American Honda Motor Co., Inc. v. Boyd

• Decision Date: 03 July 1985
• Citation: 475 So.2d 835
• Parties: 41 UCC Rep.Serv. 410 AMERICAN HONDA MOTOR COMPANY, INC., a corporation v. Donna M. BOYD. 83-1053.
• Court: Alabama Supreme Court

Page 835

475 So.2d 835

41 UCC Rep.Serv. 410

AMERICAN HONDA MOTOR COMPANY, INC., a corporation v. Donna M. BOYD.

83-1053.

Supreme Court of Alabama.

July 3, 1985

Rehearing Denied Aug. 30, 1985.

Robert M. Girardeau, Birmingham, for appellant.

J. Earl Smith, Dothan, for appellee.

ADAMS, Justice.

This is an appeal by defendant, American Honda Motor Co., Inc. (American Honda), from a judgment entered on a jury verdict which required defendant to pay $65,000.00 damages to plaintiff, Donna Boyd. We affirm.

Boyd purchased an automobile which she thought was new, but which she later discovered had been damaged and repaired prior to sale. More precisely, Donna Boyd and her husband went to the Smith Brothers Toyota dealership seeking a new car. After looking at a Honda Accord and test driving it, the Boyds decided to buy the car. This decision was made even though the car had not been cleaned up, and still had the protective film on it.

Subsequent to purchase, Boyd's husband noticed a rattle in the passenger-side door and window. Boyd found that it was difficult to open that door or to roll the window up and down. Also, Boyd's husband noticed that the paint on the passenger side of the car did not seem to match. He took the car to a body repair shop, and was informed that the car had been damaged and repaired. Based upon this information, Boyd's husband took the car back to Smith Brothers Toyota in an attempt to receive an adjustment in the purchase price, or a new car. He talked with Tom Smith at Smith Brothers, who, after having been shown the problems with the car, called the distributor, American Honda, to find out what had happened. American Honda informed Smith that en route to the United States the car had been damaged, but that it had been repaired at the port of entry prior to its shipment to Smith Brothers. Tom Smith testified that he was advised by American Honda to satisfy the customer and notify it if a reasonable solution could not be reached.

Smith and the Boyds could not agree upon a solution that was satisfactory to both parties, and, as a result, Donna Boyd filed suit against Smith Brothers Toyota and American Honda, seeking money damages based on fraud and deceit and breach of warranty. At the close of the evidence, Smith Brothers Toyota filed a motion for directed verdict, which was granted by the court. The jury then returned a verdict, against American Honda for $65,000.00. Judgment was entered in accordance with the verdict. American Honda filed a motion for judgment notwithstanding the verdict and a motion for new trial, which the court denied. This appeal followed.

Appellant American Honda raises three issues for our review:

I. Whether plaintiff proved a case of intentional fraud and deceit, thereby supporting the award of punitive damages;

II. Whether evidence of a breach of warranty supported plaintiff's recovery against American Honda;

III. Whether the trial court committed reversible error with regard to certain rulings and charges.

I.

American Honda argues that this case should fall within the narrow exception discussed by this Court in Boulevard Chrysler-Plymouth, Inc. v. Richardson, 374 So.2d 857 (Ala.1979). In that case the appellant/car dealer argued that this Court should adopt an objective legal definition of "new car," specifically "a motor vehicle for which there has been no prior retail purchaser and which has not suffered a substantial collision with another vehicle or object." In response, this Court stated:

Not only do we decline to adopt Appellants' proposed definition of "new car," we feel that a legal definition is ordinarily unnecessary to the orderly disposition of these cases. Admittedly, extreme facts can be posed at either end of the issue, where, in one case, the car is undisputedly a new car (e.g., minor adjustment or repair which does not alter the car's condition from that normally and reasonably expected by a "new" car purchaser); while, at the other extreme, the car is obviously not "new" (e.g., a previous owner or major alterations and repairs resulting from the wreck of the vehicle).

We are not saying that in certain extreme circumstances the courts should not apply an objective legal test as determinative of the "new car" issue, though we think the occasion for such application would be exceedingly rare. Ordinarily, the issue will be a factual one. Such is the case here. From the evidence, the jury was justified in concluding, "in accordance with reasonable expectations" standards, that this car was not new.

