Haynes v. Manning

• Decision Date: 09 June 1989
• Docket Number: Civ. A. No. 86-2458-S.
• Parties: Joseph E. HAYNES, Elaine Louise Haynes, Plaintiffs, v. Richard J. MANNING, Shawnee Mission Ford, Inc., Defendants.
• Court: U.S. District Court — District of Kansas

717 F. Supp. 730

Joseph E. HAYNES, Elaine Louise Haynes, Plaintiffs, v. Richard J. MANNING, Shawnee Mission Ford, Inc., Defendants.

Civ. A. No. 86-2458-S.

United States District Court, D. Kansas.

June 9, 1989.

COPYRIGHT MATERIAL OMITTED

David M. Harding, Bill W. Richerson, Van Osdol, Magruder, Erickson and Redmond, Kansas City, Mo., Bernard E. Brown, Law Offices of Bernard E. Brown, Overland Park, Kan., Reid F. Holbrook, Timothy P. Orrick, Holbrook, Ellis, & Heaven, P.A., Kansas City, Kan., for plaintiffs.

Louis S. Wexler, Overland Park, Kan., for Richard Manning.

Richard T. Merker, Stephanie Warmund, Wallace, Saunders, Austin, Brown & Enochs, Chtd., Overland Park, Kan., for defendants.

Richard Manning, Dayton, Ohio, pro se.

MEMORANDUM AND ORDER

SAFFELS, District Judge.

This matter is before the court on plaintiffs' motion for a new trial, for judgment notwithstanding the verdict, and to alter or amend judgment. Also before the court is defendant Shawnee Mission Ford, Inc.'s motion for judgment notwithstanding the verdict and to alter or amend judgment. In this case, plaintiffs asserted claims of violations of The Motor Vehicle Information and Cost Savings Act, 15 U.S.C. §§ 1981 et seq. ("federal odometer statute"), common law fraud, and breach of warranties and thus recovery of damages under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2310(d)(1). This case was tried from November 28 to December 1, 1988. The jury returned a verdict for defendants on plaintiffs' federal odometer statute claim and their warranty claims. The jury, however, returned a verdict in plaintiffs' favor on the common law fraud claims. The jury awarded plaintiffs Four Thousand Dollars ($4,000.00) in damages from defendant Shawnee Mission Ford, Inc. and One Hundred Dollars ($100.00) in damages from defendant Richard J. Manning. Oral argument has been requested on the pending motions. The court has determined that oral argument would not be of material assistance in the determination of these matters. Rule 206(d), Rules of Practice of the United States District Court for the District of Kansas.

On May 13, 1985, plaintiffs purchased a 1981 Ford Crown Victoria Stationwagon from Schlozman Ford for Seven Thousand, Nine Hundred Fifty-Five Dollars ($7,955.00). Numerous persons had previously owned the vehicle. The vehicle was originally sold to defendant Richard J. Manning ("Manning") on August 6, 1982. During the period of his ownership, Manning put many miles on the car and caused the odometer to roll over the 100,000 miles indication. In February of 1984, Manning sold the vehicle to Central Auto Brokerage, Inc. in Kansas City, Missouri. During this transaction, Manning signed all documents provided by Central Auto Brokerage for his signature to consummate the transaction. One of these documents was a statement required by the federal odometer statute, indicating the actual mileage of the vehicle. The document signed by Manning reflected only the mileage shown on the odometer and, thus, was 100,000 miles less than the actual miles on the vehicle.

Also, in February, 1984, Central Brokerage sold the vehicle to defendant Shawnee Mission Ford. Central Auto Brokerage gave Shawnee Mission Ford a federal odometer statement indicating the mileage on the vehicle at 45,630, when the actual mileage was 145,630. On August 10, 1984, defendant Shawnee Mission Ford sold the vehicle to Gary Ellis, d/b/a Ellis Motor Company, ("Ellis"), of Lawrence, Kansas. Shawnee Mission Ford gave Ellis a federal odometer statement showing the vehicle's mileage to be 45,787 miles. On August 17, 1984, Ellis sold the vehicle to Ray Smith Ford. Ellis gave Ray Smith Ford a federal odometer statement reflecting the inaccurate mileage. On August 22, 1985, Ray Smith Ford sold the vehicle back to Ellis, providing an inaccurate odometer statement with this transaction. On April 26, 1986, Ellis sold the vehicle to Schlozman Ford. Ellis gave Schlozman Ford an inaccurate odometer statement which stated the vehicle's mileage to be 46,743 miles.

Thereafter, Schlozman Ford sold the vehicle to plaintiffs and in the transaction gave plaintiffs a federal odometer statement which indicated the mileage to be 100,000 less than the actual mileage on the car. Richard Manning, Central Auto Brokerage, Inc., Shawnee Mission Ford, Gary Ellis, Ray Smith Ford and Schlozman Ford were all originally named defendants in this action. Plaintiffs failed to get adequate service of process on defendant Central Auto Brokerage, Inc.; therefore, the case against it was dismissed without prejudice. Defendants Ellis, Ray Smith Ford and Schlozman Ford entered into a settlement agreement with plaintiffs. Thus, this matter went to trial against defendants Manning and Shawnee Mission Ford.

