Chapter 4

Automotive Experts Reports Re Diminished Value of Cars

Richard Diklich, is the owner of Automotive Technical Support Services, 12119 Fishing River Lane, Liberty, Missouri 64068, Home/Office 816-781-0169, Fax 816-792-5946. He provides technical services, mechanical inspections, expert testimony and trial support services to automotive service contract administrators, insurance companies, automotive dealerships, attorneys, shop owners and governmental agencies. Services include the provision for inspection facilities and support for engineers for vehicle disassembly and evaluation, storage of evidence to maintain chain of custody, and construction of demonstrative exhibits for testing and trial use. Expertise includes the analysis of service failures of vehicle systems including engines, transmissions, brake, steering, electrical and fuel systems, and the analysis of service history, vehicle valuation, determination of vehicle condition prior to sale, collision repair methods, and odometer tampering inspection. Mr. Diklich has a Bachelor of Science in Industrial Technology from Kansas State College of Pittsburg, Kansas, where he graduated in 1966 majoring in Automotive Technology, with a minor in Business Administration. He did graduate work at the University of Missouri, Columbia, and Central Missouri State University, Warrensburg, in Technology Education and Administration. He attended extensive technical training courses and seminars from General Motors, Ford Motor Company, Chrysler Motors, Toyota Motor Sales, and I-CAR. He has been an Instructor of Automotive Technology at Longview Community College, now part-time, since 1972. Secton 4.1 is a report analyzing undisclosed wreck damage and substandard repair which resulted in the car having reduced structural integrity and crashworthiness and a substantial reduction of value.1 Section 4.3 is a report analyzing wreck damage and substandard repair work which compromised the corrosion protection reducing the value of the car by about a third if the repairs had been disclosed. Section 4.4 is a report analyzing damage to a cars engine block caused by nut dropped by a mechanic rather than damage caused by the buyer.2 Section 4.5 is a report analyzing the diminished retail value of a used car because of its prior use as a rental car whose drivers had no incentives to care for the car.3 Section 4.6 is a report analyzing the diminished value of a very high mileage vehicle. Section 4.7 is report analyzing the cause and effect of cracking paint on a car with an excessive thickness of paint applied to it, probably at the factory.4 Section 4.8 is a report of the diminished value of a truck sold with undisclosed wreck damage.

1 2 3 4

See generally NCLCs Automobile Fraud 1.4.3 (2nd Ed. 2003). See generally NCLCs Consumer Warranty Law 17.8 (2nd Ed. 2001). See NCLCs Automobile Fraud 1.4.9 (2nd Ed. 2003). See Id. at 1.4.5.

4.1

Report Analyzing Undisclosed Wreck Damage and Substandard Repair

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI WESTERN DIVISION

[CONSUMER] Plaintiff, vs. THOROUGHBRED FORD, INC. Defendant

) ) ) ) ) ) ) ) )

Case No.

AFFIDAVIT OF RICHARD DIKLICH I, Richard Diklich, after being duly sworn upon oath, do hereby state to the best of my knowledge, as follows. 1. I have reviewed the following documents relating to the above case: Retail installment contract Disclosures of prior use and odometer reading Carfax Vehicle History Report Application for Automobile insurance coverage Dooleys Auto Body repair order Dooleys Auto Body repair estimate Missouri Certified Title History Black Book Official Used Car Market Guide June/July 2000 2. On January 1, 2001, I examined the vehicle at my facility in Clay County, Missouri. Within the first ten minutes, I noted that the vehicle had been repainted, as evidenced by the dirt in the paint, solvent pinholes, and variation in painted components. The right quarter panel had been replaced, as evidenced by the poor fit of the deck lid to the quarter panel, the poor fit of the quarter glass trim to the quarter panel, the poor fit of the right taillight to the quarter panel, and the sealer variation in the deck lid drain channel. The front fenders were offset from their original positions, and there was a replacement component sticker prominently displayed on the rear of the right door. All of these indications would have been readily apparent to any person experienced in body repair, or experienced in the process of evaluating a vehicle for inclusion in a used car inventory. 3. During my first inspection, I noted that the right quarter panel was not welded in the B-pillar flange area for a distance of approximately 28 inches, but had been repaired using a bonding material that failed to provide adhesion. This area incorporates the anchor points for the

