David v. CFS Enters., Inc.

Decision Date25 June 2013
Docket NumberNo. WD 74288.,WD 74288.
Citation400 S.W.3d 372
PartiesDavid and Diana HECKADON, Respondents, v. CFS ENTERPRISES, INC. and Chad Franklin, Appellants.
CourtMissouri Court of Appeals

OPINION TEXT STARTS HERE

Douglass F. Noland, Liberty, for Respondents.

Patric Linden, for Appellants.

Before Division One: THOMAS H. NEWTON, Presiding Judge, JOSEPH M. ELLIS, Judge and GARY D. WITT, Judge.

JOSEPH M. ELLIS, Judge.

Appellants CFS Enterprises, Inc. (CFS) and Chad Franklin (Franklin) appeal from a judgment entered by the Circuit Court of Clay County in favor of Respondents David and Diana Lynn Heckadon on Respondents' claims that Appellants violated the Missouri Merchandising Practices Act (“MMPA”) by misrepresenting or omitting material facts about a vehicle Respondents purchased from Appellants. For the following reasons, the judgment is affirmed in part and reversed and remanded in part.

The evidence viewed in the light most favorable to the verdict reflects the following. Respondents wanted to purchase a more reliable vehicle with low monthly payments because they were living on a fixed income. In September of 2007, Respondents saw a television advertisement for CFS promising car payments as low as $43 a month. Respondents scheduled an appointment with CFS and drove to the dealership to discuss the advertisement.

Once there, CFS employees told Respondents that the deal described in the advertisement was real and that they could get low monthly payments of $43 by participating in CFS's promotional program. The promotional program, which would last up to four years, allowed Respondents to purchase a Suzuki vehicle, drive it for a certain period of time, return the vehicle to CFS, and select a new Suzuki vehicle. CFS employees told Respondents that their payments would remain $43 per month for the four-year promotional period. CFS employees further explained that they were offering the promotional program in order to ensure Appellants had low-mileage vehicles to sell on their used car lot.

Respondents decided to participate in the program and selected a vehicle (“the 2007 vehicle”). After filling out a credit application, Respondents spoke with CFS's finance manager. The manager gave Respondents paperwork to sign, including a loan application. The manager told Respondents not to worry about the terms of the loan application because it was merely a formality. Respondents were subsequently approved for a loan. Respondents later received a check in the mail from CFS to cover the difference between the $43 per month payment they were promised and the amount that appeared on their monthly loan statement.1

In February of 2008, Respondents received a phone call from CFS informing them it was time to return the 2007 vehicle. Appellants faxed Respondents a new credit application, which Respondents filled out and faxed back to the dealership. Without Respondents' knowledge, Appellants changed the amount of monthly income Respondents listed on their credit application, increasing it by $2,000.

When Respondents returned the 2007 vehicle to CFS, they selected another Suzuki vehicle (“the 2008 vehicle”). In purchasing the 2008 vehicle, Respondents paid $1,112 for a warranty, $540 for gap insurance, and $499.95 for an administrative fee to participate in the promotional program. Respondents also paid $427.58 in Missouri sales tax as well as a fee of $5.50 to transfer their license plates. Respondents purchased the 2008 vehicle for $19,495. Respondents later discovered that the window sticker listed the price of the 2008 vehicle as $17,495; thus Appellants marked up the price of the 2008 vehicle by $2,000.

Appellants were approved for a loan on the 2008 vehicle. CFS's finance manager again told Respondents not to worry about the loan paperwork. Respondents subsequently received a $2,619 check from CFS to cover the portion of their monthly car payment that exceeded $43. Respondents' monthly statement from its lender showed Respondents owed $649.37 per month. Respondents made four payments to the lender on the 2008 vehicle.

In July, Respondents saw a news report indicating that CFS's promotional deal was a scam. Respondents called CFS to inquire about the news report and see if they could return the 2008 vehicle. CFS stated it did not know about any promotional program and suggested that if Respondents had a problem, Respondents should seek arbitration. Respondents, however, contacted an attorney, who told them to stop making payments on the 2008 vehicle. After the attorney negotiated a deal with the lender, Respondents surrendered the 2008 vehicle to the lender, and the lender forgave the loan. Respondents paid the attorney $200 to negotiate with the lender.

