Shoals Ford, Inc. v. McKinney

• Decision Date: 07 August 1992
• Citation: 605 So.2d 1197
• Parties: SHOALS FORD, INC. v. Jerry W. McKINNEY, et al. 1902012.
• Court: Alabama Supreme Court

Page 1197

605 So.2d 1197

SHOALS FORD, INC. v. Jerry W. McKINNEY, et al.

1902012.

Supreme Court of Alabama.

Aug. 7, 1992.

Rehearing Denied Oct. 9, 1992.

Lindsey Mussleman Davis of Holt, McKenzie, Holt & Mussleman, Florence, for appellant.

Steven D. Tipler, Birmingham, for appellees.

PER CURIAM.

Shoals Ford, Inc., appeals from a judgment entered on a jury verdict awarding $50,000 in punitive damages, in this action to recover only punitive damages, based on alleged wantonness and fraud in connection with the sale of a pickup truck. We affirm.

Esta L. and Jerry W. McKinney purchased a pickup truck from Shoals Ford for their son, John. The sales representative with whom the McKinneys dealt represented to the McKinneys that the truck was "new." No discussion took place as to whether any body work or repairs had been done on the truck. A few weeks later, the McKinneys discovered that the paint on their truck was chipping and that there were dents in the hood. The McKinneys later learned that the truck had been damaged by hail and had been subsequently repaired and repainted. This lawsuit followed. ¹

The following issues have been presented for our review:

"1) whether the verdict should have been set aside on the ground that the jury did not award either compensatory or nominal damages;

"2) whether the verdict should have been set aside on the ground that there was insufficient evidence to support a finding by the jury that the McKinneys had been injured, at least nominally, by the wrongful actions of Shoals Ford;

"3) whether the evidence was sufficient to support an award of punitive damages;

"4) whether the trial court erred to reversal in refusing to allow Shoals Ford to show that it had offered to either refund the McKinneys' money or repair their truck;

"5) whether the trial court erred to reversal in admitting the testimony of three witnesses concerning other false representations that had allegedly been made by representatives of Shoals Ford; and

"6) whether the trial court erred to reversal in failing to give certain written requested instructions to the jury."

The first issue is controlled by First Bank of Boaz v. Fielder, 590 So.2d 893 (Ala.1991), and Caterpillar, Inc. v. Hightower, 605 So.2d 1193 (Ala.1992), wherein this Court held that an award of compensatory or nominal damages is not a prerequisite to an award of punitive damages. Approximately seven months before First Bank of Boaz was decided, a division of this Court had indicated in O.K. Bonding Co. v. Milton, 579 So.2d 602 (Ala.1991), which is relied on by Shoals Ford, that an award of compensatory or nominal damages was a prerequisite to an award of punitive damages. O.K. Bonding was not cited to us in the briefs in First Bank of Boaz, and we overlooked it during our independent research in preparing an opinion in that case. As a result, we failed to address O.K. Bonding in that opinion. O.K. Bonding and First Bank of Boaz were distinguished in the opinion written by Justice Adams in Caterpillar, Inc. v. Hightower, supra. In the present case, as it was in First Bank of Boaz and Caterpillar, Inc. v. Hightower, it is clear from the record that the jury found that the plaintiff had been injured by the defendant's actions. In the present case, the plaintiffs sought no compensatory damages, but only punitive damages, and the trial court correctly charged the jury that it could not award punitive damages unless it found that the plaintiffs had been "injured" or "damaged" by a false representation of Shoals Ford's sales representative and that that representation had been made knowingly and with the intent to deceive, or recklessly or wantonly.

We are satisfied from our review of the record in the present case that the evidence was sufficient to support findings by the jury that 1) the McKinneys were injured, at least nominally, by the representation of Shoals Ford's sales representative that the truck was "new" and 2) that that representation was made knowingly and with the intent to mislead the McKinneys, or recklessly or wantonly. Therefore, there is no merit in the second and third issues raised by Shoals Ford. ²

As for the fourth issue, Shoals Ford argues that its sales representative should have been allowed to testify that he offered to either refund the McKinneys' money or have the truck repaired. We agree with the trial court, however, that this testimony pertained to settlement negotiations that had taken place between the parties and, therefore, that it was inadmissible under the rule excluding evidence of settlement negotiations. See Super Valu Stores, Inc. v. Peterson, 506 So.2d 317, 321 (Ala.1987) ("The general rule is that [evidence of] offers of compromise by one party to another in a civil action, whether before or after the litigation is begun, is inadmissible").

