Art Hill Ford, Inc. v. Callender

• Decision Date: 30 June 1980
• Docket Number: No. 3-879A217,3-879A217
• Citation: 406 N.E.2d 340
• Parties: ART HILL FORD, INC., Defendant-Appellant, v. Kenneth CALLENDER and Jeannette Callender, Plaintiffs-Appellees.
• Court: Indiana Appellate Court

Page 340

406 N.E.2d 340

ART HILL FORD, INC., Defendant-Appellant, v. Kenneth CALLENDER and Jeannette Callender, Plaintiffs-Appellees.

No. 3-879A217.

Court of Appeals of Indiana, Third District.

June 30, 1980.

Joel C. Levy and Gregory R. Lyman, Singleton, Levy & Crist, Highland, for defendant-appellant.

Robert M. Schwerd and William J. Cunningham, Smith, Hilbrich, Cunningham & Schwerd, Highland, for plaintiffs-appellees.

GARRARD, Presiding Judge.

Kenneth Callender and his mother Jeannette Callender brought this action against Art Hill Ford, Inc. and Ford Motor Company alleging breach of warranty and negligence. The jury returned a verdict against both defendants. Compensatory damages were assessed against Art Hill Ford in the amount of $2,411.00 and punitive damages were assessed in the amount of $7,000.00. Against Ford Motor Company compensatory damages were assessed in the amount of $4,822.00. The trial court entered judgment on the verdict as to Art Hill Ford and, after a remittitur, entered judgment against Ford Motor Company for $2,411.00. Ford tendered $2,439.00 (the judgment plus costs) to the Callenders and the trial court entered an order of satisfaction of the judgment on the compensatory damages as to both Art Hill Ford and Ford Motor Company. ¹

Art Hill Ford, on appeal, challenges the award of punitive damages. It contends that the evidence is insufficient to sustain the award.

Punitive damages have been held recoverable in contract actions where the evidence independently establishes the element of an intentional common law tort or where the elements of fraud, malice, gross negligence or oppression mingle in the controversy. In addition, it must be shown that the public interest will be served by the deterrent effect of the punitive damages. Hibschman Pontiac, Inc. v. Batchelor (1977), 266 Ind. 310, 362 N.E.2d 845; Vernon Fire & Casualty Ins. Co. v. Sharp (1976), 264 Ind. 599, 349 N.E.2d 173.

While a party establishing a breach of contract is entitled to compensatory damages, he must show more to recover punitive damages. He must show that the breaching party has committed a serious wrong tortious in nature. Hibschman, supra. An award of punitive damages cannot be sustained by a showing of mere negligence, mistake or delay. The conduct which will support such an award is conduct which can be classified as reprehensible in nature. Prudential Insurance Co. v. Executive Estates (1977), Ind.App., 369 N.E.2d 1117.

"Punitive damages are appropriate where there is evidence of an independent tort of a 'reprehensible' nature, where the record indicates a state of mind evidencing bad faith, or where the actor's conduct has a quality that characterizes it as 'reprehensible' as where there is evidence of a consciousness of an intended or probable effect calculated to unlawfully injure the personal safety or property rights of others."

First Federal Savings and Loan Assoc. v. Mudgett (1979), Ind.App., 397 N.E.2d 1002, 1008.

Our extensive review of the evidence in the case before us has failed to reveal evidence to sustain a finding of either the necessary independent tort or of a serious wrong tortious in nature.

The evidence in the light most favorable to the verdict reveals that Kenneth Callender purchased a 1976 Ford four-wheel drive pickup truck designed for off-road use from Art Hill Ford on April 20, 1976. Two days later, while driving off the road, the front axle broke. Due to the nature of the damage, Art Hill Ford had the vehicle inspected by a Ford Motor Company representative so that repair could be authorized under the warranty before work began. The representative inspected the truck and authorized the repair in the last week of April. After the work was authorized, the Callenders were told that the parts had to be ordered and would take 10 days to two weeks to arrive. In Mid-May, Kenneth contacted Art Hill Ford and was told that the parts had not arrived and were on back order. Art Hill Ford was contacted on a regular basis thereafter and each time the Callenders were told that the parts were still on back order. Kenneth was told on several occasions that the truck would be ready the "next week." At the end of May, Mrs. Callender was told that the truck would definitely be repaired by the Fourth of July holiday weekend. On July 2, Kenneth was permitted to take the truck although the repair to the front axle was not yet completed since a part had not come in. Because the truck was not completely repaired, some restrictions were imposed on the use of the truck.

