Wiegand v. Walser Automotive Groups, Inc.

• Decision Date: 28 October 2003
• Docket Number: No. A03-250.,A03-250.
• Citation: 670 N.W.2d 449
• Parties: Jeff WIEGAND, on behalf of himself and all persons similarly situated, Appellant, v. WALSER AUTOMOTIVE GROUPS, INC., and all related dealerships including but not limited to: Walser Plymouth C., L.L.C., d/b/a Walser Chevrolet; et al., Respondents.
• Court: Minnesota Court of Appeals

670 N.W.2d 449

Jeff WIEGAND, on behalf of himself and all persons similarly situated, Appellant, v. WALSER AUTOMOTIVE GROUPS, INC., and all related dealerships including but not limited to: Walser Plymouth C., L.L.C., d/b/a Walser Chevrolet; et al., Respondents.

No. A03-250.

Court of Appeals of Minnesota.

October 28, 2003.

Thomas J. Lyons, Jr., John H. Goolsby and Thomas J. Lyons, Thomas Lyons & Associates, Little Canada, for appellant.

William M. Hart, Melissa Dosick Riethof, Meagher & Geer, P.L.L.P., Minneapolis, for respondent Walser Automotive Group, Inc.

Considered and decided by HARTEN, Judge, G. BARRY ANDERSON, Judge, and WRIGHT, Judge.

OPINION

G. BARRY ANDERSON, Judge.

Appellant Jeff Wiegand sued respondent Walser Automotive Group (Walser), asserting that Walser's misrepresentations violated Minn.Stat. § 325F.69, subd. 1 (2002), and that he was entitled to damages for this violation pursuant to Minn. Stat. § 8.31, subd. 3a (2002). In this appeal from the district court's dismissal of Wiegand's claim for failure to state a claim under Minn. R. Civ. P. 12.02(e), Wiegand argues that the district court erred when it dismissed his claim by ruling that Wiegand could not show reliance on respondents' alleged misrepresentations. We affirm.

FACTS

On or about September 26, 1998, Wiegand visited a Walser dealership to purchase an automobile. In his complaint, Wiegand alleged that a Walser representative told Wiegand that he was required to purchase a $1,500 service contract in order to obtain financing. The parties do not dispute that the service contract stated that financing could not be made contingent on the purchase of a service contract. The document includes the following language above the signature line on the service contract, "I understand that the purchase of this service contract is not required in order to obtain financing or to purchase this vehicle." Wiegand also alleged that a Walser representative told him that he had to purchase a $340.37 credit insurance policy in order to obtain financing. The sales contract states, "Credit insurance is not required." Wiegand further alleged that a Walser representative told him that after he made 12 monthly payments to the bank, he could refinance at a lower annual percentage rate (APR). After making the 12 monthly payments, Wiegand contacted a bank employee who told him that the bank would not refinance. The parties do not dispute that the payment schedule set out in the sales contract signed by Wiegand does not provide for a lower APR after 12 monthly payments.

Wiegand brought a claim against Walser as part of class action litigation, alleging violations of Minn.Stat. § 325F.69, subd. 1 (2002), a provision of the Minnesota Consumer Fraud Act (CFA), and Minn.Stat. § 168.71(a), (b) (2002), a provision of the Minnesota Motor Vehicle Retail Installment Sales Act. Walser moved to dismiss the complaint for failure to state a claim under Minn. R. Civ. P. 12.02(e), and the district court granted Walser's motion. This appeal, which only raises issues related to section 325F.69, subd. 1, followed.

ISSUE

Did the district court err when it dismissed Wiegand's claim because reliance on the alleged misrepresentation in an action under the Consumer Fraud Act could never be proven?

ANALYSIS

Wiegand argues that the district court erred when it granted Walser's motion pursuant to Minn. R. Civ. P. 12.02(e) for failure to state a claim upon which relief can be granted, and dismissed Wiegand's section 325F.69, subd. 1 claim. When reviewing a dismissal pursuant to rule 12.02(e), an appellate court must determine "whether the complaint sets forth a legally sufficient claim for relief." Bodah v. Lakeville Motor Express, Inc., 663 N.W.2d 550, 553 (Minn.2003). Thus, the applicable standard of review is de novo. Id. "[I]t is immaterial whether or not the plaintiff can prove the facts alleged, and we will not uphold a Rule 12.02(e) dismissal `if it is possible on any evidence which might be produced, consistent with the pleader's theory, to grant the relief demanded.'" Martens v. Minnesota Min. & Mfg. Co., 616 N.W.2d 732, 739-40 (Minn. 2000) (citation omitted) (quoting Northern States Power Co. v. Franklin, 265 Minn. 391, 395, 122 N.W.2d 26, 29 (1963)).

