Hale v. Basin Motor Co.

Decision Date28 June 1990
Docket NumberNo. 18426,18426
Citation110 N.M. 314,1990 NMSC 68,795 P.2d 1006
Parties, 2 A.L.R.5th 1096 Gregory L. HALE and Donna M. Hale, his wife, Plaintiffs-Appellees and Cross-Appellants, v. BASIN MOTOR COMPANY, Defendant-Appellant and Cross-Appellee.
CourtNew Mexico Supreme Court

RANSOM, Justice.

Basin Motor Company appeals a decision awarding Gregory and Donna Hale damages resulting from a violation by Basin Motor of the Unfair Practices Act, NMSA 1978, Sections 57-12-1 to -22 (Repl.Pamp.1987 and Cum.Supp.1989) (commonly known as the Unfair Trade Practices Act). We affirm in part, reverse in part, and remand with instructions.

On October 19, 1985, the Hales purchased a 1985 Buick Riviera from Basin Motor Company. The car was sold as a "new demonstrator." Several months after the purchase, the finish on the right front fender, right door, and right door pillar began to oxidize, fade, and distort. The Hales learned from a third party that the car had been in an accident and repaired by Basin Motor prior to the Hales' purchase of the car. The Hales showed the car to Bino Martinez of Martinez and Snider Motor Company of Farmington. He said he would value the car at its NADA wholesale book price of $10,175 if it had been undamaged, but, because it had been wrecked and was in need of a paint job, he would value it at $9,175. The Hales had the car repainted for $840, and eventually traded it in on a new car. The amount allowed on trade-in was $9,000 for the car's appraised value, and an additional $949 as an over-allowance to make the deal and pay off the remainder of the $9,749.50 the Hales owed on the car.

The Hales brought suit against Basin Motor in November 1987 for violating the Unfair Trade Practices Act and for fraud. Specifically, they claimed that Basin Motor willfully misrepresented the condition of the car and failed to provide them with an affidavit describing the damage to the car as required by Section 57-12-6. Under their fraud claim they alleged that, with the intent to deceive the Hales and receive a price for the car that exceeded its market value, Basin Motor concealed the fact that the car had been wrecked.

The case was tried without a jury. The court entered findings of fact and conclusions of law generally in favor of the Hales. It found that Basin Motor willfully violated Section 57-12-6 in failing to disclose to the Hales the repairs to the car, and willfully and knowingly violated Section 57-12-2(D)(6) (representing that goods are original or new if they are deteriorated, altered, reconditioned, reclaimed, used or secondhand). The court determined the Hales were damaged in the amount of $425.50, using as the measure of damages the $10,175 value the car would have had without damage, less the $9,749.50 payoff value of the loan, which the court found to be the "true value" given for the car on trade-in. It then trebled the damages pursuant to the 1987 amendment to Section 57-12-10(D), resulting in an award of $1,276.50. The court refused the requested findings of the Hales on common-law fraud and punitive damages. It found that the trebling of damages was punitive in nature, which precluded an additional punitive damage award. The court also awarded attorney fees of $7,741.93, and costs of $954.27.

On appeal, Basin Motor claims the court erred in (1) finding that it violated the Unfair Trade Practices Act, (2) awarding damages to the Hales, (3) trebling those damages, and (4) awarding certain costs. The Hales cross-appeal, claiming that the court erred by (1) using the wrong measure of damages, (2) excluding common-law fraud and punitive damages from the judgment, and (3) failing to award as costs "lost paid vacation time." The Hales also claim they are entitled to attorney fees and costs on appeal.

Violation of the Unfair Trade Practices Act. Section 57-12-2(D)(6), "representing that goods are original or new if they are deteriorated, altered, reconditioned, reclaimed, used or secondhand," is a specific example listed in the Act of an unfair trade practice. The subsection applies to the sale of all goods including automobiles. We agree with Basin Motor that there was no violation of the Act under this subsection. There is no substantial evidence to support a conclusion that Basin Motor represented that the car was "new" as that term is used in Section 57-12-2(D)(6). Basin Motor represented that the vehicle had been used as a demonstrator. The vehicle apparently had been driven for several thousand miles, and the Hales even had requested that certain minor repairs be taken care of before they took delivery. A statement by Basin Motor that the vehicle was a "new demonstrator" may well have been misleading in light of the undisclosed collision damage and repairs, and in that manner the representation may have come within the terms of the general definition of an unfair trade practice, see NMSA 1978, Section 57-12-2(D); however, we cannot conclude Basin Motor's representation was intended to suggest that the vehicle was unused or "new." This is the import of the specific Section 57-12-2(D)(6).

