Bell v. W. Sur. Co.
| Decision Date | 25 April 2017 |
| Docket Number | No. WD 79835.,WD 79835. |
| Citation | 524 S.W.3d 109 |
| Parties | Rashaunda BELL, Respondent, v. WESTERN SURETY COMPANY, Appellant. |
| Court | Missouri Court of Appeals |
Lee R. Anderson, Kansas City, MO, Attorney for Respondent.
James S. Kreamer and Noemi F. Donovan, Kansas City, MO, Attorneys for Appellant.
Before Division Two: Thomas H. Newton, Presiding Judge, and James Edward Welsh and Karen King Mitchell, Judges
Western Surety Company (Surety) appeals the entry of judgment against it on Rashaunda Bell's petition for payment of money owed under a motor vehicle dealer bond issued by Surety and its principal, KC Trend Auto, in favor of the State of Missouri. Surety brings four points on appeal, all arguing that it should not have been held liable for the full amount of the bond ($25,000). Finding no error, we affirm.
KC Trend Auto was in the business of selling motor vehicles, and, as such, was required by § 301.117.12 to secure "a corporate surety bond in the amount of twenty-five thousand dollars and conditioned on the faithful performance of all requirements for the lawful obtaining or receiving of certificates of ownership for motor vehicles." KC Trend Auto secured the required bond from Surety. Per statute, "[t]he bond shall be an indemnity for any loss sustained by reason of the acts of the person bonded when such acts constitute grounds for the suspension or revocation of his license." § 301.117.2. The bond itself provided that Surety "shall indemnify any person dealing or transacting business with the Principal [KC Trend Auto] for any loss sustained by any person by reason of the acts of Principal provided such acts of Principal constitute grounds for suspension or revocation of Principal's license [to sell motor vehicles]."
On February 28, 2014, Bell attempted to purchase a vehicle from KC Trend Auto for $4,995. Bell paid KC Trend Auto $2,000 as a down payment and financed the balance. KC Trend Auto, however, never conveyed title for the vehicle to Bell, and the vehicle broke down shortly thereafter in a manner rendering it unusable. On March 10, 2014, Bell returned the vehicle to KC Trend Auto. Because Bell had never received any title, the financing company agreed to relieve Bell of her obligations under the finance contract. Bell demanded that KC Trend Auto refund her down payment, but KC Trend Auto refused.
On October 14, 2014, Bell filed a three-count petition against KC Trend Auto, alleging a violation of the Missouri Merchandising Practices Act and common law fraud, as well as seeking a declaration that the attempted sale was fraudulent and void. Despite being served on October 25, 2014, KC Trend Auto failed to respond to Bell's petition. On March 12, 2015, the court found KC Trend Auto to be in default and took evidence from Bell on her petition. On March 17, 2015, the court entered a judgment finding that KC Trend Auto "failed to provide the vehicle title to [Bell], in violation of Mo. Rev. Stat. § 301.210.4, and ... obtained money, barter and exchange from ... Bell, by fraud, deception and misrepresentation, all in violation of Sections 301.562.2(5) and 407.020 and 407.025." The court further found that, as a result of the violations, Bell was "entitled to recover ... [a]ctual damages in the amount of $30,399.72," which encompassed Bell's down payment, payments for insurance and a keyless entry for the vehicle, loss and restricted use of the vehicle, Bell's time and labor for having to seek and use alternate transportation and attempting to cope with and resolve KC Trend Auto's misconduct, lost income due to the inability at times to get to work because she lacked the vehicle, extreme inconvenience and embarrassment and emotional distress. The court further awarded Bell $5,093.63 in attorneys' fees, expenses, and costs, as well as $30,000 in punitive damages.
Thereafter, pursuant to § 301.560.1(3), Bell forwarded a copy of the judgment to the Missouri Department of Revenue to make a claim on the motor vehicle dealer bond. On April 9, 2015, the Department notified Surety of the judgment entered against its principal on the bond. Bell then made a demand upon Surety to pay the bond, but Surety refused. Accordingly, Bell filed a two-count petition against Surety, alleging violation of § 301.560 and vexatious refusal to pay.
