Earlier this week, Carvana sued the state of Michigan in an attempt to get a temporary restraining order that would prevent the Secretary of State from revoking its dealership license. Today, the Detroit Free Press reports that request for a TRO was denied.
(Look at me using an initialism I learned watching Suits. Harvey Specter would be so proud.)
Initially, when Carvana sued, the company called its license suspension an “illegal and irresponsible attempt to shut down a growing Michigan business” simply for having some “technical paperwork violations involving title and transfer issues.” It also argued that its suspension violated part of the Michigan Vehicle Code that first required a hearing if the state wanted to suspend its license.
Michigan’s Court of Claims didn’t buy that argument, though, and on Wednesday, ruled against Carvana, saying Secretary of State Jocelyn Benson’s “decision to suspend plaintiff’s license without a hearing is statutorily permitted and therefore declines to find a violation of plaintiff’s due process rights.”
The judge also wrote, “Plaintiff states it ‘is the second-largest used car retailer in the United States and has sold over 1 million vehicles.’ Thus, plaintiff’s assertion that it suffered loss of goodwill due to the suspension is insufficient to show irreparable harm, in particular because plaintiff’s Michigan-based sales are a subset of its overall operations. Moreover, the suspension affects plaintiff’s sales only at its vending machine in Novi, but not its overall online sales.”
In an email, Carvana spokesperson told the Detroit Free Press, “We are disappointed by the court’s decision and we are considering all legal options to protect our customers and ensure the Secretary of State is held accountable for their illegal actions,” and called its suspension “an illegal and reckless attempt” to shut down its business in the state.
They did note, however, that the Secretary of State had agreed to let Carvana continue selling cars to customers in Michigan online.
In response to the latest ruling, Michigan Department of State spokeswoman reiterated a previously released statement, claiming, “Department staff met with Carvana on multiple occasions to explain Michigan law and suggest pathways to compliance. But instead Carvana continued selling vehicles without titles to scores of Michigan families, putting the residents at risk of legal violations, fines, and other penalties.”
As we previously reported, Carvana’s license was suspended earlier this month after the State of Michigan said the car company had violated the terms of its probation agreement, twice. MDOS began looking into the dealership’s practices after it says it received more than 100 complaints from customers who didn’t receive their titles or registrations on time.
Currently, there’s no telling what will happen next, but we’ll probably have to wait until November 22 to find out since that’s when parties are scheduled to reconvene for an administrative hearing.