McGraw v. Loyola Ford

• Decision Date: 28 January 1999
• Docket Number: No. 505,505
• Parties: James Henry McGRAW v. LOYOLA FORD, INC.
• Court: Court of Special Appeals of Maryland

723 A.2d 502

124 Md. App. 560

James Henry McGRAW v. LOYOLA FORD, INC.

No. 505, Sept. Term, 1998.

Court of Special Appeals of Maryland.

January 28, 1999.

David Albright (Daniel T. Corrigan and Albright, Brown & Goertemiller on the brief), Baltimore, for appellant.

Kimberly Dunn Spelman (Steven F. Wrobel and Martin, Junghans, Snyder & Bernstein, P.A. on the brief), Baltimore, for appellee.

Argued before MURPHY, C.J., and HOLLANDER and KENNEY, JJ HOLLANDER, Judge.

James Henry McGraw, appellant, instituted suit in the Circuit Court for Baltimore City against Loyola Ford, Inc. (hereinafter, the "dealer" or "Loyola Ford"), appellee, and Chrysler Credit Corporation ("Chrysler Credit").¹ The claims arose from appellant's purchase in December 1994 of a 1994 Ford Thunderbird, and his subsequent trade of that vehicle, in May 1995, for a 1995 Ford Taurus SHO. In particular, appellant alleged claims for usury, in violation of Maryland's Retail Installment Sales Act (hereinafter, the "RISA"), Md.Code (1975, 1990 Repl.Vol., 1994 Cum.Supp.), §§ 12-609(a), (g) of the Commercial Law Article ("C.L."), intentional misrepresentation, and unfair and deceptive trade practices, in violation of Maryland's Consumer Protection Act, Md.Code (1975, 1990 Repl.Vol., 1994 Cum.Supp.), C.L. § 13-301 et seq. (hereinafter, the "CPA" or the "Act"). After the circuit court granted Loyola Ford's motion for summary judgment, appellant timely noted his appeal. He presents several issues for our review, which we have reformulated:

I. Did the circuit court err in granting summary judgment as to appellant's claim of unfair and deceptive trade practices, in violation of the CPA?

II. Did the circuit court err in granting summary judgment as to appellant's common law claim for intentional misrepresentation?

III. Did the circuit court err in granting summary judgment as to appellant's usury claims under the RISA?

We answer the first two questions in the negative. As to the third question, for the reasons set forth in Section III(B), we shall, in part, vacate the entry of summary judgment as to Count II, and remand for further proceedings. See Md. Rule 8-604.

Factual Summary

On December 27, 1994, appellant purchased a new 1994 Ford Thunderbird automobile from Loyola Ford. On the same date, he entered into a retail installment contract, by which the vehicle was financed at a rate of 16.88% per annum over a period of five years. In the weeks following the purchase, McGraw experienced a variety of difficulties with the car, including a faulty brake rotor, a defective light bulb, a squeaky window, and shaking of the steering wheel when the car was driven at low speeds. Because appellant was "very unhappy" with the performance of the Thunderbird, he brought the vehicle back to Loyola Ford for repairs on several occasions. Appellant advised the dealer that "[he] was considering legal action under Maryland's `lemon' laws." He did not pursue his "lemon law" claim, however. Instead, appellant chose to replace the Thunderbird with a 1995 Taurus SHO. The dealer's actions with respect to the Taurus are the focus of appellant's appeal.

On September 17, 1996, appellant filed a two-count complaint against Loyola Ford, arising from his purchase of the Taurus. In Count I, appellant alleged that Loyola Ford engaged in unfair and deceptive trade practices, in violation of C.L. § 13-301. The claim was based on Loyola Ford's alleged misrepresentation on the buyer's order that the Taurus was "new," and its assertion that the Taurus had "the most outstanding value... in the dealership; every consideration in pricing and/or trade in allowance has been given to reduce the settlement price to its lowest". Count II alleged that the interest rate charged with respect to the financing of the Taurus was usurious, in violation of C.L. § 12-609(a). Appellant sought damages of $24,288.68.

On July 24, 1997, following the close of discovery on July 7, 1997, appellant amended his complaint to add Count III, which set forth a claim for intentional misrepresentation. Thereafter, on August 25, 1997, appellee moved for summary judgment. On October 7, 1997, one month before the scheduled trial date, and shortly before the summary judgment hearing, appellant filed a Second Amended Complaint, supplementing his usury claim. He alleged that Loyola Ford violated C.L. § 12-609(g) when it failed to disclose a "secret profit" that it realized when it assigned the retail installment contract to Chrysler Credit.²

Some of the information obtained during discovery was presented to the court in support of appellee's summary judgment motion. The discovery, which included a deposition of appellant and documents relevant to the transactions, is pertinent here.

