Suiter v. Mitchell Motor Coach Sales, Inc., s. 96-5154

• Decision Date: 31 July 1998
• Docket Number: 96-5159,Nos. 96-5154,s. 96-5154
• Parties: 98 CJ C.A.R. 4163 Gilbert R. SUITER, individual, Plaintiff-Appellee-Cross-Appellant, v. MITCHELL MOTOR COACH SALES, INC., a Florida corporation, Defendant-Appellant, and Robert E. DESBIEN; Norma J. Desbien, Defendants, v. BLUE BIRD BODY COMPANY, INC., a Georgia corporation, Third-Party-Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1275

151 F.3d 1275

98 CJ C.A.R. 4163

Gilbert R. SUITER, individual, Plaintiff-Appellee-Cross-Appellant, v. MITCHELL MOTOR COACH SALES, INC., a Florida corporation, Defendant-Appellant, and Robert E. DESBIEN; Norma J. Desbien, Defendants, v. BLUE BIRD BODY COMPANY, INC., a Georgia corporation,

Third-Party-Defendant-Appellee.

Nos. 96-5154, 96-5159.

United States Court of Appeals Tenth Circuit.

July 31, 1998.

James W. Tilly, Tilly & Ward, Tulsa, OK (Craig A. Fitzgerald with him on the briefs), for Defendant-Appellant.

Robert E. Bacharach, Crowe & Dunlevy, Oklahoma City, OK, for Plaintiff-Appellee, Cross-Appellant.

Edward H. Wasmuth, Jr., Smith, Gambrell & Russell, LLP, Atlanta, GA, (Thomas W. Rhodes, Smith, Gambrell & Russell, LLP, Atlanta, GA, and James M. Sturdivant and Timothy A. Carney, Gable, Gotwals, Mock & Schwabe, Tulsa, OK, with him on the briefs), for Third-Party-Defendant--Appellee.

Before PORFILIO, LUCERO, and MURPHY, Circuit Judges.

MURPHY, Circuit Judge.

Gilbert Suiter ("Suiter") brought this action against Mitchell Motor Coach Sales, Inc. ("Mitchell"), Norma and Robert Desbien, and Blue Bird Body Company, Inc. ("Blue Bird"), alleging violations of the Motor Vehicle Information and Cost Savings Act ("Odometer Act"), 49 U.S.C. §§ 32701-32711. ¹ The Odometer Act requires any person transferring ownership of a motor vehicle to give the transferee an accurate, written disclosure of the odometer reading or, if the transferor knows the odometer reading is not correct, a statement that the actual mileage is unknown. See 49 U.S.C. § 32705(a). If the transferor, with intent to defraud, fails to comply with these requirements, the transferor is subject to suit by the transferee and may be liable for treble damages or $1500, whichever is greater. See id. § 32710.

Suiter originally brought suit against Mitchell, a motor coach dealership, alleging that it fraudulently provided him with an inaccurate odometer statement when he purchased a Blue Bird Motor Coach ("Coach") from the dealership. Suiter later added as defendants the Desbiens, who had consigned the Coach to Mitchell. Mitchell filed cross-claims against the Desbiens and impleaded Blue Bird, which had replaced the Coach's odometer. Suiter thereafter filed a claim against Blue Bird.

The district court granted Blue Bird's motion for summary judgment, dismissing it from the case. Suiter's claims against Mitchell proceeded to trial. ² A jury found in favor of Suiter and awarded him damages of $26,286. The district court trebled the damages and ordered judgment against Mitchell for $78,858. The district court also awarded Suiter attorney fees of $72,454.75 and prejudgment interest. ³

Mitchell appeals several of the district court's rulings. Suiter cross-appeals the district court's grant of summary judgment to Blue Bird. This court exercises jurisdiction pursuant to 28 U.S.C. § 1291 and affirms on all issues with the exception of the award of attorney fees. On that issue, we reverse and remand.

I. BACKGROUND

Robert and Norma Desbien purchased the Coach in August 1988. At the time of their purchase, the odometer showed 30,091 miles. A few months later the speedometer and odometer malfunctioned, and the Desbiens took the Coach to Blue Bird for repair. Blue Bird replaced the old odometer, which then showed approximately 42,000 miles, with a new odometer showing zero miles. The new odometer therefore reported mileage which was approximately 42,000 miles less than the actual mileage of the Coach.

Four years later, in September 1992, Mitchell agreed to sell the Coach for the Desbiens on a consignment basis. The parties agreed that Mitchell would sell the Coach for no less than $125,000 and that Mitchell could keep any excess over that amount as its commission. At the time of the consignment agreement, the Coach's odometer showed 46,520 miles. Mr. Desbien provided Mitchell with an odometer statement attesting that the odometer reading was, to the best of his knowledge, the actual mileage of the vehicle.

Suiter subsequently purchased the Coach from Mitchell for $150,000. Mitchell executed another odometer statement, stating that to the best of its knowledge the actual mileage of the Coach was 46,520 miles. A few months after purchasing the Coach, Suiter reviewed the vehicle's service records, which were kept in a box in the Coach, and discovered the odometer had been replaced by Blue Bird and that the odometer reading was consequently incorrect. In September 1993 he filed this action.