door latch and the front seat passenger shoulder harness attachment. I also noted that there were no welds on the flanges securing the package tray reinforcement or the deck lid reinforcement area. This area contains the anchor points for the rear seat passenger shoulder harness attachment. These areas were visible with nothing other than minor removal of weatherstrip and looking into the trunk area. At that time I told [Consumer] that the vehicle would not be safe in the event of a subsequent accident and to definitely not place her child in the right rear passenger area. 4. On December 23, 2001 I towed the Cavalier from [Consumer]s residence to my facility in Clay County, Missouri, and began a more comprehensive inspection. During that inspection, I determined that the right quarter of the vehicle had been partially sectioned, using some new components and some used components. The methodology of repair was definitely not in accordance with manufacturers recommendations, nor was the repair in accordance with the collision repair industry standards. For example, sectioning of the roof rail and B-pillar was not performed with the use of reinforcing inserts, the major portion of the inner structure of the Bpillar was not welded, most of the welds attempted in the entire vehicle repair were substandard or missing, little if any corrosion proofing was used between mating flanges, and final dimensional fitting was accomplished with the use of hammer blows. The second inspection and disassembly verified my initial findings, and has shown the vehicle to be poorly reconstructed with respect to both methodology and quality. 5. Substandard work such as has been performed to this vehicle creates serious implications with respect to value and safety. The vehicle has reduced structural integrity and crashworthiness due to the procedures performed by the repairing body shop. Any additional or re-repair to the vehicle to attempt to restore it to preaccident condition would be cost prohibitive due to the level of corrosion and damage to panels adjacent to the originally replaced parts. Adequate information exists in the collision repair industry to properly restore the vehicle to manufacturer standards with respect to structural integrity. Many repairers cannot or will not go to the extent required to perform correct repairs because of lack of training, equipment, or cost/profit considerations. The repairs were made by a shop that is a preferred provider for a major insurance company. 6. It is common knowledge in the used car industry that vehicles undergo collision damage and repair, and that often the repair quality is far below industry standards. The industry has provisions to identify, label, disclose, and inspect for conditions that would affect the value or safety of a vehicle. For example, auctions have provisions for the disclosure of paint and metal or frame damage, vehicle value guides may give a suggested reduction in value of up to 50% for salvage branded title vehicles, and insurance companies will not pay out full market value on salvage branded title vehicles. I have reviewed many different inspection forms used by dealers to evaluate a vehicle for reconditioning or trade value, which have a specific line item check for frame or unibody damage. It is simply a good business practice for a dealer to inspect each vehicle in inventory so disclosures can be accurate with respect to both positive and negative attributes relating to condition or prior service. 7. Consumers are concerned about the safety, reliability and value of vehicles that have been in significant wrecks and subsequently rebuilt. Due to the history of the damage and rebuilding of

this vehicle, its fair market value is diminished from the value of a comparable vehicle that has not suffered damage. The vehicle was sold to [Consumer] at a price that could be fairly termed as full retail, or $12,287. Assuming that the vehicle had been disclosed to a prospective retail buyer in its actual condition, that the vehicle was improperly repaired, and that its structural integrity and safety were compromised, most consumers would decline to purchase the vehicle. The pool of buyers would then be limited to rebuilders or salvage buyers, with no viable retail market for the car. The fair market value would then be approximately $5,500, resulting in a diminished amount of $6,787. My opinions are based on my education, training, and experience in the automotive sales and repair industry, and through research relating to the repair and sales of automobiles. Materials and publications used to assist in the formation of my opinions and intended for use at trial include, but are not limited to, photographs, field notes, documents provided in discovery, and publications relating to recommendations for collision repair and vehicle value. As discovery is ongoing, I reserve the right to supplement or modify my opinions as additional information is provided or obtained. FURTHER THE AFFIANT SAITH NAUGHT ____________________ Richard Diklich, Affiant Subscribed and sworn to before me on ______________________ ____________________ Notary Public My commission Expires _________________________________

