Chapter 18

Depositions in Cases Alleging the Resale of Rebuilt Wrecked Cars (MO)

Bernard Brown has been in private practice in Kansas City since 1980. Between 1984 and 1996 his office was devoted entirely to representing consumer plaintiffs who were victims of car fraud such as the fraudulent sales of rebuilt wrecks and cars with odometer rollbacks. More recently he has also worked on consumer class actions relating to vehicle sales and financing, and on home equity fraud cases. A sizeable number of his cases have resulted in published court decisions of significance in these areas of the law. Mr. Brown began doing public interest work when he was in college, starting with volunteer work at the headquarters of Common Cause in Washington, D.C. He has worked regularly with National Consumer Law Center staff for many years on various materials, and has written or contributed to many articles relating to consumer law. He is a founding member and one of the two original Co-chairs of the National Association of Consumer Advocates (NACA). He has worked closely on a number of issues with other leading consumer groups (such as Consumers Union, Consumer Federation of America, Public Citizen, U.S. PIRG, Center for Auto Safety, and Consumers for Auto Reliability and Safety), and has drafted legislation and testified for these groups in the U.S. and state legislatures. He is often consulted by media and business entities regarding car industry-related consumer issues. He is extensively involved in networking and idea-sharing efforts of consumer advocate attorneys across the country, and regularly provides lectures for other attorneys and consumer advocates on various consumer law issues. He also serves as an adjunct law school professor teaching consumer protection law. Sections 18.1 is the deposition of the business manager for a franchised automobile dealer about a car sale for which he arranged the financing. The deponent had no recollection of the transaction at all at the beginning of the deposition or even of meeting with the dealers attorney about the suit six months before the deposition. The deposition details the dealers normal steps in arranging high rate car financing. Section 18.2 is the deposition of the former used car manager at a car dealer who had no recollection of the sale of a rebuilt wreck to one of the dealers car salesmen. It discusses what the dealers file shows about the car and the dealers asserted general practices of inspecting used cars before sale and disclosing all known defects. Section 18.3 is the deposition, with editorial comments, of a used car manager at a franchised automobile dealer alleged to have sold a rebuilt wreck to the consumer without disclosure that the car had been rebuilt and representing it was like new when a routine inspection by a sales person or mechanic would have revealed that the car had been wrecked.1 The used car manager describes the process for purchasing used cars from automobile auctions, refurbishing used cars, and reselling them. The used car manager admitted that he had almost no personal recollection of the purchase of the car or its resale so that he could not dispute the consumers description of events.

.See Bird v. John Chezik Homerun, Inc., 152 F.3d 1014 (8th Cir. 1998).

18.1 Deposition of Used Car Manager

1 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI WESTERN DIVISION [CONSUMER], Plaintiff, ) ) ) vs. ) No. ) THOROUGHBRED FORD, INC., ) Defendant. ) DEPOSITION OF [WITNESS], VOLUME I, Pages 1-133 produced, sworn, and examined on Tuesday, the 9th day of April, 2002, between the hours of 8:00 o'clock in the forenoon and 6:00 o'clock in the afternoon of that day at the Law Offices of Tyrl & Hahn, 1100 Walnut Street, Suite 2950, in the City of Kansas City, County of Jackson, State of Missouri, before: PEGGY E. CORBETT, RDR-CCR-CSR Registered Diplomate Reporter of JAY E. SUDDRETH & ASSOCIATES, INC. Suite 100 10104 West 105th Street Overland Park, Kansas 66212-5746 a Notary Public within and for the County of Jackson, State of Missouri. Taken on behalf of Plaintiff pursuant to Notice to Take Depositions.

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2 APPEARANCES For the Plaintiff: THE BROWN LAW FIRM Attorneys at Law 3100 Broadway, Suite 223 Kansas City, MO 64111 BY: MR. BERNARD E. BROWN

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For the Defendant: LAW OFFICES OF TYRL & HAHN Attorneys at Law 1100 Walnut Street, Suite 2950 Kansas City, MO 64106 BY: MR. LARRY J. TYRL Also appearing: INDEX [WITNESS] VOLUME I PAGE 3 132 133 Mr. Bob Jachaway

Direct Examination by Mr. Brown Signature: Certificate: EXHIBITS EXHIBIT NUMBER 105 106 107

DESCRIPTION

PAGE REFERENCED 3 3 3

[Consumer] File [Purchaser 1] File [Purchaser 2] File

NOTE: The exhibits were retained by Mr. Tyrl and are not attached hereto.

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3 P R O C E E D I N G S MR. BROWN: Let's make a record that we've marked Exhibits 105, 106, 107. They're the original deal jackets on the sale to [Consumer], the dealings with [Purchaser 1] on this vehicle, and the sale of the vehicle to [Purchaser 2] respectively, 105, 106, 107. We've just marked the yellow jackets, they each have documents in them, 107, the [Purchaser 2] file starts at Bates-stamp Number 1, and goes through Bates-stamp number 68; 106, the [Purchaser 1] file starts at Bates-stamp 69, and goes through Bates-stamp 125; and 105, the [Consumer] file, starts at Bates-stamp 126, and goes through Bates-stamp 187. Does that sound correct, Larry? MR. TYRL: That's what they're supposed to be. MR. BROWN: Yeah. MR. TYRL: And while you're starting

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with the deposition, I'm going to go through and check to make sure that there weren't any foul-ups on marking the documents, but that was the intended program. [WITNESS], of lawful age, having been first duly sworn to tell

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4 the truth, the whole truth, and nothing but the truth, testified as follows: DIRECT EXAMINATION BY MR. BROWN: Q. State your full name for the record, please. A. [Redacted]. Q. [Redacted], is that your middle name? A. Yes. MR. TYRL: Let me state on the record real quick. Looking at Page 10, the next page is not numbered, and it goes to 11. So do you have any objection if I just write in with ink 10a? MR. BROWN: Not at all. This is Bates-stamp numbering for Exhibit 107 that you're doing. MR. TYRL: Right. MR. BROWN: So we're marking the page that's attached to Bates-stamp Number 106 -- wait a second. It's attached to Bates-stamp number -MR. TYRL: It follows 10. MR. BROWN: We're marking that next page as 10a. Okay. MR. TYRL: And for the record, it's a tax certificate.

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5 MR. BROWN: All right. MR. TYRL: Sorry. MR. BROWN: No problem. And needless to say, if there turns out to be some mistake in numbering, we can deal with that. Q. (CONTINUING BY MR. BROWN) [Witness], have you ever had your deposition taken before? A. No. Q. Do you understand that I'm Bernard Brown, I'm counsel for [Consumer], who has a suit against Thoroughbred Ford? A. Yes, sir. Q. If I ask you a question, because the court reporter needs to make a transcript of whatever is done here, I will ask you to adjust normal conversation. You can't say "uh-huh" or "huh-uh" and have the record be clear. A. Okay. Q. You can't just nod or shake your head. A. Okay.

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Q. So try to English words. something using A. Yes, sir. Q. Also if I

make sure that you use full "Okay" is fine, but "yes" or "no," English words. Okay? ask you any question, and if for

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6 any reason there's anything confusing about the question, can we have an agreement that you will stop me before you answer a question that is confusing? A. Yes, sir. Q. Do you understand that your testimony is under oath? A. Yes, sir. Q. Under the same requirements of law as if you were present and testifying in a courtroom in front of a judge or jury? A. Yes, sir. Q. Do you also understand that a transcript will be made of this? A. Yes. Q. And under some circumstances portions or all of the transcript may be read to the judge or jury? A. Yes, sir. Q. Where do you reside? A. My address? Q. Yes. A. [Redacted.] Q. All right. A. That would be in Kansas City, Missouri,

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7 64154. Q. Are you married? A. Yes. Q. And your wife's maiden name? A. [Redacted.] Q. What's her first name? A. [Redacted.] Q. Do you have any kids? A. Yes, sir. Q. How many? A. Three, sir. Q. How old is the oldest? A. Six years-old, sir. Q. Did you grow up in one locale, or did you move around when you were growing up? A. No, I just lived at my parents' house in Kansas for 21 years. Q. Okay. What city? A. Kansas City, Kansas. Q. Where did you go to high school? A. Bishop Ward High School.

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Q. A. Q. A.

When did you graduate? 1992. Did you have any schooling after that? Yes, sir.

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8 Q. Where? A. Kansas City, Kansas Community College. Q. All right. How long did you go to school there? A. A year and-a-half. Q. Did you study anything in particular? A. Fire science, computer engineering. Q. Did you receive any kind of Associate's or other degree? A. No, sir. Q. Computer engineering, did you say? A. Yes, sir. Q. Did you have any other schooling after that? A. No, sir. Q. Have you had any technical training of any kind since you graduated from high school? A. No, sir. Q. When did you first do any work that related in any way to cars or the automotive industry? A. Probably November of 1993. Q. And what was that work? A. I washed cars for Enterprise Rental Services.

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9 Q. In Overland Park? A. Yes. Q. How long did you do that? A. About 8 months, I believe. Q. Was that the extent of your duties there, washing cars? A. Yes. Q. All right. Between when you graduated from high school and November of '93 did you have any employment? A. Yes. Q. What was that? A. I used to work at a grocery store. Q. Okay. Is that the work that you had up until November of '93? A. Yes. Q. Okay. So after you worked at Enterprise Rental, what was the next -- walk us through your employment history from Enterprise Rental up to today. A. I went with Thoroughbred Ford. Q. When did you start with Thoroughbred?

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A. November of 1994. Q. Okay. There's some four months in between there. Were you unemployed for four months between

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10 when you worked at Enterprise Rental, and when you went to work at Thoroughbred? A. No. I gave that as a rough estimate. I can't remember exactly how long I worked. Q. Did you leave Enterprise to go to work at Thoroughbred? A. Yes. Q. Who hired you? A. Steven Porter. Q. Did you know him before that? A. No, sir. Q. And what was your position when you were hired? A. Salesman. Q. Used or new? A. Both. Q. Did you receive any training in car sales? A. No, sir. Q. You didn't have any background in car sales when you went to work there? A. No, sir. Q. How did you go about selling cars when you didn't have any training at all? You just walked out on the lot and tried to interest people in cars? A. Yes, sir.

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11 Q. Who were your supervisors, people in command over you? A. At that time it would have been LeRoy Adams, who was the General Manager at the time, and then of course, Steve Porter, which is the owner. Q. Were you under the New Car Manager and the Used Car Manager also? A. I think it was one and the same. The Used Car Manager, I think was the other owner, which was Roger Porter. He was the one that purchased the used cars. Q. Roger Porter was the Used Car Manager? A. I guess that's what you can classify him as. Q. That's how they had them divided up, anyway? A. Yes, as far as I know. Q. Did Steve Porter have a position that you understood? A. He was the Desk Manager when I started. Q. And the Desk Manager was over the General Manager? A. Yeah, he was the owner.

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Q. A.

Okay. Was there a President? I guess he -- I don't know how it works in

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12 the corporation. I believe he would be the President. Q. But you don't know? A. No, sir. Q. Okay. Do you know who was the Vice-President or Secretary under the corporation? MR. TYRL: At what point in time? MR. BROWN: At the time that you started. A. I guess it would be Steven Porter would be the President, and I guess the Vice-President would be his brother, Roger. Q. (CONTINUING BY MR. BROWN) But do you know? You don't know? A. No, I don't. Q. Okay. So the only people you reported to were LeRoy Adams and Steve Porter at the time you started? A. Yes. Q. And I suppose also Roger Porter on used cars? A. I don't know how you would classify that. He purchased vehicles, and he was the Used Car Manager. I never really reported to him directly. Q. Was there a Finance Manager at the time?

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13 A. Yes. Q. Were you under the Finance Manager's supervision? A. Yes. Q. Who was the Finance Manager? A. Bob Jachaway. Q. Mr. Jachaway who is here? A. Yes, sir. Q. Were there any other people whose supervision you were under? A. I really didn't know the chains of command that well. All I knew is I just reported to Mr. Porter each time I had a customer. Q. By Mr. Porter, you mean Steve Porter? A. Yes. Q. Okay. How long were you working as a car salesman for Thoroughbred? A. About four, four and-a-half years, I believe. Q. Okay. And your position then changed? A. Yes, sir. Q. To what? A. Business Manager. Q. Was there a Business Manager at

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Thoroughbred when you started in approximately

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14 November of '94? A. Yes, sir. Q. Who was that? A. That would be the Finance Manager that I mentioned, Mr. Jachaway. Q. Mr. Jachaway? A. (Witness nodding head affirmatively). Q. The title that you use currently is you're F&I manager, Business Manager? A. Business Manager. That's what they called it. Q. You used the term Business Manager. A. Uh-huh. Q. Make sure you say "yes" or "no" for the record. A. Yes, I'm sorry. Q. In other car dealerships they will refer to F&I manager for the same position; is that right? A. I don't know about the other dealerships, sir. I just know about where I work at, and how they do it. Q. Have you heard of F&I? A. Yes, I have heard of it. That's just not what we classify each other as, just Business Managers.

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15 Q. Okay. So when did you start approximately as Business Manager? A. I believe in '98. I can't remember the month or the exact date. All I know is it was that year. Q. The first part of the year, last part of the year? A. Probably the last part, I think. Q. Weren't you the Business Manager at the time this vehicle was sold to [Consumer]? A. Yes. Q. And I think the sale of the vehicle to [Consumer] was -- I'm looking for a date on this. In approximately July of 1998, isn't that right? MR. TYRL: 2000. MR. BROWN: Oh, July of 2000. I'm sorry. Q. (CONTINUING BY MR. BROWN) You were Business Manager at the time of this in July of 2000? A. Yes, sir. Q. Okay. When you became Business Manager, to whom did you report? A. It would be to Mr. Jachaway at that time.

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16 Q. Anyone else? A. Both the before-mentioned, Steve Porter. Q. Steve Porter and Roger Porter? A. Uh-huh. And at that time it was -Q. Make sure you say "yes" or "no." A. Yes, sir. Q. Okay. And you were saying "at that time"? A. Also there was a Kent Holton there that I reported to also. Q. What was his position? A. He was the General Sales Manager, I believe. I don't know how they classified his title. Q. Was Mr. Holton working there when you started in '94? A. Yes -- no. He did not come aboard, I think, until '97 or '98, I believe. Q. Is he still there? A. No, sir. Q. When did he leave? A. I believe in '98 or '99. Q. Do you know where he went? A. No, sir. Q. Was he fired? A. I think he just left. I'm not for sure.

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17 I didn't -- that wasn't my decision, so I don't know how it went down. Q. But he was in the hierarchy something like did you say General Sales Manager? A. Or just Sales Manager. Again, I told you I don't know how they exactly classified him. I know he was like a Desk Manager at the time. Q. But you were under him and the Porters and Mr. Jachaway? A. Yes. Q. At present you are under Mr. Jachaway and the Porters? A. Yes, sir. Q. Anyone else? A. No, I guess that would it be for right now. Q. Is there anyone else at the dealership who has authority over you? A. Probably LeRoy Adams. He's the New Car Manager. Q. How long has he been the New Car Manager? A. He's been dealing with the new cars ever since Thoroughbred opened, as far as ordering them and everything, so for a long time. Q. Well, were you under him when you began as

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18 Business Manager in 1998? A. I don't know if I was -- see, there's separate departments. Who I reported to directly was Mr. Jachaway. I mean I guess you could classify him as a higher person, but I never reported to him. I guess he would have authority. I mean that's different departments. Q. As things stand, do you know if there is a President to the corporation right now? A. It would still be Mr. Steven Porter. Q. As far as you know? A. Yes, sir. Q. But you don't know if that's correct necessarily or not? A. No, not really. Q. Okay. A. I don't know how the chain of command goes with the people that actually own the dealership, no. Q. And you understand Steve and Roger Porter to have ownership interest in the dealership? A. Yes, sir. Q. Anyone else? A. To my knowledge, no. Those are the only

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19 two. Q. Is there a Porter -- a female person whose last name is Porter, associated in any way with the dealership? A. There might be Mr. Steven Porter's wife. Again, I don't know how that stuff is run. Q. Do you know her name? A. I believe her name to be Brenda. Q. Do you recall [Consumer]? A. No, I don't. Q. Did you ever talk with her? A. When I did the paperwork with her, yes, I did. Q. Do you recall any of the discussion with her? A. No, sir, I don't. Q. Do you recall talking with her at any time after her purchase? A. No, sir. Q. Are you aware that she indicates that she came back to the dealership and talked to a man about this vehicle, after she found out that it had been wrecked? A. No, sir. Q. You had not heard that from anyone?

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20 A. No, sir. Q. Have you talked with anyone inside the dealership in any way in connection with [Consumer]'s case? A. Just why I'm here today, just that you need to speak to me. Q. You've spoken with people this week inside the dealership about the fact that you're going to be coming for a deposition today? A. Just that I was supposed to be here. I don't know anything about the particulars about everything. Q. Are you aware of the allegations that she makes? A. Not exactly, no. Q. Did you know that she brought a lawsuit? A. Right now I do with you here. Q. When did you first find out? Just today? A. No, it was a little while ago, but I didn't really pay any attention to it, because it really didn't have anything to do with me. It's not my job to know that kind of stuff, sir. Q. Have you told anyone that you participated in her deal? MR. TYRL: You mean other than me?

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21 A. Other than -Q. (CONTINUING BY MR. BROWN) Well, when was it you first knew that there was a lawsuit involving [Consumer], approximately, to the best of your recollection? A. When I spoke to Mr. -Q. Mr. Tyrl? A. Uh-huh. Q. Make sure you say "yes" or "no." Yes? A. Yes. Q. How long ago was that? A. Just recently. Q. Recently could be twenty years or it could be two minutes. A. It's not two minutes or twenty years. It's probably within the last couple of days. Q. Okay. MR. TYRL: Ben, do you also recall meeting with me out at the dealership six months ago approximately? THE WITNESS: About this case? MR. TYRL: Uh-huh. THE WITNESS: Then yes, I guess it was six months ago. Q. (CONTINUING BY MR. BROWN) You have no

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recollection of that meeting? A. No, sir, not really. I can't remember what I did yesterday sometimes. I just can't remember that far back. Q. Okay. MR. TYRL: And you also met with me yesterday, right? THE WITNESS: Yes. MR. TYRL: Okay. Q. (CONTINUING BY MR. BROWN) Have you ever had any training of any kind relating to car sales? A. No, sir. Q. Have you ever had any training of any kind relating to the work that you started doing in 1998, the Business Manager work? A. Just kind of hands-on training, watching on how it gets done and everything. Q. Who trained you or who was it that you were watching, rather? A. Mr. Jachaway at the time. Q. Any other training of any kind associated with your work as Business Manager? A. I went to MBPI, mechanical breakdown. They had a class of business, for Business Managers. Q. Mechanical Breakdown Protection Insurance?

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23 A. I believe that to be the name. I think at that time it was located in Lee's Summit. Q. When was that? A. Probably around 1998. Q. Was it for an afternoon or how long was it? A. It was a couple of day training session. Q. And what was the training about? A. About how to talk to banks, how to get people approved. Q. To get them approved for MBPI? A. To purchase a vehicle. Q. How to talk to banks to get them approved for purchase of a vehicle? A. Yes, just different ways of how to present a file, and everything like that to banks. Q. So it wasn't really restricted to MBPI? A. No. The MBPI was just the place that they held the course. Q. Who put the course on? A. I can't remember the instructor's name. It's been awhile ago. Q. Did you watch any training tapes? A. Not that I can recall. Q. Was it put on by a manufacturer like Ford

24 or was it put on by --

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A. It was just an instructor that went over it. Q. Okay. Did you talk about subprime and prime lending? A. I think it was just lending and everything. Q. Okay. Have you had any other training relating to the work that you're doing other than that two-day training at MBPI? A. No, sir. Q. Have you read any materials at any time in the course of your work that explained, told you how to do any of your work? A. Just different pricing sheets. Not to tell me how to do it, just of what they were, like different interest rates and different banks. Q. Have you ever watched any training tapes or tapes of any kind, videotapes that would teach you anything about how to do anything related to your work? A. No, sir, not that I recall. Q. Do you have any manuals that you've ever referred to in your work? A. Manuals as far as --

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25 Q. Like a how-to manual or an instructional manual or a guideline manual or any kind of manuals that you would refer to in your work? A. I have guidelines as far as what banks will do. Q. Guidelines as far as what banks will do? A. Uh-huh. Q. Give me an example. A. Like term, how they would approve somebody, like by Beacon Spores, stuff like that, different pricing on vehicles. Q. B-e-a-c-o-n? A. I guess that's how you would pronounce it, Beacon Spores. Q. Any other manuals of any kind that you have available? A. No, sir. Q. Name a bank for which you have a manual? A. Ford Motor Credit Company. Q. And the kinds of guidelines that it has in it? A. Like mileage restrictions, term, like how long you can go. Q. How long the loan can go? A. Yes, sir.

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26 Q. Different classifications for like second chance or lower quality credit risk people?

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A. Ford doesn't do second chance. They're just Ford Motor Credit Company. Q. How about Fairlane? A. Yes, that's Fords subsidiary, a subsidiary of Ford. Q. And they do second chance? A. Yes, sir. Q. Do you understand when I use the term "subprime," have you heard that term before? A. Yes, sir. Q. Do you understand that also to be something that is referred to in the industry as second chance? A. Yes, sir. Q. Now does Fairlane do only second chance or does it also do -- what would you call non-second chance, anyway? A. Prime. Q. Okay. Does it also do prime? Does Fairway also do prime lending? A. No; it also depends on what you classify prime to. Q. Does that vary from lender to lender?

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27 A. It just depends on interest rate. I don't have a set figure of what's prime and not prime. I just go by interest rates. Q. Has anyone ever instructed you on the legal requirements about what documents have to show in connection with a sales transaction? A. Like the truth in lending? Q. That would be one example. A. Yes. Q. Who's instructed you on that? A. Mr. Jachaway has. Q. Okay. So you learned that from him, and not from watching him, but from him instructing you? A. Yes. Q. Okay. Any other requirements that you have ever been instructed in? A. No, just get the person approved. Q. Have you ever heard of the Federal odometer law? A. Yes. Q. Have you ever been instructed about Federal odometer statements? A. Never been instructed. I know we have to do them. I guess that has been instructed for me to do that, because that is part of the paperwork that

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28 I have to do in a sale. Q. Who was it that instructed you on that? A. It would be Mr. Jachaway also.

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Q. Okay. How about titles? Has anyone instructed you on how titles have to be handled? A. No; titles aren't my job. Q. You're not familiar with handling of titles? A. No, sir. Q. You know nothing about it at all? A. I know that there's a title to each vehicle, but I don't know how to prepare a title or anything like that. It's not my job. I don't do that, sir. Q. Do you routinely in your work see titles? A. Yes, sir. Q. Are they typically kept in the deal jacket? A. As far as what kind of a deal jacket are you talking about? Q. Well, okay, these things that we've marked as Exhibits 105, 106, and 107, what do you call them? A. Those would be the deal jackets, but before, they're just regular with no writing on it,

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29 and the titles are kept in here. Q. Okay. So the titles are kept in the deal jackets? A. Yes, sir. Q. So typically you would see the titles in the deal jackets when you're looking at documents in the deal jackets; is that right? A. These don't get to be deal jackets until I have my own folder, and then when all the paperwork is processed, then they go into the deal jackets. Q. Okay. So the deal jacket is what's put together when the deal is done? A. Yes, sir. Q. Prior to that you have a folder; is that right? A. Yes, sir. Q. And what happens to the folders, the folders themselves? Like these are manila folders? A. Yes, sir. Q. Okay. What happens to those folders? A. I put all the documentations in there, and they go upstairs, and they get sent to the banks. Q. That's for financing? A. Yes. Q. So the folders that you have relate to

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30 financing? A. Yes, sir. Q. What about where somebody makes a cash purchase? Is there a folder then?

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A. Yes, sir. Q. What happens to those folders? A. The same process. Q. Well, it doesn't go to a bank? A. It goes upstairs. I don't know what they do up there. They collect the money, just like a purchase. I don't get into any of the accounting or billing or anything like that. Q. Okay. Have you been involved in running credit reports? A. No, sir. Q. You've never had any involvement in that? A. No, sir. Q. Have you ever asked for -A. When I sold vehicles. Q. Okay. When you sold vehicles you ran credit reports? A. Yes, sir. Q. And how would you go about doing that? A. Getting on the machine and running them. Q. Was there a particular computer that you

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31 would use? A. Yes. Q. Did every salesperson have to use the same computer? A. Yes. Q. Was there only one computer in the dealership that could be used? A. Yes. Q. Is that the same today? A. No. I don't know how they do it today. They have several different computers that do that. Q. Okay. At any rate when you ran credit checks as a salesperson did you have to get authority to do that? A. Yes, sir. Q. From whom would you get that authority? A. The customer. Q. And did you get that in writing? A. Yes, sir. Q. Always? A. Yes, sir. Q. Were you trained to do that? A. Yes, sir. I mean you had to do that. Q. Who trained you? A. At the time the before-mentioned people

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32 like Steven Porter and Bob Jachaway, when I first sold vehicles. Q. Okay. So I understood you earlier to say that you didn't have any training relating in any way to vehicles.

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A. Training means common sense. When you do a deal, you have to get their permission. I never have known otherwise. Q. Okay. To a person who doesn't ever sell cars, when you talk about a credit report and how you run it and which computer you use and whether you have to get authorization and to whom you have to ask questions, that's hardly common sense. A. Okay. Q. So you were actually explicitly trained in how you ran the credit reports, what kind of an authorization you had to have before you ran the credit reports, and how you ran the credit reports; is that right? A. I was told. I don't know if I was trained, but they told me how to do it. Q. Okay. Do you remember who specifically told you how to do it? A. I do not, sir. Q. Okay.

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33 MR. TYRL: May I interject, because it's obvious, it's apparent to me that there's a miscommunication between you and the witness as to what is meant by "training." Could you be a little bit more specific or explain what you mean by "training"? MR. BROWN: Oh, I think I'll let you clean that one up later, Larry. I think we've got it pretty clear that any training that existed was at least certainly not formal, and obviously the witness can say that he was shown stuff, and so within that ball park, I'll leave the record. If you want to ask him questions, you can. MR. TYRL: Okay. Q. (CONTINUING BY MR. BROWN) You've had the chance to review the [Consumer] deal file? A. Not specifically. I looked at some of the documents, the deal packets. Q. Have you looked at them on all three of these transactions? A. Yes, sir. Q. Do you remember [Purchaser 2]? A. Yes, sir. Q. Okay. What do you remember about her? Did you know her?

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34 A. Not personally. Q. Did someone else know A. I believe her husband company a long time ago, or you. Q. Okay. So what do you

her? used to work for the ex-husband, what have recall of the

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dealings with [Purchaser 2]? A. Just that she purchased a vehicle. Q. Uh-huh. Do you remember that she bought a vehicle from you? A. Yes. Q. Do you remember talking with her about that transaction? A. No, sir. Q. Do you remember talking with her about her trade-in? A. No, sir. Q. Do you remember getting any information at all from her about the trade-in? A. No, sir. Q. Do you remember knowing anything about the trade-in? A. No, sir. Q. Tell me everything that you can recall about dealings with her of any kind.

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35 A. I didn't do the paperwork on her, so I wouldn't know. Q. Okay. But you did talk with her? A. I said "Hi." Q. Did you know her to say "Hi"? A. She bought a vehicle from us previously. Q. Is that how you knew her? A. Yes. Q. Okay. And you handled that sale? A. I don't know. I remember this, though, because she purchased a vehicle from us. I don't know about her previous cars or anything like that. I might have been selling vehicles back then. I don't even know if I was in the Business Department when she bought her other vehicles. Q. But you remember [Purchaser 2]? A. Yes. Q. And to the best of your recollection you remember [Purchaser 2] because what? A. She purchased another vehicle, and I believe I've seen her by the dealership the last time that she purchased her vehicle, and that was probably about it. Q. You can't think of anything else? A. No, sir.

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36 Q. You don't remember anything else about her? A. No, sir. Q. Okay. How about [Purchaser 1]? Do you remember [Purchaser 1]? A. Yes, sir. Q. Okay. And how is it that you recall

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[Purchaser 1]? A. I did the paperwork on [Purchaser 1]. Q. Okay. Was his mother involved also in the dealings? A. Yes, sir. Q. Why don't you walk us through what you recall of the [Purchaser 1] deal. A. Could you explain how you want me to -Q. We're trying to get all the information we possibly can, so I'd like you to tell us everything of any kind that you remember relating in any way to the [Purchaser 1], the whole story, every detail you can recall. A. I remember them purchasing the vehicle, and I did the paperwork on it, and I know they backed out of the transaction because of payments. The son couldn't afford the payments. That's the only thing that I can really remember about them.

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37 Q. You can't remember anything else? A. Just that I did the paperwork, and I knew they backed out on it. Q. Did they say how much he could handle in the way of payments? A. As far as I knew, whatever they signed the documentations for, that's what he could handle at the time. Q. I'm asking you from your recollection did they say how much he could handle in payments? A. No, not from my recollection, just from what the contract states. Q. When did you find out that they were, as you put it, backing out? A. I believe the next day. Q. How were you informed; from them? A. No, from the salesman. Q. Who was the salesman? A. That would be -- was it Sal that sold it to them, I believe? Q. What's Sal's last name? A. Ishkuntana. Q. Would you spell that, please? A. I'll try. MR. TYRL: I-s-h-k-u-n-t-a-n-a.

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38 Q. (CONTINUING BY MR. BROWN) Is he still at the dealership? A. Yes. Q. So Sal told that you they were backing out? A. Yes, sir. Q. Did he explain to you why? A. Over the payments.

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Q. Were you surprised? A. At that time, I don't know if I was surprised or not. I mean I do a lot of deals, and I don't know. I wasn't surprised then, I guess. Q. Was Sal under your authority? A. I don't know if I have authority on salesmen. Q. Do you have any authority over any sales personnel? A. I mean I tell them if their deals are approved, or what have you. I'm not directly their boss. Q. When Sal told you that they were as you say backing out -A. Uh-huh. Q. -- who was in charge of what to do at that time?

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39 A. I was. Q. Okay. So you had authority about what to do with the deal? A. Yeah, yes, about the deal. Q. Okay. And was this an every day thing that someone would the next day say they were backing out? A. No, not really, sir. Q. All right. And what did you tell Sal you were going to do at that point? A. Let them back out, and have them sign a rescission saying they didn't want anything to do with the vehicle anymore. Q. And you told him that? A. Yes. Q. And what transpired next? A. They came by and -- can I see that file, because I think they signed? Q. There it is. We're talking about Exhibit 106, the deal file. A. Yes. Q. Now when you refer to documents, there are the stamped numbers on the lower part of each document. I'd like to use those. Those are called Bates-stamp numbers, so

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40 we're looking at documents in Exhibit 106. A. Would it be the other one? Q. You tell me. MR. TYRL: For the record, Bernard -MR. BROWN: Yes. MR. TYRL: We did notice yesterday when we were going through these deal jackets, that some of the documents had been put in the wrong deal jacket, and he's -- at what point in time that

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occurred I have no idea. I don't know whether or not it was when somebody else at the dealership looked at it, or when they were in my office, but when we went over them yesterday we did note that there were some documents that were in the wrong deal jacket. For example, I think this rescission deal should be in the [Purchaser 1] file, and it's actually in the [Consumer] deal jacket. MR. BROWN: Okay. Well, let's just make a record when we are dealing with something like that. The sooner we can make a record, the better, as to which Bates-stamped number pages you're saying are in the wrong file, but at some point if you could do that in a fairly comprehensive way that would be useful. For now any time there is

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41 something like that, please point it out to me. Q. (CONTINUING BY MR. BROWN) So we're looking at Bates-stamped Pages 134, 135 through 138, and these documents were here today, and Bates-stamped numbered as being in the [Consumer] deal file which is Exhibit 105, but you're saying that they actually belong in the [Purchaser 1] deal file which is Exhibit 106; is that right? A. Uh-huh. MR. TYRL: Is that correct? A. Yes. Q. (CONTINUING BY MR. BROWN) All right. Now we were talking about what happened when Sal told you that the [Purchaser 1] were backing out, this was the day after the deal was done, and you said okay, as I understand it; is that right? A. Yes, sir. Q. And then you required a rescission agreement; is that right? A. Yes. Q. Okay. And you were going to tell us what transpired? A. They signed the rescission agreement. Q. Would you tell us what Bates-stamped page number that is?

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42 A. 00138. Q. Okay. And had they taken the vehicle with them for that one day, and then they returned the vehicle? Is that what happened? A. I don't know, sir. Q. Okay. A. I don't know if they took possession of

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the vehicle or not. I wasn't involved in that part of it. Q. How did you decide whether you were going to okay rescinding the deal? A. We don't want an angry customer. We want to keep them happy. Q. That was how you decided in this case that you would let them rescind the deal? A. Uh-huh. Q. Make sure you say "yes" or "no." A. Yes, sir. Q. Have there been other times when people after a day wanted to bring the car back and you said no? A. Not that I can recall, sir. Q. Was that "not that you recall," is that what you said? A. Yes.

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43 Q. Okay. So as a standard practice would your dealership, if somebody buys a car and comes back and wants to undo the deal, you will let them do that? A. As far as I know. Q. As far as -- is there somebody who would know this better than you? A. Probably. I don't make all the decisions if they bring the vehicle back or not. I mean we try and keep the customers happy and do anything to keep that with the customers. Q. As the Business Manager these past four years would you have been the person that would have been in charge of deciding if the vehicle would be taken back? A. Yes, if there was, but I can't recall if there was anyone else that backed out. Q. Okay. MR. TYRL: Are you talking about your deals or the dealership? THE WITNESS: Just about my deals. MR. BROWN: Well, now I'm going to object. That was a coaching question. That absolutely is something that I object to strenuously.

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44 If you want to clarify other things, to put a general state of clarification, take me aside,

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Larry, do it quietly out of the presence of the witness. MR. TYRL: I apologize, Mr. Brown, but I was trying to keep it clear, but I will take you aside next time. MR. BROWN: Okay. MR. TYRL: I'm not trying to coach the witness. I'm trying to keep the record clear, and I think there's some miscommunication going on between you and this witness. Q. (CONTINUING BY MR. BROWN) Was there another Business Manager these past four years other than you? A. Yes, sir. Q. Who was the other Business Manager? A. Daniel Fisher. Q. Is he still there? A. Yes, sir. Q. So how many Business Managers do you have? Two? A. Right now we have, at this point in time, we have four. Q. How many did you have when you started?

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45 A. We just had two when I first started with Thoroughbred. Q. Who was the other one? A. I really can't remember her name. Q. You don't remember the name of the other Business Manager that you worked with? A. That I worked with? You said when I first started back in 1994 or -Q. No, I mean when you started as Business Manager. A. Oh, it would have been Dan Fisher. Q. Okay. A. And Robin Mullinix. Q. Robin is a he or a she? A. A she. Q. And where is Robin now? A. I don't know where she works for now. Q. Okay. And Mr. Fisher and who else are Business Managers now? A. Myself, Robert Bledsoe, Andrew Mardini, like Mardini Dy. MR. JACHAWAY: With a D, M-a-r-d-i-n-i. Q. (CONTINUING BY MR. BROWN) Last name? A. Dy.

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46 Q. How do you spell that? A. D-y. MR. JACHAWAY: That's his last name, Mardini Dy. A. D-y. Q. And it's pronounced "Dy"? A. Dy. Q. I see, okay. MR. TYRL: Are you at a good point for a bathroom break? MR. BROWN: Sure. (Recess.) Q. (CONTINUING BY MR. BROWN) Were you the one who determined that [Purchaser 1] was qualified to purchase the vehicle? A. Yes, sir. Q. Now if [Purchaser 1] was qualified to purchase the vehicle, and they said he couldn't make the payments, does that come as any surprise to you? A. Not really, because he was qualified I think with his mother, because his mother helped him get the loan. Q. Okay. Did you talk with anyone else in deciding whether to accept -- let the -- let [Purchaser 1] rescind the deal?

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47 A. I think it was just my decision. Q. You think? A. I can't remember back then, but I think I was the one that allowed him to bring it back, because I just wanted to keep them happy. She bought the previous vehicle from us. I just want to keep customers happy. Q. Did you ever talk with [Purchaser 1] or his mother, [Purchr. 1's mother], about them bringing the vehicle back? A. Not that I can remember. Q. Who prepared the rescission papers? A. I did. Q. Who had them signed? Did you have them signed? A. Yes. Q. So they signed them in front of you? A. Yes. Q. Okay. But you don't -- you talked to them at that time, I presume? A. At that time, yes. Q. But you don't remember the discussion? A. No. I just wanted to know if he wanted

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another vehicle that would work, or what kind of payments, but that was about it.

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48 Q. And this was done, what, the day after? A. I believe so. I'd have to look on the paperwork. Q. Well, here's the paperwork. We're showing you the rescission paperwork that you pulled out, Pages 134 through 138 of Exhibit 105, and here is the deal jacket, the [Purchaser 1] deal jacket. A. I believe it to be the next day. Q. Okay. Do you want to look at the paperwork and see if that's correct? A. From the looks of the paperwork, they might have even come back that same night, because it shows the 27th. Q. And the rescission agreement, what's that dated? A. The 27th. Q. You're looking at Page 134, the non-interest affidavit; is that right? A. Yes. Q. Okay. Look at Page 138. Isn't that the rescission agreement? A. Yes, I'm sorry. Q. What's that dated? A. It's got 7/10/2000. Q. And you prepared it and it was signed in

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49 your presence? A. Yes. Q. So is that the date it would have been signed? A. I believe. I don't know if I -- that's not my handwriting on the date, so I'm not for sure. All is I know is I signed it and they signed it. Q. Would you believe that the 7/10 would be correct? A. I wouldn't -- I believe it to be because it was on there. Q. You would believe it to be; is that correct? A. If it's on there, yeah. Q. All right. So if the deal was rescinded on July 10th, I want you to look at the documents from [Consumer]'s file, and do you see the date on [Consumer]'s installment contract?

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A. That's the 8th. Q. 7/8? A. Uh-huh. Q. Can you explain to us why there's a rescission with [Purchaser 1] that is dated two days after the vehicle was sold to [Consumer]? A. When I signed the rescission agreement, I

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50 didn't put the date in. The date showed to be 7/10 but I didn't put that in there because I just did the rescission agreement. Q. Now do you believe the 7/10 agreement might be wrong? A. I believe it is. Q. I'll represent to you that Ms. King told us that it took weeks before the rescission actually happened. Do you have any information that would lead you to disagree with that? A. No, sir. I just believe it was the next day. I mean I can't remember that far back. Q. If it was on July 10th that that rescission paper was signed, as you testified appears to be the case earlier, can you explain how that would happen, that a rescission agreement was signed two days after the vehicle was sold to [Consumer]? A. I really don't know. Q. Is it possible that the vehicle -- that the dealings with [Purchaser 1] and his mother [Purchr. 1's mother] were, in fact, not concluded until after the vehicle was re-sold to [Consumer]? A. I don't know. Q. Okay. Were you involved in any way in

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51 making sure that disclosures of damage on vehicles would be given to purchasers if vehicles were known to have damage? A. I do disclose damage on vehicles. Q. How do you do it; in writing, orally, both, how? A. In writing. Q. Okay. And what kind of a form -- do you have a form that you use? A. Yes. Q. Okay. What does the form look like?

