Duval v. Midwest Auto City, Inc.

• Decision Date: 11 February 1977
• Docket Number: No. CV75-L-138.,CV75-L-138.
• Citation: 425 F. Supp. 1381
• Parties: Kenneth L. DUVAL et al., Plaintiffs, v. MIDWEST AUTO CITY, INC., a corporation, et al., Defendants.
• Court: U.S. District Court — District of Nebraska

425 F. Supp. 1381

Kenneth L. DUVAL et al., Plaintiffs, v. MIDWEST AUTO CITY, INC., a corporation, et al., Defendants.

No. CV75-L-138.

United States District Court, D. Nebraska.

February 11, 1977.

Leroy P. Shuster, Lincoln, Neb., for plaintiffs.

Herbert J. Friedman, Lincoln, Neb., for defendants Midwest Auto City, Inc., Ervin Delp, and Tecumseh Motors.

David R. Gilman, Overland Park, Kan., for defendants Dave Studna and Dave Studna d/b/a E & J Motor Sales and E. Studna Auto Sales.

J. Michael Rierden, and W. Michael Morrow, Lincoln, Neb., for defendant Bernard Flaherty.

MEMORANDUM OF DECISION

URBOM, Chief Judge.

Since 1972, the federal law has been designed to prohibit tampering with odometers on motor vehicles and to compensate persons victimized by the tampering. This lawsuit is one in which purchasers of two automobiles ask monetary damages for violation of that law.

Four violations are asserted: The defendants with intent to defraud disconnected, reset and altered the odometers on the vehicles the plaintiffs purchased; they with intent to defraud operated the vehicles on streets and highways knowing that the odometers were disconnected or nonfunctional; they conspired to violate the law with an intent to defraud; and they failed to furnish accurate odometer certifications.

The key statutory sections are:

15 U.S.C. § 1984:

"It is unlawful for any person or his agent to disconnect, reset, or alter the odometer of any motor vehicle with the intent to change the number of miles indicated thereon."

15 U.S.C. § 1985:

"It is unlawful for any person with the intent to defraud to operate a motor vehicle on any street or highway knowing that the odometer of such vehicle is disconnected or nonfunctional."

15 U.S.C. § 1986:

"No person shall conspire with any other person to violate section 1983, 1984, 1985, 1987, or 1988 of this title."

15 U.S.C. § 1988:

"(b) It shall be a violation of this section for any transferor to violate any rules prescribed by the Secretary of Transportation requiring a transferor to give to a transferee disclosure of the cumulative mileage registered on the odometer and disclosure that the actual mileage is unknown, if the odometer reading is known to be different from the number of miles the vehicle has actually traveled or to knowingly give a false statement to a transferee in making any disclosure required by such rules."

15 U.S.C. § 1989:

"(a) Any person who, with intent to defraud, violates any requirement imposed under this subchapter shall be liable in an amount equal to the sum of —

(1) three times the amount of actual damages sustained or $1,500, whichever is the greater; and

(2) in the case of any successful action to enforce the foregoing liability, the costs of the action together with reasonable attorney fees as determined by the court."

The facts as I find them from conflicting evidence after a five-day trial are set out in this memorandum of decision, acknowledging that the plaintiffs have the burden of establishing by a preponderance of the evidence that each defendant with intent to defraud violated one or more requirements of the above-quoted statutory sections and the amount of damages.

THE DUVAL VEHICLE

On July 3, 1975, the plaintiffs Kenneth L. Duval and Cheryl J. Duval purchased a 1973 Plymouth Fury III automobile, bearing motor vehicle identification number PH23P3D217571, from the defendant Midwest Auto City, Inc. in Lincoln, Nebraska. The odometer reading was approximately 25,800 miles at the time of purchase.

Ervin Delp, the president of Midwest Auto City, Inc., had talked by telephone with David Studna, a wholesale automobile dealer who did business under the names of E & J Motor Sales and E. Studna Auto Sales in Overland Park, Kansas, about buying the 1973 Plymouth Fury III before either Midwest or Studna bought it. Studna knew and told Delp that the car, as well as three others he proposed to buy, was a sheriff's patrol car and had high mileage on it. After the conversation, Studna, in the name of E. Studna Auto Sales, bought the car from Bud Brown Chevrolet-Plymouth, Inc., whose certificate of title showed the odometer mileage to be 83,572. Joe Studna, on behalf of E. Studna Auto Sales, reassigned the title to Bennie Motors, a used car dealership in Kansas City, Missouri, owned by Bennie Studna, the brother of David Studna. Bennie Motors then obtained a Missouri title which, in accord with Missouri law, did not reflect any odometer reading. Bennie Motors then transferred the car to Tecumseh Motors, which is one of the names under which Midwest Auto City, Inc. did business, the accompanying odometer certificate dated October 2, 1974, showing Bennie Motors as transferor and being signed "David Studna" on behalf of the transferor. The odometer certificate showed 25,628 miles.

