Steele v. Ellis
| Decision Date | 01 April 1997 |
| Docket Number | Civil Action No. 96-2209-GTV. |
| Citation | 961 F.Supp. 1458 |
| Parties | Richard STEELE, Plaintiff, v. Scott ELLIS d/b/a Pony Express Motors and John Foy, Defendants. |
| Court | U.S. District Court — District of Kansas |
Jeffrey P. Johnson, Kansas City, MO, for Plaintiff.
Paul P. Hasty, Jr., Wallace, Saunders, Austin, Brown & Enochs, Chartered, Overland Park, KS, Kirk D. Auston, Prairie Village, KS, for Scott Ellis, d/b/a Pony Express Motors.
Kirk D. Auston, Prairie Village, KS, for John Foy.
Plaintiff brings this action asserting claims of fraudulent misrepresentation, negligent misrepresentation, and breach of implied warranty.1 Plaintiff predicates his claims on the Kansas Consumer Protection Act, K.S.A. § 50-623 et seq., the Uniform Commercial Code, K.S.A. § 84-1-101 et seq., the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq., and Missouri common law. The case comes before the court on defendant Scott Ellis' motion for summary judgment (Doc. 22). For the reasons set forth below, the motion is granted.
The following facts are either uncontroverted or are based on evidence viewed in the most favorable light to the nonmoving party. Immaterial facts and facts not properly supported by the record are omitted.
In July 1992, Quality Auto Brokers, a Missouri car dealership, purchased a 1991 Lincoln Continental automobile that had been involved in a collision in Texas, and obtained a salvage title for the vehicle. Shortly thereafter, defendant John Foy, who works in the car repair business, examined the vehicle and determined that he could rebuild and later resell it for a profit. Foy then paid Quality Auto Brokers $10,000 for the automobile and began rebuilding it. After Foy completed his work, Quality Auto Brokers obtained a "clean" Missouri title, i.e., an original title not showing any prior salvage notations.3
Foy subsequently contacted defendant Scott Ellis, for whom he occasionally had performed car body work, and requested permission to title the vehicle in the name of Ellis' company, Pony Express Motors. Because Foy was not a licensed dealer, titling the car with Pony Express allowed Foy to avoid title and insurance expenses. Ellis maintains that he agreed to the transaction merely as a favor to Foy; plaintiff contends that Foy thought the transaction also benefitted Ellis in some way but offers no indication of how Ellis may have benefitted.
After title had been transferred to Pony Express, Foy advertised the vehicle in The Kansas City Star. Ellis had no participation or involvement in the advertisement and the advertisement made no reference to Ellis or Pony Express. The phone number in the advertisement was that of Foy's Olathe, Kansas residence.
Plaintiff, upon reading the advertisement, contacted Foy and made an appointment to view the car at Foy's residence. When the two individuals met, Foy stated that although he had performed some repair work on the rocker arm and back door, the vehicle remained in excellent condition. Foy did not disclose to plaintiff that the car previously had been totaled in a wreck and titled as a salvage vehicle. Plaintiff then negotiated with and agreed to purchase the Continental from Foy.
When plaintiff arranged financing through his bank, he learned for the first time that the vehicle was titled in the name of Pony Express. Until that moment, plaintiff believed he was buying the car directly from Foy. Plaintiff concedes that even after learning of Pony Express' role in the transaction, he did not, in any way, base his decision to purchase the Continental on the fact that title rested with Pony Express.
Plaintiff neither met nor spoke with Ellis prior to purchasing the vehicle; all of plaintiff's dealings were with Foy. Ellis, in fact, never saw the car before it was sold to plaintiff. Ellis' sole involvement in the sale of the car consisted of two transactions: (1) guaranteeing plaintiff's bank, upon the bank's request, that its lien on the Continental would be perfected; and (2) authorizing Foy, after he had negotiated the sale with plaintiff, to convert Pony Express' Missouri title into a Kansas title. Ellis received no remuneration from the purchase of the Continental; after plaintiff's bank tendered a check to Pony Express, Ellis immediately wrote a check to Foy for the full amount of the purchase.
In November 1994, plaintiff attempted to trade-in the automobile at a Missouri dealership. After running a CarFax (a computerized car-history database search), the dealer discovered and informed plaintiff that the vehicle had previously been issued a salvage title. Plaintiff then conducted additional investigation into the car's history and ultimately commenced this action against Foy and Ellis.