4.2

Report Analyzing Undisclosed Wreck Damage

January 11, 2004 [Attorney for Consumer] Re: [Consumer] v. Douglas Nissan Dear [Counsel for Consumer]: I have reviewed the following documents relating to the above matter. Documents relating to the sale of the Pontiac to [Consumer] Documents relating to the ownership and sale of the Pontiac by Avis Documents relating to the inspection/service of the Pontiac by Douglas Nissan Documents relating to the acquisition of the Pontiac by Douglas Nissan (P001 through P00137) Carfax Vehicle Title History Report Black Book Used Car Market Guide January 2003, May 2001 Photographs and field notes taken during my 7-24-03 inspection NADA Title and Registration Text Book I-Car Uniform Procedures for Collision Repair General Motors Standards for Collision Repair Collision Repair Industry INSIGHT 1999 Rates and Allowances I inspected the 2001 Pontiac Grand Am on July 24, 2003 in Las Vegas, Nevada. I was able to determine that the vehicle had been repainted as the vehicle was unloaded from the flatbed tow truck. The exterior of the vehicle was extremely dusty, from having been in storage for a period of time. Even with the coat of dust, I was able to see gross overspray and poor mask lines around moldings. After the vehicle was unloaded, I was able to determine within the first five minutes of a further inspection that the vehicle had suffered damage to the left side, especially to the left roof area. Simply opening the left doors provided a view of distorted metal and repair attempts. Upon opening the drivers door, I noted that the decals on the door had all been oversprayed with white paint, including the Avis decal. As the paint defects are too numerous to mention in this report, please refer to the photographs taken at the time of inspection. Using only finger pressure, the left roof weatherstrips were pulled back, a procedure requiring approximately 15 seconds. The roof to body side rail was exposed, revealing a lack of secure welds from the rear of the rear door frame opening forward to the front of the front door frame opening. The welds had been broken loose from impact/repair, and were not rewelded after straightening the roof panel. Weld repair attempts had been made inside the quarter roof reinforcement area. It appeared that an oxyacetylene torch had been used to repair weld. This method is not recommended for modern collision repair procedures except for straightening or shrinking of metal. The airbag light in the instrument panel remains on when the vehicle is started, indicating a problem with the supplemental restraint system. Further inspection revealed that the diagnostic

module under the passenger seat was unplugged, the module for the driver was unplugged in the column, and the front sensors were missing. Data and codes were retrieved with a scanner, and the screens were photographed for record. The airbag portion of the vehicle restraint system was not functioning. The inspection report of Douglas Nissan dated 8-31-02 (P00134) notes that there is structural damage/frame damage and that the vehicle has been wrecked. My inspection revealed the same information. The vehicle would probably be fit for the process of driving, but would not provide the same safety protection in the event of a subsequent accident. Avis vehicle file documents report the type of damage suffered by the Pontiac. The car brought $1,000 at auction, a sum reflecting the overall condition of the vehicle when sold. The estimate of damage used on the Avis total loss worksheet is not typical of a commercial retail collision repair estimate. Generally, there will be little or no parts discount, all labor rates quoted will be higher, and sales tax will be charged. On the other end of the FMV/COR equation, the fair market value used was consistent with the price for a comparable dealer retail vehicle. Most rental companies do not retail their own vehicles, therefore this unit would most likely have been sold at auction as a returned rental or program vehicle, and would not have the same value in the market place. The vehicle would have been close to a 100% total loss using collision repair industry methods for retail cost of repair and the fair market value in the market it was most likely to be sold. The National Auto Dealers Title and Registration Handbook states that a vehicle that has been declared a total loss by its owner must surrender the title to the DMV, then that title will be reissued as a Salvage title. When rebuilt and re-registered, the vehicle must pass a safety inspection and be accompanied by an Affidavit. The vehicle title will be branded REBUILT. A Used Car Appraisal Slip shows the ACV of the Pontiac while owned by Brietmeyer was $8500. (P100127) Black Book Used Car Guide for August 2002 shows the lowest wholesale value for a 2001 Grand Am Se 4Door as $10,150. When corrected for Mountain States pricing, the value numbers will be slightly reduced. There is also a copy of a payment to Brietmeyer for $7,000. (P00129) Both prices are typical of a distressed vehicle having a low fair market value, but with a clean title as reported by Carfax. If the vehicle had been disclosed to a prospective consumer as to its true condition, that of a poorly repaired wrecked rental, with serious safety concerns, and having been wrecked while in rental service, and with no factory warranty, the pool of buyers would have been extremely low, and there would probably not be a retail purchaser of the car. The probable sale would be to a wholesaler/rebuilder, or to a dismantler. At the time of sale to [Consumer], and assuming a clean title, the fair market value of the vehicle would have been approximately $5,500. The sales price to [Consumer] was approximately $13,500, resulting in a diminution in value of approximately $8,000. A salvage branded title makes the vehicle difficult to sell even if it is repaired correctly. Many insurance companies will not pay full replacement value for a vehicle that has a salvage title. Many dealers will not take a salvage title in on trade, or will reduce the trade value to the point

