Tutwiler v. Snodgrass

• Decision Date: 09 December 1981
• Docket Number: No. 2-1080A357,2-1080A357
• Parties: E. Martin TUTWILER, III, and Ed Tutwiler Cadillac, Inc., Appellants (Defendants Below), v. Tim SNODGRASS, Appellee (Plaintiff Below).
• Court: Indiana Appellate Court

Page 1291

428 N.E.2d 1291

E. Martin TUTWILER, III, and Ed Tutwiler Cadillac, Inc. Appellants (Defendants Below), v. Tim SNODGRASS, Appellee (Plaintiff Below).

No. 2-1080A357.

Court of Appeals of Indiana, Second District.

Dec. 9, 1981.

LeRoy A. Freiherr, Rider, Freiherr & Rawley, James A. Strain, Barnes, Hickam, Pantzer & Boyd, Indianapolis, for appellants.

Robert A. Smith and Judith T. Kirtland, Lewis, Bowman, St. Clair & Wagner, Indianapolis, for appellee.

SULLIVAN, Judge.

E. Martin Tutwiler III (Tutwiler) and Ed Tutwiler Cadillac Inc. (Tutwiler Cadillac) appeal from a judgment against them in an action for fraud brought by Tim Snodgrass, a former employee of Tutwiler Cadillac. The jury entered a verdict against the appellants for $1,660 in actual damages and $150,000 in punitive damages. Pursuant to the trial court's remittitur order, Snodgrass elected to remit $75,000 of the punitive damages award.

Appellants present three issues for review:

I. Whether Snodgrass failed to establish one or more of the essential elements of actionable fraud;

II. Whether the evidence was sufficient to support any award of punitive damages; and

III. Whether an award of $75,000 in punitive damages was excessive.

Snodgrass also submits two contentions for our consideration in the event appellants prevail on the issues they present:

I. Whether the trial court erred in dismissing Count II of Snodgrass's amended Complaint, which alleged negligent misrepresentation; and II. Whether the trial court erroneously instructed the jury on the measure of damages.

Because we affirm the trial court's judgment, we do not reach the issues presented by Snodgrass.

I. ELEMENTS OF FRAUD

Viewed in the light most favorable to Snodgrass, the evidence reveals the following: Tutwiler Cadillac is an Indiana corporation based in Indianapolis, engaged in the business of selling new and used cars. Tutwiler is its general manager. Tutwiler Cadillac's used car department was managed by John Lund from approximately November 1977 through May 1978. In June of 1978 Lund left to take another position, and Tutwiler contacted Tim Snodgrass about managing the used car department. Snodgrass at that time was Assistant Used Car Manager at Dave McIntyre Chevrolet in Indianapolis. Snodgrass testified that he was making about $35,000 a year when he left McIntyre Chevrolet.

Tutwiler and Snodgrass met and discussed Snodgrass's background and qualifications for the position of Used Car Manager, the compensation formula for the position, and the financial history of Tutwiler Cadillac's used car department. In this conversation, Tutwiler told Snodgrass that John Lund had "turned it (the department) around" and that it was "making money." He explained that the compensation would be a $300 salary per week plus a bonus of 10% of the net profit computed monthly. ¹ Tutwiler represented to Snodgrass that based on what Lund had done in the past, the compensation formula yielded an annual compensation of $25,000 to $30,000.

At trial, it was established through Tutwiler's testimony that Lund actually did not have a profitable tenure with Tutwiler Cadillac; rather, the used car department had a net loss for the period, and in five months out of seven a loss was sustained. Tutwiler testified that at the time he represented to Snodgrass that the compensation formula applied to the used car department's record during Lund's tenure would yield annual compensation of $25,000 to $30,000, Tutwiler had in fact never applied the formula to Lund's performance, and that he did not know how much gain or loss the used car department had generated under Lund's management.

Snodgrass accepted the job of Used Car Manager at Tutwiler Cadillac and began working there around June 12, 1978. In June 1978, the used car department sustained a loss of $8,762.00, and in July 1978, a loss of $5,313.00. Although Snodgrass was not entitled to any bonus for these months under the compensation formula, on July 15, 1978, he requested, and later received, a $1,000 bonus from Tutwiler Cadillac, in addition to his weekly base salary of $300.

Snodgrass testified that in July 1978 he asked Tutwiler for the profit/loss records for the used car department during Lund's tenure, but Tutwiler never produced them. He also testified that after learning of the loss sustained by the department in June, Snodgrass prepared and submitted to Tutwiler a proposal for an altered compensation formula which Tutwiler rejected. In late July 1978, Snodgrass gave Tutwiler thirty days notice that he might leave the job if they could not work things out. On August 15 Tutwiler met with Snodgrass and requested his resignation.

