In 2017, the Nevada Legislature expanded the scope of the DMV Bond Statute to cover additional statutory causes of action. Before, the bond covered breach of a consumer contract, deceptive trade practice, fraud, fraudulent representation, and statutory deceptive trade practice as defined in NRS 598. The Bond statute now also covers violations of any of the following provisions:
NRS 41- Personal Causes of Action
NRS 41 contains summaries of various causes of action in particular cases concerning persons. It includes a broad swath of causes of action including: wrongful death, personal injury, libel, slander, defamation, perjury, liability of the owner of motor vehicle for negligent operation by an immediate family member, receiving stolen property, and other causes of action that are of a personal nature.
The statutes in this section serve mainly to limit liability in certain situations, but we could see potential for people who are injured in an automobile accident making a claim upon the bond if they think the injury was caused by a faulty vehicle they purchased from a dealer/principal.
NRS 97-Retail Installment Contract
NRS 97 is the retail installment contract statute and includes NRS 97.297-.304 regarding contracts for sale of vehicles. The requirements are very stringent and often dealers will just use forms provided by their lenders, which don’t always conform with requirements. We fully expect to see bond claims under this statute as it is a common cause of action against dealers and lenders. Now the surety will be on the hook for these violations as well.
The strategy is to find any violation—no matter how small—and then demand that the RISC be rescinded and all the money refunded to the consumer, plus all the attorney fees and costs. The violation is not often the impetus of the lawsuit, but is triggered by unrelated problems, usually regarding the performance of the vehicle. Once these violations are found, it gives the consumer a way to get rid of the car and get their money back and for their attorneys to rack up a few thousand dollars in fees, which are recoverable under the bond statute revisions of 2013, which we wrote about previously.
NRS 104 and 104A-Uniform Commercial Code
Now consumers have a cause of action against the Bond for any violation of any provision of the Uniform Commercial Code.
NRS 598—Deceptive Trade Practice Also Expanded to Include GPS Tracking and Starter Interrupt Technology (NRS 598.9701 et seq.)
The bond statute already included coverage for statutory deceptive trade practice as defined in NRS 598. Now a new definition of deceptive trade practice has been added to cover the use of GPS tracking and starter interrupt technologies which have become ubiquitous in the used car market, especially at “buy here, pay here” dealers.
The statute dictates that installations of such devices must be optional, dictates forms and notice requirements, and outlines how the devices can be used which includes notice and strict timelines. Violations of this section are remedied by the greater of statutory damages or $1,000.00. The statute is not clear, so we know that consumer attorneys are going to argue that the $1,000.00 remedy is going to be per violation. We know anecdotally that these devices have been abused by dealers in the past so there is potential here for huge claims if a dealer is turning a consumer’s car on and off in order to try to collect payments.
Another issue is that the GPS/starter interrupt agreements are often dictated by lenders with whom the dealers have a relationship. Most of the lenders are not located in Nevada and may not be aware of the requirements for these technologies. As a result, the dealers may be having consumers use forms and enter into agreements that are unlawful in Nevada at the behest of lenders.
Surety to Appoint Insurance Commissioner as Agent to Accept Service
We previously pointed out that the old version of the DMV statute conflicted with NRS 680 A.250 (1) and Nevada Supreme Court precedent regarding service on sureties being through the Insurance Commissioner. This version of the bond statute has been amended to remedy that error and now the Insurance Commissioner must be designated as the agent for service of process for any action on the bond.
In practice, this was never an issue as most claimants served the surety via the Commissioner of Insurance already per NRS 680A.250 or served the surety through their registered agent. Only in rare occasions will a motion to dismiss for failure to properly serve the surety be advantageous, usually only when an action is filed on the even of the expiration of the statute of limitations, a rare event with this type of case.