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A. I don't have one in here. Q. Okay. Would you describe it? A. Just a description of damage. Q. Is it 8 and-a-half by 11? A. Yeah, it's about the size of a regular piece of paper. Q. Okay. And what is it -- is this form from the Missouri Auto Dealer's Association, somebody like that? A. I don't know where it's from originally. Q. But what does it say at the top, Disclosure of Damage? A. Uh-huh. Q. Is that a "yes"?

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52 A. Yes. Q. Are you sure that that's what it says at the top? A. It's a damage disclosure. I don't know if that's what it says at the top. Q. Okay. And how long is the text, one sentence, one paragraph, several paragraphs? A. I believe it's a description of the damage, and I sign and the customer signs. Q. How long is the text; one sentence, one paragraph, several paragraphs? What? A. Probably a couple of sentences, because it's got the connection with the purchase room, and it's got the description of damage. I guess it could be a paragraph if you write in a paragraph in there, and then I sign it. Q. And it has a place in there for you to describe just what the damage is; is that right? A. Yes. Q. All right. Is your job to fill out what that description is, and to make sure that that document is given to somebody if you know a vehicle has damage? A. If I know the vehicle has been damaged, yes.

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53 Q. How do you get information that a vehicle has been damaged? You don't physically look at them yourself, do you? A. No, sir. Q. So you have a system where somehow you get that information from someone?

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A. Sometimes it should be on the stock card to where I look at it. If it hasn't, then I have to go by maybe the salesman sees something, or what have you, and tells me about it. Q. Okay. Is the stock card in the deal jacket? A. Of which case? Q. Well, here's [Consumer]'s deal jacket, Exhibit 105. Okay, what is the Bates-stamp number on that? A. 00183. Q. Okay. That's the stock card; is that right? A. Yes. Q. Does it show anything about damage? A. No, sir. Q. Who prepares the stock cards? A. The salesman.

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54 Q. Is the salesman responsible for putting the notation on there that there's damage? A. Yes. Q. Does the salesman always know if there's damage? A. They're supposed to, with the customer. Q. And who is the salesman who prepared that? A. Jeff Potter. Q. They're supposed to ask the customer if the vehicle has damage? A. Yes. Q. Does the Used Car Manager look for damage when they appraise the vehicles? A. Yes, sir. Q. And if the Used Car Manager spots damage on the vehicle do they make a notation on there? A. They do not. It's on a separate bid slip, I believe. Q. It's on the bid slip; is that right? A. Yes. Q. Okay. Now Exhibit or Page 186 and 187 are those bids slips on a vehicle? A. Yes. Q. Those are actually the bid slips on the vehicle that [Consumer] traded in; is that

55 correct?

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A. Yes. Q. If the bid slip shows damage, do you make sure that there's a disclosure of damage given to the buyer? A. I don't see the bid slip. I just see a copy of the card. Q. Okay. Let me make sure I have the system straight. You, Business Managers are the ones responsible to make sure that when there's known damage on a vehicle, it's given in a written disclosure to the buyer of the vehicle; is that right? A. Yes. Q. That's the standard practice all the years you've worked there? A. Yes. Q. And the way that you know about damage on a vehicle, is from the stock card; is that right? A. Yes, sir. Q. Is there any other source of information that you review or are given? A. Just the stock cards. Q. Just the stock cards. But you know that the bid slips sometimes show damage.

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56 A. Yes, sir. Q. Why don't you look at the bid slips? A. Because I look at -- because they're supposed to be on here, sir. That's what I go by. Q. They're supposed to be on the stock card? A. Yes. Q. That's what you mean when you said on here you were pointing to Page 183, the stock card; is that correct? A. Yes, sir. Q. Now is there somebody who's responsible for making sure the damage that's noted on the bid slip also gets transferred onto the stock card? A. The salesman, sir. Q. The salesman is responsible both to ask the customer if the vehicle has damage? A. Yes. Q. And if the bid slip shows damage, the salesman is responsible for writing that on the stock card? A. Yes, sir. Q. All right. Is there anyone else who has responsibility for making sure that the bid slip information gets transferred to the stock card? A. Not to my knowledge, just the salesman.

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57 Q. Now the salesman is doing a deal? A. Uh-huh. Q. The salesman gets a commission when deals happen? A. Yes, sir. Q. He doesn't get a commission when deals don't happen? A. Yes, sir. Q. The salesman has every incentive to make sure deals go through, correct? A. Yes, sir. Q. That salesman will see a deal evaporate if there is a disclosure of major damage on a vehicle; is that right? A. I can't vouch for the salesman. I don't know. Q. If it is known that a vehicle being traded in has major damage, will that effect whether a deal will be accepted? A. It just depends on the customer. I can't answer for the customers or the salesman. Q. Well, does the Used Car Manager routinely accept vehicles for trade-ins that have major known damage? A. That's a whole new case, because it just

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58 depends on if they're auction or whatever. If they have like 150,000 miles on them, I mean who -Q. They may be accepted if they're old enough, and they're going to be wholesaled, if they have major damage; is that right? A. It just depends on the mileage. If I have a vehicle that has 150,000 miles, we don't sell that. Q. So it's not uncommon that your dealership would accept a vehicle on trade that has had major damage to it; is that right? A. No, we do accept them. Q. Okay. And if it's had major damage, do you retail them? A. Yes, sir. Q. You retail some, and you wholesale others? A. Again, depending upon the mileage, and everything like that, yes. Q. Who decides whether it will be retail or wholesale? A. It's a case-by-case basis. Like if a vehicle is kind of old, but has got low mileage on

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it, then yeah. Q. It will be -A. Sold retail.

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59 Q. And what about major damaged vehicles? Who decides whether those will be sold retailed or wholesaled? Is it on a case-by-case basis? A. Yes, sir. Q. Who decides what work will be done, if any, on a vehicle that has major known damage? A. Who decides on the work? Q. Yes. A. The re-conditioning people. Q. Okay. Is the Recon different from the Service Department? A. I think the Recon tells it where to go and stuff. I don't know exactly how it works. That's not my department. Q. Okay. Now if a vehicle, when the vehicle is bid, does the Used Car Manager make a decision as to whether the vehicle will be wholesaled or retailed? A. Yes. He would mark his opinion, I believe, but again I don't know exactly how that works. I'm just in the Business Department. Q. Okay. Is there any other place that you know of where records are kept showing whether a vehicle has been damaged? A. As far as my knowledge, just on the bid

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60 slips, and on these, which is the 00183 on the bid slips. Q. The stock cards? A. Yes. Q. Are the salespersons trained as to what information has to go on the stock cards? A. Yes. Q. Were you trained about that? A. Yes. Q. Who trained you about that? A. Mr. Jachaway. Q. Okay. On this stock card there are two or three kinds of handwriting. A. Okay. Q. Do you know which of the things on the stock card would have been written there by Jeff Potter?

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A. I really can't remember his handwriting. Q. Which parts would normally be filled out by the salesperson? A. Year, make and model. Q. At the bottom of it? A. Yes. Q. And the received date? A. Yes.

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61 Q. And the stock number, who would write that in? A. The salesman. Q. How about the part at the top that shows "[Purchaser 2]: Bought from," who would have filled that out? A. The salesman. Q. And the salesperson would put the salesman's name and the serial number on it? A. Yes, sir. Q. Now there is on the right-hand side a base number. A. Yes, sir. Q. That's an appraised value, is that right? A. The value, yeah, that's the value of it before it goes through the shop and everything else. Q. And that value comes from the bid slip? A. Yes, sir. Q. The column under that, "Jeff P," do you see three entries there? A. Yes, sir. Q. What are those entries? A. It shows, "Service department, Bodyworks and Classy." Q. What do those entries mean?

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62 A. The Service Department, I think that's where they take the vehicles, and do the service work on them. Bodyworks is if it needs touchup, or if it's been wrecked, or they need to repair scratches or something. Classy is like the detail shop. Q. Bodyworks is an outside body shop? A. Yes. Q. Not at your dealership? A. Not to my knowledge, no. Q. You have a body shop at your dealership, though.

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A. Yes, sir. Q. Why would you have work done at Bodyworks, instead of at your dealership? A. I don't know, sir. Q. Who makes that decision? A. I believe it to be the Recon Department. Q. What is the Recon Department? Is there an office? A. They're the people that tell the vehicle to go here or there. They're responsible for where it goes. Q. Is there a Recon manager? A. I don't know who the exact manager is.

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63 There are three or four people that send them different places. I don't know if one is a manager or not. Q. Are they under the Used Car Sales Manager? A. I guess you could say that. It would be under a lot of people. Q. Do they have titles, these people in the Recon Department? A. No, not to my knowledge they don't. Q. Is there a Used Car Manager at the dealership now? A. I think it might be the Roger Porter that purchases most of all the used cars. Q. These Recon people are they under Mr. Porter? A. Well, yeah. Q. Do they work in the same area? Where do they work? A. They work inside the sales office. Q. The used car sales office, or is it all one office? A. It's all one office. Q. Okay. Do they have a corner of it? A. Yeah, they have a corner. Q. And that's the Recon Department?

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64 A. Yes. Q. And they're under Mr. Porter, Roger Porter? A. Everyone is underneath Mr. Porter. Q. Okay. Is there anyone else they're underneath? Are they under Mr. Jachaway? A. They would probably be underneath Mr.

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Jachaway, too. Q. Are they underneath you? A. That's not my department. I mean I'm a manager, but they're not -Q. Normally on these stock cards would these entries, like on this stock card, Number 183, are the Service Department, Bodyworks and Classy entries in the middle of that card towards the top, would those have been written down by the Recon Department? A. Yes, sir. Q. But you don't know who in the Recon Department? A. No, sir. There's a lot of different people. Q. Bodyworks suggests the possibility of a vehicle having damage; is that fair to say? A. Yes, sir.

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65 Q. So did you, using this card, did you prepare any damage disclosure? A. No, sir. Q. Why not? A. I didn't know the extent of the damage. I think it was just a scratch. Q. How did you know it was just a scratch? A. Because on the -- I don't know if we had to fix it for the customer, but I do remember there was a scratch on it. I don't know if I had to disclose a scratch or something like that. Q. How did you know there was a scratch? A. I think maybe the customer might have said something, there might have been a scratch on it. Q. [Consumer], the purchaser, might have said -A. When I was looking through the -- [Purchaser 1], it showed there was a scratch on it, so that might be what stuck in my head, that there was a scratch on the vehicle. Q. Do you regard it as your job to make sure that all known damage on a vehicle is fully and accurately disclosed to a prospective buyer? A. Yes, sir. Q. So you're saying as we sit here today that

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66 when you looked at that stock card, you didn't know what damage it had. You just knew that there was

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reason to believe that it had damage? A. I don't know when that was written on there. It might have been written after the fact, after the sale, or if they would have sent it down there then or not. I don't know. I can't remember. Q. Normally would entries by the Recon Department be made before the vehicle is sold? A. It just depends on how quickly it gets sold. I don't know. If this sheet comes in to me blank, I'm led to believe there's no damage. I don't know if after the deal was done, or anything, they were going to send it there or not. I don't know. Q. Couldn't you have taken the class and looked at the bid slip? A. No. Q. Why not? A. Because I had the copy of the card, and that's what I go by. Q. That stopped you from looking at the bid slip? A. That's -Q. The fact that there was a stock card, did

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67 that prevent you from looking at the bid slip? A. Yes, sir. I don't look at bid slips. Q. Why not? Is it too much work? A. No, it's not too much work. I just go by off of this. Q. And you looking at -- if those entries were on there, you wouldn't have known how much damage it had, correct? A. If they were on there, correct. Q. All right. Normally is Recon done before a vehicle is sold or after you have sold a vehicle? A. It just depends on how quickly it gets sold. Q. Don't you normally recondition a car in order to sell it? Isn't that why you do re-conditioning? A. Normally, yes. Q. So normally these entries would be on there before the vehicle is sold, correct? A. Normally, yes. Q. All right. Now was there another stock card on this vehicle for these other -- for the other dealer, or should there have been only one stock card? A. It just depends if one got lost or what

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68 have you. Q. Ordinarily should there be only one stock card on a vehicle? A. Yes. Q. From when it's traded in, to when it's re-sold? A. Yes, but sometimes it might get lost, the salesman might put it somewhere and might lose it, we might have to do another one. Q. Do you normally lose them? A. No. Q. Is the stock card normally kept in the jacket? A. Usually copies. The yellow cards don't get pulled until the sale goes down. Q. Now to your understanding are the vehicles that are received on trade-in given an inspection to look for the possibility of wreck damage before they will be offered for resale? A. I don't know the process. Q. Is it important at your dealership, so far as you know? A. As far as I know, yes, it's important. Q. To make sure to find out if a damage has damage before reselling it?

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69 A. Yes. Q. But you don't know what process is pursued at your dealership, is that what you're saying? A. Yes, because I'm in the business office. It's a different department. Q. When you worked there in sales, did you have any idea of what was done to prevent -- to check on vehicles that were going to be offered for resale, to see if they had wreck damage? A. Just by the bid slips and when they look at them. Q. So the bid slip was the main way that you knew? A. Yes. Q. As we speak today, is your standard practice in your every day work that you don't look at bid slips; you'll only look at the stock cards to see if the vehicle has previous wreck damage? A. I myself do, yes, just myself. Q. You only look at the stock cards? A. Yes. Q. Do you think after our discussion today perhaps you'll change that, and start looking at the

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bid slips, too? A. I don't know.

I will keep on looking at

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70 the bid slips, or the yellow copies of the cards. Q. We're going to take the time. The bid slip, when a vehicle is received on trade, will that accompany the documents that you have when you're doing a deal to re-sell that vehicle? A. Can you explain that to me? I'm sorry. Q. If you're doing a deal to re-sell a vehicle, a vehicle that's been received, Mr. A trades a vehicle in, and you're reselling the vehicle to Mrs. B. A. Uh-huh. Q. Will you have a copy of the bid slip in your paperwork? A. No. In my paperwork? Q. Well, in the paperwork that is available to you relating to this vehicle. A. I'm sorry, I'm just not understanding you. Q. You're the Business Manager. A. Uh-huh. Q. You're working a deal to sell -- the vehicle has been traded in by Mr. A; a couple of weeks later you're selling it to Mrs. B. A. Okay. Q. The stock card is available to you? Is that correct? Is that available to you?

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71 A. The stock card is, yes. Q. Okay. What other documents are available to you? A. When I sell a vehicle? Q. Yeah. A. Credit applications and so forth like that, the paperwork. Q. Okay. A. And maybe the bid slips to the deal. Like if a customer has a trade-in, then I'd have their bid slip in there. Q. Yes. Anything else? No other documents? A. I don't know what you're asking me as far as what kind of documents. Q. Is the bid slip, when the vehicle was traded in by Mr. A, you understand Mr. A traded the vehicle in, and you're selling the vehicle to Mrs. B?

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A. Uh-huh. Q. The vehicle is bid when it's traded in. That's when the bid is done, correct? A. Uh-huh. Q. And that's when the bid slip is prepared; correct? A. Correct.

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72 Q. Is that available to you? A. No. Well, I mean I can go and find it, but it's not in the packet automatically, no. Q. Where is it? A. It's in the sales office. Q. Okay. And what -- is it in a folder? A. I don't know exactly. If it gets full, it might go in the deal jacket upstairs, along with the title and paperwork for that trade-in. Like if we don't trade for it, it stays in the office, but if we do trade for it, I believe it does go upstairs into its own separate deal jacket. Q. Okay, so tell me where the bid slip goes, if Mr. A trades a vehicle in and the bid slip is prepared. A. This slip goes in that deal, and when the deal goes upstairs, I don't know how the process works up there, who takes it or what, I don't know how that process is, but I do know it goes upstairs. I mean upstairs to the Business Office, as far as billing out and title and stuff like that goes. Q. At the time that the bid slip is prepared is the salesman present when that's prepared? A. He's the one that fills it out.

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73 Q. And the bid slip? A. Uh-huh. Q. I thought the bid slip was filled out by the Used Car Manager. A. No. Someone has got to get the information, like the VIN number, miles, and so forth. Q. Who gets the bid slip? A. Roger Porter or Steven Porter. Q. Okay. From Exhibit 107, the [Purchaser 2] file, I'm looking at Page 65. Is that the bid slip on this vehicle? A. Yes, sir.

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Q. Page 67 and 66, are these different copies of it? A. I believe they're the same copy as the copy G. Q. On 67, do you see the circled "ACV" written in the middle? A. Yes. Q. Who wrote that? A. I guess Roger Porter. Those look like his initials. Q. Now there was an original of this somewhere, because that's a carbon. Do you see

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74 that's a carbon? A. It looks like this would be the original. Q. Well, except there's one problem. On the original that entry doesn't appear. A. Okay. Q. Do you have any idea how many parts are there to that form, just two, white and yellow? A. Yes. Q. Do you have any idea how it happens that that ACV only shows up on the carbon, but doesn't show up on the original? A. Because that's the way he writes it, and then we write it on the back of the original. Q. Of the original, the white copy? A. Yes. Q. Okay. Do you see those entries on this page? I'll refer to Page 67. Do you see these entries in the middle of the page, "Buyer's Re-conditioning Report"? Do you see those? A. Uh-huh. Q. Make sure you say "yes" or "no." A. Yes, sir. Q. Would you read those, and tell us what you understand them to be, and you can look at 66, if that would help.

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75 A. Yes, because that's a carbon. It has something to do with the right side fender, the rear quarter, and then we've got to Dr. Dent the hood. Q. Something to do with the right side rear quarter? A. Yes. Q. If you knew of those entries, would you have given a written disclosure of damage on this

40

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vehicle? A. Yes, sir. Q. What would you have written on a disclosure of damage, if you knew of those entries, or would you have inquired to get more information? A. I probably would have inquired, and asked exactly what was wrong with it, what would be listed here, and I would take that, and just transmit it over to the sheet that I have signed. Q. So if you saw those entries that are shown on Pages 66 and 67, that bid slip, you would have inquired further to find out just what the damage was? A. Yeah. It looks like something with the right side fender and rear quarter. As far as what it was I would probably inquire just to make sure it wasn't serious or what have you.

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76 Q. Who would you ask? A. I would probably ask the salesman or maybe even the re-conditioning person to see if they might remember it or something. Q. Okay. And just with that information what would you have written on a disclosure of damage? A. I probably would have found out about it before I wrote it down because it seems kind of vague. I would want to make sure to get it exactly right. Q. Okay. By the way, do you know Mr. Potter very well? A. He was a salesman with us. I sold cars with him. Q. You are familiar with your dealership's use of referrals from companies like Auto-By-Tel? A. I know we use them. I don't know what the process is on it, though. Q. Okay. A. I know we have a separate department like Internet Department, or what have you. Q. Have you ever been instructed in what the law requires about -- what the law requires with respect to running someone's credit report? A. I have to have a signed application on it.

Q.

77 Who instructed you on anything to that

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effect? A. Back when I first sold vehicles, Mr. Jachaway. Q. Okay. And that's your understanding through this date, that you've had that understanding all along that that's required? A. Yes. Q. I may have asked you this and bare with me if I'm being repetitious. I just want to make sure I understand. Over the last four years have you run credit reports yourself? A. No. Q. Have you asked anyone else to run credit reports on occasion for you? A. No. Q. You've not been involved in running credit reports? A. No, sir. Q. And who would we talk to to find out about that, about running of credit reports by your dealership? A. Probably the salesman. He could probably tell you how to do that. Q. Is there a manager in charge of credit

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78 reports, requesting credit reports? A. We don't have per se a credit report manager, no. Q. Is it important to your understanding at your dealership to comply with Federal law in pulling credit reports? A. Yes, sir. Q. Do you get that information from -- is that made clear by the Porters that you're to be complying with Federal law? A. Well, yes. Q. Okay. So they would be aware of what the procedure is? A. The Porters or the salesmen? Q. The Porters? A. Yes. Q. How do you keep up to date on what the legal requirements are with respect to your work? Do you get publications from the State dealers, the dealer licensing people in Jeff City? A. We do get some sometimes like that Graham Leach billing deal, we were told about that. Q. Graham, Leach, Blighly? A. Yeah, I'm sorry, if I'm pronouncing it wrong or said it wrong.

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79 Q. You were told about that by something that you got from the State? A. From the State, and it was passed from the State to Mr. Jachaway, and Mr. Jachaway went over it in the meetings with us -Q. Okay. A. -- in our Monday morning meetings or Saturday meetings. Q. All right. And do you get any other bulletins of any kind from any dealer organizations that would help you keep up-to-date on the law? A. Again, like I said, when we got those one forms, the Graham, Leach billing whatever it was, they do inform us when we do get certain bulletins, and stuff like that. Q. Who's "they"? A. Whoever receives it gives it to Mr. Jachaway, and Mr. Jachaway goes over it with the salesmen and the Business Managers in the meetings. Q. Okay. On this [Consumer] deal, there were credit reports pulled with respect to [Consumer]; is that correct? A. Yes. Q. And would those have been with your paperwork at the time that you were dealing with

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80 her? A. The credit application, yes. Q. And you how about the credit reports? A. Yes. Q. Who would have put those in the file? A. The salesman. Q. Mr. Potter? A. In which case? Q. I'm sorry, the salesman on this, Gene Burgen sold this to her, didn't he? A. To [Consumer], yes. Q. Okay. By the way, do you know Gene Burgen? A. I've worked with him. I don't know him personally. Q. Has he been fired? A. I don't know what the reason for him leaving was, but I know he doesn't work for us anymore. Q. Do you know where he works now? A. No, sir. Q. Do you know anybody who is personal

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friends with him? A. No, sir. Q. Okay. Give me some idea of the volume of

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81 referrals you got from people like Auto-By-Tel over these past four years. A. Over the past four years, what kind of number? Q. Yeah. A. I really couldn't tell you to be honest. I couldn't tell you. Q. Who handled those, the referrals, who would have received them? A. I know Auto-By-Tel is by the internet. I don't know if the Internet Department would have received those or the salesmen. Q. There's an Internet Department? A. Yes. Q. Who is in charge of that? A. I believe the name is Dale Peters. Q. Dale Peters? A. Uh-huh. Q. Make sure you say "yes" or "no." A. Yes, sir. Q. How long has Dale Peters been with the dealership? A. Three or four months. Q. Do you know who was in his position before that?

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82 A. Jim Moshier, was it, beforehand? MR. JACHAWAY: I can't answer that. MR. BROWN: Well, if you know you may as well tell me. MR. TYRL: You mean it's okay if he -MR. BROWN: If he pipes up with information like, that we're trying to sort out that should be in interrogatory answers, yeah. MR. JACHAWAY: Oh, well, I didn't know that or I could have assisted you on several occasions. MR. BROWN: Okay. MR. TYRL: Mr. Brown is being somewhat facetious, but if you recall the name of the -MR. BROWN: Internet Department person. MR. JACHAWAY: Well, we've made quite

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a few changes, and Mr. Peters is one of them. He's over the department. We've had a couple of salespeople with the title of Sales Director in that department, and the one that oversaw the department at that time was really Andy Marinaro, and then since some of our process changes that we put into place, we brought Mr. Peters in.

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83 MR. BROWN: Okay. Is Andy Marinaro still there? A. Yes, sir. Q. (CONTINUING BY MR. BROWN) Who handled requests to banks or lenders with respect to [Consumer]'s purchase? A. Who called in her deal to the banks? I did. Q. Yeah, okay. You have the paperwork from her deal jacket available to you? A. Yes, sir. Q. Can you -- why don't -- I would suggest we take a break to give you long enough to look through it. You haven't had a chance to look through this deal jacket recently? A. I looked through it, but I didn't look at anything in particular. I was just trying to familiarize myself with the deal. Q. I'd like to take a break long enough to give you long enough to look through this, and pretty well familiarize yourself with the financial dealings, because I want to ask you questions about what happened, who you contacted, who the financing was with, everything.

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84 MR. TYRL: Why don't you pull out everything related to the financing. (Recess.) Q. (CONTINUING BY MR. BROWN) We're back after a break. You've had time now to look through [Consumer]'s file, Exhibit 105, to look at the documents related to doing the deal, the pricing, the credit reports, financing and etcetera; is that right? A. Yes, sir. Q. I'm going to do a quick synopsis of what

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some of these documents are. Page 127, is that your F&I recap sheet? A. Yes, sir. Q. Now Pages 133 and 143, would you state what those are? A. I have an invoice, a buyer's order, and a recap sheet. Q. Okay. 133 is what you call a sales invoice? A. Yes. Q. And 143 is the buyer's order? A. Yes, sir. Q. And then 130 is a retail installment

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85 contract? A. Yes, sir. Q. 167 and 180, these are two credit reports, is that right? A. Yes, sir. Q. 131 is her credit application? A. Yes, sir. Q. 165 is a Fairlane credit approval; is that right? A. Yes, sir. Q. From looking at these documents -- strike that. Let me start over. You don't have any actual recollection of the dealings with [Consumer]; is that correct? A. No. Q. And in looking at the documents you can piece together reasonably well what happened but you don't -- they don't bring back an active memory of what happened, is that fair to say? A. Yes. Q. Okay. So looking at these documents when you first were informed of [Consumer], what would your first knowledge have been of M[Consumer]'s interest in buying a car? Someone would have told you something or

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86 someone would have handed you something or what? A. Someone would have handed me an application and the credit bureaus to take a look at, along with the deal jacket. Q. Okay. The credit application like Page 131? A. Yes.

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Q. That typically would be the way you would have found out about someone like that? A. Yes. Q. And as far as you can tell from looking at this, that would have been the first you knew of her? A. As far as I can tell, yes, sir. Q. Okay. Do you see the credit application is dated July 8th? A. Yes, sir. Q. Normally when you receive a credit application, do you also receive credit reports at the same time? A. Yes. Q. So they have already been run by the time the -- by the time you get any -- you know about the prospective buyer? A. Yes.

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87 Q. Okay. So what else would you normally receive right at the beginning, the credit app, credit reports, what else, anything? A. No. If they know they have bad credit, then they bring in paycheck stubs and stuff like that, but as far as I can tell just the credit report and the credit application. Q. Okay. Now do you see the date on this credit report? A. Yes, sir. Q. This was -- what are the dates on these two credit reports? By the way, for the record, we're referring to Pages 167 and 180? A. It shows to be 7/6. Q. All right. And the date of this credit application again is -A. This one is 7/8. Q. Okay. You say "this one." A. Uh-huh. Q. Are you saying there was another one? A. I don't know. But as far as what I could tell, this one shows 78. Q. All right. A. I don't know if -Q. Is your dealership in the -- does it

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88 engage in the practice of destroying credit applications?

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A. No, sir. Q. So as far as you know that was the credit application, correct? A. Yes, sir. Q. Now that's dated after those credit reports were run. Do you have any explanation for that? A. No, sir, not unless they had to re-do the application because they marked something down wrong, or when they actually got to the dealership she might have changed something around. I don't know. I don't know if it was messy, or if not. I don't know, sir. Q. If they re-did the application, they don't destroy the other application, do they? A. No, sir. Q. So if there's no other application in this file then this doesn't make sense, does it? A. Somehow it might have got misplaced or anything like that. I don't know. Q. Now so you would receive a credit application and the credit reports and no other papers; is that right?

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89 A. Correct. Q. Would you be told what the deal was that the person was striking, how much they were buying the car for, or would you be told what they could make in the way of payments, or would you be told anything at all? A. Sometimes I'm just asked to see if I could even get it approved. Q. Get what approved? A. Her loan to purchase a vehicle. Q. But how do you even know how much the loan is for? A. I don't. I just call in to see if they'd even approve it. Q. Okay. Do you know whether you're trying to get somebody approved for a $1,000 loan or a $40,000 loan? A. I just basically call in to see if I can get an approval for any kind of amount. Q. Okay. So at this point you typically will have received a credit application and credit reports and you will call around to see if you can get the purchase approved? A. Yes, sir. Q. Now can you tell from looking at these

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90 things whether you called around, looking at all of these documents? A. It looks like I just called the Fairlane credit. Q. Okay. A. Because that's the only approval that I have. Q. Now you're looking at page what's marked 165; is that right? A. Yes. Q. Was there one particular person that you dealt with usually at Fairlane Credit? A. There were several. Q. Who were they? A. First name Casey, and Justin, and -Q. Casey is a he? A. Yes. There are just several different buyers there, not one in particular really. Q. Did you know him? Did you ever meet any of these people? A. Over the phone. Q. Yeah, but in person did you ever meet them? A. Yeah, one came down and visited Kansas City.

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91 Q. Who was that? A. That was Justin. Q. Okay. So Casey and Justin, and who else was there that you dealt with? A. I mean there was probably about maybe six or seven people. Some of them aren't there. Some of them still are. Q. Okay. Where is their office? A. In Colorado Springs. Q. Okay. So describe to me how typically since you don't remember this transaction, describe to me how normally -A. How I would take a look at the file? Q. Yeah, just a discussion of how this would have transpired. A. Basically just look at the vehicle to see what I think I can get it approved at, then I'd call into that bank. If they approve it, great. If they don't, then I'll try somewhere else, or what have you. Q. But again, don't you have to have some idea of how much financing the person is going to need and the car that's going to be involved?

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A. No, sir. I don't get that liberty. The bank usually tells me how much they can afford.

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92 Q. Okay. So what would you look at on these credit reports? A. I will look at how long she's been on her job, and I would just kind of take a look at the application, and take a look at the Credit Bureau. I'm kind of surprised I even got this one approved, to tell you the truth. Q. Because why? A. Because of the credit circumstances on this one. Q. What are you referring to? A. Do you want me to list everything on there of what I see was derogatory? Q. Sure. A. She had a bankruptcy that was dismissed back in 7 of '98, meaning she didn't go through with the bankruptcy and take care of obligations, because they're still on here. I seen a collection account for $526 from Fitness for Her. I see another collection account for $674 at North Kansas City, I believe it to be maybe Hospital or something like that, but it is a collection account. Meyers Women's something, I see another collection on that one. Another one for Fitness for Her. It looks like two or three more from the North

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93 Kansas City maybe Hospital, what have you. She didn't pay those bills. Hospital -- another hospital bill for $31 that she didn't pay. And then I go on down and I take a look and I see a Household account, an automobile loan that she had that was repossessed, and they had to charge off the account. Q. Okay. There's handwriting on this Page 180? A. Uh-huh. Q. Make sure you say "yes." A. Yes, sir. Q. Do you know whose handwriting that is? A. No, sir, I don't, but it might be the salesman's. I'm not for sure of that. Q. All right. And what does the handwriting indicate? A. It shows it was $7,900 and it shows "bad,

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lost job." Q. Okay. All right. A. Yes. Q. -- on this? A. Yes. Q. What's the score? A. 431.

So is there a score --

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94 Q. What's the name of that kind of score? A. The Beacon Score if I remember right, yeah, Beacon Score. Q. So you would have looked at those credit reports, and then what? A. Looked at where I thought I could get it approved at. Q. And you thought you could get it approved at Fairlane? A. Yes. Q. So you would have then called Fairlane? A. I would have submitted it, called Fairlane, and it looks like they approved it. Q. Would you have faxed something to Fairlane? A. The application. Q. This credit application? A. I don't know if it was that one or another one, but I know I faxed over an application. Q. Do you keep records of what you faxed to them? A. Records of -Q. Well, something showing what you faxed to them and when you faxed them? A. No, sir, I don't.

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95 Q. Your dealership doesn't keep those records? A. Like confirmation sheets or anything? Q. Anything. A. I don't keep confirmation sheets, no. Q. Do you have any other record showing what you faxed them, when you faxed them? A. No, sir, I don't. All I know is I just faxed the credit application, and that was it. Q. Okay. And then would you follow up on that with a phone call or would you -A. I would maybe wait and see what they had thought, but in this case it looks like they

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approved it, so I didn't really have to call. Q. Okay. The approval you got back was Page 165? A. Yes, sir. Q. All right. Now could you walk us through this Page 165, and tell us what this means, what these things mean on it, because obviously for a judge and jury they wouldn't be familiar with this particular form. A. What it is is an approval form that has the customer's name, what kind of program she got approved for, it's got the fee on there of how much

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96 they take out of the deal for them, as far as like -- just like an extra fee. Because they figured that this was probably going to be a loss. That's why they wanted some money up front. It's got the term of the loan, how long they want it to go. Q. I want you to slow down just a second there. The program she was approved for was Fresh Start? A. Uh-huh. Q. Make sure you say "yes" or "no." A. Yes, sir. Q. Up above there it says, "From WD." What's WD? A. I don't know, sir, what that means. Q. Okay. Do you see a reference number? A. Yes, sir. Q. What's the reference number? A. That's the number that they associate the customer with. Q. Okay. All right. So it says, "Program: Fresh Start." Now did you have a manual or anything that told you what the Fresh Start program was? A. Yes. Q. What was the Fresh Start program?

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97 A. The Fresh Start program was for four years, because that's the longest they're wanting to do on it, because they're taking a chance on the file. Also with an 11 percent fee, that's part of the Fresh Start file also. Q. What do you mean an 11 percent fee? A. That's what the bank wants up-front in

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order to do the loan. Q. The bank wants to be paid? The bank wants to receive 11 percent -A. Up front. Q. -- of the amount financed? A. Yes. Q. Do you mean that's how big the down payment has to be? A. No. Q. Okay. What do you mean? A. That means -- I don't know how to explain it, but that's how much the bank needs in order to finance because of the program. The program calls for an 11 percent fee, so that's a fee we've got to take out of our gross to give them to do the loan. And also with the Fresh Start, they don't

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98 do too many of these anymore, but it was 24 percent interest, which was the State max, I believe, and it shows on the contract that I did it at 22 percent, so I must have called up the bank to see if I could get even a little bit lower for her, but the program states 24 percent in there, so it looks like I kind of helped her out on the interest rate to help get the payment where she needed it to be, or what have you. Q. The program states 24 percent? A. Yes, sir. Q. All right. Keep going through these things. What's "Miles PRG." A. Program, which means 48 months. Q. What did you -A. I'm sorry, 48 months, and the program has got to be like less than 50,000 miles, and that's the Fresh Start program, because Fairlane has several different programs, but in this case this one was the worst because of the credit. Q. The "unpaid balance"? A. 115 percent. Q. What does that mean? A. Like 115 percent of NADA. Q. NADA what?

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99 A. Trade-in value. Q. That is that the vehicle couldn't be sold for more than that, or that the unpaid balance

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couldn't be more than 115 percent of the NADA? A. As far as the vehicle can't be sold for more than that. Q. Wait a minute. So when it says "unpaid balance," that's like the sale price? A. Of the vehicle itself, yes. Q. Unpaid balance sounds like loan balance. A. If you look on the bottom it says, "Total amount financed of 130 percent, includes tax, license fees, and optional products," like the extended warranties, what have you. The credit went up to 130 percent, but they're saying 115 percent on there as far as the front end. The total amount financed was like warranty or gap insurance or something like that added onto it, I could have went up to 130 percent on this particular loan. Q. Right, but the unpaid balance of the loan equals 150 percent of the NADA -A. Of the vehicle itself. Q. Of the trade-in value?

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100 A. Yes, sir. Q. So if there's -- the larger the down payment then the more the person could afford in the way of a car? A. Yeah. If she had $5,000 down or $10,000, yeah. Q. Okay. A. It would make a difference. Q. All right. Payment $275, monthly payment, that's the maximum she would qualify for? A. Yes. Then you skipped the amount financed, and that's 130 percent of the total front and back end. Q. The buy rate and the APR you're saying those are program rates? A. Yes. Q. And the buy rate was what? A. 24 percent. Q. And the program rate or the APR? A. The program rate is 24 percent, because that's the highest that it is, because of her credit circumstances, that's how much they wanted her to pay for the vehicle. Q. Okay. And they require a 15 percent cash down payment?

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101 A. Cash or trade-in equity. Q. Okay. And you have the Retail Installment Contract? A. Uh-huh. Q. That's Page what? A. 130. Q. What were the monthly payments? A. $284.04. Q. How do you explain that when the maximum is $275? A. I called them up after the fact and got it re-hashed to get to that payment amount. Q. So you got some oral allowance to do that? A. Yes. Q. Do you keep any records of conversations like that? A. I mean I kind of take their word for it. Q. They say it's going to be approved, and you take their word for it? A. Uh-huh. Q. Make sure you say "yes" or "no." A. Yes, sir. Q. Now you say that you did some other things for her. What were the things that you did for her? A. It looks like I got her interest rate down

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102 22 percent, to try and achieve that payment for her on the Cavalier. Q. How did you do that? A. Another conversation with the bank, probably the same conversation I had with them about the payment. It would go something like this, "Could you help out a guy, and drop the interest rate down a couple of points to help her out?" Q. Okay. All right. Again, you wouldn't have any notes or anything of that kind relating to who you spoke with or what the deal -A. It probably might have been Justin or Casey, one of the two. Q. Okay. All right. And you got that approval? A. Uh-huh. Q. And then you did the deal; is that right? A. Yes, sir. Q. Okay. Let's go to this F&I recap. A. Uh-huh. Q. Would you walk us through this Page 127, and tell us what this indicates in terms of profit

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and loss on the vehicle? A. It shows a profit $1,903.64. Q. Calculated how?

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103 A. Sale price of the vehicle, minus cash and trade, how much we had in the vehicle, comes up to $1,903.64. Q. Okay. The sale price of the vehicle is $12,287; is that right? A. Correct, sir. Q. And how much did you have in the vehicle? A. It shows $7,762.89. Q. Okay. So you calculate the profit that you make on the vehicle by taking the sales price, and subtracting from that how much you have in the vehicle; is that right? A. Yes, sir. Q. Okay. Anything else? Is there something I'm missing? A. No. Q. Okay. Well, that's not $1,900. A. The $12,287 minus -- well, you've got to take into consideration the trade and down payment and stuff. It shows a total of $1,903. I'm really not used to these cap sheet. I just print one up, and I sent it upstairs so the girls upstairs know how to cost out the deals. This is kind of what it looks like, $12,287 is how much we sold the vehicle, $7,762.89

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104 looks like how much we had in the vehicle. $1,500 for the trade-in, $500 cash down. When I look at that that kind of tells me how much the profit is. But again, I don't use these; I just send them upstairs, and that helps the girls upstairs cost out the deals, I believe. Q. You print them out? A. Yes. Q. Who puts the number in as to how much you have in the vehicle? A. Sometimes it's already in the system of -like I say if like I'd get some floor mats or something like that, they would include that into the price, or what have you. It's all done through the computers. Q. Is that the same way it's been all of these past four years?

