencies. Last year, the President’s Identity
Theft Task Force recommended that the FTC assess the state credit
freeze laws in order to determine whether a federal credit freeze law
is appropriate. Comments are due by February 25, 2008.
General Interest
What’s In a Name?
A loan? A retail installment contract? Does it matter what you call
that piece of paper? You betcha!
A Montana district court recently dismissed car buyers’ second
amended third party complaint alleging that a dealer and the
finance company that took assignment from the dealer of the car
buyers’ retail installment sales contract and security agreement
violated Montana’s usury laws, among other claims. The car buyers
also alleged that the “relationship between [the dealer] and [the
financing company was] one of subterfuge allowing [the dealer] as
a retail seller and [the financing company] to charge usurious interest under the guise of entering into a RISC with the [car buyers].”
(In other words, the car buyers claimed that the dealership and the
finance company were “tag teaming” to make loans disguised as
installment contracts so that they could jack up the finance charge)
The court found that the RISC was not a loan and not subject to
the interest rate limitations of Section 31-1-107 MCA. With respect
to the allegations that a subterfuge to make a usurious loan took
place, the court found that the dealer’s business relationship with
the financing company to sell this type of paper and the fact that
the financing company may have pre-approved the transaction is a
“standard commercial practice and does not add up to a subterfuge.”
The court added that the car buyers had the option of securing their
own financing. Finally, the court found that the applicable statute
of limitations barred the car buyers’ other claims.
By Thomas B. Hudson and Emily Marlow Beck
This feature brings you federal and significant state legislative highlights as well as a recap of some of the litigation we track every month.
Note that what we report here is not every recent development, but just
ones that we think are of particular interest, and that this column does not
offer legal advice – you need to consult your lawyer with questions.
We are including items from other states for two reasons. First, we want
you to be able to see trends, and, second, another state’s laws might
be a lot like your own state’s laws – if laws are being enacted there, or
AGs are pursuing particular types of claims, those laws and claims might
be coming soon to a theater near you. As always, though, you need to
check with your own lawyer before you rely on anything we report or if
you have any questions.
Federal Law
Alabama Doc Fees
Prerecorded and Autodialer Calls to Cell Phones – What’s the Call?
Call me on my cell? Maybe, maybe not. In response to a petition filed
by ACA International, an association of credit and collection professionals, the Federal Communications Commission issued a Declaratory Ruling
clarifying the prohibition against autodialed and prerecorded message
calls to a consumer’s wireless telephone number for purposes of collecting
a debt. Under the Telephone Consumer Protection Act, such calls cannot
be made absent an emergency purpose or the consumer’s prior express
consent. In the Ruling, the FCC stated that autodialed and prerecorded
message calls to wireless numbers that are provided by the called party
What’s up, Doc? Doc fees, of course! Scott Corscadden, Supervisor of the Alabama State Banking Department, Bureau of Loans,
the department that regulates the Alabama Consumer Credit Act
(commonly referred to as the “Mini-Code”), issued a written interpretation regarding document preparation fees charged on both
cash and credit sales. In the interpretation, Mr. Corscadden stated
that “[b]ecause such fees are charged consistently on all cash and
credit sales, then they are not a Finance Charge under Regulation
Z and TILA or the Mini-Code. Neither the Mini-Code nor any other
provision of the Code of Alabama prohibits a creditor from charging
fees not constituting Finance Charges.”
nonresident defendant’s use of the Internet as a basis for establishing
personal jurisdiction. Using a traditional analysis of sufficient contacts,
the high court found that the defendant did not have sufficient contacts
with the state where the buyer resided to establish personal jurisdiction.
See Marschke v. Wratislaw, 2007 WL 4277436 (S.D. December 5, 2007).
These “online sale” jurisdiction cases are very fact-specific. Maybe it’s
time you sit down with your friendly lawyer and ask her to look over your
online operations.
What’s in an Ad?
We report on enforcement actions and legislative activity directed toward
dealer advertising almost every month. This month is no exception! Illinois Attorney General Lisa Madigan filed a lawsuit against an unlicensed
auto loan broker alleging that the broker falsely advertised that he will
assume vehicle loans until another buyer can be found. The auto broker
then allegedly failed to make the monthly vehicle payments. The suit
seeks a civil penalty of $50,000 and additional penalties of $50,000 for
each violation committed with the intent to defraud.
Are You Hiding the Arbitration Ball
From Your Customer?
Arbitration Agreement “Hidden” in Customer Satisfaction Survey Deemed
Unenforceable: A car buyer signed a number of documents in connection
with her car purchase and financing. The buyer was also asked to review,
but not sign, many other documents. After the transaction, the car buyer
was given a questionnaire to complete regarding the transaction, and this
document apparently contained an arbitration agreement. When the deal
went bad, she sued the dealership, and the dealership moved to dismiss
the action and compel arbitration. The trial court denied the motion, and
the Court of Appeals of Kentucky affirmed. The appellate court concluded
that the inclusion of the arbitration provision in a document that appeared
to be a satisfaction survey in a manner which obscured the provision from
the buyer was unconscionable. See Paul Miller Ford, Inc. v. Rutherford,
2007 WL 4553662 (Ky. App. December 28, 2007). So, ask the Court of
Appeals of Kentucky, and they’ll tell you that disclosing the arbitration
agreement in the satisfaction survey is anything but satisfactory.
