Douglas v. Ostermeier
| Decision Date | 09 December 1991 |
| Docket Number | No. B046862,B046862 |
| Citation | 1 Cal.App.4th 729,2 Cal.Rptr.2d 594 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Patricia DOUGLAS, et al., Plaintiffs and Respondents, v. Anton OSTERMEIER, etc. et al., Defendants and Appellants. |
Huey P. Shepard, Torrance, for plaintiffs and respondents.
Appellants, Anton Ostermeier and West Coast Car Sales, appeal from a judgment entered on a jury verdict awarding respondents rescission on a car sales contract of $24,354 and awarding compensatory damages of $10,624 on the fraud cause of action as well as $187,000 in punitive damages. Appellants attack the amount of punitive damages as excessive as a matter of law. They also contend the punitive damage award is a result of passion and prejudice created by the improper expert testimony concerning the value of appellants' property by respondent Patricia Douglas.
During the pendency of this appeal, the California Supreme Court decided Adams v. Murakami (1991) 54 Cal.3d 105, 284 Cal.Rptr. 318, 813 P.2d 1348, which determined a plaintiff must present evidence of a defendant's financial condition as a prerequisite to an award of punitive damages. We conclude principles of fairness and public policy do not compel the conclusion the decision should be given only prospective effect and apply this new requirement to the case at bar. However, we further conclude adequate evidence of appellants' financial condition was presented at trial to substantiate the jury's award of punitive damages. We consequently affirm the judgment.
In July 1983 respondents, Patricia and Michael Douglas, decided to buy a new car. They originally intended to purchase a new diesel automobile but a friend suggested looking at used Mercedes automobiles at West Coast Car Sales. This friend had purchased a used Mercedes from appellants for what she believed was a reasonable price.
Patricia Douglas visited West Coast Car Sales, a business wholly owned by Ostermeier. She saw a diesel Mercedes for sale but also saw a 450 SLC model Mercedes which interested her more because of its style and sportiness. Each time she visited West Coast Car Sales there were about ten cars with for sale signs on the parking lot.
Approximately one week later, respondents again visited West Coast Car Sales and met with Ostermeier to discuss purchasing the 450 SLC. Ostermeier stated the car was a 1978 model worth $29,000. The parties negotiated price and extras and respondents ultimately agreed to purchase the car for $22,500 plus tax, registration and license fees with upgraded wheels and a general three-month warranty on the car.
The Douglases returned the next day to pay for the car and to sign documents. The following day the car would not start and it had to be towed for repairs.
On May 1, 1984, representatives of the California Highway Patrol (CHP) went to the Douglas' residence and impounded the car. A CHP officer showed Patricia a photograph of a totally wrecked car with the fatally injured driver still in the driver's seat. The officer explained he had reason to believe her car was the same as depicted in the photograph and was concerned her car might be stolen. The car remained impounded for approximately a month. The CHP determined the car had not been stolen but when it was returned to the Douglases the CHP required it be re-registered as a 1973 vehicle. Sometime after the CHP returned the car, the front frame of the car broke off and the car had to be towed and repaired. At some point Patricia Douglas permanently parked the car in their garage at home.
Apparently, Ostermeier had purchased two totally wrecked, "salvage" cars. He purchased the 1978 450 SLC Mercedes which had been in a car accident. From another auto wrecking facility he purchased the frame of a 1973 Mercedes which had been gutted by fire. From these two cars Ostermeier created the composite 450 SLC sold to the Douglases.
When Ostermeier purchased the two wrecks he received "pink slips" indicating their respective vehicle identification numbers (VIN). He re-registered these two cars with the Department of Motor Vehicles (DMV) as "salvage" automobiles. This re-registration triggered the attention of the CHP who regularly monitor the switching or disguising of VIN numbers for the purpose of switching high priced vehicles for salvage. In this case the re-registration led the CHP to investigate the Douglas' car.
The CHP investigation revealed VIN numbers of the 1973 Mercedes frame had either been filed off or had been covered over by a new VIN plate indicating a year and model of a 1978 Mercedes. Alteration of any VIN number is a criminal offense. The officer testified he had personally warned Ostermeier on a prior occasion to cease tampering with official identifications of cars he restored. In this case Ostermeier claimed he received the 1973 frame with Appellant was not prosecuted in this instance but the Douglases were required to re-register their car as a 1973. Based on expert testimony concerning the relative values of used, new and composite 1978 and 1973 cars, the composite car Ostermeier sold the Douglases was worth less than half its purchase price of $24,354.
the VIN numbers already obliterated. He testified that because he could no longer read the numbers and, because he could not be sure of the correct VIN number for the 1973, he covered the old 1973 VIN numbers with new 1978 numbers. On cross-examination, however, Ostermeier admitted the "pink slip" he received when purchasing the 1973 frame recorded the proper VIN number.
Appellant testified the Douglases knew the car was a composite because he personally told them it was. Based on contradictory evidence, the jury found appellant did not tell them the truth about the car. Both Michael and Patricia Douglas testified Ostermeier never told them the car was a composite nor that it was comprised of parts from salvaged cars. The sales invoice did not mention the word "salvage." The registration forms did not bear the word "salvage."
The Douglases retained counsel to negotiate a rescission of the contract. When these negotiations failed the Douglases brought suit for rescission of the contract alleging fraudulent misrepresentation and requesting compensatory and punitive damages.
The case was tried before a jury. The jury awarded the Douglases rescission of the contract and restitution of the sales price of $24,354.25 with return of the car to appellants. The jury also awarded compensatory damages in the amount of $10,624 and punitive damages of $187,000.
Alleging the punitive damage award was excessive, appellants filed post-trial motions for judgment notwithstanding the verdict and for a new trial. Appellants' motions were denied and this appeal followed.
Appellants' brief on appeal purports to raise several issues. The only issue for which appellants present argument and authority, however, concerns not respondents' entitlement to punitive damages but the amount of the punitive damage award. Specifically, appellants contend Patricia Douglas' testimony as an expert on the value of appellants' business property was improper and prejudicially influenced the jury to award a large amount of punitive damages. They also allege the punitive damage award is excessive as a matter of law and cannot stand in the absence of evidence of net worth. The other issues need not be considered. (Jimmy Swaggart Ministries v. State Bd. of Equalization (1988) 204 Cal.App.3d 1269, 1294, 250 Cal.Rptr. 891 [" "].)
We note this appeal presents no challenge to the jury's finding of liability nor to the propriety and amount of the compensatory damages award. We therefore focus our attention on the award of punitive damages.
Appellants assert the trial court committed reversible error in accepting Patricia Douglas as an expert on property valuation and in allowing her to offer her opinion the land value of appellants' business property was between $5 and $6 million. Appellants contend this testimony was improper because the valuation was mere speculation from one with no demonstrated expertise in evaluating commercial properties.
On voir dire Patricia Douglas testified she had been a real estate agent for ten years and a broker for the past two years.
She testified that to acquire her broker's license, she was required to complete additional educational courses and secure a special designation from the National Association of Realtors. She testified she primarily sold residential real estate but handled two to three commercial properties a year.
Appellants objected to Patricia Douglas' testimony as lacking foundation, contending she was not qualified as an expert. The trial court then conducted its own voir dire of Patricia Douglas' qualifications and the following exchange took place:
Patricia Douglas testified appellants' business property was approximately 80 feet wide by 500 feet long. Ostermeier's businesses, consisting...
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