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A. Uh-huh. Q. Make sure you say "yes" or "no." A. Yes. Q. Do you have any records that you can refer to that tell you how much is in this vehicle? A. As far as I can tell, $7,762.89. Q. Yeah, but what is that composed of? A. I don't have any records in here. I mean

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105 they might keep their own in the deal. Q. Who is "they"? A. Like at work. Q. I understand at Thoroughbred. A. Uh-huh. Q. But who keeps track of how much money is in the vehicle? A. The ladies upstairs. Q. They have that on the computer somehow? A. Yes. Because they have got to cost everything -- I mean I could tell you how they do it, but I might be telling you wrong, because I don't know how they do all of that stuff. Q. Are you fairly good at math? A. Yes. Q. Can you tell me again how that $1,903, where that $1,903 number comes from? A. I usually look at my screen. I don't really look at this right here. By looking at the screen, it has it all set up that way on my computer. Somebody might tell you a little better than I would, because I'm not for sure about it. But it looks to me like we have a sales price of $12,287, I see the $1,500 trade-in, I see

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106 the $500 customer cash, that leads me to believe that the $7,762.89 is how much we have in the vehicle. Q. Correct me if I'm wrong, but if you sell a vehicle for $12,000, and you have $7,000 in it, that's a 5,000 profit. A. No. Q. No? Because why not? A. Because the cash down in trade. I mean it looks to me like we allowed her $1,500, but if I take a look at her bid slip it shows $500 down. Q. All right. Let's pull the bid slip out.

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This is the bid slip. A. Uh-huh. Q. We're referring to Page 186. A. And 187, too, and it shows $500, just like on the last of that we went over. That's how much the owner put in the vehicle, and that's how much is on the back of the original copy, so it looks like we kind of over-allowed on her trade-in. Q. By how much? A. It looks to me like $1,000, because it shows $1,500 on the contract. Q. Uh-huh. A. So we over-allowed it $1,000, $1,500 for

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107 the vehicle. Q. By the way, let me back up to something. When Fairlane approves this, they require a certain amount be paid down on a transaction, right? A. Through trade-in or customer cash. Q. Do they permit you to inflate the cash value of the trade-in to whatever figure you want? A. Yes, sir. Q. You could have allowed $10,000 on this trade? A. I could have sold it to her for $22,000 and showed $11,500 for the vehicle. Q. And for this vehicle? A. It shows $1,500. Q. I know, but you could have allowed on this vehicle $10,000 on this trade-in of hers shown on Page 187? A. No, $500, please don't get me wrong, that's how much the vehicle is worth, and that's how much it's going to be worth no matter what. Q. Okay. A. But on paper, I can show it that way. Q. You can show and represent to Fairlane that she is actually paying down more when she trades in the car than $500?

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108 A. Sure. Q. How much? Can you show that she's actually paying down $10,000 by trading in this vehicle? A. If I'd like to. Q. And if we call and talk to Casey and Justin and tell them that you're taking a vehicle

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that you believe is worth $500, and you're listing it as being worth $10,000, they will accept that? A. Yes. Q. So the lender really doesn't particularly care at all what kind of value you're getting in the way of down payment on these vehicles? A. They don't care how much we've got in the vehicle. I mean if it shows 15 percent down in the contract, then that's 15 percent down. Q. And they don't care -- let's say that there was no trade-in. If they show that you had to have 15 percent down, would that mean like on a $10,000 car the person would have to pay $1,500? A. Correct. Q. So if you had a -- if you didn't have a trade-in, but you had somebody putting cash down, would they care if they found out that the person didn't actually put any cash down at all?

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109 A. But she did. Q. I'm asking. They would care? A. About the cash, yeah, but trade-in, no. Q. So if there's a trade-in, let's say again it's a $10,000 deal, and let's say they're requiring 20 percent down. A. Okay. Q. And your people have looked at the vehicle, and you believe the vehicle is worth $200. A. Uh-huh. Q. Would that bother them that you listed the vehicle as being worth $2,000, when it was actually -- when you bid it and believed it was only worth $200? A. Who would that bother? I'm sorry. Q. The lender. A. No. Q. Doesn't the lender want to have a significant value in down payment as part of what ensures them that overall they're making a good loan? A. Just as long as it shows on there. I can't speak for the lender, sir. I don't work there. Q. Okay. So in point of fact, this vehicle

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110 wasn't worth $1,500, you're saying? A. Correct.

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Q. It was worth $500; is that right? A. Yes. Q. Did she pay any cash down? A. $500. Q. What record do you have of that? A. It looks like she gave us a $500 check. Q. Okay. A. Yeah. Q. You have a record in the file of that? A. (Witness nodding head affirmatively). Q. That's Page 179? A. Yes. Q. Is that right? A. Yes. But in respect to that trade-in, too, say you came into my dealership and I was giving you $5,000 for your vehicle, and you say, "Is that all?" and I say, "What if I give you $5,500, and what if I lose money on it?" Who cares what the trade-in is worth, just as long as you're happy, and [Consumer] was happy with that. Q. Now when the loan is sold to Fairlane -A. Uh-huh.

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111 Q. -- a payment had to be made to Fairlane; is that right? Was there a payment made to Fairlane? I mean they purchased, actually the way the cash flow is on it, is they purchased the loan, right? A. Uh-huh. Q. And they pay the amount that they're going to pay for the loan, the fee will be taken out of the amount that they're going to pay; is that right? A. Correct. Q. And they're going to take 11 percent out? A. Correct. Q. Of what -- 11 percent of what figure? A. Amount financed. Q. Of the amount financed? A. Uh-huh. Q. Okay. Now if you could have, would it -would there have been other lenders that you could have gotten to approve this deal who would have not taken out a fee that big? A. For the type of credit, no. With the repossession and collections, and never paid anybody, Fairlane would have been the only place that deal with any of the Fresh Start programs. Q. Okay. Do you know what the purpose of

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112 this Fresh Start program was? Was there ever a -did you ever read a description of that program? A. For high-risk customers. Q. Okay. Now at the time that this vehicle was sold to her, you handled a lot of sales of new vehicles also; is that right? A. Yes. Q. At that time of this sale what was a new Ford Focus going for, approximately? A. A brand spanking new one? Q. Or a brand new one. We can talk about different kinds of features. A. What kind of equipment? Q. Yeah, a stripped-down one, let's say. A. Probably around $14,000, $15,000 maybe, just depending on what's in there, because a lot of that stuff comes standard. Q. A Focus? A. Uh-huh. Q. A brand new one at the time of this transaction, July of 2000? A. Probably, but I can't remember how much they cost then. I know how much they cost now. Q. How much do they cost now? A. Like $15,000 to $16,000, and they go up to

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113 $18,000, $19,000 also. Q. Did you sell any cars that sold for less than a Focus? A. Any new cars -- maybe like an Escort. Q. Yeah. How much were Escorts going for? A. Like a five-speed stripped down one, maybe $13,000, $14,000. Q. Okay. Now you would have handled this paperwork, as far as you know, consistent with your standard practice, isn't that right? A. Yes. Q. Page 142, would you have been involved in getting her to sign this Disclosure of Dealer's Information, this Page 142? A. Of where we previously got the vehicle from? Q. Yes. A. Yes. Q. Whose initials are those down there at the bottom? A. That's my signature. Q. Is that the way you actually sign? A. Yes.

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Q. Okay. Just by way of housekeeping, as far as you know, Pages 131, 164 -- 164 is a customer

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114 copy, and 131 is a dealer copy; is that right? A. Yes. Q. Page 166, did you fill out any part of that? A. No, sir, this part right here. Q. Okay. In the center of that where there's a circled text, you would have done that portion of it? A. I just would have done this part right here. Q. The line that -- what does that line say? A. It says "Fairlane 7/7 at 10:23." Q. What does that mean? A. That's when I submitted the deal. Q. Okay. And what does the text underneath that circle mean? A. "Q $275, Fresh Start, 11 percent." Q. What's the Q? A. Condition, $275. That's what they conditionally approved it for. Q. Okay. Is this something -- who wrote that down the "Q $275"? A. It might have been another Business Manager, if I wasn't there to write it down when it came across the fax machine. That doesn't look like

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115 my handwriting. Q. So somebody would have seen Exhibit 165 and written that down; is that right? A. Yes, they would have seen this. Q. Okay. Page 162, what's that? A. I believe this is what they receive when Fairlane gives us the money on the deal. Q. Are you familiar with that document? Do you see those? A. Every once in awhile, but they don't get faxed to me. They get faxed to the people upstairs to make sure that they got the money on it. Q. Now when you deal with a customer on a sale of this kind, will you typically have already shopped it to see what kind of financing you could get on it before you actually sit down with a customer? A. Could you rephrase that again, please?

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Q. When you handle one of these deals -A. Uh-huh. Q. -- have you typically already contacted the bank to see -- or a lender to see what the person would qualify for before you ever actually sit down with that buyer, the customer? A. Yes.

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116 Q. Okay. So you've typically gotten approval from a bank before you actually sit down and do the deal; is that right? A. Yes, sir. Q. And at the time you do the deal you have to handle much of the paperwork on the deal; is that right? A. Yes. Q. What all paperwork do you handle in connection with a sale like this typically? A. Contract, Bill of Sale, all the normal stuff for the sale of a vehicle. Q. The Retail Installment Contract? A. Yes. Q. Like this -A. Buyer's Order, Missouri Title Application, Odometer Statement, Prior Use Disclosure of where we got the vehicle from, or whom. Q. Okay. A. An Agreement to Provide Insurance, that the customer will have full coverage insurance on the vehicle. Q. Okay. Anything else? A. An invoice, which they don't sign. Q. What's that?

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117 A. Which is the sales invoice. Q. Like Page 133 there? A. Uh-huh. Q. Is that right? A. Yes, sir. Q. Okay. Does that cover it? A. Pretty much. Q. Can you think of anything else, any other paperwork that you handle in connection with these transactions ordinarily? A. Like when I have taken delivery of the vehicle. Q. What's -- like Page 175 there?

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A. Yes. Q. Okay. What is that document? A. It states that they take the vehicle that day, that they received the vehicle. Q. Are those normally signed? A. Right there by the customer. I don't sign them. Q. Okay. Anything else? A. I believe that's about it. It depends on if it's a new vehicle or a used vehicle. Q. For a used vehicle, have we covered the typical documents?

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118 A. Yes. Q. All right. Do you discuss the documents with the purchaser at that time? A. Yes, sir. Q. Who fills out the Application for Title? A. What do you mean fills out? Q. Well, prepares it, like typed it up. A. Uh-huh. Q. This Page 176 is typed up? A. I do, sir. Q. Okay. You type that up? A. Yes. There's my signature there. Q. Okay. Now with -- give me an example. For Page 143, this is the Buyer's Order? A. Yes, sir. Q. Give me an example for Page 143, if I were [Consumer] and you were talking to me consistent with your standard practices, what if anything you would say to me about this form? A. This is the Agreement to Purchase, and I would go through the sales price, cash down, trade-in, and go over that part, make sure that's the correct vehicle that she's trading in, then I go over all of this stuff with them, I have the customer read there, and then I have them sign

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119 there. Q. You're talking about on the left-hand side, all of the text there on the left-hand side? A. Of your left-hand, yeah. Q. As the person is looking at it on the left-hand side of Page 143 -A. Yes. Q. -- midway down there's a bunch of text?

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A. Yes. Q. And you have them read that? A. Yes. Q. And you have them sign at the bottom? A. Yes, sir. Q. Okay. And do you tell them what any of that means? A. I go over it with them. Q. Okay. Well, go over it with me as if I were [Consumer]. A. I would just have you read all of that, and then sign there. Q. Okay. And if [Consumer] said, "Well, I don't really know. What does all of this stuff say?" What would you say? A. I would just go and read over it with her and try to get her to explain it, if she didn't

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120 understand it. Q. Are you familiar with this language? A. Yes, sir. Q. Okay. What does this purchaser's certification, what is that about? A. Purchaser's certification? Q. Yes. A. If she had questions about it. If she didn't understand, I would go to the back and I would show her in detail about it also. Q. Okay. Well, again, if I were the purchaser, and I asked, "What does this purchaser's certification mean?" this Paragraph 1 on the left-hand side of Page 143, what would you explain? A. Do you want me just to read it to you, like I would just anyone that doesn't understand it? Q. Do you just read the language? A. I read the language, and if they understand it -Q. And if they're not sure what it means, do you explain? A. I have never had a case like that. Everyone has got to understand it when I go over it with them. Q. Do all the people read those all the way

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121 through? A. Yeah. I mean I would; I wouldn't sign anything that I didn't read.

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Q. Okay. There's a section here "Transit Damage." What is that about? A. Like say when the vehicle's coming to our dealership, if it applies to it, if it's got damage. Q. Does that apply to a used vehicle? A. What kind of a used vehicle? Q. Like in a case like this, if [Consumer] is buying a Cavalier like this, would that -A. No, transit damage is on a trailer when it comes to the dealership. Q. Like a new vehicle? A. Like a used vehicle, that's how our used vehicle comes from the auction. We don't have people driving to the dealership. They come on an 18-wheeler. Q. Again, with respect to [Consumer], on a deal of this kind, would transit damage have been an issue? A. No. Q. Because it was a trade-in, correct? A. Correct.

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122 Q. So if she asked about, "What does transit damage mean?" would you explain, "That doesn't apply to your vehicle because yours was a trade-in?" A. I would explain that hers is not an auction vehicle, and I would go back to here, and I would show her that it was privately-owned, meaning an individual owned it before her, and it was a trade-in. Q. Uh-huh. Do you discuss with the -- is it your job to talk to a person who is doing a deal with you, like a [Consumer], is it your job to talk with them about whether the vehicle that they're trading in has ever been wrecked, or is that the salesman's job? A. It's again with the bid slips. Q. That's done when the vehicle is being bid? A. Yes. Q. And the salesman is supposed to ask them that? A. Yes. Q. That's not your job? A. No. I don't actually go out there. I don't deal with that part of the -Q. I know you don't go out and look at the car, but is it your job to ask that?

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123 A. I don't talk to the customers when they bid them, no. Q. And at the time you're doing the paperwork, is it your job to talk to the customer and say, "Has this vehicle been wrecked?" A. No, not at all. Q. Then can you explain to me what this means in Paragraph 4 where it says, "Known defects"? What is that "Known Defects" section about? Do you know, before you look at it, do you know? A. I've got to look at it. I don't memorize it. I go over -Q. It's an important thing I want to ask. To the best of your knowledge, what does that section talk about? A. I don't know unless I see the Buyer's Order. I don't sit there and not have the Buyer's Order when I go over it with the customer. I mean you're holding it over there, and I can't see it, not like I have with a regular customer. Q. I'm going to show it to you in a second, but you don't know what that section talks about? A. No.

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124 Q. Now I'm showing it to you, Page 143. What does that "Known Defects" section talk about? A. "All equipment, including tires, as appraised on my trade-in, and known existing material defects known to me on the motor vehicle that is being traded into the dealer are:" Q. What does that mean to you? A. Like if there's any defects on the vehicle, like say if there's not a tire on it or something like that, because a lot of times we get vehicles that are towed in, or what have you. Q. So it's not talking about wreck damage then? A. No, and we haven't used these forms in awhile. We do have new forms also. Q. Do the new forms say anything about known defects? A. I'd have to go over the new Buyer's Order with you, but this is an old one from two years ago. We have since used different. Q. So if a person was trading in a vehicle that had previously been totaled in a wreck and was a rebuilt salvage vehicle, they wouldn't need to list that on the known defects?

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A.

They would have included it on the bid

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125 slip. Q. My question is if a person was trading in a vehicle that was a previous salvage vehicle that had been re-built from a wreck, would they need to list that on the "Known Defects" section of this Buyer's Order? A. If they knew about it, yeah. Q. I thought you said that the known defects didn't relate to wreck damage. A. What do you clarify as a defect, though? Q. It's your form. I'm asking you. A. But I'm asking you what are you thinking it is? Q. See, I'll have to ask the questions here. At your dealership -A. Okay. Q. -- your understanding of that text of that section, Paragraph 4 on 143, "Known Defects," I thought I understood you to testify does not cover wreck damage; is that right? A. Like a known defect in the paint, or a known defect like if the tires have been flat, what have you. Q. It covers things like that, correct? A. Correct.

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126 Q. And it doesn't cover wreck damage, correct? A. From what I see as far as defects, it just depends on what you clarify "defect" as. There's different defects to different things. Q. So it does or does not cover wreck damage, do you know? A. What do you mean "cover"? Q. Is a person who's trading in a vehicle supposed to put wreck damage down there if a vehicle has been wrecked? A. Just defects. I don't know as far as wrecks. Q. Okay. A. Again, this has been two years ago, and I don't remember the wording of how it was back then. Q. Okay. Would you go over with the buyer

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the -- this Disclosure of Dealer's Information, Page 142? A. Again, like I told you previously, we use this as far as where we got the vehicle, disclosure of prior use, like who used it before, was it the auction, a private individual, what have you. Q. Talk to me just like I'm [Consumer] sitting here today, and pursuant to your standard

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127 practices, what, if anything, would you have said about the language on this form on Page 1242? A. I would say this is "Disclosure of Prior Use," I would then go down here, this one is checked, "Other vehicle, private," meaning it was a trade-in. "I need to you sign there, verifying it was a trade-in, and I told you where the vehicle came from." Q. All right. At the time that the customer left on a standard deal like this, what documents would they leave with when they left your office after they signed the paperwork? A. Just every customer? Q. Your standard practice. A. The standard practice, they would leave with a copy of the contract. Q. Page 130? A. 00130. Q. Okay. A. They would leave with a page of their prior use disclosure. Q. Okay. Page 142? A. They would leave with a copy of the invoice.

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128 Q. Which is Page 133, I think? Okay. How about Page 143, the Buyer's Order? Would they leave with a copy of that? A. Yes. Q. Okay. A. There's two different copies on the ones that we use now. Q. All right. A. They would leave with a copy of the Agreement to Provide Insurance. Q. Page 174, okay. A. If we owed them anything, they would leave

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with a copy of that. I don't see that in here. A copy of an odometer statement sometimes, if they want one. Q. Do they leave with a copy of their credit application? A. No. Q. Okay. Why not? A. That's just not part of my own personal procedure. Q. Were you taught not to give them a copy of their credit application? A. I wasn't taught either way on the credit applications.

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129 Q. The credit application has a form for the customer, doesn't it? A. Yes. Q. So why wouldn't you give the customer that form? A. I don't know. I mean I don't go with the customer, and fill this out, and give them the copy. I don't do that part. I don't fill out the applications; the salesmen do. I send the applications over to get approved. Q. Well, it's your job to make sure that the person leaves with the paperwork they're supposed to have; is that right? A. As far as the contract on the purchase of the vehicle is concerned. Q. But not as far as the credit application goes? A. No. Q. Whose job is that? A. The salesman. Q. I see. Okay. On some occasions would you mail some of the documentation to people afterwards? A. In this instance, I think by reviewing it we had to order a duplicate title on this one, so we might have mailed her the title, or she would have

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130 came by and picked it up which is 00158. only -Q. The title application you mean? A. Yes. Q. Okay. A. Along with the title. Q. Okay.

That's the

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A. And at that time we didn't have a copy of the title, because we had to order a duplicate were the [Purchaser 1] case. Q. Okay. Anything else that would have been -- if that was sent to her, is it possible other things were mailed to her? A. No, not unless like a thank you letter, or something like that, thanking her for buying a vehicle, or what have you. Q. Okay. MR. TYRL: Is this a good break? It seems to be a logical place. MR. BROWN: Yeah. THE REPORTER: Signature and stipulations? MR. TYRL: Read. MR. BROWN: Waive formal presentment. MR. TYRL: Read and sign, if it's not

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131 signed 30 days before trial, use as if signed. THE REPORTER: I need to know what you all want, mini, full, disk. MR. TYRL: I just want the mini transcripts. MR. BROWN: I only want the mini, except of course the originals, and I like them 4 per page, and I do like the index at the back, and I do like an ASCII disk. MR. TYRL: I just like it on one side, instead of front and back. MR. BROWN: I like them front and back. (Witness excused.) S T I P U L A T I O N

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It is hereby stipulated and agreed by the parties hereto through their respective counsel, that the submission of this deposition to the witness for examination and reading, as provided in Rule 57.03, Missouri Rules of Civil Procedure, is hereby expressly waived. It is further stipulated by the parties hereto through their respective counsel that the deposition may be signed by the witness at any time before the time of trial before any notary public. However, if not signed within 30 days of the time of trial, the deposition may be used as though signed.

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132 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

. [WITNESS] (VOLUME I, Pages 1-133) STATE OF COUNTY OF ) ) )

SS:

Subscribed and sworn to before me this day of , 2002.

. NOTARY PUBLIC

My Commission Expires: In re: Inc.

[Consumer] vs. Thoroughbred Ford,

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133 C E R T I F I C A T E I, PEGGY E. CORBETT, a Notary Public within and for the State of Missouri, hereby certify that the within-named witness was first duly sworn to testify the truth, and that the deposition by said witness was given in response to the questions propounded, as herein set forth, was first taken in machine shorthand by me and afterwards reduced to writing under my direction and supervision, and is a true and correct record of the testimony given by the witness. I further certify that I am not a relative or employee or attorney or counsel of any of the parties, or relative or employee of such attorneys or counsel, or financially interested in the action. WITNESS my hand and official seal at Kansas City, Jackson County, Missouri, this 11th day of April, 2002.

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. PEGGY E. CORBETT, RDR-CCR-CSR Certified Shorthand Reporter

1 2 3

134 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI WESTERN DIVISION

[CONSUMER], 4 Plaintiff, 5 vs. 6 7 Defendant. 8 9 10 11 12 13 14 15 16 17 18 19 ) THOROUGHBRED FORD, INC.,

) ) ) ) ) No. ) ) )

VOLUME II (Pages 134 to 207) DEPOSITION OF [WITNESS],

produced, sworn, and examined on Wednesday, the 17th day of April, 2002, between the hours of 8:00 o'clock in the forenoon and 6:00 o'clock in the afternoon of that day at the law offices of Tyrl & Hahn, 1100 Walnut Street, Suite 2950, in the City of Kansas City, County of Jackson, State of Missouri, before: ANN M. HAMILTON, RPR, CSR Registered Professional Reporter of JAY E. SUDDRETH & ASSOCIATES, INC. Suite 100 10104 West 105th Street Overland Park, Kansas 66212-5746 a Notary Public within and for the State of Missouri.

20 21 22 23 24 25 Taken on behalf of Plaintiff pursuant to Notice to Take Depositions.

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135 1 2 3 4 5 6 7 8 9 10 11 INDEX 12 [WITNESS] 13 14 15 16 17 18 108 19 20 21 22 23 24 25 NOTE: Exhibit Number 108 was retained by Mr. Brown. Copy of Exhibit A 137 EXHIBIT NUMBER EXHIBITS PAGE REFERENCED Direct Examination Resumed by Mr. Brown Signature: Certificate: 136 206 207 VOLUME II PAGE APPEARANCES For the Plaintiff: THE BROWN LAW FIRM Attorneys at Law 3100 Broadway, Suite 223 Kansas City, MO 64111 BY: MR. BERNARD E. BROWN For the Defendant: LAW OFFICES OF TYRL & HAHN Attorneys at Law 1100 Walnut Street, Suite 2950 Kansas City, MO 64106 BY: MR. LARRY J. TYRL Also Present: MR. BOB JACHAWAY

DESCRIPTION

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136 (Whereupon, [Witness] Deposition Exhibit Number 108 was marked for identification by the reporter.) [WITNESS], of lawful age, having been first duly sworn to tell the truth, the whole truth, and nothing but the truth, testified as follows: DIRECT EXAMINATION RESUMED BY: MR. BROWN: Q. You understand, [Witness], this is the continuation of the first part of your deposition which was on April 9? A. Yes, sir. Q. And you understand you're under oath under the same requirements of law, and that your testimony will be transcribed, and could under some circumstances be read in front of a judge and jury? A. Yes, sir. Q. Have you had a chance to review the transcript of the first part of your deposition? A. No, sir. Q. I'm going to show you what's marked as Deposition Exhibit 108. Well, it might be simpler if I just go through some of it with you. For the record, Exhibit 108 is a copy of

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137 Exhibit A which was attached to the plaintiff's 30 (b) (6) corporate deposition notice to Thoroughbred. Point 1 of this I understand [Witness] has been designated to testify for. Also Mr. Ishkuntana, I-s-h-k-u-n-t-a-n-a, is designated to testify about this. Point 1 of this Exhibit A is talking about subjects that the witnesses are talking about. Are you familiar with the handling of the sale of the vehicle or transactions resembling a sale to [Purchr 1s mother] and [Purchaser 1]? A. As far as the financing, I would know about that part of it, getting it approved. Q. And about the rescinding or the vehicle not being sold, you testified some about that? A. Yes. Q. You don't know about any representations made to them during a process when the vehicle was being, quote/unquote, sold --

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No, sir. -- to them? Now, with respect to this vehicle, this Cavalier -- now I'm alluding to point 18 in this Exhibit A, which is marked as Deposition Exhibit 108 -- to clarify some areas that you do and don't have knowledge about; do you have any knowledge about

A. Q.

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138 inspection of the vehicle, for example, of the Cavalier? A. What type of inspection? Q. Any kind of inspection; do you have any knowledge of any inspections of this vehicle? A. As far as just the vehicle itself when it was appraised or what? Q. Any kind of inspection? A. As far as I know about the appraisal on it when it was appraised before. I mean, I don't know as far as inspections. I'm not quite sure what you're trying to ask me about the inspections. Q. Okay. For example, it's my understanding the vehicle was put through a used vehicle inspection in the service department at one time? A. No, I don't know anything about the service department, how they do the -Q. And on the appraisal of the vehicle, an inspection where it was appraised, were you present or involved in that appraisal? A. No, sir. Q. Any knowledge you would have about that appraisal would be secondhand? A. Yes, sir. Q. You dealt with [Consumer] at the time

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139 that she purchased this vehicle; is that correct? A. Was with her as far as going over the documents or -Q. Okay. I mean, the extent of your dealings with her was going over documents relating to financing? A. Yes, sir. Q. At the conclusion of the purchase; is that right? A. Yes. Q. You were not involved in negotiating the

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selling price? A. No, sir. Q. You were not involved in making any representations, if any, about the history or the condition of the vehicle? A. No, sir. Q. You did not have any knowledge of any of those things? A. Of the -Q. Any representations made about the history or condition of the vehicle? A. No, sir; I couldn't tell you what the salesman and customer went over. Q. After her purchase of the vehicle, did you

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140 have any further communications with her? A. No, sir. Q. You were not involved when she came back to talk to somebody at the dealership? A. Not that I can recall, no. Q. You have no knowledge of any such conversations she had with anyone? A. No, sir. Q. You communicated with Fairlane Credit relating to her possible purchase of the vehicle? A. Yes, sir. Q. You communicated, I take it, with a salesperson or someone else in order to get the word that [Consumer] was interested in purchasing the vehicle, correct? A. Could you explain that to me, please? I'm sorry. Q. The way you would have found out that a [Consumer] was interested in purchasing the vehicle was someone would have come to you and said, Hey -A. Yes. Q. -- see if you can shop this deal for us, shop for financing for -A. To try to get her approved?

1 2 3

Q. A. Q.

141 Yeah. Yes. Do you know who it was that came to you?

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A. Mr. Briggin. Q. Do you recall a conversation with him? A. No, sir, I really don't, no. Q. Was there anyone else involved in that conversation? A. Not to my knowledge, no, as far as who he talked to, no. Q. Do you know how many conversations you had with him? A. No, sir. Q. Was he a salesperson or a manager or what? A. He was a salesperson. Q. Were you involved in any decision about whether to do any repair or maintenance work of any kind to the vehicle? A. Could you explain to me on that part? Q. Well, if a vehicle comes in, sometimes repair work will be done on it, correct? A. Yes. Q. Are you involved in making that kind of decision? A. Of what work gets done; no, sir.

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142 Q. And you were not then on this vehicle involved in that kind of decision, what work would or would not get done on the vehicle? A. Prior to or afterwards? Q. Any time? Were you at any time involved in any decision about what work of any kind would be done or would not be done to this vehicle? A. As far as work, you're meaning a mechanical, or like, say, if she needed some floor mats or something like that? Q. Let's start with mechanical. Mechanical works. A. Well, if there was something wrong probably I would okay it like on a we owe or something like that. Q. Do you have any recollection of any dealings with her about anything like that? A. No, sir. Q. Have you had the chance to review her car file? A. From the last time we were here when I looked through it, yes. Q. If there is anything at all relating to your involvement in a decision about work to be done would it be shown on a we owe?

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143 A. It should have, yes. Q. Your standard practice would be you would put on a we owe something that you had approved that needed to be taken care of? A. Yes. Q. But you don't have any recollection of this vehicle having any particular problems that were brought to your attention? A. Not to my knowledge. Q. But you simply don't have any recollection about that subject at all, correct? A. Correct. Q. And you have no knowledge of any discussions among people at Thoroughbred about this car except for these discussions relating to financing; is that correct? A. Correct, sir. MR. BROWN: I'll just note, so that it's not like I'm ignoring the subject, on the record, that counsel and I will be discussing further after the deposition witnesses to cover certain areas. He's indicated that he's unclear what is meant by section 18, for example, of Exhibit A, and I'm not by proceeding saying that we regard this witness as having full knowledge of everything covered by 18, I

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144 think he doesn't, but counsel and I are working in good faith, and we'll talk further about this after the deposition. Q. (By Mr. Brown) If I understand correctly, correct me if I'm wrong, the first information you would get about someone seeking financing on a possible purchase of a car would typically come from a salesperson or a sales manager; is that right? A. From a salesman. Q. And what are you -- what information do you typically receive? A. As far as about the whole deal or just what I get from the salesman? Q. Tell me everything that you would -- in a deal of this kind like [Consumer]'s purchase, what would, in typical practice, have been the information you would have first received? A. Credit application and a deal jacket. Q. Now, and that would physically be handed to you by a salesperson or a sales manager? A. A salesman.

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Q. Would you occasionally receive -- on some occasions did you receive requests to try to arrange financing for someone when they had not selected a car?

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145 A. Yes, sir. Q. What would you receive on circumstances like that? A. The credit application and the deal file to see if I can get it approved. Q. Now, what would a deal file consist of if a car had not been selected? A. Just a folder so we could keep the stuff in. Q. It wouldn't have a VIN number, a year, make and model of a car? A. No, sir. Q. It would just have a folder? A. Yes, sir. Q. Would it have the prospective customer's name on the folder? A. Yes, sir. Q. And the credit application completed by the prospective customer? A. Yes, sir. Q. What about credit reports; as I understand, you did not run those? A. No, sir. Q. Would you get a credit report before you would try to shop the person's financing?

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146 A. Yes, sir. Q. Where would you -- what would you do to get the credit report? A. Ask the salesman, or it would probably already be in the file along with the credit application. Q. You understand that this is -- I want to get all the information you had received -- so if I understand you correctly, correct me if I'm wrong, you would typically get a credit application and a credit report that had been run, and a folder that you are calling a deal jacket folder; is that right? A. Yes, sir. Q. Was that standard? Was that normal?

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A. Yes, sir; it's normal. Q. Were there any other documents you would normally receive when you were being asked to shop for financing for someone? A. It depends on the customer, if they have any information with them like a driver's license or what have you. Q. Did you ask for driver's licenses? A. I did not ask. Q. Now, are your practices today the same as they were then at the time of this purchase -- well,

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147 from 1998 through the present have they been the same? A. I mean, there's been many changes with different things. I mean -Q. With respect to the documents that you would receive when you're being asked to shop for financing for someone, has that changed; has the documents you would receive at that time, has that changed? A. It depends on the customer. I don't know exactly what you're trying to ask for as far as in the deal. Q. [Witness] -A. Yes, sir. Q. -- people who don't know anything about car dealings, like a judge and jury in this case, may know nothing at all about what a business manager does in handling financing might suppose that when you would first get documents you would get a credit application, a credit report, a signed retail installment agreement, an odometer statement, a vehicle inspection, an appraisal, and I could go on? A. Yes, sir. Q. And it's up to you to tell us here today what documents you would always receive, what documents you would sometimes receive?

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148 A. Well, sir, it just depends on what customer has at the time. Like I couldn't for every single deal; I mean, I'm not for Q. I understand. There might be some documents you would sometimes get? A. Yes. Q. But were there some documents that

the tell you sure. extra

you

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would always get? A. Right when I try to get one approved, or throughout the whole deal? Q. When you're trying to get one approved, when you're trying to get financing approved? A. If they're on the vehicle, I guess the vehicle information; if they're not, then no. Q. So tell me everything that you would get if you didn't know -- if a particular vehicle had not yet been selected, tell me everything you would always get? A. Credit application and credit bureau. Q. And credit report? A. Yes. Q. Anything else you would always get? A. On a deal where the car had not been selected but you're trying to get financing, just that to start it off.

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149 Q. Then about the things that you would sometimes get, you said you would sometimes get a driver's license? A. If they demo drived a vehicle, yes, that would be in the file. Q. Anything else? A. Probably insurance card. Q. If they demo drove a vehicle? A. Yes. Q. Anything else? A. Not to my knowledge, no, to get a deal started, no. Q. So you would -- if somebody was looking at vehicles, hadn't selected a vehicle, you were shopping for financing, you would always get a credit application, a credit bureau report on that person, and a deal jacket folder? A. Yes, sir. Q. Then what would your first action be? A. To determine where to get her approved at if I could at all. Q. How would you decide? A. Looking at the information I had at hand. Q. You'd be looking over the credit report? A. Yes.

150

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Q. The credit application that the customer had signed and the credit report, that would be all the information you would have, correct? A. Yes, not unless they had the driver's license and the insurance. Q. Based on what you saw in the credit report and your knowledge of what kind of financing was available from different lenders, that's how you would make your first determination about what financing they might be able to get? A. By looking at it, yes. Q. Once you decided what kind of financing they could get, what would you then do? A. Send it to the bank to see if they would approve it. Q. By fax? A. Yes, sir. Q. What exactly would you send by fax to the lender? A. The credit application. Q. Anything else? A. No, sir. Q. Not the credit report? A. No, sir. Q. And would you typically call that

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151 possible -- that prospective lender, and tell them that you wanted to know something, or would it just -would you just go by the fax? A. I would go by the fax. Q. Would the fax have a cover sheet or any information with it? A. No, it would just be the fax itself, if it was approved or not. Q. So, basically, like with Fairlane Credit, for example, you would simply fax a copy of the completed -- the prospective customer's completed and signed credit application, that's all that would go in the fax machine faxed to their number, right? A. Yes, the application. Q. Wouldn't the prospective lenders be interested in what the results of the credit report would be? A. I believe they do that themselves as far as that's concerned. Q. They run their own credit report? A. Yes. Q. Then typically what would happen next; would you get a phone call or a fax? A. A fax. Q. Back from them?

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A. Q.

152 Get a fax. And what would -- would the fax typically

be like a one pager? A. Yes, sir. Q. And that would say if they -- what would those faxes typically say? A. How much they were approved for, what kind of guidelines I had to go by, and the different programs they have. Q. I'm showing you what's Bates stamped 185, which is a copy of page 185 from the -- from Exhibit 105, [Consumer]'s car file. Is this page 185 -- would you identify what that is? We can use the original or this copy, whichever you want to use? A. It is the NADA Official Used Car Guide Book Value Sheet. Q. I meant page 165? A. Okay. This would be the fax back by Fairlane Credit. Q. That's the one that indicated approval and what guidelines are to be followed, et cetera, correct? A. Yes, sir. Q. Now, when you submitted these credit

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153 applications, did the lenders ever ask you for credit reports or results of credit reports? A. No, sir. Q. So it was your understanding they would run their own? A. Yes, sir. Q. Did Thoroughbred have an agreement with the lenders, such as Fairlane Credit, about its relationship with Thoroughbred, a contract governing the relationship between Fairlane and Thoroughbred, or do you know? A. I believe they do, but I'm not -- I don't know what the correct word for that would be. Q. Have you ever seen an agreement or guidelines or a manual or anything instructing you

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what you had to comply with to do business with Fairlane, for example? A. Comply with as far as? Q. Well, they would tell you what you had to submit to them, for example, correct? A. What do you mean submit to them, as far as documentations? Q. Yeah. A. Yes. Q. Did you have rules of some kind that you

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154 followed? A. Like a program sheet or what have you? Q. Anything? A. Yes. Q. This process you followed, this was and has been from '98 through the present your standard practice; is that correct? A. As far as what? Q. Everything you've described in terms of how you would handle an initial request to a lender for prospective credit? A. As far as submitting -Q. Everything you've testified here to today about how you would submit documents, what documents would be submitted, what documents you would have, these are all -A. What part of -- are you talking about at the conclusion of the loan or to get the deal started or -Q. Is there anything you've testified about today that was not standard practice throughout all the time between 1998 and the present? A. Standard practice as far as -MR. TYRL: I'm going to -- go ahead. A. I'm not understanding your question.

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155 You're asking as far as standard practice. I've told you in this deposition so far I would fax over the application. Q. (By Mr. Brown) Was that a standard practice? A. Standard practice as far as faxing stuff over; yes, sir.

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Q. And you would always fax over a completed credit application from a prospective customer in order to solicit credit, that has been a standard practice from '98 through the present; is that correct? A. Yes, I would fax over the application. Q. A standard practice was that was the only thing that would be faxed over, correct? A. Yes. The application, yes. Q. And the standard practice was that they would then respond by fax, correct? A. Or they would call. It's on a case-by-case basis. Q. It was standard that they did not ask for or receive copies of credit reports from Thoroughbred; is that correct? A. I haven't had a situation where I had to send over a credit report, no.

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156 Q. So as far as standard practice goes, it's standard practice they don't request that, and you don't give that to them, correct? A. As far as standard I'm still -- I'm still not trying to understand -- I'm trying to understand what you're asking me. Q. Do you understand what I mean by the word "standard practice"? I mean, if it's your standard practice to drive your car on the right side of the road instead of the left, your standard practice to sit in the driver's seat when you drive the car instead of passenger? A. Standard practice is to fax over the stuff like I told you twice already, yes. Q. So you understand what I mean by the term "standard practice"? A. Standard practice is what I do when I get a deal. Q. Now, this date at the lower right of page 165 from [Consumer]'s car file, the approval sheet from Fairlane -- and so we're clear, this is from Exhibit 105 -- the date at the lower right of the approval sheet from Fairlane Credit, the date and time, that's when they made the decision to approve her credit; is that right?

