Hyundai Spoliation of Evidence Lawsuit: $9.8M Sanction, Florida Case

In March 2026, a Pennsylvania judge ordered Hyundai Motor America to pay $9,784,075 in sanctions in a spoliation of evidence lawsuit after finding the automaker had crushed hundreds of recalled Sonatas and deleted a case manager’s emails that were central to its own fraud case against two dealerships. Judge Philip A. Ignelzi of the Court of Common Pleas in Montgomery County called Hyundai’s conduct “widespread, pervasive, and blatant” spoliation and one of the worst discovery abuses he had seen in 16 years on the bench.¹

Why Hyundai Sued the Dealerships

The fraud case Hyundai brought grew out of its Theta II engine recall, which covered 2.0-liter turbo and 2.4-liter gasoline direct injection engines prone to premature bearing wear, seizure, and fires. As part of its response, Hyundai ran a repurchase program that bought affected cars back from dealers.²

Between 2018 and early 2019, Knight Motors LP and Doman Auto & Marine Sales Inc., both owned by Christopher Pantelis, bought 628 Hyundai Sonatas (model years 2011–2014) at auction, all falling under the Theta II recall. They submitted the cars for buybacks and engine replacements. Hyundai internally flagged the stores as part of what it called the “Frequent Buyback Club.” In May 2019, it denied every open claim from Knight Motors and sued both dealerships for fraud, alleging they had tampered with the cars to trigger recall payouts.¹

What Hyundai Destroyed

The evidence Hyundai needed to prove tampering was the cars themselves. After buying them back, the automaker crushed hundreds of them. Judge Ignelzi found that by March 2019, when Hyundai was on notice of potential litigation, at least 330 of the vehicles had already been destroyed. Another 69 were crushed after Knight Motors filed its own suit in May 2019.³

The destruction was not limited to cars. The court also found that emails from a Hyundai case manager involved in the dispute had been deleted.¹ Between the crushed vehicles and the missing messages, the dealerships had no way to have independent experts inspect the cars, and Hyundai had no physical evidence to back its own fraud allegations. Judge Ignelzi called the combined destruction “rampant spoliation” and stated: “Hyundai has come before this court and lied — pure and simple.”³

The Ruling and How the Sanction Was Calculated

The court dismissed Hyundai’s fraud claims, concluding the automaker had made its tampering allegations “without evidence.”⁴ Court-ordered inspections by 16 different dealers and an outside appraisal firm found no evidence of tampering by Knight Motors or Doman Auto.¹

The $9,784,075 sanction covers seven years of storage fees for 163 vehicles still sitting on the dealerships’ lots, calculated at $25 per day per vehicle. Those cars remained unsold while the litigation dragged on, running up daily costs the dealers had to carry.¹ The order also required Hyundai to obtain a supersedeas bond before any appeal could delay payment.³

Where the Case Stands

Hyundai has notified the trial court that it intends to appeal.³ Payment of the judgment is on hold while that appeal proceeds, and the underlying claims between the parties are not yet resolved.¹ Jason Archinaco, the attorney for the dealerships, said his client “feels vindicated by the decision.”

A Parallel Spoliation Ruling in Florida

The Pennsylvania sanction is not the first time Hyundai has been penalized for destroying recall-related evidence in a fraud case it started. In Hyundai Motor America Corp. v. North American Automotive Services, Inc., filed in the Southern District of Florida, Hyundai sued a dealership affiliated with the Napleton Automotive Group, alleging employees at its West Palm Beach store drained oil from Theta II engines and ran them until they failed to collect warranty payments.⁵

Of 917 engines the dealership returned to Hyundai between 2015 and 2021, only eight were preserved. The rest were shipped to a Hyundai affiliate in Mexico for remanufacturing. The court identified a specific date on which Hyundai’s duty to preserve had crystallized: June 9, 2020, when in-house attorney Alex (Youngshick) Kim sent an internal email ordering that engines from Napleton dealerships “be officially preserved until notified.” Even after that directive, 144 engines returned by the dealership were not retained, and no one followed up to confirm the hold was being carried out. Hyundai’s outside counsel later said they had believed the engines were being kept and only learned otherwise in June 2021, after discovery had closed.⁵

In a July 2021 ruling, Judge William Matthewman called Hyundai’s failure “far worse” than negligence and an “inexplicable failure” by a “large sophisticated corporation.” The court found bad faith, said Hyundai may have been “deliberately ignorant” of whether the engines were being preserved, and issued an adverse inference instruction telling the jury to presume the missing engines contained evidence favorable to the dealership.⁵

At trial in early 2023, the jury found that two Napleton employees, former general manager Gene Khaytin and service manager Ernesto Revuelta, had committed fraud, but awarded Hyundai zero damages, concluding the automaker had “unclean hands” and engaged in “reprehensible conduct.” Final judgment was entered for the defendants on January 19, 2023.⁶

The two cases follow the same arc. Hyundai accused dealerships of gaming its Theta II recall program. In each, the physical evidence at the heart of its own claims (vehicles in Pennsylvania, engines in Florida) went missing while Hyundai controlled it. And in each, the court concluded that Hyundai’s litigation conduct did more damage to its position than any alleged dealer misconduct: dismissal and nearly $9.8 million in sanctions in Pennsylvania, and a jury verdict of zero in Florida even where some fraud was found.