BOERNE, Texas — Felipe Villarreal bought a bight orange 2020 Ford Mustang GT 500 back in 2022. He found it in a dealership in Las Vegas and paid more than $90,000.
"It was kind of my dream car. I always wanted to get a car just like that since it came out. That particular color they only made like 400 of them," Villarreal said.
Unfortunately after the record inflation in 2022 and several medical bills, Villarreal just could not justify the loan he still owed on the vehicle. In October of 2023, Villarreal signed a deal with Hovey Motorcars in Boerne to do a consignment sale. Villarreal said the dealership had been around for many years and specialized in dealing with "high-end" cars.
"Based on their history, and working on these expensive cars, I figured it was a good fit," Villarreal said. "The car was parked in the showroom floor as we agreed. There were no test drives."
Then, three weeks later, the dealership gave him a call. Villarreal said he was told they, "had good news and bad news."
In reality, there was no good news. The car was gone. The dealership had given the car to another party and had no money to show for it.
"He told me it was a fraudulent buyer," Villarreal said.
Now, seven months later, the dealership still hasn't paid Villarreal anything in compensation.
KENS 5 reached out to Boerne PD and asked for the report on the fraud case to find out how it happened. The City of Boerne decided not to provide the report and asked the Texas Attorney General for an opinion instead.
Rick Hovey Jr. sent KENS 5 a statement giving their side of the story. The statement said in part, "On 10-20-2023, a suspect made a $10,000 down payment on the car, obtained auto insurance, and was subsequently approved for a loan to finance the balance. Five days after the down payment was made, and one day after the loan transaction was completed, Hovey Motorcars received a letter informing us that the down payment was made using a stolen credit card. We immediately reported this to the Boerne Police Department. Despite our diligent efforts and our twenty-six years of business experience, we became victims of theft and fraud in this instance."
Villarreal still doesn't understand how it could happen.
"I work really hard for what I have including that car," Villarreal said. "For it to be taken so easily, it's just baffling."
Villarreal had already gone to the dealership and had expected that either his insurance or the dealership's insurance would cover the loss. The dealership said Mr. Villarreal would need to file a claim on his insurance because of the contract he signed.
The contract states that Villarreal declared "to have in affect full coverage insurance and acknowledge that I am totally responsible for all damages, repairs, and/or theft that might occur to said auto."
The dealership also told KENS 5, "Unfortunately, our insurance policy does not cover the theft as we did not own the vehicle."
Meanwhile, Villarreal's insurance has a specific exception that states it does not cover consignment sales. He is now left paying down a, roughly, $60,000 loan for a car he no longer has.
"It feels like someone hit you really hard in the gut," Villarreal said.
But is Hovey Motorcars really not legally responsibly for what happened to Villarreal's car? KENS 5 reached out to an insurance expert and a consumer protection attorney to find out.
Insurance Council of Texas Communications Director Rich Johnson told KENS 5 "full coverage insurance" does not, in fact, normally include consignment coverage.
"Full coverage is typically a term that involved collision insurance, liability insurance and comprehensive insurance.," Johnson said. "Most policies, typical policies, are going to have exclusions for consignment."
Johnson further said, "If you are consigning a car it is typically not covered in a typical insurance policy, including comprehensive."
Consumer Protection Attorney Bill Clanton told KENS 5, if the insurance listed in the contract would normally not cover this situation, Villarreal could sue the dealership and claim the contract is vague.
"Mr. Villarreal's argument would be that this is an ambiguous contract and the term 'full coverage' is vague. He would also argue this is neither damage, repair or theft. This is identity theft. This is fraud."
The last distinction is important because the contract requires the dealer be "held harmless" for damage and theft but does not mention fraud.
Clanton said the dealership is also open to a lawsuit because of another legal principle: bailment.
"It sounds a lot like a bailment. A bailment is like when you check your car at a valet: you give them your car and you trust them with it." Clanton said.
Still, Clanton said Villarreal would likely need to prove that the dealership was negligent with his property and would need more information to prove that. He said Villarreal would have a better chance if he had a full police report detailing what happened.
Villarreal is still waiting for the Texas Office of the Attorney General to rule on whether Boerne PD can release that report.
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