Online used-car retailer Carvana’s license to operate its Novi dealership remains suspended after a judge denied the company’s request to block the state’s suspension.
Court of Claims Judge Thomas Cameron said in an opinion filed Wednesday that Carvana “failed to establish sufficient danger of irreparable harm.”
Carvana had requested a temporary restraining order against the state after the Michigan Department of State this month suspended the license of the company’s Novi dealership, a car “vending machine” on Adell Center Driv,e for what the state said were “several alleged violations of the Michigan Vehicle Code,” including handling title and registration matters in timely manner. An administrative hearing is set for Nov. 22.
Cameron wrote that Carvana’s “Novi brick-and-mortar operation provides car buyers a unique purchasing experience— one that would be difficult to replicate by competitors in the short-time frame of a TRO. And, while one aspect of plaintiff’s Michigan operations have been suspended, its other operations have not, lessening the risk that other vehicle dealers will be able to gain a foothold in the market.”
The Michigan Department of State said this month that the agency discovered violations during an investigation into complaints from consumers that the dealership did not properly handle title transfers. The agency said Thursday that it has received more than 100 complaints from consumers since suspending the dealership’s license.
“The Michigan Department of State protects consumers when they make what are often among their family’s most significant purchases and buy a car,” the department wrote in a statement. “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 said Thursday that it is disappointed by the decision and it continues to sell vehicles online to Michigan customers.
“The Secretary of State has agreed we can continue selling online to our Michigan customers and we plan to continue doing so while this matter is addressed,” the company wrote in a statement Thursday. “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.”
“Despite a judge’s ruling, we maintain the Secretary of State’s recent actions are an illegal and reckless 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 statement continued. “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. As we consider next steps, we will continue serving extraordinary online car buying and selling experiences to our Michigan customers, and we will continue collaboratively working with state bureaucrats to remedy these issues as quickly as possible.”
Carvana opened its Novi dealership in October 2020, its first physical location in the state. After ordering online, customers have been able to pick up their cars from an eight-story brick-and-glass tower.
cwilliams@detroitnews.com
Twitter: @CWilliams_DN