Smith v. Walt Bennett Ford, Inc.

Decision Date01 November 1993
Docket NumberNo. 93-185,93-185
Citation864 S.W.2d 817,314 Ark. 591
CourtArkansas Supreme Court
PartiesRichard SMITH, Appellant/Cross-Appellee, v. WALT BENNETT FORD, INC., Appellee/Cross-Appellant.

William G. Almand, Little Rock, for appellant/cross-appellee.

Barber, McCaskill, Amsler, Jones & Hale, Little Rock, for appellee/cross-appellant.

CORBIN, Justice.

Appellant, Richard Smith, appeals a judgment of the Pulaski Circuit Court awarding him damages of $19,195.31. He filed a complaint against appellee, Walt Bennett Ford, Incorporated (WBF), and against separate defendants Ford Motor Credit Company and Junior C. Landis for odometer fraud pursuant to Subchapter IV of the Motor Vehicle Information and Cost Savings Act, 15 U.S.C. §§ 1981-1991 (1988 & Supp. IV 1992) (hereinafter "Federal Odometer Fraud Act" or "the Act") and for common law fraud or misrepresentation. The jury returned a verdict in Smith's favor against WBF and Landis. Smith asserts five points of error for reversal of the judgment. WBF cross-appeals, asserting five additional points for reversal. Landis and Ford Motor Credit are not parties to this appeal. As this case involves a question in the law of torts, jurisdiction in this court is pursuant to Ark.Sup.Ct.R. 1-2(a)(16).

I. BACKGROUND FACTS AND PROCEDURAL HISTORY

Smith alleges that sometime during December 1986 and January 1987, Landis voluntarily returned to Ford Motor Credit fifteen dump trucks on which he was in default. Landis had purchased all fifteen trucks from WBF several years earlier. Ford Motor Credit assigned the fifteen trucks to WBF. WBF was able to re-sell all fifteen dump trucks previously owned by Landis. Smith purchased one of the fifteen trucks from WBF; that truck, Vehicle Identification No. 1FDYU80U0FVA11368, is the subject of this litigation.

From evidence presented at trial, the jury could have concluded the following. On July 9, 1987, Smith purchased a 1985 Ford dump truck, Model No. LT8000 with a Caterpillar engine, from WBF who certified the mileage on the truck to be 45,974. WBF received the truck from Ford Motor Credit, who certified the mileage to be 45,890 on January 9, 1987. On August 4, 1988, with the truck's odometer reading 84,242 miles, Smith's truck began to overheat so he took it to J.A. Riggs Tractor Company, an authorized warranty repair center for Caterpillar. The service personnel at J.A. Riggs Tractor Company determined the truck had a faulty head gasket and that the truck's warranty had expired, but that the necessary repairs could possibly be covered under a service program. The service manager checked his computer for the history of warranty and service program work done on Smith's truck. The computer revealed that Smith's truck had previously been repaired under the same service program in November 1986 with 84,272 miles on the truck.

Based on the information he obtained from the J.A. Riggs Tractor Company, Smith concluded his truck's odometer had been tampered with and immediately returned his truck to WBF. Smith left his truck at WBF's service department for repairs. A dispute arose over who should pay for how much of the repairs and on the next day, August 5, 1988, Smith demanded the return of his down payment and all payments he made under the purchase contract. WBF retained possession of the truck and later re-sold it. Smith eventually filed this lawsuit.

Smith's complaint alleged two causes of action against all three defendants. Count I alleges specific violations of 15 U.S.C. § 1984 for changing the odometer and 15 U.S.C. § 1988 for failing to disclose the actual mileage of the truck. Under Count I, Smith alleged damages of $17,860.31 down payment and installment payments; $2,294.33 repair parts and labor; $4,229.00 loss of income; and treble damages and attorneys fees pursuant to 15 U.S.C. § 1989. As an alternative to the foregoing damages, Smith asks for rescission of the sales contract and refund of his down payment and installment payments, plus the statutory penalty of $1,500.00, treble damages, and attorneys fees pursuant to 15 U.S.C. § 1989. Count II alleges an alternative claim for common law misrepresentation. Under Count II, Smith alleged damages of $17,860.31 down payment and installment payments; $2,294.33 repair parts and labor; $4,229.00 loss of income; prejudgment interests and costs; and all other appropriate relief. As an alternative to the foregoing damages, Smith requested rescission of the sales contract and refund of his down payment and installment payments, plus prejudgment interest, costs, and other appropriate relief. Smith filed an amended complaint adding a request for punitive damages.

