Tusa v. Omaha Auto. Auction Inc.

Decision Date21 July 1983
Docket Number82-2414,Nos. 82-2399,s. 82-2399
Citation712 F.2d 1248
PartiesTeresa M. TUSA and Jean E. Tusa, Appellees/Cross-Appellants, v. OMAHA AUTO AUCTION INC., a Corporation, Appellant/Cross-Appellee, Allan Studna, d/b/a Way Low Auto Sales, Cross-Appellee.
CourtU.S. Court of Appeals — Eighth Circuit

William E. Gast, Thomas J. Jenkins, Gast & Kielty, Omaha, Neb., for appellees/cross-appellants.

Dennis E. Martin, Daniel G. Crouchley, Dwyer, O'Leary & Martin, P.C., Omaha, Neb., for appellant/cross-appellee.

Before HEANEY, Circuit Judge, FLOYD R. GIBSON and HENLEY, Senior Circuit Judges.

FLOYD R. GIBSON, Senior Circuit Judge.

Omaha Auto Auction (OAA) appeals the finding of the district court 1 that OAA violated the odometer disclosure provisions of the Motor Vehicle Information and Cost Savings Act. 15 U.S.C. § 1981 et seq. (Disclosure Act). The Act and the regulations promulgated under its authority require a transferor to fill out a disclosure form which gives the odometer reading and certifies that it is accurate to the best of the transferor's knowledge. 15 U.S.C. § 1988 (1976); 49 C.F.R. §§ 580.1 to 580.6. OAA also complains that the attorneys' fees award of $11,926.40 to plaintiffs, Teresa and Jean Tusa, is too high. The Tusas cross-appeal, complaining that the attorneys' fees award is too low. We affirm the judgment of the district court on the issue of OAA's liability, but we reverse the part of the judgment relating to the attorneys' fees and remand the case to the district court with instructions to amend its judgment to make the attorneys' fees award $8,000.

I. Facts

OAA runs an automobile auction which sells primarily to registered dealers. The Tusas are not dealers, but a friend of Teresa Tusa who was a registered dealer agreed to make a bid on her behalf. On July 12, 1979, Teresa and her brother Gary looked over the cars on the OAA lot. They picked out a car they liked, a 1974 Chevrolet Nova, and Gary made a successful bid of $1,800. Gary presented OAA with a money order for $1,820 (the purchase price plus a buyer's fee) and then signed documents on behalf of T & M Auto, the name of the friend's dealership. The Tusas drove off in the car that day. They started having problems with the car shortly thereafter.

The transfer of title to Teresa Tusa and her mother Jean followed an indirect path. Title went from Allan Studna (a dealer who delivered the car to the OAA premises) to OAA to T & M to Teresa and Jean Tusa. Studna, d/b/a Way Low Auto Sales, had acquired title on July 6, 1979, from Tracy Waton, d/b/a Way Low Auto Sales. The car had a Kansas title at that time. According to the odometer disclosure statement which Waton had received when he acquired title three weeks before selling it to Studna, the car had an odometer reading of 80,720 miles. When Studna delivered the car to OAA on July 12, the odometer read 60,239 miles. OAA employees recorded this mileage figure on an odometer mileage disclosure statement which had been previously signed in blank by Studna as the transferor. Apparently due to a clerical error OAA was listed as the transferor on this form which Studna had signed and T & M was listed as the transferee. Perhaps to correct the mistake, OAA employees prepared another odometer statement on July 30 which correctly stated that Studna transferred title to OAA. Also, on July 30, OAA acquired the Kansas title from Studna, took it to the Douglas County Clerk in Nebraska, and acquired a Nebraska title. The clerk at the Douglas County office took the 60,239 mileage figure from the OAA mileage statement and put it on the Nebraska title. The acquisition of this new title was significant because, according to the district court, the mileage figure on the Kansas title had been intentionally altered by someone before OAA received it. Because of the acquisition of the new title, T & M and the Tusas did not have a chance to see that the mileage figure on the Kansas title had been changed. OAA transferred title to T & M on July 30 and T & M transferred to the Tusas on the next day. A few days later the Tusas acquired their own Nebraska title.

