If you’ve ever felt like a little guy being crushed by a big company, this one’s for you. A Pittsburgh used car dealer walked away with nearly $10 million after a Pennsylvania judge essentially left Hyundai Motor America sitting in a corner thinking about what it had done.
Between early 2018 and mid-2019, Knight Motors and its sister company Doman Auto & Marine Sales (both based in Pittsburgh and owned by the same person) purchased 628 used Hyundai Sonatas (model years 2011-2014) at auction. These aren’t random old things; They are part of a massive recall involving Hyundai’s notoriously problematic Theta II engine, which affects more than 1.6 million Hyundai and Kia vehicles. Dealers followed the recall process exactly: They took the cars to Hyundai’s own franchised dealers for engine replacement or buyback.
Totally legal. Totally logical. In fact, American capitalism is at its best—a phrase we’ll return to shortly.
Instead of fulfilling its recall obligations like any responsible automaker would, Hyundai apparently looked at the number of claims coming from Knight and its peers, deemed something fishy, and made what a judge later called a “shocking decision” in May 2019 to deny every claim related to Knight Motors — while denying any nuance and without individual review. Hyundai internally labels Knight and similar dealers a “repurchase club” and “repeat offenders” and has taken steps to reduce or deny payments to them.
Then Hyundai sued the dealer for fraud in 2019 after paying more than $5 million in buyback fees, a bold move that can only be described as extremely confident for someone about to be caught.
Allegheny County Civil Court Judge Philip Ignelzi had been on the bench for 16 years when this case came to trial. Finally, he said Hyundai’s actions were one of the most egregious examples of evidence destruction and court abuse he has seen in years. For a major automaker, that’s a big deal.
What did Hyundai do? Automotive News first reported that the court found that the company shredded hundreds of recalled vehicles — the vehicle at the center of the lawsuit — effectively destroying key physical evidence. Emails from Hyundai case managers were also deleted. The judge called the behavior “rampant destruction,” which is the legal term for destroying evidence and is generally considered very bad behavior in court.
Ignazi also found that Hyundai’s own witnesses did not tell the full truth, and that multiple inspections of Knight’s vehicles, including those commissioned by Hyundai itself, found zero evidence of any tampering or manipulation.
He didn’t mince words in his ruling: He wrote that Hyundai used the court system to commit the fraud it alleged the dealers committed. In his assessment, the automaker found it cheaper to file legal action than simply comply with its recall obligations.
As a sanction specifically for the destruction of evidence, Judge Ignazi ordered Hyundai to pay Knight Motors $9,784,075. That number represents Knight’s cost of storing 163 recalled vehicles (all in Knight’s name) on its lot over nearly seven years at $25 per vehicle per day. Hyundai also has to come and collect these cars.
All of Hyundai’s initial fraud claims were dismissed. The dealers’ counterclaims – which included fraud, breach of contract, intentional interference and abuse of legal process – were all ruled in their favour. Additional damages could still be determined at a future trial.
Hyundai has appealed the ruling, and a judge granted a stay of execution of the order in early March. Jason Archinaco, an attorney for the dealer, said he was confident the ruling would stand.
This is not an isolated situation. In a separate case in Florida, Hyundai is holding a franchise dealer liable over a similar Theta II recall claim. A magistrate judge in the case noted that Hyundai botched the recall process due to testing errors, delayed engine replacements and persistent misinformation. The case went to trial in January 2023, and neither side was awarded damages — a much quieter conclusion than what just happened in Pittsburgh.
For Knight Motors, a nearly seven-year battle with a company with deep pockets is finally paying off — literally. For the rest of us onlookers, it’s a helpful reminder that “we recalled the car, stop asking questions now” is not, in fact, a complete legal defense.