Mitchell v. Backus Cadillac-Pontiac, Inc.

• Decision Date: 12 July 2005
• Docket Number: No. A05A0327.,No. A05A0326.,A05A0326.,A05A0327.
• Citation: 618 S.E.2d 87,274 Ga. App. 330
• Parties: MITCHELL v. BACKUS CADILLAC-PONTIAC, INC. Backus Cadillac-Pontiac, Inc. v. Mitchell.
• Court: Georgia Court of Appeals

274 Ga. App. 330

Page 87

618 S.E.2d 87

MITCHELL v. BACKUS CADILLAC-PONTIAC, INC.

Backus Cadillac-Pontiac, Inc. v. Mitchell.

No. A05A0326.

No. A05A0327.

Court of Appeals of Georgia.

July 12, 2005.

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Murphy A. Cooper, Savannah, for appellant.

Stanley E. Harris, Jr., Karsman, Brooks & Callaway, P.C., for appellee.

MIKELL, Judge.

In Case No. A05A0326, Willie Mitchell appeals from the grant of a directed verdict to Backus Cadillac-Pontiac, Inc. ("Backus"), in his suit for rescission, breach of warranty, fraud, and other causes of action. We reverse in part, holding that the trial court erred in directing a verdict against him on his claim for rescission. The remainder of the judgment is affirmed. In Case No. A05A0327, Backus appeals from the denial of its motion for summary judgment. We affirm as to the rescission claim but do not consider the remainder of Backus's appeal as it is moot.¹

Case No. A05A0326

A motion for directed verdict should be granted only when there is no conflict in the evidence as to any material issue and the evidence introduced, with all reasonable deductions therefrom, demands a particular verdict. All evidence must be construed most favorably to the non-movant. Before the trial court can direct a verdict for the movant, he must find from the evidence that there is no evidence of any kind supporting the nonmovant's position.²

So viewed, the evidence shows that on December 15, 1997, Mitchell bought a 1995 Cadillac Eldorado with 45,296 miles on it from Backus for $22,180, trading in a car for $4,400 and financing the remainder through a home equity loan, which he continues to pay at the rate of $76 per week.³ According to Mitchell, he asked the salesman whether the car had been in a wreck, and the salesman replied that it had not. Mitchell subsequently learned that the car had been in a collision in early 1996, requiring $3,874.57 in repairs, which were performed by Backus. Mitchell began experiencing problems with the vehicle and brought it to Backus for numerous repairs. Mitchell sought to return the vehicle and cancel the contract, but Backus refused.

On October 8, 1999, Mitchell filed a pro se action against Backus in magistrate court, but the case was transferred to superior court. Mitchell then retained counsel and filed an amended complaint alleging (1) breach of warranty, both express and implied, under the Uniform Commercial Code (UCC), (2) breach of contract, (3) violation of the Magnuson-Moss Warranty Act ("Magnuson-Moss"),⁴ (4) rescission, and (5) fraud and deceit. The parties filed cross-motions for summary judgment. The trial court denied both motions, and the case proceeded to trial on the issues of breach of express warranty, revocation of acceptance, fraud, rescission, and violation of Magnuson-Moss.

At trial, Mitchell testified that he went to look at the Eldorado on a Friday. The salesman, Charlie Cook, let him take the vehicle home over the weekend. Mitchell testified that he did not notice anything wrong with it other than a few exterior blemishes. According to Mitchell, Cook assured him that the car had never been wrecked. Mitchell testified that he relied on this statement and that he would not have purchased the car had he known about the prior damage to it.⁵ Mitchell further testified that he learned about the collision about three weeks after he purchased it when he sought out the car's previous owner, Lance Smith, in order to obtain an extra set of keys.

According to Mitchell, Smith invited him into his office while Smith telephoned George B. Backus, Jr., ("Mr. Backus") one of the dealership's owners. After the conversation, Mitchell went to Mr. Backus's office, told him that he knew that the car had been wrecked, and informed Mr. Backus that he did not want it. Mr. Backus then agreed to find Mitchell another car, an "even swap." However, Mr. Backus never found him an even trade; instead, the dealership located vehicles for which it wanted thousands of dollars more. Three of the vehicles Backus found would have required Mitchell to pay an additional $13,600 to $19,000.

