Unlicensed Used Car "Finder" Can Recover Unpaid Wages from Car Dealer

This case has a pretty limited scope, but it's entertaining. The plaintiff alleged that he entered into an oral contract with a used car dealer to act as a used car "finder." The used car dealer refused to pay the plaintiff his "finder's fees," and the plaintiff sued. The trial court sustained the car dealer's demurrer, holding that the plaintiff could not recover because he was not licensed as a used car dealer. The Court of Appeal reversed.

Here's the good part. The Court wrote:

Back in the 194o's, a character in a theatrical comedy flatly stated that there is no such thing as a perfect crime. To which the retort was: “Ever buy a used car?”

The exchange might be a bit out of date today. California law has not only required car dealers to be licensed since 1959 (see Veh. Code, § 117002; added by Stats. 1959, ch. 3), but has subjected car dealers to specific statutes against fraud (see generally § 11711) since that date as well. And a relatively recent statute, section 11711.3 (added by Stats. 2002, ch. 407, § 2) goes so far as to completely preclude any recovery by a dealer of the price of a car if the dealer is not licensed. The “dominant purpose” of California‟s statutory car dealer licensing scheme is, of course, the protection of car buyers from irresponsible or unscrupulous dealers. (Valiyee v. Department of Motor Vehicles (1999) 74 Cal.App.4th 1026, 1032, italics added.)

The irony of the present case is that a scheme designed to protect consumers from unscrupulous dealers has, at least under the law as interpreted by the trial court on a successful demurrer, resulted in a car dealer reaping the benefit of an outright fraud on one of its salespeople, to whom it owed substantial finder‟s fees. The theory, which the trial court accepted on demurrer, was that the salesman really was himself a used car dealer, and, because he did not have a dealer‟s license, he could not complain when he was not paid his finder‟s fees for about 11 cars he obtained for the dealership.

At this stage we deal only with the facts in the complaint. That said, to affirm would be to allow the car dealership to get away with a perfect crime. We reverse.

Wald v. Truspeed Motorcars, LLC (May 3, 2010) --- Cal. App. 4th ----, 2010 WL 1744893.