Police blotter: eBay suit over $380,000 Porsche

"Police blotter" is a weekly CNET News.com report on the intersection of technology and the law.

What: Porsche enthusiast in South Carolina buys a top-of-the-line, 605-hp Carrera GT, isn't happy, and sues.

When: Federal district court in South Carolina ruled May 11.

Outcome: Case referred to arbitration.

What happened, according to court documents:

Robert A. Gossett, a resident of Hilton Head, S.C., spotted a black Porsche Carrera GT on eBay and bought it for the princely sum of $380,000.

This is not your average Porsche 911 or Boxster. The Carrera GT is the closest thing Porsche makes to a street-legal race car, with 605 hp, a 0-62 speed of 3.9 seconds, and a top speed of 205 mph. Porsche calls it a "race-bred sports car" outfitted with a carbon fiber chassis, a V10 engine, a six-speed racing gearbox, and a ceramic clutch.

Credit: Porsche

The Carrera GT, suggested list price:
$440,000

The eBay seller was HBL, which operates the Porsche Tyson's Corner dealership in Virginia. Both Gossett and HBL agreed to substitute a silver Carrera GT for the black model, and it was delivered without incident to South Carolina.

That, according to the documents, was where the problems started. Gossett says he heard a knocking noise from the engine and took it to a local dealer, who said the engine would have to be lifted to diagnose the cause.

Fearing the value would be diminished, Gossett didn't want to do that and sued for breach of contract, breach of warranty, breach of implied covenant of good faith and fair dealing, negligence, unfair trade practices, misrepresentation, conspiracy, and even more lawyerese that is, frankly, too lengthy for even Police Blotter to list in its entirety. In short, Gossett claimed, a car listed as "new" on eBay should have zero problems.

The United Auto Group (the successor to HBL as a result of a merger) asked the judge to dismiss the case based on lack of jurisdiction and also based on an arbitration clause in the purchase agreement.

Gossett claimed the arbitration clause should be unenforceable because the sale was complete at the time the eBay auction closed, but U.S. District Judge C. Weston Houck referred the bulk of his claims to arbitration.

Excerpt from Houck's opinion: "The U.S. Supreme Court has held that 'as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay or a like defense to arbitrability...'

"When a arbitration agreement governed by the Federal Arbitration Act covers claims that have been asserted in a lawsuit, the court must compel arbitration and either dismiss the action or stay further judicial proceedings until the arbitration has been held.

"Congress, in the Federal Arbitration Act, declared written agreements to arbitrate 'valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.'

"Courts have consistently interpreted this mandate broadly, addressing questions of arbitrability 'with a healthy regard for the federal policy favoring arbitration...'"

"The plaintiff's motion for reconsideration is denied...UAG's motion to compel arbitration is granted."

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