Lawrence v. Intermountain, Inc.

• Decision Date: 04 November 2010
• Docket Number: No. 20080835-CA.,20080835-CA.
• Parties: Cindy LAWRENCE, Wilma L. Schwenke, Tania P. Schwenke, and Wayne Wong, Plaintiff, Counterclaim Defendant, and Appellant, v. INTERMOUNTAIN, INC. dba Intermountain Isuzu; Isuzu LT, Isuzu Motors Acceptance Corporation; and Bank of America, N.A., Defendant, Counterclaimant, Third-party Plaintiff, and Appellee, v. Victor Lawrence; A. Paul Schwenke; and cSave.net, LLC, Third-party Defendant and Appellant.
• Court: Utah Court of Appeals

243 P.3d 508 Cindy LAWRENCE, Wilma L. Schwenke, Tania P. Schwenke, and Wayne Wong, Plaintiff, Counterclaim Defendant, and Appellant, v. INTERMOUNTAIN, INC. dba Intermountain Isuzu; Isuzu LT, Isuzu Motors Acceptance Corporation; and Bank of America, N.A., Defendant, Counterclaimant, Third-party Plaintiff, and Appellee, v. Victor Lawrence; A. Paul Schwenke; and cSave.net, LLC, Third-party Defendant and Appellant. No. 20080835-CA. Court of Appeals of Utah. Nov. 4, 2010.

Donald J. Winder and Lance F. Sorenson, Salt Lake City, for Appellants.

P. Bryan Fishburn, Salt Lake City, for Appellee.

Before Judges DAVIS, VOROS, and CHRISTIANSEN.

OPINION

DAVIS, Presiding Judge:

¶ 1 Victor and Cindy Lawrence appeal the trial court's judgment in favor of IntermountainIsuzu (Intermountain). They primarily argue that the trial court erroneously determined that they are liable for (1) conspiracy to defraud, (2) conversion, and (3) punitive damages. We affirm.

BACKGROUND ¹

¶ 2 In late 1999, A. Paul Schwenke, a business client of Mr. Lawrence, established cSave.net, LLC. Several months later, Schwenke decided to lease three vehicles for the personal use of his wife, his daughter, and the Lawrences. Mr. Lawrence helped Schwenke in this endeavor, contacting a car dealership in Bountiful to discuss leasing arrangements. But then Schwenke explored leasing possibilities with Intermountain, and the vehicles were ultimately leased from that dealership. Mr. Lawrence was present for some negotiations with Intermountain, and at one point he advised Schwenke to go to the Bountiful dealership if Intermountain would not meet the terms that the Bountiful dealership had offered. Mrs. Lawrence was also involved in the lease negotiations at some level, at least enough to know approximately how much the monthly lease payments on the vehicles would be.

¶ 3 Although Schwenke apparently first contacted Intermountain on behalf of cSave.net, cSave.net never had good credit or assets of any significance and the leases were ultimately not signed on behalf of cSave.net. Rather, Schwenke, his wife, his daughter, and Mrs. Lawrence offered $10,000 to Wayne Wong, who worked for cSave.net, to use his credit-worthiness and sign the leases. This arrangement was not, however, disclosed to Intermountain. With no intention of making the lease payments, Wong signed the contracts to lease three new Isuzu Rodeos on March 31, 2000. And to cover a cash down payment of $1,000 on each of the three leased vehicles, Mr. Lawrence wrote a personal check for $3,000, for which he was eventually reimbursed. At this point, the Lawrences took possession of one of the three leased vehicles-a black Isuzu Rodeo.

¶ 4 Shortly after the leases were signed, Intermountain sold the lease for the black Rodeo to Bank of America and the leases for the other two Rodeos to Isuzu Motors Acceptance Corporation/Isuzu LT (Isuzu). Soon thereafter, on May 25, 2000, Plaintiffs-Schwenke's wife, Schwenke's daughter, Wong, and Mrs. Lawrence-filed their complaint against Defendants-Intermountain, Bank of America, and Isuzu-asserting various causes of action, including breach of contract. Plaintiffs' complaint sought to enjoin Defendants from enforcing the three lease agreements, that is, from "declar[ing] the leases in default and repossess[ing] the vehicles."

¶ 5 After no payments were made on any of the three Rodeos for several months, and after Wong ignored several notices and demand letters, Intermountain was forced to repurchase the leases from Bank of America and Isuzu. After regaining ownership of the Rodeos, Intermountain attempted to repossess them. Intermountain tried to repossess the black Rodeo on January 31, 2001, while it was parked outside Mr. Lawrence's office. The owner of Intermountain, George Watkins, was present for the attempted repossession and showed Mr. Lawrence documentation evidencing Intermountain's right to the black Rodeo. But Mr. Lawrence refused to turn the black Rodeo over without a court order and then assaulted Watkins, putting him in a headlock and causing minor injuries. Immediately after the attempted repossession, Mr. Lawrence turned the black Rodeo over to Schwenke, knowing that the vehicle's lease was in default and knowing that Schwenke had no right to possess the vehicle. Schwenke then allowed a family member to drive the black Rodeo to California, where it was thereafter totaled in an accident.

