Revenge Lawsuit Over Repossession of Car

Sometimes students are a gift that keeps on giving. So it is with Lynn Neveu (left), who has fed me blogworthy material before and has done so again.

In February, 2024, Plaintiff Tiah McCreary bought a 2022 Kia from Taylor Kia of Lima (the Dealership) in Ohio, which had been opened in 2012 by Taylor Cadillac.  The Dealership assisted Ms. McCreary in obtaining financing for the vehicle through Global Lending Services, LLC (GLS). GLS gave preliminary approval for the loan, and Ms. McCreary took possession of the vehicle.

GLS soon discovered that it did not have sufficient information from Ms. McCreary to grant final approval of the financing. The Dealership repossessed the car one month after the purchase date. Already, I want to know more. Were attempts made to gain more information from Ms. McCreary? Did she have an opportunity to seek financing elsewhere? Was she provided with notice that repossession was a possible outcome if she could not get financing? All of this is unknown.

But Ms. McCreary got creative. She discovered that the Ohio Secretary of State had cancelled the Dealership’s registration because it had not applied for renewal. Ms. McCreary did so, registering the Dealership in her own name and then sending Taylor Cadillac a cease and desist order for operating under a name owned by her. She filed suit, alleging various causes of action relating to the car purchase, and she sought an order enjoining Taylor Cadillac from transacting business under the name “Taylor Kia of Lima” without her consent.

Predictably, Taylor Cadillac invoked an arbitration agreement that Ms. McCreary had signed electronically in connection with the car purchase. The trial court granted the motion to compel arbitration. Ms. McCreary appealed.

In McCreary v. Taylor Cadillac, Inc., an Ohio appellate court affirmed in part and reversed in part. Ms. McCreary argued that she had never authorized the Dealership’s agent to affix her electronic signature to the arbitration agreement. The appellate court was unmoved, because she did not deny signing another document that incorporated the arbitration agreement by reference.

More interestingly, Ms. McCreary argued that the arbitration agreement could not be enforced because it was with a fictitious entity, “Taylor Kia of Lima,” which did not exist at the time of the sale. The Court identified two problems with this argument. First, Taylor Cadillac was a party to the agreement. Second, while a fictitious entity cannot sue, it can be sued. Once sued, it can defend itself. The Court rejected Ms. McCreary’s unconscionability argument because she had not raised it below, nor had she established substantive unconscionability. The trial court did not err in referring the question of whether GLS could be a party to arbitration as an assignee to the arbiter.

However, Ms. McCreary’s action seeking to enjoin the Dealership’s use of the name “Taylor Kia of Lima” is separate from the transaction to which the arbitration agreement relates. The Court thus reversed the trial court’s grant of the motion to compel arbitration with respect to that claim. One would think that would be enough to force a settlement. The parties have likely expended far more litigation costs than Ms. McCreary’s monthly car payments. But I hope that we have not heard the last from Ms. McCreary, who seems to have found a very creative solution to a legal problem.