157

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A. Yes, sir. Q. So it was July 7? A. Yes. Q. The credit application for [Consumer], that's dated July 8, correct? A. Correct, sir. Q. Can you explain why the credit application is dated after the approval? A. I can't remember if she put the date on it or not when she signed the application. I'm not for sure. Q. Let's put it this way, if I understood your testimony about standard practice correct, correct me if I'm wrong, the credit application would always be filled out and completed and sent to the lender before the lender would consider approving credit, right? A. As far as complete as how? Now you're saying something else to what we were talking about earlier. Q. What is it that I'm saying that is, as you put it, "something else to what we were talking about earlier"? A. I don't know when she put the date on there. I see a signature on there. I don't know if

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158 she put the date on there when she came and signed the paperwork. Q. [Witness], did you send incomplete credit applications to the lenders? A. No, sir. Q. Okay. The date was part of completing the applications, correct? A. As far as complete -- I'm really not understanding what you're trying to get at here. When I have the application, I mean, it could be a signed -- all of them would be signed to fax over the fax machine. I don't know if she put the date on there at a later time or not. I knew that I faxed over the application then. Q. So you're saying that it's possible that you sent an incomplete credit application, one that didn't have a date on it? A. I might have. Q. Is that a standard practice? A. Standard practice is what I do every time, sir, is that what you're saying? Q. What you do -- do you not understand the term "standard practice"? Is it your normal practice, normal practice, to send incomplete credit applications to the credit bureau, to the prospective

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159 lenders? A. What do you mean as far as -- I mean, as far as your knowledge on the application what do you mean is complete? There's different things on this that's not filled out on there, I mean, that would not be complete, so -Q. Is this an incomplete credit application? A. I don't know if it has all of her previous cars financed or leased through on there. I mean, at the time -- I mean, it's not complete -- if I didn't have a structure on that with the vehicle, that would be incomplete, but banks do not ask for that. It might be incomplete if the information up here is not on there. Q. Do you normally send credit applications that look very much like this page, this credit application of hers, page 164 from Exhibit 105, do you normally send credit applications that look like this to the prospective lenders? A. That look like this, yes. Q. Now, tell me by your language and your understanding is this properly completed for being submitted to a prospective lender? A. It has enough information on there for the lender.

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160 Q. And is one of the things you normally would have on these applications before they would be sent to the lender the date and the signature, the date it is signed and the signature, normally would those be on there? A. Normally the signatures would be, but as far as the dates I don't know if the customer didn't date it or what have you. Q. Normally would the customer -- would the date be on there as well as the signature? A. Normally, yes. There's some times when I can't answer for some of the customers that forget to put that on there, though. Q. Let's just suppose that what happened here, [Witness], was that you did not send a credit application that she had submitted, that that's not what you submitted to Fairlane?

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A. What did I submit to Fairlane? Q. I'm asking you, what would you have submitted if you had a credit application that was not signed or dated by her, what could you possibly have submitted to Fairlane? A. The application with the information on there. Q. Where would the information come from if

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161 she didn't sign or date it? A. From the customer. Q. As far as you know? A. As far as -- I mean, yes. As far as I know, I can't tell you how the information got on there. I don't fill out the credit applications so I'm not for sure. Q. So you're saying it's not normal for a credit application to be sent to a prospective lender without the signature and date by the customer; is that correct? A. I never said anything about the date. I did say the signature when I fax it over. Q. Is it your testimony now that it is normal to send credit applications to the prospective lenders with a signature from the prospective customer, but with no date? A. Sometimes, yes. Q. So that is normal or is not normal? A. Without the date, but if I have the signature. Q. Answer my question, please. Is it normal; yes or no? A. Normal -- could you repeat that question? Q. Is it normal to send credit applications

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162 to prospective lenders that have been signed by the customer, but have not been dated? Is that normal; yes or no? A. As far as I can tell, yes. Q. It is normal? A. As far as -- yes. Q. Do the lenders regard a credit application that's not dated to be acceptable? A. Yes, sir. Q. Is it normal to send credit applications

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to the prospective lenders that have not been signed by the customers; yes or no? A. As far as in what regards? Have they been to the dealership or what have you? Q. I don't know what you're saying, [Witness]. A. I don't know what you're saying. Q. My question -- if you don't understand my question, tell me. My question is a real simple plain English question. Is it normal to send credit applications to prospective lenders that have not been signed by the customers? Is that normal; yes or no? A. Yes. MR. TYRL: That have not been signed?

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163 THE WITNESS: I'm getting confused here. I mean, he's -Q. (By Mr. Brown) Okay. We have this page 164, [Consumer]'s credit application from Exhibit 105, her car file. If you pictured this credit application with no signature and no date on it, would it be normal to send a credit application like that completed the rest of the way? A. No, they always have signatures on them when I send them. That is normal. Q. Always, they always have signatures? A. Yes. Q. But they normally do not have dates; is that what you're saying? A. If the customer puts them on there, then it would be on there. Q. I didn't ask -- I'm not asking how it happens. I'm just asking is it or is it not normal that the credit applications you will send to the prospective lenders will be lacking a date? I've been through this before, I understood you to say it is normal to send them without dates on them? A. Yes, that would be correct. Q. That's normal? A. Yes.

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164 Q. So it would have been abnormal to send one with a date on it? A. I guess that would be normal too with the

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dates on there also. Q. Well, which happens more often? Are most of the credit applications -A. Sir -Q. Let me finish my question, please. A. Yes, sir. Q. Are most -- more than 50 percent of the credit applications you send to lenders, do most of them have dates on them? A. Most of them, yes. Q. Okay. Give us an estimate of what percentage of the credit applications you've sent to lenders didn't have dates on them? A. I really -- I can give you a rough estimate, but I do thousands of deals. Q. Yes, give us a rough estimate. MR. TYRL: I'm going to object to the form of the question as calling for speculation and conjecture on the part of the witness. MR. BROWN: Okay. I certainly disagree. I can't think of anybody better who would know how many there were.

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165 Q. (By Mr. Brown) Give me a rough estimate. A. Of what again? I'm sorry. Q. Of the number of credit applications that were sent by you to a prospective lender where there was no date on it? A. How many that I did send over that did not have a date on it? Q. Exactly. A. Maybe 10 percent, but that's a guess. I'm not for sure. I'm guessing. Q. Did you always try to make sure they were dated before they were sent? A. If I had a signature, I'd send it. Q. That isn't my question. My question is, did you always try to make sure they were dated before you sent them? A. I tried, yes. Q. So if one was sent without a date, would you regard that as a mistake? A. If the bank didn't look at it that way, then I don't know if it was a mistake, because if the bank looked at it then -Q. Was it part of your job to make sure that they would be dated before they were sent? A. If you're saying it is.

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166 Q. You're the one who knows what your job is, [Witness]. Is it part of your job to make sure that the credit applications are dated before they're sent? A. It is part of my job, but I'm not the one that actually gets the signatures on the applications. Q. Is it part of your job to look over the applications before they're sent to make sure they're properly completed? A. Completed as how? Q. However they need to be completed, however much they need to have; is it part of your job to make sure they have however much information they need to have? A. For the banks, yes. Q. Now, I think I understood you to testify that banks didn't care if they were dated? A. Well, they don't. Q. Then why did you concern yourself as to whether they were dated? A. Can I not do that, or -Q. My question is why did you not -- why did you concern yourself with whether they were dated if the banks didn't care? A. Just to see if it was on there. I'm not for sure. I'm not understanding what you're asking

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167 again, sir. Q. Is having proper paperwork in the file an important part of your job? A. Proper paperwork as far as how? Q. Properly completed? A. Completed as how? Q. Do you understand the English word "completed"? A. Yes, sir, but do you understand the English word "how"? How do you want me to tell you as far as completed? Again, this application is not complete with all the lines on there with the information that it needs. Q. Then this one, this application, page 164, is not properly completed? A. It doesn't have the information on there, but the bank will accept that if we don't have some of the information on there. Q. So what's the information missing, identification of the vehicle? A. Or of how long she had -- that she

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graduated high school, if she had any college or anything like that. Q. Those things you understand the banks don't care if those are on there?

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168 MR. TYRL: Object to the form of the question, misstatement of his testimony. Q. (By Mr. Brown) Do you understand banks don't care if they're on there? A. Just depends what information you need, because on here I see that she didn't mark off as far as some of the stuff that she was supposed to mark off on there that was supposed to be on there. MR. BROWN: I want to take a little break in order to make an important phone call that relates to this, what I'm asking about, if I may. Do you have a phone around I can use? (Recess taken.) MR. BROWN: Back on the record after a note that we've had a significant break. Q. (By Mr. Brown) Has your dealership throughout the time from '98 through the present at any time submitted any applications to Fairlane for credit electronically, like not by fax? A. Ford Credit? Q. Or Fairlane Credit? A. We just faxed Fairlane. Q. How about to Ford Credit? A. Ford Credit we don't fax it, it's electronically.

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169 Q. Where was this credit request for [Consumer] sent? A. To Fairlane. Q. Okay. So it would have been faxed to Fairlane? A. Yes. Q. Would there be a record kept of that? A. No. Q. How do you know it was sent to her and not sent to -- sent to Fairlane and not sent to Ford Credit? A. Because of the approval at Fairlane. Q. How much was it that you were asking Fairlane to approve the loan for?

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A. I didn't ask them anything. Q. Didn't ask them any number? A. No. Q. So when they're approving a loan do they approve it for a given dollar amount? A. Just for payment. Q. Just for a monthly payment? A. Yes, sir. Q. And that's their standard practice? A. Yes. I can't answer -- I'm sorry -- I can't answer for Fairlane how they do stuff, but

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170 that's how I usually get the answers is by payment. Q. You don't normally describe to them a vehicle that's involved? A. Not to get things started, no. Q. Okay. At some later point you normally do describe a particular vehicle involved? A. On a case-by-case basis. I mean, if -- I don't have to give them the information, I can just do it myself as far as if it fits the program. Q. Once you got back this page 165, the credit approval, was she approved for the loan that she needed? A. She was approved. Q. Okay. Then you have to submit certain documentation to Fairlane at some point that is consistent with this agreement or with the plan that they have, correct? A. Yes. Q. What kinds of documentation do you have to submit to Fairlane? A. What part of the transaction, after the deal has been done or -Q. Yeah, after the purchase agreement has been struck? A. Paycheck stubs, phone bill and utility

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171 bill, references. Q. Anything else? A. Driver's license. Q. Anything else? A. The approval itself. Q. I presume the installment contract itself? A. Yes, sir.

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Q. Anything else? A. Information on the vehicle they purchased. Q. Year, make, model number, vehicle identification number? A. Uh-huh. Q. Mileage, things like that? A. Yes. Q. Anything else? A. I believe that's about it. Q. Agreement to provide insurance? A. Yes, that goes with it also. Q. How about odometer statement? A. I'm not for sure if that goes or not, but I believe it does. I'm not for sure of what they send to the banks. Q. Who is the "they" that sends things to the banks? A. The people upstairs that break the deals

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172 down and send them to the banks. Q. Do you know who these people upstairs are? A. Right now it's Lori. Q. What's her position? A. I don't know how to characterize it. I mean, I don't know what the exact title is. Q. Do you know her last name? A. No. Q. Do you know who it was in 2000, summer? A. I can't remember which -- who was doing it at that time. Q. So it's your testimony that when the -when you're first shopping for a credit approval from a prospective lender like Fairlane, like Ford Credit, you don't -- if a vehicle hasn't actually been finally settled on you don't tell the lender what kind of vehicle is being considered; is that your testimony? A. When I send it to Fairlane, that is correct, yes. Q. What about to Ford Credit? A. I didn't send this one to Ford Credit. Q. If you sent one to Ford Credit, would you tell them what kind of vehicle you were -- was being considered? A. We put in a vehicle, isn't necessarily

173

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going to buy that vehicle, but it gives us a good range of us and Ford, what they will approve. Q. So with Ford Credit throughout this time from '98 through present when you submit a request electronically for them to consider advancing credit -- right? A. Uh-huh. Q. Make sure you say yes or no. A. Yes. Q. And you would put in an approximate kind of a vehicle, like a year and a make or something like that? A. Yes. Q. But you wouldn't do that with Fairlane? A. No, sir. Q. Why not; why the difference? A. Because Ford is prime and Fairlane is sub-prime. Q. Would you have known that [Consumer] was sub-prime when you were contacting the prospective lender? A. When I looked at the credit application and the bureau, yes. Q. Now, if Ford Credit has records that you submitted a request to Ford Credit for possible

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174 financing on this vehicle, would that make sense to you? A. If I had? Q. Yeah. A. I can't remember if I did or not. Q. Would that make sense to you if you did? A. Would it make sense if I would have sent it to Ford after looking at her? Q. Yeah. A. No, it really wouldn't. Q. If Ford Credit has records indicating that you made a request, and that you were looking for a new -- financing a new 2000 Ford, would that make sense to you? A. I mean, I don't think I did. I can't remember. Q. Would it make sense to you if you had done it? A. When I looked at her credit, no, it wouldn't make sense to call her into Ford Credit. Q. How about to request possible financing on a new 2000 Ford, would that have made sense? A. To have made a request, no, I wouldn't make a request like that because I would just call it in like I explained to you to get approved.

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175 Q. Now, you don't use -- you don't call it in, you don't make a phone call, correct? A. Fax it over. I'm sorry. Q. That's to Fairlane Credit? A. Yes. Q. But to Ford Motor Credit you submit requests electronically, correct? A. Yes. Q. Do you keep copies of the electronic records on what you've requested from Ford Credit? A. No, sir. Q. No records are kept on that, or do you know? A. I don't keep a record, no. Q. When you make electronic requests do you make them at your personal computer? A. Yes. Q. Have you always done that from 1998 through the present, made electronic requests to Ford Credit? A. To Ford Credit, yes. Q. At your computer? A. At my computer yes. Q. Is your computer linked to another computer? Is there a main server at the dealership

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176 that your computer's linked to? A. I'm not a computer expert. I don't know what it's linked to. Q. You don't know whether -A. All I know is I have a computer, that's what I use, I don't know if it's linked to anybody else or not. Q. And you don't know whether there are records kept of electronic requests or not; is that right? A. I do not -- I personally do not keep a record, no. Q. You don't keep one separately yourself, correct? A. I do not have a record; no, sir. Q. But as to whether one is kept by anyone else at the dealership, or any of your computer people, you don't know?

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No, sir. MR. BROWN: Larry, I don't think we've gotten any such, and we're told by Ford Credit that there were electronic submissions made on this car. Can you get somebody on the phone, Mr. Jachaway, to ring up and find out right away, because I'm in the middle of this deposition with this gentleman, and I

A.

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177 want to know if your records show that. MR. TYRL: Let's go to the telephone. MR. BROWN: Take a break to do that. (Brief recess taken.) MR. BROWN: Let's go back on the record. We've taken a break, and it's my understanding that Thoroughbred -- Thoroughbred has access, electronic access, to records relating to electronic submissions to Ford Motor Credit, such as potential loan application submissions, Thoroughbred only has access to those for some 90 days, and beyond that they're archived on the -- Ford Motor Credit's computers; do I understand that right? MR. JACHAWAY: Yes. MR. TYRL: In general I would agree. I would -- we could parse some of the language you're using because I don't know if it's technically correct, but in essence that's what we thought, and that's what we confirmed when we called. MR. BROWN: I'm just trying to explain as well as I understand it, but if there are loan applications, applications for credit, or possible loans, financing from Ford Motor Credit that are submitted electronically, that Thoroughbred doesn't have those after 90 days?

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178 MR. TYRL: I don't think Thoroughbred ever has them, they have access to the system, and then Ford Motor Credit deletes it off the system; to what extent, I have no idea. MR. BROWN: How much they archive it after 90 days, you all don't know, but if they're archived anywhere they're archived by Ford Credit? MR. TYRL: Correct me if I'm wrong, Bob, if we submitted an application today electronically to Ford Motor Credit, we went back and wanted to look at it 30 days from now, it would be

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there, 91 days from now it wouldn't be there. MR. BROWN: Okay. MR. TYRL: One thing I do want to do before we adjourn is make sure that we have all of the documents out of these deal folders. MR. BROWN: You mean make sure they don't get confused? MR. TYRL: Right. MR. BROWN: Sure, I couldn't agree more. I managed to leave one accidentally last time. I'm going to try to keep them out of the -MR. TYRL: Another thing we ought to do is go through and get them all back in numerical, or numerical sequence as they were stamped,

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179 make a duplicate copy, we both verify we've got a duplicate copy. MR. BROWN: Of course, I think you've already given us a complete copy in Bates stamp order, haven't you? MR. TYRL: I thought I did, and we missed some on photocopying when we did it, and Jim wrote me a letter with the numbers that he was missing, and we made other copies, so I think you already have, but I don't think I have a complete copy. I'll just do it myself. MR. BROWN: Okay. Well, yeah, when we get done we'll just make sure you have all the originals. You can go through the files and make sure they're numerically complete and in order. If there's anything missing, of course, let me know, but I'll be really scrupulous today to make sure we don't mix any up with my stuff. Q. (By Mr. Brown) [Witness], back on the record after this break. Page 165, Bates stamp number 165 from [Consumer]s car file, after you received that approval from Fairlane Credit -- again, that doesn't tell you a dollar amount, dollar amount of a loan that Fairlane was offering to carry; is that right?

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180 A. Just payment. Q. Okay. With this approval would [Consumer] have been authorized to buy a vehicle for $30,000?

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A. No, sir. Q. How would you calculate how much of a vehicle she could buy? A. By the program, because it's a Fresh Start, with Fresh Start it's for four years, 24 percent interest. Q. And using that how would you calculate -can you tell us approximately what would be the highest dollar vehicle she could have bought? A. No, I can't right now. I'd need my computer. Q. If you have a computer you can run the numbers? A. Yes. Q. The unpaid balance, 150 percent, you see that? A. 115, yes. Q. That's 115 percent of what? A. Of the vehicle itself. Q. Of the fair market value of the vehicle or the wholesale book value or what?

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181 A. 115 percent of the trade in on the '98 wholesale book value. Q. 115 percent of NADA's trade in value for the vehicle? A. Yes. Q. There's a document in the car file that relates to NADA's book value on the vehicle; is that right? A. Yes. Q. This is page 185, right? A. Yes. Q. What does it show the -- that NADA trade in book value to be? A. 8950. Q. Okay. So she could have an amount financed of 115 percent of 8950; is that right? A. 130 percent. Q. 130 percent, okay. Wait a minute, 115 percent, what's that? A. You just said amount financed. It's 130 percent of amount financed that I can go including back in as far as extended warranty, whatever. Q. What was the amount financed on this, does it show on the loan agreement -A. We can use this.

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182 MR. TYRL: Here it is. Q. (By Mr. Brown) Amount financed on this vehicle according to page 130, the retail installment contract, is how much? A. $10,287. Q. And that amount can be as high as 130 percent of the NADA book value of 8950 on this page 185; is that correct? A. Yes, sir. Q. This thing was financed right at the top end of those limits, if not a little bit over; were you permitted to fudge those figures a little bit? A. Fudge what figures? Q. To have a loan for a little bit over 130 percent of the NADA book value, for example? A. I don't have, but that's not -- doesn't look like it's 130 percent. I think it's just 115 percent. MR. JACHAWAY: Do you have a calculator? Can you calculate it? Q. (By Mr. Brown) I can do pretty close. A. 8950 I believe times 115 percent is 10,287. Q. Would be 10,287? A. Yes. And it says I can go up to 130

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183 percent. Q. Okay. What's the 115 percent figure on this page, the approval, page 165, what is that 115 percent? A. As far as the car itself, this 130 percent includes like warranties, GAP insurance, stuff like that, after market stuff. Q. But the 115 percent is 115 percent of the NADA book value of the vehicle, correct? A. Yes. Q. Now, could you go to the higher of that 115 percent, or the 130 percent, or did you have to comply with both of those limits? A. I had to comply with both of those. I didn't -Q. So was the unpaid balance, approximately 10,287, it says the amount financed? A. Yes. Q. Is that the same as unpaid balance? A. Yes. Q. So that is apparently 115 percent of this

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8950, correct? A. Yes. Q. So you would have been right at the very limit, exactly at the limit of what you're permitted,

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184 what you're authorized by Fairlane Credit for financing; is that right? A. No. The limit was 130 percent. Q. You've lost me, because I understood you to have to comply with both 130 percent and 115 percent? A. 130 percent is the most I can go on the amount financed. Q. 115 percent is the most you can go on unpaid balance? A. No. Unpaid balance is amount financed. I could have been 130 percent of amount financed. It was misunderstood whether you went over that. I can go 130 percent of the NADA trade in, of the amount financed on the contract. Q. Okay. Then what is this 115 percent limit ever mean? A. On this particular one I don't know, but this is what I got to go by because this is very, very important to the banks is 130 percent loan to value on the vehicle. Q. You don't even understand what this 115 percent means? A. Unpaid balance of what, I'm not for sure of 115 percent, but I know amount financed is 130

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185 percent. Q. Isn't the point that -- let's say on this vehicle were there any add ons, was there a service contract, or anything like that? A. No, sir. Q. Sometimes you'll have service contract, credit life, credit disability, correct? A. Yes. Q. The banks are really -- if you add in a bunch of that stuff they want -- that's significant to them in terms of whether they will accept a loan, correct? A. As long as I don't go over 130 percent of

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the trade in value they don't care what I do as far as what I can sell. Q. But you're not sure what this 115 percent means? A. I mean, no, sir, I'm not. I really haven't been doing a lot of business with Fairlane lately. From what I can tell on this amount financed, 130 percent is what I can do on that vehicle. Q. Okay. So the amount financed you're saying could be as high as 130 percent of the trade in value of 8950? A. Yes, sir.

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186 Q. Wait a minute. I had that wrong. A. No, it was correct. 130 percent of NADA trade in. That's the most I can go on the loan. Q. Okay. So, as far as you know, the banks don't really care at all about this 115 percent? A. They only care about the 130 percent as far as the total amount financed. Q. I understand you say they care about that. My question is, as far as you know, the banks don't care at all about the 115 percent? A. 115 percent of what? That's just a number there. I mean, 115 percent of what? Q. You don't even know what it is? A. 115 percent of what? What's your question? Q. Do you know what that 115 percent is? A. No. I know about the 130 percent. I mean, that doesn't have any kind of a deal on there as far as that. It has 130 percent, amount financed. That's what I'm going for. Unpaid balance, I'm not for sure exactly what that is on. But this amount financed is 130 percent of the trade in that I can do. Q. So this vehicle could have been sold to her for a lot more money than it was, is that your testimony?

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187 A. Could have been sold to her for a lot more money? Q. The loan would have been approved for a whole lot more money than the -- well, than as shown on this retail installment contract, page 131? A. Yes, I could have had 130 percent at the

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amount financed. Q. So it's just a coincidence that 115 percent of the trade in value is the 10,287; that's just a coincidence? A. Yes, as far as I know, because I didn't go to the 130 percent what I could have. Q. Now, when somebody, a salesman, would come to you and ask you to try to arrange financing for someone, you would then -- with Fairlane, for example -- send a fax of their credit application, and you would get it back an approval of this kind like page 165, that was normal, correct? A. Yes. Q. After you would get that approval back, would you talk to the salesperson about what the person, what the customer qualified for? A. As far as the payment range, yes. Q. You would tell them -- what would you tell them?

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188 A. I would say we got a 275 payment, we need to find a vehicle that's going to work for that amount. Q. Would you tell them what the term of the loan could be? A. Yeah, I would. Well, it would say right on there too, so they might have seen it also, 48 months, as far as the term. Q. Would you show them this document, show the salesperson this document? A. They might have seen it. I'm not for sure if I would have shown it to them or not. Q. If the salesman was Gene Burgen, you would have given him the information from this page 165; is that right? A. I would have told him it was a Fresh Start. He probably knew what a Fresh Start was, I'm not for sure, I can't speak for him, but -Q. Would you have told him the $275 payment that she was -A. Yeah, I would have. Q. And the term of the loan? A. Yeah. We can only go 48 months for the 275 payment, and the rate would have been 24 percent. MR. BROWN: I ask that you --

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189 THE WITNESS: What? MR. JACHAWAY: I was tapping. Q. (By Mr. Brown) After that point when you told the salesman what the customer was approved for, what typically would be your next involvement of any kind in the sales transaction? A. Wait until they find a car, a vehicle the customer wanted. Then after she selected a vehicle I probably would have took over from there. Q. Would you be involved in helping tell the salesperson what -- which car the customer would be qualified to buy? A. In some cases. Q. How would you go about doing that? A. Seeing if -- on this particular case or any? Q. On this particular case how would you go about doing that? A. I don't know if I did, to tell you the truth. Q. If you had done it, what would you have done to help them -- help the salesperson decide if she was qualified for a car? A. I don't think I did it on this one. Q. What makes you think you did not do it on

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190 this one? A. Because I can't remember back to then of how it went down as far as if she liked that vehicle or not. I'm not for sure. Q. So it's possible that you did help the salesperson decide which car she'd be eligible for, it's possible you didn't help the salesperson; is that right? A. I can't remember, sir. Q. Either one is possible, correct? A. I can't remember. Q. Is it possible that you talked to the salesperson about which particular car [Consumer] would qualify for? A. It's possible, but I can't remember. Q. If you did, because it's possible, if you did help the salesperson, [Witness], how would you have gone about deciding if [Consumer] was able to buy a particular vehicle? A. By the mileage on it, the year on it. Q. Is that all? A. Yeah, mileage and year, and how much we can, you know, finance. Q. Determining how much you could finance

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wouldn't you have to know what the NADA trade in value

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191 was? A. Yeah, either the salesman or myself, and it's possible that either one of us could have done it, got a workout sheet on the vehicle, but this is after the fact she picked out a vehicle, that's the one she wanted to purchase. Q. Or that one had been picked out, at that point you or the salesperson would pull the NADA trade in value on the vehicle; is that right? A. Yes, sir. Q. What difference would the mileage make? A. Of how long, if it was even within program guidelines. Q. What were the program guidelines? A. Again, it was 48 months, 24 percent interest, had 275 payment. Q. What about mileage? A. The mileage was in there also. Q. What were the mileage guidelines? A. I couldn't go over 50,000 miles on it. Q. Any other guidelines? A. Had to be underneath 130 percent amount financed on it. Q. Anything else? A. That's about it. Structure it up, see if

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192 Fairlane -- if it would fit those guidelines. Q. [Consumer] has testified or indicated that she was told that it was only one particular vehicle on this lot -- on the lot at that time that she was qualified for. From your knowledge of the general inventory kept at that time, would you believe that she was qualified to purchase only one of the vehicles on the lot? A. There probably would have been other possibilities, but we have over 700 vehicles in our lot. I don't know. As far as I knew, I can't testify for [Consumer], but as far as I knew she liked this Chevrolet Cavalier. Q. Is it fair to say that she would have been eligible to purchase any other vehicle on the lot that

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had an NADA trade in value of no more than 130 percent -- strike that. Is it fair to say that she would have been eligible to purchase and financing for the purchase of any vehicle on the lot that the vehicle had a trade in value, NADA trade in value, which times 130 percent -well, let me strike that. Let me go back to what would be the top dollar amount she could have borrowed, do you know?

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193 You'd have to put it in the computer? A. Yeah, I would. I can't calculate it like that. MR. TYRL: Do you want a calculator? THE WITNESS: No, I need the computer for term, interest rate, see if she fit the payment. Q. (By Mr. Brown) But you're saying she would -- we can at least say this much, correct me if I'm wrong, she would have been eligible to purchase any other car on the lot that had a trade in value of $8,950 or less, and that had 50,000 miles or fewer on it; is that correct? A. Yes. Q. Is it safe to say that there would have been other such vehicles on the lot at that time? A. Yeah, again, we have a bunch of vehicles; so, yeah, there might have been a couple. Q. There was no year limitation of any kind on what vehicle she would purchase? A. I'd have to take a look at the program. I'm pretty for sure I don't think the year mattered on it, to my knowledge. Q. So you'll have to -- if I can go over this with Mr. Jachaway in his deposition, he can look at the Fresh Start program guidelines, that would tell

1 2 3 4 5 6 7 8

194 us; is that right? A. Yes. MR. TYRL: To save time, Bernard, you've got them in the materials you got from Fairlane. MR. BROWN: Okay. Q. (By Mr. Brown) Do you know what fax number you used when you faxed things to Fairlane?

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A. No, I don't. It was all programmed in the computer -- I mean, into the fax machine. Q. Did you put a fax cover sheet on when you faxed it? A. No, just the application. Q. Is it possible you sent any request to any other lender other than Fairlane? A. As far as I could tell, it was just Fairlane. Q. How would you know? A. On my sheet of where I sent it, plus for the fact there was only one approval in there. There wasn't any turn downs in there also. As far as I could tell in the cover sheet of 166, I just sent it in to Fairlane. Q. The notes that you made within the circle on page 166 --

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195 A. That's not my handwriting normally, notes. Q. Who would have written those notes? A. Any of the other business managers at the time, if they would have seen an answer come across the fax machine, they would have stuck it on there for me, try to help me out. Q. Would have gone on the deal jacket? A. Yes. Q. The guidelines of the lenders were not concerned with the loan values on the vehicles? A. No, it's trade in, just depends on the banks. Q. With Fairlane are you certain that it was the trade in value that mattered, not the loan value? A. Correct. Q. You're sure of that? A. As far as I know, yes, trade in. Q. You're certain, or you don't know? A. I'm pretty certain it is trade in. Q. Do you know what a yo-yo deal is? A. Which -- yo-yo, can you show me which one it is? Q. is? A. I'm asking if you know what a yo-yo deal A yo-yo deal?

196

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Q. Uh-huh. Do you know what the term "yo-yo" means in the industry? A. Like this is just my interpretation of it, like say if the customer lied on their credit application, or we couldn't get the loan finalized, we needed to get the vehicle back, I believe. Q. Did you have everything from [Consumer] that you needed in order to complete this deal? A. Can I look through here and see? Q. Of course. A. Because Fairlane funded the deal; so, yes, I would have had to have everything for Fairlane. Q. When the customer -- when [Consumer] sat at the desk with you, you would have gone over the documents with her; is that right? A. Uh-huh. Q. Make sure you say yes or no. A. Yes. Q. You would have gone over page 142 with her; is that right? A. Yes. Q. And would you tell us what your normal practice would be in terms of what you would say to someone like [Consumer] in describing what's meant by page 142?

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197 A. I think we went over this last time. It's disclosure prior to use of where the vehicle came from. In this case it was a private individual. Q. Okay. You would have her sign it, you would retain it? A. She would get a copy of it. Q. After you're done you would give her a copy? A. Yes. Q. She couldn't like walk out with this document? A. With the original? Q. With the original? A. No, sir. Q. Or she couldn't walk out -- she couldn't leave with any of this stuff until after she signed it, you had the originals, the deal was done; is that right? A. Yes. Q. You would show these things to her on your desk, you would have her sign them, you would be keeping them, when you were done she would get copies of everything she signed; is that right? A. Yes, sir. Q. Would you go over the retail installment

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198 contract with her, page 130? A. Yes, sir. Q. This is one of the documents you would handle at that same time the same way as the rest of the documents; is that right? A. Yes, sir. Q. The title had to be assigned to the buyer at the time of the sale; is that right? A. Yes, sir. Q. Did you have the title to assign to her at the time of the sale? A. No, sir. We had to apply for duplicate title. Q. But you had to get her signature on that title once you got it, correct? A. Yes. Q. Did you tell her you didn't have the title? A. Yes. Q. What's your understanding of Missouri law whether you have to have a title at the time you sell the vehicle? A. We didn't have one at the time. I told her she would have to come back, pick up the title so she would get her vehicle licensed.

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199 Q. That's all very interesting, but that didn't answer my question at all. A. Okay. Q. My question to you -- listen, please, carefully -- what's your understanding of what the law says about whether you have to have a title and sign it over at the time of the sale? A. That we have to have the title. Q. It's your understanding the law requires you to sign that title over at the time of sale, correct? A. I don't -- I'm not a notary to do that. Q. I know you don't notarize, but a notary -you don't even have to have a notary to assign a title, do you? A. I don't know how to fill out a title. I'm sorry. Q. Do you go over the titles with people at

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the time they purchase the vehicles? A. Yes. Q. But you didn't have a title to go over with her? A. No, sir. Q. You knew that? A. Yes, sir.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

200 Q. Did you explain to her that the reason why you didn't have a title was because someone else had bought the car and then the deal had been backed out? A. I just said -- I really can't remember what I told her to tell you the truth about the title. Q. Well, in your -- consistent with your normal practices, what would you tell a customer if you knew that the vehicle had been sold and somebody had backed out of the deal and you didn't -- couldn't assign a title because of that, what would you normally tell people? A. Just I don't have a title right now, they would have to come back up, sign it, take the vehicle, take the title and get it registered. Q. How was that title -- when it did come, how was it delivered to [Consumer]? A. I do not know, sir. Q. How would you normally deliver it, by mail? A. In this particular case, I don't know how, if it was by mail, if she came up, picked it up herself, I don't know. Q. How would you normally deliver them? A. I'd give it to them when they purchase the vehicle.

1 2 3 4 5 6 7 8 9 10

201 Q. But if you didn't have the title at the time of sale, how would you normally deliver the title? A. They would come up and sign it and take it with them. Q. Normally they would come back into the dealership? A. Yes. Q. Was there a copy of this installment agreement in the file signed by somebody for

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Thoroughbred? A. I don't know. Q. Do you keep a copy of the installment contract signed by Thoroughbred? A. I don't know what they keep in the deal jackets. Q. Who normally signs the retail installment contracts for Thoroughbred? A. That would be Paula, wouldn't it? May I ask Bob? Q. No. It's someone else at the dealership? A. Yes. Q. But you don't -- it's not -- it's not signed by anyone at the dealership until after -until after copies of all the documents have been

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

202 given to the customer and the deal is complete; is that right? A. To my knowledge, yes. Q. The sale to [Purchaser 1], the documents show that the rescission agreement they entered into was on July 10; you handled the rescission papers, correct, rescinding, backing out their deal? A. Yes, my signature was on there. Q. How could it be that you hadn't rescinded that deal yet at the time that you sold this vehicle to [Consumer]? A. I don't know, sir. Q. Can you offer any explanation? A. No, sir. Q. It's not correct, is it? A. It doesn't seem so. Q. I'll just take these documents anyway for the moment. We'll look at 142, 143, 130. These three documents, if they were executed and handled according to standard practice, at the time of dealing with [Consumer] you would have shown to her, you would have talked to her about them, you would have had her sign them, and when everything was done then you would make copies of them and give her the copies, correct? A. I would not make copies, no.

1 2 3

Q. A. Q.

203 There would be copies on these forms? Yes. Like page -- the retail installment

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contract, 130, would have a buyer's copy, correct? A. Yes. Q. The copy she would receive would not have been signed by someone for Thoroughbred, correct? A. No, sir. Q. Page 143, the buyer's order, those are multiple part forms also? A. Yes. Q. She would have gotten -- what color copy would she have gotten on that? A. Yellow. Q. 142, is that a multiple part form? A. Yes. Q. What color? A. Yellow. Q. Okay. She's not free to leave with any of these documents until the deal is done, correct? A. Correct. Q. Okay. This is all pursuant to your standard practice in how you handle these deals? A. Of how I -- yes. Q. Now, [Consumer] has indicated to us that

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204 she did not actually get these, most of these documents at least, until the title was made available to her some approximately a month after sale; does that sound possible to you? A. No, sir; that is not possible. Q. How do you know it's not possible? A. My standard practice is I give copies to each customer at the time they leave the dealership. Before they leave my office they have the documents. Q. Did you tell her her financing had been approved? Would you in your normal practice have told her if her financing had been approved? A. Yes. Q. And her financing had been approved by Fairlane, correct? A. Yes. Q. You don't recall if anyone else was involved in making the decision about [Purch. 1s mother] or [Purcahser 1] and backing out of that deal? A. No, sir. MR. BROWN: No further questions for the witness. MR. TYRL: No further questions. THE COURT REPORTER: Signature? MR. BROWN: Same agreement we had.

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205 MR. TYRL: Read and sign. Waive formal presentment. If not signed 30 days before trial -MR. BROWN: It will be treated as if it had been signed. And we're retaining -- the parties are retaining the originals. (Witness excused.)

S T I P U L A T I O N It is hereby stipulated and agreed by the parties hereto through their respective counsel, that the submission of this deposition to the witness for examination and reading, as provided in Rule 57.03, Missouri Rules of Civil Procedure, is hereby expressly waived. It is further stipulated by the parties hereto through their respective counsel that the deposition may be signed by the witness at any time before the time of trial before any notary public. However, if not signed within 30 days of the time of trial, the deposition may be used as though signed.

206 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

. [WITNESS] (Volume II) STATE OF ) SS: COUNTY OF ) Subscribed and sworn to before me this day of , 2002. )

. NOTARY PUBLIC My Commission Expires:

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In re:

[CONSUMER] vs. THOROUGHBRED FORD, INC.

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207 C E R T I F I C A T E I, ANN M. HAMILTON, a Notary Public within and for the State of Missouri, hereby certify that the within-named witness was first duly sworn to testify the truth, and that the deposition by said witness was given in response to the questions propounded, as herein set forth, was first taken in machine shorthand by me and afterwards reduced to writing under my direction and supervision, and is a true and correct record of the testimony given by the witness. I further certify that I am not a relative or employee or attorney or counsel of any of the parties, or relative or employee of such attorneys or counsel, or financially interested in the action. WITNESS my hand and official seal at Kansas City, Jackson County, Missouri, this 27th day of April, 2002.

ANN M. HAMILTON, RPR Certified Shorthand Reporter

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18.2 Deposition of Former Used Car Manager

1 THE CIRCUIT COURT OF JACKSON COUNTY, MISSOURI AT INDEPENDENCE

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[CONSUMER],

) ) Plaintiff, ) vs. ) No. ) BLUE SPRINGS FORD ) SALES, INC., et al., ) ) Defendants. ) DEPOSITION OF [WITNESS], being sworn and examined on Wednesday, April 26, 2000, between the hours of 8 a.m. and 6 p.m. of said day, at the law offices of William L. Carr, Hidden Creek Law Building, 14801 East 42nd Street, Independence, Jackson County, Missouri, before: CHERYL R. BEAL Certified Shorthand Reporter of Peak Court Reporters 1200 S. Outer Road, Suite 315 Blue Springs, Missouri 64015 (816) 224-5533 a Notary Public for the State of Missouri. Taken on behalf of the Plaintiff. APPEARANCES For the Plaintiff: Mr. Bernard E. Brown Brown Law Firm 3100 Broadway, Suite 223 Kansas City, Missouri 64111

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2 APPEARANCES, Continued For the Defendant Blue Springs Ford: Mr. Larry J. Tyrl Tyrl, Sanderson & Hahn 1100 Walnut, Suite 2950 Kansas City, Missouri 64106 For the Defendant Superior Ford: Mr. William L. Carr Attorney at Law

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Hidden Creek Law Building 14801 E. 42nd Street Independence, Missouri 64055

S T I P U L A T I O N It is hereby stipulated by and between the parties herein and by the witness, in their own behalf, that the signature of the witness is hereby waived to their deposition, and that the deposition of the witness shall be of the same force and effect as though the witness had read over and signed the deposition.