In deciding a motion for summary judgment, the court must examine any evidence tending to show triable issues in the light most favorable to the nonmoving party. Bee v. Greaves, 744 F.2d 1387, 1396 (10th Cir. 1984). A moving party is entitled to summary judgment only if the evidence indicates "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A genuine factual issue is one that "can reasonably be resolved only by a finder of fact because [it] may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986).
The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. This burden may be discharged by "showing" that there is an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2553-54, 91 L.Ed.2d 265 (1986). Once the moving party has properly supported its motion for summary judgment, the burden shifts to the nonmoving party, who "may not rest on mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256, 106 S.Ct. at 2514. Thus, the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Id.
Plaintiff has asserted misrepresentation tort claims as well as breach of implied warranty contract claims. The court will address each in turn.
The court's first task is to determine what state's substantive law governs plaintiff's tort claims. A federal court sitting in diversity must apply the choice-of-law rules of the state in which it sits. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021-22, 85 L.Ed. 1477 (1941). Kansas adheres to the lex loci delicti approach, meaning that the law of "place of the wrong" controls. Ling v. Jan's Liquors, 237 Kan. 629, 703 P.2d 731, 735 (1985). The "place of the wrong" is the location in which the last event necessary to impose liability occurred. Id. (). In a misrepresentation or fraudulent omission claim, the "last event" is the injury; the "place of the wrong," therefore, is where the loss is sustained, not where the fraud or misrepresentations were made. Atchison Casting Corp. v. Dofasco, Inc., 889 F.Supp. 1445, 1456 (D.Kan.1995)(citing Raymark Indus., Inc. v. Stemple, 714 F.Supp. 460, 464 (D.Kan.1988)). Under this analysis, the law of the state in which plaintiff felt the "effects" of the fraud controls. Maberry v. Said, 911 F.Supp. 1393, 1399 (D.Kan.1995).
Plaintiff resides in Missouri. The injuries he allegedly suffered from defendants' misrepresentations would have been felt in that state. See id. at 1399-1400. Accordingly, the court finds that Missouri law governs plaintiff's tort claims.
To prevail on a claim of fraudulent misrepresentation under Missouri law, plaintiff must establish: (1) a false, material representation; (2) the speaker's knowledge of its falsity or his ignorance of the truth; (3) the speaker's intent that it should be acted upon by the hearer in the manner reasonably contemplated; (4) the hearer's ignorance of the falsity of the statement; (5) the hearer's reliance on its truth, and the right to rely thereon; and (6) proximate injury. Gast v. Ebert, 739 S.W.2d 545, 547 (Mo.1987)(en banc).
Plaintiff concedes that he had no contacts with Ellis prior to purchasing the Continental. His sole theory for subjecting Ellis to liability, therefore, rests on his allegation that an agency relationship existed between Ellis and Foy such that Foy's conduct is imputed to Ellis. A relationship of principal and agent cannot be presumed but must be proved by the party asserting the existence of such relationship. Martin Coin Co. v. King, 665 S.W.2d 939, 942 (Mo. 1984)(en banc)(citing Dudley v. Dumont, 526 S.W.2d 839, 843-44 (Mo.Ct.App.1975)).
The crux of plaintiff's agency argument is that "[w]hen the vehicle was placed in the name of Mr. Ellis' dealership, Mr. Ellis then owned it and had the right to control Mr. Foy's every action concerning any aspect of the handling of the vehicle." (Pl.'s Resp. at 10). Construing the evidence in a light most favorable to plaintiff, the court finds that no agency relationship has been established. First, under Missouri law, a certificate of title is not conclusive proof of ownership; it is only prima facie evidence of ownership that may be rebutted. Lightner v. Farmers Ins. Co., 789 S.W.2d 487, 490 (Mo.1990) (en banc); Landshire Food Serv., Inc. v. Coghill, 709 S.W.2d 509, 512 (Mo.Ct. App.1986). There is ample evidence in the record indicating that Foy purchased the vehicle with his own money and for his own personal benefit, conducted all dealings with plaintiff, and received all...
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...`place of the wrong,' therefore, is where the loss is sustained, not where the fraud or misrepresentations were made." Steele v. Ellis, 961 F.Supp. 1458, 1463 (D.Kan.1997) (citations omitted). Thus, the governing law comes from the state where the plaintiff felt the effects of the fraud. Ma......
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...committed in the state where the economic loss occurred and not where the fraudulent misrepresentations were made.’); Steele v. Ellis, 961 F.Supp. 1458 (D.Kan.1997) ; Restatement of Conflict of Laws § 377 (1934). Therefore, the court will look to see in which state any alleged economic impa......
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