Ferris v. Haymore, s. 91-1412
| Decision Date | 22 July 1992 |
| Docket Number | Nos. 91-1412,91-1420,s. 91-1412 |
| Citation | 967 F.2d 946 |
| Parties | Alfred J. FERRIS, Plaintiff-Appellant, v. Dean HAYMORE; Lucille Inman, Defendants-Appellees, Western Surety Company, Defendant & Third Party Plaintiff-Appellee, and Carl Edward Simmons, d/b/a Simmons Auto Sales, individually; Clarence B. Inman, "Bill," t/a Inman Motors; Myrtle Inman; Dorothy M. Simmons, Defendants. Alfred J. FERRIS, Plaintiff-Appellee, v. WESTERN SURETY COMPANY, Defendant & Third Party Plaintiff-Appellant, and Dean Haymore; Lucille Inman; Carl Edward Simmons, d/b/a Simmons Auto Sales, individually; Clarence B. Inman, "Bill," t/a Inman Motors; Myrtle Inman, Defendants, v. Dorothy M. SIMMONS, Third Party Defendant. |
| Court | U.S. Court of Appeals — Fourth Circuit |
William Henry Shewmake, Coates & Davenport (Malcolm P. McConnell, Coates & Davenport, Anton J. Stelly, Thompson, Smithers, Newman & Wade, Richmond, Va., on the brief) for plaintiff-appellant.
William Watts Walker, Craige, Brawley, Liipfert & Ross, Winston-Salem, N.C., for defendants-appellees.
Before WIDENER and LUTTIG, Circuit Judges, and RESTANI, Judge, United States Court of International Trade, sitting by designation.
Alfred J. Ferris appeals and Western Surety Company crossappeals from a judgment of the United States District Court for the Middle District of North Carolina in an action arising out of the fraudulent rollback of an automobile odometer. Ferris, the purchaser of the automobile, appeals various rulings of the district court that reduced his recovery. Western cross-appeals the court's refusal to grant summary judgment in its favor and the court's failure to reduce the judgment against Western by amounts Ferris received in pretrial settlements. We affirm in part, reverse in part, and remand.
Alfred Ferris bought a 1980 Buick from a Richmond, Virginia, automobile dealer in November 1983 for $7,995, after having been assured by the dealer that the odometer was accurate. The odometer reflected that the automobile had previously been driven 33,393 miles. See J.A. at 402. In December 1983, after Ferris began experiencing costly mechanical problems with the car, he contacted the Virginia Division of Motor Vehicles (VDMV). See id. at 517. By letter dated January 21, 1985, VDMV informed Ferris that he might be a victim of odometer fraud. Id. at 493-94. A subsequent review of the automobile's title history showed that it had actually been driven 70,930 miles at the time that he purchased it. See id. at 393. The fair market value of the automobile at the time of his purchase was in fact only $4,850. See id. at 337.
Ferris sued the Richmond dealer from whom he had purchased the automobile in the United States District Court for the Eastern District of Virginia, and the dealer settled the suit with Ferris for $6,000. Id. at 497-99.
Ferris then brought an action in the United States District Court for the Middle District of North Carolina against Carl Simmons, Bill Inman, Dean Haymore, and Western Surety Company. See id. at 1219. He subsequently joined Lucille Inman as a fifth defendant. See id. at 23-31. Simmons, Lucille Inman, and Haymore owned and operated two dealerships in the automobile's chain of title; Western provided surety bonds to both dealerships. Before trial, default judgment was entered against Lucille Inman and Haymore for failure to respond to the complaint, see id. at 62-63, and Ferris settled with Simmons for $5,000 and voluntarily dismissed his claim against Bill Inman, see id. at 151, 287, 334-35.
The district court, by memorandum opinion on April 26, 1988, granted Western's motion to dismiss Ferris' direct claims against it under the federal and state odometer laws. See id. at 157. The court also granted Western's motion to dismiss Ferris' claim for treble or punitive damages and attorney fees. See id. at 157-59. It denied motions for summary judgment on other issues filed by both parties. See id. at 161.
Following a bench trial in December 1988, the district court held that Haymore and Lucille Inman had violated the federal and state odometer laws. Based upon its finding that Ferris had suffered actual damages of $3,712.84, the court awarded Ferris treble damages of $11,138.52 under federal law, and additional treble damages of $11,138.52 under state law. The court then deducted from the resulting $22,277.04 the $11,000 paid to Ferris in prior settlements and added $3,090.40 in prejudgment interest, which resulted in a total judgment of $14,317.44 against Haymore and Lucille Inman. See id. at 343-46. The court later ordered Haymore and Lucille Inman to pay Ferris $17,207.25 in costs and attorney fees. See id. at 358-59.
