Sides v. John Cordes, Inc., 89

• Decision Date: 04 May 1999
• Docket Number: 207.,No. 89,89
• Citation: 981 P.2d 301,1999 OK 36
• Parties: Tom C. SIDES and Judy C. Sides, Plaintiffs-Appellees, v. JOHN CORDES, INC., Defendant-Appellant.
• Court: Oklahoma Supreme Court

981 P.2d 301

1999 OK 36

1999 OK 36

Tom C. SIDES and Judy C. Sides, Plaintiffs-Appellees, v. JOHN CORDES, INC., Defendant-Appellant.

No. 89,207.

Supreme Court of Oklahoma.

May 4, 1999.

Tommy L. Sims, John P. Zelbst Law Firm, Lawton, Oklahoma, for Appellees.

Manville Redman and Robert Ross, Lawton, Oklahoma, for Appellant.

OPALA, J.

¶ 1 The dispositive issue tendered on certiorari is whether the evidence adduced in this jury-waived trial of an action at law supports an award of punitive damages in excess of the amount of actual damages. We answer in the affirmative.

I THE ANATOMY OF LITIGATION

¶ 2 Tom C. Sides and Judy C. Sides ("the Sides" or "plaintiffs") purchased in November 1994 what they believed to be a new automobile from John Cordes, Inc., a car dealership located in Walters, Oklahoma ("the dealership" or "defendant"). The salesman did not disclose to the Sides that the car they were buying had been damaged in a storm nor that it had required substantial repairs. Only after taking the car home and driving it for a few days did the Sides realize that their "new" car was not pristine.

¶ 3 The Sides filed suit against defendant, alleging that by failing to disclose the damage and repair history of the automobile and selling the car to them as if it were a new car, defendant had committed fraud for which plaintiffs were entitled to actual damages. The Sides also complained that the defendant's failure to disclose the relevant information was done either intentionally or with gross negligence, which they invoked as a predicate for a punitive damages award.

¶ 4 The parties waived trial by jury and the cause was presented to the court on 13 September 1996. Approximately five months later, the trial judge reached his decision and entered judgment in favor of the plaintiffs, awarding them actual damages in the amount of $4,525.00 and punitive damages in the amount of $45,250.00. In awarding punitive damages, the court stated, in reference to the applicable statutory language, that it had found "clear and convincing evidence of defendant's false representations", warranting the assessment of punitive damages in excess of the actual damages award.

¶ 5 Defendant appealed for corrective relief from the actual as well as punitive damages award.¹ The Court of Civil Appeals affirmed that portion of the judgment imposing liability and assessing actual damages, but held that the trial court erred in its ruling that there was clear-and-convincing evidence to authorize that the cap on punitive damages be lifted. Accordingly, the appellate court reduced the punitive damages award to an amount equal to that of actual damages.

¶ 6 We granted certiorari on plaintiffs' petition and now affirm the trial court's judgment.

II THE RECORD OF THE PROCEEDINGS BELOW CONTAINS COMPETENT EVIDENCE TO SUPPORT THE TRIAL COURT'S AWARD OF PUNITIVE DAMAGES IN EXCESS OF THE AMOUNT OF ACTUAL DAMAGES

¶ 7 The Sides' common-law fraud claim is based upon the defendant's failure to disclose to them the fact that the car they were purchasing had been damaged and repaired. This failure to disclose amounted to an affirmative, false representation that the automobile was new. Oklahoma statutory law imposes a duty on every dealer to disclose in writing to the purchaser of a new or previously unregistered motor vehicle any damage known by the dealer to have been sustained by the vehicle and subsequently repaired, if the value of the repairs exceeds three percent (3%) of the manufacturer's suggested retail price of the vehicle or five hundred dollars ($500.00), whichever is greater.²The dealership clearly had a statutory duty to disclose to the Sides the fact of the damage and repair to the vehicle they were purchasing. In the absence of the disclosure, the dealership gave the Sides the false impression that the automobile was new and undamaged. It was the judgment of the trial court that the failure of the salesman (and hence the dealership)³ to disclose the true condition and history of the automobile constituted fraud. The Court of Civil Appeals agreed and affirmed the trial court's judgment insofar as it imposes liability and for the amount of actual damages. Defendant concedes that there is competent evidence in the record to support that portion of the judgment.

