Poller v. Okoboji Classic Cars, LLC

• Decision Date: 04 June 2021
• Docket Number: No. 19-0875,19-0875
• Parties: Al POLLER and Deb Poller, Appellants, v. OKOBOJI CLASSIC CARS, LLC, Appellee.
• Court: Iowa Supreme Court

960 N.W.2d 496

Al POLLER and Deb Poller, Appellants,

v.OKOBOJI CLASSIC CARS, LLC, Appellee.

No. 19-0875

Supreme Court of Iowa.

Submitted March 23, 2021

Filed June 4, 2021

Matthew G. Sease (argued) and Kylie E. Crawford (until withdrawal) of Sease & Wadding, Des Moines, for appellants.

Jordan M. Talsma (argued) and John R. Walker Jr. (until withdrawal) of Beecher, Field, Walker, Morris, Hoffman & Johnson, P.C., Waterloo, for appellee.

Appel, J., delivered the opinion of the court, in which all justices joined.

APPEL, Justice.

In this case, the owners of a 1931 Chevy claim that a company in the business of restoration of antique vehicles violated various provisions of the Motor Vehicle Service Trade Practices Act (MVSTPA), Iowa Code chapter 537B, and breached its contract with the owner. The company denied the claims, asserted affirmative defenses, and filed a counterclaim alleging breach of contract arising from the failure of its customer to pay an outstanding balance for restoration work on the vehicle.

After a two-day trial, the district court concluded that there were no violations of the MVSTPA and that the plaintiffs were not entitled to relief on their contract claim. The district court further held that the company was entitled to a verdict on its counterclaim and awarded damages of $67,396.15.

Plaintiff appealed. The court of appeals affirmed. According to the court of appeals, the plaintiff failed to prove "ascertainable" damages under the Iowa Consumer Fraud Act, which provides the remedies for violations of the MVSTPA. The court of appeals further upheld the district court's verdict on the breach of contract counterclaim.

We granted further review. For the reasons expressed below, we affirm in part and reverse in part, and we remand the case to the district court for the entry of judgment consistent with our opinion.

I. Background Facts and Procedural History.

A. Introduction. Al and Deb Poller are residents of New Jersey who own a 1931 Chevy. Okoboji Classic Cars, LLC (OCC) is a company located in Spencer, Iowa, that is in the business of restoring antique cars.

After some preliminary communications, the Pollers shipped their disassembled 1931 Chevy from New Jersey to OCC for restoration in November of 2013. In late December, the Pollers visited OCC in Iowa and made a $10,000 down payment on costs of the restoration project.

OCC commenced work on the vehicle in late 2013. Although the Pollers were told by OCC staff that they would receive monthly invoices, no invoices were sent to them during the first seven months of the project. In August of 2014, when OCC asked for additional payment for their work, the Pollers requested the unsent invoices. OCC promptly sent six invoices to the Pollers, which showed that after a credit for the $10,000 down payment, the Pollers owed OCC a balance of $39,560.27.

In the ensuing months, invoices accumulated as work continued on the restoration of the Pollers’ vehicle. The Pollers paid an additional $35,000 to OCC in three separate payments after August of 2014 but did not satisfy the entire amount ultimately invoiced by OCC. According to OCC, the total cost of the restoration of the ’31 Chevy came to $112,396.15. The balance OCC claimed the Pollers owed was $67,396.15.

In December 2014, Al Poller and his son arrived at OCC to see the car. OCC, however, refused to permit them to view the vehicle until bills were paid. OCC placed the car in storage and refused to allow the Pollers to inspect it, apparently asserting an artisan's lien under Iowa Code section 577.1.

Ultimately, OCC permitted an expert to view the vehicle for appraisal purposes. The expert concluded that the quality of the restoration work on the vehicle was excellent and that the cost to restore a vehicle to the quality observed would be in excess of $100,000. Yet, the expert opined that the current fair market value of the restored vehicle itself was $37,900.

B. Overview of Petition and Counterclaim. The Pollers filed a petition with three counts relevant to this appeal. In count I, the Pollers sought a declaratory judgment regarding the nature of the contractual relationship of the parties. According to the Pollers, the parties "agreed (at least implicitly), that the costs of restoration would not greatly exceed the overall value of the final finished product." The Pollers sought a declaration that with their total remittance of $45,000, they had "paid the proper amount for the restoration of the ’31 Chevy."