INDEX Witness: [Witness] . . . . . . Identified *Deposition Exhibit No. 28 . . . . . 6 Deposition Exhibit No. 35 . . . . . . 36 Examination by Mr. Brown . . . . . . . Examination by Mr. Carr . . . . . . . . *Exhibit was previously marked 3 37

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Q. A. Q. A. Q. A. Q.

A. Q.

A.

3 [WITNESS], being sworn and examined on behalf of the Plaintiff, deposeth and saith: EXAMINATION BY MR. BROWN: State your full name for the record, please. [Redacted.] [Witness], you've had your deposition taken before, a couple of times anyway? Just once that I remember. Once? Yeah. You understand I'm Bernard Brown, I'm counsel to the plaintiff, [Consumer], in this case where Blue Springs Ford and Superior Ford are defendants relating to a 1991 Mustang that had repaired wreck damage? You understand that? Okay, yeah. I don't know who [Consumer] is but -Just a reminder: Do make sure that you give answers in full English words for the court reporter who has to make a transcript. You also understand that you're under oath the same as if you were testifying in front of a judge and a jury? Yes, I do.

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4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. Where do you reside at the present time? [Redacted.] Do you happen to know or do you have any expectation of attending the trial? I have no expectation of being there, no. I'm thinking -- I bring it up just because we may want to procure your attendance, and I don't ordinarily like to ask somebody their phone number, but if we do, would you please give us that number? [Redacted.] Okay. By whom are you employed? Rex Spencer Equipment. And where is -- where is that? It's in Belton, Missouri. What do you do for them? Equipment salesman. What kind of equipment? Heavy equipment. Do you need -Well, just give a general description, like heavy earth-moving equipment or construction equipment or -Construction equipment.

A. Q. A. Q. A. Q. A. Q. A. Q.

A.

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Q. A. Q. A.

Q. A. Q. A. Q. A. Q. A. Q. A. Q.

A.

5 Like for highway type construction? More so for -- not that big a stuff. Normally, it's just midsize stuff, midsize contractors. During what years did you work for Blue Springs Ford? I don't remember when I started. I remember when I quit. It was in February of '97 is when I quit, and I think I was there about eight years. All right. You started in the '80s anyway? Yeah, late '80s. When you started there, what was your position? I was an assistant used car manager. And did you become a used car manager? Eventually, yes. When was that? I don't remember. I went back into sales for a while. In 1994 what was your position? I'm not sure. I think I was used car manager then, comanager. Who would have been other managers with you at the time? Well, one of them is apparently Robert Peed? Yeah. He was in that era. There were several

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Q. A.

Q. A. Q.

A. Q.

managers, or directors they called them. In the tenure I was there, there was probably 12 or 13 of them. Some of them were above me, some of them were equal. Who were you under like in '94, Bob Balderston? He was the owner. Mark Talbot would have been the general manager, and I'm not sure who the general sales manager was at that time. I would have reported directly to the general sales manager. Do you know Dan Bishop? Name is familiar, but I wouldn't recognize him if I saw him. I'll represent he was a new car salesman at Blue Springs Ford from like right at the end of '93 and the first couple of months of '94. It's possible. Like I say, because I was in used cars, I don't really remember him. Showing you what we've marked as Deposition Exhibit 28, a number of documents that are numbered up through -- I think up to 29 -well, looks like some are -- some have apparently been pulled out, but the last Bates stamp number is 32. But at any rate, Deposition Exhibit 28, have you had a chance to

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A. Q.

A. Q. A. Q. A. Q. A. Q. A. Q.

7 review these documents? Yes. This relates to a 1991 Ford Mustang. Do you see any -- are any of those documents that you took part in preparing? The only thing I noticed -- is there a number on that one? This is I think 32. It's the last page of this exhibit at any rate. Go ahead. That would have been the one I would have done. That's my signature. Toward the lower right-hand side? Right. And to the right of internal, the last writing there in that space is your signature? Yes, sir. And what is that an internal order for? That was the order for a Missouri vehicle inspection and lube, oil and filter. Do you remember that Tony Vargas purchased a -a 1991 Ford Mustang, a red Ford convertible Mustang, that was -- came into the dealership after being wrecked on a flatbed truck, he purchased that Mustang and rebuilt it and it was then sold by the dealership? Do you recall

8 1 that?

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A. Q. A.

Q.

A. Q.

A.

I don't remember a red Mustang, no. Do you remember any other vehicles that Mr. Vargas rebuilt and sold? Not to my recollection. I mean, I know he does some stuff for like, you know, hobbies and does stuff on the side for the, you know, fancy cars. I'll represent to you that Mr. Bishop has testified that when he bought this vehicle from Blue Springs Ford as these documents show at the beginning of '94, I believe, January of '94 -- you're calling my -- oh, I see. You're calling attention to the --- purchase order. And it shows January 13th of '93 at the top there. I'll represent to you I believe that that's a wrong date because we've got -- it's probably one of those things where at the beginning of the year people will keep writing the previous year. Well, those are finance contracts, and sometimes from point A to point B takes a few days, so the dates could be different because I noticed on the cover sheet the first time it

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Q. A. Q. A. Q.

A. Q. A.

Q. A.

Q.

A. Q.

9 was submitted it was turned down. Would you explain that to me? This marking over here. You're talking about the first page of this Exhibit 28? Right. And you're calling attention to the upper left-hand top third and there's a circled, looks like -TD. -- TD? At the time it looks like -- I wasn't involved in the finance, but these are a cover sheet for the finance manager, different places it's been submitted to, and it looks like at Ford Motor Credit it was turned down. Okay. And then eventually approved over here on the opposite side of the page, looks like maybe Mercantile. Okay. Now, there's an installment agreement in this. I think it's Bates stamp page 4. Do you see that installment agreement? Yes. Does that tell us who the lender was? Probably

10 1 2 A. on the next page. That's an insurance certificate.

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Q.

A. Q. A. Q. A. Q.

A.

Q.

Well, we don't need to spend more time on this. Apparently financing was approved through a different lender other than Ford? According to the cover sheet, that's what it looks like. Now, the date on this installment agreement is '94, January '94? 13th of January. Of '94? Uh-huh. Mr. Bishop indicates to us that he saw this vehicle on the lot, he was a new car salesman, that he inquired about the vehicle and he worked out a purchase deal on the vehicle. But from looking at this, you don't have any recollection of this '91 red Ford Mustang with a convertible top being bought? I really don't, not that long ago. The only thing I can tell you is where the buyers order -- from the stock number it looks like it was a new car trade-in. You mean that it was traded in by somebody on a new car?

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A. Q.

A. Q.

Q.

11 That's what it looks like, appears like with the stock number. Okay. Mr. Bishop has testified that a matter of a couple days or a few days after he purchased the vehicle, he was having some kind of -- he had a question or needed some work done on the convertible top and that he talked to you about that, that you referred him to a Tom, a used car mechanic. He took the vehicle into the shop to have it worked on and that Tom told him this vehicle came in here on a flatbed truck, it was wrecked, it was Tony Vargas' car, that Tony Vargas got it wrecked and fixed it. Mr. Bishop further testifies that after being told that, he then went in to talk to you about the vehicle and brought that up with you. Do you have any recollection of that? I have no recollection of that. It's possible you had a conversation with him, you simply don't recall? MR. TYRL: I'm going to object to the form of the question as calling for speculation and conjecture. (By Mr. Brown) All right. Back up. Is it possible that you had a conversation with him

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12 and don't remember? MR. TYRL: Same objection. THE WITNESS: Does that mean I answer

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A.

Q. A.

Q. A. Q. A. Q. A. Q. A.

or not? MR. TYRL: Yeah, go ahead. I'm sorry. I don't remember. I mean, if he was working there at the time, I'm sure I talked to him at all different times, but it's hard to tell. If he was there for a short period of time, I don't know. (By Mr. Brown) Okay. What was the reason for your separation from Blue Springs Ford? To go to work at a job where I had less hours, and I had a young daughter at the time and I wanted to spend more time with my family. Again, that was February '97? Uh-huh. Make sure you say yes or no. Yes. You remember the trial of the Grabinski case? Vaguely. Did you have any discussions with Mr. Balderston about that case? No, sir.

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Q. A.

Q. A. Q. A. Q.

13 Did you talk with him at all about it after the trial? No, sir. So was there any inquiry from anybody at Blue Springs Ford about what all transpired with respect to the Grabinski vehicle? MR. TYRL: For the record, I'm -(By Mr. Brown) Aside from attorneys? No, sir. MR. TYRL: But still for the record, I'm going to object to this whole line of inquiry. Lack of relevance. MR. BROWN: Relevance is not a proper objection in a -MR. TYRL: I'm still making my objection, Bernard. (By Mr. Brown) Were you ever disciplined in any way relating to the Grabinski vehicle? No, sir. Did anyone criticize your conduct in any way related to the Grabinski vehicle? No, sir. Did you ever talk with anyone else associated with Blue Springs Ford or Blue Springs Ford Wholesale Outlet about the Grabinski case other

1 2 3 4

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14 than the attorneys? No, sir. When you were used car manager or assistant used car manager or a salesperson at Blue

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A.

Springs Ford, throughout the time that you were there did you in all respects act in accordance with the policies, procedures, that were set down by your higher-ups in the company? Yes, sir. So all of your conduct was in conformance with company policies? Yes, sir. How long were you a salesman at Blue Springs Ford approximately? I'd say approximately a year, year-and-a-half maybe. Can you approximate when that likely was without giving specific dates? It would have been about a year after I started as an assistant. So if I added up right, from, say, '92 on or so you were always either an assistant used car manager or a used car manager. Does that sound about right? Sounds about right. I don't really recall for

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q.

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A. Q. A. Q.

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15 sure. During the time that you were used car manager, say, in '94, what approximately was your compensation? I don't remember. Can you tell from looking at these documents, Exhibit 28, who the -- who the managers were that were involved in the sale? Bob Peed. His signature shows up or initials show up? Initials. Such as this page No. 3, those are his initials at the lower right-hand where it says accepted dealer? Uh-huh, yes. You see some other signatures you don't recognize? Yeah. I can't make out -Page 4? This is the finance contract. Can't make out the signature? Huh-uh. That's page 7? That's just the odometer. That says signature of seller and printed name

1 2 3 4 5

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16 of seller. Can you place that? No. Okay. Keep going. Page I think it's 11. That's Bob Peed's again. Okay. Can you tell us where Mr. Peed is these

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A.

days? I have no clue. Did he -- do you remember where he went from Blue Springs Ford? I believe he went to another car dealership, and I know that the last recollection I had of him was that he worked for Have-A-Car. Have-A-Car? Uh-huh. It's a leasing company, Ford Motor Credit leasing company. In the Kansas City area? He did some traveling. He was an instructor, a trainer. Now, if a vehicle was sold, used vehicle was sold, for a Blue Springs Ford employee, was it a standard practice to sell the vehicle at cost? No. It was -- there was no really standard. I mean, standard practice, I would say more or less a fair market value would be a good word

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. A.

Q.

A. Q. A. Q. A.

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17 for it. Okay. To the best of my recollection, most likely employees got prices from at that time it would have been Mark Talbot. If an employee were going to buy a vehicle like Mr. Bishop bought this vehicle in early '94, would the used car manager then ordinarily talk with Mark Talbot? Yes. Was there a commission on the sale of such a vehicle? From what I have there, I can't answer that. This document, page No. 19, does that give you any information on that point? The only thing it shows me on this page is there was no salesman involved except for Mr. Bishop, and there's no commission structure on this. This is the finance sheet. It shows profit down in an area circled at the bottom; is that right? On the left. Okay. What does it show as profit? Shows you have total financing and credit life and extended service policy that he purchased.

1 2 3 4 5 6

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18 So what was the total profit? Calculator? MR. TYRL: They're broken down. (By Mr. Brown) Okay. As used car manager, did you follow any policy about disclosure of repaired damage on vehicles offered for sale?

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Q. A.

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I believe we did. And what was the policy? To -- I mean, as far as I can recollect, we disclosed the amount of -- you know, if we had damage and we knew about it, we disclosed the amount of damage when we sold the vehicle. And I don't remember at that time of timing what was involved with what was available to us or not. What do you mean? As far as Carfaxes and so on and so forth. Those came slowly into the picture later on, but I don't remember whether -- whether we had it then or not. I don't remember. Okay. If you knew of damage on a vehicle at the time this vehicle was sold, say, in early '94, would you give as a standard practice a written disclosure that it had repaired damage? I believe we did, yes. I think it was either

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

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A.

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19 on the buyers order itself or we had a form. Again, I don't remember paper work then versus later on. Did it matter whether the vehicle was wholesaled out or sold to a retail customer? I don't recall. Do you recall using a form of any kind in giving a damage disclosure to a wholesale buyer of a vehicle? Not that I recall unless it was -- you know, unless it was known, proven salvage type stuff, and there was stuff that was done in the office when the wholesaler came in and picked up his paper work if they bought such a vehicle. So ordinarily there wouldn't be if the vehicle was sold at wholesale unless it was a known salvage vehicle? I would have to say probably not because most of what we sold wholesale was either a lot of miles or already had visible damage on it that was there. I'm talking about vehicles that had known repaired damage where it wasn't something that was obvious unrepaired damage to the naked eye.

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20 Oh, I don't -- I don't remember whether we had a particular form for that or not. But if you sold a vehicle like this to a retail customer, ordinarily there would have been a written disclosure? Then again, at that time I can't remember what we had as far as paper work trail because the

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paper work changed over the 18 years I was in the business, and over the last few it was different at Blue Springs. In your later years at Blue Springs Ford, were there written disclosure forms used? Yes. And in a sale to a retail customer, they would identify repaired damage on the vehicle? Yes. Let's talk about your early years at Blue Springs Ford. Were those written disclosures used as a standard practice? Standard practice on a sale? Trade-in. Trade-in. There was a form filled out and customers were asked questions, and then it was also presented on the other side of the sale. Was the same form used at both --

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Q.

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21 I don't think so. I mean, both forms were there, one form for trade-in, one form for sale, but both were available to the buying -buying. In other words, we had a form that if you traded a car in, list of questions, so and so, that was made available to the purchaser. So if a Mr. Smith traded in a car on a new car, we'll say he traded in a minivan, and he signed a part of that -- his buyers order had a disclosure and he said the vehicle has front end damage, that would be on like his buyers order when he was -No. It's a separate form. Oh, separate form. And a copy of that form would then be given to a subsequent purchaser. Is that what you said? Yes. That was what was done towards the end when you were working there? Yes. But that policy changed, it wasn't that way before? I don't remember. I mean, it's changed since '79 since I got in the business. The paper work trail has changed. Even the state forms

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22 have changed since then. Did your compensation include both a flat salary and any commission components? Yes. And what was the commission based on? It was based on new, used and finance sales. And would it be a percentage of the gross profit from those?

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Yes. What was the percentage? It varied by department and timing. In the car business paper plans change frequently. All I remember was that it was a larger percentage of used cars versus percentage of what you got out of new and out of used -- I mean, out of finance. And the money made through finance was money that was made like on the -- on the cost of the finance of the purchase itself and then credit life commissions profits and service contract profits; is that right? Yes. After charge-backs. All right. So when any vehicle was sold at Blue Springs Ford and there was money made from the financing or money made from the just high

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A. Q. A. Q. A. Q. A. Q.

A. Q. A. Q.

23 -- profit on the resale of the vehicle, you would end up getting a percentage of those profits? Yes. When a vehicle was received in on a trade during the time that you were used car manager, at least in 1994, say, would the vehicle be inspected before being resold? Yes. And what kind of inspection would it receive? Missouri vehicle inspection, plus the mechanics had a checklist they went over. Did the -- did you as the used car manager also do appraisals of vehicles? Yes. Was any vehicle that was received appraised? Restate that. Any vehicle that the dealership received, a used vehicle that the dealership received, was an appraisal done? That's kind of categorized. Go ahead. Because if you go out to an auction and buy a car, that's not an appraisal. All right.

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24 Any public trade-in would be appraised, yes. Did you buy quite a few cars from the auction? Bought quite a few program cars in the later years. How about general auction wholesale cars, not program cars. Not very many, a few. 15 a month, something like that? Oh, no.

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Five a month? I'd say on an average, maybe. Most of what we bought were program cars. So if a vehicle were traded in, would all such vehicles be given an appraisal? On a trade-in, yes. And when you did an appraisal, did you look for signs of repaired wreck damage as well as other things? To the best of my knowledge, yes. I'm not exactly an expert, but I looked for it, yes. When the vehicle was subsequently looked at by the service department, inspected there, did they look for signs of repaired wreck damage? I don't know that I know that answer. I don't remember the checklist and stuff that they

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Q.

A. Q. A.

Q.

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Q.

25 performed. Well, before a vehicle was offered for retail sale, was it checked pretty carefully to make sure whether it had repaired wreck damage? It was checked pretty thoroughly on mechanical. Okay. Okay. And like I said, as far as the mechanics, you know, I recall a few times they'd come up and say, hey, this has been damaged or not and then we could handle it from that point, but like I say, theirs was more of a mechanical inspection more than anything. And then after a vehicle had been appraised and then the MVI inspection is done and the mechanical inspection is done by the service people, then it would be put back out on the lot for sale? Close to that step, yeah. Is there anything I'm missing? Well, sometimes it would go to clean-up. I mean, it would depend on who was busier at the time as to what got done. Normally it followed that progression and then to clean-up and then on the lot. So there wasn't any inspection done looking for

1 2 3 4 5 6 7 8 9 10

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Q.

26 repaired wreck damage except to the extent that you might see it when you appraised the vehicle; is that correct? Basically -MR. TYRL: I'm going to object to the question. I believe the form is incorrect because it mischaracterizes his testimony. (By Mr. Brown) You indicated there were some times that you would be told that a vehicle had

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A. Q.

some repaired damage. I take it sometimes you would learn this when a vehicle was traded in? You mean like from a customer or -Yes. Yes, sometimes, sure. And sometimes you would learn it when you did an appraisal. You would see signs of damage? Yeah. Once in a while it was visible, sure. I mean repaired damage. You would see signs that a vehicle had been in a wreck and had been repaired? Once in a while, yeah, I could pick it up. And once in a while somebody from the service department would say something about a vehicle having repaired wreck damage?

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27 Once in a while, yeah. In those cases, what would you do? Depends on the extent of what the damage was but, I mean, if it was something that was, you know, a minor $500 fender or a bumper or something like that, we would disclose it and go ahead and sell it. What if it was $15,000 worth of damage? Wouldn't know. You wouldn't know? More than likely, I wouldn't know. You mean you wouldn't know it was that extensive or wouldn't know what to do? I'm saying if it was that kind of damage, it would be extremely obvious, but there again, I don't recall having a car that was anything like that. Well, some cars that you would trade for or would obtain even from the auction, you would be informed by somebody that it had previous, say, unibody damage. Is that fair to say? Well, if it had unibody damage, we wouldn't have bought it, number one. And number two, we wouldn't have sold it or probably traded for it in advance. We would have sold it to a

1 2 3 4 5 6 7 8 9 10 11

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A.

28 wholesaler. So if a vehicle had unibody damage, it was standard practice that you would not offer that for sale off your -- off your lot? Right. You would wholesale a vehicle like that out? Right. As near as you can recall, would you have been most likely assistant used car manager in July of 1992? I don't recall. I'd have to have my start date

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A. Q.

to go from there. Were vehicles fairly frequently sold on consignment by Blue Springs Ford? No, sir. Under what circumstances would vehicles be sold on consignment, if at all? I don't recall ever having one on consignment. Did any employees or personnel or managers of Blue Springs Ford ever have vehicles sold off the lot for them by Blue Springs Ford? Not to my recollection. Was it standard practice throughout the time you were either an assistant manager or used car manager that when a vehicle was received on

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A. Q. A. Q. A. Q.

29 a trade-in, whoever traded it in would be required to sign something saying whether it had repaired damage? Towards the end I know for a fact, but I can't recall back seven, eight years ago. I'm going to ask you to work on your memory a little bit on one point and see if you can help us. 1991 Ford Mustang, you got some description of it here in Exhibit 28. If a vehicle didn't have any repaired damage on it and it was sold originally for I think right about 22,000 in September or so of '91, what would its value have been approximately in July of '92? I have no idea. Can't remember at all Mustangs and what they went for? Not over 18 years of looking at cars, no. That's why we have black books. Yeah, fair enough. They were a guide. If a vehicle had previous repaired unibody damage, would that have been offered for sale without it being approved of by top management?

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A.

30 MR. TYRL: I'm going to object to the question. Lack of foundation, calls for speculation and conjecture. (By Mr. Brown) Let me back up a second. [Witness] -- oh, are you getting paged? That's okay. This pager never shuts off. Okay. At the time that you were working as either assistant manager or used car sales manager, your conduct conformed with the directions from your higher-ups; is that correct? Yes.

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Q.

A. Q.

If I understand correctly, generally speaking it was -- it would have been against policy to sell a vehicle with repaired unibody damage off the used car lot to a retail customer; is that right? Yes. If such a vehicle had been sold during the time period you were assistant manager or used car manager that had repaired unibody damage that was known, would that have been done without the knowledge of your superiors? MR. TYRL: Objection. Calls for speculation. There's no foundation.

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Q.

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A. Q.

31 (By Mr. Brown) Go ahead. MR. TYRL: Go ahead. I never recall ever having one that was that way, so I can't -- it never came up to have that question answered. (By Mr. Brown) Okay. If somebody had raised that question, you would have consulted with your superiors? Most definitely. Do you recall any occasions when people came back to Blue Springs Ford after purchasing a vehicle sometimes subsequently and complained that they bought a vehicle that had previous damage that they didn't know about? Not to my knowledge. Were there ever any occasions that you heard about when anyone complained that they had received a vehicle and they had been told something incorrect about the ownership history of the vehicle, how many owners it had or whether it was a rental car or something like that? No. You were present at Blue Springs Ford and working there when the 60 Minutes piece ran in

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32 February of 1993 where Mike Wallace did some interviews at Blue Springs Nissan; is that correct? I was told I was. What do you mean you were told you were? At the last case we were at. I never saw the piece. Did you hear about it? From you. Did you not hear about it from anybody at Blue Springs Ford? No, sir. Not until the court date. You never heard any discussion about the 60

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Minutes piece? No, sir. Would you describe the role -- was it a Mr. McWilliams? There was a Mr. McWilliams there? Yes, Bruce McWilliams. What was his position during the years that you worked there? Well, let me make it easier. Without describing -- knowing his job title, describe what he did so far as you saw in connection with the business. Was he over you? Well, at one time Bruce was the body shop manager, okay, and then at that point he was

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A. Q.

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33 basically moved to being in charge of the shop kind of -- not just the shop but shop, body shop, and it was kind of a comptroller I guess would be the word. As far as actually being over me, no. You reported to -- primarily to general managers, Mark Talbot, Bob Balderston. Are those the main people you reported to? I reported to general sales managers, sales managers and Bob Balderston. Was -- was Bob Balderston kept informed pretty clearly and pretty regularly of day-to-day sales activities? Most normally, yes. Did you have sales meetings on a regular basis? Yes. Was he regularly in attendance at those? Yes. Was there discussion of changes, any changes, in practices and procedures? Yes. Did you discuss interesting vehicles or any vehicles of special note? Vehicles of special note, in other words, what would be the sales ads for the vehicle.

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34 Would you discuss selling points of vehicles such as it was a vehicle that really was owned by a little old lady, only drove it to church, that kind of thing? No. If a vehicle was a one-owner vehicle, was that a selling point? Never used it as a selling point because to my personal belief, I'm not sure there is such a thing. What do you mean? Well, the company owns it to start out with, whether it's got an open MSO or not. In your experience did purchasers pay any

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attention to how many owners a vehicle had had? From time to time. So you would wait for them to ask before you would tell them about ownership history? Yes. As far as how many owners it had. You became familiar with Carfax eventually? Yes. Tell me what Carfax does. Carfax, what it does now I don't know. What it did back then was give you a title history of the vehicle and a mileage -- kind of a mileage

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A. Q.

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35 tracking. It would show in some instances, say, if there was a mild discrepancy that showed on a Carfax. That would show sometimes? Sometimes. And sometimes it would show if there was a previous salvage title or flood title on the title history? Normally just salvage or junk. If a Carfax showed up something like that, salvage or junk titles, would you offer a vehicle like that for sale at retail? No, sir. Did you Carfax all of the cars that came -Yes, sir. At the end. Well, Mr. Balderston has indicated you started using Carfax the day after the 60 Minutes piece ran, the day after it aired in February of '93. So did you Carfax every car that came in after that? Yeah, if we had them then. I know when they came in, the Carfaxes themselves, you could only get information from a few of the states, not all of the states. When a Carfax showed up something like that,

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Q.

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36 would you take it to the auction and sell it or sell it to a wholesaler? We wouldn't trade for it, not if it showed up. We would make the customer aware of what we found and let them go fight their battle. (Marked for identification Deposition Exhibit No. 35.) MR. BROWN: I'm going to mark Exhibit 35 consisting of four pages Bates-stamped Nos. 13, 14, 15 and 30. (By Mr. Brown) [Witness], I'm showing you what's marked as Exhibit 35, Bates stamp No. 15. Uh-huh. This shows an appraisal of the vehicle; is that

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right? Shows an appraisal of the vehicle. Do you know what -- can you see who did that? I can see who the salesman was. Who was the salesman? Kent. Kent Hessefort? Probably. There was more than one Kent, but that's the name that comes to mind. Can you see who did the appraisal?

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Q. A. Q. A. Q. A. Q.

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A.

37 Not really. I can't tell. MR. BROWN: No further questions. MR. CARR: I just have a few. Sorry. EXAMINATION BY MR. CARR: How long have you been in the -- or were you in the car business? I think since '79. And you got out of it in '97, right? Uh-huh. Is that a yes? February, yes. And through that time, one of the things you did during that process was appraise used cars, correct? Through the latter part of my career, yes. When you were at Blue Springs Ford as a used car manager, one of the things you'd do is appraise some of the trade-ins and appraise some of the vehicles that came in, correct? That was -- yes. When you appraised a vehicle then, you were trying to determine what a fair price to pay for the car would be, correct? Yes.

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38 And your intention was obviously to pay a fair price for the car but not so much that you couldn't turn around and make a profit, turn around and sell it and make a profit of some sort? Correct, yes. You wouldn't want to pay more than the car was worth, would you? No. And one of the things you would be looking for, as Mr. Brown mentioned, would be previous wreck damage that was repaired and things like that, correct? Yes, if it was visible. And if it was visible wreck damage, that was something you might take into consideration in

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A. Q. A.

appraising the value of the vehicle, correct? Yes. And if you found apparent repaired wreck damage, you might reduce what you'd pay for that vehicle, correct? Yes. You wouldn't want to pay full wholesale price for a vehicle you knew had been in a wreck? I wouldn't want to pay full price for a vehicle

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39 I knew had previous damage. I wouldn't know about a wreck. MR. CARR: That's all I've got. MR. BROWN: Nothing further. (The witness was excused.)

By agreement between counsel for plaintiff and counsels for defendants and the consent of the witness, the signature of said witness was waived. My commission expires October 21, 2002.

________________________________ Notary Public, State of Missouri (Commissioned in Jackson County)

40 1 2 3 4 5 6 7 8 9 C E R T I F I C A T E STATE OF MISSOURI COUNTY OF JACKSON ) ) )

ss.

I, CHERYL R. BEAL, a Notary Public in and for the State of Missouri, do hereby certify that there came before me on the day, between the hours and at the place set forth in the caption page thereof, witness: [WITNESS],

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who was by me first duly sworn; that he was examined and the examination was taken down in stenotype by me and thereafter transcribed; that the foregoing pages are a true record of the testimony given; and said deposition is herewith returned. I further certify that the exhibit marked in said deposition was retained by counsel. I further certify that I am not counsel, attorney, or relative of either party, or clerk or stenographer of either party or of the attorney of either party, or otherwise interested in the event of this suit. GIVEN, under my hand and notarial seal at my office in said county and state, this _____ day of ______________ 2000. My commission expires October 21, 2002.

21 22 23 24 25

_________________________________ Notary Public, State of Missouri

THE CIRCUIT COURT OF JACKSON COUNTY, MISSOURI

41 1 2 3 [CONSUMER], 4 Plaintiff, 5 6 7 Defendants. 8 9 10 11 12 13 14 15 16 The taxed costs of $_______ have been paid by the Defendant Blue Springs Ford. vs. BLUE SPRINGS FORD SALES, INC., et al., AT INDEPENDENCE

) ) ) ) No. ) Division No. 2 ) ) ) )

REPORTER'S CERTIFICATE I hereby certify that the deposition of [Witness] is in the custody of Mr. Bernard E. Brown, 3100 Broadway, Suite 223, Kansas City, Missouri 64111. Said deposition was taken on 4/26/00. The taxed costs of $_______ have been paid by the Plaintiff.

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The taxed costs of $_______ have been paid by the Defendant Superior Ford.

_________________________________ Notary Public, State of Missouri My commission expires October 21, 2002.

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18.3 Deposition (With Comments) of Business Manager

1 1 2 3 4 5 Plaintiff, 6 7 8 Defendants. 9 10 11 12 13 14 15 16 17 18 a Notary Public for the State of Missouri. 19 Taken on behalf of the Plaintiff. 20 21 22 23 24 25 2 1 2 3 APPEARANCES For the Plaintiff: Mr. Bernard E. Brown Law Offices of Bernard E. Brown 200 Westwood Colonial Building 4800 Rainbow Westwood, Kansas 66205 CHERYL R. BEAL Certified Shorthand Reporter of Peak Court Reporters 1200 S. Outer Road, Suite 315 Blue Springs, Missouri 64015 (816) 224-5533 DEPOSITION OF [WITNESS], being produced, sworn, and examined on Thursday, January 23, 1997, between the hours of 8 a.m. and 6 p.m. of said day, at the law offices of Ensz & Jester, 2121 City Center Square, 1100 Main Street, Kansas City, Jackson County, Missouri, before: vs. JOHN CHEZIK HOMERUN, INC., and NKC MOTORS, INC., IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI WESTERN DIVISION

[CONSUMER],

) ) ) ) No. ) ) ) ) )

APPEARANCES, Continued For the Defendants: Mr. Randall D. Thompson

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Ensz & Jester 2121 City Center Square 1100 Main Street Kansas City, Missouri 64105

INDEX Witness: [Witness] Page Deposition Exhibit No. 2 . . . . . . . . 35 Deposition Exhibit No. 3 . . . . . . . . 35 [Consumer] Deposition Exhibit No. 1. . . 18 Lunch recess . . . . . . . . . . . . . . 32

12 13 14 15 16 17 18 19 20 21 22 23

S T I P U L A T I O N S It is hereby stipulated by and between the parties herein that presentment to the attorneys of record of a copy of this deposition shall be considered submission to the witness for their signature within the meaning of Rule 30(e) Federal Rules of Civil Procedure; but shall in no way be considered as a waiver of the witness' signature, and will be filed with the taking attorney of record to be signed by the witness at any time before or at trial of this case; and if not signed by time of trial, may be used as though signed. It is further stipulated that the deposition of the witness may be signed before a notary public other than the notary before whom the deposition was taken.

[ Comment: Deposition of a used car manager in a rebuilt salvage car case. Of particular value regarding the dealer buying and selling cars at auctions, analyzing all the factors tending to show the used car manager and dealer knew or should have known they were handling a rebuilt wreck and werent disclosing it, car inspections by the dealer, financial motives, disclosures of all types, explanations of doc fees, and in a couple of passages pressing an evasive witness and persisting in the face of an objecting lawyer.]
3 1 2 3 4 5 6 7 8 10 11 12 13 [WITNESS], being produced, sworn, and examined on behalf of the Plaintiff, deposeth and saith: EXAMINATION BY MR. BROWN: State your full name for the record, please. [Redacted.].

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[Witness], have you had your deposition

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taken before? Yes. How many times? Once. And that was in the case of Bay -- no, that was in the case of Calia, Mr. John Calia; is that right? Yes. I'll just review some basics. You understand that I'm Bernard Brown. I'm counsel for [Consumer] on the case that she's brought against Chezik, and you understand that? 4

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Yes. And it relates to a car that's asserted to have had wreck damage when it was sold to her. Yes. If I ask you any question and for any reason you don't understand it, please feel free to stop me and we'll get any confusion sorted out before you give an answer, all right? Yes. A reminder: Try to make sure you give your answers out loud and in English because the court reporter needs to have something she hears to take it down. I understand. You also understand your testimony is under the same requirements of law as if you were testifying in a courtroom? Yes. By whom are you currently employed? John Chezik Honda. And how long have you been so employed? With John Chezik Honda, six years. Your current position there is? Used car manager. How long have you been used car manager? 5

[ Comment: Work history questions help to set up witnesss extensive experience in the industry]
1 2 3 4 5 6 7 8 9 10 11 A. Q. A. Q. A. Q. A. Q. A. Six years. Who hired you? Mike Nitsech. So your approximate starting date was when? Six years, it would be '89. Well, let's see, this is January of '97. Do you think you started in '89? That would be -I'm sorry. -- seven-plus years? '89, yes. Then it would have been seven years then. I'm sorry.

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But it was '89 when you started? Yes. Are you originally from Kansas City? Yes. Where did you go to high school? North Kansas City. When did you graduate? 1973. Did you have any schooling after that? No. Were you in the military? No. Would you give us a rundown of your work and occupation history from the time you graduated 6

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from high school? Okay. Worked at Worlds of Fun for six months. Worked for probably six months. Was hired at Van Chevrolet in 1974 in sales, worked there for eight years. Went to Superior Nissan, worked there for approximately four years. I was hired by John Chezik Buick, worked there for approximately four years. And John Chezik Toyota -- I'm trying to add this up here. Try to put the approximate -- especially if it helps to get the timing right, try to put in when you started and left these places. Like Van Chevrolet, started in '74, worked for eight years. When did you start with Superior Nissan? Let's see, eight years from 1974 would have been '81. Worked for them until 1985. Went to work for the Buick store -- see, I'm getting these dates wrong. I'm sorry. I've been in the business for several years. Let's see, went from Buick to Toyota to the Honda store. Does that break down? Can you tell us approximately -- did you start at Chezik Buick immediately after leaving Superior Nissan? 7

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A couple of weeks, yes, after I left Nissan. Approximately two weeks. Approximately '85? Yes. And you were there four years? Approximately. It might have been three. Then Toyota starting approximately when? What date do we have there? I'm sorry. I'm losing -Just go from the best of your recollection. '85 to '88 to the Toyota store. Maybe I was at Toyota for just a couple years then. Well, now

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we're getting our -Take your time. I'm sorry. I'm not expecting perfection. Anything that will help you sort through it, go ahead and think about it for a little while. Okay. I was at the Honda store six years so we back that up to '91. And Toyota, I guess I was only there for a couple years so that would have been what, '87, so the Buick store maybe I was just there a couple years so '85 to '87, '89 to current with Honda. So Buick from maybe '87, '85 to '87? 8

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Yeah. Toyota from '87 to '89? Right. And then Honda from '89 to the present? Yes. Were you a Superior Nissan salesperson? No. I was used car manager at Superior Nissan. What about John Chezik Buick? Used car manager. And at Toyota? Used car manager. Have your duties changed at all during all the time you've been at Chezik Honda? No. Were your duties essentially the same at the Chezik Buick and Chezik Toyota dealerships? Yes. Do you remember [Consumer]'s vehicle? From the deposition that I looked at the other day, yes. MR. THOMPSON: For my clarification, do you mean her Citation or the Dodge Shadow? You know, the one she brought in to trade in? MR. BROWN: Oh, I didn't mean the one 9

[ Comment: Pinning witness down on what materials he reviewed before the deposition.]
1 2 3 4 5 6 7 8 9 10 she traded in, I meant the one she bought, yeah. (By Mr. Brown) What was the deposition you reviewed? [Consumer]'s. Have you reviewed any other materials prior to your deposition today in preparation for it? This packet. The car packet? Yes.

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Anything else? No. After reviewing [Consumer]'s deposition, do you have some recollection of the vehicle and the transaction? Yes. Take us back to the beginning. What's the first thing you recall conducting with [Consumer]'s vehicle? I guess -I'm referring to the Shadow when I refer to [Consumer]'s vehicle. I guess it was remembering her coming in to have me look at the car for an inspection. When approximately did that happen? 10

[ Comment: This vehicle had extremely obvious damage when viewed from below, when it was on a rack. This testimony, establishing that witness looked at it from below after the lawsuit was in process, and then that he was saying that he only saw signs of paint work, was significant for impeachment. Also, his comments about what was said by the mechanic at the time were contradictory to what our client heard the mechanic say, again a matter of impeachment.]
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. It would have had to have been in '94 sometime I guess just with the dates there. Would you describe what transpired? There was a meeting set up from our counsel to look at the car with [Consumer] to see what damages -- what the amount of damages might have been or what the condition of the car was. And what happened? We took the car into our shop, put it on a lift, lifted the car up. I looked underneath of it with a mechanic, and I'm not for sure if [Consumer] looked at the car with us or not. Okay. And set the car back down and she was on her way basically. Who was the mechanic? I don't remember actually. I think there was something mentioned about Maloy possibly. We had several mechanics come and go. And your counsel was present, Mr. Jester? No, he was not. You said a meeting with counsel, [Consumer]'s counsel? [Consumer] I believe had counsel with her. She had another gentleman with her at that time. 11 1 2 3 Q. A. Right. I thought that was her counsel. sure.

