INDY LUXURY MOTORSPORTS LLC v. PHILLIPS (2026)

MEMORANDUM DECISION

Statement of the Case

[1] Indy Luxury Motorsports, LLC, (“ILM”) appeals the small claims court's judgment in favor of Celesta Phillips (“Phillips”) on her claim for fraud. ILM argues that the small claims court clearly erred when it entered judgment in favor of Phillips. Concluding that the small claims court did not clearly err, we affirm its judgment.¹

[2] We affirm.

Issue

Whether the small claims court clearly erred when it entered judgment in favor of Phillips.

Facts 2

[3] On April 18, 2024, seventy-three-year-old Phillips went to ILM to look for a car. She explained to a salesperson (“the salesperson”) that she was on a fixed income and that she needed “dependable transportation.” (Tr. Vol. 1 at 19). The salesperson showed Phillips a 2011 Ford Escape (“the Escape”). During a test drive, Phillips “heard something up underneath the vehicle.” (Tr. Vol. 1 at 6). The salesperson told Phillips that the Escape had not yet been inspected but that a mechanic would inspect the Escape and make any necessary repairs before Phillips purchased it. Following Phillips’ test drive, ILM took the Escape to an auto repair shop that ILM frequently used to service its cars. A mechanic at the auto repair shop replaced the ball joints and outer tire rods.

[4] Two days later, Phillips returned to ILM with her nephew. She asked the salesperson if the Escape had been inspected and “how ․ everything ․ look[ed] up underneath the car[.]” (Tr. Vol. 1 at 6). The salesperson told Phillips that “they had done some work[,]” that “everything looked okay[,]” and that there was “nothing to be concerned about.” (Tr. Vol. 1 at 18, 6). Phillips “took [the salesperson's] word” and agreed to purchase the Escape for a total purchase price of $11,995.93. (Tr. Vol. 1 at 6).

[5] While Phillips was completing the purchase paperwork, she signed a bill of sale, which provides the following warranty disclaimer:

Unless Seller provides a written warranty, or enters into a service contract within 90 days from the date of this contract, this vehicle is being sold “AS IS – WITH ALL FAULTS” and Seller makes no warranties, express or implied, on the vehicle, and there will be no implied warranties of merchantability or of fitness for a particular purpose.

(Ex. Vol. at 4). In addition, at the time of the sale, the salesperson presented Phillips with a “Buyer's Guide[,]” which provided that Phillips was purchasing the Escape “AS – IS – NO DEALER WARRANTY[.]” (Ex. Vol. at 54). Phillips signed the buyer's guide to acknowledge that she had received it.

[6] In September 2024, the Escape “broke down[,]” and Phillips took it to Big O Tires (“Big O Tires”) for repairs. (Tr. Vol. 1 at 6). The mechanic at Big O Tires (“the mechanic”) estimated that the cost to repair the Escape was $4,780.55. However, the mechanic also told Phillips that he “didn't feel that [the Escape] was worth fixing[,]” that she “shouldn't put any money into it[,]” and that the car was “not roadworthy.” (Tr. Vol. 1 at 6, 21). Specifically, the mechanic told Phillips that there was extensive rust underneath the Escape. The mechanic further told Phillips that if he attempted to make the necessary repairs by attaching parts to the underside of the Escape, the parts “probably wouldn't hold very long” because of the rust. (Tr. Vol. 1 at 13). In addition, the mechanic told Phillips that whoever sold her the Escape would have known about the rust because it would have been visible during previous repairs. Thereafter, Phillips took the Escape to another auto service center, where the mechanic put the Escape on a lift and photographed the rust on its underside.

[7] On September 25, 2024, Phillips, acting pro se, filed a notice of claim in the small claims court. Specifically, the notice of claim provides as follows: “On April 20, 2024, I purchased a vehicle from Indy Luxury Motorsports. They misrepresented the condition of the vehicle and the repairs ․ they would perform. Thereby committing fraud.” (App. Vol. 2 at 6).