that the dealer can recover their base cost at auction. A salvage/rebuilt title effectively reduces the retail value of the vehicle by approximately 50%. The above opinions are based on my education, training and experience in the automotive industry, and my review of documents provided and my inspection of the vehicle. As additional information is developed, I reserve the right to amend my report. Sincerely, Richard Diklich

4.3 Report Analyzing Wreck Damage and Substandard Repair Work Which Compromised the Corrosion Protection
May 12, 2003 [Attorney for Consumer] Re: [Consumer] v. Lewis Toyota Dear [Counsel for Consumer]: I have reviewed the following documents relating to the above case: Field notes and photographs from my 9-29-01 inspection Black Book Used Car Market Guide May 2001 Carfax Vehicle Title History 8-24-01 AutoCheck Vehicle Title History 6-6-01 Documents relating to the sale of the vehicle to [Consumer] Documents relating to the service and repair of the vehicle Documents relating to financing the vehicle Documents relating to the inspection of the vehicle The vehicle was brought to my facility in Liberty, Missouri on September 29, 2001. Within the first five minutes of my inspection, I was able to determine that the vehicle had been in a collision, and had suffered damage to the left front corner of the vehicle. Most of the repair was observed by simply lifting the hood. On the underside of the hood, a RDOT sticker was prominent, indicating that the hood had been replaced. The left fender did not have an anti-theft sticker, indicating that the fender had been replaced. The right fender had an anti-theft sticker that matched the VIN on the vehicle, indicating that it was an original equipment part and had not been replaced. Inside the hood opening, the left fender had a prominent paint mask line, and the paint was so thin on the front part of the attaching flange as to show primer beneath the paint. Paint film thickness measurements revealed that the fenders, hood, and left door had been painted several times; possibly in order to achieve a color match. The core support (the structural part that surrounds and supports the radiator) had been replaced. No corrosion protection was added to the underside of the assembly after repair, and there is a burn through of the weld on the right side. The left frame horn shows some distortion. On the left side, the fender apron had been replaced. Again, there was no corrosion protection applied to the back side of welded areas. Inside the cab of the vehicle, where the apron was welded to the cowl/floor pan, the insulating mat has suffered fire damage from heat created during repair welding. The sealer application at the apron to cowl/bulkhead was of a markedly different nature then the unrepaired side, and the finish color of the sealer was lighter and stood out prominently as a repaired area.