Wiegand brought his claim pursuant to two statutes that, together, permit an individual to seek damages for a violation of Minnesota's consumer fraud statutes. Minn.Stat. § 325F.69 (2002), prohibits fraud and misrepresentation related to the sale of merchandise. See Flynn v. American Home Products Corp., 627 N.W.2d 342, 351 (Minn.App.2001)

.

The act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale of any merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby, is enjoinable as provided herein.

Minn.Stat. § 325F.69, subd. 1 (2002). Thus, section 325F.69, subd. 1, authorizes enjoining violators of the statute. Minn. Stat. § 8.31, subd. 3a (2002), the Private Attorney General statute, authorizes a private action seeking damages for a violation of Minn.Stat. § 325F.69. See Flynn, 627 N.W.2d at 351

; see also Ly v. Nystrom, 615 N.W.2d 302, 310 (Minn.2000).

In addition to the remedies otherwise provided by law, any person injured by a violation of any of the laws referred to in subdivision 1 may bring a civil action and recover damages, together with costs and disbursements, including costs of investigation and reasonable attorney's fees, and receive other equitable relief as determined by the court.

Minn.Stat. § 8.31, subd. 3a (2000).

Wiegand's challenge on appeal hinges on the distinction between a private action seeking damages pursuant to the CFA and a common law fraud action. A claim pursuant to Minn.Stat. § 8.31, subd. 3a, alleging a violation of Minn.Stat. § 325F.69, subd. 1, has two elements: (1) there must be an intentional misrepresentation relating to the sale of merchandise, and (2) the misrepresentation must have caused damage to the plaintiff. Group Health Plan, Inc., v. Philip Morris Inc., 621 N.W.2d 2, 12 (Minn.2001) (noting that "to state a claim that any of the substantive statutes has been violated, the plaintiff need only plead that the defendant engaged in conduct prohibited by the statutes and that the plaintiff was damaged thereby.")¹; Minn.Stat. § 325F.69, subd. 1 (prohibiting misrepresentation); Minn. Stat. § 8.31, subd. 3a (requiring injury "by violation" of consumer fraud laws, including Minn.Stat. § 325F.69). The plaintiff's reliance on the defendant's misrepresentation, however, is not an independent, third element of a claim pursuant to Minn.Stat. § 325F.69, subd. 1, and Minn.Stat. § 8.31, subd. 3a. Group Health, 621 N.W.2d at 12 (stating that "[a]llegations of reliance are therefore not necessary to state a claim under section 8.31, subdivision 3a, for damages resulting from a violation.").

Group Health clarified the role of reliance in a section 8.31, subd. 3a, action. Although it explicitly held that reliance is not an independent element of a private action for damages based on a violation of Minn.Stat. § 325F.69, subd. 1, it also held that reliance is a necessary component of the causation element of such a claim.

[A]s a practical matter it is not possible that the damages could be caused by a violation without reliance on the statements or conduct alleged to violate the statutes. Therefore, in a case such as this, it will be necessary to prove reliance on those statements or conduct to satisfy the causation requirement.

Group Health, 621 N.W.2d at 13.

In contrast to a CFA claim, common law fraud requires a showing of reliance. See Flynn, 627 N.W.2d at 349

(stating that fraudulent misrepresentation requires that "representation caused the other party to act in reliance").

In passing consumer fraud statutes, the legislature clearly intended to make it easier to sue for consumer fraud than it had been to sue for fraud at common law. The legislature's intent is evidenced by the elimination of elements of common law fraud, such as proof of damages or reliance on misrepresentations. (emphasis in original)

State by Humphrey v. Alpine Air Prods., Inc., 500 N.W.2d 788, 790 (Minn.1993)

.

Ruling on Walser's motion to dismiss, the district court concluded that the reliance necessary to prove the causation element in this CFA action could never be proven. Although Wiegand alleged that the Walser representative's oral representation prompted the purchase of the service contract and credit insurance and caused him to believe that refinancing would be possible, the district court concluded that because the contracts Wiegand signed contradicted these oral representations, "case law is clear that such reliance can never be proven."

The district court relied on Scott v. Forest Lake Chrysler-Plymouth-Dodge, 598 N.W.2d 713, 720 (Minn.App.1999), review denied in part (Minn. Nov. 17, 1999) (denying review on consumer-fraud issue), rev'd on other grounds, 611 N.W.2d 346 (Minn.2000) and cited it for the proposition that "when oral representations contradict clear and unambiguous contract language, reliance on the oral representation is unjustifiable as a matter of law." In Scott, the defendant dealership sold a vehicle to Scott, the plaintiff in an action brought under section 325F.69, subd. 1. Id. at 715. Scott alleged that a representative of the dealership orally represented that the credit terms of a retail installment contract represented the final agreement, but the language of a conditional delivery agreement signed by Scott "expressly stated that the vehicle was delivered to Scott conditionally subject to financing approval." Id. at 720. Scott also alleged that a representative of the dealership stated that the vehicle's price would be reduced if Scott signed a retail installment contract with a...