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Wald v. Truspeed Motorcars

May 3, 2010


Appeal from a judgment of the Superior Court of Orange County, Gregory Munoz, Judge. Reversed. (Super. Ct. No. 30-2008-00112013).

The opinion of the court was delivered by: Sills, P. J.




Back in the 1940‟s, a character in a theatrical comedy flatly stated that there is no such thing as a perfect crime. To which the retort was: "Ever buy a used car?"*fn1

The exchange might be a bit out of date today. California law has not only required car dealers to be licensed since 1959 (see Veh. Code, § 11700*fn2 ; added by Stats. 1959, ch. 3), but has subjected car dealers to specific statutes against fraud (see generally § 11711) since that date as well. And a relatively recent statute, section 11711.3 (added by Stats. 2002, ch. 407, § 2) goes so far as to completely preclude any recovery by a dealer of the price of a car if the dealer is not licensed. The "dominant purpose" of California‟s statutory car dealer licensing scheme is, of course, the protection of car buyers from irresponsible or unscrupulous dealers. (Valiyee v. Department of Motor Vehicles (1999) 74 Cal.App.4th 1026, 1032, italics added.)

The irony of the present case is that a scheme designed to protect consumers from unscrupulous dealers has, at least under the law as interpreted by the trial court on a successful demurrer, resulted in a car dealer reaping the benefit of an outright fraud on one of its salespeople, to whom it owed substantial finder‟s fees. The theory, which the trial court accepted on demurrer, was that the salesman really was himself a used car dealer, and, because he did not have a dealer‟s license, he could not complain when he was not paid his finder‟s fees for about 11 cars he obtained for the dealership.

At this stage we deal only with the facts in the complaint. That said, to affirm would be to allow the car dealership to get away with a perfect crime. We reverse.


The last operative complaint by the plaintiff was the second amended complaint. Again, we stress that the case comes to us after a sustained demurrer without leave to amend. That means plaintiff Alex Wald is entitled to all reasonable inferences from facts alleged in that document, but not conclusions of law.

The story alleged is this: Plaintiff Wald is in "the business" of finding, buying and then selling again used Porsches.*fn3 Defendant Truspeed is in the "business of selling sued Porsches." Truspeed liked Wald‟s ability to find used Porsches, and in June 2008 Wald and three representatives of Truspeed met to work out an arrangement.*fn4 The meeting resulted in an oral agreement which would work this way: Wald would locate a used Porsche, and "propose" the car to Truspeed. If Truspeed was "interested," Wald and Truspeed would negotiate a price between themselves. Then Wald would return to the owner and negotiate a lower price: The difference between the Wald-Truspeed price and the Wald-owner price would be Wald‟s compensation -- though there was a statement by one of the Truspeed representatives that Wald would receive no less than $500 per vehicle.*fn5

Importantly, the actual buying of a used Porsche would be done by Truspeed: It would be Truspeed that would write the check and do the other paperwork to actually procure the car from the owner located by Wald and at the price negotiated by him.*fn6 Thus -- if we may make a reasonable inference from that allegation -- Wald would not automatically get paid as might be case if he bought the used Porsche himself and then re-sold it to the dealer. He was dependent on the dealer for any compensation for his services. The parties thus called the compensation a "finder‟s fee" and Wald trusted Truspeed to obtain any necessary licenses to implement the arrangement.*fn7

A few other aspects of the complaint are noteworthy: The Truspeed representatives asked Wald whether he would be interested in selling vehicles for Truspeed "on the floor," though the parties agreed that "Plaintiff would essentially be locating cars from private parties and would receive a finder‟s fee" for his work. A Truspeed representative also asked Wald to "assist with pre-purchase inspections and shipping," and also "encouraged [Wald] to spend time at the store, offered [him] an office and asked [him] to help on the sales floor once or twice a week."

The complaint does not say that Wald accepted any of these "on the floor" offers. But the complaint does say that Truspeed‟s representative Rob Morgan and Wald had a discussion over the possibility that some of the prospective buyers might not want to sell to a dealer (which was the substance of the arrangement -- Truspeed would be the real buyer). In this conversation, Morgan told Wald he "did not care how" Wald "got the cars and encouraged [Wald] to lie to the sellers and say whatever it took to get the cars." The complaint does not say whether Wald actually misrepresented his ultimate purpose of having Truspeed buy the used Porsches, but the allegations to the effect that it was Truspeed who wrote the checks and actually did all the buying establishes a reasonable inference that Wald did not lie and that all sellers knew that the buyer of their cars was a dealer.

About 11 cars were obtained by Wald for Truspeed under the arrangement, and if the contract had been honored Wald would have been paid about $40,000. Truspeed, however, reneged on the deal and refused to pay Wald his fees for any of the cars obtained.*fn8 Truspeed‟s profits on the cars were alleged to exceed $100,000.

Truspeed filed a demurrer based on Wald‟s lack of dealer‟s license (and lack of a salesperson‟s license for that matter). The trial court sustained, without leave to amend, Truspeed‟s demurrer to four of the five causes of action set forth in the second amended complaint,*fn9 overruling a cause of action for common counts for $524.66 in actual expenses incurred. The court ruled that section 11711.3 of the Vehicle Code, which applies to unlicensed dealers, precluded any recovery by Wald of monies owed under the oral contract. As against Wald‟s argument that he was really a salesperson and his claims could be enforced in equity despite his lack of a salesperson‟s license, the trial court alluded to Tri-Q, Inc. v. Sta-Hi Corp. (1965) 63 ...

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