Do you have a dispute with a car dealership over a car you purchased, a refund on a warranty, or bad title? You have several options, including suing the car dealership in small claims court.
In this article, learn about:
- Common types of small claims lawsuits against car dealerships.
- What to do before suing a car dealership in small claims court.
- How much does it cost to sue a car dealership in small claims?
- How much can you sue a car dealership for in small claims?
- How to file a small claims lawsuit against a car dealership.
- Fun fact, lawyers are not allowed at the initial small claims hearing! This is to even the playing field so that each party has an equal chance of obtaining justice.
Common types of small claims lawsuits against car dealerships
We often receive the question, can I sue a car dealership in small claims? The answer is yes as long as the dispute is for $10,000 or less (more on this below).
Here are some examples of small claims lawsuits against car dealerships:
- The car had mechanical issues shortly after you bought it. For example, you bought the car and the next day the engine started to act up.
- Made a fraudulent misrepresentation or advertising regarding the car you purchased. For example, the car dealership lied that the car was never in an accident.
- Failing to fix your car after you purchased a warranty. For example, you purchased a warranty when you bought the car and you pay for repairs after having mechanical issues. Now the dealership or the warranty won't refund you for the money you spent fixing the car.
- Failure to refund you. For example, if you cancelled an extended warranty you purchase and the dealership agreed to refund you but never did.
- Failure to give you the title documents. For example, you purchased a car but the car dealership didn't provide you with the title documents to the car.
California DMV Car Buyer's Bill of Rights. The DMV publishes a guide on common issues with car dealerships here are some of the topics covered (1) required disclosures car dealerships are supposed to provide you with, (2) using the word "certified" when selling a used car, (3) buying a used car and the option to cancel the contract within 2 days.
What to do before suing a car dealership in small claims court
Consider filing a complaint against the car dealership with the DMV
- Prepare the DMV complaint form.
- Create an evidence packet to attach to the complaint form. For example, any contracts, receipts, disclosures, warranties, checks, pictures, etc. that are relevant to the DMV complaint you are filing against the car dealership. We can create an evidence packet for you!
- Mail the complaint and the evidence packet to the closest DMV investigations office to where the car dealership is located. You can find a list of DMV investigative offices on the second page of the DMV complaint form.
Send a Demand Letter
A demand letter is a letter that outlines a set of requests. For example, you could request a refund and explain why you are requesting a refund.
If you eventually decide to sue in California small claims court, you are required to first request your money or property back before you can file the lawsuit. While you can request your money or property back orally, it is recommended you do so in writing in the form of a demand letter.
What to include in the demand letter?
Unsure of what to include in your demand letter to the car dealership:
- How much money you are owed.
- Why you are owed money.
- Your contact information.
- Where to send payment.
- Give them a few days to respond (usually about 7 to 14 days).
- State that if they don't respond, you intend to sue.
Make sure to review any contracts you have from the car dealership in detail in case they have requirements on where to send a demand letter or if they have forced arbitration.
How much does it cost to sue a car dealership in small claims?
So how much are you going to spend by suing a car dealership in small claims court?
Court Filing Fees
The amount you will pay to file a small claims lawsuit in California depends on how much you are suing the car dealership for. You will pay between $30 to $75 to file the lawsuit. If you cannot afford to pay court fees, you can ask the court to waive the fees.
Once the lawsuit is filed, you have to notify the car dealership that you have sued them. This is called "serving." Serving Costs can range from $0-$75.
More on who to serve on behalf of the car dealership below. If you win, you can request that the car dealership pay for your court fees and serving costs.
How much can you sue a car dealership for in small claims?
In California, you can sue a car dealership for a maximum of $10,000 if you are an individual. If you are a business suing a car dealership, you can sue for a maximum of $5,000. Note, if you are a sole proprietor, you count as an individual.
By suing in small claims you are agreeing to waive any amount over the maximum amount you can sue for, even if you are owed more. For example, if the car dealership owes you $12,000, and you decide to sue in small claims, you are waiving suing for an additional $2,000. Meaning that you will win a maximum of $10,000.
While you may be missing out on the full amount you are owed, there are practical benefits to suing in small claims instead of suing in "regular court."
