McGowan v. Chrysler Corp.

• Decision Date: 19 November 1993
• Citation: 1993 WL 477336,631 So.2d 842
• Parties: Dock McGOWAN v. CHRYSLER CORPORATION and Heritage Chrysler-Plymouth-Dodge. 1920634.
• Court: Alabama Supreme Court

Page 842

631 So.2d 842

Dock McGOWAN v. CHRYSLER CORPORATION and Heritage Chrysler-Plymouth-Dodge.

1920634.

Supreme Court of Alabama.

Nov. 19, 1993.

As Modified on Second Denial of Rehearing

Jan. 21, 1994.

Lynn W. Jinks III and L. Bernard Smithart of Jinks, Smithart & Jackson, Union Springs, and Andrew J. Smithart III and John W. Stahl of Pearson & Smithart, P.C., Tuscaloosa, and Walter E. McGowan of Gray, Langford, Sapp, McGowan & Gray, Tuskegee, and Frank M. Wilson of Beasley, Wilson, Allen, Main & Crow, P.C., Montgomery, for Dock McGowan.

James F. Walsh, Timothy A. Palmer and J. Franklin Ozment of Lange, Simpson, Robinson & Somerville, Birmingham, for Chrysler Corp.

John Martin Galese of Galese & Moore, Birmingham, for Heritage Chrysler-Plymouth-Dodge.

Joseph S. Bird III and T. Michael Brown of Bradley, Arant, Rose & White, Birmingham, and Phillip D. Brady and Jane Lightfoot, Detroit, MI, for amicus curiae American Auto. Mfrs. Ass'n, Inc.

Matthew C. McDonald and E. Barry Johnson of Miller, Hamilton, Snider & Odom, Mobile, for amicus curiae Alabama Retail Ass'n.

Robert A. Huffaker of Rushton, Stakely, Johnston & Garrett, Montgomery, for amicus curiae Auto. Dealers Ass'n of Alabama.

Corey B. Moore, Asst. Gen. Counsel, for amicus curiae Alabama Independent Auto. Dealer's Ass'n. On Application for Rehearing

SHORES, Justice.

The opinion of August 27, 1993, is withdrawn, and the following is substituted therefor.

Dock McGowan appeals from a summary judgment entered for Chrysler Corporation ("Chrysler") and its dealer, Heritage Chrysler-Plymouth-Dodge ("Heritage"). We affirm.

"A summary judgment is proper when there exists no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. In determining whether a summary judgment was properly entered, this Court will view the evidence in a light most favorable to the nonmovant and will resolve all reasonable doubts concerning the existence of a genuine issue of material fact against the moving party. In determining the existence or absence of a genuine issue of material fact, this Court is limited to a consideration of the factors that were before the trial court when it ruled on the summary judgment motion. However, this Court's reasoning is not limited to that applied by the trial court.

"Once the moving party makes a prima facie showing that no genuine issue of material fact exists, then the burden shifts to the nonmovant to go forward with evidence demonstrating the existence of a genuine issue of material fact. Because this action was filed after June 11, 1987, the nonmovant must meet this burden by 'substantial evidence.' Under the substantial evidence test, the nonmovant must present 'evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved.' "

Chatham v. CSX Transportation, Inc., 613 So.2d 341, 343 (Ala.1993) (quoting West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989) (citations omitted)).

The evidence, viewed in a light most favorable to McGowan, suggests the following facts: McGowan bought a new 1987 Chrysler Fifth Avenue automobile from Heritage on October 26, 1987. The salesman at Heritage represented the car to McGowan as a top-of-the-line, smooth-riding luxury car. Advertisements by Chrysler made similar representations. Soon after he purchased the car, McGowan began to experience problems with the brakes, with engine stalling and hesitation, and with excessive vibration when travelling above 60 mph. He took the car back to Heritage for service, but was told the car could not be serviced until the next week. Heritage went out of business before it could service his car. McGowan took the car to other dealers twice; most repairs were done at McGowan's gasoline service station and at a nearby tire store. Within two years of his purchase, McGowan was aware of the problems with his car. McGowan did not know, until he was contacted by a lawyer in 1991, that Chrysler was aware of recurring problems, such as excessive vibration at high speeds, with its line of Fifth Avenue cars produced between 1982 and 1989, and that most of Chrysler's dealers were aware of these problems because Chrysler had supplied them with kits to fix the problems when the cars were brought in for service or repair under warranty.

