Thornton v. Ford Motor Co.

• Decision Date: 28 December 2012
• Docket Number: 108,092,Nos. 108,089,108,093.,108,090,Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 3.,108,091,s. 108,089
• Citation: 297 P.3d 413
• Parties: Timothy THORNTON and Tammy Thornton, Plaintiffs/Appellees/Counter–Appellants, v. FORD MOTOR COMPANY, Defendant/Appellant/Counter–Appellee, and Nowata Ford, unknown Oklahoma Limited Liability Company, Edward Taylor, Gregg Carter, and Thomas Plummer, Defendants.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

297 P.3d 413

Timothy THORNTON and Tammy Thornton, Plaintiffs/Appellees/Counter–Appellants,

v.FORD MOTOR COMPANY, Defendant/Appellant/Counter–Appellee,andNowata Ford, unknown Oklahoma Limited Liability Company, Edward Taylor, Gregg Carter, and Thomas Plummer, Defendants.

Nos. 108,089, 108,090, 108,091, 108,092, 108,093.Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 3.

Court of Civil Appeals of Oklahoma,

Division No. 3.

Dec. 28, 2012.

Appeal from the District Court of Nowata County, Oklahoma; Honorable Carl G. Gibson, Trial Judge.

REVERSED IN PART AND AFFIRMED IN PART.

Todd Alan Cone, William E. Maddux, Todd A. Cone Law Offices, Nowata, Oklahoma, for Plaintiffs/Appellees.

Mary Quinn Cooper, Mary E. Kindelt, Eldridge Cooper Steichen & Leach, PLLC, Tulsa, Oklahoma, and Timothy S. Millman, Neil L. Johnson, Berkowitz, Oliver, Williams, Shaw & Eisenbrandt, L.L.P., Kansas City, Missouri, for Defendant/Appellant.

WM. C. HETHERINGTON, JR., Judge.

¶ 1 The trial court entered judgment in favor of numerous plaintiffs after a non-jury trial in their fraud and negligence action against Ford Motor Company (Ford) and its defunct car dealership in Nowata, Oklahoma. Ford's appeal and the plaintiffs' counter-appeal were consolidated for review. For the following reasons, we REVERSE the order finding Ford liable for the plaintiffs' actual damages, attorney fees and costs. In all other respects, the judgment is AFFIRMED.

SUMMARY OF FACTS & PROCEDURAL HISTORY

¶ 2 Within seven months of Ford's approval of the sale of an existing Ford dealership in Nowata, Oklahoma, to Ibex, LLC, (Ibex), d/b/a Nowata Ford, the new dealership (Dealership) had to close its doors for business. Based on pre-closing conduct of Dealership's employees, e.g., executing a bogus check, failing to deliver vehicles, title certificates or to pay balances owed on trade-in vehicles, several customers filed separate lawsuits against Ibex and/or Nowata Ford, Edward Taylor and Thomas Plummer, and Ford,¹ alleging, inter alia, breach of contract, fraud, deceit, negligent misrepresentation, and negligence. Ford and Taylor unsuccessfully sought dismissal of each action, all of which were subsequently consolidated for discovery and dispositive motions. Thereafter the trial court granted several customers' partial motion for summary judgment and ordered the Oklahoma Motor Vehicle Commission to issue them title certificates. Several customers settled their lawsuits.

¶ 3 Following the denial of Ford's motion for summary judgment, the seven lawsuits which remained (“Customers”) ² were consolidated for non-jury trial. Ford was the only defendant in attendance at the trial held September 14–17, 2009,³ during which the trial court approved the parties' agreement to admit numerous exhibits into evidence and denied Ford's pretrial motion in limine regarding Customers' expert witness.

¶ 4 Customers' case in chief included the testimony of Customers and the settling customers. Over Ford's objections, Customers also called a prior car dealer, Mark Roberts, as an expert witness. For its case in chief, Ford called one witness, Gregory Houston, an employee who was directly involved with approving Dealership as a Ford dealer. After closing arguments and receipt of each party's proposed findings of fact and conclusions of law, the trial court identified in open court which of those he had adopted, modified or rejected and also rendered his decision.

¶ 5 In a detailed journal entry of judgment filed five months after trial due to the parties' disagreement over its form and content, the trial court granted judgment in favor of Ford, Plummer and Ibex, against the claims of two Customers.⁴ In favor of the remaining five Customers, the trial court granted judgment against Ford for their actual damages but sua sponte reduced each amount based on equitable principles. After finding clear and convincing evidence “the tortious conduct of Defendants, Plummer and [Ibex], has been fraudulent and oppressive, both to [Customers] and to the public” and the same defendants “have been guilty of reckless disregard for the rights of others,” ⁵ the trial court awarded $100,000 in punitive damages against Plummer and Ibex and in favor of each of the five Customers.⁶ The trial court also ordered Ford to pay each Customer a sum certain in attorney fees and costs. Ford's timely appeal of the judgment was followed by a counter petition-in-error filed by Customers. Ford thereafter amended its appeal to include the trial court's postorder granting Customers' motion to modify the judgment as to attorney fees.