Mr. Backus testified that he became aware in January 1998 that Mitchell was dissatisfied with the car, not because it had been in a wreck, but because he had some problems with it that had not been corrected when it was delivered. Mr. Backus testified that his dealership repaired the problems. He further testified that Mitchell did not complain about the car being in a collision until "much later," in June or July, after Backus tried to find him a replacement car. According to Mr. Backus, his used car manager went to two auctions for several months trying to find the identical car, but he was unsuccessful.

Mitchell testified that he experienced numerous problems with the vehicle, including the fact that frequently it would not start. Mitchell testified that Backus picked up the car with a wrecker seven or eight times, put a new battery in it three times, and repaired a shortage in the power driver's seat. Backus also told him that the car's cell phone was draining the battery, so the repair department removed the phone. Backus finally told him that he had to drive the car every day so that the battery would not drain. Mitchell had a sun roof installed on the vehicle by a third party, and Mr. Backus testified that, based on the repair orders, the "no start" problem was caused by the sun roof installation and the lack of the car being driven.

Mitchell testified that at the time of trial, the car was not running; that the engine skipped; and that the windshield, which had to be replaced after the wreck, leaked water and drained onto the control module. Seventy-three pages of repair orders were introduced into evidence, although some were duplicates.

After the evidence was closed, Backus moved for a directed verdict on the fraud because there was no evidence of the diminution in value of the vehicle attributable to the collision. The trial court granted the motion, ruling that Mitchell failed to prove damages. In addition, the court directed a verdict on the issues of rescission and revocation of acceptance because Mitchell retained possession of the vehicle. Mitchell appeals these rulings as well as the denial of his motion for summary judgment.

1. In his fifth enumerated error, Mitchell contends that the trial court erred in directing a verdict on his fraud claim for failure to prove damages.

(a) "[A] party alleging fraudulent inducement to enter a contract has two options: (1) affirm the contract and sue for damages from the fraud or breach; or (2) promptly rescind the contract and sue in tort for fraud."⁶ These two options each contain an element of fraud. But the measure of damages is quite different. If the disgruntled party chooses the first option, the "affirm and sue" option, the measure of his actual damages "is the difference between the actual value of the property at the time of purchase and what the value would have been if the property had been as represented."⁷ If he makes the second choice, the "rescind and sue" option, the measure of his actual damages is the amount of money necessary to restore him to the status he held before the transaction.⁸

In the case at bar, Mitchell attempted to pursue both causes of action. The trial court properly ruled that Mitchell's "affirm and sue" claim failed because he failed to prove damages. He did make an offer of proof that, based on his research on the Internet, the car was worth 18 percent less than what he paid for it.

[A]n owner of property can be qualified to state an opinion as to value. But opinion evidence as to the value of an item, in order to have probative value, must be based upon a foundation that the witness has some knowledge, experience or familiarity with the value of the property or similar property and he must give reasons for the value assessed and also must have had an opportunity for forming a correct opinion.⁹

Moreover, "the question of whether a witness has established sufficient opportunity for forming a correct opinion, and a proper basis for expressing his opinion, is for the trial court. Absent an abuse of discretion, the trial court's decision will not be disturbed."¹⁰ In this case, the trial court did not abuse its discretion in excluding Mitchell's opinion testimony concerning the value of the car after it had been wrecked and repaired. Although Mitchell testified that he had bought and sold cars over a period of 30 years, he further testified that the only bases for his knowledge of the value of the automobile in its defective condition were talking to people in the car business and performing internet research. The first basis was inadmissible hearsay, and when the court probed Mitchell concerning the second ground, he stated that the vehicle was worth 18 percent less regardless of the extent of the damage incurred in the wreck. Under these circumstances, the trial court did not abuse its discretion in ruling that Mitchell failed to lay a proper foundation for the admission of his opinion evidence.

(b) However, Mitchell's failure to introduce probative evidence as to the value of the vehicle in its true condition at the time of purchase is not fatal to his claim for rescission, i.e., his "rescind and sue" option. If he recovered pursuant to that claim, his actual damages would be measured by the amount it would take to restore him to the status he held before the transaction.¹¹ If a purchaser has promptly restored the subject of the contract to the seller, or offered to do so, his action is one for rescission at law and he is entitled to recover as restitution the purchase price actually paid by him.¹² There was evidence in the record of the purchase price.

The measure of damages for a "rescind and sue" claim is always the amount necessary to restore the purchaser to the status he held before the transaction. But that figure may or...