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I wasn't for

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Would you describe anything you recall of any discussions at that time? Actually, with her, no, I don't think there was too much conversation there. How did the meeting come about; did she call you? Mr. Jester called. Okay. And said she was going to come out, we need to look at the car. Prior to looking at the car, did you know anything about what the problem was, what the complaint was? Actually, that was the first that I had known that there was any problem at all is when he had called. When he called. But before they actually came, had you been advised of what their complaint was, what [Consumer]'s complaint was, before they actually came in for the inspection? That we were to inspect the car by Mr. Jester's request. 12

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Were you aware that she was saying that there was some damage to the car? I can't remember the complete conversation now. I mean, I don't remember anything transpiring with that. It was just that we needed to look at the car, report our findings. Do you recall anything of any discussions you had with anybody at the time the car was inspected? Actual -- I mean, what had taken place, the conversation, three years ago, no, I don't. Do you remember the substance? I mean, without remembering the exact words, do you remember generally what was said back and forth? With? With [Consumer]. Between yourself and [Consumer] or between yourself and the gentleman who was with [Consumer] or between you and the mechanic. No. We looked for tire wear, anything that was maybe out of align, some things like that, but that was what I was looking for. You were looking for things like tire wear and alignment? Tire wear basically and underneath the car. And what underneath the car, like oil leaks? 13

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Something that might have been out of place that you could visually see. Did you see anything notable about the car? That it looked like there had been -- when the

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car came in, looked like there had been some paint work done to the hood area and the bumper area. Anything else? Not that I recall, no. Did you -- you and the mechanic looked at it at the same time? Yes. I was there with him. Did you open the hood? I don't recall, I don't recall. But did you open the doors? The part that stands out to me is when we actually put the car on the rack. I don't remember opening the doors and everything, no. You may have, but you don't recall? Possibly, yes. Did you drive it? No, I don't believe I did. I don't recall it if I did. I don't recall that. So what conclusions did you draw from the inspection? 14

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That there had been paint work done, and I think that was basically about it. I think we gave all the other findings. What transpired from there, I just lined it up with the mechanic. I didn't get too much more involved with that. Did you see any signs of wreck damage beyond the paint work? Not that I recall. I'm not a mechanic. I mean, if I visually look at something, I could see there had possibly been some paint work done to the car. Did the mechanic offer any comments that you can remember about what he saw? Basically, like I say, we were looking for like major tire wear or something like that, like something might be out of align. It looked like the tires were in good shape and not too much more than that. Have you seen the car at any time since? No. Have you talked to anyone who had seen it anytime since? No. Do you have any recollection of anything 15

[ Comment: These questions begin the examination regarding the witnesss recall, from memory, of the sale and financing of the vehicle. The questioning pins him down on having very little actual memory of the sale to the plaintiff and of no specific memory at all of his purchase of the vehicle at auction. An interesting sidelight: the plaintiff, a pretty and single young woman, had indicated that the witness called her and insisted on bringing title 145

papers to her in person at her workplace. She felt he was hitting on her. Similarly, the cars salesman had seemed to her to be hitting on her. The witnesss testimony here admitting the handling of the paperwork and delivering it in person to her, and the oddity of that event, was significant particularly for that reason. The witnesss acknowledgement that he personally delivered the papers, and that it was not a usual process, is thus significant. Everything about the defendants personal treatment of a client could end up having some importance.]
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 relating to this car back at the time [Consumer] bought it, dealing with her or dealing with any -- with this transaction at all? I'm sorry. Could you -Yeah. Do you remember at all when the car was being sold to [Consumer]? Not much. What do you remember? I remember [Consumer] came to our dealership several times requesting a car. Looking at the deposition and the packet here, I bought this car at an auction. It wasn't on our lot very long. It was sold pretty fast after I got the car. You do remember [Consumer] coming to the dealership several times? Yes. Do you remember talking with her? Vaguely, yes. I do, yeah. You have reviewed the packet? Yes. What do you recall of talking with her? That she needed a car. Her car was in bad shape, and she seemed -- I mean, she really needed a car. She needed our help. 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Q. A. Do you recall any specific discussions with her? The only ones I can recall would be that when she was trying to get her paper work after she had bought the car and the time that I had taken the paper work to her job on the Plaza, and that was about it, phone conversation type, I mean, that I can recall. Walk me through those -- those are two occasions, two discussions you recall? I recall when she came into the store and she needed a car. I don't get involved with the customers until, you know, I need to. And in this particular case she was calling about her paper work, and I said it was ready, she needs to come get it. She didn't show up for several meetings or occasions. I remember that just from the deposition, recalling, and that I needed to -- I had to take the paper work to

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her at her job. Did you actually take the paper work to her? Yes. And you met her on the Plaza? Yes. At her job. Do you remember any discussion with her at the 17

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time you met her at the Plaza? No. I just said, this is your paper work, and had her sign that she had received her paper work and that was about it. You don't recall any other discussion? No. What was the paper work that you were giving to her? Applications to title the car and some paper work that she would need to license it. Which would be what? Missouri application for title. I don't know what else is in here. I mean, basically it was the Missouri application for title so she could get the car registered and licensed. What about the title itself? There was a lien on there. This was in the state of Missouri, I believe; is that correct? She lived in Kansas. She lived in Kansas? Yes. Then we would have given her the title also then. That would have been delivered by you to her at the Plaza? 18

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I believe so, yes. Approximately how long after the sale of the car was this meeting? Several months it seems like. I mean, I don't know exactly. We're talking some time ago. There's something in the file that looks like a certified mail receipt or some such item. We'll refer to the car file as Deposition Exhibit 1, [Consumer] Deposition Exhibit 1, and Bates stamp page 12. Do you know what that's about? It looks like a mailing label. This is paper work that we mail out certified mail to the address. That would be the paper work that they would need, and if it is not claimed, it would be sent back to us. What was the -- what was the practice in terms of when paper work would be given to people at that time? I'm not familiar with that because that's done in the back office when they process the paper

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work. It's usually right away. Now, by the back office that handles that, do you mean F&I office or do you mean like the billing, title clerk? The billing, title clerk people. 19

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And the practices and the handling of the documents and the delivery of documents, they have not changed at the dealership during the time you've been there; is that correct? No. Unless I'm requested -- if this is unclaimed and somebody is calling me and we need to take care of this and -Would it be fair to surmise that apparently somebody from the billing office asked you to get this -- get this stuff to her, something like that? Yes. It wasn't an everyday thing that you would be -No. -- taking documents to somebody? No. I mean, I'd think at this time the salesperson who had handled the situation wasn't available to do that. Can you recall any other discussion of any kind with Melissa at the time you took this stuff to her and met her on the Plaza? No. Do you have any recollection of talking with her at all in connection with the sale itself 20

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before the sale was completed? Actual conversation, no. I remember she needed a car. The car that she was driving I believe was not running at the time. It got to our lot somehow and quit running and I think, and I'm not for sure, I think I even gave her a car while hers was not running until maybe we could find a car for her. Do you have a recollection from your memory of who the sales -- who dealt with her on the selling of the car to her? From the deposition, it was Sammie Nasr. But you didn't remember that, it was only from the deposition that you knew that? We're going back three years. Sure. I mean, I don't remember, you know, exactly like it was yesterday but, I mean, from this, yeah. I want you to understand I'm not saying that you're supposed to remember something. I

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understand there's been a long passage of time and all. All I'm asking for in your deposition here is the best of your recollection as you can dig it out. Don't feel just because I ask 21

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you that you have to remember. I'm just asking. Yes. To my recollection it was Sammie Nasr. Do you recall anyone else being involved besides Sammie? Mark White would have done the paper work. Now, what was Mr. White's role? He was the special finance manager type. He wasn't the regular finance manager? No. He was our -- he understands the special financing end of this business. He deals directly with the finance people and sets up the deals as far as what the payment would be and the down payment money or what have you. The special end of the business, what do you mean by that? Special financing. And what does that mean? People that have a hard time with credit or credit problems. At what stage did he get involved in deals, before or after prices were reached? Both actually. Would the salespeople consult with him if somebody had credit problems? 22

[ Comment: This portion is beginning discussion of the witnesss and dealers practices in buying cars from auctions, what precautions they took, what kinds of disclosures they gave, whether they changed any practices, whether they paid attention to media reports and dealer association bulletins regarding rebuilt wreck problems. The ultimate point starting to be developed here is that if theyre buying from auctions they almost surely are not taking real care to avoid reselling rebuilt wrecks. Likewise, their policy of disclosing damage surely is not a consistent, serious damage disclosure policy. We had a good start on proving this because the clients car was an obviously rebuilt, previously salvaged vehicle, bought from an auction but sold to her as a being obtained by the dealer as a trade-in for an upgrade with nothing wrong with it but the pop-can holder. Given that this car was handled in their regular course of business, the stuff witness is telling suggesting that they had realistic policies to prevent this from happening is hardly credible and may be an attempt to cover themselves after the fact. Internal inconsistencies in the testimony become quite important, such as his inability consistently to say what changes they made in their policies, whether they gave written disclosures of damage, etc.]
1 2 3 A. Q. A. Yes. And would you consult with him? With Mark White?

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Yes. Yes. The loan on this -- the financing on this, who was it through, do you remember? I'd just have to look at the paper work here. Americredit Financial Services. Were they a special financing type lender? Yes. Going back in time before her purchase, do you remember the -- do you have any recollection of the vehicle itself prior to the time it was sold to [Consumer]? As far as -Do you remember buying it? I don't remember buying the car. Do you remember seeing it on the lot or looking at it on the lot? That particular car, no. We sell quite a few cars. I don't remember that particular car. Did you buy a lot of Dodge Shadows? Yes. You're the primary guy at the dealership in 23

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terms of buying cars from the Chicago auction; is that right? Yes. Are you the person in charge of buying used cars generally? Yes. And how long has that been the case? Ever since I've been at the Honda store. Have practices changed at all in terms of buying used cars? Basically, anybody can buy a car, I mean, at the store, in management, you know. At management level? Yes. Are there other people from the store who go out and buy used cars at auctions? No. I'm primarily the one. That's remained the same pretty much throughout? Yes. Have your procedures, how you pay for the cars, how you check the cars out, how you choose where to go to buy cars, how you handle the cars, have any of those procedures in the buying of used cars changed during the time 24

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you've been there? We tend to look at the cars a lot closer at this point because of situations like this. The buying practices? Not really.

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When did you start looking at the cars more closely? To put a date on it -- I know we try to do as much as we possibly can on every one of them and look at them as closely as we can, time permitting. Well, can you remember any events or any news media reports or anything that stimulated you guys, made you want to look at them more closely? No. I mean, not any one particular thing, no. Your dealership is a member of the Missouri Auto Dealers Association? Yes. You get the bulletins from the Missouri Auto Dealers Association, correct? Yes. Do you review those? Periodically, yes. Did you -- were you aware of the piece that was on 60 Minutes about cars that were in wrecks, 25

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totaled? No. I mean, not that I can recall, no. You don't recall actually seeing it? No. Did it involve a Blue Springs dealership and the Bob Albright -- not Bob Albright, Albright Pontiac, do you remember hearing about that? I do remember that. It caused a stir in the community? Yes. Did that have any impact on your thinking about buying cars that might be wrecked? Yes. Was -- after that were you more on the alert then to be careful and check them out? We tried to, yes, we did, and with titles and things like that. What were all the things that you did in buying used cars through -- during the time that you've been used car manager at Honda anyway, to keep from not just buying but to keep from reselling cars that had wreck damage? MR. THOMPSON: I'm going to ask you to be more specific. I mean, he's been there for six years. He's testified 26

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things have changed. MR. BROWN: Well, I'll ask him -that's a fair point. (By Mr. Brown) I'd like you to describe what all things you have done to avoid buying or

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reselling cars with wreck damage and how that's changed, if it's changed, during the time you've been at Chezik Honda. Have the mechanic take a look at them. If there's something to be noted, he'd let us know, and basic visual looking at the cars. And that's -Title checks, Carfax. Anything else, is that it? Yeah. Did any of those things change during the time period you've been there? Having mechanics take a look at the car and letting you know, that was one thing. Has that changed? We look at them a lot closer. Okay. And also if there is anything the auction would disclose to us, we would pass it along to our customers. And has that changed or was that always the 27

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case? If we knew if there was any damage to the car that the auction disclosed to us, we needed to disclose it to the customer. If we did any body work at our shop, we would disclose that to the customer. Anything that we knew about the car we'd disclose it. And has that been the case throughout the time that -No. That's changed. When did it change? Several years back. Approximately? Three, four I'm going to say. I mean, there were some changes that were made and some paper work that was passed along that said, hey, we need to do this. Taking those one at a time like with respect to if you had bought a car at an auction and it had a disclosure on it, approximately when did you start -If we had a disclosure from the auction, ever since I've been at the Honda store we would disclose that. Always, okay. Any other auction -- any other 28

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disclosures relating to auction cars that have changed at all during the time you've been at the dealership? I'm sorry? I thought I was following you saying these were some things that had changed.

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Right. Have there been any other changes of any kind relating to cars coming from auctions that have been disclosed -We would disclose the car, the origin of it, if it was an auction car or a trade-in, what the prior use of the vehicle was. When -- you didn't always do that? I think we've had that form for quite a long time, yeah. So you think that form has been used by you since you've been used car manager? Yes, I think. I mean, we got -- try to, yes. Likewise, if the car has been a rental car, is that one of the things that would be disclosed on this form? Yes. And I'm not sure how long that's been in effect actually. But has that been on the same form that has 29

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auction disclosure and would have rental car disclosure on it; is that right? Yes. And that's been on the form all this time as long as you can recall at the Honda store; is that right? We haven't been using that form I don't think all the time I've been at the Honda store. When do you think that changed? There's been -- I mean, we introduced a lot of new disclosures that MADA suggested that we came up with, and I'm not for sure how long we've had that exact form. So did you try to follow -- generally speaking, did you follow at the dealership what MADA suggested? Yes. So you would read their bulletins, implement their ideas and make changes that they were suggesting? Yes. You talked about cars that had work done on them at the body shop, body work while you owned them. Yes. 30

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You say you implemented a policy of disclosing that? Yes. When was that implemented? I can't come up with an exact date, but I think it's always been policy since I've been with John Chezik Honda.

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Perhaps I misunderstood. I thought you were talking about some things that have changed, and I've got the auction disclosure, disclosing that a car came from an auction or that a car had been a used car. Right. And there was a form that started being used at some point? Yes. And do you think that that form was in use all the time that you were used car manager at Chezik Honda? The form that said that the car was from an auction? I think I stated that might have been recently. I'm not for sure. I mean, a couple years. I don't know exact date. Could have started being used a couple years ago? 31

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Maybe three or four. I'm not sure of the exact date. I'd have to pick up some stuff. Now, what you refer to as far as if we did body work for the car, we would always disclose that to the customer if John Chezik Honda took the car with damage, had it fixed and knowingly, you know. That was always disclosed? Yes, always. Was there a form for disclosing body work that you did on cars? We have a form, yes. Did you always have a form for that? We have a form now that actually is written out. I don't know if that form is -- I mean, I know it's been around for quite a while. I don't know if we've always had that particular form and disclosed it to them that says, hey, we've done this work and it was this amount. Did you always give written disclosures? I don't remember actually, no. So with respect to a car that body work was done while Chezik had the vehicle at your body shop, were those -- have there been any changes in disclosures, the manner of disclosing that 32

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sort of thing, since you've been at Chezik Honda? I'm going to say it was the written part of it. A change in the form or the fact that it was changed to be disclosed in writing? The change in the form of disclosure in writing. But it was always written you think? I thought

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I understood you to say you didn't really remember if it was always written. Well, I know we have a form now that has disclosures, and anything we've done we'll write it out and give it to the customer. I don't know how long that form exactly has been around. I know it's been around for quite some time. Before that form, you know, possibly could have been orally or written somewhere that, yeah, this car has had damage. (Lunch recess.) (By Mr. Brown) Referring to the car file, [Consumer] Exhibit 1, are there documents in there that you're familiar with? Yes. Would you walk us through them? And you can refer to -- for a page number you'll see 33

[ Comment: Reviewing the paper file and the logistics of buying cars at auction.]
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 they've been -- well, they generally will be -yeah, they've got a number there on them. So you're looking at one that's got No. 6 on it? Yes. That's the first one in the file you're familiar with? Well, there's another -- the first one is -Exhibit No. 1 is a packet, a copy of the packet. Yes. No. 2 is a Greater Chicago Auto Auction bill of sale selling the car to -- from looks like Terrapin Sales to the auto auction to John Chezik Honda. No. 3 is a buyers guide that states what the warranty is on the car, which states it has a remaining factory warranty when transferred by purchaser. MR. THOMPSON: I'm going to interrupt. I think Mr. Brown asked you the documents you were familiar with or had knowledge of. (By Mr. Brown) I didn't -Oh, I'm sorry. I didn't mean to ask you to state what everything was in there. 34 1 2 3 4 5 6 A. Q. No. 5 is a check to the Greater Chicago Auto Auction. No. 6 -Again, don't stop with documents unless you would have had something to do with the document. Oh, I'm sorry. I thought you wanted me to --

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I appreciate the effort. Something I would sign? Something you would sign or something you would have reviewed in the transaction. I would have definitely reviewed the Chicago Auto Auction receipt. That's No. 11? Yeah. I signed that. Your signature appears at the lower left? Yes. Now, there are different copies of that. I think at the very beginning -- that's page No. 11 of this Exhibit 1? Exactly. They're just carbon copies. Well, they're a little bit different. We have the originals. I think I can see from looking at the original, the yellow original is the same as page No. 2? Okay. 35

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Yes. The yellow original is the same as No. 2 and the blue original carbon is the same as page No. 11? Exactly. Now, they're multiple parts of a form. Do you know which version it would have been in at the time that you signed it? It should be in I believe this way, the blue with the yellow behind it because this is the original because I wrote the stock number on this one. MR. BROWN: You know, I think it would probably be helpful to mark them, Randall, just because they are carbons and this has original ink on them. (Marked for identification Deposition Exhibit Nos. 2 and 3.) (By Mr. Brown) So referring to page No. 11 of that Deposition Exhibit 1, and we've marked this now as Deposition Exhibit 2 of today's date. This is a blue copy. That's what you would have signed? Yes. Although even this -Actually, I'm sorry. This is a multicopied 36

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deal. There's several other ones. This is a copy. The one that I would have signed would look like this, but this is not -Would have been the top part of the form? Yeah. There was a couple other forms on top. Who keeps the original one, would that be at the auction?

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Yes. But on this Exhibit 2 where there's a handwritten number just above where it says John Chezik Honda, that's your blue ink handwriting? Yes. And you're writing the last seven digits of the VIN or your stock number? That would be our stock number. When would that have been written on there? That would have been written on the day we received the car, possibly before. You mean when it showed up at the lot? Possibly. Or I go to the auction on Thursday. I go in the morning, I come back at night, usually get off the plane 7:30, eight, 8:30 at night. I'll usually bring this in on Friday or on Saturday to stock these in and do the paper 37

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work. When you stock them in, you assign them stock numbers? Yes. And you sometimes will do that -- you won't do that before you leave the auction? No. You'll do it back here in Kansas City? This has to be done at the dealership. Now, there are some notations on Exhibit 3, the yellow version, here at the top. Do you know what those notations refer to? No. That was something that obviously the auction has done. That's their writing. When would you have received this Exhibit 3? You say Exhibit 3 would have been underneath Exhibit 2 on the form? Exactly. When would you have received Exhibit 3, on the day of the auction or -Yeah. These are handed to me when I buy the car. You get two? Yeah. I get both of these. I take this one back to Kansas City, I give this one to my 38

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transportation guy. The yellow one, No. 3, went to the transportation guy? Yes. So he can take this, get the cars and bring them back to Kansas City. Now, up here at the upper right where it says state, do you see where I'm referring to, the AK where it says state on Exhibit 3?

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Uh-huh. Who would have written those notations at the top there, title received? I don't know. Those appear to be carbon also. Yes. Are you quite clear that you get both forms at the same time? This is -- usually, I get a blue and a gold copy at the same time. At the same time? And I grab this one, take it back to Kansas City, and give this one to my trucking agent. Now, when he takes this, this is a receipt for him to get the car out. They take this at the gate, as far as I know, and keep this copy and then return it obviously to somewhere inside 39

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the -- okay. This does not come back to me. I give it to the trucker, the trucker loads the cars at the gate, he gives them this to get outside the gate. All right. So obviously this goes from wherever the gatekeeper keeps it to wherever the internal duties are assigned, I guess. You mean it goes back into the auction? I guess. I don't know that part. How does it get back to you? Because it was in your file. I don't know if they mail that with the title or what the situation is. Okay. Speaking of titles -Okay. -- first, how do you pay for the cars when you buy them at an auction? We take the cars, we mail checks for titles. You sign the invoice? Right. Do you give a draft, sign a draft or anything like that? No. In Chicago we just -- we buy the cars. When I sign this, it basically acts as if I'm 40

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going to pay for the car. You're authorized to sign for Chezik Honda to buy the cars? Yes. Is there anyone else authorized to buy cars at the Chicago auction for Chezik Honda? I would have to look at who's actually on the statements. I think Bobby Hennessey was possibly at one time.

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John Chezik? Yes, Honda. John Chezik himself? I don't think so, no. When you buy at other auctions, do you have to give drafts? At the Kansas City -- not Kansas City, but the Metro Auto Auction in Lee's Summit I have to sign drafts that they will hold until we bring them a check. When is the title actually delivered when you buy cars at the Chicago auction? In Chicago? Yes. We will mail them checks, and they will mail us titles when the title comes in. 41

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Who handles the checks? Who handles -- who writes the checks? Right. The back office. I turn this in, and how they get the check or however it gets there I don't know. I mean, I guess the title gal. And who handles the titles? Our title gal, title person. Who is it now? Now it's Marcy. Do you know her last name? No, I don't. I think it was Baker. I'm not for sure. Marcy title gal? Yeah. Who was it in '93? I don't remember. Was there someone before Marcy? Oh, yes. Was Carol Tracy at one time a person who did that? Carol Tracy was an office manager at our dealership at one time. But the office manager and the title clerk biller are different -- generally different 42

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people, right? Yes. Well, I mean, they can both -- I think the office manager can perform any procedure in the back office. So you don't know how the titles would actually be delivered? No. I mean, Federal Express. At that point I say, here, you guys take care of that, get the titles, and here's what I paid for the cars, send them the money and pay for the cars and

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I'm going to go sell some cars. Is there any way from looking at the sales invoice to know whether the title is available at the time you purchase the car? If it -- sometimes if they're going to be a late title, they will announce it at the block to be a late title. They have what is called a TA, title attached. I don't pay too much attention to that when I'm buying the car though. I'm usually pretty busy. And what does title attached mean? I don't -- it's -- that the title I think is there. Title attached? I thought title attached meant that it would come later. 43

[ Comment: When dealers buy cars at auction, they do not know where the cars come from. One brick in the foundation of a huge point: they are buying highly suspect cars from highly suspect sources. And this is a point that can be made constantly, in almost any case where a dealer buys cars from auctions.]
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. Okay. You're not sure? I'm not for sure on that, I mean, with this auction. Now, this -- the purchase date on this vehicle at the auction was 9-23, correct? Yes. This notation at the upper right-hand side, do you see where it says title received on Exhibit 3? Okay. And it appears to show 9-28. You don't know what that means? That's not something I would be familiar with. This is obviously something Chicago has done at the auction. When you buy cars at the auction, do you know who is selling the cars? No. Unless it's like G.E. Capital or Enterprise or Avis, and that's a promotional type of situation. But no, they do not say this is so-and-so's car and he wants to sell it, no. Do you know where the cars come from? No. 44 1 2 3 4 5 6 Q. A. Q. A. All over? Yeah. When did you first start buying cars at the Chicago auction? I'm going to say probably four years ago, maybe five.

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That would be -- five years ago would be early '92, four years ago would be early '93? I'm just going to have to say that it's been five years ago. I don't know. I'd have to look and see when I was registered with them. Have you bought cars at the Chicago auction throughout the time that you've worked for Chezik Honda? Yes. Did you buy cars at the Chicago auction before that, before you worked for Chezik Honda? No. How long -- when did you first buy cars at auctions for any dealer? Van Chevrolet. All the way back in -- when was that? '77 probably, '76. During the time that you've been used car manager at Chezik Honda and throughout your 45

[ Comment: Witness admits to high volume of buying 30 suspect cars a month at auction. This indicates a big business, experience at many different auctions, and lots of knowledge about the risks and profits of this business. This testimony introduces the judge and jury to the shadowy netherworld of the wholesale car business, as the 8th Circuit described it in the Pelster v. Ray case.]
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 employment there, approximately what kind of volume did you do buying cars from Chicago Auto Auction? Oh, I'm going to say 30 a month, maybe more. Has that fluctuated much? It depends on the business we're having. If we have an increase in people demanding cars, we would probably have to go supplement it with an auction. Now, what -- but 30 a month is a fair approximation for over those years, or more? Yeah. Well, I mean, in the winter months I might not go at all, you know, or maybe once a month. Okay. At least try to get eight to 10, maybe 16, every time that I went. And that would fluctuate, like I say, maybe three times a month, maybe once a month, maybe twice a month. In the summer months? In the summer months, yeah, maybe more heavily when the business is better. What other auctions have you bought cars at during the time you've been working with Chezik Honda? 46 1 A. Denver Auto Auction, Kansas City Auto Auction,

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Metro Auto Auction, there's one in Kentucky. St. Louis? I went there when I was with the Toyota store. I mean, you were talking about Honda. Usually, we would go to some of the Honda sales. I'm going to say possibly, yeah, St. Louis one time or not. 166? I've visited that one. I don't know if I bought anything for the Honda store at that time or not. Oklahoma? No. Dallas? No. Omaha? No, not that I recall. I mean, I don't know. Any others, any other on either coast? For Honda, no, not that I recall actually. The 30-plus a month that you talked about buying, those are at the Chicago auction, right? Yeah. And different auctions, Kansas City. That's all auction cars? 47

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I'm going to say yeah. Over these years have the vast majority of the auction cars you've bought come from the Chicago auction? I'm going to say yeah. Yeah. Do you have an opinion as to what the value of that car was, [Consumer]'s car was, at the time you bought it at the auction? What the car was worth at that time? Yes. Obviously it was worth what I paid for it, the 6,000. Well, sometimes you got better deals than others, didn't you? Depending on who was there present at the auction. If there were a lot of people there, more buyers, you could probably pick up a car a little bit cheaper, yeah. Didn't you choose where to go to the auction to find places where you could get cars for the best price? I choose to go to auctions where they have the most variety and most cars available at hand so you could go and have a variety of cars, Hondas, Toyotas, Acuras, Nissan, an abundancy 48

[ Comment: These questions contrast the dealers high auction purchase volume with low volume of sales to auctions. In other words, they build inventory for retail sales to

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consumers from cars bought from unknown wholesale dealers from all over the country, and they push hard to retail cars that come into their hands if at all possible. This is understandable from a pure profit motive cars sell for more at retail to consumers than at wholesale to dealers, and supplies motive to sell rebuilt wrecks. And it leads directly to the question on the flip side: why do other dealers sell their cars at wholesale rather than at retail? And how do they decide which ones to wholesale? The answer is the extremely dark fundamental truth of the car auction industry: it is bad cars that are so often being sold at auctions, and the fact that the selling dealers got them cheaply is why they can make profits selling them at wholesale prices at auctions. The witness is asked why he does sell some cars to an auction, and he says they sell cars at auction that are older age and sitting a number of days. Really, are those the only ones they sell to an auction? Note that the vehicle in this case was a newer car why did someone sell it at auction? More on this later in the deposition.]
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. of those cars. Do you sell cars at auction? I have sold cars at auction, yes. Approximately how many a month have you sold at auction during the time you've been at Chezik Honda? Not very much, not very much. We do a lot of retail actually. I don't need to liquidate anything that's a retailable car, you know. So approximately -We do good business. What kind of number then? Oh, maybe 14 maybe a year, 10 to 14 a year. How do you decide which cars go to the auction? If it's an older-age vehicle and it's been sitting there a number of days and I've exhausted any retail exposure to it. And where -- which auctions have you sold at? Metro Auto Auction and Kansas City Auto Auction. I got off on -- we were going through the documents. Would you continue through Exhibit 1 there and single out documents that you would have reviewed in connection with this [Consumer] transaction. 49 1 2 3 4 5 6 7 8 9 10 11 12 A. Q. A. Q. A. Q. A. This is a commission voucher that -- commission voucher. Now, this is what page number? That's No. 14. Who would have prepared that? This looks like it came from the back office because it wasn't my handwriting. Who's that sales manager? I don't know, I don't know. I don't know whose signature that is. Looks like it's from the back office so somebody prepared this in the back office obviously.

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I want to pause here and ask you what is your compensation arrangement with Chezik? My compensation? Yes. I'm paid on a percentage of the gross profit. Of the entire dealership? No. Of what, of the used cars? Used cars and a percentage of -- well, actually a small percentage of the new cars and a small percentage of the finance. This is of the Honda dealership cars? Yes, sir. 50

[ Comment: Witness discusses commissions, accounting, F & I recap sheet, stock cards, and another document that the used car manager kept separately and that just happened not to be produced. The accounting for profits and commissions on these transactions is very interesting, often both outrageous and hilarious if closely analyzed, and so much a matter of furtiveness that it rarely comes out making sense, except for the owner of the dealership. This examination is laying the groundwork certainly for disputing the defendants contention that it made only a small $292 profit. Profit from financing and from service contracts and other add-ons can be elusive, often involving hold-backs and potential future reimbursements to the dealer, and in the case of service contracts often involving subsidiary companies of the defendant. Careful spadework is important to uncovering the underlying profits. Note extended discussion using the term juice, regarding money paid to subprime lenders in particular to get top-heavy transactions to fly. Terms like this make great fodder for trial.]
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Q. A. Q. A. Q. A. Q. What is the percentage on the used cars? My percentage on the used cars? Yes. Is on the net profit of my department. Okay. And what percent do you get? 17 percent. Do you know, do you also get any commission on sales transactions when you've involved on them, on individual sales? I'm sorry? Well, when you're working, you approve all the used car sales; is that right? Yes. You don't get commission car by car, your payment is entirely from the -Bottom line. -- bottom line? The net profit of my department. I mean, there's advertisement and everything that comes out. Can you say how much this car -- the sale of this car contributed to your compensation when it was sold? By this voucher here? No. You would have to

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compile this $292.98 with any of the other 51

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sales and then take out all your expenses out of that. I get paid whatever of the net, bottom line. Let's put it this way: Whatever the bottom line was the month when this car was sold, it added something to that bottom line; is that right? Yes. My question is how much it added to the bottom line. If you figure $292 -Is that the correct way to figure it or do you know? Based on this, that's what your question was? I don't know if it should be based on this. That's what I'm asking. Is this where you would look to find how much it contributed to the bottom line, or would you look at some other documents to see how much it contributed to the bottom line? This is what -- yeah. This is what we made on this particular car, less expenses. Look at the next page, it's page 15. What's that? This is a recap sheet, business office copy. Does that tell you what the sale of this car 52

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contributed to the bottom line? Can you tell from this or are you familiar with this form? I don't use this. I use the right side of this form to -- the sale price, 7,671, the trade was 300, cash down, total down payment and then the interest rate. This would not tell me how much I would get paid on this deal, no. But does it tell you how much would be added to the bottom line for the used car sales department? Would that be that 1,045 figure on the upper right-hand side? There's -- there's finance involved in this also. Does finance get -- is that also credited to the used car sales department? No. They have their own department. So we'll leave the finance out then. Okay. So would you be looking at that figure in the upper right-hand side, is that what would be contributed to the bottom line for the used car department? No. What would be? Referring back to this sheet here to the

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53 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 $292.98. That's where it's taken from? It just doesn't reflect that figure. Do you know how it's calculated? When it comes with this form here, no, I don't. And that's page 15? Right. I mean, this is -- this has got interest rates and things. Let's put it this way. You've been a used car manager for some time. Right. If you sell a car at a dealership, can you look at that car and knowing how much it's selling for, knowing how much you have in it, do you know how much you're going to get, you personally will end up getting, because of the sale of that car? No. Because there's a lot of other things taken into account like your advertisement. Like I say, I get paid on the bottom line. Your advertisement, your compensation, your advertisement, cost of delivery expense, I mean, there's a lot of things taken out of that. So as far as when you say $292, I get 17 percent of that, no, that would not be 54 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 accurate. What things are taken out? Advertisement. That's one. Compensation. What compensation? Salesmen's compensation, their commission. That's two. And the commission on this car that the salesman got was what, 50 bucks? Yes. What else? Advertisement. Is there any advertisement on this car? The advertisement, we do so much a month, and like I say, you get a top figure, you take off advertisement, compensation, delivery expense, gasoline, used car floorplan, which would be the interest we paid on the cars. And as far as breaking it down each particular car, no, I could not break that down. All right. You know, this particular deal, I didn't make much at all after everything was taken out, I'm sure. Now, would you -- going back to Exhibit 1,

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55 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 continue to go through it. Go on past page 15 and see if there are any other documents you would have reviewed. I think page 16 is a duplicate of page 14. MR. THOMPSON: It's not. No. That was Mark White's commission. They have it split. There's Sammie Nasr, he got $50, Mark White, he got $50. So now we're $100 out of the 292. (By Mr. Brown) That says sales manager. Is a sales manager supposed to okay that form? I don't -- that's not me. It could have came back. I don't know who that is. That's not me. We're at page 17. This is a used vehicle inventory card, shows what we gave for the car and -Is that also called a stock card? This is a stock card, yes. Where were the stock cards kept? These are kept in the back in a booklet back there where they do internal -- these are things that come in like $150 transportation, this is logged in in the back by one of the office help. 56 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. A. Q. That's where they were prepared. Where were the cards physically kept, in the back? Yes. In a book specially for stock cards? Yes. Where were the car files kept? In the back office. What kind of file was available for you to review as used car sales manager on a car that was offered for sale? Did you go back to the back office to look up cars? Yes. I could do that. You had to know what was in a car when the deal was being cut. What would you look at? My stock card is in here. I don't know if you have a copy of that or not, but that's what I keep up front to keep abreast of what we have into a car and what we've done to it. I don't know if we have a copy of that or not. Yeah. Page 38 -- well, actually it probably starts on -- before that. Yeah, 38 and 39. And 38 and 39, that's what you call a stock card? This is my stock card for up front in the sales office. 57

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For the used car sales manager? Yes. And salespeople. And the earlier page, what -38? No, no. 38 and 39 are both the stock card that you keep up front; is that right? Right. One is the front, one is the back? Right. And in your left hand there, page 17, that's -do you have a different name for that than stock card, inventory card? You don't know what they call it? Yeah. It's just for internal use for whatever we've incurred, to mark it in here. All right. Now, who prepared the information showing on the stock cards there at page 38 and 39? Not from page 17. Oh, 38 and 39? Yes. I gave the information, which is actually a smaller version of this which is handwritten, to the secretary and she would type this up for me. All right. This doesn't show how much you had 58

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in the car. How could you do a deal if you didn't have something telling you how much you had in the car? I have another sheet that would show my stock in the car and if I put this number here in it, it would show how much I paid for it. Another sheet? Yeah. And would you keep that other sheet with the stock card, or would they be stapled together or were they in a file? Actually, it would be in a notebook in my desk. You kept that other sheet in a notebook in your desk? Yeah. Is there a copy of that sheet in here anywhere? No. I don't think so. It was basically on a piece of notebook paper just for my use that I would scribble on and have. And where would you get the information that you put on that notebook paper from the car? From this. From the sales invoice? Yes. And the sales invoice would be kept in a file 59

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in the back? Yes. So when you'd stock the car in, you would write something? Yes. Assign it a stock number. And the invoice would go in the car file. It would go back to the office and they would start a car file? Yeah. What kind of information did you keep written on the notebook paper? Basically the same information as this, a '92 Dodge Shadow, got it from Chicago Auto Auction, the amount, the miles and the serial number. And what if you had some other money in the car, you know, like transport on the car? Well, when I would look at that, I would know if it was from Greater Chicago Auto Auction, there would be transportation. What if you have some other money in the car? For my use? For your use. That would be 38. And where would you get the information you put on page 38 there, the stock card? 60

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That was generated from an internal out of our shop. Internal repair order? Yes. If that's where we did the car at. RO No. 71230, obviously it was, yeah, done in our shop. So at the time you had this thing offered for sale, you figured you had in it the purchase price of what, $6,050? Right. Plus your buyers fee that the auction charges you. 6,100, okay? 6,100 and $150 for transportation and $87.67 and there was also a 300 pack. And I don't see that pack on here on your stock card. No. Would that have gone on your notebook paper? If you would want to go to 40. Okay. That is a tape of my -- when I commission a deal, 6,100, you have $100 reserve, the pack, which is 300, transportation, which is 150, mechanical, 87.68, and then 640.04 for charges. What is that word there? 61

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I can't make it out.

I get to going pretty

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fast. I don't know. Is that juice? Possibly, yes. What does that mean? That would be some charges that we had incurred. 640 bucks worth of charges that were incurred on it? Yes, from something. Where would that number come from? Let me look. I would have to see all of the paper work to figure it out. What would you have to see? What the charges might have been with the finance company. I don't see that in here. Finance companies sometimes charge us an amount to finance a car. So what do we need to do to find out what that amount is? MR. THOMPSON: On the last sheet, is that something? Possibly that was a charge that the finance company charges us for processing this deal is the only thing I could think of. 62

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(By Mr. Brown) Did they do that on a regular basis? Yes. All of the finance companies you dealt with? Special financing? Yes. Some had fees, some did not have fees. And you would pay that directly? I don't know how that was broke down. It was done through the back office. Well, they wrote a check or somehow you're saying that money was paid to a finance company? As far as I know, yes. Did you usually call it juice? Yeah. We call it juice, fees. Was it a standard 10 percent figure when you paid it, was that standard? Some were 10, some were five, some were flat 200, some were flat 500. Americredit was one lender you worked with. Did you work with Honda? What other lenders did you work with? On special financing? On any kind of financing. 63

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Anything? On selling cars.

