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08/08/94 RUTH E. HICE v. J. T. HAUN

COURT OF APPEALS OF TENNESSEE, EASTERN SECTION


August 8, 1994

RUTH E. HICE, PLAINTIFF-APPELLEE
v.
J. T. HAUN, INDIVIDUALLY, AND D/B/A AUTO WORLD, DOROTHY HAUN, INDIVIDUALLY, AND D/B/A AUTO WORLD, ROY CLARK, CAROL CLARK AND WEST TOWN AUTO SALES, INC., DEFENDANTS-APPELLANTS

BRADLEY COUNTY. HON. EARL H. HENLEY, CHANCELLOR

Petition to Rehear Denied August 30, 1994,

Goddard, Franks, McMurray

The opinion of the court was delivered by: Goddard

Goddard, P.J.(E.S.)

Ruth E. Hice initially filed a complaint against J. T. Haun, d/b/a Auto World, and Ray Clark, d/b/a West Town Auto Sales, as a result of Auto World selling her an automobile she contends had been wrecked. Thereafter, she amended her complaint to also sue Dorothy Haun, wife of J. T. Haun, alleging that Mrs. Haun was the titled owner of Auto World. Later, she further amended her complaint to change Mr. Clark's first name to Roy *fn1 rather than Ray and to add West Town Auto Sales, Inc., *fn2 as a party Defendant.

The suit sought damages against Auto World under the following theories:

1. That Auto World's agents and employees "knew or should have known that this vehicle had been involved in a motor vehicle accident."

2. Fraud by misrepresenting the true and correct status of the automobile.

3. Unfair and deceptive acts under Consumer Protection Acts, specifically T.C.A. 47-18-104(6), that the damage awarded be trebled and that she recover reasonable attorney fees in accordance with T.C.A. 47-18-109(a)(3), and 47-18-109(e)(1), respectively.

As to West Town, she alleges it was "engaged in a civil conspiracy to deny plaintiff the true and correct status of the motor vehicle."

At the Conclusion of the trial the Trial Judge sustained West Town's motion for summary judgment as to the claim under the Consumer Protection Act--which he had reserved at the time it was filed--on the ground that any claim against West Town was barred by the applicable statute of limitations. Auto World attempted to amend its answer to also plead the statute of limitations as to the Tennessee Consumer's Act feature of the case, but the Trial Court denied this amendment because it was not timely filed.

The Trial Court did find that both Mr. and Mrs. Haun, d/b/a Auto World, and West Town were guilty of common law fraud and entered the following judgment:

IT IS THEREFORE ORDERED, ADJUDGED, AND DECREED that the Plaintiff Ruth E. Hice have and recover of the Defendants J. T. Haun, individually, and d/b/a Auto World, and Dorothy Haun, individually and d/b/a Auto World the sum of five thousand dollars ($5,000.00).

The Hauns, individually and d/b/a Auto World, and West Town appeal, contending the evidence preponderates against a finding of common law fraud and that Ms. Hice did not properly prove her damages. Additionally, West Town appeals, contending the Trial Court should have awarded attorney fees to its counsel for successfully defending against the Tennessee Consumer's Act claim, and Auto World contending that the Trial Court should have required Ms. Hice to mitigate her damages.

Ms. Hice also raises an issue, insisting that she is entitled to recover under the Tennessee Consumer Protection Act.

The automobile in question is a 1988 Oldsmobile, originally purchased in Michigan by Hutzel Hospital of Detroit. The automobile was subsequently stolen and stripped, and upon recovery salvaged by Amerisure (Michigan Mutual Insurance Company). The salvage was then sold to Miami Motor Sales, which thereafter sold it to West Town. West Town contracted to have the automobile repaired and then procured a Tennessee title.

Still later, a man by the name of Edwards, who is referred to in the record as an "automobile jockey," took the automobile to Cleveland and, on behalf of West Town, sold it to Auto World.