[8] Before trial, ILM's owner (“the owner”) went to Phillips’ home to inspect the Escape. Following the inspection, the owner told Phillips that he “wouldn't [p]ut this [car] on the road.” (Tr. Vol. 1 at 21).

[9] At the February 2025 bench trial, the small claims court heard the facts as set forth above. In addition, Phillips testified as follows:

I believe that [the salesperson] wasn't forthcoming with his statement that everything was okay up underneath the car because I specifically asked him that. The car doesn't appear to be roadworthy․

* * * * *

․ I felt like that it was fraudulent because if they looked up under the car they would see what --- you know, the rust and they should have been forthcoming with me in --- in revealing that.

(Tr. Vol. 1 at 6, 8). Further, Phillips tendered to the small claims court, and the small claims court admitted into evidence, several photographs of the rusted underside of the Escape. In addition, the small claims court admitted into evidence a photograph of pieces of rust that had fallen from the underside of the Escape onto Phillips’ driveway.

[10] The owner testified that when he had inspected the Escape at Phillips’ home shortly before trial, he had seen “surface rust.” (Tr. Vol. 1 at 37). Further, the owner denied that the condition of the Escape had been misrepresented to Phillips.

[11] After hearing the testimony of Phillips and the owner and viewing the photographs of the rusted underside of the Escape, the small claims court entered judgment in favor of Phillips. Specifically, the small claims court's order provides, in relevant part, as follows:

The subject car was not fit to have been sold[,] [and] [ILM] misrepresented the condition of the car[.] Sale is vacated [and] Court's jurisdiction limit is $10,000.

* * * * *

That judgment is rendered in favor of [Philips] in the sum o $10,000[.]

(App. Vol. 2 at 24).

[12] ILM now appeals.

Decision

[13] ILM argues that the small claims court clearly erred when it entered judgment in favor of Phillips. We disagree.

[14] Small claims proceedings are informal and are not “bound by the statutory provisions or rules of practice, procedure, pleadings or evidence except provisions relating to privileged communications and offers of compromise.” Ind. Small Claims Rule 8(A). Judgments in small claims actions are “subject to review as prescribed by relevant Indiana rules and statutes.” Ind. Small Claims Rule 11(A). Because this case was tried before the bench in small claims court, we review for clear error. Bonecutter v. Discover Bank, 953 N.E.2d 1165, 1171 (Ind. Ct. App. 2011), reh'g denied, trans. denied. “The small claims court is the sole judge of the evidence and the credibility of witnesses, and on appeal we neither reweigh the evidence nor assess the credibility of the witnesses.” Hetty Incorporated v. Weems, 237 N.E.3d 701, 704 (Ind. Ct. App. 2024) (cleaned up), reh'g denied.

[15] We will affirm a small claims court's judgment in favor of a party having the burden of proof “if the evidence was such that from it a reasonable trier of fact could conclude that the elements of the party's claim were established by a preponderance of evidence.” Eagle Aircraft, Inc. v. Trojnar, 983 N.E.2d 648, 657 (Ind. Ct. App. 2013). “This deferential standard of review is particularly important in small claims actions, where trials are designed to speedily dispense justice by applying substantive law between the parties in an informal setting.” Hetty, 237 N.E.3d at 704 (cleaned up). We presume the small claims court correctly applied the law and give due regard to the small claims court's opportunity to judge the credibility of witnesses. Eagle Aircraft, 983 N.E.2d at 657.

[16] Our Indiana Supreme Court has explained that the elements of common-law fraud are: “(1) a material misrepresentation of past or existing fact which (2) was untrue, (3) was made with knowledge of or in reckless ignorance of its falsity, (4) was made with the intent to deceive, (5) was rightfully relied upon by the complaining party, and (6) which proximately caused the injury or damage complained of.” Kesling v. Huber Nissan, Inc., 997 N.E.2d 327, 335 (Ind. 2013) (cleaned up), superseded by statute on other grounds. Further, “fraud is not limited only to affirmative representations; the failure to disclose all material facts can also constitute actionable fraud.” Id. (cleaned up). “In particular, when a buyer makes inquiries about the condition, qualities, or characteristics of property, the seller must fully declare any and all problems associated with the subject of the inquiry, or else risk liability for fraud.” Id. (cleaned up). See also Lawson v. Hale, 902 N.E.2d 267, 276 (Ind. Ct. App. 2009) (finding “a textbook case of fraud” where the seller told the buyer that a tractor leaked oil and gas but claimed to know nothing else about it when he in fact knew that the engine block had cracked and had been welded), superseded by statute on other grounds.

