A Michigan Court of Claims judge has denied Carvana's request that a temporary restraining order be granted against Michigan Secretary of State Jocelyn Benson for suspending its Novi dealership operations.
State officials suspended the Carvana dealership operations in Novi for "imminent harm to the public," earlier this month. Carvana called the "baseless."
The state alleges Carvana LLC, owned by Paul Breaux and located off of Novi Road near I-96, violated the Michigan Vehicle Code. A state investigation discovered the alleged violations after multiple complaints from consumers about title problems with their vehicles.
Carvana filed injunction motions on Oct. 13 with the Michigan Court of Claims asking for an immediate stop to the state’s suspension. The filing alleged the state's suspension violated the Michigan Vehicle Code that mandates holding a hearing prior to a suspension.
Carvana spokesperson Kristin Thwaites called the suspension an "illegal and irresponsible attempt to shut down a growing Michigan business" over "technical paperwork violations involving title and transfer issues."
However, Michigan Court of Claims Judge Thomas Cameron ruled that the "defendant’s decision to suspend plaintiff’s license without a hearing is statutorily permitted” and thus not a violation of the plaintiff’s due process rights.
Judge Cameron noted Carvana did not offer any evidence to support its claim that the suspension caused "irreparable injury to its goodwill" or affected its “overall economic well-being.”
Carvana's Thwaites told the Free Press in an email Thursday that the Secretary of State has agreed to allow the company to sell online to Michigan customers as the matter is addressed. Carvana plans to sell online but declined to outline how it will deliver cars sold online to customers.
"We are disappointed by the court’s decision, and we are considering all legal options to protect our customers and ensure the Secretary of State is held accountable for their illegal actions," Thwaites added.
Thwaites in an email also reported that the Secretary of State “has brazenly violated its own rules, regulations and due process requirements while making false and reckless statements rather than engaging in constructive dialogue to remedy these technical paperwork issues.”
The spokesperson promised that as Carvana considers its next steps, the company will continue to deliver extraordinary online car buying and selling experiences to Michigan customers. And, “we will continue collaboratively working with state bureaucrats to remedy these issues as quickly as possible” she concluded.
Michigan Department of State spokeswoman Aneta Kiersnowski Crisp reported the state has received over 100 complaints from consumers since suspending the dealership.
"Department staff met with Carvana on multiple occasions to explain Michigan law and suggest pathways to compliance," Crisp said. "But Carvana continued selling vehicles without titles to scores of Michigan families, putting the residents at risk of legal violations, fines and other penalties."
Cameron's ruling stated that a preliminary conference was scheduled for Oct. 20 and an administrative hearing on the matter scheduled for Nov. 22. During the Oct. 20 meeting, "Carvana provided some of the information the department requested for consideration ahead of the Nov. 22 administrative hearing," Crisp said. No further details were provided.
Originally posted on Auto Dealer Today