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On selling cars? Yes. All kinds of different -- I mean, Commerce Bank, United Missouri Bank, Boatmen's Bank. Did they take juice, Commerce Bank? That was not special financing. Fees were incurred with your special financing deals. If the person had paid cash for the car, there wouldn't have been any juice in the deal? If somebody pays cash for a car, no. If they paid cash for the car, would they get the car -- they could have gotten the car then for I presume $640 less; is that right? No, I don't believe so. It would be whatever the car would sell for. I mean, if the car was 8,000 or 7,000, if you wanted to come in and pay cash for a car, that's what we would sell it for. Let me follow this for a second. If you had a sale deal worked out with somebody where they were going to pay $7,000 for a car and it was special financing where the dealer was going to have to give 10 percent juice to Americredit, 64

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and we'll say the 10 percent juice, say it was 500 bucks. Down there you're writing out the papers, you're getting ready to do it and they say, you know what, I'll give you $6,500 in cash if you'll sell it. Would you do that? If there was a profit in it, yeah. If you have a choice between a deal for $7,000 where you pay juice of 500 bucks or a deal for $6,500 where you don't pay any juice, you don't have to give any money to Americredit -Well, in particular, when you're dealing with used cars, you usually have one car and you don't have two people sitting there saying -I'm talking about if my mom gets on the phone and says I'll give you the money, honey, to buy the car. If the deal would be $7,000 and you know you have to pay 10 percent juice to Americredit or -Okay. -- let's say on $7,000, you have to pay juice of $500 or they give you cash $6,900. If there was profit in the deal, depending -- I mean, if I could make 100 or 1,000, if it was there, I would take any deal that I could do. I know. But if one person is sitting there 65

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buying a car and you've reached a sale agreement for $7,000 where you're getting special financing through Americredit --

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Right. -- and you know that you guys are going to have to pay 10 percent juice, we'll say it's 500 bucks -Okay. -- to Americredit on the deal. If you're ready to finalize that transaction and she offers you instead she could come up with $6,900 cash, would you be ahead to take the $6,900 cash deal? I would take that deal, yeah. That would be better for the dealership? Yeah. So you would be willing to take it in cash, you'd give a little discount in cash in order not to have to pay so much juice? If I could sell the car for 7,000 and they say, hey, I'll finance it with you or I'll pay you cash, sometimes they look at cars for 7,000 one day and call you up the next day -- and this is any kind of deal -- I'll give you 6,500. I make a decision on that. Do I make 6,500 or do 66

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I wait two weeks and sell it for 7,000. I understand. Yeah. If there's profit in a deal, we're going to make it happen. And dollar per dollar, juice takes away from your profit? When we have to pay it, sure. So you'd rather cut the selling price by $100 than pay juice of $500? Every car stands on its own. I mean, I might sell that car for $6,500, I might sell it for $6,000, I might sell it for $8,000. I mean, it's -- it's remarkable. I'll just try this one more time. I'm trying to understand the deal. Juice eats into your profits? Yeah. We do incur a fee out of profit, yes. And if you had a choice, you wouldn't pay any juice at all? That would be nice. If you have a $7,000 car and you have to pay $500 worth a juice, the effective selling price for you is like $6,500? Yes. So if you could -- if that same person would 67

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pay you $6,900 cash, you would take that deal rather than sell the car for $7,000 and have to pay $500 in juice; is that right? Unless I'm missing something. Same person sitting right

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there, like I say, her mom gets on the phone and says, honey, I'll give you $6,900 cash. Right. Would you take that rather than selling it for $7,000 and having to pay juice in the amount of $500? At the same time she might call back and say I'll give you $6,500 for the car? No. I'm saying the one deal is for $7,000 and you have to pay $500 in juice, the other deal is a cashier's check of $6,900. Wouldn't you rather take the $6,900 deal instead of paying the $500 juice that eats into your profits? Yeah, I would sell the car. For $6,900? I might sell it for 6,500. But you'd be money ahead if you sold -Sure. If I sold it for 8,000, that would be great. THE WITNESS: Can I take a recess for a minute? 68

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MR. BROWN: Sure. (Recess.) (By Mr. Brown) We left off with I think pages -- we may have skipped a few. I think we were at 17 maybe. You may be right. Would you keep looking through and see if there are any other documents you would have handled? Handled? Yes. I wouldn't have handled the credit report. I wouldn't have handled the customer statement. I think the reconditioning disclosure we talked about and the tape we talked about and the buyers order. Would you look at the previous page at 41 there? Yeah, okay. What is that? This is an F&I jacket, it says, and -- it's an F&I jacket. The salesman fills this out basically at the top. Is that -- can you see who filled that out? I guess Sammie Nasr filled that out. You don't recognize it? 69

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I recognize Sammie Nasr there at the end. There's an initial of some kind toward the right-hand at the top. Would it help you to see the original? Yeah. I mean, it's kind of cut off. Looks

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like Sammie Nasr and White, slash White. So that's Mr. White's notation up at the top? Yes, uh-huh. Keep going, if you would. You would not have reviewed that at the time? No. Then we have a sales write-up order. We would have signed off on this. That's your signature down there where it says accepted by towards the lower right-hand side? Yes. And this is page No. 42, the handwritten version of the buyers order? Yes. All right. Page No. 43. Yes. Is your signature on there? Yes. Is that at the lower right where it says accepted by? Yes. 70

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How is that different from the previous one? This one was in Sammie's handwriting it looks like. Which one? Page 43. And page 42? 42 looks like Mr. White's handwriting. Do you know why there were two of these written up? I believe the first one, 43, was written up on an offer to purchase on a conventional financing. That would mean they would not have any problems with credit or anything. And that was submitted to me, and then it had to go through Mr. White because it was not being able to be financed conventionally. Now, generally speaking for [Consumer], she would have been able to qualify for a loan for apparently some $6,000 and that could have been applied toward any car that you offered, correct? What? MR. THOMPSON: I think I'm going to object in that you've presupposed a fact in there and made an assumption that he 71

[ Comment: The original Buyers Guide is required by F.T.C. Used Car Rule to be taped in the window when a used car is sold. This one obviously was not, since the dealer still had the original. May be significant if there is an issue of warranty disclaimers.]
1 may not know.

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MR. BROWN: I'll do that with White anyway. I'll withdraw that question. (By Mr. Brown) Keep going. The next page is 44. Buyers guide. What is that? That's just showing for this 1992 Dodge, there's a remainder of factory warranty when transferred by purchaser. Was that given to the purchaser when they're doing the paper work? It should have been, yes. Would it have been in the window of the car? Yes. It should have been in the window. Do we have the original of it? Of this? Of the buyers guide, yes. Is this the original? I'm showing you something. We haven't marked it, but is this the original, the original buyers guide? Looks like it, yes. How do you fasten those in the windows? Sometimes they're taped. Now we stick them on with hot glue. Several different ways to do 72

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it. It appears that the tape strips have not been taken off that. Was that put up in the window? It should have been, yes. But was it, in fact? I don't remember exactly. I see this one is not removed, but sometimes we taped them in there with Scotch tape. I see. You don't know if this was taped in with -I don't remember. -- Scotch tape? I don't remember. Would you have handled that buyers guide? There's -- possibly myself, my porter, maybe one of the salespeople. Would handle it? Yeah. Would you ever put anything on the back of those forms? Sometimes. I mean, as far as? Did you ever write on the back of them? Like where it says dealer address? That sort of stuff, yes. Yes. There was another copy that goes with 73

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this too. There was?

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It should -- there should be. This is a duplicate form. It should be in your file? I don't know, unless it was given to [Consumer]. What was the standard practice; was a copy given to [Consumer]? There should have been, yeah, or a copy of this. And it would not be in that file? She would have it unless she's done something with it. Does that cover -- the last page of Exhibit 1, was that familiar to you? This is -- no. I mean, I didn't have anything to do with this. That's handled by Bobby Hennessey, right? Looks like he was the witness. Do you still keep documents available to yourself about a given car in your office the same way you did back when this car was sold? You mean as far as where they came from and the amount of money we discussed earlier? Yes. 74

[ Comment: Questions begin to lay the foundation that the salesmen were not told the negative histories of these vehicles, though the used car manager would know. This relates to the vehicle having been sold with specific one-owner trade-in misrepresentations, and to the entire system being set up so that commissioned salesmen will be deliberately kept in the dark at best (or told to lie at worst).]
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 A. Q. Yeah. What documents are available to the salespeople to look at on any given car that's available for sale, the stock card? The stock card, yes. Anything else? In my office? I mean, they're stocked in. They have window stickers and things like that in them and buyers guides. Are there any other documents that the salespeople can look at? If anything ever arose and they have a question, you can take them back and show them anything they want to see in the -- the packet. In the office? Yeah. And they have access to those? By request, yes. Sometimes you had cars on the lot that you would find damage on; is that correct? Yes. How would you handle cars that were on your lot that got damage?

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MR. THOMPSON: I'm going to object as the question not being specific enough to 75

[ Comment: Very interesting testimony about how they would handle wreck damage. Witness says if they bought a car at auction they would probably not have bought it if it had real bad previous damage, and that if there was large damage, yes, they could see that, sure. That line is especially significant given that the plaintiffs vehicle was rebuilt salvage.]
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 be answered. It's vague. It could be hail damage, it could be vandalism, it could be damage discovered after it was delivered, it happened in transit. It could be all sorts of things. (By Mr. Brown) Let's start with an example if you bought a car from the auction and you found damage on it once you got it back to Kansas City. What would you do with it? If we found damage on the car? Yeah. We would probably fix it. Did it matter how much the damage was or how bad it was? Well, if it was real bad damage, I probably would not have bought the car. And you're good at always catching that? I mean, if there's large damage on the car, you're going to be able to see that, sure. So cars that had damage that you got them back to Kansas City and you found damage on them, if you bought them at the auction, you would fix those? Yeah, sure. And then when the car was being sold, would you 76

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[ Comment: This gets to the core of the auction buying practices. The witness run on and on and give lots of details about how auctions work, but what he is telling is far from the truth about the bad condition of auctioned cars. He cant say sure we bought cars that were obviously badly damaged previously, so long as we thought we could move them for a good price. So the longer and more detailed his descriptions of just how all this auction stuff worked, what they were thinking, how they would or wouldnt disclose damage and inspect for damage, etc., the more likely inconsistencies would become evident. And they run throughout his answers a fair bit of truth mixed in with a lot of storytelling.]
1 2 3 4 5 6 7 A. Q. A. give a disclosure about that? Yes. Now, what percentage of the cars that you bought had some body damage? I try to stay away from body damage because we tie the car up in a body shop so we try to get them pretty much ready to go.

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When you bought them at the auction? Yes. MR. THOMPSON: Mr. Brown, I'm going to ask to clarify this because I'm confused. Are you talking about a situation where at the auto auction it was announced that there is damage like a dent and you buy it, knowing there is damage, or are you talking about a situation where you buy it and then you get it home and there is damage? I think those are two situations. (By Mr. Brown) There may be a third one, that you didn't notice it at the auction and then you got it back here and saw there was indeed damage on it. So if a car was announced to have had damage at the auction, would you buy those cars? 77

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No. I stay away from those cars. You've never bought a car having been announced as having damage at an auction? I've bought a car that had paint and metal, sure. Did that happen fairly frequently? For me buying the cars? Yes. No. I try to stay away from those cars. Sometimes you would buy them, but generally you would try to avoid it? Yes. Now, taking an example of one they disclose as having paint and body damage, what would you do with those cars? What would you do with them once you got them back to Kansas City? Frame damage, undercarriage damage? There's several different ways they describe the damage. There's some other damage they'll disclose, paint and metal or frame. I stay away from that. They'll say $250 or $300. That's not a lot of money. I mean, if you get a shopping cart shoved in or something like that, you might spend $200, $300. So that 78

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kind of damage, bring it back, disclose it to the customer, great. If they don't want it, no problem. Somebody else will come along and won't care. Anything with a frame damage or something like that, steer clear of that. So going through those, did you buy any cars at the auction that were disclosed as having had frame damage?

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No. When you bought cars that were disclosed as having paint and metal damage, would they always tell you a number, a dollar figure? If they didn't, I wouldn't buy them. So you never bought any cars at the auction that didn't give you a number for the damage? Right. If they say this car has paint and metal, $200, yeah, that's pretty acceptable. They'd even write it on the sheet. Did you buy any cars at the auction that were disclosed as having paint and metal damage, $2,000? No. What was your -- did you have a limit? Two or $300. $500 would have been above your limit? 79

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You're getting into, I mean, something I don't think people want to mess with too much. Taking a car that you bought from the auction that was disclosed as having paint and metal, $300, what would you do with that car, if anything, differently when you brought it back to Kansas City? We'd run it through our 50-point check, have them take a look at it and make sure it wasn't any more than that. Okay. I mean, like deeper damage, inspect it a little bit. And if you found any deeper damage, what would you do? Arbitrate it through the auction. How many times had that kind of thing happened that you had to arbitrate it because you found it was more damage than they told you? Usually, you find out -- after I buy a car, I look at it at the auction and if it looks like it had more than that, I'd arbitrate it at that point and not even ship it. I mean, if I had missed something, I got it all the way back here and we said, boy, we really have a problem 80

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here, which doesn't happen very often -Sure. -- then I'd arbitrate it with the auction and they'd buy it back. What if you didn't reach an agreement with the auction? We -- I mean, they always reach an agreement with us. They would always buy it back?

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Most generally, yeah, because it was more than what they said. It doesn't happen that much. Take the example of a car that you bought that didn't have any damage disclosed and you got it back to Kansas City and found damage, body work, some significant damage on it. What would you do with those cars? Same procedure, arbitrate it back. Arbitrate it with the auction? Right. And it didn't -- what was the -- what were the auction's rules about taking cars back? If it wasn't disclosed, I mean, they would take it back and do something else with the customer. What if it wasn't disclosed and it was only 81

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$200 worth of damage? It would be up to me to say, hey, this is way too much damage or, you know, find out about it and disclose it to the customer. If they didn't tell me, it's a hard way to -If you had a car at the auction and had no damage disclosed when you bought it and you got it back to Kansas City and you found this thing had three or $400 worth of damage that had been repaired, could you make the auction take that car back? If it was undisclosed damage, yeah. The auction would take that car back with two or $300 worth of undisclosed damage? I mean, we're a pretty good customer so they would usually cater to us pretty well. So if I raised enough stink, you know, yeah. Have you sold any cars at the Chicago Auto Auction? Have I sold any? No. Are there rules similar to what's at Metro, for example? Yeah. What is their rule about what has to be disclosed? 82

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I don't have a copy exactly. They have a copy up on the wall. But paint and metal damage, I don't know if it's disclosed on the back of this or not, frame damage. I don't know if they set a certain amount on the paint and metal or not but, I mean, I don't think there's any certain set agreement here that says if it's over this amount they won't do anything about it. So it just boils down to if you're unhappy with

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the car, they'll take it back? If I talk to them, sure. How many cars have you taken back, had them take back, over average per year? MR. THOMPSON: And for clarification, do you mean after they've arrived in Kansas City? MR. BROWN: Yes. After they've arrived in Kansas City. I don't know. Two or three maybe. (By Mr. Brown) Two or three a year or two or three total? Maybe two or three total. That's since you've been the used car manager at Chezik Honda; is that right? 83

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Uh-huh. Why were those two or three taken back? These have been several years ago. I think one had a mileage discrimination. Mileage disclaimer on it? Where the miles wasn't proper or something. And I think the other one had a bent frame, and I'm not for sure about the other one. It was just two or three. If I understand you correctly then, there's only one car you recall that you returned to the auction over these several years because of damage to it; is that right? Yes. Sometimes they would say, hey, look -there might have been another case they said, just sell the car down there or get it fixed and we'll participate or help you out, and keep it at that point. There might have been one other case where that happened? Well, maybe two or three actually. And then if I fixed it, I would disclose it to the customer. But as we sit here today, you do not know what the auction rules are about what damage is 84

[ Comment: A huge inconsistency develops: the witness cant tell a clear story about what damage must be disclosed under auction rules when a car is sold at auction. The law would require far more stringent disclosures than the auction rules.]
1 2 3 4 5 6 7 A. Q. A. Q. supposed to be disclosed by the seller? Not -- not 100 percent. I'd have to get a copy. Well, give me -- do you have -- can you say at all what they require to be disclosed? Frame damage. Anything else?

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Being -- transmissions, motors. It depends on the year of car it is also. If it's a current year, it's different. If it's two years old, it's different, if it's over a five-year-old car, over 100,000 miles, as is. There's lights that light up when these cars go through. They've got ride and drive, which basically says this car is okay. You got to rely upon them, when they're running three or four cars a minute in there, that these guys are representing the cars to you to the best of their ability. When you take a car to Metro to sell it, what do you have to disclose about it? Everything that you know, otherwise it's not going to sell. Salvage titles, you have to disclose salvage titles. I'm not asking about whether it would sell. 85

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I'm asking about what the auction rules require you to disclose. Salvage titles. Frame damage? Yeah, frame damage. I don't really sell that many cars where I'm on the other end and it says it has to be this, this, this. Don't you sell 10 or 15 cars a month at auction? No. Did I misunderstand? Yes, you did. You buy 30 cars a month at auction? Yes. And you sell? I maybe sell -10 or 15 a year? Yeah. Well, what do you understand yourself to be obligated to disclose, frame damage, salvage title, what else? If you know of any damages done to the car, you need to tell them, paint and metal. $100 worth of scratch? I'm going to say substantial damage. 86

[ Comment: Questioning goes back to showing the suspect sources of auction cars. The witness admits auctioned cars unknown reputations, that they come from all over the country.]
1 2 3 4 Q. A. Well, do they have a rule? I'd have to get a -- I haven't sold a car there for probably six, seven months. I mean, I could show you. I'd have to get a copy.

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You don't know? I really don't know exactly, no. What if the thing had hail damage all over the place, is that required to be disclosed? Yes. They have a rule saying that? I don't know. The hail damage is usually pretty visible, yeah, but yeah, they do disclose that. I don't exactly know what the rules are per say that says you have to disclose this and this because I don't sell that many cars at the auction. I mean, it's been six months ago. I can get their things that we have to disclose. Where do the guys come from that sell at the Chicago auction? All over. From Kentucky? Kentucky, yeah. Arkansas, Oklahoma, wherever, Lebanon, Missouri, some of them? 87

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I would imagine. Sure. Do you know anything about the reputation of the people that sell cars at the auction? Do I know them? Do you know anything about their reputations? Not much. Do you know anything about where the cars come from? When I'm buying them? Yes. No. Do you care? MR. THOMPSON: For clarification, are you talking about people that run the Greater Chicago Auto Auction or selling them? Selling them? (By Mr. Brown) He just said the correct thing. I'm talking about the people that are selling them. Yeah. I don't know too much about that. Do you care if you're buying cars from a reputable dealer or not? I'm buying cars, when I look at those cars, 88

[ Comment: Witness admits he has heard stories about some bad wholesale dealers (bad reputations), and that by reputation general auction wholesale cars have more trouble than cars in the ordinary market. He wants to hide behind the auction, saying he relies on the auctions representations, but then is confronted with the fact that the paperwork says that the representations are only from the selling dealers (and compare his earlier statements 183

showing he, a selling dealer at some auctions, doesnt know what he has to represent re damage). This supports a central theme of the case for punitive damages.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 from the Chicago Auto Auction. They're represented as true mileage, nonsalvage titles, and they didn't disclose that to us. That's where it says ride and drive. Now, the wholesale car business has always had some pretty bad-reputation people in it, wouldn't you agree? I've heard some stories. Sure. Is it fair to say that in the wholesale used car business, there have always been a bunch of dealers who would be problem types? I mean, you hear a lot of stories, sure. You have problems with any business. Did you see the 60 Minutes piece back some years ago about odometer roll-backs being sold through auctions? I don't recall that. But you remember hearing about it? Sure. Auction cars have a reputation for having some more trouble than ordinary cars; isn't that right? I usually, like I say -- there's a lot of lease cars that have that problem too. Aside from like fleet cars. I'm not talking 89 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 about like the fleet consignment sales from one of the big leasing companies, but the general auction type of wholesale cars have the reputation for having more trouble than the cars in the everyday ordinary market, right? I haven't researched it. By reputation? Yeah. Now, when you buy a car at the auction, you say you're relying on the auction to be representing this car to you; is that right? Yes. Let me see that blue version. Oh, sure. Specifically, do you see right above the sticker here on Exhibit 2, do you see where it says no retail sales? Where is this now? Right underneath where it says no retail sales. Okay. Would you read the language right underneath that for me? All vehicles sold to dealers for resale only without warranty. Auction assumes no

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90 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 responsibility nor guarantees the accuracy of the odometer reading. You can stop there. Okay. Now, you see the line at the bottom of the page in the dark print? Uh-huh. Would you read that? This sale is solely a transaction between the buying and selling dealers. No representation of title to third parties is made or intended. Subject to agreement on reverse side. On the reverse side -- are you familiar with the lawsuit that your dealership brought against the auction? Were you aware they sued them in connection with [Consumer]'s case? I wasn't told. I mean, they don't confer with me on situations like that. Who makes those decisions? Mr. Jester, I guess. Does Mr. Jester consult with Mr. Chezik or does he consult with anybody in making the decision whether to bring a suit against somebody like that? They don't consult me on those things. I don't 91 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 know. Who does consult with Mr. Jester? I don't know. I mean, I'm used car manager. You got Phil Hicks, and that's a different level. And John Chezik up above Phil Hicks? I would -- yeah. Does the auction make any statements or put anything up on the board about whether they give any guarantees about any of these cars, the Chicago auction? Yeah. They have -- I mean, what this says, no, they don't, but I think they do. And they arbitrate with the seller, with you, as kind of a go-between situation. Where does it indicate if it's sold ride and drive? It should say so on here. Is this one sold ride and drive? Let me take a look. If I remember correctly, it was. I mean, it doesn't say so on here, but if there would have been any announced conditions, it would have said so here under announced conditions. That would mean frame damage, paint and metal, five speed, no

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92 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 air-conditioning, whatever. I don't see anything on there. If you took a car to Metro auction to sell it and it had $3,000 worth of repaired damage to it, is it your understanding that would be a violation of auction rules if you didn't disclose that damage? Well, they would probably not accept the car, whoever bought it. They try to -- these people here want to keep people buying cars from them, okay? The auction does? Yeah. And if we get bad cars and they intend not to do anything about it, I probably won't buy anymore cars from them. So they generally try to protect me, you know. Hey, this car has had a lot of damage done to it, I don't particularly want to have this car. Well, we'll buy it back and give you back your money. I've seen few auctions that don't cooperate. But does the auction have a rule that says you have to disclose that damage? I can't answer that because I don't sell that many cars there. But generally, I mean, you'd 93 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 have to understand what I'm saying. You get up there and this car has had paint and metal, this car is true mileage unknown, this car has been frame damaged, this car has had paint and metal. I mean, this car is being sold as is. If it's an as-is situation, then that means that you own it, anything goes. If an engine is knocking or the transmission is bad or it's had a bent frame, whatever, that's an as-is car. Do you -- does the auction inspect cars that are coming in? I don't know exactly what their procedures are. Do they indicate to you, hey, we inspect cars and you can count on us to have checked them out for damage? They do have what is called a Golden Eagle Sale, which means they inspect those cars. They give it their stamp of approval and they run it through a certain lane. How long have they been doing that? For years. Over here at Kansas City, not at Chicago, over here at Kansas City in the Lee's Summit auto auction. What do they say they do with those? 94

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[ Comment: The auctions do have special sales where the cars are inspected for damage and the results disclosed. The car in this case was not bought in such a sale. This undermines the witness testimony that he relied on the auctions to tell about damage generally. If they did generally disclose, what would be special about these special sales? And he acknowledges at least not knowing if the auction inspects general wholesale cars. They dont, and he must know that.]
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. They say they check them out from head to toe. Inspect them for everything? Yes. Check them out for damage and everything? Everything. And they're saying, now, this car you can count on? Exactly. That's what the Kansas City Auto Auction offers in Lee's Summit. The Chicago auction, they don't offer that? They do it as kind of a hypothetical to make the cars bring a lot more money. Well, it makes you more comfortable buying them when it has that seal? Sure. But then their guarantee is as good on a piece of paper, I guess. Sure. Do you have any understanding that the Chicago auction does any inspection, mechanical, body inspection or miles inspection on these cars? I can't answer that, but I would think they would. I don't know. When you bought the cars -- all these years buying cars at the Chicago Auto Auction, were you counting on the Chicago Auto Auction to 95

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[ Comment: He leans on Carfax now, that the auction runs Carfaxes, which he says will reveal if cars have previous wreck damage. The plaintiff can prove with abundant other evidence that Carfax doesnt come close to any such reliability, and that it is common knowledge and widely reported in the industry that Carfax does not show most rebuilt wrecks at the time theyre being sold. Such knowledge can be brought home to the witness in that it is in car dealer bulletins he reads, in that other dealer witnesses will acknowledge it, and in that experts will testify that it is commonly known. Again, this undermines the witness credibility. It builds the basis for suspicion of what he is actually doing when buying cars at auction.]
1 2 3 4 5 6 7 8 9 A. inspect them for body damage? If they put on there ride and drive, I would look at that and say, hey, obviously they're saying that this car will ride and drive. I want to get specifically to inspection. Was it your understanding that the Chicago Auto Auction inspected the cars that they were going to sell to check them out for any kind of problem they have?

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I can't answer that because I don't know what their procedures are. Did you rely on that? Probably to a certain extent, yeah. You were relying on the auction to check out the cars before they were selling them to you? For a little bit. For a little bit like what? Well, a car for a salvage title. I mean, they run Carfaxes on these cars. If they have a salvage title, they would have to announce that. Carfax doesn't by any means pick up all the cars that are -That's what MADA says I need to check with. That's what MADA says. 96

[ Comment: Questions focus on how the witness handles wrecked cars when they get to the dealers lot, how he sells them, when he retails them and when not. This becomes an example of pressing ahead and pinning down evasive answers, in the face of an objecting defense attorney. The witness obviously doesnt want to answer this stuff, and is having to wing it with his answers. Note the extraordinary vagueness of the answers. Do they sell cars with major damage off the lot to consumers? His answers are all over the place. Finally, at page 114, he specifically says that if a car has too much major damage they will wholesale it. What does that mean? But more to the point: he is saying that they will sell these cars at auction, since that is where he has already said they wholesale cars. So now his testimony comes full circle, when presented to the jury: What does he think other dealers are selling at auctions? By his dealers example, they are often selling wrecks! Note also that he says his conduct is consistent with the dealer policies. This supports pattern evidence: if the jury is satisfied that this guy was involved in bad practices, they can believe him when he says his conduct is consistent with dealer practices, which supports the conclusion that the dealer followed bad practices, not just fraud in selling one car.]
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Q. A. Q. Was it your understanding that Carfax would find out cars that had major wreck damage? That is my understanding, yes. All the cars. So what kind of inspection did you believe all these years the Chicago Auto Auction did of cars that were checked in? You said that they'd run Carfaxes? Yeah. And you said they'd handle -- look at title work? Right. But what kind of physical inspection of the cars? Like I said, I can't speak for the auction because I don't know what they did. I know they were representing the car to be a ride and drive if that's what they announced. If it was as is, hey, this car is a piece of junk and

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they got the lights. Who did you understand to be representing that, the seller or the auction? I had been under the understanding it was the auction, based on what the seller has told them there. If the seller didn't tell them, then they 97

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wouldn't be disclosing something, right? I guess, yes. So you basically were relying on the integrity of the dealers bringing the cars to the auction? And the auction protected me when I bought the car. If you had a car on your lot that somehow was -- you had received it on trade-in or something and it got damage, somebody was test-driving it and it got some damage, what would you do with a car like that, would you fix it and sell it? If we owned a car and it received some damage, we would fix it and sell it, yes. Did it matter how much damage it had whether you would fix it and how you would sell it? MR. THOMPSON: I'll object to the hypothetical that's been provided by counsel as it has no relevance at all to the facts in this case, no foundation for the question. MR. BROWN: I'll stipulate to a continuing objection if you like. (By Mr. Brown) Go ahead. 98

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A certain amount? Yes. Yeah. I guess there would probably be a line we would draw. You guess? MR. THOMPSON: I'm going to object to the argumentative form of the question. He's giving him a hypothetical which has no bearing at all on the facts of the case and, therefore, it's impossible for the witness to give him an answer when it's a fact situation he's never dealt with. (By Mr. Brown) Let's back that up then. Your counsel is saying it's a fact situation you've never dealt with. MR. THOMPSON: Also not a part of this case. (By Mr. Brown) Have there ever been any cars on your lot that were damaged while they were on

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your lot? My lot, my used car lot? Dealership, cars at the dealership that were offered for sale. MR. THOMPSON: I have the same objection. The line of questioning has 99

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nothing to do with the facts in this case and it's an inappropriate hypothetical. MR. BROWN: I really respectfully disagree, but if you'd like a continuing objection, go ahead. You mean as far as my used cars, the ones I manage? (By Mr. Brown) Used or new. I don't have anything hardly to do with the new car side. All right. Any used cars? Any used cars? I guess if that situation arose and it was a major damage. I want to back you up just a second. The first question is your counsel was saying I was talking about no foundation where it had never happened. Have there been occasions where you had used cars where the cars got damaged on your lot that the dealership owned? Yes. Now, what did you do with those cars? If they -MR. THOMPSON: I'm going to object. We have an incomplete hypothetical. We haven't determined what caused the damage, 100

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what year it occurred, what year of car it was or anything so it's incomplete. MR. BROWN: You said hypothetical. I'm not talking hypothetical at all. MR. THOMPSON: Sure you are. MR. BROWN: I'm talking about specific cars. MR. THOMPSON: You haven't asked of a specific instance. (By Mr. Brown) Go ahead. If the damage was too much, the car would have been totaled out by an insurance company and released it then. What about the cars that didn't have that much damage? MR. THOMPSON: Same objection. Incomplete hypothetical being given to the witness. We would fix them and disclose it to the customer.

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(By Mr. Brown) And sell them and give disclosures? Yeah. Did you resell them all at retail off your lot, the ones that had damage while you owned them? 101

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Some we retailed, some we wholesaled. How did you decide which ones you would retail and which ones you would wholesale? Depending on the year of the car, what the value was of the car, how much damage was involved and what the extent of the damage was. Did you have any late-model cars that had major damage that wasn't salvage damage during the years you've been used car manager? Not any used cars that I can recall of, no, that have been damaged as -- you mean salvage like sold them to the insurance company? No, no. Major damage that wasn't salvage. While it was on our premises somebody had taken and wrecked and turned around and resold them? Or had hail damage or any other kind of major damage. Hail damage, sure, we've suffered hail damage. And those cars you always disclose? MR. THOMPSON: Bernard, let me ask you, what do these questions have to do with this case? Because we don't have any facts where this car was damaged on the lot and sold retail or wholesale or anything else. So what does this have to 102

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do with this case? MR. BROWN: I'd be happy to explain to you out of the hearing of the witness if you want to take a short break. I just want to tell you outside the hearing of the witness if you don't mind. MR. THOMPSON: Well, I'll probably tell the witness. MR. BROWN: What? MR. THOMPSON: I'll probably just tell the witness anyway. MR. BROWN: I'm not going to tell you -- if you tell the witness -- I don't feel like explaining everything I'm thinking. I'll do it for your convenience if you're not disclosing it to the witness. MR. THOMPSON: I'm telling you unless you explain to me what relevance it has, I'm going to instruct him not to answer because it has nothing to do with this case.

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MR. BROWN: At your own peril. It's abundantly relevant. MR. THOMPSON: Why can't you explain it to me? 103

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MR. BROWN: I'm not explaining it to the witness. The witness doesn't know the legal theories of the case. (By Mr. Brown) When you had a car that had major damage on your lot that wasn't given back to the insurance company, a car your dealership owned, you would wholesale some of those and retail others, correct? MR. THOMPSON: I'm going to object unless counsel wants to be specific as to what particular car you're talking about, what the damage was and what happened in a particular case. To speak in generalities on something that has nothing to do with the case is irrelevant. (By Mr. Brown) Go ahead. Okay. I'm confused. You want to know a dollar amount figure that we cut it off? I don't know. You tell me what your policy and practice was. I don't know. That's what I'm trying to get at. Okay. You were talking about hail damage. We can start with that example. If we got hail damage, we could fix it and we would disclose to the customer that they had 104

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hail damage suffered and it was disclosed to the customer the amount figure that we fixed. How about wreck damage? Same thing. Fix the car, disclose it to the customer the amount of damage that was incurred. Have you had some cars during the years you've been used car manager that while they were being owned by Chezik Honda had major wreck damage that you resold? I'm sure there was, yes. At retail? When you say retail, I mean, to a retail customer? Yes. Yes. So people going to the Chezik Honda lot, retail customers, do I understand correctly what your dealership offers for sale, your dealership will offer cars that have had major wreck damage for sale at retail; is that right? Well, usually when you disclose that the car

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has had damage to them, retailers want a price put on that that we fixed. Did you advertise any of those cars for sale? 105

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MR. THOMPSON: I'm going to have to ask for clarification. Are you talking about cars which were damaged while on the lot that they knew about? MR. BROWN: Yes. MR. THOMPSON: Are you talking about cars that were wrecked and they purchased not knowing of the damage? MR. BROWN: Exactly. Cars that were wrecked. MR. THOMPSON: Now you've switched gears. MR. BROWN: No, I haven't. MR. THOMPSON: Yes, you have. And you're attempting to back-end him into saying he sells wrecked cars, and that's not what they do. (By Mr. Brown) Perhaps your counsel missed something, perhaps you may have missed something. Over the last several years while you've been used car manager, it's my understanding you have indicated there have been several cars at least that had had major wreck damage while your dealership has owned them; is that correct? 106

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I don't know how much -- you say several. You said has there been anytime that it's happened, and I'm sure there has been. As far as a dollar amount, I don't know. I'm sure there has. I don't know how many. Of those cars that did have -- get major damage while they were owned by your dealership, you resold some at retail to retail customers; is that correct? MR. THOMPSON: If you can remember any. MR. BROWN: Counsel, I think that was inappropriate coaching of the witness. If you have an objection, state your objection. Okay. When you say major, are you putting an amount on that? (By Mr. Brown) I'm not putting an amount on it, but I will borrow from your interrogatory answers. Let's change the word "major." Let's call it substantial. Mr. Hennessey used the word "substantial" wreck damage. Used what word?

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Substantial wreck damage in the response to the interrogatory. 107

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MR. THOMPSON: What's the interrogatory ask? MR. BROWN: Have a look. (By Mr. Brown) We'll refer to substantial damage. MR. THOMPSON: If you want to ask this witness about a interrogatory question -- you're just referring to an answer by someone else, and you want to use a word that someone else used in answer to an interrogatory and you're not even disclosing it to him. (By Mr. Brown) Have there been cars -MR. BROWN: You're making this longer. MR. THOMPSON: No. You're making this longer. (By Mr. Brown) Have there been cars that received substantial wreck damage at your dealership that were owned by your dealership during the time you've been used car manager at John Chezik Honda? MR. THOMPSON: I think that question has been asked and answered. I again don't think there's any relevance to the 108

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facts of this case. Counsel is simply badgering the witness. MR. BROWN: The witness asked me what I meant by major. I'm trying to respond to him. MR. THOMPSON: Did you tell him? MR. BROWN: Randall, you're getting way out. Can you please cut it out? MR. THOMPSON: In response to his request for clarification of the word "major," you said substantial. So is that what your definition of major is, substantial? MR. BROWN: Randall, I told him I'll use the word that Mr. Hennessey used. Can you figure an amount on major or substantial? (By Mr. Brown) I don't know what you guys call substantial, but Mr. Hennessey uses the word "substantial." If you can give me a dollar amount. I don't know. Let's say this. We may be here for a while at this rate.

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Bernard? MR. BROWN: That's not a threat. MR. THOMPSON: Sounded like one to me. MR. BROWN: You want to go through this a much harder way than we were, but I will go through it in whatever detail it takes to make sure the witness understands the questions and that we have an understanding so we can get substantial answers. (By Mr. Brown) Now, perhaps you and I could talk about what would be meant by substantial or major, but would you agree that if a car just had a scratch causing perhaps $100 worth of paint work necessary, that that would not be what you would call major damage? Correct. Would you agree that if you had a $10,000 car that had $6,000 worth of damage, that would be major damage? Yes. Would you agree that if a car had -- was a $10,000 car and had $3,000 worth of damage, that would be major damage? 110

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Yes. In the same sense that you just answered these questions, have there been cars owned by your dealership during the time you've been used car manager that received major wreck damage while your dealership owned them? MR. THOMPSON: And for clarification, you're talking about $3,000 or more based upon your hypotheticals? MR. BROWN: No. MR. THOMPSON: Well, that was the fact situation you just gave him, $3,000 being major. You didn't go below 3,000. (By Mr. Brown) Go ahead. There was one that I can recall, and that would be Richard Bay. Is that the only car you recall having major damage while it was owned by your dealership through the years? That comes to my mind. Have there been others that don't come to your mind? At $3,000 or above? I can't think of any other ones. But there have been cars that were totaled

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111 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 while your dealership owned them; is that correct? And not retailed? Yes. Yes. Well, and the totaled cars were returned to the insurance companies? Right. Have there been any cars that were totaled that were wholesaled? When they're totaled by an insurance company, the insurance company does whatever they want with them. I don't get involved with that. Have there been any cars that were sold at wholesale by your dealership that had suffered major damage during the time you've been used car manager? While they were in our possession and they were wrecked? They suffered major damage while in your position, yeah. I mean, nothing comes to my mind at this point. I mean, nothing that stands out, no. Does your dealership have a policy with respect to whether it will sell, at retail, cars that 112 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 have had major damage? Okay. You're saying what now? I'm sorry. I'm not thinking. Does your dealership have a policy about whether it will sell cars at retail if those cars have previously suffered major damage? I guess it depends on how major the damage was, I mean, as far as a certain -- I mean, I know what it is in used cars. If it's had too much damage, I don't want to mess with this car, okay. What will you do with the car if it has major damage that is too much, you don't want to mess with; what do you do with it? You mean if like we took one on trade that had major damage? We would probably wholesale it out to an independent lot. If for any reason a car was on your lot that you owned that had major damage, if it was too much major damage, you would not retail it; is that correct? If it suffered it while it was in our possession like somebody else took it out and wrecked it, it would go to the insurance company, is that what you're saying, while I

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113 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 owned it? No. It doesn't matter whether it got damaged while you owned it or whether it had been damaged before like somebody, an individual, owned it and traded it in. Let me back up. Any car that for any reason your dealership ended up owning. You have a car sitting on your lot, wherever it came from. If you knew that that car had suffered major damage, if I understand you correctly, your policy was if it was too much major damage, you would not sell it retail; is that right? MR. THOMPSON: I think that misstated the witness' statement. He never stated it was a policy. MR. BROWN: You're interrupting too much, and I'm asking if that's correct. If it's not correct, he can straighten me out. MR. THOMPSON: I'm making my objection to the question as misstating the witness' prior testimony. MR. BROWN: Go ahead. MR. THOMPSON: I just did. (By Mr. Brown) Go ahead. 114 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. Okay. So if somebody is trading in a car and they tell us this car has had a lot of damage? No. Stop. Okay. I don't care whether the car came from a trade-in, dealer demo, whatever, I don't care. If a car is sitting on your lot, owned by Chezik, for whatever reason that car has had major damage and you know this -Okay. -- would it be a -- would it be correct to say that Chezik's policy is to sell those cars at wholesale if they've had too much major damage? Yes. And not to sell them at retail? Yes. Now, can you give me any sense of what you mean by too much major damage? You're the used car sales manager. You tell me what you consider too much major damage. I'd say maybe a third of the cost of the vehicle. And I'm not the last word on that. I mean, it would be -- maybe Phil Hicks and I both might sit down and talk about it. Or John Chezik? 115

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No. Do you follow the policies that John Chezik established in connection with the dealership? I follow what Phil Hicks tells me to do. He's the general manager. Do you follow any dealership policies at all? Oh, sure. And who establishes the policies? I think -- I don't know. They give us a manual. It's like when you're supposed to be there, sick time, insurance benefits, things like that, and I don't know where they come from actually. Well, who -- you say that it's a standard practice not to retail cars that have had too much major damage. Okay. Who decided that those cars would not be retailed? Did you set up that practice? Well, it's just kind of if I came to you and said, this car has had so much damage, you would probably say, I don't want to buy this car because it's not a good car, and it would not be a retailable piece. So there wouldn't be any sense keeping it tying your money up. 116

[ Comment: Questions about consumer disclosures and about supposed training of salespeople to give disclosures. This will be grist for conflicts with the testimony with the salespeople, which will almost never be consistent.]
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Q. On the cars that had major damage that wasn't too much, have you had a standard practice for disclosing that damage if you sell them at retail? Yes. And how exactly do you disclose the damage? We'll write on it disclosure, what the damage was to the car and the amount. And if I recall correctly, you use a form now? Yes. You don't know that you used the same form when you started? Exactly. Do you also have a policy for verbally telling the customer about the damage? When we write those out, we make them sign it and tell them verbally also and in writing. How about back before you had the forms, did you have a policy for verbally telling the people? Yes. So all of the salespeople were trained then to verbally disclose any known damage on the cars? Yes.

