Henley v. Neessen Chevrolet, Inc.

Background

Nicholas Henley alleged that Neessen Chevrolet, Inc., Automotive Restyling Concepts, Inc. (ARC), and BB Motor Sales, LLC violated the Federal Odometer Act. He also alleged that ARC and BB Motor violated the Minnesota Odometer Act. Henley separately alleged that Auto-Owners Insurance Company was liable under Minnesota’s dealer-bond statute. Auto-Owners brought crossclaims against ARC and BB Motor.

The complaint alleged that a Chevrolet pickup truck had recorded mileage exceeding 200,000 miles before Neessen acquired it in 2019. Neessen later certified mileage of 90,103 when selling the truck to ARC, while also preparing an affidavit listing the mileage as 150,025. The complaint alleged that ARC subsequently certified the truck’s mileage as 90,277 when selling it in Minnesota. BB Motor later certified mileage of 99,879, and Minnesota Truck Headquarters sold the truck to Henley on January 25, 2022, stating that its actual mileage was 99,893. In May 2022, another dealership told Henley that the truck had more than 200,000 miles and that its odometer had been rolled back.

ARC’s Motion to Dismiss

ARC moved under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim, to dismiss Counts I and II. Count I asserted violations of the Federal Odometer Act, and Count II asserted violations of the Minnesota Odometer Act.

The court explained that the federal law requires a vehicle seller to disclose the odometer mileage and, when the seller knows the odometer reading differs from the vehicle’s actual mileage, to disclose that the actual mileage is unknown. The law also prohibits false statements in the required disclosure. The court considered the complaint’s factual allegations true for purposes of the motion and found that Henley plausibly alleged ARC knew or had reason to know that the truck’s mileage was higher than the number ARC certified. The court therefore denied ARC’s Motion to Dismiss.

Neessen’s Motion to Dismiss

Neessen moved to dismiss Count I for lack of personal jurisdiction under Rule 12(b)(2) and as barred by the statute of limitations under Rule 12(b)(6).

Personal jurisdiction. Personal jurisdiction is the court’s authority to exercise power over a defendant. The court found that Henley made the required preliminary showing that Neessen had sufficient connections with Minnesota. The court relied on allegations that Neessen was an experienced dealership, knew ARC was a Minnesota dealership that would sell the truck to Minnesota consumers, provided allegedly inaccurate transfer documents, and knew those documents would be used in transferring the truck’s title in Minnesota. The court also found that the alleged conduct was directed toward Minnesota and that the claimed injury occurred there. The court therefore denied Neessen’s motion to dismiss for lack of personal jurisdiction.

Statute of limitations. The Federal Odometer Act requires a claim to be brought within two years after it accrues. Applying the federal discovery rule, the court stated that the period begins when the purchaser discovers, or reasonably should discover, the odometer discrepancy. Henley alleged that he purchased the truck on January 25, 2022, and filed the complaint on January 24, 2024. The court concluded that the complaint could not be found time-barred as a matter of law and denied Neessen’s motion to dismiss as time-barred.

Order

The court ordered that ARC’s Motion to Dismiss, Document No. 19, was DENIED, and that Neessen’s Motion to Dismiss, Document No. 27, was DENIED. The order addressed only the motions to dismiss and did not determine the ultimate merits of Henley’s claims.