Freeman v.
| Decision Date | 04 November 2015 |
| Docket Number | Appellate Case No. 2014-000642,Opinion No. 27586 |
| Court | South Carolina Supreme Court |
| Parties | Julie Freeman, Appellant/Respondent, v. J.L.H. Investments, LP, a/k/a Hendrick Honda of Easley, Respondent/Appellant. |
Appeal From Pickens County
Doyet A. Early, III, Circuit Court Judge
AFFIRMED
Terry E. Richardson, James David Butler and Brady Ryan Thomas, all of Richardson, Patrick, Westbrook & Brickman, L.L.C., of Barnwell, A. Camden Lewis, of Lewis, Babcock & Griffin, L.L.P., of Columbia, Gedney M. Howe, III, of Gedney M. Howe, III, P.A., of Charleston, and Michael E. Spears, of Michael E. Spears, P.A., of Spartanburg, for Appellant/Respondent.
James Y. Becker and Mary McFarland Caskey, both of Haynsworth Sinkler Boyd, P.A., of Columbia, Sarah Patrick Spruill, of Haynsworth Sinkler Boyd, P.A., of Greenville, John T. Lay, of Gallivan, White & Boyd, P.A., of Columbia, Marvin D. Infinger, of Nexsen Pruet, L.L.C., of Charleston, for Respondent/Appellant.
Julie Freeman, individually and on behalf of 5,314 similarly situated car buyers, filed a lawsuit against J.L.H. Investments, LP, a/k/a Hendrick Honda of Easley ("Hendrick"), seeking damages under the South Carolina Dealers Act1 (the "Dealers Act") on the ground that Hendrick "unfairly" and "arbitrarily" charged all of its customers "closing fees"2 that were not calculated to reimburse Hendrick for actual closing costs. A jury returned a verdict in favor of Freeman in the amount of $1,445,786.00 actual damages. In post-trial rulings, the trial judge: (1) denied Hendrick's motions to overturn or reduce the jury's verdict; (2) granted Freeman's motions to double the actual damages award and to award attorneys' fees and costs3; and (3) denied Freeman's motion forprejudgment interest. This Court certified this case from the Court of Appeals. We affirm.
In 2000, the South Carolina Legislature enacted the "Closing Fee" Statute as a provision within the South Carolina Consumer Protection Code ("SCCPC").4 Act No. 387, 2000 S.C. Acts 3311, Part II, § 82. The "Closing Fee" Statute, which is codified at section 37-2-307 of the South Carolina Code, provides:
Every motor vehicle dealer charging closing fees on a motor vehicle sales contract shall pay a one-time registration fee of ten dollars during each state fiscal year to the Department of Consumer Affairs. The closing fee must be included in the advertised price of the motor vehicle, disclosed on the sales contract, and displayed in a conspicuous location in the motor vehicle dealership.
S.C. Code Ann. § 37-2-307 (2015). In 2001, the South Carolina Department of Consumer Affairs (the "Department") issued a formal interpretation of this code provision and identified four procedural requirements that a motor vehicle dealer must meet before charging a closing fee to its customers.5 Danny Collins, theDeputy for Regulatory Enforcement and General Counsel for the Department, explained that the Department generally accepts all registration forms submitted by the dealers, but does not establish the closing fee charged by the dealer.
On July 12, 2006, Freeman purchased a pre-owned vehicle from Hendrick. Hendrick charged Freeman a $299.00 closing fee that was pre-printed on the final sales invoice and identified as "PROCUREMENT FEE." Hendrick informed customers that it charged closing fees by posting a notice approved by the Department, which stated:
THIS DEALERSHIP CHARGES A $299.00 CLOSING FEE AS [A] MEANS OF REIMBURSING IT FOR CERTAIN OVERHEAD COSTS SUCH AS DOCUMENT RETRIEVAL AND DOCUMENT PREPARATION. IT IS A CHARGE THAT IS PERMITTED BUT NOT REQUIRED BY LAW. THE FULL CASH PRICE CHARGED AT ANY DEALERSHIP DEPENDS ON MANY FACTORS, INCLUDING ALL PRODUCTS AND SERVICES BOUGHT WITH THE VEHICLE. (Emphasis added).
Hendrick has consistently registered with the Department its intent to charge closing fees, which have ranged from $249 to $399.
After discussing her purchase with a friend, who is an attorney, Freeman initiated this action on August 29, 2006 against Hendrick.6 In her Complaint, Freeman alleged, inter alia, that Hendrick violated the Dealers Act by charging closing fees that "were not for reimbursement of certain closing costs"7 from August 29, 2002 to August 29, 2006. Specifically, Freeman claimed Hendrick's "charging of closing fees in violation of § 37-2-307 renders the fees illegal and in violation of the Dealers Act."
