Ioffe v. Skokie Motor Sales, Inc., 04-3083.

• Decision Date: 07 July 2005
• Docket Number: No. 04-3083.,04-3083.
• Citation: 414 F.3d 708
• Parties: Garry IOFFE, Plaintiff-Appellant, v. SKOKIE MOTOR SALES, INC., doing business as Sherman Dodge, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

414 F.3d 708

Garry IOFFE, Plaintiff-Appellant, v. SKOKIE MOTOR SALES, INC., doing business as Sherman Dodge, Defendant-Appellee.

No. 04-3083.

United States Court of Appeals, Seventh Circuit.

Argued April 15, 2005.

Decided July 7, 2005.

Richard J. Rubin (argued), Santa Fe, NM, Lance A. Raphael, Consumer Advocacy Center, Chicago, IL, for Plaintiff-Appellant.

Ira M. Levin (argued), Burke, Warren, MacKay & Serritella, Chicago, IL, for Defendant-Appellee.

Before FLAUM, Chief Judge, and BAUER and EVANS, Circuit Judges.

FLAUM, Chief Judge.

Plaintiff-appellant Garry Ioffe filed suit regarding a used car he purchased from defendant-appellee Skokie Motor Sales, Inc., doing business as Sherman Dodge, a car dealership. Although Ioffe alleges a violation of 49 C.F.R. § 580.5(c), a regulation promulgated under the federal Odometer Act, 49 U.S.C. § 32701 et seq., his claim is wholly unrelated to the vehicle's odometer or mileage. For the reasons stated herein, we agree with the district court that an Odometer Act claim that is brought by a private party and is based on a violation of § 580.5(c) requires proof that the vehicle's transferor intended to defraud a transferee with respect to mileage. Accordingly, we affirm the entry of summary judgment in favor of Sherman Dodge.

I. Background

On September 12, 2001, Sherman Dodge purchased a 1993 Toyota Tercel, giving its customer a trade-in allowance of only $500 for the car because its certificate of title stated that it had been "rebuilt." On October 1, 2001, Sherman Dodge sold the same Toyota Tercel to Garry Ioffe for $2,637.11, but did not tell him that the car had been rebuilt or show him the car's title. At the time of sale, Sherman Dodge gave Ioffe an odometer disclosure statement which said that, to the best of Sherman Dodge's knowledge, the Tercel's odometer reading of 90,258 was accurate. Although Sherman Dodge did not give it to Ioffe at the time, the title listed the same mileage. Ioffe does not dispute the accuracy of the disclosed mileage.

Shortly after the purchase, Ioffe started having mechanical problems with the Tercel. He consulted a mechanic and learned for the first time that the car had been rebuilt. When Sherman Dodge refused to remedy the situation to his liking, Ioffe traded in the car at another dealership, receiving $500 for it.

On September 30, 2003, Ioffe filed suit against Sherman Dodge in federal court, alleging two claims under Illinois law and one claim under the federal Odometer Act. Following cross-motions for summary judgment, the district court granted Sherman Dodge's motion for summary judgment on the Odometer Act claim, denied Ioffe's motion on that claim, and declined to exercise supplemental jurisdiction over Ioffe's state-law claims. In ruling on the federal claim, the court stated that the Odometer Act requires a private plaintiff to prove (1) a violation of the Act or a related regulation, and (2) that the violation was committed with intent to defraud. The evidence viewed in the light most favorable to Ioffe showed that Sherman Dodge had failed to disclose the mileage in writing on the title in violation of 49 C.F.R. § 580.5(c), and that its intent in withholding the title was fraudulent. Nevertheless, the district court held that the Odometer Act claim failed as a matter of law because Sherman Dodge intended to defraud Ioffe with regard to the car's rebuilt status and not its mileage.

Ioffe appeals, arguing that the district court misinterpreted the statute and regulation, and that the "intent to defraud" element of an Odometer Act claim based on a violation of 49 C.F.R. § 580.5(c) may be satisfied by demonstrating fraudulent intent unrelated to a vehicle's mileage.

II. Discussion

Summary judgment is appropriate if the evidence presented by the parties "show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). We review the district court's grant of summary judgment de novo, viewing all facts and drawing all reasonable inferences in the non-moving party's favor. Eiencorp, Inc. v. Rocky Mountain Radar, Inc., 398 F.3d 962, 965 (7th Cir.2005).