In count II of the amended petition, the Pollers alleged breach of contract and breach of the duty of good faith and fair dealing. They alleged that there existed a valid and enforceable contract between the Pollers and OCC and that the Pollers had met the necessary terms of the contract by "paying a reasonable and fair amount for the work performed on the ’31 Chevy." The Pollers claimed OCC breached the contract by making demands for payment outside the scope of any contractual agreement and by failing to return the vehicle to the Pollers after receiving payment for services.

In count IV of their amended petition, the Pollers alleged violations of the MVSTPA. The Pollers claimed that OCC violated section 3 of the MVSTPA by failing to disclose that the Pollers had a right to an estimate, failing to provide an estimate, and failing to have proper forms documenting the transaction. See Iowa Code § 537B.3. In the alternative, the Pollers pled that if the ballpark figure was, in fact, an estimate, OCC violated section 6 of the MVSTPA by not obtaining oral or written authorization from the consumer when the costs of the repairs or service amounted to more than ten percent above the original estimate. See id. § 537B.6(3).

Further, the Pollers charged that OCC violated section 6 of the MVSTPA in other ways. They claimed that OCC improperly charged them for disassembly and reassembly or partially completed work without obtaining authorization in advance. See id. § 537B.6(5). The Pollers alleged that they incurred charges that they had not authorized, including storage fees for their vehicle. See id. § 537B.6(6). Further, the Pollers asserted that OCC "materially and intentionally understate[d] or misstate[d] the estimated cost of the repairs or service." See id. § 537B.6(12).

Because of the above violations, the Pollers sought damages, including damages for loss of use of the ’31 Chevy and money previously paid. The Pollers also sought injunctive relief seeking to enjoin OCC in order to protect the public from further violations. See id. § 714H.5(1). The Pollers further sought an award of attorney fees under Iowa Code section 714H.5(2). Finally, the Pollers sought statutory damages up to three times the actual damages because the actions of OCC were alleged to be in willful and wanton disregard for the rights of consumers. See id. § 714H.5(4).

OCC generally denied many of the Pollers’ allegations in their claims. Notably, however, OCC admitted that in approximately November of 2013, the parties entered into an oral contract in which OCC was to restore the Pollers’ ’31 Chevy. OCC further pled affirmative defenses of estoppel, waiver, laches, and acquiescence.

In addition, OCC brought a counterclaim for breach of contract. In the counterclaim, OCC alleged that an oral contract between the parties was reached. Under the oral agreement, OCC made it clear that the charges were on a time and materials basis, with labor being charged at the rate of $65 per hour. OCC alleged that the Pollers were provided with periodic billings and encouraged OCC to continue work on the vehicle. OCC asserted that it continued work until the car was completed without any indication from the Pollers that they should cease working on the vehicle. OCC asserted that the Pollers were in breach of contract for failure to make payments for work on the completed car and sought damages plus interest. Further, OCC asked the court to permit it to maintain possessory control of the vehicle pursuant to its lien until the judgment of the court, including interest and costs, was satisfied.

In response to OCC's counterclaim, the Pollers admitted that OCC refused to provide an estimate but otherwise denied the allegations. As affirmative defenses, the Pollers claim that OCC breached the contract by failing to deliver the vehicle in a timely manner and demanding an amount beyond that agreed to by the parties. The Pollers further asserted that there was no mutual assent to the terms of the contract. The Pollers also claimed that OCC breached the contract first, thus excusing performance. Finally, the Pollers charged that any alleged contract is illegal under the MVSTPA and is therefore void. Finally, in light of the statutory violations, the Pollers claimed that OCC was precluded from receiving any payment from them.

C. Trial Before the District Court. The district court held a two-day trial in January 2018. Witnesses at trial included Deb Poller, Al Poller, a former OCC employee Robert Kirschbaum, and current OCC employees Denny Linn, April Torrence, and Ken Potter. Exhibits were admitted into evidence that included OCC invoices and backup documents, a number of email communications between the Pollers and OCC, photographs of the car during the work in progress and upon completion, and the report of the expert on the value of the restored vehicle and the work done by OCC.

Many of the facts were undisputed and well documented in the record. But there were two key factual disputes at trial.

First, the Pollers claimed that early in December 2013, an employee of OCC provided them with what the Pollers claim either was a nonbinding ballpark statement or, in the alternative, an initial estimate of $45,000 for the restoration project. The OCC employees who testified at trial denied that such a representation was made.

Second, OCC offered testimony that all of the work on the vehicle was approved by the Pollers. OCC notes that it maintained close contact with the Pollers as...