Subsequently, Hendrick filed motions seeking judgment on the pleadings and summary judgment. In these motions, Hendrick posited that it was entitled to judgment as a matter of law on the grounds that Freeman: (1) could not pursue a cause of action under the Dealers Act because section 37-5-202, which is located within the SCCPC, provides her exclusive remedy; (2) had not complied with the provisions of Rule 23, SCRCP8 for class certification; and (3) was precluded from recovery based on the voluntary payment doctrine.
During the pre-trial proceedings, the trial judge adopted several rulings that were issued in a case similar to the one brought by Freeman. In particular, the judge interpreted "closing fee," which is undefined in section 37-2-307 or any other code provision, to mean: "A 'closing fee' is a pre-determined set fee for the reimbursement of closing costs, such as document retrieval and document preparation, but only those actually incurred by the dealer and necessary to the closing transaction." (Emphasis added).
Ultimately, the judge denied Hendrick's pre-trial motions and the case proceeded to trial. A jury returned a verdict in favor of Freeman in the amount of $1,445,786.00 actual damages. Both parties filed post-trial motions. In her motions, Freeman sought an award of prejudgment interest, double the amount of actual damages, and attorneys' fees and costs under the Dealers Act. Hendrick moved for judgment notwithstanding the verdict ("JNOV") and, alternatively, a new trial nisi remittitur. Following a hearing, the trial judge denied Hendrick's motions, granted Freeman's motion for double actual damages, and denied Freeman's motion for prejudgment interest. The parties agreed to a consent order providing that Freeman was entitled to an established amount of attorneys' fees and costs contingent on the outcome of this appeal.
The parties filed cross-appeals to the Court of Appeals. This Court granted Freeman's unopposed motion to certify this case pursuant to Rule 204(b), SCACR.
In the interest of logical progression, we have grouped Hendrick's eight issues into those that were raised during (1) pre-trial, (2) trial, and (3) post-trial. We have also incorporated into the post-trial category the issue raised by Freeman in her cross-appeal.
Hendrick contends that "[t]his case should never have reached the trial phase as a 'group action' under the Dealers Act." Specifically, Hendrick claims that: (1) Freeman was precluded from pursuing an action under the Dealers Act because her exclusive remedy for an alleged closing fee violation was under the SCCPC; (2) the class action proceeding was impermissible because Freeman failed to plead or prove the prerequisites for class certification under Rule 23, SCRCP; (3) the trial judge misinterpreted the term "closing fee" to mean that a dealer may only charge a closing fee that equates to the actual costs incurred by a dealer during closing; (4) procedural compliance with the "Closing Fee" Statute is sufficient to absolve a dealer from an alleged violation; and (5) Freeman waived her claim by voluntarily paying the closing fee.
As a threshold matter, we find that Freeman pursued the proper course of action in seeking recovery for a closing fee violation under the Dealers Act. Although the "Closing Fee" Statute identifies the procedural requirements that must be met before a dealer can charge a closing fee, neither the "Closing Fee" Statute nor other provisions of the SCCPC provide any remedy for a consumer claiming a closing fee violation.
As stated by this Court, "[t]he purpose of the SCCPC is to clarify the law governing consumer credit and to protect consumer buyers against unfair practices by suppliers of consumer credit." Fanning v. Fritz's Pontiac-Cadillac-Buick, Inc., 322 S.C. 399, 401, 472 S.E.2d 242, 244 (1996) (); see Davis v. NationsCredit Fin. Servs. Corp., 326 S.C. 83, 86, 484 S.E.2d 471, 472 (1997) .
Despite the well-defined purpose to protect against unfair practices involving consumer credit transactions, Hendrick identifies several provisions in the SCCPC as potential avenues for recovery.9 However, none of these are applicable to the type of claim brought by Freeman. A review of these code sections reveals that the remedies are directed at recovery for specifically identified acts involving lending transactions between creditors and debtors. Here, Freeman did not allege any unfair practice regarding the financing of her vehicle purchase. Rather, she claimed she was unfairly charged a "closing fee" that bore no relation to the actual expenses incurred by Hendrick. Given this claim did not involve an unfair consumer credit transaction between a creditor and a debtor, Freeman had no means of recovery under the SCCPC. Instead, Freeman's claim fell within the purview of the Dealers Act, which: (1) prohibits a motor vehicle dealer from engaging "in any action which is arbitrary, in bad faith, or unconscionable and which causes damage to any of the parties or to the public;" and (2) provides aremedy for a consumer that is damaged by this action. S.C. Code Ann. §§ 56-15-40(1), -110(1...
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