Peel v. Credit Acceptance Corp.

• Decision Date: 01 October 2013
• Docket Number: No. WD 75409.,WD 75409.
• Citation: 408 S.W.3d 191
• Parties: Carrie A. PEEL, Respondent, v. CREDIT ACCEPTANCE CORPORATION, et al., Appellant.
• Court: Missouri Court of Appeals

408 S.W.3d 191

Carrie A. PEEL, Respondent,

v.CREDIT ACCEPTANCE CORPORATION, et al., Appellant.

No. WD 75409.

Missouri Court of Appeals, Western District.

May 28, 2013.

Application for Transfer to Supreme Court Denied June 25, 2013.

Application for Transfer Denied Oct. 1, 2013.

Bernard E. Brown, Dale K. Irwin and Gina M. Chiala, Kansas City, MO, for respondent.

James F. Bennett and Robert F. Epperson, Clayton, MO and James R. Jarrow, Kansas City, MO, for appellant.

Before Division One: GARY D. WITT, Presiding Judge, THOMAS H. NEWTON, Judge and MARK D. PFEIFFER, Judge.

GARY D. WITT, Judge.

Carrie A. Peel (“Peel”) purchased a used vehicle from Car Time L.L.C. (“Car Time”), a car dealership specializing in selling to those with credit problems, using credit extended by Credit Acceptance Corporation (“CAC”). Peel signed a sales agreement to purchase the vehicle and took possession but never received the vehicle's title. Peel's subsequent attempts to register the vehicle failed due to the lack of a title. Peel filed suit against both Car Time and CAC, alleging fraud, conversion, and violations of the Merchandising Practices Act (“MPA”).¹ Car Time, whose dealership had since closed, did not answer, appear, or defend and was defaulted. Car Time is not a participant in this appeal. Following trial in the Circuit Court of Jackson County, the jury returned a verdict for Peel against CAC, finding it liable for violations of the MPA. The jury assessed actual damages of $11,007.81 and punitive damages of $1,187,505.00 against CAC. The trial court also assessed attorney fees of $165,350.00. The trial court, pursuant to the statutory cap in section 510.265,² reduced the punitive award to $881,789.05 “which is five times the result of adding together $11,007.81 in actual damages and $165,250.00 in attorney's fees, so that the assessment of punitive damages” is reduced to that cap amount. CAC timely appealed. For reasons explained below, we affirm.

Factual Background ³

On July 7, 2008, Carrie Peel (“Peel”) went to Car Time in Independence, Missouri, to look at used vehicles.⁴ Peel selected a 2005 Ford Taurus and proceeded to negotiate an agreement to purchase the car. Peel signed a Retail Installment Sales Contract which was a preprinted, copyrighted form prepared by CAC, whose name appeared on each page of the document. Peel was also required, as a condition of CAC providing financing and taking an assignment of the loan, to sign another CAC preprinted and copyrighted form, an “Agreement for Installation of a Vehicle Starter Interruption Device and GPS System.” ⁵ The terms of the agreement to purchase the car were that Peel make a down payment of $800 in cash and trade in her Suburban (trade-in value $2,500), and the remainder of the purchase price of $17,580.21 was financed at an interest rate of 23.99 percent for a little over four years.

Peel took possession of the car but did not receive the title. Unbeknownst to Peel, the vehicle title was in possession of Great American Acceptance Corporation (“GAAC”) which was the “Floor Plan Bank.” ⁶ GAAC had loaned the money to Car Time to purchase its inventory, held the titles to the cars in that inventory, and had filed a UCC–1 showing its security interest in the inventory. Upon a sale, Car Time would pay a portion of the money from the sale to GAAC and then GAAC would provide the title to that car to Car Time so that it could complete the sale. In the Peel transaction and many others, Car Time sold the cars without paying GAAC and therefore could not provide the buyer with a title to the vehicle that was purchased.

When Peel attempted to register the car, she was told that she could not do so without the title. Prior to the expiration of her thirty-day temporary tag, Peel went back to Car Time to attempt to obtain the title, but found it had permanently closed. Peel then began contacting CAC directly to request the title. CAC told Peel that the only way she could obtain the car's title was to file a lawsuit against Car Time seeking a declaratory judgment. CAC also told Peel that she continued to owe them money under the sales contract and note despite the fact that Peel never received the title. Over the course of time, Peel spoke to CAC representatives more than one hundred times and was continually told that the title was not CAC's problem and she had to keep making the payments on the loan or CAC would disable the car with the ignition-interruption device, repossess the car, and report her to the credit bureaus. Based on other transactions that CAC was involved with regarding Car Time customers, CAC was aware that GAAC was the Floor Plan Bank for Car Time and was the probable possessor of the title. CAC never provided this information to Peel.

