Richardson Ford Sales, Inc. v. Johnson

Decision Date24 January 1984
Docket NumberNo. 7229,7229
Citation1984 NMCA 7,100 N.M. 779,676 P.2d 1344
Parties, 38 UCC Rep.Serv. 390 RICHARDSON FORD SALES, INC., Plaintiff-Appellee, v. Frances A. JOHNSON and Glenn M. Johnson, Defendants-Appellants.
CourtCourt of Appeals of New Mexico
Ethel J. Abeita, Indian Pueblo Legal Services, Inc., Laguna, Jim D. James, Indian Pueblo Legal Services, Inc., San Juan Pueblo, Robert N. Hilgendorf, Santa Fe, for defendants-appellants
OPINION

WOOD, Judge.

By written contract signed in May 1980, defendants agreed to buy a used pickup truck from plaintiff and pay for it by monthly payments. Unable to make the monthly payments, defendants voluntarily returned the pickup to plaintiff on October 1, 1981. Thereafter, plaintiff sold the pickup to a third party at a private sale. Plaintiff sued defendants for the unpaid portion of the sales price which remained after crediting the price received at the private sale. The trial court entered judgment for the amount of the deficiency. Defendants counterclaimed; the counterclaim sought relief under both the Unfair Practices Act and the Uniform Commercial Code. The trial court denied relief on the counterclaim. Defendants' appeal raises three issues: (1) whether plaintiff violated the Unfair Practices Act; (2) notice to defendants of the intended private sale; and (3) whether the private sale was commercially reasonable.

Unfair Practices Act

NMSA 1978, Sections 57-12-1 to 57-12-16, are the statutes pertaining to the alleged unfair practice in this case. Our discussion concerning plaintiff's alleged unfair practice subdivides into five topics: (a) pleading and issues; (b) unfair practices under the New Mexico statute; (c) requirement for an unfair or deceptive practice; (d) requirement for an unconscionable practice; and (e) causation.

(a) Pleading and Issues

The brief-in-chief asserts the trial court erred in holding that plaintiff did not commit either an "unfair or deceptive" trade practice or an "unconscionable" trade practice. The factual basis for both items is that the credit representative who contacted defendants about their payments did not tell them they could be liable for a deficiency if the pickup was returned. This contention is made in disregard of the provision in the written contract: "If the money from the sale [after repossession] is not enough to pay off this contract and costs, the Buyer will pay what is still owed to the Creditor, if allowed by law." Liability for a deficiency was allowed by law, it being undisputed that the pickup was a consumer good. 1 Compare NMSA 1978, Sec. 55-9-504(2) with NMSA 1978, Sec. 55-9-504(2) (Cum.Supp.1983). There is no claim, in the appeal, as to the validity of this contract provision and no claim that it did not apply to defendants.

Defendants' counterclaim alleged that sale of the pickup at a private sale was not commercially reasonable and was not in good faith, and alleged that a reasonable price was not received for the vehicle. The counterclaim then alleged: "The foregoing acts and omissions constitute unfair and deceptive and/or unconscionable trade practices * * *." No issue as to an unfair trade practice in connection with a deficiency was raised by this pleading. However, evidence that the credit representative did not tell defendants about a possible deficiency was admitted without objection at trial.

Defendants requested a finding that the failure to tell them about the possibility of a deficiency was an unconscionable trade practice. Defendants requested a conclusion that this failure was either an "unfair or deceptive" trade practice or an "unconscionable" trade practice. Plaintiff requested neither findings nor conclusions as to either item. The trial court denied defendants' requests. The trial court found that plaintiff did not inform defendants "after repossession" that defendants would be liable for a deficiency. This finding is both incorrect and irrelevant. It is incorrect because the notice given to defendants referred to liability for a deficiency. It is irrelevant because information disclosed after repossession does not, in this case, pertain to disclosing information before or at the time defendants returned the pickup. The trial court concluded there was neither an "unfair or deceptive" nor an "unconscionable" trade practice.

We avoid sorting out what issues were properly preserved for appeal. We discuss both "unfair or deceptive" and "unconscionable" trade practices on the basis of an assumption. The assumption is that defendants requested a finding as to both items, and the trial court's denial of the request was a denial of the requested finding that went to both items.

(b) Unfair Practice Under the New Mexico Statute

Section 57-12-3 declares both "unfair or deceptive" and "unconscionable" trade practices to be unlawful.

Section 57-12-4 states: "It is the intent of the legislature that in construing Section 3 [57-12-3 NMSA 1978] of the Unfair Practices Act the courts to the extent possible will be guided by the interpretations given by the federal trade commission and the federal courts."