At his deposition, appellant testified that, during one of his visits to Loyola Ford regarding the problems he experienced with the Thunderbird, he noticed the Taurus on the lot. Appellant decided to trade the Thunderbird for a different car, and expressed interest in the Taurus to Tony Smith, a Loyola Ford salesperson. According to appellant, Smith told him that Loyola Ford "had a good deal" on the Taurus. Smith also described the Taurus as a "top of the line car," which appellant took to mean that the car was "loaded" with extra features. The Taurus was equipped with several optional items, including a sunroof, compact disc player, leather seating, keyless entry, power seats, air conditioning, and paint and fabric protection. Appellant accompanied Smith on a test drive of the vehicle. When Smith drove the Taurus, appellant rode in the back seat, and he never looked to see how many miles were on the car.

On May 25, 1995, appellant decided to purchase the 1995 Taurus. Accordingly, he signed a "Buyer's Order" form that indicated a "base price" for the vehicle of $28,866.00, and a total price of $34,615.00, including options, delivery charge, taxes, and title service. Additionally, the document reflected an "allowance for trade in" of the Thunderbird of $17,825.00, less the same amount as the "balance owing" for that vehicle. The buyer's order also indicated that McGraw would pay a $3,000.00 down-payment and receive a $1,500.00 "Ford Rebate." After the down payment and the rebate, the document reflected a total balance due of $30,115.00.

The May 25 buyer's order also provided a box for the dealer to indicate whether the vehicle was "new," "used," or a "demo." Loyola Ford checked the box denoting that the vehicle was "new." The form also provided a space adjacent to the box on which to write the specific mileage of the vehicle. Immediately under the word "mileage", Loyola Ford wrote the following: "(6161K)".

In addition, the buyer's order form contained a paragraph disclosing the dealer's policy regarding the sale of demonstrator vehicles. It stated:

A demonstrator is the most outstanding value that we sell in the dealership; Every consideration in pricing and/or trade allowance has been given to reduce the settlement price to its lowest. However, every demonstrator sold may have paint touchup, mouldings dented, an upholstery tear, wheel covers chipped, or other conditions considered visible at the time of sale. It is the policy of this dealership that no adjustments be made after the sale and after delivery, unless specifically stated on our sales contract. A squeak or touch up or mechanical adjustment will be made free of charge only within 10 working days of delivery date.

Appellant testified at his deposition that he read the May 25 buyer's order, including the preprinted portion of the form. Moreover, he conceded that Smith told him the Taurus was a demonstrator vehicle. Further, appellant testified that he understood the phrase "demonstrator vehicle" to mean a car that "had been used" by employees of the dealership to "drive back and forth to home." The following portion of appellant's deposition testimony is relevant:

APPELLEE'S COUNSEL: Before you signed the contract of sale on the Taurus, did anyone actually say to you that the Taurus was new?

APPELLANT: The '95?

APPELLEE'S COUNSEL: Uh-huh.

APPELLANT: No, nobody told me it was new.

APPELLEE'S COUNSEL: In fact, they told you it was a demonstrator, correct?

APPELLANT: Yes.

* * *

APPELLEE'S COUNSEL: Did you read this buyer's order referring to the May 25, 1995 buyer's order before signing it, Mr. McGraw?

APPELLANT: Yes, I did.

APPELLEE'S COUNSEL: Did you read everything on it?

APPELLANT: Yes. Almost everything.

APPELLEE'S COUNSEL: Did you read the preprinted information? Do you understand what I mean?

APPELLANT: No, I don't.

APPELLEE'S COUNSEL: There is a lot of preprinted text on the buyer's order, not something that the salesperson would have inserted in, but that would be on the document before writing it up for a particular customer. Do you understand what I'm asking now?

APPELLANT: Yes.

APPELLEE'S COUNSEL: And at the time that you signed this document on May 25 th, 1995, you understood that the car had 6,161 miles on it; is that right?

APPELLANT: At the time I purchased it?

APPELLEE'S COUNSEL: At the time you signed this document, the buyer's order, on May 25th, 1995?

APPELLANT: Yes.

The next day, May 26, 1995, appellant entered into a retail installment sales contract with Loyola Ford for the financing of the Taurus, by which he promised to pay $31,335.00 over 60 months, with interest charged at the rate of 16.75% per annum. Thus, the total obligation under the contract, including the finance charge, was $46,797.60. Loyola Ford arranged financing for the purchase through Chrysler Credit. A settlement sheet provided to appellant from Loyola Ford during discovery indicated that Chrysler's "APR buy rate" was 9.85%, although the retail installment contract provided that appellant was charged the rate of 16.75%.

Apparently, appellant failed to pay the $3,000.00 down-payment reflected in the May 25 buyer's order. Consequently, on May 29, 1995, appellant signed a second...