McGinty v. Beranger Volkswagen, Inc.

• Citation: 633 F.2d 226
• Decision Date: 25 September 1980
• Docket Number: No. 80-1065,80-1065
• Parties: Kathleen McGINTY, Plaintiff, Appellant, v. BERANGER VOLKSWAGEN, INC. et al., Defendants, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

Page 226

633 F.2d 226

Kathleen McGINTY, Plaintiff, Appellant, v. BERANGER VOLKSWAGEN, INC. et al., Defendants, Appellees.

No. 80-1065.

United States Court of Appeals First Circuit.

Submitted May 9, 1980.

Decided Sept. 25, 1980.

Steven M. Wise and Fraser & Wise, Brighton, Mass., on brief, for plaintiff, appellant.

Howard A. Pinta and Pinta & Murphy, Boston, Mass., on brief, for Ralph J. Lenoci, defendant, appellee.

Before COFFIN, Chief Judge, CAMPBELL and BOWNES, Circuit Judges.

BOWNES, Circuit Judge.

After learning that the 1971 Dodge Dart she bought in 1976 had 126,514 miles on it, not just the 26,514 she thought, Kathleen McGinty filed suit against various defendants under 15 U.S.C. § 1989 (the federal odometer act), Mass.G.L. c. 266, § 141 (the Massachusetts odometer act), and Mass.G.L. c. 93A, § 9 (the Massachusetts consumer protection act). McGinty obtained default judgments against (1) Beranger Volkswagen, Inc., a New Hampshire corporation that bought the car from a customer who disclosed the odometer had "turned over," i. e., started over at 0 after registering 99,999.9 miles, (2) King Motors, a Massachusetts business that bought the car from Beranger, (3) Carefree Auto Dealers, Inc., a Massachusetts corporation that bought from King, and (4) Ralph Lenoci, a director and agent of Carefree, who sold the car to McGinty. ¹ The district court assessed triple damages of $4334.25 under 15 U.S.C. § 1989, plus $2,000 in attorney's fees, against Beranger, and held King, Carefree and Lenoci jointly liable for actual damages of $1,444.75 under Mass.G.L. c. 93A, § 9 and for $1,000 in attorney's fees. McGinty's appeal concerns only the judgment against Lenoci.

McGinty challenges the judgment against Lenoci as insufficient for three reasons: (1) the district court erroneously denied recovery against Lenoci under 15 U.S.C. § 1989, (2) the district court erroneously refused to double or triple damages under Mass.G.L. c. 93A, § 9, and (3) the award of attorney's fees was too low. We consider these contentions in order.

RECOVERY UNDER 15 U.S.C. § 1989

McGinty sued all defendants including Lenoci under 15 U.S.C. § 1989, a provision of Subchapter IV of the Motor Vehicle Information and Cost Savings Act, 15 U.S.C. §§ 1981-1991, which sets forth certain "odometer requirements" in an effort to prevent odometer tampering and protect car purchasers. 15 U.S.C. § 1981. Section 1989 imposes liability for triple damages (or at least $1500) upon "(a)ny person who, with intent to defraud, violates any requirement imposed under this subchapter." The requirement that the defendants allegedly violated with intent to defraud is contained in 15 U.S.C. § 1988, which at the time of the sale to McGinty provided, in pertinent part:

(a) Not later than 90 days after October 20, 1972, the Secretary (of Transportation) shall prescribe rules requiring any transferor to give the following written disclosure to the transferee in connection with the transfer of 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 travelled.

Such rules shall prescribe the manner in which information shall be disclosed under this section and in which such information shall be retained.

(b) It shall be a violation of this section for any transferor to violate any rules under this section or to knowingly give a false statement to a transferee in making any disclosure required by such rules.

15 U.S.C. § 1988 (Supp.1973) ((b) amended 1976). The rules promulgated under this section and in effect at the time of the sale are found at 49 C.F.R., Chapter V, Part 580 (1975).

In support of her federal claim, McGinty alleged the following in her amended complaint-- While stating that the defendants' defaults "establish(ed) all the well-pleaded facts in the complaint and the plaintiff's right to all recovery warranted by law on those facts," the district court denied recovery under 15 U.S.C. § 1989 against King, Carefree and Lenoci on the ground that their intent to defraud had not been pled with sufficient particularity. In this regard, the court said the following:

: (1) that when Birlem Pomroy sold the Dodge Dart in January 1976 to Beranger Volkswagen for $700, as part of a trade-in, he disclosed that the odometer had turned over, but was instructed by Beranger to write 25,932 instead of 125,932 on the odometer mileage statement, (2) that when Beranger transferred the car to King Motors later in the month, Beranger stated deliberately, falsely, and with intent to defraud on the odometer mileage statement and the New Hampshire title that the odometer mileage was 25,932, knowing the odometer mileage accrued was actually 125,932, (3) that when King transferred the car to Carefree Auto at the end of January, King stated deliberately, falsely, and with intent to defraud on the odometer mileage statement and the New Hampshire title that the odometer mileage accrued was 26,100 miles, (4) that when Carefree transferred to McGinty in March, it did not give her an odometerileage statement as required by 15 U.S.C. § 1988, and (5) that, at the time of the transfer from Carefree to McGinty, Carefree through its agent Lenoci "made both oral and written misrepresentations, deliberately, falsely, and with intent to defraud, that the total mileage accrued to the automobile ... was 26,514 miles," upon which misrepresentations McGinty relied in purchasing the car for $2124.75. Later in the complaint McGinty alleged that the unlawful acts of each defendant were committed deliberately, knowingly, and with intent to defraud in violation of 15 U.S.C. § 1989.

The general conclusory allegations of knowledge and fraudulent intent are insufficient to warrant a finding that King, Carefree and Lenoci actually knew that the odometer certificates which they received from their sellers were false or that they acted with fraudulent intent. It appears from the plaintiff's testimony at the hearing on assessment of damages that the car was in apparent good condition, so that there were no circumstances which should have put them on notice to investigate the certified mileage. The actual facts alleged not only failed to support but tended to negate the general averment of knowledge. Cf. Kadar Corp. v. Milbury, 549 F.2d 230, 233 (1st Cir. 1977). Fraud must be alleged with particularity, Fed.R.Civ.P. 9(b), and this requirement may not be avoided by pleading "fraudulent intent," even though intent may be averred generally. Id.

We do not agree that recovery against Lenoci was unwarranted because intent to defraud was inadequately pled. Rule 9(b) provides:

In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other conditions of mind of a person may be averred generally.

The clear weight of authority is that Rule 9 requires specification of the time, place, and content of an alleged false representation, but not the circumstances or evidence from which fraudulent intent could be inferred. E. g., Cramer v. General Tel. & Elecs. Corp., 582 F.2d 259, 272-73 (3d Cir. 1978), cert. denied, 439 U.S. 1129, 99 S.Ct. 1048, 59 L.Ed.2d 90 (1979); Felton v. Walston & Co., 508 F.2d 577, 581-82 (2d Cir. 1974); Walling v. Beverly Enterprises, 476 F.2d 393, 397 (9th Cir. 1973); 5 C. Wright & A. Miller, Federal Practice and Procedure: Civil § 1297, at 403-04, § 1298, at 410, § 1301, at 426 (1969 ed.); 2A Moore's Federal Practice P 9.03, at 9-23 (2d ed. 1979). Contra, Ross v. A. H. Robins Co., 607 F.2d 545, 557-58 (2d Cir. 1979), cert. denied, 446 U.S. 946, 100 S.Ct. 2175, 64 L.Ed.2d 802 (1980). This interpretation of Rule 9 comports with its language, harmonizes the rule with Rule 8, which requires that averments in pleadings be concise and direct, and at the same time fulfills a major purpose of Rule 9: to give We also think Lenoci's intent to defraud was "well-pleaded" in the sense that the pertinent allegations were at least minimally sufficient to support a default judgment under 15 U.S.C. § 1989. To be sure, McGinty alleged that King had misrepresented the car's mileage in writing in transferring the car to Carefree. But such written misrepresentation did not necessarily preclude Lenoci's having gleaned the "true facts" either informally or from his examination of the condition of the vehicle, or both. The alleged misrepresentation by King did not so clearly contradict the allegation of Lenoci's intent to defraud as to prevent that element from being "well-pleaded" for default judgment purposes. See Trans World Airlines, Inc. v. Hughes, 308 F.Supp. 679, 683 (S.D.N.Y.1969), modified on other grounds, 449 F.2d 51 (2d Cir. 1971), rev'd on other grounds, 409 U.S. 363, 93 S.Ct. 647, 34 L.Ed.2d 577 (1973).

                adequate notice of the plaintiff's claim of fraud or mistake, see 5 C. Wright & A. Miller, supra, § 1297, at 403-04.  2 Judged by this standard, the complaint here complied with Rule 9(b).  With respect to Lenoci, the complaint as a whole alleged that in selling the car to McGinty, he represented the mileage as 26,514, although the odometer had "turned over" and the mileage was over 100,000.  Because the circumstances of the misrepresentation were specified, 3 it was sufficient under Rule 9 and 15 U.S.C. § 1989 for McGinty to have pled generally that Lenoci's intent was fraudulent.  Compare Robinette v. Griffith, 483 F.Supp. 28, 30-31 (W.D.W.Va.1979)
                

The district court, it is true, did not bottom its finding that Lenoci lacked fraudulent intent solely on the absence of supporting facts in the complaint. The court also observed that plaintiff's testimony at the hearing on damages- that the car appeared in good condition when she purchased it-tended to undercut plaintiff's conclusions concerning Lenoci's...