Online used-car retailer Carvana is seeking a temporary restraining order against the state of Michigan after the Secretary of State’s office moved to suspend and revoke its license over no-title complaints from consumers.
The Arizona-based company said in a statement Friday that it filed the motion in the state Court of Claims this week in a bid to stop what it characterized as the the Michigan Department of State’s “illegal and irresponsible attempt to shut down a growing Michigan business with tens of thousands of customers over what amounts to technical paperwork violations involving title and transfer issues.”
“The Secretary of State has brazenly violated state law in addition to its own rules, regulations and due process requirements while making false and reckless statements through press releases rather than engaging in constructive dialogue to remedy what are essentially technical paperwork issues,” the company alleged in its statement, further claiming that the state agency’s “arbitrary and abrupt actions … have angered and disappointed out customers, some of whom have literally been stranded without a vehicle they had counted on to get them to work, doctors’ appointments or the grocery store.”
The legal filing follows the Department of State last week announcing it had suspended the license of a Carvana dealership in Novi “for imminent harm to the public.” The dealership, at 26890 Adell Center Drive, opened in 2020 with one of Carvana’s signature car “vending machines.”
The state suspended the dealership’s license for what the agency said were “several alleged violations of the Michigan Vehicle Code.” Those violations were discovered during an investigation by the agency into complaints from multiple consumers that the dealership had failed to properly handle title transfers.
The Department of State alleged the following violations on the retailer’s part:
- Failing to make application for title and registration within 15 days of delivery for 112 customers since agreeing to an earlier probation extension.
- Committing fraudulent acts in connection with selling or otherwise dealing in vehicles. Those acts allegedly included Carvana employees destroying title applications and all applicable documents pertaining to the sale of three vehicles that Carvana took back after they were sold to customers.
- Failing to maintain odometer records.
- Improperly issuing temporary registrations.
- Failing to have records available for inspection during reasonable or established business hours.
- Possessing improper odometer disclosure records on which the odometer disclosure had been signed on behalf of the purchaser.
- Violating terms of a probation agreement 127 times.
The state also said it would seek to have the dealership’s license revoked at an administrative hearing. Carvana faces similar allegations in Illinois.
The Department of State said Friday that the agency could not comment on pending litigation, but pointed to a statement from earlier this week in which the department said it “protects consumers when they make what are often among their family’s most significant purchases and buy a car. The Department does this in strict accordance with state and federal laws and does not provide special treatment to any dealership, including large, national corporations. Department staff met with Carvana on multiple occasions to explain Michigan law and suggest pathways to compliance. But instead Carvana continued selling vehicles without titles to scores of Michigan families, putting the residents at risk of legal violations, fines, and other penalties.”
Carvana has denied the state’s claims and chalked the matter up to paperwork issues that it says largely have been resolved. It claimed in its court filing that it was not given a hearing on the license matter, and said that it was forced to immediately halt sales in Michigan — impacting 71 customers whose sales were in process.
jgrzelewski@detroitnews.com
Twitter: @JGrzelewski