O'Shields v. Columbia Auto., 5845

CourtCourt of Appeals of South Carolina
Writing for the CourtKONDUROS, J.
PartiesDaniel O'Shields and Roger W. Whitley, a Partnership d/b/a O&W Cars, Appellants, v. Columbia Automotive, LLC d/b/a Midlands Honda, Respondent. Appellate Case No. 2017-000902
Docket Number5845
Decision Date11 August 2021

Daniel O'Shields and Roger W. Whitley, a Partnership d/b/a O&W Cars, Appellants,

Columbia Automotive, LLC d/b/a Midlands Honda, Respondent.

Appellate Case No. 2017-000902

No. 5845

Court of Appeals of South Carolina

August 11, 2021

Heard Date: March 1, 2021

Appeal From Richland County R. Ferrell Cothran, Jr., Circuit Court Judge

C. Steven Moskos, of C. Steven Moskos, PA, and Brooks Roberts Fudenberg, of the Law Office of Brooks R. Fundenberg, LLC, both of Charleston, for Appellants.

James Y. Becker and Robert Lawrence Reibold, both of Haynsworth Sinkler Boyd, PA, of Columbia; Sarah Patrick Spruill, of Haynsworth Sinkler Boyd, PA, of Greenville; and Harry Clayton Walker, Jr., of Haynsworth Sinkler Boyd, PA, of Charleston, all for Respondent.


This case arises out of the sale of a 2003 Honda Civic by Columbia Automotive, LLC d/b/a Midlands Honda (Midlands) to Daniel O'Shields and Roger W. Whitley, together d/b/a O&W Cars (O&W), at the Automobile Dealer Exchange Services of America (ADESA) auction in North Carolina. After becoming aware the car had been "clipped"-reconstructed from two cars-O&W brought claims against Midlands in South Carolina for breach of contract, negligent misrepresentation, violation of the North Carolina Unfair Trade Practices Act (NCUTPA), and fraud.[1] After trial, the jury returned a verdict for O&W in the amount of $6, 645 in actual damages with respect to O&W's NCUTPA claim, and $6, 645 actual damages and approximately $2.38 million in punitive damages for fraud.[2] The circuit court required O&W to elect between the punitive damages award and any attorney's fees award under the NCUTPA claim, and O&W elected to recover under the NCUTPA verdict. In its orders regarding post-trial motions, the circuit court reduced the punitive damages award to $46, 515; awarded attorney's fees in the amount of $21, 264; and denied offer of judgment interest to O&W. O&W appeals the rulings therein and the circuit court's ruling on election of remedies. We affirm in part, reverse in part, and remand.


Sandra Gaskins bought the new 2003 Honda Civic in August 2003. In July 2004, Gaskins' daughter had an accident while driving the car, and it was deemed a total loss. Gaskins's insurer, Nationwide Mutual Insurance Company (Nationwide), bought the car and sold it at a salvage auction. An undetermined person modified the damaged car by welding the front half of the car to the back half of another car, and put it back into the stream of commerce. In June of 2008, Nancy Watkins sold the car to Midlands, and the car had a clean title. In July, the car underwent a 159-point inspection at Midlands, including an oil change, and was placed in Midlands' certified preowned vehicle inventory. In August, Charles Ecklund purchased the car without knowledge of its modification.

In March 2010, Ecklund had an accident while driving the car and in having the vehicle repaired discovered it was clipped. Ecklund's wife notified Midlands of the issue by phone message. Near the end of the month, Ecklund traded the car in to Midlands. Within the next few days, Midlands placed the vehicle for sale at the ADESA auction in North Carolina under a red-light designation, which indicates the sale is "as is," but which also includes rules regarding disclosure as to certain types of defects or damage. Midlands did not notify the auction the car was clipped. An employee of the auction completed the disclosure form as power of attorney for Midlands.

O&W purchased the car for $5, 200 at the auction on April 1, 2010. In late June, O&W sold the car to the White family for $6, 800. In July, the Whites brought the car back to replace the timing belt and water pump, as they had discussed with Whitley, who agreed at the time of sale to provide the labor for those repairs. When the car was placed on the lift at a nearby garage, the technician was able to clearly see the car had been clipped, and indicated it was "a chopped up mess underneath." O&W refunded the purchase money to the Whites and retook possession of the car when the defect was discovered.