[17] Here, ILM specifically contends that Phillips “presented no material misrepresentation of the Escape at the trial.” (ILM's Br. 14). However, our review of the evidence most favorable to the judgment reveals that during her first test drive of the Escape, Phillips was concerned about a noise coming from underneath the car. The salesperson told Phillips that the Escape had not yet been inspected but that a mechanic would inspect the Escape and make any necessary repairs before Phillips purchased it. When Phillips returned for a second test drive two days later, she specifically asked the salesperson if the Escape had been inspected and how everything looked underneath the car. The salesperson told Phillips that some work had been done, everything underneath the car looked good, and there was nothing to be concerned about regarding the Escape. This was a material misrepresentation about the condition of the Escape. Specifically, a mechanic subsequently discovered that the rust under the car was so extensive that the car was not worth repairing. Indeed, the Escape was not roadworthy. ILM's argument is simply a request that we reweigh the evidence, which we will not do. See Hetty, 237 N.E.3d at 704.

[18] In addition, ILM argues that Phillips “failed to present any testimony that any of [ILM]’s statements were made with knowledge or reckless ignorance of the falseness.” (ILM's Br. 14). However, as previously stated, during Phillips’ second test drive, the salesperson told her that some work had been done on the Escape and that everything underneath the car looked good. Yet, the evidence further reveals that ILM would have known about the rust because it would have been visible during the repairs a mechanic made to the Escape before Phillips purchased it. Failing to disclose the rust and instead representing that everything underneath the car looked good “not only permits an inference of fraudulent intent, but also runs afoul of the related duty to fully declare any and all problems associated with the subject of a buyer's inquiry about the condition, qualities, or characteristics of property.” Kesling, 997 N.E.2d at 336 (cleaned up). Again, ILM's argument is a request that we reweigh the evidence, which we will not do. See Hetty, 237 N.E.3d at 704.

[19] The small claims court did not clearly err when it entered judgment in favor of Phillips. Accordingly, we affirm the small claims court's judgment.³

[20] Affirmed.

FOOTNOTES

1.   In an order issued contemporaneously with this decision, we deny as moot Phillips’ Motion to Enforce this Court's Order Compelling Small Claims Court Clerk to Accept Filings Despite Pending Appeal.

3.   ILM also argues that “the [small claims court] erred by disregarding the clear and enforceable ‘AS IS’ terms of the parties’ sales contract, which lawfully disclaimed all warranties under Indiana law.” (ILM's Br. 11). However, our Indiana Supreme Court has previously explained that “[a]n as-is provision disclaims implied warranties, but it provides no insulation from fraudulent misrepresentations.” Kesling, 997 N.E.2d at 336. See also Lawson, 902 N.E.2d at 271, 276 (allowing a fraud claim for nondisclosure of a cracked engine block to proceed despite the presence of an as-is disclaimer in the sales invoice); Martin v. Shoub, 113 N.E. 384, 386 (Ind. Ct. App. 1916) (explaining that “[i]f appellant made statements as to the horse's condition which he knew or should have known were false, and thus induced appellee to purchase him, relying on such statements, the effect of such fraud cannot be overcome merely by a contract expressly omitting warranties. Because the fraud was so successful as to induce the buyer to take a contract without a warranty is all the more reason that there should be liability on the fraud.”). Here, as in Kesling, Lawson, and Martin, the as-is provision in the parties’ sales contract does not insulate ILM from its fraudulent misrepresentation.

Pyle, Judge.

Vaidik, J., and Mathias, J., concur.