Relying on Section 57-12-4, defendants assert that a trade practice that a federal court holds to be unfair is unlawful and a violation of the New Mexico statute. Thus, defendants assert that a practice which offends established public policy or is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers is an unfair trade practice, unlawful under New Mexico law. See FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 92 S.Ct. 898, 31 L.Ed.2d 170 (1972); Spiegel, Inc. v. F.T.C., 540 F.2d 287 (7th Cir.1976); Robert's Waikiki U-Drive, Inc. v. Budget Rent-A-Car Systems, Inc., 491 F.Supp. 1199 (D.Hawaii 1980). Defendants assert that application of these factors established an unfair or deceptive trade practice in this case.

There are two answers to this contention; one is procedural, one is substantive.

The procedural answer is that the trial court was not requested to rule as to an unfair or deceptive trade practice on the basis of federal decisions. In the trial court defendants relied on the unfair or deceptive trade practice defined in Section 57-12-2(C)(14), and the unconscionable trade practice defined in Section 57-12-2(D)(1). Not having requested the trial court to rule on the basis of an unfair trade practice declared in federal decisions, the applicability of federal decisions to this case is not properly before us for review. See NMSA 1978, Civ.App.R. 11.

The substantive answer is that defendants fail to recognize the differences between the federal and New Mexico statutes. The federal statute, 15 U.S.C.A. 45(a)(1), declares unfair or deceptive acts to be unlawful; however, that statute does not define unfair or deceptive acts. Because of the lack of definition, federal decisions have supplied a general meaning to the words "unfair or deceptive". See FTC v. Sperry & Hutchinson Co.; Spiegel, Inc. v. F.T.C. Similarly, where a state statute fails to define "unfair or deceptive," but does contain a provision similar to Section 57-12-4, a federal court applied the general meaning developed by federal courts. See Robert's Waikiki U-Drive, Inc. v. Budget Rent-A-Car Systems, Inc.

The New Mexico statute defines the meaning of both unfair or deceptive and unconscionable trade practices. Compare Sec. 57-12-2(C) and (D) with 6 HRS Secs. 480-1 and 480-3 (1976 Repl.). In addition, Section 57-12-4 states we are to be guided by federal decisions "to the extent possible * * *." Our statute is to be read and given effect as written. Gonzales v. Oil, Chemical and Atomic Workers International Union, AFL-CIO, 77 N.M. 61, 419 P.2d 257 (1966). The Legislature has defined "unfair or deceptive" and "unconscionable" trade practices, and this Court may not disregard those definitions in favor of a definition developed by federal courts in interpreting a federal statute. See Bills v. All-Western Bowling Corporation, 74 N.M. 430, 394 P.2d 274 (1964). Rather, defendants were required to prove a practice defined by the New Mexico Legislature. See Fancher v. Board of Commissioners of Grant County, 28 N.M. 179, 210 P. 237 (1921). Should we rely on federal decisions as to what constitutes an "unfair or deceptive" or "unconscionable" trade practice, we would not be giving effect to the legislative definitions.

(c) Requirement For an Unfair or Deceptive Practice

The applicable statutory definition in this case, Section 57-12-2(C)(14), reads:

C. "unfair or deceptive trade practice" means any false or misleading * * * representation of any kind knowingly made in connection with * * * the collection of debts by any person in the regular course of his trade or commerce, which may, tends to or does deceive or mislead any person and includes:

* * *

* * *

(14) * * * failing to state a material fact if doing so deceives or tends to deceive[.]

Intent to deceive is not, under the federal law, a prerequisite to finding a trade practice unfair. Regina Corporation v. F.T.C., 322 F.2d 765 (3rd Cir.1963). Such an intent is not stated in the New Mexico statute. Accordingly, applying Section 57-12-4, an intent to deceive is not a requirement under the New Mexico statute.

Our statute does, however, require that a representation be "knowingly made". In this case the failure to disclose must have been a knowing nondisclosure. A knowing nondisclosure requires an awareness of the nondisclosure. State v. Sanders, 96 N.M. 138, 628 P.2d 1134 (Ct.App.1981); See Hays v. Hudson, 85 N.M. 512, 514 P.2d 31 (1973); State v. Craig, 70 N.M. 176, 372 P.2d 128 (1962). There is neither evidence nor inference in the trial transcript of a knowing failure to tell defendants about a potential liability for a deficiency.

The applicable statute also requires a nondisclosure that deceives or tends to deceive. The evidence was that the decision to return the pickup was the decision...

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