On September 19, 1978, Snodgrass filed a complaint against Tutwiler and Tutwiler Cadillac alleging fraudulent misrepresentation, fraud, negligent misrepresentation, and equitable estoppel. By reason of subsequent amendments and rulings, trial was had on the fraud count only.

The basis for Snodgrass's claim of fraud is that Tutwiler, while negotiating Snodgrass's employment terms, misrepresented the financial history of the used car department.

The essential elements of actionable fraud are: a material misrepresentation of past or existing fact, which representation is false, and made with knowledge or reckless ignorance of the falsity, and which causes reliance upon such representations to the detriment of the person so relying. Carrell v. Ellingwood (1st Dist. 1981) Ind.App., 423 N.E.2d 630, 635; Rhoda v. Northern Indiana Public Service Co. (3d Dist. 1976) 171 Ind.App. 401, 357 N.E.2d 287. Appellants argue that the evidence did not support any of these essential elements. In order to obtain reversal, they must demonstrate that as a matter of law, one or more essential elements was not established. Physician's Mutual Ins. Co. v. Savage (1st Dist. 1973) 156 Ind.App. 283, 296 N.E.2d 165.

A. Material Misrepresentation of Past or Existing Fact

Appellants contend that the crux of Snodgrass's claim is that Tutwiler "misrepresented" what Snodgrass "would have made" under the proposed salary arrangement, if Snodgrass performed as well as his immediate predecessor, John Lund. Appellants contend that this claim, and the evidence supporting it, were insufficient to permit recovery for fraud because they fail to establish that Tutwiler made any representations as to a past or existing fact. Appellants claim that any statements made by Tutwiler were statements of prediction, rather than fact.

It is true that an action for fraud must be predicated on statements regarding past or existing facts rather than predictions or promises to be performed in the future. Middelkamp v. Hanewich (1970) 147 Ind.App. 561, 263 N.E.2d 189; citing Smith v. Parker (1897) 148 Ind. 127, 45 N.E. 770. However, we agree with Snodgrass that his claim of fraud is not based upon any predictions or promises by Tutwiler as to what Snodgrass could expect to earn as used car manager. Rather it is based on alleged misrepresentations regarding the used car department's financial state at the time of the conversation between Snodgrass and Tutwiler, and before and during Lund's employment, which are past and existing facts. Even if Tutwiler, at the time he made the representations, was not aware of the extent of losses of the used car department, the general rule in Indiana is that that which is susceptible of exact knowledge when made is generally considered to be a statement of fact. Smart & Perry Ford Sales, Inc. v. Weaver (1971) 149 Ind.App. 693, 697; 274 N.E.2d 718, 721. As Tutwiler himself testified, monthly profit and loss statements for the used car department were prepared and given to him. The jury could reasonably have concluded that the financial history of the used car department was an ascertainable fact which was the basis for the misrepresentation. Furthermore, Snodgrass may recover for damages resulting from his reliance on misrepresentations as to financial history even if such misrepresentations were mixed with promises regarding future income. Where the representation was a material inducement to action, recovery may be had despite the fact that the claimant relied in part upon other representations of the speaker which were not actionable in themselves because of their promissory character. Robinson v. Reinhart (1894) 137 Ind. 674, 36 N.E. 519. We find that there was sufficient evidence from which the jury could conclude that Tutwiler made representations regarding past or existing facts.

B. Falsity

The representations upon which an action for fraud are predicated must be false. Appellants argue that any representation Tutwiler may have made to Snodgrass concerning the financial history and condition of the used car department were truthful; that Lund had indeed "turned around" the department and it was "making money." To support this argument, they point to the fact that Lund's greatest loss ($20,974) occurred during his first month of management, he reduced this loss by nearly 80% in one month, after his second month he incurred no loss as great as $3,000. However, when Lund's record is compared with that of his predecessors, the profit/loss figures reveal that his performance yielded substantially similar results; it could hardly be said that he "turned around" the department. The jury could have reasonably concluded that by reason of Tutwiler's intimate familiarity with used car sales and particularly the sales of his own corporation, his statement about "turning the business around" was a statement of ascertainable fact rather than mere sales puffing or opinion. Smart & Perry Ford Sales, Inc. v. Weaver, supra.

Even if Tutwiler's statement that the department had been "turned around" by Lund be considered as a mere subjective opinion rather than a statement of ascertainable fact, his other misrepresentations were of existing fact. Those misrepresentations, of themselves were sufficient to engender reliance by Snodgrass and...