## Facts

- Diane Newman owned a 1984 Chevrolet Suburban and sold it to A.J.’s Automotive Sales, Inc., a used-car dealer.
- A.J.’s resold the Suburban to Donna and Samuel Freet when the vehicle was about eleven years old and the odometer displayed about 80,000 miles.
- After the purchase, the Freets experienced extensive, recurring mechanical problems.
- Several years later, the Freets learned the odometer had been replaced or altered before their purchase and the vehicle likely had about 100,000 more miles (about 180,000 miles total).
- The Freets sued A.J.’s and Newman seeking rescission, damages, and attorney’s fees based on federal odometer law and state-law misrepresentation theories.

## Issues

1. Whether rescission was available where the buyer used the vehicle for years and the seller could not be returned to an exact pre-sale status quo.
2. Whether the federal odometer statute in effect required mileage disclosure for a vehicle more than ten years old, and if not, whether Newman could be liable for non-disclosure alone.
3. Whether summary judgment was proper on fraud/odometer claims turning on knowledge or intent.
4. Whether attorney’s fees awarded under the federal odometer statute had to track the defendants and claims properly subject to statutory liability.

## Decision

- The court held rescission was not barred merely because precise restoration of the parties’ pre-contract positions was impossible after the passage of time and vehicle use.
- The court held the federal odometer disclosure requirement did not apply to sales of vehicles more than ten years old under the version then in force; Newman could not be liable under the Act solely for failing to provide an odometer disclosure for such a vehicle.
- The court stated that questions of knowledge or intent central to fraud-based and statutory-fraud theories commonly present factual disputes not suitable for resolution by summary judgment unless undisputed.
- The court affirmed in part, reversed in part, and remanded for further proceedings consistent with its rulings, including adjustments tied to the limited scope of statutory liability and related fee consequences.

## Legal Principles

- Rescission is an equitable remedy; the party seeking rescission must restore or offer to restore consideration to the extent possible, but exact restoration is not required where the court can return the parties as nearly as possible to their former positions.
- A buyer’s continued use of property before discovering an alleged odometer misrepresentation does not automatically bar rescission where the use flowed from the transaction and the defect was concealed.
- Under the then-applicable federal odometer scheme, sellers of vehicles more than ten years old were exempt from statutory mileage-disclosure duties; liability cannot rest on failure to perform a duty the statute did not impose.
- Summary judgment is improper where genuine disputes of material fact exist, and state-of-mind elements such as knowledge or intent generally require factfinding absent conclusive, undisputed evidence.
- Statutory attorney’s fees under the federal odometer law depend on prevailing on valid statutory claims against defendants properly subject to the statute’s liability provisions.

## Conclusion

The court permitted rescission of a used-vehicle sale despite depreciation and post-sale use, rejected federal odometer-disclosure liability for the prior owner based solely on non-disclosure because the vehicle was over ten years old under the governing statute, and remanded for further proceedings where liability and fee issues depended on claim validity and fact questions about knowledge or intent.


A.J.’s Automotive Sales, Inc. v. Freet, 725 N.E.2d 955 (Ind. Ct. App. 2000)