Pelster v. Ray

• Decision Date: 03 March 1993
• Docket Number: No. 92-1036,92-1036
• Citation: 987 F.2d 514
• Parties: 37 Fed. R. Evid. Serv. 1292 Vernon PELSTER, Michelle Pelster, Appellees, v. Gary RAY, Cletus Grace, doing business as U.S. Wholesales, Defendants, Earl Wayne Morton, Joyce Morton, doing business as South Central Auto Auction, Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 514

987 F.2d 514

37 Fed. R. Evid. Serv. 1292

Vernon PELSTER, Michelle Pelster, Appellees, v. Gary RAY, Cletus Grace, doing business as U.S. Wholesales, Defendants Earl Wayne Morton, Joyce Morton, doing business as South Central Auto Auction, Appellants.

No. 92-1036.

United States Court of Appeals Eighth Circuit.

Submitted Sept. 16, 1992.

Decided March 3, 1993.

Alan G. Kimbrell, St. Louis, MO, argued, for appellants.

John Rauscher, St. Louis, MO, argued (Richard Baugh, on the brief), for appellees.

Before McMILLIAN, Circuit Judge, BRIGHT, Senior Circuit Judge, and WOLLMAN, Circuit Judge.

WOLLMAN, Circuit Judge.

Vernon and Michelle Pelster bought a used car on which the odometer had been rolled back. The Pelsters brought claims against Gary Ray and Cletus Dwight Grace for rolling back the odometer. They alleged separate counts under federal and state odometer statutes and Missouri's common law of fraud. The Pelsters brought similar claims against Earl Wayne Morton ("Wayne Morton") and Joyce Morton for passing the rolled-back car through their wholesale auto auction, the South Central Auto Auction ("South Central"). By consent of the parties, the case was tried before a magistrate judge and jury. The jury found for the Pelsters, assessing both compensatory and punitive damages against all four defendants. Ray and Grace were not present at the trial and have not filed an appeal. The Mortons, however, appeal from the district court's entry of judgment. They challenge the magistrate judge's denial of their motions for a directed verdict, the jury instructions, the admissibility of the testimony of the plaintiffs' chief witness, and numerous other rulings by the magistrate judge. Concluding that errors prejudicial to the defendants were made at trial, we reverse the district court's judgment and remand the case for a new trial.

I.

The Pelsters began their odyssey through the world of used cars in the fall of 1988. Like countless other American families, they determined that they had outgrown their present automobile and decided to look for a dependable low-mileage used car that could accommodate "the kids and stuff." In the course of their car shopping, the Pelsters discovered a four-door 1986 Oldsmobile Cutlass Ciera (the "Ciera") on the lot of Modern Auto Co. ("Modern Auto") in Washington, Missouri. The Ciera was clean and appeared to have a low number of miles (37,344) on it. After a test drive and the usual thrust and parry of negotiation, the Pelsters bought the Ciera for $7400, plus additional charges for a service agreement and financing.

As the Pelsters later learned, their new purchase was hardly the meticulously cared-for cream puff that all used car buyers dream about. Instead, the Ciera had just completed its travels through the shadowy netherworld of used car wholesalers and dealers. It had entered that world as a high-mileage lease car; by the end of its journey, however, the Ciera had emerged with the rejuvenated outward appearance of a clean low-mileage dream car.

Kevco Limited, an Ohio leasing company, originally bought the Ciera in December 1984 from a dealership in Columbus, Ohio. As is customary in the auto leasing business, Kevco Limited leased the Ciera for approximately two and a half years, and then in August 1988 sold the Ciera to Chase Motors, Inc. ("Chase Motors"). At the time of the transfer, Kevco Limited certified to Chase Motors that the Ciera's odometer reading of 95,804 miles was correct. Chase Motors obtained a new Ohio title, on the front of which was written the 95,804 mileage figure representing the miles on the car at the time Chase Motors bought it. A copy of this title was retained by the Clerk of the Court of Common Pleas for Franklin County, Ohio, whose duty it is to retain automobile title records.

A few weeks later, Chase Motors sold the car to U.S. Wholesales through the Ohio Auto Auction. According to the Ohio Auto Auction check-in sheet, the mileage on the Ciera at that point was 96,242. U.S. Wholesales, or at least a group of individuals involved with U.S. Wholesales, appears to have been in the business of rolling back the odometers on used cars. U.S. Wholesales was a registered car dealer licensed to operate in Paragould, Arkansas, although it apparently conducted its operations in Murray, Kentucky. Information concerning the ownership, organization, and membership of U.S. Wholesales is sketchy, at best; it appears, however, that at least twenty or more individuals were involved with the organization in some manner. Those individuals included Dave Manier (identified by some as the owner of U.S. Wholesales), Larry Shelton, Gary Ray, Aaron "Red" Morris, Cletus Dwight Grace, and Tommy Jones. (The organization and all of these individuals will be collectively referred to as "U.S. Wholesales.")

