Concorde Limousines, Inc. v. Moloney Coachbuilders, Inc.

• Decision Date: 23 December 1987
• Docket Number: No. 87-2008,87-2008
• Citation: 835 F.2d 541
• Parties: CONCORDE LIMOUSINES, INC., Plaintiff-Appellee Cross-Appellant, v. MOLONEY COACHBUILDERS, INC., Defendant-Appellant Cross-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 541

835 F.2d 541

CONCORDE LIMOUSINES, INC., Plaintiff-Appellee Cross-Appellant, v. MOLONEY COACHBUILDERS, INC., Defendant-Appellant Cross-Appellee.

No. 87-2008.

United States Court of Appeals, Fifth Circuit.

Dec. 23, 1987.

Larry Huelbig, Butler & Binion, Houston, Tex., for defendant-appellant cross-appellee.

Elena Maslia Marks, Mayor, Day & Caldwell, Houston, Tex., for plaintiff-appellee cross-appellant.

Appeals from the United States District Court for the Southern District of Texas.

Before WISDOM, GEE, and RANDALL, Circuit Judges.

WISDOM, Circuit Judge:

This appeal grows out of a dispute between a limousine retailer and its supplier. Moloney, the supplier, is an Illinois corporation that converts standard automobiles into limousines and sells them through dealers. Concorde, the retailer, is a Texas corporation that sells cars. Early in 1983, Concorde decided to expand its operations into limousine sales. By June 1983, Concorde had expanded its sales facility, purchased and sold several limousines, and inquired of several limousine suppliers regarding distributorship arrangements and purchase prices. Moloney was one of these suppliers.

After preliminary discussions, representatives of Concorde and Moloney met on June 30, 1983 to work out the terms of a distributorship agreement. At that meeting, the Moloney representatives said that they had done a market survey showing that a new Moloney distributor could sell 72-75 limousines in Houston within a year. They also promised the limousines to Concorde at the "best price available". Concorde understood this to mean that its purchase price was to be the lowest of all but one of Moloney's existing distributors, Potamkin Cadillac.

Concorde and Moloney signed a formal, three-year distributorship agreement on July 20, 1983. Among other things, this obliged Concorde to purchase at least 60 limousines according to a prepayment and delivery schedule covering October 1983 to September 1984. In exchange, Moloney promised that Concorde would be its exclusive dealer in the Houston area and guaranteed Concorde a price of $16,500 for the regular (46-inch) stretch limousine.

On the basis of Moloney's earlier representation, Concorde took this to be the lowest price paid by any Moloney dealership but Potamkin. It was not. In February 1984, Concorde received what later became known as the "mystery letter", an anonymous letter containing a price list for all of Moloney's distributors. ¹ The list showed that Potamkin paid the lowest price, $12,000 per regular stretch limousine. It also showed that another distributor paid Moloney's second lowest price, $12,800--$3700 less than Concorde's price of $16,500. In fact, Concorde's price was the highest of any Moloney buyer listed. Excluding Potamkin, Concorde paid about $2500 more per limousine than the average price paid by Moloney's other listed distributors. ²

This information distressed Concorde's management. Concorde had begun purchasing Moloney limousines soon after the formal agreement was signed and, by January 1984, had purchased 28 Moloney limousines but sold only 14. ³ The "mystery letter" and Concorde's difficulties selling its limousine inventory led it to seek price concessions and reimbursements from Moloney. Although Moloney negotiated with Concorde over these demands, the parties failed to resolve all their differences. Concorde cancelled its distributorship and filed this suit in December 1984.

Concorde based its action on common law fraud and misrepresentation, breach of contract, and the Texas Deceptive Trade Practices Act ("DTPA"). ⁴ In response to interrogatories, the jury found that Moloney's "best price" representation violated the DTPA, but found against Concorde on the other claims. For the DTPA violation, the jury awarded $77,805 in actual damages and no punitive damages. On this verdict, the district court entered a final judgment for Concorde of $79,805 ⁵ and $25,000 in attorney's fees. ⁶

Both Concorde and Moloney appeal this judgment. Moloney challenges the sufficiency of the evidence supporting the DTPA verdict and contends that the fee award should have been reduced by the amount of work Concorde's attorneys did on the losing claims. Concorde challenges the trial court's decision not to award prejudgment interest on the DTPA award. We affirm the district court's award of DTPA damages and attorney's fees, but remand the cause to the district court to reconsider Concorde's request for prejudgment interest.

I.