In December of 2009, Respondents filed a petition for damages against CFS, CFS's president and owner, Chad Franklin, and American Suzuki Motors Corporation (“ASMC”).2 The petition alleged five counts: (1) fraudulent misrepresentation, (2) MMPA violations, (3) negligent misrepresentation, (4) piercing the corporate veil, and (5) civil conspiracy. Respondents alleged all counts, except for the piercing the corporate veil claim, against CFS, Franklin, and ASMC. Respondents alleged the piercing the corporate veil claim solely against Franklin.

Prior to trial, Respondents entered into a confidential settlement agreement with ASMC. ASMC was subsequently dismissed from the suit, with prejudice. More facts regarding Respondents' settlement with ASMC will be discussed infra as needed.

On May 23, 2011, a bifurcated jury trial commenced against Appellants CFS and Franklin. Respondents as well as four other individuals testified to the misrepresentations Appellants made while selling them Suzuki vehicles. Respondents also introduced evidence from both the Missouri and Kansas attorney general regarding the number of complaints made against Appellants. Franklin also testified in both his individual capacity and capacity as a representative of CFS.

At the conclusion of the first stage, Respondents submitted only the MMPA claims to the jury. The jury returned verdicts in favor of Respondents and awarded $2,144.87 in actual damages against CFS and $2,144.87 in actual damages against Franklin. The jury also determined Respondents were entitled to punitive damages. In the second stage, the jury awarded $100,000 in punitive damages against CFS and $400,000 in punitive damages against Franklin. The trial court entered its judgment accordingly.

Respondents and Appellants both filed post-trial motions. Respondents filed a motion requesting the judgment be amended to include attorney's fees. Appellants filed two joint motions. Their first motion was to amend the judgment by (1) reducing the judgment by the amount of Respondents' settlement with ASMC pursuant to § 53.060 and (2) merging the awards of actual damages entered against CFS and Franklin. Appellants' second joint motion was a motion for remittitur or, in the alternative, a motion for new trial. The motion for remittitur asserted that the amount of punitive damages awarded was grossly excessive and, thereby, violated Appellants' constitutional due process rights under the Fourteenth Amendment. The court held a hearing on the post-trial motions and took them under advisement.

On August 15, 2011, the trial court entered its amended judgment, which awarded Respondents the attorney's fees they requested and denied Appellants' motions to amend the judgment and remit the punitive damages awards. Appellants now assert three points on appeal regarding the denial of their post-trial motions.3

In their first point, Appellants assert that the trial court erred by failing to amend its judgment to reduce the actual damages awards against Franklin and CFS in an amount equal to Respondents' prior settlement with ASMC because Appellants were entitled to a reduction under § 537.060. We review the denial of a motion to reduce a judgment pursuant to § 537.060de novo.4McGuire v. Kenoma, LLC, 375 S.W.3d 157, 179 (Mo.App. W.D.2012); see also Gibson v. City of St. Louis, 349 S.W.3d 460, 465 (Mo.App. E.D.2011).

Section 537.0605 provides, in pertinent part:

When an agreement by release, covenant not to sue or not to enforce a judgment is given in good faith to one of two or more persons liable in tort for the same injury or wrongful death, such agreement shall not discharge any of the other tort-feasors for the damage unless the terms of the agreement so provide; however such agreement shall reduce the claim by the stipulated amount of the agreement, or in the amount of consideration paid, whichever is greater.

Thus, [s]ection 537.060 permits a defendant's liability to be reduced by the amount of settlements with joint tortfeasors.” Sanders v. Ahmed, 364 S.W.3d 195, 211 (Mo. banc 2012).

Reduction pursuant to § 537.060 must be pled and proven as an affirmative defense. Id. “The burden of proof is on the party seeking reduction.” Id. at 213. The party seeking reduction, therefore, bears the burden of pleading and proving “1) the existence of a settlement and 2) the stipulated amount of the agreement or the amount in fact paid.” Id. at 211–12.

Likewise, the party seeking reduction also “bears the burden of proving it had joint liability with the settling tortfeasor.” Stevenson, 326 S.W.3d at 928. By its own terms, § 537.060 requires a showing that “two or more persons [are] liable in tort for the same injury.” Application of § 537.060, therefore, is predicated upon a showing that joint tortfeasors are liable for the same injury.6Id. at 925. Thus, as the parties seeking reduction, Appellants bore the burden of proving they were jointly liable with ASMC for the same injury at issue in this case in addition to the burden of pleading and proving the existence and the amount of a settlement between Respondents and ASMC.

Here, Appellants satisfied their...

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