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Jury denies Hyundai damages in lawsuit against Napleton's West Palm Beach dealership

Two employees committed fraud but jurors fault automaker
Paul G. Rogers Federal Building in downtown West Palm Beach, Aug. 12, 2022
Posted at 9:22 PM, Jan 19, 2023
and last updated 2023-01-20 03:11:29-05

WEST PALM BEACH, Fla. — A federal jury faulted Hyundai Motor America Corp. in awarding no damages against Napleton's Hyundai dealership in West Palm Beach though they found two employees committed fraud in destroying engines to receive funds related to a vehicle recall.

In a two-week trial in the Southern District of South Florida in West Palm Beach, the nine jurors on Wednesday determined Gene Khaytin, a former general manager at Napleton's Hyundai, and service manager Ernesto Revuelta, committed fraud against Hyundai Motor America.

But the automaker denied damages because it engaged in its own wrongdoing, described as "unclean hands in the affair."

The dealership's parent company, Illinois-based North American Automotive Services Inc., said in a statement: "The jury’s verdict included a finding that Hyundai committed an unconscionable act or engaged in reprehensible conduct."

The jurors also denied defendants' counterclaims that the automaker failed to fairly allocate new cars in reasonable quantities and in a timely manner. And they voted no on violations of the Civil Racketeer Influenced and Corrupt Organization act, known as RICO, as claimed by Hyundai.

Magistrate Judge William Matthewman rendered the final judgment Thursday after the jury deliberated for four hours.

"Hyundai’s 2 1/2-year campaign filled with baseless accusations against the Ed Napleton Automotive Group has failed," the dealership's parent company said in a statement,

In November 2020, Hyundai sued the dealership and North American Automotive Services Inc. They alleged that service technicians, advisers and managers conspired to drain oil from functional engines and run them until they seized.

The dealership countersued Hyundai, saying it unfairly allocated vehicles in violation of the Florida Dealer Act.

The jury said three other defendants were not frauldent: Edward W. Napleton Jr., the son of the founder, and service technicians Geovanny Pelayo, and Jorge Ruiz

McRory of ArentFox Schiff LLP, who represents the defendants, said only eight of the engines were preserved. Hyundai's own expert said only two might have been damaged intentionally.

In opening statements, Hyundai's attorney Joel Smith of Bowman and Brooke LLP said that the dealership used the same photos repeatedly to receive authorization.

The recall started in 2015, involving 2011 and 2012 Sonata models, and was expanded to include 2013 and 2014 Santa Fe vehicles with Theta II 2.0 engines.

In the defect, the engines had bearing wear and engine failure, according to Hyundai.

The dealership, which is located at 2301 Okeechobee Blvd., has been family owned and in business for over 50 years.

"West Palm Beach Hyundai earned their reputation as the #1 South Florida Hyundai dealer because they truly believe that customer satisfaction and common courtesy should be held above all else, the dealership wrote on its website.

Edward W. Napleton opened his first dealership in Chicago in 1931.