Mardis v. Ford Motor Credit Co.

• Decision Date: 20 May 1994
• Citation: 642 So.2d 701
• Parties: Wayne MARDIS and Jacqueline Mardis v. FORD MOTOR CREDIT COMPANY. 1921935.
• Court: Alabama Supreme Court

Page 701

642 So.2d 701

Wayne MARDIS and Jacqueline Mardis v. FORD MOTOR CREDIT COMPANY.

1921935.

Supreme Court of Alabama.

May 20, 1994.

E. Ray McKee, Jr., Huntsville, for appellants.

S. Dagnal Rowe and G. Bartley Loftin III of Burr & Forman, Huntsville, for appellee.

HOUSTON, Justice.

The plaintiffs, Wayne and Jacqueline Mardis, appeal from a summary judgment for the defendant, Ford Motor Credit Company ("FMCC"), the assignee of a consumer credit contract signed by the Mardises when they purchased an automobile from Cloverleaf Lincoln-Mercury, Inc. ("Cloverleaf"). We affirm.

The evidence, viewed in the light most favorable to the Mardises, indicates that the Mardises purchased a used 1985 automobile from Cloverleaf based on representations from a salesman that the automobile was a 1986 model. The Mardises did not discover until approximately a year and a half later that they had been sold a 1985 model automobile. By the time they made this discovery, the Mardises had driven the automobile over 53,000 miles. The Mardises stopped paying for the automobile shortly after learning of the problem, and FMCC repossessed it. When FMCC thereafter attempted to collect the deficiency owed on the debt after the resale of the automobile, the Mardises sued, seeking to rescind the contract and to recover damages from FMCC under federal law based on allegations of breach of contract and fraud on the part of Cloverleaf. The Mardises also sought to rescind the contract and to recover damages from FMCC under state law based on allegations that Cloverleaf was acting as FMCC's agent when its salesman misrepresented the model year of the automobile and that FMCC should therefore be held responsible for Cloverleaf's actions, under the doctrine of respondeat superior. FMCC counterclaimed, seeking to recover the balance owed on the debt. The trial court entered a summary judgment for FMCC on the Mardises' claims and certified that judgment as final pursuant to Rule 54(b), A.R.Civ.P. FMCC's counterclaim remains pending below.

The Mardises make four contentions to which FMCC takes exception:

1) That language included in the contract pursuant to a Federal Trade Commission ("FTC") regulation, 16 C.F.R. § 433 (1993), gave rise to an affirmative action on their part to rescind the contract and to recover damages from FMCC based on the alleged wrongful actions of Cloverleaf;

2) That they presented sufficient evidence to show that Cloverleaf was FMCC's agent;

3) That they presented sufficient evidence to show that they timely revoked their acceptance of the automobile and rescinded the contract; and

4) That the trial court failed to give them sufficient time to respond to FMCC's summary judgment motion.

With regard to the Mardises' first contention, 16 C.F.R. § 433.2 (1993) ("Preservation of Consumers' Claims and Defenses, Unfair or Deceptive Acts or Practices"), provides that the following statement, which was incorporated into the Mardises' contract, must be included in a consumer credit contract:

"NOTICE

"Any holder of this consumer credit contract [FMCC] is subject to all claims and defenses which the debtor [the Mardises] could assert against the seller [Cloverleaf] of goods or services obtained pursuant hereto or with the proceeds hereof. Recovery hereunder by the debtor shall not exceed amounts paid by the debtor hereunder."

The commentary to this regulation indicates that the FTC did not intend for the consumer to be restricted to defensive theories only. 40 Fed.Reg. 53526-7. The FTC's position with respect to the remedies afforded by the regulation does not, however, support the Mardises' contention that their claims against Cloverleaf may be maintained against FMCC, the assignee/creditor.

"From the consumer's standpoint, this means that a consumer can (1) defend a creditor suit for payment of an obligation by raising a valid claim against the seller as a setoff, and (2) maintain an affirmative action against a creditor who has received payments for a return of monies paid on account. The latter alternative will only be available where a seller's breach is so substantial that a court is persuaded that rescission and restitution are justified. The most typical example of such a case would involve non-delivery, where delivery was scheduled after the date payments to a creditor commenced."