The question before the Court—whether the Odometer Act creates a private right of action based on a violation of 49 C.F.R. § 580.5(c) where the transferor's fraudulent intent is unrelated to a vehicle's odometer or mileage— comes to us as a matter of first impression. Neither the United States Supreme Court nor any of the federal courts of appeals have addressed it. We begin our inquiry into the proper interpretation of the statute and regulation by determining "whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case." Robinson v. Shell Oil Co., 519 U.S. 337, 340, 117 S.Ct. 843 136 L.Ed.2d 808 (1997). "The plainness or ambiguity of statutory language is determined by reference to the language itself, the specific context in which that language is used, and the broader context of the statute as a whole." Id. at 341, 117 S.Ct. 843. "Our inquiry must cease if the statutory language is unambiguous and `the statutory scheme is coherent and consistent.'" Id. at 340, 117 S.Ct. 843 (quoting United States v. Ron Pair Enters., Inc., 489 U.S. 235, 240, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989)).

The Odometer Act requires the written disclosure of a vehicle's mileage upon transfer and authorizes the Secretary of Transportation to prescribe procedures for doing so:

Under regulations prescribed by the Secretary of Transportation that include the way in which information is disclosed and retained under this section, a person transferring ownership of a motor vehicle shall give the transferee the following written disclosure:

(A) Disclosure of the cumulative mileage registered on the odometer.

(B) Disclosure that the actual mileage is unknown, if the transferor knows that the odometer reading is different from the number of miles the vehicle has actually traveled.

49 U.S.C. § 32705(a)(1). Based upon this delegation of authority, the National Highway Traffic Safety Administration ("NHTSA")¹ promulgated the following regulation: "In connection with the transfer of ownership of a motor vehicle, each transferor shall disclose the mileage to the transferee in writing on the title or . . . on the document being used to reassign the title." 49 C.F.R. § 580.5(c). Finally, the section of the Odometer Act which creates a private right of action provides in relevant part:

(a) Violation and amount of damages.—A person that violates this chapter or a regulation prescribed or order issued under this chapter, with intent to defraud, is liable for 3 times the actual damages or $1,500, whichever is greater.

(b) Civil actions.—A person may bring a civil action to enforce a claim under this section in an appropriate United States district court or in another court of competent jurisdiction.

49 U.S.C. § 32710.

Based on these provisions, Ioffe presents the following syllogism: a plaintiff has a private right of action under § 32710 if there has been a violation of the Odometer Act or any of its implementing regulations and the violator intended to defraud the plaintiff; Sherman Dodge violated 49 C.F.R. § 580.5(c), promulgated pursuant to 49 U.S.C. § 32705(a)(1), by disclosing the Tercel's mileage on a document other than its title, and Sherman Dodge intended to defraud Ioffe by hiding the title's "rebuilt" designation; therefore, Ioffe has a claim against Sherman Dodge under the Act. Upon consideration of the language of the statute and the regulation, the specific context in which that language is used, and the broader context of the statute and its implementing regulations, see Robinson, 519 U.S. at 341, 117 S.Ct. 843, we conclude that Ioffe's first premise misstates the law. Section 32710 does not create a private right of action for all violations of the Act and regulations that are accompanied by any "intent to defraud." Rather, where a plaintiff alleges a violation of 49 C.F.R. § 580.5(c), he must prove intent to defraud as to a vehicle's mileage. With a correct statement of the law, Ioffe's syllogism, and his claim, fall apart.

The provision of the Odometer Act that provides a private right of action states: "A person that violates this chapter or a regulation prescribed . . . under this chapter, with intent to defraud, is liable." 49 U.S.C. § 32710(a). The verb "to violate" and its object "this chapter or a regulation" state the prohibited conduct, while the adverbial phrase "with intent to defraud" modifies the prohibited conduct and defines the way in which it must be committed for a private claim to arise. Ioffe first tries to get to his desired interpretation by separating these two aspects of the provision. He contends that we first should ask if there was any violation, and then if there was any contemporaneous intend to defraud. This is not a proper way to read the statute.

When analyzing a prohibited act, we must construe general statements of prohibited conduct (such as "[violation of] this chapter or a regulation") as "shorthand designation[s] for specific acts or omissions which violate the Act [or a regulation]." United States v. Int'l Minerals & Chem. Corp., 402 U.S. 558, 562, 91 S.Ct. 1697, 29 L.Ed.2d 178 (1971). Because intent requirements modify specific alleged violations, we must replace any shorthand designation for prohibited conduct with a specific violation before interpreting the intent element. Cf. Int'l Minerals, 402 U.S. at 561-62, 91 S.Ct. 1697. Here, Ioffe alleges a violation of 49 C.F.R. § 580.5(c), which provides in relevant part that each transferor of a motor vehicle "shall disclose the mileage to the transferee in writing on the title." Replacing § 32710(a)'s shorthand designation with the specific conduct prohibited by § 580.5(c), we find that the Act creates the following private right of action: "A person...