Colorado § 44-20-131 - Right of action for loss.

§ 44-20-131. Right of action for loss.

(1) (a) If a person suffers loss or damage by reason of fraud practiced on the person by a licensed dealer or one of the dealer's salespersons acting on the dealer's behalf or within the scope of the employment of the salesperson, or if a person suffers any loss or damage by reason of the violation by the dealer or salesperson of any provision of this part 1 related to fraud that is designated by the board by rule, whether or not the violation is the basis for denial, suspension, or revocation of a license, the person suffering loss or damages has a right of action against the dealer or the dealer's motor vehicle salespersons. The right of a person to recover for loss or damage as provided in this subsection (1) against the dealer or salesperson is not limited to the amount of their respective bonds.

(b) A person suffering loss or damages has a right of action against a licensed business disposer if:

(I) The loss or damage is caused by fraud practiced on the person by the disposer or the disposer's agent within the scope of employment; or

(II) The loss or damage is caused by the disposer violating any provision of this part 1 related to fraud and the violation is designated by the board by rule, whether or not the violation is the basis for denial, suspension, or revocation of the license.

(2) If any person suffers any loss or damage by reason of any unlawful act as provided in section 44-20-124 (1)(a), the person shall have a right of action against the manufacturer, distributor, or manufacturer representative. In any court action wherein a manufacturer, distributor, or manufacturer representative has been found liable in damages to any person under this part 1, the amount of damages so determined shall be trebled and shall be recoverable by the person so damaged. Any person so damaged shall also be entitled to recover reasonable attorney fees as part of his or her damages.

(3) If any licensee suffers any loss or damage because of a violation of section 44-20-124 (1), the licensee shall have a right of action against the manufacturer, distributor, or manufacturer representative. In any court action wherein a manufacturer, distributor, or manufacturer representative has been found liable in damages to any licensee under this part 1, any licensee so damaged shall also be entitled to recover reasonable attorney fees and costs as part of his or her damages.

(4) A person who suffers loss or damages resulting from fraud may bring a separate action against, and recover from the surety on the bond of, the licensed dealer, business disposer, buyer agent, or salesperson if:

(a) The licensed dealer, disposer, buyer agent, or salesperson has not reimbursed the person for the loss or damages; and

(b) After either:

(I) The board issued a final agency order with a finding of fraud by a licensed dealer, disposer, buyer agent, or salesperson; or

(II) A court entered judgment upon a claim of fraud by a licensed dealer, disposer, buyer agent, or salesperson.

Source: L. 2018: Entire article added with relocations, (SB 18-030), ch. 7, p. 85, § 2, effective October 1. L. 2019: (1) amended, (SB 19-249), ch. 309, p. 2806, § 11, effective August 2. L. 2020: (1) amended and (4) added, (SB 20-140), ch. 225, p. 1104, § 4, effective September 14.

Editor's note: This section is similar to former § 12-6-122 as it existed prior to 2018.

ANNOTATION

Annotator's note. Since § 44-20-131 is similar to repealed § 13-11-11, C.R.S. 1963, § 13-11-11, CRS 53, and § 12-6-122, relevant cases construing those provisions have been included in the annotations to this section.

Any person who suffers loss or damage by reason of a violation by any automobile dealer of any of the laws of this state respecting commerce in motor vehicles shall have a right of action not only against the automobile dealer but also against the surety on the dealer's bond. Nat'l Motors, Inc. v. Newman, 29 Colo. App. 380, 484 P.2d 125 (1971).

Where plaintiff elects to bring an original action against both the principal and the surety, he is bound by whatever takes place in said proceeding. Mass. Bonding & Ins. Co. v. Ginsberg, 131 Colo. 1, 278 P.2d 1018 (1955).

When the trial court in that suit enters a final judgment of dismissal, it becomes a final determination as to the nonliability of the bonding company. Mass. Bonding & Ins. Co. v. Ginsberg, 131 Colo. 1, 278 P.2d 1018 (1955).

The general assembly intended for this section to apply to disputes between automobile dealers and manufacturers rather than to general consumers. Molina v. Ford Motor Co., 441 F. Supp. 3d 1176 (D. Colo. 2020).

An essential element of fraud is that the misrepresentation relied on must be of an existing or past material fact. United Fire & Cas. Co. v. Nissan Motor Corp. in U.S.A., 164 Colo. 42, 433 P.2d 769 (1967).

The trial court's findings that there was constructive fraud was erroneous because no showing was made that the automobile distributor had a right to rely on what the dealer said prior to the creation of the distributorship. United Fire & Cas. Co. v. Nissan Motor Corp. in U.S.A., 164 Colo. 42, 433 P.2d 769 (1967).

No fiduciary relationship existed, and the dealer was not the distributor's agent in a legal sense because he purchased the automobiles and parts from the former and sold them as he desired, apparently without any control, and no prior business agency nor professional or confidential relationship and no family ties were shown which might have impelled or induced the distributor to relax the care and vigilance it would and should have ordinarily exercised in dealing with a stranger. United Fire & Cas. Co. v. Nissan Motor Corp. in U.S.A., 164 Colo. 42, 433 P.2d 769 (1967).

Dealer may recover its loss or damage under subsection (3) where manufacturer violates independent control of dealer provision. Maehal Enters. v. Thunder Mtn. Custom, 313 P.3d 584 (Colo. App. 2011).

The court of appeals retained sole jurisdiction under § 12-6-120.3 (4)(b)(II) to review the executive director's final agency action where claimant sought a stay followed by a cease-and-desist order with respect to a proposed relocation and not damages under subsection (3) of this section. W. Colo. Motors v. Gen. Motors, LLC, 2016 COA 103, 411 P.3d 1068 (decided prior to 2017 repeal of § 12-6-120.3 (4)).