Pittsburgh Consumer Sues State Farm Insurance for Selling Salvage Cars Without Disclosure

Consumer Found Out Pre-Certified Honda Had Salvage History Two Years After Purchase

SEWICKLEY, Pa., Nov. 17 -- More than two years after purchasing a pre-certified Honda Civic for his stepson, Robert Beaves received a letter from the Pennsylvania Attorney General informing him the car was previously declared a "total loss" by State Farm Insurance. The carrier omitted the salvage history of the Civic, along with the histories of 30,000 other cars, when selling the cars on the auction block. The AG's office endorsed a modest cash settlement offered by State Farm, however the car must now be titled as a salvage vehicle thus significantly diminishing the value. In addition, Honda has cancelled the 100,000-mile extended warranty which was purchased with the vehicle.

Beaves has filed a lawsuit against State Farm Insurance and the dealership that sold him the vehicle, Moon Township Honda, for not disclosing the salvage history at the time of sale, as required by Pennsylvania Law. Attorneys Craig Thor Kimmel and Susanne Kimberland of the Pittsburgh-based lemon law firm of Kimmel & Silverman, P.C. are representing Beaves.

According to court papers filed in Court of Common Pleas, Allegheny County, on November 2, 2005, Beaves first visited the Moon Township Honda dealership on or about July 16, 2003 looking for a pre-owned vehicle and was offered a 2001 Honda Civic LX with 11,063 miles. The car was represented as being in good condition, with no salvage, flood or lemon history; and had been cared for with regular repair maintenance. The car was sold as a certified pre-owned Honda, after what the dealer claimed was an extensive inspection, and came with a 100,000-mile bumper-to-bumper manufacturers warranty. Beaves purchased the car for $14,026.43 and had it registered in Pennsylvania.

On September 15, 2005, more than two years after the purchase, Beaves received a letter from the Commonwealth of Pennsylvania, through the Attorney General's office, which advised him that the Honda Civic had been the subject of a State Farm Insurance claim prior to his purchase. The vehicle damage was so extensive that the car was required to have a "salvage" title issued. The letter had stated that the Civic was one of 30,000 cars not properly titled by State Farm, but a settlement had been arranged between the insurance carrier and Attorney Generals throughout 48 states and the District of Columbia. In exchange for their efforts in arranging and administering this settlement, the Attorney Generals received payments up to $1 million from State Farm.

Under the proposed settlement, Beaves was to receive approximately $2,700 for the diminished value of his vehicle as a result of this inaccuracy. According to NADA, a 2001 Honda Civic LX with a clean title is currently worth $10,250. According to attorney Craig Kimmel, a salvaged 2001 Honda Civic LX in otherwise perfect condition "is worthless in the retail market since few consumers will accept the poor reliability and poor safety hazards of these cars. Whatever value it does have, exists primarily in the wholesale market among dealers, for non-personal use or parts only."

Speaking on the warranty, which has been voided by Honda, Kimmel adds, "By voiding the warranty, Mr. Beaves is now required to pay for repairs that had been covered in the past. The value of that loss alone is more than the settlement offered by State Farm."

"We would have never purchased a salvaged car in any event, and certainly not as a teenager's first car," says Beaves. "We have no way of knowing what this car has gone through. Was it stolen and abused before it was recovered? Was it in a flood? State Farm is unwilling to provide us with any of this information, and as a result, we don't know what problems we may experience in the future with this car. We bought what we considered to be a quality car that would serve our son through his college days with little trouble and we paid top dollar. The settlement offered by State Farm does not come close to compensating us for our loss."

According to the complaint, State Farm Insurance has violated the Pennsylvania Automotive Industry Trade Practice Act and Moon Township Honda has violated the Pennsylvania Unfair Trade Practices Act. Beaves is seeking a repurchase of the vehicle, along with punitive damages to discourage future sales abuses, collateral charges, attorneys' fees, court costs and treble damages.

For more information on the lawsuit, visit http://www.state-farm-salvage-titles.com/.

Kimmel & Silverman is the oldest lemon law and automotive consumer advocacy firm in the Northeast. The Firm has six offices throughout Eastern and Western Pennsylvania, New Jersey, Maryland, Delaware and Massachusetts. For more information on Kimmel & Silverman, P.C., please visit the firm's website at http://www.lemonlaw.com/ or call 1-800-LEMON-LAW.

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