Although the defendant Dave Studna, whose correct name is David Studna, has raised some question of the authority of Joe Studna, who is David Studna's son, to sign a certificate of title on behalf of E. Studna Auto Sales, the fact that the certificate of title from E. Studna Auto Sales to Bennie Motors shows that Joe Studna's signature was notarized by David Studna ends the argument.

Thus, sometime between the car's arrival at E. Studna Auto Sales and its receipt by Midwest, the odometer reading was altered. Midwest then advertised the car in the Sunday Journal and Star with the following words:

"This like new car has been driven only 25,544 miles and is priced to sell fast at only $2187."

The Duvals saw the advertisement and bought the car without being told by Midwest or anyone else that the odometer reading was incorrect. By the time the Duvals purchased the car they suspected and had reason to believe that the car had been a patrol car, although not because of anything told to them by any Midwest employee. Not only was nothing said to the Duvals to the effect that it had been a patrol car, but Midwest had removed from the frame a tag and had put on a vinyl top, each of which tended to disguise the car's use as a patrol car. The Duvals did not know that the car had more than 25,800 miles of actual use. A purchase price of $2,197.00, including a trade-in of a 1973 Hornet for $1,800.00, was paid by the Duvals.

Midwest had purchased the car for $1,750.00 and incurred expenses on it while it had it sufficient to bring its investment in it to $2,097.82. The wholesale value — the reasonable market value to a dealer — of an automobile of this car's make and model was $1,375.00 if the mileage were 83,572, and $2,100.00 if the the mileage were 25,800. The retail value — the fair market value to an individual buyer from a dealer — of such an automobile was $1,950.00 if the mileage were 83,572, and $2,675.00 if the mileage were 25,800.

THE MASON VEHICLE

On July 25, 1975, the plaintiffs Jerry K. Mason and Linda L. Mason bought in Lincoln, Nebraska, a 1973 Ford Country Sedan station wagon, bearing motor vehicle identification number 3P74S138762, from the defendant Midwest Auto City, Inc. The odometer reading was approximately 29,570 miles.

Midwest, under the name of Tecumseh Ford-Mercury, which was one of the names under which it regularly did business, obtained the Ford station wagon from E & J Motor Sales by virtue of a reassignment of the certificate of title from Joe Studna on behalf of E & J Motor Sales on June 19, 1975. David Studna notarized the signature of Joe Studna. The reassignment showed no odometer reading.

E & J Motor Sales on June 12, 1975, had received a reassignment of the certificate of title from Pat Patterson Motor Co., Inc., Topeka, Kansas. The mileage on the reassignment, whether placed there at the time of the reassignment or later, was 29,486. Pat Patterson Motor Co., Inc. on June 7, 1975, received title from Robert E. and Lorene Powell and a certificate of title showing the mileage to be 68,901. That figure was obliterated on the copy of the certificate of title which thereafter went to Midwest and which was presented by Midwest to the County Clerk of Johnson County, Nebraska, for the obtaining of a certificate of title in the name of Tecumseh Ford-Mercury. Despite the obliteration, a certificate of title was issued. No satisfactory explanation has been made for why a certificate of title was issued. Evidently on the strength of an odometer certificate by Joe Studna and Colleen J. Miller, the odometer reading was shown on that certificate of title to be 29,486 miles.

It appears that, either immediately before the car came into the possession of E & J Motor Sales or while it was in E & J Motor Sales' possession, the odometer was altered.

Midwest paid E & J Motor Sales $2,150.00, and its expenses on the automobile brought the investment in the car to $2,426.44. The wholesale value of that make and model was $1,775.00 if the mileage were 68,901, and $2,300.00 if the mileage were approximately 29,500. The Masons paid $3,195.00, including a trade-in of a 1973 Ford LTD for $2,830.00. The fair market retail value of such an automobile was $2,375.00 if the mileage were 68,901, and $2,900.00 if the mileage were 29,500.

CONSPIRACY

The two foregoing transactions, standing alone, do not establish a conspiracy. When amplified by substantial evidence of many other similar transactions, however, a conspiracy to violate the law with an intent to defraud is established by clear and convincing evidence.

Midwest, through the person of Ervin Delp, has done business for several years with David Studna, who has operated his wholesale business under various names, including E. Studna Auto Sales and E & J Motor Sales. During the two years immediately before the two sales to the Duvals and Masons, Midwest bought about 96 cars that originated with David Studna. Many of them were high-mileage cars and a substantial number of them had had the odometers turned back. The frequency with which transactions occurred similar to those involving the Duvals and Masons makes a...