The court held that Western's liability should be limited to Ferris' actual damages. It therefore ordered Western to pay $3,712.84--plus 9.43 percent postjudgment interest. Western was not ordered to pay treble damages, costs, or attorney fees. See id.
From the district court's judgment, Ferris appealed, and Western cross-appealed.
We first address four claims by Western which, if we were to accept them, would entitle Western to complete relief from the district court's judgment. We reject each of these claims.
Western first argues that Ferris cannot recover against it as a matter of law because under the North Carolina suretyship statute, its "bond applies only to purchasers from Western's principal" and Ferris did not purchase the 1980 Buick from either Simmons or Haymore and Inman, Western's principals. Appellee's Br. at 9. Western contends that "the requirement that all North Carolina dealers have similar bonds" makes it "reasonable to assume that [the suretyship statute] intended to provide bond protection only to persons who dealt directly with the dealer." Id. at 12. 1
North Carolina's motor vehicle dealer suretyship statute provides a cause of action against both the dealer and surety to "[a]ny purchaser" of a motor vehicle who suffers loss or damage as a result of a dealer's violation of the state's odometer law. N.C.Gen.Stat. § 20-288(e). 2 Consistent with the plain language of the statute, North Carolina courts have refused relief to injured parties who did not "purchase" an illegally altered vehicle. See Taylor v. Johnson, 84 N.C.App. 116, 351 S.E.2d 831, 834 (1987) (); Fink v. Stallings 601 Sales, Inc., 64 N.C.App. 604, 307 S.E.2d 829, 831 (1983) (); Triplett v. James, 45 N.C.App. 96, 262 S.E.2d 374, 375-76 (), review denied, 300 N.C. 202, 269 S.E.2d 621 (1980); cf. NCNB Nat'l Bank v. Western Sur. Co., 88 N.C.App. 705, 364 S.E.2d 675, 676-77 (1988) (). No court, however, as Western concedes, see Appellee's Br. at 11, has ever defined "purchaser" so as to exclude a downstream purchaser who did not purchase his automobile directly from the surety's principal. Indeed, no court has ever held that any purchaser of a vehicle was without a cause of action under the statute. The North Carolina courts understandably have hewed closely to the plain language of section 20-288(e), which creates a cause of action against the dealer and surety for any purchaser, and we have neither authority nor reason to narrow the broad class of purchasers protected by the statute's plain language. 3 Accordingly, we decline to engraft onto section 20-288(e) what in effect would be a requirement of privity between dealer and complainant. See Appellant's Reply Br. at 6.
Western next argues that Ferris' 1980 Buick was not a "motor vehicle" within the meaning of the North Carolina suretyship statute. Appellee's Br. at 11-12. The North Carolina statute provides a cause of action only to the purchaser of a "motor vehicle," which is defined as "any motor propelled vehicle ... required to be registered under the laws of this State." N.C.Gen.Stat. § 20-286(10). Western would have us read this statutory definition to exclude vehicles purchased outside of North Carolina. We decline to interpret the statute in the restrictive manner urged by Western. The statute could not be clearer that it includes all motor propelled vehicles that are required to be registered in North Carolina. The 1980 Buick sold to Ferris was required to be registered under North Carolina law at least prior to or during the time when Haymore and Inman owned the vehicle, if not immediately following its sale to Ferris. Haymore and Inman could not otherwise "cause or permit" the vehicle "to be operated or moved upon a public highway" in North Carolina. Id. § 20-79(c). The Buick therefore was a "motor vehicle" within the meaning of N.C. Gen.Stat. § 20-286(10).
Western's final argument with respect to N.C.Gen.Stat. § 20-288(e) is that nonresidents of North Carolina such as Ferris are not entitled to sue on Western's bond with the automobile dealers because the bond's terms bind Western only "unto the people of the State of North Carolina." 4 ] Appellee's Br. at 12. Western's contractual obligation may be only unto the people of North Carolina, but the scope of its obligation is defined by the state's suretyship statute and, to the extent not inconsistent with that statute, the terms of the bond itself. 5 Both the North Carolina statute and the bond unmistakably obligate Western to indemnify dealers on claims by residents and nonresidents. The statute creates a cause of action in favor of "any purchaser," which includes in-state and out-of-state purchasers, and the bond correspondingly obligates Western to "indemnify any person who may be aggrieved by fraud." J.A. at 434 (emphasis added). Neither the language of the statute nor that of the bond permits an interpretation that would confine the surety's obligation to in-state residents. See Mawyer v. Lumbermens Mut. Cas. Co., 237 Va. 299, 377 S.E.2d 401, 403 (198...
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