On January 3, 1989, Ms. Hice, a 70-year-old widow, seeking a low-mileage car, negotiated the purchase of the vehicle after being assured that it had not been wrecked. At the time, she dealt with both Mr. Haun and one of Auto World's employees, Maureen Flynn. The purchase price, including tax and certain fees, and allowing a credit as to her trade-in vehicle, was $13,585.14.

Shortly after purchase, Ms. Hice noticed some problems with the vehicle and, according to her testimony, it was taken back to Mr. Haun for repair on three separate occasions. On the first occasion she requested the stripes on the doors, which were upside down, be replaced and certain paint work be done. On the second occasion she testified her daughter and son-in-law took the car back because of the following problems:

A I was -- I would get in the car and drive it and the back end of it -- it would seem like the back end would jump to this side and then this side. And the steering wheel would at times lock and if you were on wet pavement it would just about throw you out of the road.

A You'd take your foot off the accelerator and it would just keep going. You'd have to put your foot on the brake to stop the car, or to slow it down.

On the third occasion an arm rest had detached.

On all three occasions Auto World made the necessary corrections and repairs, apparently to Ms. Hice's satisfaction.

Later, when her son-in-law was washing the vehicle, he concluded that it had been "wrecked," and that two vehicles, which sustained damage in opposite ends were welded together.

Upon learning this, she returned to Mr. Haun and was again advised that the car had not been wrecked. She nevertheless was reluctant to drive the automobile because of the problems she had experienced, purchased another automobile and allowed her daughter, who used it as a flag car for her husband who transported over-sized loads, to use the vehicle. No problems were experienced while the vehicle was being used by the daughter, who drove it approximately 50,000 miles, and it was not necessary that the vehicle receive any further repairs, but only routine maintenance.

At the time of sale the odometer reading was 13,740 miles, and by the time of trial was over 63,000 miles.

In April 1990, Ms. Hice received a letter from the motor car division of the State of Michigan, which advised her that the car had a salvage title, and she also learned this title contained the notation: "Not To Be Registered For Highway Use." Upon receiving this information she again contacted Mr. Haun who, according to him, which is denied by her and her daughter, offered to return her money.

Although, as already noted, the Trial Court found that the Hauns and West Side were guilty of common law fraud, we conclude that the evidence preponderates against such a finding. We reach this Conclusion because the record, without dispute, shows that the automobile had not been wrecked, although it had received considerable damage when stripped by the thieves. The only evidence that it had been wrecked is a foot-ball-sized dent in the right front fender, as shown by photographs taken of the vehicle prior to its repair and furnished Ms. Hice by Michigan authorities.

In reaching this Conclusion we recognize that parties familiar with automobiles, such as the Hauns and the employees of West Town, could make a distinction between a stripped automobile and a wrecked one. Although such a distinction would not be appreciated by a lay person and would not technically be false, the proof is undisputed that the Hauns were not aware that the car had even been stripped and, consequently, a representation that it had not been wrecked would not render them guilty of fraud.

In reaching our Conclusion relative to fraud, we are not unmindful of the testimony in the record that Mr. Haun had been convicted and served time for rolling back odometers and also that Mr. Clark had served time in the penitentiary for an offense "in conjunction with the automobile business." Nevertheless, we are persuaded that fraudulent conduct has not been established by a preponderance of the evidence. As a matter of fact, the proof shows that Mr. Haun did not know Mr. and Mrs. Clark or of West Town at the time of this transaction, although there is proof that Ms. Flynn had met Mr. Clark on one occasion.

Moreover, it does not appear that the Hauns learned that the vehicle had even been salvaged until after their conversation with Ms. Hice subsequent to her receipt of the letter from Michigan.

Additionally, the only evidence in the record relevant to any conspiracy on the part of the appealing Defendants is the following testimony of Ms. Hice:

Q Mrs. Hice, you have also alleged in your complaint that Mr. Haun has engaged in a willful scheme with a Mr. Clark to defraud the public, would you explain to this Court what that scheme is?

