The legal fallout surrounding Hyundai’s infamous engine recalls continues to escalate. A Pennsylvania court has officially awarded two car dealerships nearly $9.8 million as a severe sanction against Hyundai Motor America, concluding that the automaker “consciously” crushed vehicles and made baseless accusations against the dealers.
According to court documents, Judge Philip A. Ignelzi issued the massive award on Wednesday to Knight Motors LP, Doman Auto and Marine Sales Inc., and their owner, Christopher Pantelis. The dispute centers around Hyundai’s allegations that the dealerships intentionally damaged vehicles to exploit the automaker’s engine repurchase program. However, the judge found that Hyundai destroyed the very evidence it needed before making these claims.
“Widespread, Pervasive, and Blatant” Spoliation
In his factual findings, Judge Ignelzi excoriated the automaker. He confirmed that out of the vehicles submitted by the dealerships, “not one, single, solitary car” was actually found to be fraudulent as of May 2019, which is when Hyundai ultimately chose to deny all claims involving the defendants.
Instead of preserving the vehicles for inspection, the court found that Hyundai engaged in the massive destruction of potential evidence. By March 2019 – which the judge identified as the earliest point Hyundai was on notice of potential litigation – at least 330 vehicles had been destroyed. An additional 69 cars were crushed after Knight Motors explicitly sued Hyundai in May 2019.
“In this court’s entire career, it has never seen spoliation so widespread, pervasive, and blatant as in this case,” Judge Ignelzi wrote in his scathing review. “Hyundai has come before this court and lied — pure and simple.”
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This massive legal battle stems from the notorious engine issues plaguing Hyundai Sonata vehicles produced for the 2011 to 2014 model years. These defects ultimately forced the company to issue sweeping voluntary recalls in 2015 and 2017, allowing eligible owners and dealers to submit their cars for either an engine replacement or a full repurchase.
Seeing a massive business opportunity, Knight Motors acquired and submitted nearly 630 Sonatas between early 2018 and March 2019. While Hyundai cried foul, the court found that the dealerships “did nothing differently” than any other individual or business submitting vehicles under the program. The judge also noted that Hyundai failed to present any credible evidence that fraud actually occurred.
The judge concluded that the dealership simply “found a way to capitalize on the problem Hyundai itself created,” firmly adding, “This is not illegal or fraudulent – it is American capitalism.”
The Next Steps
The massive $9.8 million award is specifically for the purpose of Hyundai obtaining a supersedeas bond, and it largely represents the extensive storage costs the dealerships incurred during the dispute. The judge also said that Hyundai agreed to accept full liability and responsibility for the 163 vehicles still remaining on the dealerships’ lots.
Following the ruling, Jason Archinaco, an attorney representing the dealership defendants, released a statement celebrating the decision. “Our client feels vindicated by the decision,” Archinaco stated. “We recognize that the appellate process is available and remain confident the court’s ruling will stand.”
A spokesperson for Hyundai recently confirmed to Law360 that the automaker “has informed the trial court that it disagrees with the decision and has sought to appeal the ruling.”