An extended service contract was sold with the vehicle to [Consumer]. Many extended service contract providers are adverse to providing coverage for wreck damaged vehicles. Often, when it is discovered that the vehicle has been wrecked and repaired, the service contract claims office will deny coverage either on the entire unit or on any component that might have been affected by the accident. In addition, Toyota Paint and Corrosion warranty would not be valid for areas of the vehicle not repaired and refinished by a Toyota Collision Repair Center. The vehicle has had body damage, structural damage, and has a negative history on the title report. Although the title was not branded with a salvage disclosure, that does not mean that the vehicle has not suffered significant damage. For a vehicle to have had a frame damage disclosure at auction, the damage was significant. Auction disclosures are well known in the used car industry to be a minimal disclosure, and often disappear at a subsequent auction. The vehicle appears to have been presented four different times at auctions in Wisconsin and Missouri. Consumers are concerned about the prior history and condition of vehicles they are considering for purchase. Many vehicles are wrecked and rebuilt, but few are repaired to manufacturers specifications. Professional collision repair shops that perform insurance related work restore vehicles to pre-accident condition. This process ensures that the vehicle retains the safety features designed into the structure of the vehicle, and that the structural repair will not deteriorate over time. This vehicle was not restored back to manufacturers specifications with respect to welding and corrosion protection. The type and extent of repair to the vehicle would have been noticeable to any person responsible for taking a vehicle into inventory, or by any person with collision repair experience, or any person involved in the overall inspection of vehicles for condition. The person inspecting the vehicle for the Lewis Toyota Touch stated that there was body damage to the vehicle. The AutoCheck Vehicle Title History document indicated that the vehicle had been sold at auction with a frame damage disclosure. If the vehicle were to have been disclosed to a prospective consumer that it had been involved in a major accident, poorly repaired, sold at one auction with a frame damage disclosure, the pool of buyers would have been very small. Most likely, the vehicle would have been ineligible for Toyota Certification and not qualified for an extended service contract. The vehicle was sold to [Consumer] for $19,995 a price best described as full retail. The fair market value of the 2000 Toyota Tacoma Prerunner, at the time of sale to [Consumer], if accurately disclosed, would have been approximately $13,495, or a diminution in value of approximately $6,500. These opinions are based on my review of documents, my inspection of the vehicle, and my education, training and experience in the automotive industry. Additional information will be forthcoming in this case, therefore I reserve the right to supplement my report as necessary. Sincerely, Richard Diklich

4.4 Report Analyzing Damage to Cars Engine Block Caused by Mechanic Rather Than Buyer
[CONSUMER] v. DON STEIN BUICK-ISUZU, et. al.

AFFIDAVIT OF RICHARD DIKLICH

I, Richard Diklich, after being duly sworn upon oath do hereby state to the best of my knowledge, as follows: 1. I have reviewed the following documents relating to the above case: Documents relating to the sale of a used 1992 Ford Explorer to [Consumer]. Documents relating to the sale of an extended service contract to [Consumer]. Vehicle service history from Don Stein Buick-Isuzu relating to the Explorer. Service records from independent repair facilities relating to the Explorer. Inspection report from Magoos Automotive Consultants Inc. Correspondence from Mr. Irwin relating to the Explorer Correspondence from National Warranty Insurance Co. to Mr. Irwin. 2. I received the short block and cylinder heads from storage at the home of [Consumer]s mechanic, Ordell, in Turner, Kansas, on February 12, 2000. The cylinder heads were not bolted to the block. A plastic bag of small parts was also transferred at that time. 3. At that time, I made certain observations about the condition of the head and engine, but did not make notes or take photographs. I then placed the engine components into storage at my facility. 4. I reviewed documents as they were provided to me by Mr. Irwin. On 8-27-2000, I completed my examination of the engine, made field notes, and photographed the engine components. 5. I determined that the cylinder heads transferred to me were the original heads on the vehicle at the time of the overheating issue, based on wear patterns on the piston and head surfaces. The heads were not new heads, and had markings on them consistent with having been checked for cracks by a machine shop. Several cracks in the head surfaces were observed. 6. There was a broken piston and twisted rod assembly on the center piston on the right bank.