McGowan sued Chrysler and Heritage on December 6, 1991, alleging fraudulent misrepresentation, suppression of material facts, breach of contract (claiming to be a third-party beneficiary of the dealer service contract between Chrysler and Heritage), and several other claims that he later dismissed. The trial court granted Chrysler's motion for a summary judgment against all of McGowan's remaining claims, holding that the fraud claims were barred by the statute of limitations and that the third-party beneficiary claim was "not tenable." C.R. 1084-85. McGowan appeals.

McGowan argues that the fraud was not in the faulty product, i.e., problems with the brakes, with engine hesitation, and with high-speed vibration, which he noticed soon after his purchase of the car. Rather, he contends that the fraud lay in the fact that the defendants knew in 1987, when he purchased his car, that the Fifth Avenue line of cars had recurring defects, but represented the car as a top-of-the-line, smooth-riding luxury car and sold it to him without disclosing any of the problems that they knew existed with the Fifth Avenue car. Thus, he argues, he did not, and could not, discover the fraud until 1991, when he was made aware that Chrysler and its dealers had known of the problems with the car but had not revealed them to him.

Chrysler contends that the two-year statute of limitations barred McGowan's fraud claims because he knew of his car's problems within two years of the purchase, but did not sue until four years after the purchase. The trial court held that the statutory period of limitations had run on the fraud claims, because, it held, the fraud should have been discovered when McGowan became aware of problems with his car; the court entered a summary judgment for the defendants. The trial court also stated in its order that anything said by the dealer in selling the car was "puffing" and was not actionable as fraud.

"A fraud action is subject to the two-year statute of limitations of Ala.Code 1975, § 6-2-38(l ), but the two-year period does not begin to run until the plaintiff has discovered, or should have discovered, the fraud. See § 6-2-3." Howard v. Mutual Sav. Life Ins. Co., 608 So.2d 379, 381 (Ala.1992). We use an objective standard to determine when a party should have discovered fraud for the purpose of the statute of limitations. Hicks v. Globe Life & Acc. Ins. Co., 584 So.2d 458, 463 (Ala.1991). "Facts which provoke inquiry in the mind of a [person] of reasonable prudence, and which, when followed up, would have led to the discovery of the fraud, constitute sufficient evidence of the discovery." Willcutt v. Union Oil Co. of California, 432 So.2d 1217, 1219-20 (Ala.1983). "The question of when a party discovered or should have discovered fraud which would toll the statute of limitations is for the jury." Vandegrift v. Lagrone, 477 So.2d 292, 295 (Ala.1985). However, there are times when this question is removed from the purview of the jury. "The question of when a plaintiff should have discovered fraud should be taken away from the jury and decided as a matter of law only in cases where the plaintiff actually knew of facts that would have put a reasonable person on notice of fraud." Hicks, supra, 584 So.2d at 463 (emphasis original). Thus, it is the knowledge of such facts that would have alerted a reasonable person to the existence of a potential fraud, and not actual knowledge of the fraud itself, that determines whether the question of the tolling of the limitations period in a fraud case can be decided as a matter of law.

The record reveals that McGowan knew, more than two years before he filed his complaint, that his 1987 Fifth Avenue car did not perform like the smooth-riding luxury car he was told it would be. However, his fraud claims do not rely solely on his contention that the car he bought did not perform according to his expectations of how a luxury car should perform. Rather, McGowan argues that the fraudulent misrepresentation occurred when the dealer sold him a car after representing it to him as a luxury car, when, according to McGowan, at the time of the sale both the dealer and Chrysler were aware of the recurring and allegedly irreparable problems with the entire line of Chrysler Fifth Avenue automobiles. McGowan also argues that fraudulent suppression of a material fact occurred when both the dealer and Chrysler failed to inform him that they were aware of the recurring problems with the Fifth Avenue line of cars. Thus, for the statute of limitations to have run on his fraud claims as a matter of law, McGowan must have actually known of such facts as would have alerted a reasonable person to the possibility of any alleged fraud (i.e., that the defendants sold him the car at a time when they were aware of the recurring problems with the Fifth Avenue line of cars).

Although McGowan knew more than two years before he filed his complaint that his car had problems, we cannot agree with the trial court that knowledge of these problems would be sufficient to alert a reasonable person to the fraud complained of. The facts support a conclusion that McGowan's car had problems, but these problems are not sufficient as a matter of law to alert a reasonable person to the possibility that the entire line of Fifth Avenues had similar problems or that the defendants were aware of these problems. But for other reasons we discuss later, this question should have been put before the jury. Reasonable people could disagree on whether any inquiry or investigation by a...