Walker v. Sunrise Pontiac-Gmc Truck, Inc.

• Decision Date: 13 February 2008
• Docket Number: No. W2006-01162-SC-S09-CV.,W2006-01162-SC-S09-CV.
• Citation: 249 S.W.3d 301
• Parties: Bill WALKER et al. v. SUNRISE PONTIAC-GMC TRUCK, INC.
• Court: Tennessee Supreme Court

249 S.W.3d 301

Bill WALKER et al. v.SUNRISE PONTIAC-GMC TRUCK, INC.

No. W2006-01162-SC-S09-CV.

Supreme Court of Tennessee, at Jackson.

November 13, 2007 Session Heard at Memphis.

February 13, 2008.

Appeal by permission from the Court of Appeals, Western Section, Circuit Court for Shelby County, No. CT-005518-04; Jerry Stokes, Judge.

George T. Lewis, III and Kristine L. Roberts, Memphis, Tennessee, for the appellant, Sunrise Pontiac-GMC Truck, Inc.

Gary K. Smith, C. Wesley Fowler, and James D. Causey, Memphis, Tennessee, and Gordon Ball, Knoxville, Tennessee, for the appellee, Bill Walker.

Douglas S. Johnston, Jr., Nashville, Tennessee, and R. Sadler Bailey, Memphis, Tennessee, for Amicus Curiae, Tennessee Association for Justice.

WILLIAM M. BARKER, C.J., delivered the opinion of the court, in which JANICE M. HOLDER, CORNELIA A. CLARK, and GARY R. WADE, JJ., and HOLLY M. KIRBY, Sp.J., joined.

OPINION

We granted the defendant's application for permission to appeal in this case to determine whether a class action may be certified in a claim brought under the Tennessee Consumer Protection Act ("TCPA"), Tennessee Code Annotated sections 47-18-101-125(2001), or in a claim for common law misrepresentation and fraud.The plaintiff, on his own behalf and on behalf of similarly situated individuals, filed a complaint against Sunrise Pontiac-GMC Truck, Inc., challenging sales transactions in which buyers were charged "dealer incurred costs" as part of the purchase price.The complaint alleged class action claims for, among other things, Tennessee Consumer Protection Act violations and common law misrepresentation and fraud.The trial court denied the defendant's motion for summary judgment with respect to the class certification of the TCPA, misrepresentation and fraud claims.The court granted the defendant's motion for a Rule 9 interlocutory appeal and to stay discovery.The Court of Appeals denied the motion for a Rule 9 appeal on the basis that we would soon be addressing the same issues in a different case.¹We granted the defendant's application for permission to appeal when the issue remained unresolved.Upon thorough review of the record and the legal issues presented, we hold that class certification is unavailable under the TCPA and that class certification was not appropriate in the plaintiff's claims for common law fraud and misrepresentation due to the individual nature of those claims.

I.Factual Background

On or about January 17, 2004, the plaintiff, Bill Walker, bought a 2002Ford Taurus automobile from the defendant, Sunrise Pontiac-GMC Truck, Inc.("Sunrise Pontiac").On September 23, 2004, Mr. Walker filed a class action suit against Sunrise Pontiac, alleging that Sunrise Pontiac charged "Dealer Incurred Costs" or "DIC" as a part of the vehicle's price and that Sunrise Pontiac fraudulently misrepresented the nature of those costs to him during the transaction.Mr. Walker requested that the court certify a class of "[a]ll individuals in Tennessee who purchased motor vehicles from Sunrise Pontiac and with respect to which paid `Dealer Incurred Costs' . . . ."

Mr. Walker testified via deposition regarding his car-buying experience at Sunrise Pontiac.He was in the market to buy a car because his previous vehicle was old and in need of expensive repairs.Prior to visiting Sunrise Pontiac, he looked at a used Ford Taurus at a local Ford dealership and a similar car at another used car dealership.He also used the internet to research features and prices of the cars that interested him.

When he arrived at Sunrise Pontiac and found the 2002Ford Taurus that suited his needs, he already had an idea of the market rate for a used Taurus.He decided to deal with John Haynes, a salesman at Sunrise Pontiac, because they were already acquaintances.After he agreed with Mr. Haynes on a price for the vehicle, he met with the finance manager to complete the paperwork.It was only after he signed the final buyer agreement that he signed a worksheet that showed the breakdown of the costs and fees, including the DIC.