Massachusetts Attorney General Martha Coakley reached a settlement
agreement with eight car dealers that allegedly used false or misleading
prices in their print advertising, obtaining $290,000 in civil penalties. The
settlements specifically prohibit the use of “asterisk pricing,” a practice
where a dealer advertises a price with an asterisk and, in small print at
the bottom of the ad, indicates that the advertised price presumes, for
example, “$3,000 in cash or trade.” The settlement also prohibits advertising rebates where the terms are not clearly disclosed or universally
applicable, and hiding terms and conditions in small print where the terms
affect the actual price of the vehicle.
The Oregon Department of Justice has finalized amendments to four rules,
effective January 2, 2008. The first final rule sets forth unfair or deceptive motor vehicle pricing and sales practices, including television, print,
Internet, and radio advertising considerations; requires dealers to disclose
all fees, add-ons, and payments made on behalf of the buyer; and clarifies
negative equity. The second final rule concerns motor vehicle advertising,
including misleading business names, Internet advertising, misleading
reasons for sale, withdrawals of advertisements, and broker fiduciary
obligations. The third final rule governs the unfair or deceptive use of
“free” offers and rebates. Finally, the Oregon DOJ finalized a rule adopting
the Federal Trade Commission Used Car Rule, federal Truth in Lending Act,
and federal Consumer Leasing Law. The state adoption of the federal laws
allows the DOJ to enforce these laws in Oregon. The Oregon Department
of Transportation finalized a new rule which describes requirements for the
transfer, release, or assignment of ownership interest in a vehicle.
Are You Practicing Law Without a License?
Magistrate Refused to Dismiss Claim Alleging Dealer’s Preparation of Legal
Documents for Fee Constituted Unauthorized Practice of Law: Claims that
dealers are engaging in the “unauthorized practice of law’ by charging
fees to prepare documents are increasing in many states, and Colorado
is no exception. A car buyer sued the dealership where he bought a car,
alleging that the dealership’s preparation of legal documents for a $299
“Delivery and Handling Fee” in connection with the sale and financing of
his vehicle constituted the unauthorized practice of law. The dealership
moved to dismiss, claiming a non-lawyer may prepare legal instruments to
which it is a party without engaging in the practice of law. A magistrate
judge for the U.S. District Court for the District of Colorado concluded that
a court could determine that a non-lawyer preparing legal documents
engaged in the practice of law and, therefore, recommended that the
court deny the motion to dismiss. See Newman v. Ed Bozarth Chevrolet
Co., Inc., 2007 WL 4287478 (D. Colo. December 4, 2007).
So, there you have it. Until next time, stay legal!
Jurisdiction in Cyberspace
State Lacks Personal Jurisdiction Over One-Time Seller to State Resident:
Two cases we report on this month both agree that a state court lacks
personal jurisdiction over an out-of-state seller who made a one-time sale
to a state resident. Because of their facts, though, the cases won’t help
dealers who are trying to avoid being hauled into court in other states.
In the first case, the car was purchased via an online auction web site. The
Ohio Court of Appeals found that where an individual posts an advertisement on an auction site and makes a single transaction, the individual
does not purposefully avail himself or herself of the privilege of doing
business in the state where the buyer resides and is not subject to personal
jurisdiction in that state. See Malone v. Berry, 2007 WL 4261679 (Ohio
App. December 6, 2007). In the second case, the car was advertised on
eBay, but the parties negotiated the purchase outside of the eBay context.
The South Dakota Supreme Court found that, because the buyer did not
bid on or buy the car through eBay, it would not address the issue of a
Tom and Emily are lawyers in the law firm of Hudson Cook, LLC. Tom
([email protected]) is the author of a book, CARLAW®, and, with Emily
([email protected]), is the Editor/author of the CARLAW® F&I Legal Desk
Book. The books are available at Tom is also
the publisher of Spot Delivery®, a monthly legal newsletter for auto dealers,
and the Editor in Chief of CARLAW®, a monthly report of legal developments
in all states for the auto finance and leasing industry (not to be confused
with the book). Spot Delivery, CARLAW and the books are produced by LLC. For information, call 410-865-5411 or visit www.
Copyright 2008, all rights reserved. Single publication
rights only, to the Association. HC# 4845-3604-7618 (2/08).
It is always a good idea to set up a monthly check on the status of valid salesman licenses,
your listing of dealer tags, temporary registrations, and valid drivers licenses of employees
using your dealer tags. Report any loss or stolen items stated above to MVA in writing and
always keep a copy for your files.
Also remember when your dealer license is due for renewal and check on its status with
MVA at Dealer Licensing at least two weeks before the license expires. That can save you
a real nightmare.
Spring 2008
We welcome the following new members
and extend our invitation to dealers who
are not members to join the Association.
A membership application can be found
elsewhere in this newsletter. Your participation is needed for our Association
to remain a strong and effective voice for
the automotive industry.
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Cockeysville, MD 21030
Salt Lake City, UT
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