¶ 8 As for punitive damages, the Court of Civil Appeals departed from the trial court's judgment, holding that while there was competent evidence upon which punitive damages equal to the sum of actual damages could be awarded,⁴ the proof adduced was insufficient to justify the judge's removal of the statutory percentage limitation on punitive damages. Accordingly, the appellate court reduced the punitive damages award to a sum equal to the amount of actual damages adjudged.

¶ 9 The sole issue before us on certiorari today⁵ is whether the evidence adduced at this jury-waived trial is legally sufficient to support the trial court's award of exemplary damages in excess of actual damages.

¶ 10 The imposition of punitive damages is governed by statute. At the time this case came to trial, the statute controlling a punitive damages award, 23 O.S.1991 § 9,⁶ provided:

A. In any action for the breach of an obligation not arising from contract, where the defendant has been guilty of conduct evincing a wanton or reckless disregard for the rights of another, oppression, fraud or malice, actual or presumed, the jury, in addition to the actual damages, may give damages for the sake of example, and by way of punishing the defendant, in an amount not exceeding the amount of actual damages awarded. Provided, however, if at the conclusion of the evidence and prior to the submission of the case to the jury, the court shall find, on the record and out of the presence of the jury, that there is clear and convincing evidence that the defendant is guilty of conduct evincing a wanton or reckless disregard for the rights of another, oppression, fraud or malice, actual or presumed, then the jury may give damages for the sake of example, and by way of punishing the defendant, and the percentage limitation on such damages set forth in this section shall not apply.

B. The provisions of this section shall be strictly construed.⁷

¶ 11 Section 9 expressly introduces two levels for an award of punitive damages. They may be capped at the level of actual damages or left uncapped and unrestricted by the amount of actual damages. Which level of punitive damages a jury may consider in a given case is determined by which, if either, of two different preliminary evidentiary findings is made by the trial judge. First, if the trial judge determines that there is any competent evidence demonstrating that the defendant has engaged in at least one of the statutorily enumerated behaviors,⁸ the judge must submit to the jury the plea for capped punitive damages. Second, if the judge finds that there is clear-and-convincing evidence that the defendant is guilty of at least one of the enumerated behaviors, the trial judge must submit to the jury the plea for uncapped punitive damages. Both of these threshold rulings present issues of law for the trial judge.⁹ Either completes the first stage of the process that leads to an award of punitive damages and opens the second stage — the jury's ultimate decision whether the evidence actually warrants punitive damages, and if so, in what amount.¹⁰

¶ 12 In rejecting the trial court's ruling, the Court of Civil Appeals held that evidence of the statutorily described conduct had not been demonstrated by clear-and-convincing evidence, as required by statute, but had merely been "plainly shown". The appellate court concluded that the defendant's acts were "the result of the dealership's neglect or omission in records keeping and management information rather than from . . . some design to harm the plaintiff-buyers." The plaintiffs argue on certiorari that the Court of Civil Appeals improperly substituted its own findings for those of the trial court. We agree.

¶ 13 The first step in our review is to consider whether the evidence establishes, clearly and convincingly, the existence of facts which would permit the trial judge, acting as fact finder in the second stage of punitive damages deliberation, to assess uncapped punitive damages. It is important to keep in mind that the clear-and-convincing standard is applicable only to the threshold question of whether the jury may consider uncapped punitive damages.¹¹

¶ 14 When reviewing the proof's sufficiency, the question is whether a prima facie case has been presented.¹² A prima facie case is made out by that quantum of proof which, if unexplained or uncontradicted, is sufficient to establish a given fact and to uphold a judgment in favor of the issue which it supports, but which may be refuted by other evidence.¹³ The evidence may be direct or it may be such as supports an inference in favor of the fact in question.¹⁴ In the context of a punitive damages award, one's successful presentation of a prima facie case gets the issue of punitive damages to the jury. In reviewing whether the plaintiffs in this case have presented a prima facie case for submission of uncapped punitive damages, this court must bear in mind the higher clear-and-convincing standard of proof.¹⁵

¶ 15 Fraud is one of the behaviors expressly enumerated in § 9 as authorizing the court to submit to the fact finder the question of whether punitive damages are to be awarded. The trial court found clear-and-convincing evidence that the defendant committed fraud in the sale of the automobile to the Sides.¹⁶ We ascribe no legal fault to this determination. The record contains direct evidence which, taken together with all reasonable inferences in plaintiffs' favor, is sufficient to present a clear and convincing prima facie case of fraud. Hence, the trial court's threshold finding passes muster under the pre-1995 version of § 9 and justifies the trial judge in moving ...