Wesley v. Schaller Subaru, Inc.

• Decision Date: 28 March 2006
• Docket Number: No. 17407.,17407.
• Citation: 893 A.2d 389,277 Conn. 526
• Court: Connecticut Supreme Court
• Parties: Steven WESLEY et al. v. SCHALLER SUBARU, INC., et al.

893 A.2d 389

277 Conn. 526

Steven WESLEY et al. v. SCHALLER SUBARU, INC., et al.

No. 17407.

Supreme Court of Connecticut.

Argued November 29, 2005.

Decided March 28, 2006.

COPYRIGHT MATERIAL OMITTED

Stephen P. Brown, Stamford, with whom, on the brief, were Joseph A.H. McGovern, Somers, NY, and John D. Morio, New York, NY, for the appellant-appellee (defendant Subaru Auto Leasing, Ltd.).

Stephen G. Murphy, Jr., Branford, for the appellee-appellant (named defendant).

William F. Gallagher, Syracuse, NY, with whom, on the brief, was Hugh D. Hughes, for the appellees (plaintiffs).

Daniel L. Goldberg, Alicia L. Downey, Boston, MA, and Ann M. Siczewicz, Hartford, filed a brief for the Association of International Automobile Manufacturers, Inc., as amicus curiae.

SULLIVAN, C.J., and NORCOTT, PALMER, ZARELLA and PELLEGRINO, Js.

Opinion

NORCOTT, J.

The principal issue in this appeal is whether an automobile dealership that assigned automobile leases to a leasing company was that company's agent for the purpose of entering into those leases. The plaintiffs, Steven Wesley (Steven) and Rachel Wesley (Rachel), brought this action against the defendants, Schaller Subaru, Inc. (Schaller), and Subaru Auto Leasing, Ltd. (Subaru Leasing), seeking, inter alia, reformation of an automobile leasing contract. Subaru Leasing appeals and Schaller cross appeals from the judgment of the trial court reforming the contract by including Rachel's name as an "authorized driver" of the vehicle thereon.¹ On appeal, the defendants claim, inter alia, that two of the trial court's factual findings were clearly erroneous, specifically that (1) there was clear and convincing evidence that the parties had intended Rachel to be an "authorized driver" under the lease, and (2) an agency relationship existed between Schaller and Subaru Leasing such that Subaru Leasing would be bound by the actions of Schaller's employees with respect to the execution of the lease. The defendants also contend that the plaintiffs lack standing to bring this action against Subaru Leasing because there is no practical relief that can be afforded to them. We conclude that the plaintiffs have standing with respect to their action against Subaru Leasing, and also that the trial court's factual finding with respect to the existence of an agency relationship was clearly erroneous. Accordingly, we reverse the judgment of the trial court and remand the case with direction to render judgment for the defendants.

The record reveals the following background facts and procedural history. In October, 2000, Steven relocated to Connecticut from Georgia in connection with his employment as a technical writer of jet engine repair manuals for Pratt and Whitney. He initially came to Connecticut alone; Steven was not joined here by his wife, Rachel, and their children until December, 2000. On October 21, 2000, Steven, concerned about Rachel's safety while driving in the upcoming winter, went to Schaller to acquire a Subaru, which he had understood to handle well in those weather conditions. At Schaller, Steven met with Christopher Mailhot, a sales manager, and Joe Scott, a salesperson, and told them of his desire to obtain a safe car for Rachel to drive in Connecticut, rather than the Dodge Caravan that she had been driving in Georgia. Steven test drove a Subaru Outback later that day, but was unsure at that time whether he wanted to lease or to purchase the car. At Mailhot's request, however, Steven completed and signed a purchase application form, provided by Sovereign Bank (Sovereign),² that requested assorted personal and financial information.³ On this form, Steven represented that he had an income of approximately $55,800 annually, and that he had "other income" of approximately $42,000 annually through Rachel's teaching salary. Rachel was not present at this time.

On October 24, 2000, Steven returned to Schaller to complete the transaction and met with Mailhot again. By this time, the plaintiffs had decided to make a down payment on their new car by trading in the Caravan,⁴ and also to lease the Outback rather than to purchase it. In addition to deciding to lease the Outback, Steven also entered into an arrangement under which Mailhot, who had friends in South Carolina, would deliver the new Outback to Rachel in Georgia, and return to Connecticut in the traded-in Caravan. This delivery arrangement was expressly authorized by Arthur Schaller, the dealership's vice president.