Peel's communications with CAC spanned around a year, during which time she continued to drive the car without proper registration because she needed it to get to work and pick up her children. She also continued to make the monthly payments because she was trying to protect her credit rating and was afraid the car would be repossessed, leaving her family without transportation.

As Peel continued to drive the unregistered car, she was stopped multiple times by the police and received tickets and penalties. She also became anxious and embarrassed over the situation, especially after being pulled over with her son and his friend in the car. Peel contacted multiple attorneys but was unable to afford to proceed with the declaratory judgment action that CAC had told her she needed to file. After Peel lost her job, she qualified for Legal Aid, and only then was she informed that under Missouri law, if a buyer is not provided with a title to the vehicle, the sale is void and the buyer is relieved of the obligation to make payments on the debt. § 301.210; Public Fin. Corp. of Kansas City, Mo., No. 1 v. Shemwell, 345 S.W.2d 494, 497 (Mo.App. W.D.1961).

On June 7, 2010, Peel filed suit against Car Time and CAC, alleging fraud, conversion, and violations of the MPA. Ultimately, only the MPA claim was submitted to the jury.

Following a trial in the Circuit Court of Jackson County, the jury returned a verdict for Peel against CAC, finding it liable for violations of the MPA. Car Time did not answer or defend itself, and a default judgment was entered against it. The jury assessed actual damages of $11,007.81 and punitive damages of $1,187,505 against CAC. The court also assessed attorney fees of $165,350 against both defendants jointly and severally. The trial court, pursuant to section 510.265, reduced the punitive award to $881,789.05 “which is five times the result of adding together $11,007.81 in actual damages and $165,250.00 in attorney's fees, so that the assessment of punitive damages” is reduced to that cap amount. CAC timely appealed.

CAC alleges eight points of error, three of which allege error in the jury instructions and five of which allege error in the trial court's rulings on post-trial motions. As to jury instructional error, CAC alleges that the trial court erred in: (1) giving an instruction on the elements of an MPA violation which lacked the essential element that the offending practice occurred “in connection with” the sale of the car; (2) refusing to give a mitigation of damages instruction because Peel never pursued a declaratory relief action against Car Time to obtain the title; and (3) giving an instruction about the void status of a vehicle sale in which title does not pass because the instruction did not “fit the rules” for a non-MAI instruction.

As to the court's rulings on post-trial motions, CAC alleges the trial court erred in: (1) denying its motion for directed verdict and for judgment notwithstanding the verdict (“JNOV”) because evidence showed that the alleged offending practice was not “in connection with” with the sale of the car and thus “outside” the MPA; (2) denying CAC's motion for directed verdict and for JNOV on Peel's punitive damage claim because Peel failed to present evidence that CAC's conduct was outrageous; (3) denying its motion for remittitur because the punitive damage award was disproportionate to the conduct; (4) denying its motion for a mistrial following Peel's opening statement in which Peel referred to a relationship between Car Time and CAC; and (5) granting Peel's motion for a directed verdict on and dismissing CAC's unjust enrichment claim because there was evidence that Peel drove the car and will receive the money back that she paid for it, making her unjustly enriched.

For ease of analysis, we will first address the three points regarding jury instructions and then address the five remaining points concerning rulings on post-trial motions.

Further facts are set forth as necessary.

I.Standard of Review for Jury Instructions—Points I, III and VI

Whether a jury was instructed properly is a question of law this court reviews de novo. Hervey v. Mo. Dept. of Corr., 379 S.W.3d 156, 159 (Mo. banc 2012) (internal citation omitted). “Review is conducted in the light most favorable to the record, and, if the instruction is supported by any theory, then its submission is proper.' Id. Instructional errors are reversed only if the error resulted in prejudice that materially affects the merits of the action.” Id. The party challenging the instruction must show that the offending instruction “misdirected, misled, or confused the jury,” resulting in prejudice to the party challenging the instruction. Sutherland v. Sutherland, 348 S.W.3d 84, 89 (Mo.App. W.D.2011) (citation omitted).

Analysis on Point I

In Point One, CAC alleges that the trial court erred in submitting Instruction 8, which was the verdict director regarding the MPA claim. There is no MAI instruction for submitting an MPA violation. Where there is no applicable MAI, the instruction given shall be simple, brief, impartial, and free from argument. Rule 70.02(b).⁷ Hence, in submitting an MPA violation count to a jury,...