Prior to trial, Smith was required to elect between proceeding under the Federal Odometer Fraud Act or under the state common law of fraud. Arguing that he should not be forced to elect his remedy until the jury was instructed, he chose to proceed under the federal statute. The jury was instructed, without objection, as follows:

If you decide for the plaintiff, Richard Smith, on the question of liability, you must then fix the amount of money which will reasonably and fairly compensate him for any of the following three elements of damage sustained: First, any sums paid in connection with the purchase of the vehicle in question; Second, the cost of any necessary repairs; and third, the value of any profits lost. Now, whether any of these elements of damage have been proved by the evidence is for you to determine.

The jury returned with a verdict and answers to interrogatories finding Ford Motor Credit not liable and both WBF and Landis liable for damages to Smith in the amount of $19,195.31. The jury apportioned liability between WBF and Landis at 65% and 35% respectively. The trial court subsequently entered judgment awarding Smith the following damages in addition to the jury's award: $1,500.00 in actual damages pursuant to 15 U.S.C. § 1989(a)(1); prejudgment interest on actual damages of $3,060.96; and $15,000.00 in attorneys fees and $259.12 in court costs pursuant to 15 U.S.C. § 1989(a)(2). Smith appeals and WBF cross-appeals, each asserting five points of error.

On direct appeal, Smith makes the following assignments of error: (1) the trial court violated 15 U.S.C. § 1989(a)(1) by failing to treble the damages awarded by the jury; (2) the failure to admit evidence of similar fraudulent transactions by WBF; (3) the failure to allow evidence of lost profits; (4) the requirement that Smith elect his remedies; and (5) the granting of WBF's motion in limine on the day before trial. We have reviewed all five assertions of error and conclude only one has merit--the issue of lost profits. Therefore, we reverse on direct appeal.

On cross-appeal, WBF makes the following assignments of error: (1) the denial of WBF's motion for directed verdict based on agency regulations exempting heavy vehicles from the Federal Odometer Fraud Act; (2) the denial of WBF's motion for directed verdict based on insufficient evidence that the odometer was altered while the truck was in WBF's exclusive dominion and control; (3) the denial of WBF's motion for directed verdict based on insufficient evidence of WBF's intent to defraud when disclosing the odometer reading; (4) the admission into evidence of two groups of hearsay documents, a computer printout from J.A. Riggs Tractor Company and registration certificates from the Department of Finance and Administration; and (5) the award to Smith of both restitutionary damages and federal statutory damages. We have reviewed all five assertions of error and conclude only the fifth one has merit. Therefore, we reverse on cross-appeal.

As the two reversible errors concern only damages and not liability, we depart from our practice of addressing the points of error in the order raised by the parties and address the points on damages separately from the other points. This is done in an attempt to make it easier on the reader of this opinion as well as to provide better direction on remand.

II. DAMAGES ISSUES

We have before us the three points of error raised on direct appeal that concern damages--the trebling of the jury's award, the election of remedies, and the exclusion of evidence of lost profits. Also before us is the single point on cross-appeal concerning damages--the recovery of both a restitutionary award and statutory damages. We find reversible error occurred as to the lost profits and as to the double recovery of both a restitutionary award and damages and therefore reverse on those points. The remaining points on damages are closely related and we address them together to the extent they will arise on remand.

The basic issue common to all the damages questions is the meaning of "actual damages" in 15 U.S.C. § 1989(a). The resolution of that basic issue determines the resolution of the remaining damages issues. Therefore, we consider that basic question first.

A. THE MEANING OF "ACTUAL DAMAGES"

The particular section of the Federal Odometer Fraud Act at issue is 15 U.S.C. § 1989, which provides in part that (a) Amount of damages

Any person who, with intent to defraud, violates any requirement imposed under this subchapter shall be liable in an amount equal to the sum of--

(1) three times the amount of actual damages sustained or $1,500, whichever is the greater; and

(2) in the case of any successful action to enforce the foregoing liability, the costs of the action together with reasonable attorney fees as determined by the court.

There is no statutory definition of "actual damages" as used in section 1989. However, the landmark case interpreting that term has stated that:

"Although 'actual damages' is not defined in the statute, it seems reasonable to give it the meaning commonly applied to fraud cases. This is the difference between the amount paid by the plaintiffs--not the value of the car if it had been as represented--and the fair market retail value of a vehicle of the...

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