With respect to the fifth issue, Shoals Ford argues that the trial court erred in allowing three of the McKinneys' witnesses to testify concerning false representations that representatives of Shoals Ford had allegedly made to them. The record indicates that these witnesses testified that representatives of Shoals Ford had made false representations to them within approximately nine months of the McKinney transaction concerning the physical condition of the vehicles that they had purchased. Lynn Clements, a 79-year-old man with failing eyesight, testified that Shoals Ford sold him a hail-damaged pickup truck approximately two months after the McKinney transaction without disclosing the fact that the truck had been damaged and then repaired and repainted. Michelle Higgins testified that Shoals Ford sold her a Ford Mustang automobile approximately five months before the McKinney transaction without disclosing the fact that it had previously suffered hail damage and had subsequently been repaired and repainted. Wanda Woods testified that she purchased a used truck from Shoals Ford approximately nine months after the McKinney transaction and that a representative of the company falsely represented to her at the time of the purchase that the vehicle had never been damaged and repaired. Evidence of similar fraudulent acts is admissible to show a fraudulent intent, plan, or scheme, provided that the acts sought to be proven meet the requirements of similarity in nature and proximity in time. See Harris v. M & S Toyota, Inc., 575 So.2d 74 (Ala.1991); see, also, C. Gamble, McElroy's Alabama Evidence § 70.03(1) (4th ed. 1991), and the cases cited therein. All of the fraudulent acts testified to by the three witnesses in the present case were similar in nature to the act made the basis of the McKinneys' fraud claim (i.e., all of the acts concerned the failure of Shoals Ford to disclose that a vehicle had been damaged and repaired prior to its sale). Likewise, all of the acts testified to by these witnesses occurred within a period extending from approximately five months before the McKinney transaction to approximately nine months after the McKinney transaction; we consider this sufficiently close in time to the McKinney transaction to create a reasonable inference that Shoals Ford was engaging in a pattern or practice of fraud at the time of the McKinney transaction. See Davis v. Davis, 474 So.2d 654 (Ala.1985). We also note that the trial court gave a limiting instruction to the jury both immediately following the testimony of these three witnesses and in its oral charge (i.e., the trial court told the jury that evidence of similar fraudulent acts was admissible to show a fraudulent intent, plan, or scheme, but that such evidence, standing alone, was not sufficient to establish that Shoals Ford had defrauded the McKinneys). See Davis v. Davis, at 655. The trial court did not err in admitting the testimony of these witnesses.

Finally, Shoals Ford contends that the trial court erred to reversal in not instructing the jury as to the proper measure of compensatory damages and in not providing a space on the verdict form for an award of compensatory damages to be designated. Shoals Ford also argues that the trial court erred in denying several of its written requested jury instructions. The record shows that the McKinneys did not make a claim for compensatory damages and that the trial court specifically told the jury that no such claim had been made. Consequently, the trial court did not err in refusing to instruct the jury on the proper measure of compensatory damages or in refusing to provide a space on the verdict form for compensatory damages to be designated. Furthermore, our review of the record indicates that the written requested instructions submitted by Shoals Ford were properly denied because they either were confusing or had been sufficiently covered in the trial court's oral charge. See Rule 51, Ala.R.Civ.P.

For the foregoing reasons, the judgment is affirmed.

AFFIRMED.

HORNSBY, C.J., and SHORES, ADAMS and KENNEDY, JJ., concur.

HOUSTON, J., concurs in part and concurs in the result in part.

INGRAM, J., concurs specially.

MADDOX, ALMON and STEAGALL, JJ., dissent.

HOUSTON, Justice (concurring in part and concurring in the result in part).

I do not think that First Bank of Boaz v. Fielder, 590 So.2d 893 (Ala.1991), which I authored, can be reconciled with O.K. Bonding Co. v. Milton, 579 So.2d 602 (Ala.1991), as the majority holds. I write separately, however, because I disagree with Justice Almon's suggestion that, as between the two cases, First Bank of Boaz should be the one overruled. As I wrote in First Bank of Boaz, an inflexible rule requiring an actual award of compensatory or nominal damages as an absolute prerequisite to an award of punitive damages, even in cases where jury verdicts separate punitive damages from compensatory or nominal damages, has no basis in precedent in this state and would run counter to the interests of justice. Furthermore, such a rule, contrary to the assertion made by Justice Almon in his dissent, would, in my...