There is, however, substantial evidence to support the finding of an unfair trade practice based upon a violation of Section 57-12-6(B) and we direct our attention solely to that subsection of the Act. Section 57-12-6(B) is applicable only to motor vehicles. The provision requires the seller of a motor vehicle to furnish the purchaser with an affidavit that (1) describes the vehicle, and (2) states to the best of the seller's knowledge whether there has been an "alteration or chassis repair due to wreck damage." NMSA 1978, Sec. 57-12-6(B).1

Rejecting the Hales' argument that the "alteration" language of Section 57-12-6(B) applies to any change due to wreck damage, we agree with Basin Motor that the phrase "due to wreck damage" modifies only "chassis repair" and not "alteration." As we understand the plain meaning of the subsection, a vehicle might be deemed altered regardless of whether it had been wrecked. If the legislature had intended to limit the entire subsection to wreck damage it clearly could have required, "in the event of wreck damage, the seller shall provide an affidavit stating whether there has been any alteration or chassis repair."

As a rule of construction, the word "or" should be given its normal disjunctive meaning unless the context of a statute demands otherwise. Public Serv. Co. v. New Mexico Public Serv. Comm'n, 106 N.M. 622, 747 P.2d 917 (1987). Thus, the term "alteration" stands alone and must be interpreted by itself. This interpretation follows from the doctrine of the "last antecedent." "[R]elative and qualifying words, phrases, and clauses are to be applied to the words or phrase immediately preceding, and are not to be construed as extending to or including others more remote." In re Goldsworthy's Estate, 45 N.M. 406, 412, 115 P.2d 627, 631 (1941); Garcia v. Schneider, Inc., 105 N.M. 234, 731 P.2d 377 (Ct.App.1986). A contrary interpretation of the statute would limit severely the circumstances under which disclosure of alteration is required. We believe the legislature did not intend to enact so narrow a provision, and one so lacking in a reasonable relationship to the purposes of the Unfair Trade Practices Act.

We further agree with Basin Motor that not just any change in the condition of a motor vehicle from its original state will trigger the disclosure requirements of Section 57-12-6(B). The disclosure requirement is intended to protect consumers from deceptive business practices that negate reasonable expectations. Therefore, within the context of Section 57-12-6(B), goods are "altered" if, as measured against the reasonable expectations of the consumer, the characteristics or value of the motor vehicle is affected in a meaningful way. Cf. Boulevard Chrysler-Plymouth, Inc. v. Richardson, 374 So.2d 857, 859 (Ala.1979) (car is not "new" if not in accord with reasonable expectations of "new" car purchaser); Watkins v. Roach Cadillac, Inc., 7 Kan.App.2d 8, 13, 637 P.2d 458, 463 (1981) (car is altered if materially different from that which it is held out to be).

In this case, the evidence of the body repairs made to the car was sufficient evidence for the trial court to have concluded that the characteristics or value of the car was affected in a meaningful way. The repairs entailed more than just substituting one standardized part with a new one. The repairs were ones that would affect the value of the motor vehicle in the eyes of a consumer. The evidence showed that the right front fender was replaced, the right door frame was straightened, holes were drilled in the door panel to pull out a dent, the sheet metal in the damaged area was ground down and resurfaced with body filler, and the damaged area was repainted. This is sufficient evidence to support the trial court's finding that the vehicle was altered within the meaning of Section 57-12-6(B) and that the repairs should have been disclosed by affidavit.

Basin Motor also argues that the court erred in finding a violation of the Unfair Trade Practices Act because the Act requires a showing of multiple violations. The Act does not so require. Ashlock v. Sunwest Bank of Roswell, N.A., 107 N.M. 100, 102, 753 P.2d 346, 348 (1988) (expressing disagreement with In re Klein, 39 B.R. 20 (Bankr.D.N.M.1984) to the extent Klein held that the Act applied only to recurring conduct).

Damages issues. Basin Motor claims that the court erred in its calculation of damages because the Hales actually suffered none, and even if damages were suffered, they should not have been trebled. In their cross-appeal the Hales...

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