A used-car dealership in Pittsburgh has secured a major legal victory against Hyundai Motor America. After years of litigation involving recalled vehicles, a Pennsylvania judge has ordered the automaker to pay nearly $10 million.
Knight Motors and its affiliated company, Doman Auto & Marine Sales, both operated by the same owner in Pittsburgh, spent much of 2018 and early 2019 purchasing used Hyundai Sonata sedans through vehicle auctions. Altogether, the businesses acquired 628 vehicles from the 2011 through 2014 model years.
These were not ordinary used Sonatas. Every vehicle purchased was connected to Hyundai’s large-scale Theta II engine recall, a campaign that affected more than 1.6 million Hyundai and Kia vehicles across multiple production years.
Instead of repairing the vehicles themselves, the dealerships followed the recall process exactly as outlined. They transported the cars to Hyundai dealerships to request engine replacements or buybacks, the same procedure any vehicle owner would follow after experiencing an engine failure. The only difference was the scale, as the dealerships submitted these claims in large numbers.
Initially, the process unfolded without any issues. Hyundai processed the claims and repurchased vehicles, eventually paying more than $5 million for Sonatas supplied by Knight Motors alone. However, as the volume of claims continued to rise, Hyundai began to question the situation.
Internal emails within the company began referring to certain dealerships as members of a so-called “Frequent Buyback Club.” Knight Motors was among roughly two dozen dealers identified for repeatedly submitting recall-related claims.
In May 2019, Hyundai took action that would later prove controversial. The automaker rejected every outstanding claim submitted by Knight Motors simultaneously.
Soon afterward, Hyundai filed a lawsuit against the dealership, alleging fraud. The company argued that the dealership had tampered with vehicles in order to trigger engine replacement claims or qualify them for buyback under the recall program.
However, Hyundai’s fraud allegations quickly encountered significant obstacles. Over the following year, multiple Hyundai dealerships inspected hundreds of vehicles owned by Knight Motors.
Technicians photographed the cars and examined them for signs of manipulation or interference with the engines. Court documents show that 16 different dealerships conducted inspections. None reported evidence suggesting that the vehicles had been altered.
Hyundai also hired an independent appraisal firm to conduct another round of evaluations. The findings were the same: investigators were unable to identify any proof that the dealerships had tampered with the cars to trigger recall repairs or buybacks.
The case ultimately unraveled for Hyundai because of how evidence was handled. Judge Ignelzi determined that Hyundai had crushed hundreds of the recalled vehicles that were central to the dispute.
Those vehicles could have served as crucial evidence in determining whether tampering had occurred. Additionally, emails belonging to a Hyundai case manager involved in the matter were deleted.
The judge described the situation as “rampant spoliation,” a legal term referring to the destruction of relevant evidence. In his written opinion, Ignelzi stated that the conduct represented one of the most severe examples of discovery abuse he had encountered during his 16 years on the bench.
As a result, the court ordered Hyundai to pay Knight Motors $9,784,075. The amount represents nearly seven years of storage costs for 163 recalled vehicles that remain at the dealership. The storage fee was calculated at $25 per day for each vehicle.
Hyundai has stated that it disagrees with the court’s decision and has already filed an appeal. For now, the payment has been paused while the appellate process moves forward. The legal dispute between the automaker and the dealership may continue for some time.