A. Plaintiffs' Motions.

1. Admission of evidence that plaintiffs settled their claims against other dealers.

During the trial, the court allowed, over plaintiffs' objections, the introduction of evidence that plaintiffs had reached settlement agreements on their claims against three dealers who had previously owned the vehicle at issue. The court admitted this evidence to assist the trier of fact in understanding the factual background of this case. Without evidence of why the other dealers in the chain of ownership were not litigants, the jury would be confused and left to speculate. The Seventh Circuit Court of Appeals has stated that "settlement negotiations are admissible to explain another dispute and to assist the trier of fact in understanding the case." MCI Communications v. AT & T, 708 F.2d 1081, 1152 (7th Cir.1983). In the present case, the evidence of settlements with other parties was admitted for the purpose indicated by the Seventh Circuit and not to prove liability or invalidity of plaintiffs' claims. Therefore, the evidence is not prohibited by Rule 408 of the Federal Rules of Evidence.

In addition, evidence that plaintiffs had asserted claims against other car dealers was admissible because of the abandoned pleadings doctrine. Under this doctrine, earlier abandoned pleadings are admissible evidence as admissions by the plaintiffs. See Friedman v. Sealy, Inc., 274 F.2d 255, 259 (10th Cir.1959) (The fact admissions were contained in pleadings does not make them inadmissible, "nor is it significant that the representation was made in litigation of a third party."); Jelleff v. Braden, 233 F.2d 671, 675-77 (D.C. Cir.1956) (pleadings against other parties are admissions); Dreier v. Upjohn Co., 196 Conn. 242, 247, 492 A.2d 164, 167-68 (1985) (Superseded or abandoned pleadings are admissible as an admission as long as plaintiff has an opportunity to explain why pleadings were abandoned.).

For these reasons, the court finds no error in the introduction of evidence regarding plaintiffs' settlements of claims against other parties. Such evidence was necessary for the jury to properly consider and understand this case. Also, this evidence was admissible under the superseded or abandoned pleadings theory.

2. Instructions regarding Federal Odometer Statute claim.

In Instruction No. 8, the court informed the jury on the law regarding plaintiffs' claims under the federal odometer statute. Plaintiffs make numerous arguments, contending this instruction was erroneous.

First, plaintiffs argue that the court's definition of "intent to defraud" was incorrect. An essential element of plaintiffs' federal odometer statutory claim was that defendants acted with an intent to defraud someone. The court's instruction stated in part:

To act with the intent to defraud means to act with specific intent to deceive or cheat, ordinarily for the purpose of bringing some financial gain to one's self.

Plaintiffs contend that the court should have instructed the jury that defendants could have acted with reckless disregard rather than with specific intent to deceive.

The court is convinced that Instruction No. 8 properly and correctly defined "intent to defraud." The court is not alone in this definition. See Shipe v. Mason, 500 F.Supp. 243 (E.D.Tenn.1978), aff'd, 633 F.2d 218 (6th Cir.1980). In Shipe, the court stated that under 15 U.S.C. § 1989(a), intent to defraud means "to act willfully and with specific intent to deceive any purchaser or potential purchaser of a motor vehicle...." Id. at 245. The court finds that the challenged instruction correctly stated the law regarding intent to defraud.

Plaintiffs contend that reckless disregard for the truth of the mileage is sufficient to prove intent to defraud under the federal odometer statute. The court finds that this is not a correct statement of the law. To recover under the federal law, plaintiffs must show that defendants had actual or constructive knowledge of the mileage/odometer discrepancy. See Williams v. Toyota of Jefferson, Inc., 655 F.Supp. 1081, 1085 (E.D.La.1987). In the cases finding liability under a constructive knowledge theory, defendants had been put on notice of the possible inaccuracies of odometers. See, e.g., Williams, 655 F.Supp. at 1085 (defendant received disclosure statement from previous owner indicating odometer could not be relied on); Leach v. Bishop Bros. Auto Auction, 624 F.2d 34, 35 (5th Cir.1980) (defendant put on notice of possible rollover).

The court instructed the jury that for plaintiffs to prevail on the federal odometer claim, plaintiffs had to show that "the defendant knew, or should have known" of the discrepancy in mileage. This instruction properly reflects the law that plaintiffs must show actual or constructive knowledge on the part of defendants. To instruct that the plaintiffs need only show that defendants acted in reckless disregard of the truth of the mileage to satisfy the intent to defraud element, as plaintiffs contend here, would have been an incorrect statement of the law. Actual or constructive knowledge must be shown.

Secondly, plaintiffs argue that the court erroneously instructed the jury on the burden of proof...