Art Hill Ford blamed the delay in fixing the truck on the difficulty in obtaining the necessary parts. The parts manager testified that the part was not in stock in any Ford parts depot in the United States and that a front axle was not a part that a dealer would normally have in stock. Further compounding the difficulty was the fact that the incident occurred just prior to a new model year. The parts manager testified that he made numerous calls to Ford and other dealers around the country in order to locate the necessary parts.

Over the Fourth of July holiday, the Callenders went on a trip to Benton Harbour, Michigan in the truck. On the way, Kenneth noticed a strange noise he later determined to be a problem with the transfer case. He returned the truck to Art Hill Ford on July 19th and was told that the truck would be repaired.

Kenneth, who had training in automotive repair, testified that the transfer case should have been inspected and repaired when the front axle was repaired. He stated that when the front housing of the axle breaks, the drive shaft will go back up in the transfer case causing damage. Art Hill Ford admittedly did not inspect or repair the transfer case when the axle was repaired. The testimony of Ford Motor Company witnesses, who also were qualified as experts, was that if the axle had broken under the circumstances as described by Kenneth, the transfer case would not have been damaged and there would be no reason to inspect it.

Repairs to the transfer case were not completed until October 18, 1976. Again the necessary parts were not normally kept in stock by a dealer. Nor were the parts available from any Ford parts depot in the United States. The parts manager at Art Hill Ford again had to call Ford Motor Company and other dealers several times attempting to obtain the various parts. Besides the difficulties encountered because of the change in the model year, further problems arose in September because of a strike at Ford Motor Company during which no parts could be delivered.

Mrs. Callender contacted the Ford MOtor Company's customer service department located in Melrose Park, Illinois. This department was also unable to obtain the necessary parts to repair the truck. Eventually the major part necessary for repair was obtained by Melrose Park from a dealer in Oklahoma. After this part was delivered, Mrs. Callender was told by Art Hill Ford that the truck would be ready on September 24. However, Art Hill Ford subsequently discovered that additional parts were needed to complete the repair. These parts also had to be ordered causing an additional delay.

Kenneth testified that he knew that the repair was a major one and it was difficult to tell what was wrong until the unit was taken apart and put together again.

Kenneth testified that the salesmen he dealt with and the parts department were fair and cooperative. The salesmen tried to help him and showed concern for him as a customer. They were not happy that the parts could not be located to fix the truck. Kenneth thought that Art Hill Ford had made a sincere effort to find the parts. However, he testified that he felt he was being ignored in that when he and his mother would enter the dealership everyone would take off running. He also felt that Art Hill did not cooperate with them and Melrose Park in their attempt to obtain the parts. Kenneth further complained that Art Hill Ford would not use parts from other trucks or obtain used parts although he was aware and understood that the warranty required the use of new Ford parts. Kenneth also complained that Art Hill Ford did not offer the use of another vehicle while the truck was being repaired.

In August, Kenneth had "words" with the general manager of Art Hill Ford during a discussion concerning Mrs. Callender's car which was also in for repairs. Kenneth had accused Art Hill Ford of scratching this car. At one point during the discussion, the manager raised his fist at Kenneth and told him that he (Kenneth) did not know what he was talking about and had caused enough trouble. The manager stated that he wanted them both out of there. Both Callenders testified that this discussion did not concern the truck.

This suit was filed by the Callenders on October 15, 1976. Art Hill Ford telephoned Mrs. Callender on the 18th and told her that the truck could be picked up. This was verified by a letter addressed to Kenneth dated October 25.

On October 22, Art Hill Ford had the Ford representative, who had authorized the repair under warranty on the axle, inspect the truck to see if it was acceptable or deliverable. This was done because the Callenders had been notified and had not picked up the truck. In December, the attorney for Art Hill Ford wrote the following letter to the Callenders' attorney:

"As I advised you on December 8, 1976, the plaintiffs' vehicle was repaired on October 18, 1976 and by letter of that date they were advised that they could pick up the vehicle. I have also advised you that Art Hill Ford, Inc., pursuant to normal procedures because of the age of the vehicle, has tendered the claim under warranty to Ford Motor Company. In the event that Ford Motor Company does not accept the claim under warranty, it will be necessary for the plaintiffs to pay for the costs of repair.

It is our belief that the vehicle was abused by Kenneth Callendar (sic) in the way he operated the...