Both Blue Bird and Mitchell moved for summary judgment. The district court granted Blue Bird's motion, concluding there was no evidence Blue Bird had acted with the requisite intent to defraud. The district court denied Mitchell's motion, finding a material issue of fact existed with respect to Mitchell's intent. A jury subsequently found in favor of Suiter and against Mitchell.

Mitchell appeals, arguing the district court erred (1) by not rendering judgment in favor of Mitchell, when Mitchell was exempt from the odometer reporting requirements under the regulations; (2) by not rendering judgment in favor of Mitchell, when there was no evidence Mitchell acted with intent to defraud; (3) by erroneously instructing the jury as to the degree of culpability necessary to support liability under the Odometer Act; (4) by granting summary judgment in favor of Blue Bird; (5) by not granting Mitchell a new trial; (6) by awarding Suiter attorney fees of $72,454.75; and (7) by awarding Suiter prejudgment interest. Suiter cross-appeals, also arguing the district court erred by granting summary judgment in favor of Blue Bird.

II. DISCUSSION

A. Exemption

Mitchell first argues that because it was exempt under the regulations from providing Suiter with an odometer statement, the district court erred by not granting its motion for judgment as a matter of law. Mitchell specifically relies on the exemption for transferors of vehicles with a gross vehicle weight rating ("GVWR") ⁴ in excess of 16,000 pounds. See 49 C.F.R. § 580.17(a)(1). Suiter argues Mitchell waived the exemption defense because it failed to plead the exemption as an affirmative defense. In the alternative, Suiter argues the exemption is invalid.

Mitchell initially claimed that it was exempt from the odometer disclosure requirements in a motion for summary judgment filed on the eve of trial. The parties and the district court agreed to treat the motion as a motion for judgment as a matter of law. After Suiter rested, at the close of evidence, and again after the jury rendered its verdict in favor of Suiter, Mitchell moved for judgment as a matter of law, relying on the exemption. The district court denied the motions based on its conclusion that the exemption was invalid. During these proceedings, Suiter argued the Secretary was without authority to promulgate the regulatory exemption and that the exemption was therefore invalid. Suiter never argued, however, that Mitchell had waived its exemption defense by failing to plead it in the answer.

A claim of exemption is an affirmative defense, which must be specifically pleaded. See Rachbach v. Cogswell, 547 F.2d 502, 505 (10th Cir.1976). Failure to raise the defense in a responsive pleading, however, does not necessarily result in waiver. Federal Rule of Civil Procedure 15(b) provides that "[w]hen issues not raised by the pleadings are tried by express or implied consent of the parties, they [are] treated in all respects as if they had been raised in the pleadings." The parties in this case agreed to treat the exemption defense as a legal issue ⁵ within a motion for judgment as a matter of law. Suiter was fully aware of Mitchell's intent to raise the issue and was given the opportunity to present his arguments in a written response to Mitchell's renewed motion for judgment as a matter of law. Cf. Hardin v. Manitowoc-Forsythe Corp., 691 F.2d 449, 456 (10th Cir.1982) ("The test of consent is whether the opposing party had a fair opportunity to defend and whether he could have presented additional evidence had he known sooner the substance of the amendment."). By arguing the applicability of the exemption on the merits, Suiter consented to the litigation of the issue. See, e.g., Ringuette v. City of Fall River, 146 F.3d 1, 4-6 (1st Cir.1998); United States v. Banks, 115 F.3d 916, 918 n. 4 (11th Cir.1997), cert. denied, --- U.S. ----, 118 S.Ct. 852, 139 L.Ed.2d 752 (1998); Bailey v. Northern Ind. Pub. Serv. Co., 910 F.2d 406, 412 (7th Cir.1990). We therefore address the merits of Mitchell's argument that it was exempt from the odometer disclosure requirements.

The Odometer Act requires "a person transferring ownership of a motor vehicle" to give the "transferee" an accurate, written disclosure of the vehicle's odometer reading or, if the transferor knows the odometer reading is incorrect, a written disclosure that the actual mileage is unknown. 49 U.S.C. § 32705(a)(1). The term "motor vehicle" is defined broadly as "a vehicle driven or drawn by mechanical power and manufactured primarily for use on public streets, roads, and highways, but does not include a vehicle operated only on a rail line." Id. § 32101(7). The Act further provides that regulations prescribed by the Secretary of Transportation ("Secretary") shall provide the "way in which information is disclosed and retained." Id. § 32705(a)(1).

Shortly after the Act was passed, the Secretary, through the National Highway Traffic Safety Administration, promulgated regulations relating to the disclosure of odometer information. The Secretary exempted transferors of certain classes of vehicles from the odometer disclosure requirements. ⁶ See 49 C.F.R. § 580.17. At issue in this case is the regulatory exemption for vehicles with a GVWR of more than 16,000 pounds. See id. § 580.17(a)(1).

Mitchell argues it was exempt from the odometer disclosure requirements because the Coach weighs in excess of 16,000 pounds....