Surety filed an answer, denying any refusal to pay; instead, Surety claimed "that it had the right to investigate the claim to determine whether the damages claimed were covered under the terms of the Bond." Surety claimed that "the damages asserted ... may not be recoverable under the terms of the Bond, including but not limited to damages for alleged emotional distress, because recoverable damages are limited to those that are a result of acts which could result in the suspension or revocation of a motor vehicle dealer's license." Surety sought partial summary judgment, arguing that Bell was "not entitled to recover her alleged damages for loss of use of the vehicle she attempted to purchase from KC Trend Auto, LLC nor is she entitled to recover alleged damages for emotional distress pursuant to the provisions of a motor vehicle dealer bond."
The trial court denied Surety's motion for partial summary judgment, and after a hearing, entered a judgment in favor of Bell on Count I (violation of § 301.560) and in favor of Surety on Count II (vexatious refusal to pay). Surety appeals.
"Appellate review of a court[-]tried case is governed by the standard set forth in Murphy v. Carron , 536 S.W.2d 30, 32 (Mo. banc 1976)." Woods of Somerset, LLC v. Developers Sur. and Indem. Co. , 422 S.W.3d 330, 334 (Mo. App. W.D. 2013). "The judgment of the trial court will be affirmed unless it is unsupported by substantial evidence, is against the weight of the evidence, or erroneously declares or applies the law." Id. "Evidence and inferences are viewed in the light most favorable to the trial court's judgment, and all contrary evidence and inferences are disregarded." Id.
Surety raises four points on appeal. First, Surety argues that the court erred in holding it "strictly liable" on the bond without allowing it to contest the damages awarded in the underlying tort suit. Second, Surety argues that the court erred in describing the motor vehicle dealer bond as a "judgment bond." Third, Surety argues that the court erred in determining that emotional distress damages were recoverable under the bond. And, finally, Surety claims that the court erred in determining that "loss of use" damages were recoverable under the bond. Because all of the claims are related, we address them together.
In Missouri, any person or entity that "conduct[s] a business, the purpose of which is to act as an agent for a fee in obtaining a certificate of ownership of a motor vehicle" must have a license to do so from the Department of Revenue. § 301.114.1. "The application for licensure shall be accompanied by a corporate surety bond in the amount of twenty-five thousand dollars and conditioned on the faithful performance of all requirements for the lawful obtaining or receiving of certificates of ownership for motor vehicles." § 301.117.1; see also § 301.560.1(3) (). "The bond shall be an indemnity for any loss sustained by reason of the acts of the person bonded when such acts constitute grounds for the suspension or revocation of his license." § 301.117.2; see also § 301.560.1(3) (). Section 301.562.2 identifies a variety of acts constituting grounds for suspension or revocation of a dealer's license; among them is "[o]btaining or attempting to obtain any money, commission, fee, barter, exchange, or other compensation by fraud, deception, or misrepresentation." § 301.562.2(5).
Bonds are to "be executed in the name of Missouri for the benefit of any aggrieved party; except, that the aggregate liability to all aggrieved parties shall, in no event, exceed the amount of the bond." § 301.117.2; see also § 301.560.1(3) (same). And "[t]he proceeds of the bond shall be paid upon receipt by the director of a final judgment from a court of competent jurisdiction against the principal and in favor of an aggrieved party." Id. ; see also § 301.560.1(3) (same). In short, "[t]he bond ... imposes liability based upon actions taken or not taken by [those] in the operation of the business of motor vehicle dealer." Walker v. W. Sur. Co. , 824 S.W.2d 456, 459 (Mo. App. S.D. 1992). The purpose of such bonds is "to [e]nsure compliance by ... a motor vehicle dealer[ ] with state statutes regulating the conduct of motor vehicle dealers." Id. at 460.
"If [a] surety is liable [on a motor vehicle dealer bond], that liability must accrue according to the terms of the bond construed in accordance with the statutory provision pursuant to which the bond was given."3 Id. at 459. "Under Missouri law, a surety's liability for ... damages is co-extensive with the liability of its principal." Sheffield Assembly of God Church, Inc. v. Am. Ins. Co. , 870 S.W.2d 926, 932 (Mo. App. W.D. 1994). And "a judgment against the principal, [even when] obtained [by default], absent fraud, collusion, or clerical error in its entry, is conclusive on the sureties." Home Ins....
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