On September 7, 1988, Dixon Motors of Washington, Missouri, bought the Ciera from U.S. Wholesales at South Central's weekly auction. Dixon Motors received the Ohio title listing Chase Motors as the owner of record. The mileage figure on that title stating the number of miles on the odometer at the time Chase Motors had purchased the vehicle had been changed from 95,804 to 35,804. In the reassignment section on the title's back, the writing showed that Chase Motors had sold the Ciera to U.S. Wholesales with a mileage reading of 36,242.

It is unclear exactly how the paperwork for the transfer between U.S. Wholesales and Dixon Motors changed hands. The paperwork does show that U.S. Wholesales and Dixon Motors did not complete the space for a second reassignment on the back of the Ohio title; instead, Dixon Motors received a separate Arkansas Dealer's Reassignment of Title form (the "dealer's reassignment") from U.S. Wholesales. Dealers and wholesalers commonly use such reassignment forms when transferring vehicles among themselves rather than completing the reassignment section on the back of the title itself. The dealer's reassignment contained what purported to be the signature of Dave Manier on behalf of U.S. Wholesales as seller. According to the dealer's reassignment, Manier's signature had been notarized by Vorea Tackett on September 6, 1988. It remains unknown who actually signed the dealer's reassignment (whether it was Dave Manier or somebody else on his behalf) and who Vorea Tackett was.

In her deposition, which counsel for the Pelsters read into evidence at trial, Joyce Morton admitted that she had completed part of the dealer's reassignment. She testified that she had written "miles 36904" near the top of the dealer's reassignment. She also testified that she had filled in Dixon Motors's name and address as buyer.

After Dixon Motors had obtained a fresh Missouri title in its own name, it sold the Ciera to Modern Auto on September 19, 1988. Dixon Motors completed the first reassignment section on the back of its Missouri title and there certified that, to the best of its knowledge, the Ciera had travelled 36,968 miles as reflected on the odometer. It is unknown what other representations, if any, Dixon Motors made to Modern Auto.

As noted above, the Pelsters ultimately purchased the Ciera from Modern Auto. In addition to giving the Pelsters a vehicle invoice describing the terms of the sale, Modern Auto reassigned the Ciera's title to the Pelsters by completing a second reassignment on the back of the title that Modern Auto had received from Dixon Motors (the Missouri title listed in Dixon Motors's name). Also, as required by federal and Missouri law, Modern Auto completed an odometer statement certifying that, to the best of its knowledge, the Ciera's actual mileage was 37,344 and the odometer had not been altered or repaired. Vernon Pelster signed this odometer statement to acknowledge that he had received it.

The Pelsters first learned of the Ciera's true history when they received a letter from Tom Ley, an investigator for the Missouri Department of Revenue. The Pelsters subsequently filed this suit.

Both Vernon and Michelle Pelster testified that they had relied on the odometer itself and the odometer statement provided by Modern Auto in making their decision to purchase the Ciera. When asked what the value of the Ciera would have been to him if he had known that the vehicle had over 97,000 miles, Vernon replied, "Maybe five hundred dollars or a thousand dollars, but I know--I doubt if it'd be one that would even interest me."

The Pelsters called Tom Ley to the stand. Ley described himself as a criminal investigator specializing in vehicle theft and odometer fraud for the Missouri Department of Revenue. In outlining his qualifications and work experience, Ley stated that he had conducted 50-60 odometer fraud investigations in the five years that he had worked for the Department of Revenue.

Ley described the general investigative techniques that he customarily uses in his work. He testified that he attempts to trace a vehicle's title history back through its various owners to the manufacturer. He stated that in the course of an investigation he speaks with dealers and obtains from them whatever documentation they can provide, usually titles, odometer statements, repair records, and bills of sale. He further stated that he also talks to auto auctions; he seeks similar documents from them, often including the auction's check-in sheets (also known as "block sheets"), which contain a description of the car and its current odometer reading. He testified that he contacts former owners of the vehicle, seeking oral and written information about the vehicle's mileage. Finally, he stated that he obtains copies of titles, odometer statements, and other documents from government agencies in the various states in which the vehicle had been titled. He testified that he had followed this procedure in investigating the roll-back of the Ciera.

Ley described generally how the roll-back game operates. He explained how people alter or roll back a car's...