Crime & Courts

SC Supreme Court rules against car dealership charging “closing fees”

SC Supreme Court rules
SC Supreme Court rules

The S.C. Supreme Court ruled 3-2 Wednesday that a Pickens County car dealership shouldn’t have charged a $299 “closing fee” when it sold a used car to a local woman.

The car dealership will have to pay $2.8 million actual damages to Julie Freeman and 5,314 other people who bought cars from Hendrick Honda of Easley from 2002 to 2006, according to the opinion and Columbia attorney Cam Lewis, one of the lawyers who sued Hendrick.

That computes to about a $525 refund for each of Hendrick Honda’s 5,315 car buyers over that period.

The lawsuit was not technically a “class action” suit. Under S.C. law, Freeman was allowed to file suit as a representative of the thousands of other Hendrick Honda customers during the four-year period in question.

The lawsuit is one of many similar lawsuits brought against S.C. car dealerships across the state, some of whom have settled their cases and others that were on hold pending the resolution of this case, according to the Supreme Court’s opinion.

Winning lawyer Lewis estimate there are currently more than 200 such lawsuits against other state car dealerships.

“All of them were waiting to see what the Supreme Court did in this case,” Lewis said.

At issue in Freeman’s lawsuit was whether Hendrick Honda had a factual basis for tacking on a closing fee for each car it sold. Its closing fees ranged from $249 to $399 per car, according to the opinion.

Under a law called the Dealers Act, a car dealer must satisfy certain requirements such as only including actual costs when it charges a closing fee, the opinion said. Freeman had charged in her lawsuit that Hendrick’s closing fee “bore no relation to the actual expenses incurred by Hendrick.”

“Hendrick failed to offer any evidence that it calculated the costs that comprised the closing fee,” the opinion said. During the trial, Hendrick’s general manager testified he didn’t know how closing fees were computed, the opinion said.

“Any costs sought to be recovered by a dealer under a closing fee charge must be directly related to the services rendered and expenses incurred in closing the purchase of a vehicle,” the opinion said.

Lewis said, “These fees are little but they add up to a lot if you are a car dealer. It’s a big win for consumers because it will make cars cheaper.”

Sims Floyd, executive director of the S.C. Automobile Dealers Association, was not available for comment Wednesday.

Other lawyers on the winning side were Terry Richardson of Barnwell, Gedney Howe of Charleston and Michael Spears of Spartanburg.

Hendrick Honda lawyers included James Becker, Mary Caskey and John Lay of Columbia, Sarah Spruill of Greenville and Marvin Infinger of Charleston.

The court’s majority opinion was written by Associate Justice Donald Beatty and joined by Chief Justice Jean Toal and Kaye Hearn.

Dissenting were Associate Justice John Kittredge and Acting Justice James Moore.