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The damage is not consistent with a hydrostatic lock condition. There are witness marks on the top of the piston consistent with a foreign object, such as a nut, having been ingested into the cylinder and compressed between the piston and the cylinder head. There were no corresponding marks on the cylinder head for the right bank. A flattened nut, which was transferred to me in the plastic bag of small parts mentioned in (1), matched the marks on the damaged piston. 7. The connecting rod bearings for two cylinders were checked, and were found to have the bearing material worn down to copper on their thrust or upper portions, and would have caused an engine knock. As this engine was a rebuilt or remanufactured unit, the amount of wear is abnormal. The discoloration of the bearing is consistent with the entry of ethylene glycol into the lubricating system, and the wear is consistent with damage caused by coolant contaminated oil. Main bearings were found to be in normal condition. The crankshaft was in good condition, and was serviceable. 8. Mr. Kohler indicates in his report that at the time of his inspection, there were new heads installed on the block. The heads were not removed, which did not allow a complete investigation into the cause of the engine lockup. If the heads were subsequently removed and retained by Steins service department, there should be a credit memo to the bill for the repairs on the Explorer. 9. The engine appeared to have made about 3 revolutions after the nut was ingested into the cylinder. At that time, the piston cracked, the connecting rod and pin pulled loose from the piston, then twisted and locked up the engine. This would have occurred after the new cylinder heads were installed, and the engine restarted. The noise associated with this condition would not be the same as a noise caused by bearing clearance knock. 10. In the letter from Mr. Scott Emery to Mr. Irwin, the issue of abuse is discussed, and Mr. Emery assumes that [Consumer] caused the hydrostatic lock, causing the additional damage to the engine. The service technicians are responsible for determining the nature and extent of the damage to the engine at the time of repair. The piston was clearly broken due to the ingestion of a foreign object after the new heads were installed and the engine was started. 11. I have personally inspected over 3000 vehicles with extended service contract coverage. In my opinion, the damage that caused the engine to lock up was not caused by [Consumer]s operation of the vehicle, but was a result of the ingestion of a foreign object while in the control of Don Stein Buick-Isuzu. I base these opinions and observations on my experience, education, and training in the automotive industry, and the review of documents provided to me in this case. FURTHER THE AFFIANT SAITH NAUGHT Richard Diklich, of lawful age, being first duly sworn upon his oath states: That he is the person above named; that he has read the above Affidavit; that he knows the contents thereof, and that to the best of his knowledge and belief, all the statements therein are true.

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___________________ Richard Diklich, Affiant SUBSCRIBED AND SWORN to before me this ______day of September, 2000. ______________________ Notary Public

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4.5 Report Analyzing Diminished Value Because of Prior Use as a Rental Car
October 5, 1999 [Attorney for Consumer] Re: [Consumer] v. William Chevrolet/Geo, Inc., and HFC Auto Credit Corp. Dear [Attorney for Consumer]: I have reviewed the following documents relating to the above captioned matter: Illinois Certified Title History Carfax Vehicle History Report National Auto Research Black Book Used Car Monthly Guide Documents relating to the sale of the vehicle Correspondence from your office to William Chevrolet/Geo. Inc. Enterprise Leasing Company of Indianapolis, Indiana originally owned the vehicle sold to [Consumer], a 1997 Nissan Altima. It was sold to William Chevrolet/Geo approximately 17 months later. During that time, the vehicle was driven 34,267 miles. As there are no indications in the documents reviewed that the vehicle was leased to an individual, there is a fair assumption that the vehicle was in daily or weekly rental service. Even though the title is marked as having been owned by a leasing company, it would be misleading if this information were used to represent the vehicle as a typical lease car driven by one consumer for the duration of its mileage. A rental vehicle has an entirely different pattern of use than a true leased vehicle. A rental vehicle has had multiple drivers, no sense of pride of ownership, a lessened concern for the consequences of abuse or accident damage, and has been driven on generally unfamiliar roads while the driver is trying to adhere to a tight time schedule. Rental drivers are not responsible for maintenance, and often will not report mechanical problems to the rental company for fear that they will be blamed for the cause and subsequent damage to the vehicle. Assuming an average of 200 miles per rental period, there may have been as many as 170 different drivers during the 17 months of service. Prior rental cars are often represented and sold to consumers as program cars. This term has no specific definition, is unclear, and lacks accuracy when used to describe the type of prior use of a vehicle. If a consumer has a favorable response to the term, the sales person will often allow the consumer to believe what they will, and not offer to correct the misconception. If the vehicle was represented as a clean one-owner, there is certainly a difference in the value of the vehicle in the open market when compared to a prior rental vehicle. If a rental vehicle has extra value in the marketplace, it would be a customary practice to use this value as a positive attribute to help with the sale. I have yet to see a prior rental history used as a positive disclosure to a customer who did not specifically ask for that type of car. Individuals who seek out prior