Here are some of the benefits:
- Court filing fees are cheaper in small claims than in other courts.
- The process is faster in small claims than in other courts as your hearing will usually be scheduled 30-70 days after you file the lawsuit.
- Lawyers are generally not allowed in small claims which helps keep the costs of suing low.
You can also speak to a lawyer if you think the car dealership may owe you a lot more than the small claims limit. Most consumer fraud lawyers will provide you with a free consultation to determine if they can take your case. Reach out to us via our chat if you need assistance finding a consumer fraud lawyer.
How to file a small claims lawsuit against a car dealership
Step 1: Identify the legal name for the car dealership, their address, and their "agent of service of process."
In order to sue in California small claims, you need to be able to correctly name the person or business you are suing. Identifying whether the car dealership is doing business as an LLC or Corporation is very important. Alternatively, the business may be owned by a person, known as a "sole proprietorship."
- Look for names the car dealership uses on contracts, receipts or the store front. Look through any documents you have from the car dealership and write down any potential names you have from the car dealership. Follow the steps below using the names you have written down.
- Run a search on the CA DMV website. Car dealerships have to be licensed with the DMV. You can run a search for their license information on the DMV website. Their license information will list their legal entity name.
- Fictitious Business Names. Many car dealerships use a name other than their legal name to do business. They do this for marketing purposes usually because their legal name is too long. A name other than a legal name is called a fictitious business name. Each county has a database of fictitious business names where you can search for the real legal entity name. In this article, we cover this process in detail.
- Business License Search. Using the address for the car dealership, you can search for their business license. Each city has a database of business licenses. Call the business license department for the city where the car dealership is located in.
- Search on the California Secretary of State's website. The car dealership may be registered as a corporation or LLC. You will need to identify the name of the corporation or LLC. In this article, we cover this process in detail. It is important to identify who the agent for service of process (someone selected by the corporation or LLC to receive legal documents on its behalf) as this is the person who will be served.
Step 2: Complete "Plaintiff's Claim and Order to Go to Small Claims Court" (Form SC-100)
- This form starts the California Small Claims Court lawsuit process. Download here.
- It is also known as the "complaint" or "claim."
- Remember, we can help you prepare the small claims lawsuit and file it with the court!
Step 3: File "Plaintiff's Claim and Order to Go to Small Claims Court"
Each California Small Claims Court has a different procedure for filing. You have to check with your local small claims court whether they allow filing in-person, by mail, online, or by fax. Or we can file your case for you!
Step 4: Serve the car dealership
If the car dealership is owed by an individual (not registered as a corporation or LLC)
Once you file your California small claims court lawsuit, the next step is to notify the car dealership that they have been sued. This is called "service of process" (also known as "service"). If the car dealership is owned by an individual or sole proprietor, they are the person that has to be served. You must serve the car dealership owner at least 15-20 days before the small claims court hearing (sometimes you are required to serve at least 30 days before the hearing). There are several ways you can serve the car dealership owner including by having a friend serve, hiring a process server, or hiring the sheriff. You cannot serve your own lawsuit.
If the car dealership is registered as a corporation or LLC
Remember, you will be serving the car dealership's "agent for service of process" as listed on the California Secretary of State's website. Learn more here.
What is a small claims court hearing like?
Small claims hearings in California small claims are informal and most hearings last around 15 minutes. While many disputes settle before the hearing, here is what to expect if your lawsuit does not settle.
Who will represent the car dealership at the hearing?
- The easiest way to answer this question is that a lawyer will not be representing the car dealership since lawyers cannot represent parties at the initial small claims hearing. They will have a non-attorney representative.
- Right before the hearing, the judge will ask you and the car dealership's representative to show each other the evidence that you will later show the judge.
- The judge will ask you why you are suing.
- The judge will ask the car dealership's representative to tell them their side of the story.
- The hearing will last around 15 minutes.
- The judge will ask you to show them the evidence you brought. Sometimes the judge will keep the evidence. Other times, you will get the evidence right back.
- Very rarely a judge will tell you whether you won or lost at the hearing. Instead, the judge will tell you that their decision will be mailed to you (usually takes a few weeks to two months or so).