374 So.2d at 859.

American Honda asserts that, according to the facts of this case, the car should be declared a "new car," as only minor repairs had been made and they did not affect the value of the car. We disagree. Although there was evidence presented that the actual cost of the repairs to the automobile was $172.00, the Boyds offered expert testimony that the cost to properly repair the car would be approximately $550.00 to $600.00. The jury also heard expert testimony that the damages to this vehicle would be classified as major, rather than minor, damages. Finally, the jury had the opportunity to view the passenger-side door from the car to determine for itself the quality of the repairs that had been performed and the extent of the damage to the automobile.

In light of the foregoing, and our hesitance to adopt a categorical definition of "new car," we are of the opinion that the jury had sufficient evidence before it to determine that the subject automobile was not a "new car." Since the question of whether the car, after being damaged and repaired, was in fact a "new car" was properly submitted to the jury for determination based upon the evidence presented, we focus our attention on whether the jury's award of punitive damages was supported by the evidence.

American Honda argues that, for the jury to receive the issue of punitive damages, there must be proof that American Honda knowingly and intentionally made a false statement of a material fact with an intent to injure Donna Boyd and that such misrepresentation was gross, malicious, or oppressive. This, however, is not an accurate statement of the law in Alabama.

This precise issue was discussed thoroughly in the case of Ex parte Lewis, 416 So.2d 410 (Ala.1982), wherein Justice Jones, in his special concurrence, stated:

The elements which, when proved, sustain an action in deceit and the concomitant recovery of punitive damages, are set out at § 6-5-103, which states in part:

"Willful misrepresentation of a material fact made to induce another to act, and upon which he does act to his injury, will give a right of action.... In all cases of deceit, knowledge of a falsehood constitutes an essential element. A fraudulent or reckless representation of facts as true, which the party may not know to be false, if intended to deceive, is equivalent to a knowledge of the falsehood."

....

Deceit, ... as contemplated by § 6-5-103, is an intentional tort which, when proved to the satisfaction of the finder of fact, will support an award of punitive damages. International Resorts, Inc. v. Lambert, 350 So.2d 391 (Ala.1977). Absent an initial finding of the essential element of "knowledge of a falsehood," however, there can be no determination of an intent to deceive; and, therefore, the factfinder would be precluded, as a matter of law, from awarding punitive damages. See Mobile Dodge, Inc. v. Waters, 404 So.2d 26 (Ala.1981).

It is the finding of intent to deceive, which must be based upon the initial finding of knowledge of the falsity of the material representation, that triggers the discretionary power of the factfinder to award punitive damages. It is a misinterpretation of the cases to require that the incidents of grossness, oppressiveness, and maliciousness be found as additional elements to be superimposed upon the statutory requisite of intent to deceive, in order to warrant punitive damages.

This is the reason for the clarifying language in Shiloh Construction Co., Inc. v. Mercury Construction Corp., 392 So.2d 809 (Ala.1980):

"Once an intent to deceive has been established it is difficult to see but that a fraud was committed grossly. Randell v. Banzhoff, 375 So.2d 445 (Ala.1979); Hall Motor Co. v. Furman [285 Ala. 499, 234 So.2d 37 (1970) ]. [Emphasis added.]"

416 So.2d at 411-413.

It is well settled, therefore, that if the evidence establishes an intent to deceive or defraud, then punitive damages are recoverable. Courtesty Ford Sales, Inc. v. Clark, 425 So.2d 1075 (Ala.1982); Big Three Motors, Inc. v. Smith, 412 So.2d 1222 (Ala.1982). This principle was espoused over 100 years ago in the case of Munroe v. Pritchett, 16 Ala. 785 (1849), where this Court held that punitive damages are justified if a misrepresentation is made by one knowing that it is false.

In the case before us, it is undisputed that American Honda represented that the subject automobile was a "new car," when it in fact had suffered what has been termed "major" damage. Once the jury found that the car was not a "new car," it was not difficult then to find that American Honda was guilty of intentionally misrepresenting the condition of the car to the Boyds.

It has long been the rule in Alabama that jury verdicts carry with them a presumption of correctness, and that this presumption is strengthened when the trial court denies a motion for new trial. Carroll Kenworth Truck Sales, Inc. v. Leach, 396 So.2d 1044 (Ala.1981); Walker v. Cardwell, 348 So.2d 1049 (Ala.1977). American Honda has failed to convince this Court that we should abandon this rule in the instant case. Therefore, we are of the opinion that the jury's award of punitive damages was justified.

II.

American Honda next argues that there was a complete lack of evidence to support a verdict based on a breach of warranty claim. We disagree.

Mike Boyd, Donna Boyd's husband, testified that he told the salesman at Smith Brothers Toyota,...