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rental vehicles expect a reduction in price, and the market reflects that practice. William Chevrolet/Geo had adequate information at the time of the sale to [Consumer] to properly disclose the origin and prior use of the vehicle. Several states require prior rental history to be disclosed in writing to the consumer prior to the consummation of the sale. The fair market value of a prior rental vehicle is established by comparison with other vehicles of like kind and quality that do not have any conditions which could be viewed in a negative light. Value guides such as the NADA Gold Book, Kelly Blue Book, and National Auto Research Black Book do not address prior rental vehicles as a specific category. Instead, the buyer is admonished to properly classify the vehicle in a column which best fits all the known factors that affect value. Generally, a prior rental vehicle results in a reduction of at lease one column in most guides, and more if mileage is excessively high or the vehicle has suffered impact damage. This vehicle has high mileage for its age. It is my opinion that the fair market value of the vehicle at the time of sale to [Consumer] was approximately $12,000, or a diminution of $1,995. This opinion is based on my education, training and experience in the automotive industry.

Sincerely,

Richard Diklich

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4.6

Report Analyzing Diminished Value of Very High Mileage Vehicle

June 11, 2001 [Attorney for Consumer] Re: Claim [No.] [Consumer] Dear [Attorney for Consumer]: Following please find my estimate of the fair market value of the [Consumer] vehicle located at Lansing Auto Body. 1993 GMC 1500 5.7 gas, automatic, 4WD, full power, 3rd seat, receiver hitch, dual air, am/fm/tape, Trailmaster Custom Conversion. Mileage 202205. Vehicle condition is average for the mileage, and appears to be well maintained with respect to interior and exterior condition. Mechanical condition is unknown, tires are nearly new. There is some deterioration of paint on the left side as a result of repaint to repair previous damage, and will require a full repaint to correct and color match. For vehicles of this age category, condition, and optional equipment, the fair market value is approximately $13,200. The Trailmaster conversion adds approximately $1500 to the vehicle value. Tire condition adds approximately $375. Excess mileage/high mileage deducts a minimum of approximately $3500. The fair market value of this vehicle is $11,575. Value assessments are based on a review of value guides, classified ads, and experience in the used vehicle sales industry. Sincerely, Richard Diklich

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4.7

Report Analyzing Car Valuation Where Excessive Paint Applied

DECLARATION OF RICHARD DIKLICH

Subject:

Paint concerns Meyer 1997 Thunderbird

1. My name is Richard Diklich. I have been an instructor of Automotive Technology at Longview Community College, Lees Summit, Missouri, for over 30 years. Prior to assuming teaching duties, I was a Quality Control Supervisor at the Ford Claycomo Assembly Plant for 6 years. I also provide consulting services in automotive related matters to attorneys, dealerships, governmental agencies, and insurance companies. 2. I inspected the vehicle on 10-20-01 at my facility in Liberty, Missouri. The odometer reading was 88,994, VIN [VIN]. The vehicle exterior was clean and the interior was well maintained. Paint code is UA Ebony Solid C/C. 3. The paint appeared to be a base/clear application. There was no evidence of a complete repaint/refinish of the type performed by most collision repair shops. Typically, a vehicle is not completely detrimmed, but is masked off and refinished in the areas damaged. In addition, there is typically a variation in film thickness in lower panels and at the edges of the panels as a result of the human factors involved in the paint application process. This vehicle appeared to have had the paint applied with all trim removed, or more likely repainted at the factory prior to transfer to the trim line. 4. Paint film thickness readings were taken with an electronic gauge, which was calibrated before use on this vehicle. Overall paint film measurements were from 9 to 12 mils, and were consistent on each panel. There had been some additional repair to the lower part of the left fender. The field of the panels had a slightly thicker buildup of paint than the edges. Factory paint thickness is typically between 4 and 5 mils on a solid color vehicle. The thickness of the original finish and one refinish, assuming additional base and clearcoat applications, typically results in a cumulative film buildup of 8-12 mils. Collision repair industry repaint recommendations limit paint film buildup to 10-12 mils before requiring removal of all old paint prior to refinishing. 5. The paint has a classic pattern sometimes referred to as crowfoot, and also may be called crazing, cracking, or checking. The defects are primarily on horizontal surfaces, with the hood and tops of the fenders more pronounced. Causes of this defective condition may be, but are not necessarily limited to, excessive heavy film of paint applied at one time, use of a wrong type reducer, repainting a previously repainted panel, solvents penetrating the lower paint film, and extreme temperature changes. Dark color cars are more prone to checking than are light color cars or those cars that are kept in a temperature controlled environment. The paint had not begun to delaminate at the time of my inspection. I did not perform any tests on this vehicle to determine the chemical composition of the paint. 6. In my opinion, it is more probable than not that the vehicle was repainted at the assembly plant and that the paint has excessive film thickness. The paint is unable to withstand the