DTPA Section 17.50 makes sellers liable to consumers for actual damages where "a false, misleading, or deceptive act or practice" is "a producing cause" of those damages. ⁷ As this court noted in Pope v. Rollins Protective Services Co.,

One of the primary reasons for the enactment of the DTPA was to provide consumers with a remedy for deceptive trade practices without the burdens of proof and numerous defenses encountered in a common law fraud or breach of warranty action. ⁸

In keeping with the DTPA's broad, remedial purpose, Section 17.44 provides:

This subchapter shall be liberally construed and applied to promote its underlying purposes, which are to protect consumers against false misleading and deceptive business practices, unconscionable actions, and breaches of warranty and to provide efficient and economical procedures to secure such protection. ⁹

In the light of the DTPA's broad purpose and the act's specific provision that sellers are strictly liable for misleading statements about price, ¹⁰ the jury had ample grounds to find that Moloney's "best price" representation was a "deceptive act" within the meaning of the DTPA. What Moloney actually meant by "best price" is irrelevant. ¹¹ The record supports both the finding that Concorde understood "best price" to mean it would receive the lowest price of all but one of Moloney's then distributors, ¹² and the finding that this understanding was reasonable. ¹³ It is clear that Concorde did not receive Moloney's "best price".

The jury also had ample grounds to find that Moloney's "best price" misrepresentation was a producing cause of the damages awarded Concorde. "A producing cause" means a cause-in-fact--"an efficient, exciting, or contributing cause"--not the cause. ¹⁴ Moloney argues that Concorde's problems selling its limousine inventory stem more from poor management than from the price Moloney charged. This has little to do with whether Moloney's misrepresentation was a producing cause of the damages awarded. Regardless of the quality of Concorde's management, regardless of how much of its limousine inventory it sold, and regardless of the magnitude of its profits or losses, Concorde would have paid less per limousine had Moloney charged the "best price" it promised.

The record contains convincing evidence that Concorde could have received the "best price" it expected. Moloney faced competition from several other limousine suppliers. Concorde's officers testified that it ceased looking for a better price on the strength of Moloney's "best price" promise. ¹⁵ Had Concorde known it would not receive Moloney's "best price", it could have held out for a better deal from Moloney or taken its business to a competitor. The record shows that Moloney offered considerably better prices to all its other buyers, including distributors with lesser volume than Concorde and even prospective buyers who, unlike Concorde, had not yet signed distributorship agreements. This more than adequate grounds for a jury to conclude that Concorde could have received a much better price, even the "best price" Moloney promised.

Finally, we add that the jury's award of $77,805 is a conservative estimate of Concorde's actual damages. Giving Concorde the benefit of the bargain it expected from Moloney's "best price" promise is the minimum measure of Concorde's actual damages. Concorde purchased 28 limousines from Moloney. The price list from the "mystery letter", the accuracy of which Moloney admits, shows that Concorde paid $3700 more than Moloney's second best price for each limousine and $2500 more than Moloney's average price. ¹⁶ On this basis alone, an award of actual damages anywhere in the range of $70,000 to $103,600 would be reasonable. ¹⁷ Accordingly, we affirm the district court's damages judgment against Moloney. ¹⁸

II.

Because Concorde prevailed on its DTPA claim, an award of court costs and "reasonable and necessary" attorney's fees was mandatory. ¹⁹ Like the other provisions of the DTPA, the mandatory award of attorney's fees to prevailing plaintiffs is to be construed liberally "to provide consumers with an efficient and economical means to seek redress for [ ] deceptive practices". ²⁰ Although prevailing DTPA plaintiffs must usually allocate fee expenses between their winning and losing claims, ²¹ allocation is not necessary where there is a substantial overlap among the claims. ²²

Concorde submitted evidence that it incurred $21,779 of attorney time, $4324 of paralegal time, and $2257 in "related expenses" preparing all its claims, but did not allocate fee expenses between its DTPA claim and its other claims. ²³ The district court, over Moloney's objections, required no allocation and awarded Concorde $25,000 in attorney's fees. ²⁴

Moloney contends that there was not a substantial overlap in Concorde's claims and, as a result, the fee award erroneously compensates Concorde for work done on its losing claims. ²⁵ We cannot agree. The district court found a substantial overlap and determined Concorde's "reasonable and necessary" attorney's fees as a trier of fact. Accordingly, we can reverse its award only if it is "clearly erroneous". ²⁶ It is not.

We agree with the district court that there was a substantial overlap in Concorde's preparation of its three claims. As we discuss above, to prevail on its DTPA claim, Concorde was required to prove only that Moloney misrepresented a material fact and that this was a producing...