TRIAL COURT'S ORDER

¶ 6 The difficulty in this negligence case is deciphering which of the many commingled findings of facts and conclusions of law in the sixteen page order corresponds to the four theories of recovery the trial court decided in favor of customers, i.e., agency-based vicarious liability, “negligent approval of the dealer,” statutory liability under Title 47 O.S.2001 § 561 et seq., and general negligence. In summary, approximately half of the 106 paragraphs address the terms of the Ford Sales and Services Agreement (FSSA), effective February 5, 2008, and Ford's conduct thereafter (post-FSSA), both relevant to the issue of Ford's control over Dealership and whether it was (1) Ford's agent, the liability for whose employees' wrongs may be imputed to Ford, as Customers argued, or (2) an independent dealer, the liability for whose employees' wrong Dealership alone would bear, as Ford argued.

¶ 7 Based primarily on the FSSA,⁷inter alia, the trial court found Dealership was an “independent dealer,” but agreed with Customers that “Dealership projected apparent authority for Ford.” The order basically set out two reasons for this decision. First, after finding on February 6, 2008, Ford 1) learned from an employee of the Oklahoma Motor Vehicle Commission (OMVC) that Plummer and Taylor had not obtained the required state license to operate a dealership,and 2) “threw its considerable weight and influence in support of the application and in [its] participation in securing the license to sell new and used vehicles,” the trial court concluded “in the initial application process, Ford acted as an agent in order to secure [the license to sell new vehicles] from [OMVC].”

¶ 8 The second reason is best understood in light of the findings of fact pertaining to subsequent events: 1) OMVC did not receive the license application until February 21, 2008; 2) on March 3, 2008, Plummer “was arrested and charged with providing a forged identification number with false Social Security number to the Oklahoma Department of Public Safety”; 3) on March 11, 2008, Plummer and Taylor “finally obtained approval from the OMVC to operate a dealership”; and 4) on March 12, 2008,⁸ Mr. Haynes, “the first Ford customer to be victimized by the Ford dealership ....filled out paperwork for a ‘credit check.’ ”

¶ 9 Without identifying which of the last two dates Dealership opened for business, the trial court found Ford “did manage and control dealership transactions on day one of the dealership relating to trading in used vehicle [s] by the dealership customers, specifically, when participating in securing the Oklahoma Motor Vehicle Application.” In a separate paragraph, the trial court also found “Ford did manage and control the administrative detail on day one of the dealership, i.e., the paperwork [for] the car sales transactions a [t] the dealership.”

¶ 10 The remaining findings of fact and conclusions of law address Ford's direct liability for its pre-FSSA conduct, i.e., “negligent approval of the Dealership,” to which the trial court referred in its order as Ford's “initial mistake.” Although the order indicates this process began on August 6, 2007 when “[Plummer] and [Taylor] completed a fraudulent Prospective Dealer Application,” the record demonstrates, the approval process began in June of 2007, with Ford's receipt of the former dealer's proposed sale agreement to Ibex. After an extension for re-submission of the sales agreement, Ford denied in mid-October 2007 the proposed sale for lack of supporting documentation of Plummer's experience in the car industry. Upon receipt of sales reports from prior dealers for whom Plummer had worked, Ford approved the proposed sale in mid-November 2007 conditioned upon the final real estate closing between the former dealer and Ibex. The closing finally occurred February 5, 2008.

¶ 11 As we interpret the order, Ford's “initial mistake” is comprised of several acts and/or omissions that occurred at different points during the approval process which generally involved investigation of the financial and experience information submitted by Plummer and Taylor, review of the results of their background checks, and compliance with state law and its own procedures. Regarding these acts and/or omissions, the trial court found “... it was foreseeable that an inexperienced, undercapitalized dealership could cause harm to the consuming public.” The court further found that Ford “was negligent under the law,” identifying in separate findings that Ford had 1) “an obligation under Oklahoma law, including but not limited to the law in Title 47, [§ ] 561, when approving the change in dealership, to verify the integrity of the process” and 2) “a duty to exercise ordinary care in the appointment process and the approving of an authorized Ford dealer.”

¶ 12 Despite finding Ford's “limited” ⁹ background check “revealed no negative findings,” the trial court concluded Ford had breached its duties when it did not “comply with Oklahoma Statutes that govern dealership applications” or “follow its comprehensive procedures and processes in evaluating the Ibex dealership application.” In three separate paragraphs, the court found Ford (1) “did not verify the information, as expected,” (2) “failed to verify and perform due diligence on the Nowata Ford application,”...