SEATTLE — Despite maintaining that no laws were broken, an Everett auto dealer settled a more than two-year-old lawsuit filed by the state Attorney General Rob McKenna’s office. It charged the dealer and his operation with engaging in deceptive advertising and sales practices.

In a deal reached last week, the owner of Performance Kia and the former Performance Nissan will pay $150,000 in attorneys’ fees and penalties to resolve the lawsuit. Performance Jeep-Eagle, the business that operated Performance Kia and the former Performance Nissan, is also on the hook for another $55,000 if the business continues to violate the Consumer Protection Act and other state laws.

“We were ready to go to trial as we felt we would prevail, but agreed to settle the dispute in order to avoid the high cost of litigation and the uncertainties inherent in any trial,” said a defiant Hugh Hall, owner of Performance Nissan and Performance Kia. “The agreement does not contain any admission of violation of any law, nor does it represent agreement with any of the allegations made by the Attorney General's office. In fact, we absolutely and flatly deny that any laws were violated.

The lawsuit was filed in 2010 after the attorney general’s office received multiple consumer complaints. Even while the lawsuit was pending, consumers continued to complain. One complaint described Performance Kia’s television commercials for the Kia Soul, which claimed the dealership was overstocked with the compact cars. The ads also allegedly claimed that they vehicles were marked down to $9,988, and guaranteed trade-in values of $4,000.

One consumer complained that when he visited the dealership, none of the advertised vehicles were on the lot. Performance relied on language buried in the television ad that was said there was only one vehicle available. A sales associate also claimed the trade-in offer did not apply to the Kia Soul.

“I just sent a message to the dealership and said I thought their commercials are misleading and their sales tactics were bait and switch … he replied that their commercial was approved by the Attorney General,” the consumer wrote. “If you watch this commercial and still approve it, I would be very surprised.”

Assistant Attorney General Mary Lobdell responded: “We were surprised because we don’t approve television commercials. We’re not authorized to do so, and we certainly don’t approve of these kinds of sales tactics. We also don’t approve of ads that show pictures of junkyard jalopies, suggesting the dealership will pay $2,000 for trade-ins, no matter what condition, because we know that offer is seldom honored.”

Consumers also report being the victims of misleading tactics. One consumer, who complained when the dealership did business as Performance Nissan, spoke of a promotion for Nissan Altimas. “We test drove a car we liked and decided to purchase it,” he wrote in his complaint. “[T]he salesperson came back and told us this particular car was not part of the promotion and it would cost $2,000 more than the advertised price. [W]e felt like it was a ‘bait and switch.’ After further negotiation, the sales manager said he would split the difference and sell us the car for $1,000 more.”

Selling a vehicle at a higher price than advertised is a violation of both the Revised Code of Washington and Washington Administrative Code. The settlement, filed in Snohomish County Superior Court, resolved the Attorney General’s 2010 lawsuit against Performance and establishes a commitment by the dealer to revise its policies and practices.

Performance also agreed not to run ads that suggest the dealership will match buyers’ down payments, not to sell vehicles over the advertised price and not to engage in “false premise” advertising. The operation also must identify used vehicles in its advertising, as well as advertise only those vehicles that are in its possession, among other conditions.

“We continue to operate our business as we always have … in an ethical manner, compliant with the laws of the state of Washington,” Hall said. “This is reflected with the attorney general dropping many of its original allegations, including 'packing' and 'bait and switch,' neither of which is contained within this consent decree.”