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Unless you asked for a Carmax specifically, the dealer sadly has some legal ground here in stating they were not aware. This could very well be true.
Doesn't mean you are screwed, however it does mean that somewhere down the chain someone has lied, likely the previous owner. If the dealership did in fact not know of the damages, you likely would end up suing damages from the previous owner.
If this is a GM dealer, I would just report it to GM and see where that takes you. No sense in going through the courts. The process alone would drive anyone nuts.
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