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expansion rates associated with temperature fluctuations and the result is checking or crazing. 7. There is a diminution in value associated with a repainted vehicle. A dealer, when appraising the vehicle for trade in purposes, would probably assume that the car had been wrecked, and would devalue the vehicle by at least 20-30 percent of the trade-in value. To fully establish the diminution, a date certain must be determined for final calculation. If the repaint were disclosed at the time of the sale of the vehicle when new, the diminution in value would be approximately 15% of the vehicle list price. The cost of a quality paint refinish on this vehicle would be approximately $5,000. 8. As additional information is provided, I reserve the right to amend my opinions as necessary.

Dated _____________

Signed _______________________ Richard Diklich

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4.8 Report of Trucks Diminished Value Sold with Undisclosed Wreck Damage
May 5, 2003 [Attorney for Consumer] Re: [Consumer] 1999 Dodge Ram Dear [Attorney for Consumer]: I reviewed and considered the following documents in this matter: Black Book Official Used Car Market Guide March 2002 Retail Installment Contract Title Transfer and Registration Offer to Purchase Field notes and photographs taken 6-29-02 Response to Interrogatory No. 10 and No. 11 relating to repairs by Zangara Albuquerque Auto Auction sale form Ticket 1309-Dent Repair ---Impressions Service Order Mountain Shadow Invoice Service One Auto Body Repair Preliminary Estimate Zangara Dodge service inspection ticket Page 1 of 2 Carfax Vehicle Title History Report I inspected the 1999 Dodge Ram 4x4, VIN [VIN], on 6-29-02. Odometer reading at the time of the inspection was 37,033 miles. Place of inspection was Northwest Automotive, Albuquerque, New Mexico. Within the first five minutes of my inspection, I was able to determine that the vehicle had extensive repaint to the cab of the vehicle, but not to the box/bed section. There were visual indications of repaint such mask lines, dirt and runs in the paint, including the left door, hood, right fender, and right door. The right fender has an A-gap and the left fender has an uneven fender to door margin in the center. Upon further inspection, I was able to determine that the right frame horn has been heated and straightened, with visible discoloration and the presence of hammer marks. There is a replacement parts sticker on the right bumper bracket. The right fender has a foam silencer insert missing in the rear section. The left inner fender apron has been installed with sheet metal screws instead of welds. The core support has been replaced. The vehicle has suffered collision damage in the front end. Any reasonable inspection by a person familiar with evaluating vehicles for used vehicle inventory or any person familiar with collision repair processes would have noted the paint and sheet metal issues and the frame damage. Typical auction disclosures would have included paint and metal, and at some

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auctions, a frame horn disclosure. The fender condition disclosure at the Albuquerque Auto Auction is typical of the type of incomplete minimum disclosure made at a dealer to dealer auction. Consumers are concerned about the prior history of vehicles when considering whether or not to commit to a major investment. When a negative history and/or condition is fully disclosed, many consumers will decline to purchase the vehicle and opt for a non-damaged unit. This is especially true when the consumer is willing to pay full price for a full quality truck or car. As a bank repo, the vehicle would have a much lesser value than if it were a clean one-owner unit. [Consumer] complained that the vehicle lacked power on highways and had poor fuel mileage. Oversized tires can be a cause of low power and high fuel consumption. Zangara noted the vehicle to have oversize tires during the predelivery inspection, prior to sale to [Consumer]. [Consumer] paid $18,950 for the 1999 Dodge Ram, a price best described as full retail when compared to the March 2002 Black Book. If the condition and prior accident damage history of the vehicle were fully disclosed to a prospective consumer, the fair market value of the vehicle on the date of sale to [Consumer] would have been approximately $15,500, resulting in a diminution in value of $3,450. The above opinions are based on my education, training and experience in the automotive industry. If additional information becomes available, I reserve the right to amend my report as required. Sincerely,

Richard Diklich

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