Waton, who had received a mileage statement with an 80,720 reading, and Studna, who delivered the car with the 60,239 odometer reading, were both named as defendants in the Tusas' complaint along with OAA. Waton could not be located and was never served. Studna failed to appear or defend and a default judgment was entered against him. The district court found OAA liable under the Disclosure Act and awarded the Tusas damages of $1,500, the minimum allowed under the Act. The court acknowledged there was no allegation that OAA itself had tampered with the odometer. The district court determined the attorneys' fees by multiplying the number of hours worked by an hourly rate below that which the court considered a reasonable rate. The court lowered the rate after considering a variety of factors, such as the difficulty of the case and awards in similar cases. OAA contests its liability on the basis that it was neither a transferor nor a transferee and that it lacked the requisite intent to defraud. Both sides appeal on the attorneys' fees issue.

II. Liability of OAA

Section 1988 of Title 15 requires a transferor of a car to disclose mileage information to a transferee. It also authorizes the Secretary of Transportation to issue regulations imposing specific disclosure requirements. Section 1988 reads in its entirety:

(a) Not later than 90 days after October 20, 1972, the Secretary shall prescribe rules requiring any transferor to give the following written disclosure to the transferee in connection with the transfer of ownership of a motor vehicle:

(1) Disclosure of the cumulative mileage registered on the odometer.

(2) Disclosure that the actual mileage is unknown, if the odometer reading is known to the transferor to be different from the number of miles the vehicle has actually traveled.

Such rules shall prescribe the manner in which information shall be disclosed under this section and in which such information shall be retained.

(b) No transferor shall violate any rule prescribed under this section or give a false statement to a transferee in making any disclosure required by such rule.

(c) No transferee who, for purposes of resale, acquires ownership of a motor vehicle shall accept any written disclosure required by any rule prescribed under this section if such disclosure is incomplete.

Section 1988 imposes certain requirements, but it does not provide a remedy. One of the remedies provided by the Disclosure Act is contained in § 1989. This section allows for private civil actions to enforce liability for violations of odometer requirements. Section 1989(a) reads:

(a) 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.

OAA contests its liability to the Tusas under § 1989 on two points. First, OAA argues that it did not violate § 1988 because that section only imposes duties on a "transferor" or a "transferee," and OAA was neither. Second, OAA argues that even if it did violate § 1988, its liability under § 1989 is limited to situations where the violation is committed with an "intent to defraud," and it had no such intent. We will treat each contention in turn. 2

A. Status as a "Transferor" or "Transferee"

Section 1988 requires that a "transferor" disclose mileage information to a "transferee." The regulations define those terms:

"Transferor" means any person who transfers his ownership in a motor vehicle by sale, gift, or any means other than by creation of a security interest.

"Transferee" means any person to whom the ownership in a motor vehicle is transferred by purchase, gift, or any means other than by creation of a security interest.

49 C.F.R. § 580.3 (emphasis added). OAA argues that it was not a transferor or a transferee of the car because it never was the owner; when it put itself in the chain of title it was simply acting as an agent for T & M. It involved itself in the title only to facilitate the transfer from Studna to T & M. Being in the chain of title is not conclusive evidence of ownership. OAA's lack of an ownership interest can be demonstrated by considering what would have happened if OAA had tried to transfer the title to someone other than T & M. No court would have considered OAA the owner had it tried that. Because OAA could not transfer title to anyone but T & M, OAA did not have an ownership interest; OAA was merely an agent for T & M, acting for T & M's convenience. This analysis is correct to a limited extent, but it still does not absolve OAA of liability.

We refuse to accept OAA's interpretation of the terms "transferor" and "transferee." First, OAA was an owner of record. It had title to the car, and a "certificate of title of a motor vehicle is generally conclusive evidence in [Nebraska] of the ownership of the vehicle." Turpin v. Standard Reliance Insurance Co., 169 Neb. 233, 99 N.W.2d 26, 35 (1959). In Forman v. Anderson, 183 Neb. 715, 163 N.W.2d 894 (1969), the Nebraska Supreme Court held that there would not be an exception to the general rule that the title is conclusive evidence of ownership where the titleholders voluntarily put their names on the title and there was no showing of mistake of fact, coercion, or fraud. Id. 163 N.W.2d at 896. The fraud exception alluded to in Forman would apply to the hypothetical suggested by OAA in which OAA transferred title to a third party rather than delivered the title to T & M. Even though Nebraska courts would not allow a fraudulent transfer of title, Turpin and Forman...

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