Some time after Mr. Walker bought the car, Mr. Haynes called him to tell him that he and his attorney were looking into some fees that the dealership had been adding on to used car sales.According to Mr. Haynes, the fees that the dealership had been categorizing as "Dealer Incurred Costs" were nothing more than pure profit for the dealership and had no connection to any costs associated with the individual cars.Mr. Haynes asked Mr. Walker if he was interested in pursuing the issue and getting his money back for the fees he paid.Mr. Walker agreed, copying his paperwork, and giving those copies to Mr. Causey, the attorney working with Mr. Haynes.Mr. Walker spoke with Mr. Haynes again when Mr. Haynes approached him about being the lead plaintiff in the case against Sunrise Pontiac.

John Haynes testified regarding his employment at Sunrise Pontiac and his role in selling Mr. Walker his automobile.Mr. Haynes began working at Sunrise Pontiac in December of 1993 as a salesman on the economy used car lot and was later promoted to manager of that lot.He and the other salespeople at Sunrise Pontiac received training three times a week at meetings that were led by Robert Berkheimer, the owner of the dealership, or by Terry Sullivan, one of the managers.As part of the training, they were taught how to use the sales worksheets as negotiation tools in a way that would generate the most profit.

When a customer approached him, Mr. Haynes would use one of these handwritten worksheets in calculating price, fees, taxes, and then payments.Included on the worksheet were the DIC, which were to be included in every sale.The standard DIC was approximately $400, but at times it was higher.He heard of other salespeople bragging about collecting DIC as high as $900.If the fee was questioned by the customer, he would waive the fee rather than lose the sale.He and the other salespeople told the customers that the DIC covered such expenses as insurance, security, car washing, and other costs that could not be attributed to a particular vehicle.However, it was his understanding that such costs were built into the price of the car, so the DIC was pure profit to the dealership.In 2004, the dealership stopped charging the DIC, and instead increased the amount of the documentation, or "doc" fee that it charged.

Mr. Haynes testified that there are a variety of ways that deals are negotiated and closed.Some customers are more careful than others and negotiate harder over price or fees.Some customers end up paying more of the DIC than others; some pay none.When Mr. Walker came in to buy the Ford Taurus, there was some difficulty in closing the deal after the final price was agreed upon.Mr. Walker was having trouble understanding certain fees associated with the deal, so Mr. Haynes completed the worksheet with him, trying to explain the fees.These included $400 of DIC.Mr. Haynes testified that he"picked up a DIC of $400 trying to get more profit because it was a nothing deal."

Several other people from Sunrise Pontiac testified via deposition, including Robert Berkheimer, the owner of the dealership.Mr. Berkheimer testified that he has sales meetings every Monday, Wednesday, and Saturday for all salespeople and managers.They discuss any problems that may arise, new programs offered by General Motors, and go over the current inventory.

He explained that the DIC are costs that the dealership incurs in connection with the sale of cars, but which cannot be assigned to a particular car.These costs include insurance, advertising, interest, car washes on the lot, and security.These costs are kept separate from other operating costs.There is no formal written policy concerning DIC at the dealership.DIC are charged based on the average number of cars sold at the end of each month, each year, and on expenses.There is no one specifically responsible for determining this amount, but he set a maximum amount of $389.He would like to see it collected on all deals, but every deal is different, and ultimately, very few people end up paying the DIC.

Mark Halterman testified that he worked as a salesman on the economy lot at Sunrise Pontiac for approximately two years, leaving in the middle of 2004.He received training at the meetings led by Terry Sullivan and Robert Berkheimer.He was told that the DIC covered expenses such as clean up and maintenance.

The salespeople were trained to use the worksheet as a way to begin negotiations with a customer.All customers would negotiate differently.Those customers with worse credit ratings were less apt to challenge fees such as the DIC.The standard DIC was around $389, but he heard of other salespeople charging more or less.

Bethany Michell worked in the finance department of Sunrise Pontiac beginning in 2001, becoming finance manager in 2003.As finance manager, she attended the meetings with the salespeople.At these meetings, Mr. Berkheimer discussed the amount of DIC to be charged—$400— and what the fee was for—"anything that cannot be charged directly to a stock number, such as insurance, the washing of cars, lot security and advertising."

The salespeople used a worksheet as a negotiation tool when dealing with the customer.There were several places to enter different numbers, including the price, DIC, tax, tags, DOC fee, and trade-in allowance.The only things that are negotiable are the price, DIC, and trade-in allowance.The documentation fee was $198.The DIC was never listed on the buyer's order or final contract; when it was collected, it was rolled into the final sales price.

Sunrise Pontiac eventually stopped charging DIC.At one of their meetings, Mr. Berkheimer said they were changing computer systems and that there was no place for the DIC on there.About that time, the documentation fee went from $198.50 to about $399.

Peter Kelly was the...