Hughes v. Box, s. 86-1136

• Decision Date: 12 March 1987
• Docket Number: Nos. 86-1136,86-1310,s. 86-1136
• Citation: 814 F.2d 498
• Parties: Alice HUGHES and David Hughes, d/b/a United Auto Sales, Appellees, v. Fred BOX d/b/a Regency Vans, Appellant, Gene Wilson, d/b/a Regency Vans, Joseph E. Hammett, d/b/a Regency Vans, Appellant. Alice HUGHES and David Hughes, d/b/a United Auto Sales, Appellants, v. Fred BOX d/b/a Regency Vans, Appellee, Gene Wilson, d/b/a Regency Vans, Joseph E. Hammett, d/b/a Regency Vans, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 498

814 F.2d 498

Alice HUGHES and David Hughes, d/b/a United Auto Sales, Appellees, v. Fred BOX d/b/a Regency Vans, Appellant, Gene Wilson, d/b/a Regency Vans, Joseph E. Hammett, d/b/a

Regency Vans, Appellant.

Alice HUGHES and David Hughes, d/b/a United Auto Sales, Appellants, v. Fred BOX d/b/a Regency Vans, Appellee, Gene Wilson, d/b/a Regency Vans, Joseph E. Hammett, d/b/a

Regency Vans, Appellee.

Nos. 86-1136, 86-1310.

United States Court of Appeals Eighth Circuit.

Submitted Nov. 14, 1986.

Decided March 12, 1987.

Warren H. Sapp, Kansas City, Mo., for appellant.

Bernard E. Brown, Kansas City, Mo., for appellees.

Before McMILLIAN, ARNOLD, and WOLLMAN, Circuit Judges.

WOLLMAN, Circuit Judge.

Plaintiffs, Alice and David Hughes, doing business as United Auto Sales, brought suit against Fred Box and Joseph Hammett ¹ for violations of Subchapter IV of the Motor Vehicle Information and Cost Savings Act, 15 U.S.C. Secs. 1981-91 (1982), and for common law fraud. Plaintiffs alleged that the conversion van that they purchased from an auto auction in Denver, Colorado, was falsely represented to them as having traveled 31,395 miles when in fact the actual mileage was at least 131,395 miles. They further alleged that defendants sold the vehicle to plaintiffs' transferor under the same misrepresentation.

After a jury trial, the district court ² entered judgment against defendant Hammett for $8,000 in actual damages on the common law fraud claim, $75,000 in punitive damages, and $2,392 in monetary sanctions for failure to provide discovery. Judgment was also entered against defendant Box for $21,000 in treble damages and $5,949.88 in attorney fees under the federal odometer statute.

Although defendants raise a number of issues on appeal, we find that only three necessitate extended discussion: (1) whether defendants fully complied with the disclosure requirements of the federal odometer statute; (2) whether the amount of actual damages assessed by the jury was improper; and (3) whether the punitive damages assessed against defendant Hammett was so excessive as to reflect bias, passion, or prejudice on the part of the jury. We affirm.

To best understand this case, it is helpful to trace the chain of title of the van in question. The vehicle, a 1980 Ford Econoline van, was originally owned by National Car Rental and then sold to Metro Auto Auction (Metro) for $2,517. Metro later sold the vehicle to Regency Vans ³ (Regency) in September 1983 with documentation that the van had 129,497 miles on it. Regency subsequently transferred the vehicle to B & B Enterprises (B & B), a Missouri automobile dealership; approximately two weeks later, the van was transferred from B & B back to Regency.

Sometime between the time Regency first received the van and the time when the title was transferred back to Regency from B & B, the vehicle, which had originally been titled in Illinois, became titled in Oklahoma, and the mileage on the title was altered to read 29,497 miles. It appears that a title-laundering process was employed whereby a carefully placed notary stamp was used to obliterate the fact that the mileage exceeded 100,000, and the typewritten "129,000" on the Illinois title was changed and a handwritten "29,497 miles" was put in its place.

After receiving the title back from B & B, Regency transferred the van to Colorado Auto Auction (CAA) in November 1983. The mileage was represented as being 29,497. That same month, CAA sold the vehicle to plaintiffs at an auction for $8,025. At that time, plaintiffs received a sales invoice incorporating a federal odometer mileage statement certifying that the actual mileage on the vehicle was 31,395 miles.

Since CAA did not have title to the van at the time of the auction, it notified Regency that the van had been sold and requested the title. Defendant Hammett signed the title in the name of defendant Fred Box, the owner of Regency, and supposedly forwarded it with an odometer statement showing the miles on the van to be over 100,000. CAA received the title--and presumably the odometer statement--and forwarded the title to plaintiffs' bank. Apparently, CAA did not include along with the title the odometer statement indicating that the van's mileage exceeded 100,000 miles. Consequently, besides the sales invoice, the only other document that plaintiffs received from CAA that showed the van's mileage was the title, which falsely indicated the van's mileage to be 29,497 only a month before the purchase and which further showed a certification on the assignment of title that the van's mileage was 31,395 miles at the time of purchase.