O&W sought to arbitrate the issue through the ADESA auction but was told the time period to seek arbitration had passed. Eventually, O&W filed the subject litigation in January of 2013. The matter proceeded to trial on April 18, 2016, in Richland County, and the jury returned a verdict for O&W for actual damages in the amount of $6, 645 on each of O&W's causes of action. In a bifurcated punitive damage hearing, the jury rendered a verdict for O&W for punitive damages in the amount of $2, 381, 888.

Both parties filed posttrial motions. O&W moved to treble the verdict under the NCUTPA and for attorney's fees and costs. O&W also moved for offer of judgment interest under section 15-35-400 of the South Carolina Code (Supp. 2020), and for prejudgment interest. Midlands moved for judgment notwithstanding the verdict (JNOV) or in the alternative a new trial.

Midlands also filed a motion to require O&W to elect a remedy and moved for an order to reduce the punitive damages award to comply with section 1D-25 of the North Carolina General Statute and for an order to set off the judgment with the amount previously paid by Nationwide.[3] The circuit court granted Midlands' motion to require O&W to elect a remedy on May 18, 2016. On May 23, 2016, O&W moved to request reconsideration, asking the circuit court to allow it to elect a remedy after the court made its decision on the other motions, the rulings of which would impact O&W's election decision.

The circuit court heard posttrial motions on July 27, 2016. The circuit court reduced the punitive damages award to $46, 515 and granted $21, 264 in attorney's fees and $529.07 in costs. The court also denied O&W's motion for offer of judgment interest.

By email on August 29, 2016, the circuit court notified counsel for the parties of its decision to direct O&W to elect from the following remedies: (1) treble damages of $19, 935 ($6, 645 in actual damages times three) and attorney's fees of $21, 264 for the NCUTPA cause of action, for a combined total of $41, 199 or (2) actual damages of $6, 645 and punitive damages reduced to $46, 515 for the fraud cause of action, for a total of $53, 160.

Without waiving its assertion it should not be required to elect between attorney's fees under the NCUTPA and actual and punitive damages on the fraud cause of action, O&W elected the first option, choosing treble damages and attorney's fees pursuant to the NCUTPA. Thereafter, O&W sought additional attorney's fees for work performed for additional time periods. This appeal followed.


I. Punitive Damages[4]

O&A contends the circuit court erred in reducing the jury's punitive damages award to $46, 515 on the basis that the jury's award of $2, 381, 888 was excessive by constitutional standards.[5] We disagree.

"Whether a punitive damages award is unconstitutionally excessive is a question of law reviewed de novo on appeal." Everhart v. O'Charley's Inc., 683 S.E.2d 728, 740 (N.C. Ct. App. 2009). When a punitive damages award is "grossly excessive," it violates the due process clause of the Fourteenth Amendment. BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 568 (1996). Gore set out three "guideposts" for evaluating whether a punitive damages award is grossly excessive: "the degree of reprehensibility of the nondisclosure; the disparity between the harm or potential harm suffered by [the plaintiff] and his punitive damages award; and the difference between this remedy and the civil penalties authorized or imposed in comparable cases." Id. at 574-75. We will address each of the Gore guideposts in turn.

A. Reprehensibility

"[T]he most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant's conduct." State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 419 (2003) (quoting Gore, 517 U.S. at 575).

We have instructed courts to determine the reprehensibility of a defendant by considering whether: the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had financial vulnerability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident The existence of any one of these factors weighing in favor of a plaintiff may not be sufficient to sustain a punitive damages award; and the absence of all of them renders any award suspect. It should be presumed a plaintiff has been made whole for his injuries by compensatory damages, so punitive damages should only be awarded if the defendant's culpability, after having paid compensatory damages, is so reprehensible as to warrant the imposition of further sanctions to achieve punishment or deterrence

Id. (citation omitted).

The harm in this case to the plaintiff was economic. The "target" of the conduct was ADESA auction buyers as opposed to the general consumer.[6] No evidence demonstrated other instances in which Midlands had failed to make disclosures on an ADESA auction form or sold a clipped car through its certified program, and no direct evidence established the harm to O&W was intentional.

O&W rests its reprehensibility argument on the premise that Midlands, knowingly and intentionally, put a "Frankencar" on the road with no regard to the safety of others. O&W contends it strains credulity for Midlands to claim it was unaware the car had been clipped when Midlands originally sold it to Ecklund. However, Midlands obtained the car with a clean title because Nationwide failed to have the title marked "salvage." See N.C. Gen .Stat. § 20-71.3 (Westlaw through S.L. 2021-17 of the 2021 Legis. Sess.)...

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