Shortly thereafter, Steven met with Keith Brick, Schaller's finance and insurance manager, to execute the applicable leasing documents. At that time, Steven reviewed a Subaru Leasing lease application that, using information taken from the Sovereign purchase application, already had been completed for him by Brick and Peter Zagorski, another sales manager.⁵ Unlike the Sovereign purchase application form, the Subaru Leasing lease application had contained a space for listing any "other authorized driver," which did not mean anything to Steven at the time. Brick already had written Steven's name and temporary Connecticut address⁶ into the "other authorized driver" section of the application.⁷ Steven did not discuss the meaning of this space with Mailhot, Brick or anyone else at Schaller because he had assumed that both he and Rachel would be permitted to drive a car that he had leased, and all of the family's cars always had been in his name. After Subaru Leasing approved Steven's credit, Brick and Steven then executed the actual lease itself in the finance and insurance office. Brick testified that all of the paperwork that he saw mentioned only Steven's name, including the insurance documents and the trade-in registration, and there was no indication that Rachel was involved.⁸ Brick was, however, aware of the arrangement under which Mailhot was to deliver the car to Georgia.

The lease agreement itself provided that the authorized use of the vehicle was limited to the lessee, and stated that the lessee "[would] not permit anyone other than [himself] or the persons listed in [his] credit application as other authorized drivers to use the vehicle for any purpose without [assignee's] written consent." Thus, under the terms of the lease, the applicant on the credit application, in this case Steven, automatically was an "authorized driver" of the vehicle. It is undisputed that Rachel was not listed as an "other authorized driver" on the credit application.⁹ Moreover, under the lease, Schaller is the lessor. The lease was financed when Subaru Leasing paid Schaller the total moneys owed under the lease, and Schaller then assigned the lease to Subaru Leasing, who collected the monthly payments from the lessee. Subaru Leasing did not "fund" the lease until it had received all insurance and title information from Schaller and the lessee. The assignment was made pursuant to a dealership agreement between Subaru Leasing and Schaller.

The lease was executed by Steven and Schaller on October 24, 2000. While Mailhot was in the process of delivering the car to Georgia, Rachel, who was in Connecticut visiting Steven, also went to Schaller and test drove a similar Outback at that time with Scott.¹⁰ She did not, however have actual contact with any Schaller employee prior to Steven signing the lease. The delivery arrangement worked successfully and Rachel drove the newly leased Outback around Georgia with the children until she moved to Connecticut with them in December, 2000.

In January, 2001, while driving the Outback in Connecticut, Rachel was involved in an accident that caused the death of one of the Wesleys' children, and also caused other people to suffer severe personal injuries. The Outback was totaled in this accident, which led to the institution of two personal injury lawsuits against the plaintiffs in the judicial district of Hartford. Subaru Leasing, as the owner of the Outback, also was named as a defendant in those actions pursuant to General Statutes (Rev. to 2001) § 14-154a.¹¹ Subaru Leasing then moved for summary judgment in those cases, arguing that it could not be held liable under § 14-154a because Rachel was not an "authorized driver" of the Outback.

In response to those motions, the plaintiffs brought the present action to reform the contract to "reflect the intention of the parties to the agreement that [Rachel] is an authorized driver." They alleged that Rachel was not listed as an authorized driver because of "mutual mistake, scrivener's error, or mistake of the plaintiffs, coupled with inequitable conduct on the part of [Schaller] . . . ." In response, the defendants asserted numerous special defenses, including waiver, estoppel, laches and unclean hands on Steven's part. Subaru Leasing also contended that there was no privity between it and the plaintiffs, and that it did not authorize, approve or ratify the omissions alleged in the complaint, namely, the failure to name Rachel as an "authorized driver."

After a bench trial, the trial court first found that the plaintiffs had proven, by the applicable clear and convincing evidence standard, the parties' intent to include Rachel as an "authorized driver" of the Outback, and that the failure to do so was the result of "errors [that] were entirely innocent and were made primarily in an effort to maximize the customer's convenience. In any event, the clear agreement of both Schaller and Steven was that Rachel would be the primary driver of the Subaru. Neither side appreciated the consequences of Rachel not being included." The trial court also found that this mistake was not the result of Steven's negligence, and that there was no inequitable conduct by either party.

The trial court then turned to the defendants' standing arguments, and concluded that "no effective relief can be granted as to [Schaller], because it owned the automobile only briefly after the transaction with Steven and perhaps then only momentarily. It assigned title to...