¶ 6 In May 2001, Intermountain counterclaimed against Plaintiffs and initiated claims against Third-party Defendants-Schwenke, Mr. Lawrence, and cSave.net-pleading causes of action that included fraud, conspiracy to defraud, and conversion. Also in May 2001, Intermountain served interrogatories on Wong, the Schwenkes, and the Lawrences in an attempt to discover the location of the leased vehicles. Shortly thereafter, Mr. Lawrence entered an appearance as counsel, representing himself, his wife, Wong, and the Schwenkes. Mr. Lawrence then purposefully delayed the proceedings by attempting to remove the case to federal court despite the fact that removal would have been improper.² Thus, Intermountain did not obtain a Writ and Order of Replevin on the black Rodeo until October 5, 2001. And it was not until the trial court entered a contempt order and Plaintiffs were faced with jail time that they finally answered the interrogatories intended to reveal the location of the vehicle. The completely totaled black Rodeo was eventually returned to Intermountain in 2002.³

¶ 7 Each of Plaintiffs' causes of action was eventually dismissed on motions for summary judgment, and the trial court characterized the lawsuit as "designed to impede Intermountain's efforts to recover the vehicle[s]." The trial court also determined that Mr. Lawrence had filed a similar lawsuit on behalf of himself, his wife, and the Schwenkes regarding a similar leasing deal with another automobile dealership, West Valley Dodge. In that case, (1) another entity owned by Schwenke arranged the leasing of three vehicles; (2) one of those vehicles was given to the Lawrences to use; (3) payments were not made on the leased vehicles; (4) shortly after the vehicles were leased, Mr. Lawrence filed a lawsuit against the dealership in an attempt to assert rights to continued possession of the vehicles; and (5) the vehicles were ultimately repossessed-less than one month before the Lawrences and the Schwenkes leased the vehicles at issue here from Intermountain.

¶ 8 A bench trial on Intermountain's claims was held in June 2007. The trial court held Wong liable for fraud and held the Lawrences liable for conspiracy to defraud and conversion. The three were held jointly and severally liable for $138,267.25, which included prejudgment interest. The trial court also determined that punitive damages were warranted against Wong and the Lawrences, and another bench trial was held in March 2008 to determine the amount of punitive damages. The resulting awards of punitive damages were $138,267.25 against Wong, $484,000.00 against Mr. Lawrence, and $99,999.99 against Mrs. Lawrence. The Lawrences now appeal.

ISSUES AND STANDARDS OF REVIEW

¶ 9 The Lawrences initially argue that the trial court erred, as a matter of law, in determining that they were liable for conspiracy to commit fraud. We review this question of law for correctness, granting the trial court no deference. See State v. Pena, 869 P.2d 932, 936 (Utah 1994).

¶ 10 Second, the Lawrences argue that the trial court erred in holding them liable for conversion because Intermountain did not have rights to the vehicle prior to January 31, 2001, and they "relinquished possession" on that date. Whether the facts establish the elements of conversion is a question of law, see Nielsen v. Spencer, 2008 UT App 375, ¶ 12, 196 P.3d 616 (treating as questions of law arguments "ask[ing] us to interpret and apply the elements of [a tort]"), which we review for correctness, see Pena, 869 P.2d at 936.

¶ 11 Third, the Lawrences argue that the punitive damages awards against them are excessive under both state law and the federal constitution. In Crookston v. Fire Insurance Exchange, 817 P.2d 789, 808 (Utah 1991), the Utah Supreme Court "enunciated seven factors to be analyzed in evaluating whether a punitive damage award is excessive" under state law.Smith v. Fairfax Realty, Inc., 2003 UT 41, ¶ 32, 82 P.3d 1064. And the Utah Supreme Court "has adopted a de novo standard for reviewing jury and trial court conclusions under the Crookston factors." Id. ¶ 31; see also Diversified Holdings, LC v. Turner, 2002 UT 129, ¶ 5, 63 P.3d 686. Likewise, " 'the question whether a [punitive damages award] is constitutionally excessive calls for the application of a constitutional standard to the facts of a particular case, and in this context de novo review of that question is appropriate.' " Cooper Indus., Inc. v. Leatherman Tool Grp., Inc., 532 U.S. 424, 435, 121 S.Ct. 1678, 149 L.Ed.2d 674 (2001) (emphasis omitted).

ANALYSIS

I. The Legal Requirements of Conspiracy to Defraud

¶ 12 The trial court determined that the Lawrences had participated in a conspiracy to defraud Intermountain of the use of the three Rodeos, and the trial court held the Lawrences liable for the damages flowing from the fraudulent scheme. "To prove a civil conspiracy, plaintiff must show the following elements: (1) a combination of two or more persons, (2) an object to be accomplished, (3) a meeting of the minds on the object or course of action, (4) one or more unlawful, overt acts, and (5) damages as a proximate result thereof." Israel Pagan Estate v. Cannon, 746 P.2d 785, 790 (Utah Ct.App.1987). The Lawrences argue that the facts here did not support the trial court's determination that they met each element of conspiracy to defraud, specifically, that there was a meeting of the minds regarding the fraud committed by Wong.⁴ We agree with the trial court that sufficient facts showed the Lawrences' "knowing and intentional participation...