I.

Defendants first contend that the district court erred in denying their motions for directed verdict and in failing to sustain their motions for judgment notwithstanding the verdict because the facts presented at trial conclusively established that they had complied with the federal odometer statute. ⁴

The standard of review applied in reviewing a ruling on a motion for judgment n.o.v. is the same as that used in reviewing a decision on a motion for directed verdict. Country Shindig Opry, Inc. v. Cessna Aircraft Co., 780 F.2d 1408, 1411 (8th Cir.1986). Hinkle v. Christensen, 733 F.2d 74, 77 (8th Cir.1984). An appellate court must:

consider the evidence in the light most favorable to the prevailing party, assuming as true all facts that the prevailing party's evidence tended to prove and giving him the benefit of all favorable inferences that reasonably may be drawn from the proven facts. If, in light of the above, reasonable jurors could differ as to the conclusions that could be drawn from the evidence, the court must deny the motion for a directed verdict.

Country Shindig, 780 F.2d at 1411 (citation omitted). Applying this standard, we find that the district court did not err in denying defendants' motions for directed verdict and judgment n.o.v.

Under Subchapter IV of the Motor Vehicle Information and Cost Savings Act, 15 U.S.C. Secs. 1981-91 (1982), the following disclosure must be made upon transferring ownership of a motor vehicle: "(1) Disclosure of the cumulative mileage registered on the odometer. (2) Disclosure that the actual mileage is unknown, if the odometer reading is known to the transferor to be different from the number of miles the vehicle has actually traveled." 15 U.S.C. Sec. 1988(a) (1982). Moreover, the statute provides that "[n]o transferor shall violate any rule prescribed under this section or give a false statement to a transferee in making any disclosure required by such rule." 15 U.S.C. Sec. 1988(b) (1982).

The Act was passed by Congress to protect purchasers of motor vehicles by entitling them to rely on representations made regarding a vehicle's mileage. 15 U.S.C. Sec. 1981 (1982). Such information allows a purchaser of a motor vehicle to make a more informed decision as to a vehicle's value, safety, and reliability. Id. Ryan v. Edwards, 592 F.2d 756, 760 (4th Cir.1979). Given the fact that the statute is remedial legislation, it "should be broadly construed to effectuate its purpose." Ryan, 592 F.2d at 760.

The thrust of defendants' argument is that they complied with the letter and the spirit of the statute, even though their initial representation to CAA concerning the van's mileage was incorrect. Defendants point to the fact that prior to the transfer of title by CAA to plaintiffs, Regency sent CAA a second odometer statement revealing that the van had over 100,000 miles on it. Relying on Tusa v. Omaha Auto Auction, Inc., 712 F.2d 1248, 1253-54 (8th Cir.1983), they assert that CAA was at fault for not forwarding the second mileage statement to plaintiffs and for failing to establish a system that would detect defendants' initial misrepresentation of the van's mileage.

We find this case to be analogous to Ryan v. Edwards, 592 F.2d 756 (4th Cir.1979), wherein the transferor, Edwards, placed an advertisement in a newspaper describing the automobile for sale as a "low mileage" vehicle. Ryan, responding to the advertisement, met with Edwards and was told by him that the vehicle's actual mileage was roughly 32,000 miles. Edwards also showed Ryan an odometer mileage statement incorrectly stating the vehicle's mileage. Ryan paid for and took possession of the vehicle. Several days later, Ryan received the title certificate to the car revealing that the vehicle had actually traveled 110,020 miles.

The trial court ruled that Sec. 1988(b) did not apply to the newspaper advertisement or to Edwards' oral statements and entered a judgment n.o.v. in Edwards' favor. The Fourth Circuit reversed the trial court's ruling and reinstated the verdict, stating: "A transferor cannot insulate himself from liability under the statute by completing the odometer mileage statement correctly, and then contradicting that statement with false oral claims." Id. at 761.

The lesson of Ryan is that a transferor of a motor vehicle cannot blow both hot and cold with respect to a vehicle's actual mileage and then reasonably expect his actions to amount to compliance with the statute. Given the broad purpose of the Act to protect motor vehicle purchasers from inaccurate mileage representations by sellers, a transferor should, at the very least, have some duty to specifically and unambiguously alert the transferee to the fact that the transferor's initial representation of the vehicle's mileage was incorrect, and to make clear the vehicle's actual mileage. This defendants failed to do.

Defendants make much of the fact that CAA failed to send the second odometer statement to plaintiffs. We note, however, that CAA is not a party to this lawsuit, and our concern is not with CAA's potential liability to plaintiffs. Moreover, even if CAA had forwarded to plaintiffs all the paperwork that defendants claim they sent to CAA, plaintiffs still would not have been sufficiently informed of the van's correct mileage. No one disputes that the...