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How would they know about the damage on the 117

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cars? By this stock card. It would say what body shop and how much and the amount and also the disclosure with the amount of money. You trained salespeople to say this? I train people to check on this, and they would come in and say, look, you need to tell these folks that this car has had some damage on it, yes. Did you train Mr. Nasr to do that? Mr. Nasr was well aware of the fact he should have disclosed anything that would have damage on the car that we knew about. Does anyone employ Mr. Chezik, any business employ Mr. Chezik, that you know of? I don't have any idea. Who exactly do you work for? I work for -- who's my direct -No, what business? Oh. John Chezik Honda. Do you know what corporations do business at your location exactly? No. I mean -Can you name any corporations that do business where your dealership is? 118

[Comment: There was a $39.95 charge to the consumer on the sales invoice, not noticed by her or called to her attention, for a title, filing and document fee. The questions in this part of the deposition relate to how the witness and the dealership did or did not discuss such items with purchasers. The consumer contended that it was simply a deceptive practice to throw in these charges without telling the consumer, especially with deceptive labeling like title and filing making them sound state-required. It almost always is at best humorous to hear the dealer people tell what they say about such charges, when the truth is almost always different, and the dealer people are almost always scrambling to say something that sounds acceptable in the deposition as here.]
1 2 3 4 5 6 7 8 9 10 11 12 13 14 A. Q. No. Are you familiar with how the F&I people handle paper work when they're concluding the sales transactions? No. I'm not involved in that. Do you know how much has to be paid to the state for taxes, licensing fees, things like that, to title or license cars? No. Are there any charges that the customers -- car purchasers are charged when they buy cars on all sales other than the purchase price of the car, the finance charges and any extras that they buy? Are there any other things that

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they're charged for? $39.95. What is that? It's a fee for -- that the back office needs for paper handling and things like that. What's it called? Consumer services. Has the dealership always referred to that as the consumer services fee? That's what it says here, yes. You're the used car manager. In conversation 119

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with people, do you talk about the consumer services fee? Yes. And that's what you refer to it as, the consumer services fee? That's what it says here, yes, sir. I'm not asking whether that's what it says there. I'm asking in talking with people at the dealership, if you walk up to a salesman right now and say document -Documentation fee. What do you call it, documentation fee? Yes. You call it a documentation fee? That's what I call it. It says consumer services fee here. If you're talking with the salespeople, you'll call it the documentation fee; is that right? Yes, sir. Now, when you're selling cars to people, is this consumer services document fee the same for all purchasers? Yes. Is it the same amount for all purchasers? Yes. 120

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Has it changed over the years? I think it did before, and I don't remember what it was before. Was it higher or lower? I can't remember. Now, on that form -- I think you're looking at one of the -Yeah. Was it ever 89.95? Does that ring a bell? 89.95 does sound familiar, yes. Do you know why that was changed to 39.95? I do not, unless it was something that the back office incurred for some other expenses and they didn't confer with me. So who set the policy of charging that?

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Somewhere in the back. I don't -- I didn't. If you were to pick a person who would have knowledge, who should I ask for on that; who would know all about that? I would say the business manager. Which is who? Or the back office manager, one of those two. And who are they? Now? Their names? Yes. 121

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It would be Curt Hogue or Terri. I can't think of Terri's last name. I'm sorry. Who was the business manager in '93? I don't remember. When you cut the deals with people, selling them the cars, do you talk about the consumer services fee? Yes. Always? Yes. Every single car? It's right there on the order. When they sign the order, it's right there. I understand you're saying it's on the order. I'm talking about do you talk verbally aloud with the purchasers about that charge? They're supposed to. I don't. I mean, the salespeople do. The salespeople are supposed to? Yes. And what are they supposed to say about it? Documentation fee, consumer services. I don't understand. Are they supposed to -you just said a couple words. If I'm a salesman and I'm dealing with the purchaser -122

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All right. There is a $39.95 charge for documentation fee. And do they explain what that is? If the customer asks, yes. And what is it they explain? It's that it covers the notarization, handling of paper work, any fees that we might incur to take care of mail, to mail out, just different expenses that we incur. I don't know exactly what it all does entail. It's just for handling services. Well, part of it you say goes for services. Does it pay any official fees like for licensing? I don't think so. I don't -- I don't know exactly. I do know it is to cover additional

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expenses that we incur. Do you ever call it anything other than consumer fee or document fee? I don't. Have you ever heard it called anything other than that? No, not that I can recall. Do you give specific instructions to your salespeople as to what they're supposed to say 123

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about that fee? Yeah. And what exactly do you instruct your salespeople? I just did. I'm sorry if I'm repetitious. Any additional -Train me. If I'm a salesman, tell me what I'm supposed to tell people. The $39.95 consumer documentation fee is to cover any expenses that we do not -- the notarization, paper work, mailing out the payoffs, paper work handling and things like that. And have you had that conversation with all the salespeople who worked under you throughout the time you've been used car manager? Yeah. Instructing them to give that description? Yes. May I see that exhibit? On what's been numbered page 34 of Exhibit 1, do you see there's a fee there -Uh-huh. -- on the right-hand side? 124

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Uh-huh. Title, filing and document fee. Do you know what it's referring to when it refers to title and filing? I guess that would be referring to if they have to notarize it or any of the handling of the paper work by the title people as far as in our shop, in our organization. What notarization are you referring to, notarization on the title? Yes, I guess. But this is what you tell your people to say? Yes. Now, in the state of Missouri you don't have to notarize. I don't know. In Kansas I think it does. I guess it's just any documents that have to be notarized. However, power of attorneys have to

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be notarized, do they not? I don't know. At the time you inspected this car with [Consumer] and another mechanic and another person present in approximately 1994, had anyone informed you that the thing had been badly wrecked? Before they got there? Yes. 125

[Comment: Questions return to the witnesss inspection of the vehicle during litigation, and then to his inspections of vehicles in general. This is setting up his testimony to be contradicted directly by the plaintiffs expert: as witness describes many things that he would look for that would show wreck damage, but still says that his inspection showed no wreck damage. The consumers expert will testify that those same things certainly and clearly showed wreck damage on this car. The photos would even show the damage to the uninitiated (jurors) eye.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. No. Were you surprised to find out after that inspection that it was claimed that the car had been totaled? Yes. Were you surprised to find out that it had major wreck damage? Yes. So you, when you inspected it, saw no signs of wreck damage; is that correct? Except for what we talked about earlier with the paint work. You saw paint work? Yes. Now, paint work to you, is that something that's an indicator of possible wreck damage? Yes. You saw the paint work but saw no other signs of potential wreck damage? Yes. Were you satisfied at the time you did the inspection that the vehicle did not have other wreck damage? Yes. When you buy cars at the auction, what do you 126 1 2 3 4 5 6 7 8 9 look for? Visual damage, visual damage. If you see signs of -Rips in interior, tires, glass breakage, motor knocks, just general appearance of the car. Do you look them over before they go across the block? As much as I possibly can. Do you pop the hoods on them?

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Try to, yes. And the doors, open the doors? Yes, try to. You don't remember seeing this car at the time you bought it, you can't remember it at the auction? I can't remember this particular car when I bought it at the auction. By the way, back up another step. Did the mechanic that was inspecting the car with you see signs of wreck damage other than that paint? MR. THOMPSON: I'll object to the client's inability to be able to tell us what someone else saw. MR. BROWN: That's a fair objection. 127

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(By Mr. Brown) Did the mechanic say anything to you indicating that he saw signs of wreck damage? As far as I can remember, he did not say anything, no. Did you ask him? I asked him if anything looked out of place. He said, no, it doesn't. Do you remember Mr. Lewellen, Orlando Lewellen? Yes. Do you remember his car? Yes. What kind of car was it? If I remember correctly, it was a little four-by-four. Where did you buy that? I don't remember. At the auction? MR. THOMPSON: The question has been asked and answered. I don't remember. I really don't. (By Mr. Brown) Do you recall talking with Mr. Lewellen about a complaint he had about the car? Yes. 128

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MR. THOMPSON: I have an objection to counsel for plaintiff going into any of what he calls pattern car cases. I haven't stated the objection. MR. BROWN: On this deposition, but if you'd like, incorporate your objection as stated in the deposition of Mr. Phil Hicks earlier today in this record if you'd like to do that. I'd be happy to do that. I will stipulate for the record I

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agree to that being asserted here and to what we said on other cars. MR. THOMPSON: So the objection I stated in a previous deposition that I characterized as pattern car cases -MR. BROWN: Yes. MR. THOMPSON: -- will also apply in this case and it will be a continuing objection? MR. BROWN: Yes, yes. (By Mr. Brown) What was Mr. Lewellen's objection about the car, what was his complaint? It had some damage on it. What was the damage that it had? 129

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If I remember correctly, it was in the front end. Could you describe it? There was something with some damage on a fender, I believe. Do you remember talking with Mr. Lewellen about his complaint? A little bit, yes. What did he say? He said that there was some damage on his car. And pointed it out to you? Yes. Did you agree with him that it had that damage? Yes. Was this damage repaired wreck damage or what? No. It was damage. Showing on the front of the car? No. Not showing? Right. Why not? Because there was a mask over it. What they call a bra that goes over the front of the car? Yes. 130

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And what did you -- what was your response to his complaint about that damage being on the car? I don't know exactly what we had talked about at that time. I do remember that particular instance. I don't remember the conversation. You don't remember what you said to him? No. Had you disclosed that damage to him when the car was sold? I don't remember. I'd have to look at the

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file. Did you know about the damage? No. Because of the mask. No, I don't think so. You may have, but you're not sure? Right. Well, all your cars that are offered for retail go through the 50-point check; isn't that right? Yes. Wouldn't part of that check be glancing under the bra? Possibly. Possibly? 131

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Yeah. I don't know if they remove the bra or not. What exactly goes on in this 50-point check? Brakes, transmission, engine, drive train, headlights, air-conditioning, proper driving function. Test-driving? Yeah, test-driving. Looked at real thoroughly? As far as -- yeah, they look at them pretty good. And they're looking at every kind of problem they can find? Mechanically, yeah. Body damage? Yeah. And do they typically -- if there's something like a bra, do they look under it to see if there's any damage? I don't know. I mean, this is the first case that's ever come up like that. I mean, I usually don't buy them with bras on them. Do you remember speaking with Mr. Yount, Terry Yount? I did not speak to Mr. Yount. 132

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Do you know what Mr. Yount's complaint was? Yes. What was his complaint? That he had bought a car with damage that had been sustained on the car with 6,000 miles on it. And did you inspect the car? We ran it through our MVI, lube, oil, filter. I believe we did. I'd have to check on that. Did you buy that car? Yes. You bought it at the Chicago Auto Auction?

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Yes. And did you inspect the car when Mr. Yount brought it back? I can't answer that. I'd have to check my records, but I think we did, yes. Did you look at it? Did I look at the car? When it came back. Yes. And wasn't this just like right before Christmas? Yes. Did you see signs of damage at that time? 133

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To me, no, I did not. Did he show you a service ticket on the vehicle? Yes. Your dealership agreed to take the vehicle back and give him another vehicle; is that right? Yes. Have you contacted the auction about that problem? Yes. And what did they have to say about it? I'm waiting for their reply. And it came from G.E. Capital? Yes. At the Kansas City Auto Auction. I'm sorry. I thought it came from Chicago. You bought it at Kansas City? I'm sorry. Wait a minute. I'm going to have to look and see. Maybe I did get that car from Chicago. She's here in town, the rep from G.E. at the Kansas City Auto Auction. That's why I'm thinking of that one. I see. Did you talk with the person who handled that inspection of that car? At our store? At your store. 134

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No, I haven't. Mr. Bay's vehicle was sold without disclosure of damage that it suffered when it was owned by the dealership; is that correct? I didn't have too much to do with that deal. That was a new car. I do know the case you're talking about. You didn't have a lot to do with it, but you knew of the vehicle; is that correct? After our lawsuit, yes. You were involved in some sense -- in some respect on the sale transaction of that vehicle; is that correct?

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I looked at his trade-in. Did you take any steps after you realized that vehicle had been sold without disclosure to try to correct whatever caused it to be sold without disclosure? Myself? Yes. No. I wasn't involved. It was a new car deal. When did you find out [Consumer]'s car had been totaled in a wreck? I guess when the -- Mr. Jester informed me of that. 135

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Have you taken any steps to change your practices about inspection of these cars since you found out that her car had been totaled in a wreck? Everything we discussed before. I mean, trying to give them a more rigorous look-through. You started doing that like after the 60 Minutes piece, right? I -- I didn't say that, you did. I mean -Is that about right? Correct me if I'm wrong. I mean, it did impact us a little bit, yes. By 1994 were you doing your work carefully, extra carefully, buying cars, checking out cars? Trying to, yes. And you simply looked harder; would that be a fair statement? MR. THOMPSON: I think I'm going to object. There's been no statement that prior to 1994 they didn't do their work carefully so that's argumentative, the manner in which it's phrased. (By Mr. Brown) The question was when you stepped up your precautions, it was the main step-up that you simply looked harder for 136

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things like wreck damage? Yes. At the time that you had [Consumer] and her attorney at your dealership for the inspection of her car, did you look extra hard at that car? I was told to look at the car and give us a finding and see if there was something that looked out of place. I mean, I'm not a mechanic. I had a mechanic with me. I mean, it was like it was an inspection and we were looking for something, I mean, you know, to see what it looked like underneath there. Do you hire and fire salespeople?

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It's -- no. I really don't fire too many people. I mean, I have the ability to, but I don't get involved too much with that. And the hiring, it's generally we -- Billy Aston, who is the new car manager, Phil Hicks and myself will get together with the person and see if we want to put that person to work or not. Do you take any steps to check out the backgrounds of the people you hire? We do. We do checks, yes, like previous employment, how they worked and how they showed 137

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up and what their work practices were, yes. Do you do what you can to determine that they're honest? Try to, yes. Do you keep anyone employed if you determine that they're dishonest? No. Do you have anyone employed that has a criminal conviction? Not to my knowledge. Would you hire someone that had a criminal conviction? Depending on the situation, I don't know. I mean, it would be -- like I say, it would be something that Phil and Billy and I would talk about, check out the background. It would generally be a negative, I take it? Depending on the weight of the situation and if the person is reformed. I mean, everybody can take a second chance. If you had somebody who had a conviction for stealing or handling stolen property, would you keep them employed? Like I say, once again, it would depend on the situation, how, you know, much stolen property 138

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we're talking about here. Does the name Dale Kutz, K-U-T-Z, ring a bell with you? Yes. MR. THOMPSON: I have the same continuing objection. MR. BROWN: Yes. So noted. I know Dale Kutz just from my brother and him playing golf. (By Mr. Brown) Tell me what you recall about his car transaction. I just remember he had some kind of a problem with a car that he had bought from -- I don't know even what store it was actually. It was before I got there.

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When did you work at Chezik Buick, '85 to '87 I think you said? I guess so, yeah. Now, you were used car sales manager at Chezik Buick? Right. MR. THOMPSON: I'm going to state an additional objection. Perhaps the individuals being talked about now did not even deal with the defendant in this case, 139

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John Chezik Honda, so it's irrelevant to your discussion of the issues here. (By Mr. Brown) I'll represent to you that the records we have reflect this car was sold in 1987, used, to Mr. Kutz by John Chezik Buick. MR. THOMPSON: The same objection. I didn't -- I don't remember if I did. I didn't have anything to do much with that. (By Mr. Brown) Were you aware there was a suit filed against the dealership by Mr. Kutz because of that vehicle? Yes. And did you discuss that vehicle with anyone during the pendency -- well, after that suit had been filed? Dale. Dale? Kutz. And what did he have to say about it? Not much. He basically just said he had something pending with the deal and, you know, just conversation. Do you consider him a personal friend? I know Dale. I mean, he knows my brother more so than I do. I mean, if I'd see him, I'd say 140

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hi. That vehicle was purchased back by the dealership while you were the sales manager. Do you recall that? No, I don't. Do you recall selling a vehicle to Mr. Richard Cushon, does that name ring a bell? I've heard of a customer -- not a customer but a Cushon. I don't know exactly what that situation is. Wholesaler -Yeah, yeah. -- who handles wholesale cars. Do you handle them? Yes. Now, this car was bought back from Mr. Kutz

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pursuant to a settlement of that suit that he brought. Okay. And it went back to your dealership, and your dealership sold it to Mr. Cushon while you were the used car manager. Okay. MR. THOMPSON: Just so the record reflects I have a continuing objection to 141

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this line of questioning. MR. BROWN: Yes. (By Mr. Brown) It was a Mercedes that had been previously totaled. Okay. Do you have any recollection of that? No. So you have no recollection of handling a car that was bought back because of a suit that was a totaled Mercedes that was resold by your dealership? Not that I can recall, okay? I don't remember getting that involved with that deal. Is there anyone else who would have handled the sale to Mr. Cushon? Possibly so. I don't know. Why wouldn't you have handled it? I don't know. I don't remember. If I could see some paper work or something. I mean, when was this? 1991 was when it went back to Mr. Cushon. Okay. It came back from Mr. Kutz and went on to Mr. Cushon. Okay. And it was handled through which store? 142

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Then it was handled in the name of Chezik Honda. Okay. Possibly I might have been at the Toyota store. I don't know. I'd have to get these dates. Okay. I'm sorry. Do you recognize the name Paul and Denise Howard? No, I don't. Brought a suit against Chezik Buick and John Chezik himself. MR. THOMPSON: Same objection. MR. BROWN: Sure, same objection noted. I don't remember them. (By Mr. Brown) Do you remember any other

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lawsuits against the dealership? Just the ones that we talked about, Richard Bay. Were you concerned at the dealership about the possibility of cars being misrepresented when they were sold, about the possibility of salespeople or anyone misrepresenting the cars? MR. THOMPSON: You mean when they 143

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were sold to the dealership? MR. BROWN: No. When they were sold by the dealership on to someone else. I mean, we discuss that, sure. (By Mr. Brown) And were you familiar with the fact that the dealership signed a consent decree with the state attorney general's office back in 1990 about selling cars as "brass hat" cars when they're actually rental cars? No. You didn't even know about that? No, I didn't know that. Did John Chezik keep you informed about these problems? He didn't discuss too many problems with me directly. Who would have known about that, Mr. Chezik? MR. THOMPSON: About what? What is the question? (By Mr. Brown) About lawsuits against the dealership. He doesn't discuss things with me unless -unless -- like here, he wouldn't have shared it with me. He would have shared it with the general manager, and the general manager would 144

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have said, you know, we need to watch this or whatever and passed that along. Do you have any idea where Mr. Nasr is now? I do not. Back to the purchase of this car at the auction, did you -- did you think you were getting a good deal on the purchase price? MR. THOMPSON: The [Consumer] car? MR. BROWN: The [Consumer] car, the Dodge Shadow. Yeah. If I don't think they have good prices, I won't buy them. (By Mr. Brown) What was normal wholesale for a car like that at that time? As far as I can tell, it was pretty close. I think Mr. Jenke stated he thought standard wholesale on that car at that time would have been $1,000 higher. Would you dispute that if

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he said that? I don't know. Like I said, I'd have to get a black book for 1993 and tell you what a 1992 Shadow would be worth at that time. Given the fact the car had been previously totaled in a wreck, what do you think its value was at the time it was being sold to [Consumer]? 145

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If it had been a salvage title? Not a salvage title, no, no. Okay. Knowing what I know now about this car, it had a salvage title and had been wrecked? This car never had a salvage title. It was in one of many states that didn't issue salvage titles on cars like this. Knowing what you know now, if it had been totaled in a wreck, sold back to the insurance company, no salvage title was issued. And they announced this at the auction that it was totaled out? No. I'm saying this car had been offered for sale in Kansas City at the time it was sold to [Consumer] and if it were disclosed to anybody who were interested in buying the car that this thing had been totaled in a wreck. I wouldn't have bought it. Okay. You wouldn't have bought it. What would you have put on that for a fair market value for a car like that, not saleable? I don't know. I mean, I wouldn't have even attempted to buy it and messed with it and have even offered it for sale, so it's hard to put a price on that car because I wouldn't have 146

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bought it. Had it been totaled and you were selling it to a wholesaler, this car, what do you think a wholesaler would have given for it? Then or now? Then, at that time. I would say a couple thousand dollars less. A couple thousand less? Uh-huh. Instead of 6,000, 4,000 then is what you're saying? Possibly so. Like I said, these are all hypothetical. How did you decide what the value of the cars were at the auto auction in Chicago? By the black book. Do you know what the black book value was on this car at that time? If I could get a '93 black book, I could tell

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you. So you don't know where this car placed on your black book? In 1993, no. And you tried to get cars as under black book as possible? 147

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I've paid over black book for cars. Just what cars you can make money on is the issue? What's in demand. When you, at the time you sold cars, offered cars for sale, is it your standard practice to have the title on the cars when you offer them for sale? We try to or we have guaranteed for title. What's guaranteed for title? That just means we send a letter of -- letter of guarantee that we will send the title to the lienholder or the bank. If you don't have the title at the time of sale of the car, do you always use that letter? To the bank, yes. Did you send a letter like that to Americredit? I don't know. I didn't see it in here. MR. BROWN: Before I forget, counsel, can we have an agreement that you'll check on whatever records would reflect payment to Americredit of that juice amount? We've never gotten any records on that. There must be a record somewhere. MR. THOMPSON: So you want me to 148

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agree to look into that? MR. BROWN: Please. MR. THOMPSON: I'll do that. MR. BROWN: And produce any documents, if you have them. I mean, I'm just learning about them today. Can we have that agreement? MR. THOMPSON: I'll agree to look into it and I'll tell you what I found out, and you can take it from there. MR. BROWN: Okay. (By Mr. Brown) If a title came in and showed that a car had been titled in the name of an insurance company, would you have accepted a car like that? An insurance company. You mean if I've bought cars from insurance companies? No. If you bought a car from the auction -you didn't see the titles at the auction, right?

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Right. If when the title showed up at the dealership it showed that the car had been owned by an insurance company -Depending what the case might be, I've bought 149

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cars from insurance companies when the salespeople have driven them or something like that. Sure. No red flag would be known there unless when I bought the car it was disclosed to me, hey, this car has had a salvage title or whatever. Good point. Let me see this. This title showed up in the documents, unfortunately, on two very separate pages. Page 7 of Exhibit 1 and page 33 I believe counsel can confirm from the title history are the front and back of this title. What is it? Seven and 33. Do you see this page 7? Uh-huh. And it shows the vehicle owned by David M. Nigro in Arkansas? Correct. Now, you see page 33, and the top assignment shows David M. Nigro assigning the car to Terripan Auto Sales? Yes. And Terripan Auto Sales assigning to John Chezik Honda? 150

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Yes. Instead, if it had gone David Nigro to an insurance company like Hartford Insurance Company on this and then promptly been reassigned to John Chezik Honda, would you have accepted that? MR. THOMPSON: Accepted the car or the title? (By Mr. Brown) Accepted the title or had any questions about it. Oh, we would have probably had some questions about it I think, yeah. What would you have done? The title gal would probably have brought it to my attention or called and said, hey, what was the situation here or -- I guess it would depend on the situation, you know. I don't know because they've always disclosed that, you know, up front. This car came from an insurance company, it was a total. I mean, you'd have to go and listen because they'll

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say, this car was owned by an insurance company, it was a recovered theft, okay, because the seats were stolen out of it so that was the only thing. So, I mean, they put the 151

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seats back in it or whatever. If a vehicle was a one-owner, was that a selling point on cars at your dealership? It would be, yeah. It would be nice to know. Would it be better -- would people be more interested in buying a one-owner car than an auction car? MR. THOMPSON: I'll object it calls for the witness to speculate. (By Mr. Brown) Just in general from the way you've seen people react, in general. MR. THOMPSON: Same objection. I guess it would depend on the price of the car. (By Mr. Brown) Would it tend to put downward pressure on the price if the car was disclosed as coming from an auction as opposed to a one-owner car? MR. THOMPSON: Same objection. It calls for the witness to speculate. What I mean is if you would sell anything under $8,000 -- if you're talking about a 60 and $70,000 Lexus and, well, this car has had three owners, well, you're not going to buy it. If I can say it's a one-owner, because I'm spending 152

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$70,000, you see what I'm saying? (By Mr. Brown) Sure. If you're talking five, six, seven, $8,000 cars, it doesn't make a big impact because of the money value we're talking about. If you're talking about a car a year-and-a-half old, 14,000 miles on it, and you're selling it and you give a written disclosure it's coming from an auction instead of being able to say it's a one-owner car, would it affect the value of the car? MR. THOMPSON: Same objection. It calls for the witness to speculate. Probably would a little bit. (By Mr. Brown) When you bought cars at the auction, you'd see a year-and-a-half old car with 14,000 miles on it, thereabouts, did that raise your suspicions at all? MR. THOMPSON: Are you talking about the 1992 Dodge Shadow? MR. BROWN: That's right. (By Mr. Brown) You can look at Deposition

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Exhibit 3. This is a Dodge Shadow. Look at Deposition Exhibit 3, and it shows this thing as being auctioned off on September 23rd of '93 153

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and the mileage on the thing was 16,575 miles. The car was a year, four months old, over 1,000 miles a month. I don't know the average. I think the average is 12,000 miles a year. That's what they give you on a lease. So if they got 16,000 miles on a 16-month-old car, that's about right. Not with respect to mileage. Does it raise questions in your mind why this car with only 16,000 miles on it is at an auction? They have a lot of cars that are current year. In Chicago you got 6 million people. They trade cars almost every year. I mean, they have a lot of cars there. When they run them through the auction, you know, no, it really doesn't. I mean, there's low-mileage cars, there's seven and 8,000-mile cars that are two years old. I don't know if they don't drive them or whatever. It doesn't get your curiosity up at all? No. When a car -- your policy now is when a car comes from an auction, you will disclose it as an auction car in writing; is that right? Yes. I have a form. 154

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And your policy in 1993 -- to clarify as well as we can, did you have a policy during the time this car was sold in October of '93? Was it policy to disclose that the car came from an auction? I don't actually recall at the time. I know we have forms now that designate that. I'm not sure if we had it installed at that point or not. Did you train your salespeople to tell buyers that the cars that you had bought at auction came from auction? I told them to tell them everything we knew about the car if it was available. Including if it came from an auction? If they asked, yes, we got this car at an auction. If they asked. What if they didn't ask? That they're buying a used car. So you did not feel an obligation to tell them the car was bought at an auction unless they asked; is that correct? It would depend on the circumstances. We

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usually would say, hey, we got this car at an auction, this was a one-owner car, this was a 155

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lease car, yeah. You usually would tell them? Yes. To the best of my knowledge. You're talking four years ago. We tried to get everything out to please people as much as we possibly can. How would the salesman know it came from the auction? By the auction card. It says on the front of the cards the Greater Chicago Auto Auction. The stock card? Uh-huh. Let's see that. If I can find it. What is it? 38, I think. Is that right? Yeah. It doesn't say there, does it? No. I don't think it does say. It doesn't say. So I take it that generally the salespeople wouldn't know that the cars came from the auction; is that right? Yeah. Because usually the salespeople are right there when it came off the truck, and they knew I had been at auction and we would 156

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discuss we got these cars coming from somewhere or something. Usually? Try to, yes. But, of course, salesmen don't work 24 hours a day. If they're not standing there when the cars come in, they wouldn't see the cars coming onto the lot? They're always at our Saturday meetings. If they missed it -- Saturday and Monday morning meetings, everyone is there. Did you tell -- in 1993 at the meetings would you tell the salesmen that the car came from the auction? I would go over the slips. We got this car coming in, we got this car coming in, we got this car coming in, and they would make notes. It still is that way today. This says Greater Chicago Auto Auction, but that was back in the back though. So there's nothing in writing that told the salespeople that the cars came from auctions; is that right? They were to make notes, yes, in the meetings.

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And keep notes for themselves? 157

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Keep notes for themselves, yeah. And, also, this designates that this was a purchased car, that stock number, that 1921280. As we speak today, if someone goes up to your lot and is looking at a car and it comes from an auction, are they told as they're looking at the car this car came from the auction? Yeah. Is that volunteered, are the salespeople trained to volunteer that information? I don't -- yeah. If they're asked, to be told, yes. We tell the customer what is going on. This is an auction car. And people generally, before you can even say anything, will ask you, can I get the customer's name, can I get his address, can I get a telephone number, is this a one-owner? Was this car described as being a one-owner by your people? Not to my knowledge, no. You would not regard that to be a truthful statement; is that correct? You would regard that to be untruthful if a car that came from an auction was described as being a one-owner, right? 158

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A statement from one of my salespeople, yes. Now, when this vehicle was sold, there's nothing in the file showing a disclosure given that it was an auction car? Right. And you don't know if that was a mistake or if you just didn't have a practice of giving disclosures at that time? Exactly. Why didn't you write down on the cards, on the stock cards, that the car came from an auction? Obviously, it was an oversight by the secretary who typed that card. Oh. So -- oh, you mean -- I'm sorry. I missed something. You didn't put auction on the stock cards, right? Yeah -- no, no, I did. It's just this particular one didn't happen to have it? And I'm sure it had it on the form I gave to her and she bothered not to do that, but we did tell everybody on the Saturday sales meeting what we had coming in and where they were from. Have the cars you bought from auction generally been profitable?

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159 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. Yes. Have they been a big part of the used car department's profits? No. What kind of net profits have you been making out of the used car department over the last three years? Per month are you saying? Per month. Net profit? Yes, yes. Bottom line after everything is said and done? Yes. I'd have to look at some of my stuff, but probably somewhere from 10 to $20,000 a month. Is that after commissions like yours are paid, after people like you have been paid? Yes. That's after everybody has been paid? Pretty much. What has your income been for the last four years? My income? Annual income. MR. THOMPSON: Is there some 160 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 relevance to that? MR. BROWN: Certainly. Profitability of this. MR. THOMPSON: Well, we've given you -MR. BROWN: Motive. MR. THOMPSON: -- given you the operating statement for the corporation. This man is not a party to the case, he's an employee. What his income is has nothing to do with the profitability to the corporation, which we have disclosed to you. MR. BROWN: The entire business of talking about his salary against the issue of motive, that's why I talk about commission. MR. THOMPSON: Motive for what? MR. BROWN: To sell cars. MR. THOMPSON: Obviously, that's what they're in business to do is sell cars. They're not going to keep selling used cars if they go broke at it. It has no relevance. MR. BROWN: That's your position. It

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161 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 doesn't have to like demonstrate the entire case in one question. MR. THOMPSON: I don't think he has to answer that question. I'll instruct him not to. MR. BROWN: I'll volunteer if it is at all reassuring for you and state for the record it is to be bound as confidential what his salary is because I have no interest in what he makes, what he has made, for purposes outside this case at all. MR. THOMPSON: So it won't be disclosed in court? MR. BROWN: No. I'm not saying it wouldn't be disclosed at trial if it's deemed admissible by the Court. I'm saying I would agree to be bound personally whatever he discloses at this time about his income because I don't have any interest in it personally. I have every interest in it professionally in this case. MR. THOMPSON: In my judgment I'm telling you he doesn't have to answer. 162 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 He's told you what his percentage is, he's told you what the net profit is. We've given you the operating statement for the corporation. I don't think it's relevant to the case. MR. BROWN: I don't think he's told me what the net profit is. MR. THOMPSON: He's provided you the operating statement. MR. BROWN: That doesn't provide the used car department. I don't think I have to be bound by confidentiality at all, but I'm volunteering it. MR. THOMPSON: He's told you what the net profit is of the used car department. MR. BROWN: That's after his salary. THE WITNESS: No. I don't have a salary. MR. BROWN: That's after his cut. There may be 10 different people getting a cut. (By Mr. Brown) What is approximately the profit of the used car department before anybody is paid, people like yourself and Mr. Chezik? You're saying gross profit? 163

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Yes. Let's talk gross profit. Gross profit generally runs anywhere between 85 to $100,000. A month? A month. And has that been pretty consistent over the last four or five years? No. It's picked up pretty good. I'd have to look at the statements and stuff, but it has picked up. Has your buying of cars at the Chicago auction increased? Not really. Approximately what portion of the used cars that you've offered for sale off your lot at retail in the last four years has been cars that came from auction? Probably 25, 30 percent. Now, you've worked at other dealerships and you know something about the business. Is that a pretty normal figure for a franchise dealer like yourselves to have about 25 to 30 percent of their used cars to be cars that were purchased at auction? Yeah. And the reason why I have to do that is 164

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we are limited on new Hondas, which does not generate a lot of trade-ins. Okay. If we are not generating trade-ins, I don't have any cars to sell. That forces me to go outside to buy cars to bring in and offer for sale as a used car dealer. If you go to a Chevy store lot, they got 300 or 400 brand new Chevys or Fords for sale. Every time that they sell a new car, they're going to get a trade-in for that car. That generates them to have used car stock, okay, which I don't have the luxury of that option. So I have to go out and buy some to put on the lot. To answer your question, I know some aggressive dealers. Courtesy Chevy, they buy 30 to 40 percent at the sales. At the auction sales? Yes. Most of your aggressive dealers buy at the auction because they need the supply and demand. And some dealerships even that have a sizable source of trade-in cars, the aggressive ones will go ahead and buy a bunch of auction ones too; is that right? Some, yeah. But I know you see the aggressive ones at the auctions and, you know, buying 165

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cars. Is it your position that your dealership has done everything reasonably possible to keep from buying and reselling cars with major wreck damage? Yes. Aside from some increase in attention, some extra hard looking at the cars, have your practices in trying to avoid buying and selling these cars with wreck damage, have your practices changed over the years? Yes. Other than looking somewhat more carefully as you described earlier, have they changed? Yes. What other things have changed? Disclosure forms, any damages that have been incurred on cars, just, you know, a closer look, inspection a little closer, things like that. Disclosure forms, closer look, what was the other thing you said? Disclosure forms, closer looks, that's about it. When people trade in cars, do you require them 166

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to sign a disclosure statement? Yes. And have you always during the time you've worked at Chezik Honda required that? No. When did you start doing that? A couple years ago, I believe. Did MADA come out with something suggesting that? I think they did. Now, Carfax picks up cars that have salvage titles, right? Yes. If the car doesn't have a salvage title, it won't be shown on the Carfax as having wreck damage; is that right? As far as what I know. That's what they tell me. MR. BROWN: I have no further questions of the witness. (The witness was excused.)

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2 3 4 5 6 7 My commission expires ______________. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 168 1 C E R T I F I C A T E 2 3 4 5 6 7 8 9 [WITNESS], 10 11 12 13 14 who was by me first duly sworn; that he was examined and the examination was taken down in stenotype by me and thereafter transcribed; that the foregoing pages are a true record of the testimony given; and said deposition is herewith returned. I further certify that the exhibits marked in said deposition were retained by I, CHERYL R. BEAL, a Notary Public in and for the State of Missouri, do hereby certify that there came before me on the day, between the hours and at the place set forth in the caption page thereof, witness: STATE OF MISSOURI ) ) ss. COUNTY OF JACKSON ) ____________________________ Notary Public __________________________ [WITNESS] Subscribed and sworn to before me this _____ day of ________________ 19____.

IN RE: [CONSUMER] V. JOHN CHEZIK HOMERUN, INC., ET AL.

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counsel. I further certify that I am not counsel, attorney, or relative of either party, or clerk or stenographer of either party or of the attorney of either party, or otherwise interested in the event of this suit. GIVEN, under my hand and notarial seal at my office in said county and state, this _____ day of ______________ 1997. My commission expires October 21, 1998.

_________________________________ Notary Public, State of Missouri

169 1 2 3 Re: [Consumer] v. John Chezik Homerun, Inc., et al. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page: ______ Line No. ______ Change: ____________________________ To: ________________________________ Reason for Change: __________________ I am therefore signing my deposition on Page: ______ Line No. ______ Change: ____________________________ To: ________________________________ Reason for Change: __________________ Page: ______ Line No. ______ Change: ____________________________ To: ________________________________ Reason for Change: __________________ Page: ______ Line No. ______ Change: ____________________________ To: ________________________________ Reason for Change: __________________ Page: ______ Line No. ______ Change: ____________________________ To: ________________________________ Reason for Change: __________________ Page: ______ Line No. ______ Change: ____________________________ To: ________________________________ Reason for Change: __________________ Page: ______ Line No. ______ Change: ____________________________ To: ________________________________ Reason for Change: __________________ MAIL TO: Mr. Bernard E. Brown 200 Westwood Colonial Building 4800 Rainbow Westwood, Kansas 66205

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the condition that the above-noted shall be entered upon the deposition. ________________________ [Witness] 170

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IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI WESTERN DIVISION

[CONSUMER],

) ) Plaintiff, ) vs. ) No. ) JOHN CHEZIK HOMERUN, INC.,) and NKC MOTORS, INC., ) ) Defendants. ) REPORTER'S CERTIFICATE I hereby certify that the deposition of [Witness] is in the custody of Mr. Bernard E. Brown, 200 Westwood Colonial Building, 4800 Rainbow, Westwood, Kansas 66205. Said deposition was taken on 1/23/97.

16 17 18 19 20 21 22 23 24 25 The the The the taxed costs of $_______ have been paid by Plaintiff. taxed costs of $_______ have been paid by Defendants.

_________________________________ Notary Public, State of Missouri My commission expires 10-21-98.

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