Court Of Appeals Affirms Fraud Ruling In Used Car Sale Over Hidden Odometer Discrepancy; Vacates Attorney Fee Award

McCallum v M 97 Auto Dealer, Inc

• Opinion Published: September 30, 2025 (Kelley, O’Brien, Ackerman)

• COA Docket No. 367630

• Macomb County Circuit Court

Holding: The Court of Appeals affirmed the trial court’s findings of liability, fraudulent intent, and treble damages with regard to claims based on failure to disclose accurate mileage, but vacated its attorney fee award and remanded for reconsideration under the proper legal framework as articulated in Pirgu v United Serv Auto Ass’n, 499 Mich 269 (2016).

Facts:

In January 2021, plaintiff Jessica McCallum was living in Colorado as she shopped for a used Toyota Sienna minivan between $12,000 and $14,000. Her father, Kevin McCallum, lived in Michigan and helped her by looking at listings local to him. Her plan was to fly to Michigan and drive her Sienna back to her home in Colorado. That month, he found a listing posted by defendant for the vehicle at issue in this case. The listing stated that it had 71,000 miles.

Initially, the plan was for Kevin to purchase the vehicle and transfer it to Jessica, but she ultimately decided to streamline the process and purchase it directly herself. Defendant required that she send a picture of her drivers license, which she sent to Kevin. Kevin negotiated the selling price to $13,000, signed the necessary documents, and drove the vehicle home. A few days later, plaintiff emailed defendant to ask when she would receive the documents needed to finalize the purchase, to which defendant’s sales manager responded that they had been signed and sent to Michigan’s Secretary of State. Plaintiff then flew to Michigan and drove the vehicle back to Colorado.

Upon registering the vehicle in Colorado, the paperwork revealed that the odometer reading was “not actual mileage” and that the vehicle had actually travelled more than 200,000 miles - far beyond what plaintiff believed the mileage to be when she agreed to the sale. Plaintiff contacted defendant seeking to return the vehicle. Initially, defendant attempted to auction the vehicle off on plaintiff’s behalf but was unsuccessful. Defendant then offered to repurchase the vehicle for $12,000, but defendant refused to send the money via cashier’s check or wire transfer as plaintiff insisted. Plaintiff then ceased using the vehicle.

On October 12, 2021, plaintiff filed suit asserting claims for “Fraud in the Inducement and/or Misrepresentation,” “Breach of Warranty of Title,” “Revocation of Acceptance Pursuant to MCL 440.2608 and/or Damages Pursuant to MCL 440.2715(2),” “Breach of Express Warranties,” “Breach of Implied Warranty of Merchantability,” “Liability Under Magnuson-Moss Warranty Act (15 USC §2301 et seq),” “Violation of MCLA 445.901, et. seq. (Michigan Consumer Protection Act),” “Violation of Motor Vehicle Code,”1 “Violation of Motor Vehicle Information and Cost Savings Act (49 USC 32701, et seq),” “Negligence,” and “Exemplary Damages.”

In March 2023, plaintiff moved for partial summary disposition under MCR 2.116(C)(10) on her claims under the Michigan Consumer Protection Act, the Michigan Vehicle Code, and the federal odometer law. She argued that defendant had violated MCL 257.235(1) and MCL 257.233a(3) by failing to provide proper documentation of the vehicle’s mileage. The trial court granted summary disposition under the Michigan Vehicle Code, concluding that defendant failed to satisfy its obligations, but found a question of fact remained as to whether defendant intentionally withheld information from plaintiff.

Plaintiff then moved for “Election of Remedies, Entry of Judgment Pursuant to Election and to Set Matter for Evidentiary Hearing as to Plaintiff’s Statutory Damages, Costs and Attorney Fees.” In it, she elected rescission of the contract of sale and sought entry of judgment to that effect, along with treble damages, costs, and attorney fees under MCL 257.233a(15). Her claimed damages included the $13,000 purchase price of the vehicle, which she sought to have trebled, and $38,861.90 in attorney fees.

The parties stipulated to an evidentiary hearing, where evidence was presented on whether defendant deliberately misled plaintiff and her father in the transaction. The trial court found that defendant did act with the intent to mislead, and ordered rescission of the sale, directed defendant to return the $13,000 purchase price, to retrieve the vehicle, and trebled plaintiff’s expenses of $3,489.80, awarding her $10,469.40 in addition to the return of the purchase price. The court further ordered $30,000 in attorney fees, which was less than the amount plaintiff had requested.

Defendant appealed, challenging the trial court’s findings that (1) defendant violated the Michigan Vehicle Code, (2) defendant acted with fraudulent intent, and (3) any portion of plaintiff’s recovery should have been trebled. Plaintiff cross-appealed, contending that the trial court erred in declining to treble the full amount of her recovery, including the purchase price and in reducing her requested attorney fee reward.

Key Appellate Rulings:

In its opinion, the Court of Appeals finds that the trial court was correct in granting summary disposition on plaintiff’s claim that defendant violated MCL 257.233a(1) and (3). The Michigan Vehicle Code straightforwardly provides requirements for disclosing a vehicle’s mileage when a title is transferred, in short, “mileage must be disclosed at the time of title transfer through either the certificate of title or a written statement that identifies the odometer reading, the transferee, and the transferor’s assessment of the mileage’s accuracy.” The statute contains provisions that require proper documentation of communications, and explicitly prohibits odometer tampering. Defendant argues that it complied with communications requirements and denies acting with “intent to defraud,” both of which the Court found unpersuasive. In its communication with Kevin, the court found that defendant did not comply with the statute’s requirements. On the question of intent to defraud, Michigan law regarding fraud includes both “actionable fraud,” or fraudulent misrepresentation, as well as “silent fraud,” or fraudulent concealment. The doctrine of silent fraud “ “holds that when there is a legal or equitable duty of disclosure, ‘[a] fraud arising from the suppression of the truth is as prejudicial as that which springs from the assertion of a falsehood . . . .’ ” Titan, 491 Mich at 557, quoting Tompkins v Hollister, 60 Mich 470, 483; 27 NW 651 (1886). Here, the Court finds that the trial court did not clearly err when finding that defendant acted with intent to defraud.

The Court notes that “although incidental expenses incurred in connection with the transaction are “damages” subject to trebling under MCL 257.233a(15), restitution of the $13,000 purchase price as part of rescission is not.” Therefore, they affirm the trial court’s decision to treble incidental damages and its refusal to treble the purchase price. Citing Alken-Ziegler, the Court finds that the $13,000 was not repayment for any loss, but rather is a form of restitution. Because restitution is not a form of damages, the Court took no issue with the trial court’s declining to treble that portion of the recovery.

Lastly, because the trial court failed to conduct a proper Pirgu analysis in awarding attorney fees, the Court of Appeals vacates that portion of the judgment and remand for further proceedings. Pirgu sets forth a framework for determining reasonable attorney’s fees when those fees are authorized by statute. In that framework, “a trial court must begin its reasonableness analysis ‘by determining the fee customarily charged in the locality for similar legal services’ and then multiplying that number ‘by the reasonable number of hours expended in the case.’” Here, the trial court did not begin its analysis as Pirgu requires, settling instead on an arbitrary round number. Therefore, the Court of Appeals vacated that portion of the judgment and remanded.