Dealers who sell cars using the Internet are operating in an area where there isn’t much of a legal roadmap. There are very few state laws that deal directly with Internet sales and, as usual, when the legislatures haven’t weighed in with guidance, the courts have to sort things out.

That is beginning to happen. We watch the reported cases that deal with Internet sales and we would guess that there have been perhaps 10 reported cases on this subject. Nearly all of the cases have dealt with whether an unhappy customer who has bought a car from a dealer in another state can sue the dealer in the customer’s home state.

A recent case that we saw offers an interesting twist on this question—can a seller who sells to a buyer in another state sue the buyer in the seller’s home state. Let’s look at what happened.

Llexcyiss Omega and Dale York of Indiana listed a Porsche for sale on the auction Website eBay. The listing provided that the winning bidder was required to arrange and pay for delivery of the car. Richard and Marlene Attaway of Idaho bid and won the auction. They paid Omega and York through PayPal, an online payment service owned by eBay.

The Attaways arranged for a transporter to deliver the car. After taking delivery of the car, the Attaways filed a claim with PayPal seeking a refund, stating that the car did not match the eBay auction listing. PayPal denied the refund and told the Attaways to work with the sellers.

The Attaways ultimately got their credit card company to refund their money and Omega and York sued the Attaways in small claims court. The Attaways moved to dismiss, claiming lack of personal jurisdiction. The trial court denied the motion and the Attaways appealed to the Indiana Court of Appeals. The Attaways claimed that the Indiana courts lacked either general or specific personal jurisdiction over them. General jurisdiction exists where the party’s contacts are so continuous and systematic in a state that the party should reasonably anticipate being haled into the courts of that state. Specific jurisdiction requires that the party purposefully avail himself of the privilege of conducting activities within the forum state and that the conduct would make the party reasonably anticipate being haled into court.

The appellate court noted that it could not locate any other case in which a seller sued a buyer for rescission of payment after the buyer collected the item from the seller. The appellate court found that the Attaways knew of the sellers’ location before bidding. Additionally, the Attaways agreed to appear in Indiana to pick up the car when they submitted a bid.

The appellate court concluded that these facts satisfied the requirements for personal jurisdiction, finding that the Attaways purposefully availed themselves of the privilege of conducting activities in Indiana such that they should have anticipated defending a lawsuit there.

This case may prove useful for a dealer who needs to bring an action against an out-of-state buyer who bought a car over the Internet. Be warned, though, this is a developing area of the law and that courts may well come to different conclusions based on similar facts.

Internet selling is one of those areas that will be a legal minefield until laws or court decisions give us more guidance. If your dealership is active in this area, make sure your lawyer knows what you are up to.

Attaway v. York, 2009 Ind. App. LEXIS 515 (Ind. App. March 13, 2009)

Tom Hudson is a partner in the Maryland office of Hudson Cook, LLP. The firm represents motor vehicle dealers, sales finance companies, and lenders engaged in motor vehicle finance transactions. He can be reached at 410-865-5411 or by email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Cathy Brennan is a partner in the Maryland office of Hudson Cook, LLP. She can be reached at 410-865-5405 or by email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .