from the Iowa District Court for Polk County, Paul D. Scott,
vehicle dealership, which held licenses to sell and recycle
automobiles, appeals from the district court ruling affirming
the agency's decision to revoke both licenses for one
A. Nading II of Nading Law Firm, Ankeny, for appellant.
J. Miller, Attorney General, and Michelle E. Rabe, Assistant
Attorney General, for appellee.
Considered by Vaitheswaran, P.J., and Potterfield and Tabor,
Auto Plaza, Inc. (Extreme) appeals from the district court ruling
affirming the decision of the Iowa Department of
Transportation (DOT) revoking its motor vehicle
dealership's licenses to sell and recycle automobiles for
Background Facts and Proceedings.
2014, the DOT performed an audit of Extreme's business
after receiving a consumer complaint alleging Extreme failed
to disclose to a purchaser that the purchased vehicle had a
previous salvage title.
performing an audit of forty of Extreme's files regarding
sales of vehicles, the DOT determined Extreme had overcharged
the buyer for registration fees on nine of the sales. Based
on this finding, the DOT applied for and received a search
warrant and then seized Extreme's files for sales made
between January 2013 and May 2014. After reviewing the files,
the DOT found 122 buyers had been overcharged for
registration fees by Extreme, totaling an amount more than
$11, 000. In some cases, buyers had also been undercharged,
with those amounts totaling approximately $1450.
in reviewing Extreme's records, the DOT noted a number of
vehicles for which Extreme had applied for and received a
"clear," non-salvage title by checking the box on
the front of the title application form for a "regular
title." Additionally, when Extreme later signed those
vehicles over to its purchasers, Extreme certified
"no"-again by checking a box on the form-when
presented with the following statement: "I have
knowledge the motor vehicle is now or was previously titled
as salvage, rebuilt or flood in this state or any other
state." However, on sales contracts for the same
vehicles, Extreme included handwritten notes stating the new
buyer understood the vehicle had been a total loss to someone
else and having the purchaser sign next to the statement.
result of these discoveries, the DOT sent a letter to Extreme
in December 2014 notifying it that its motor vehicle dealer
and recycler licenses were being revoked for one year,
starting December 31, 2014. According to the letter, the
revocations were based upon:
• The motor vehicle dealer has demonstrated a pattern of
obtaining clear Iowa certificates of title for vehicles known
to salvage or have damage greater than 50 percent of their
value by making false statements or knowingly concealing
material facts on title applications, which constitute
violations of Iowa Code § 321.97 [(2014)] and are
• Vehicles with similar salvage and damage history
continue to be offered for sale by the motor vehicle dealer
with clear Iowa certificates of title.
• The motor vehicle dealer has overcharged consumers for
vehicle registration fees as a routine course of business.
the DOT demanded Extreme "immediately remove from its
sales inventory all vehicles that have a salvage history or
current or previous damage greater than 50 percent of their
value, for which the dealer possesses clear Iowa certificates
of title" and threatened Extreme with an injunction if
it did not comply.
responded with an affidavit stating it had identified
fourteen vehicles "that fail to conform with the
notice" from the DOT, which Extreme was "in process
of changing clear title to salvage title." Additionally,
Extreme contested the revocation by requesting an evidentiary
hearing in front of an administrative law judge.
administrative hearing took place in July 2015 with testimony
and exhibits presented by both parties. At the hearing,
Extreme stated it was challenging both the DOT's finding
of violations and the DOT's chosen punishment of
revocation, as the DOT had other, less severe options such as
suspension. However, Extreme conceded that people had been
overcharged registration fees. Extreme appeared to focus on
contesting whether the violations had been intentional or
accidental. Additionally, after the execution of the search
warrant, Extreme refunded the customers the amount they were
overcharged and provided receipts to the DOT to show that it
had done so.
Decisions and Remand:
August, the administrative law judge (ALJ) who heard the case
issued a proposed decision, which affirmed the DOT's
findings of violations and sustained the decision to impose a
one-year revocation of Extreme's licenses. In reaching
its decision, the ruling recited the following conclusions of
Iowa Code § 322.9 provides that the Department may
revoke or suspend the license of a retail motor vehicle
dealer if, after notice and hearing by the department of
inspections and appeals, it finds that the licensee has been
guilty of an act which would be ground for the denial of a
license under Iowa Code § 322.6. That section authorizes
the Department to deny an application for a dealer's
license if the applicant has not complied with provisions of
chapter 322 or rules adopted by the Department pursuant to
Chapter 322, or if the applicant is about to engage in a
fraudulent practice or other indictable offense in connection
with selling or other activity relating to motor vehicles.
Iowa Code § 322.6(1)(b), (e).
Iowa Code § 321H.6 provides that a recycler license may
be revoked if the Department finds the licensee has made any
material misrepresentation to the Department in connection
with an application for a license, junking certificate,
salvage certificate, certificate of title, or registration of
a vehicle. Iowa Code § 321H.6(2).
Iowa Code § 321.52 governs out of state sales and
wrecked or salvaged vehicle. When a wrecked or salvage
vehicle is repaired, an application can be made for regular
title. A wrecked or salvage vehicle is defined as a vehicle
for which the cost of repair exceeds fifty percent of the
fair market value. Disclosure of the vehicle's history
must be made and the resulting title and registration will be
designated as a prior salvage vehicle thereafter. Iowa Code
§ 321.52(4)(b), (d).
Iowa Code § 321.105 requires the payment of annual
registration fees for vehicles operated on the public
highways. The annual registration fee is to be paid to the
county treasurer at the time the application for registration
is made. If the registration fee amount collected by a motor
vehicle dealer exceeds the required fee, the dealer ...