40 Fed.Reg. 53524. The FTC regulations further state that "[c]onsumers will not be in a position to obtain an affirmative recovery from a creditor, unless they have actually commenced payments and received little or nothing of value from the seller" and that a "total failure of performance" is necessary to entitle a consumer to sue an assignee/creditor for a return of money paid on account." 40 Fed.Reg. 53527.

The undisputed evidence in the present case shows that the Mardises took possession of the automobile in question and drove it over 53,000 miles. Therefore, because the Mardises received an automobile of substantial value from Cloverleaf (although they may not have received the model that they thought they had contracted for), they had no basis under the FTC regulations to sue FMCC for the wrongdoing of Cloverleaf. The Mardises' remedies under the FTC regulations are defensive in nature and should be considered by the trial court in connection with FMCC's counterclaim. Accordingly the summary judgment was proper with respect to the Mardises' federal law claims for rescission and damages based on allegations of wrongdoing by Cloverleaf.

The Mardises' second contention (i.e., that Cloverleaf was acting as FMCC's agent when its salesman misrepresented the model year of the automobile and that FMCC should therefore be held liable under the doctrine of respondeat superior for Cloverleaf's actions) is equally without merit. Although agency is almost always an issue for the trier of fact, "the party asserting it has the burden of adducing sufficient evidence to prove its existence." Wood v. Shell Oil Co., 495 So.2d 1034 (Ala.1986). Once the party moving for a summary judgment has made a prima facie showing that there is no dispute as to the material facts of the case, the burden shifts to the nonmovant to produce "substantial evidence" creating such a dispute. § 12-21-12, Ala.Code 1975; Bean v. Craig, 557 So.2d 1249, 1252 (Ala.1990). The Mardises argue that because FMCC supplied the contract form and could approve or disapprove the credit application filled out by Cloverleaf's salesman, Cloverleaf became FMCC's agent. The Mardises further argue that FMCC's exercise of its rights as a secured creditor under Article 9 of the U.C.C., § 7-9-101 et seq., Ala.Code 1975, was in fact a ratification of Cloverleaf's actions. We disagree with both arguments, and hold that the Mardises failed to meet their burden of showing a genuine issue of material fact.

This Court has held on several occasions that actions similar to those taken by FMCC in this case do not create a principal-agent relationship. In Kimbrel v. Mercedes-Benz Credit Corp., 476 So.2d 94 (Ala.1985), Kimbrel purchased a tractor from Liberty Truck Sales, financed through the Freightliner Credit Corporation. Like the Mardises, Kimbrel had no contact with any employee or representative of the creditor corporation. Also like the Mardises, Kimbrel alleged that the seller made misrepresentations during the sales transaction. Kimbrel's proof of an agency relationship was essentially similar to that asserted by the Mardises: that Freightliner Credit had a right of approval over Kimbrel's credit, that Freightliner Credit's name appeared on the contract Kimbrel signed with Liberty Truck, and that Freightliner Credit dictated the terms of Kimbrel's payments. This Court stated in that case:

"None of these actions is inconsistent with the extending of credit by an institution, and these actions would not legally amount to a ratification of any statements made during negotiations by Liberty employees. There is no evidence in the record [regarding] the relationship between Liberty and Freightliner [that] would support a finding of agency."

Kimbrel, 476 So.2d at 97.

In Turner v. Deutz-Allis Credit Corp., 544 So.2d 840 (Ala.1988), this Court stated that "the record indicates that Deutz sells retail finance plans to dealers. The dealer in turn presents those plans to retail customers and, finally, the dealer offers the paper to Deutz for consideration. Clearly, under the applicable principles of agency law, these actions would not create a principal-agent relationship between Deutz and [the dealer]." That is exactly the same situation presented in this case, and we reach the same result--there is no principal-agent relationship.

We note the Mardises' assertion that Tony Moore, Cloverleaf's owner, admitted in his deposition to being FMCC's agent. However, this Court in Guess v. Snyder, 378 So.2d 691 (Ala.1979), ruled that "[t]he trial court can consider only that material before it at the time of submission of the motion" and that "[a]ny material filed after submission of the motion comes too late." 378...