A Well, I just feel like they worked together on these wrecked cars.

Q You feel like they did; do you have any specific knowledge or information to present that they did that?

A No. But I feel like it.

In view of the proof that the salvage title was a public record available to the Hauns, we do conclude that they were guilty of negligence in not observing the upside down stripes prior to sale and at least making inquiry regarding its title after her complaint that the vehicle had been wrecked. It is true the title records were equally available to Ms. Hice, but she, being unfamiliar with such matters, should not be charged with a similar duty.

There is no proof in the record that any one employed by West Town made any representations to Ms. Hice relative to the condition of the car prior to her purchase. It is true that after she became suspicious she did call Roy Clark, *fn3 who told her that he traded the automobile for the purpose of purchasing a Cadillac but, as already noted, this occurred after Ms. Hice had purchased the automobile.

We conclude that it is appropriate that the case be dismissed as to West Town, and that Ms. Hice be entitled to recover on the theory of negligent misrepresentation against the Hauns.

There was absolutely no proof introduced at trial relative to the damages suffered by Ms. Hice. The only evidence touching on this question is the purchase price and the photographs of the automobile prior to its repair. Consequently, even if the Trial Court had found a violation of the Consumer Protection Act, he would not be in a position to award actual damages as provided by 47-18-109(a)(1), or enhance damages as provided in Subsection (3).

Notwithstanding the failure of this proof, we do deem it appropriate in the interest of Justice under the facts of this case that the cause be remanded to permit Ms. Hice to introduce proof as to the difference in the value of the automobile as represented to her and as purchased by her.

West Town insists that the Trial Court was in error in not awarding it an attorney fee because of the successful defense of the Consumer Protection Act feature of this case. The Consumer Protection Act does provide for attorney fees for a person bringing such action. T.C.A. 47-18-109(e)(1). However, we do not find, nor have we been cited to any provision that permits an attorney fee for defendants. The action of the Trial Court in denying an attorney fee was proper.

As to Ms. Hice's issue, the record clearly establishes that her claim against West Town under the Tennessee Consumer Protection Act is time barred. We also find, in light of our determinations above set out, that she is not entitled to proceed under the Act against Auto World.

For the foregoing reasons the judgment of the Trial Court is vacated and the cause remanded for proceedings not inconsistent with this opinion. Costs of appeal are adJudged one-half against Ms. Hice and one-half against the Hauns, d/b/a Auto World.

Houston M. Goddard, P.J. (E.S.)

CONCUR:

Separate Concurring opinion.

Herschel P. Franks, J.

Don T. McMurray, J.

CONCURRING OPINION

I concur with Judge Goddard's opinion to remand the case for the purpose of allowing plaintiff to offer proof of damages. However, I would affirm the Chancellor on his Conclusion of a fraudulent transaction by the Hauns.

Professor Gibson's in his treatises observed:

Fraud is seldom established by direct and positive proof, and such proof is not necessary. Generally the first effort of a man, who intends to commit a fraud, is to so avail over the transaction, to conceal it from discovery, to baffle all attempts at detection, and to shield it against attack. No man willingly furnishes proof of his own turpitude. Fraud is, for this reason, rarely perpetrated openly and in broad daylight. It is committed in secret, and is usually hedged about by every guard that can be devised to prevent its discovery and exposure. Its path is crooked and circuitous, its footprints are carefully covered up, the signs of its operation are diligently removed, or attempted to be removed, and the mask of honesty and good faith is put over the face of the real transaction.

Gibson's Suits in Chancery, 4th Ed. § 448.

Chancellor Gibson further observed:

While at law before a misrepresentation can be fraudulent, it must be made with the guilty knowledge of its falsity, in equity such knowledge is not necessary. A person making an untrue statement, without knowing or believing it to be untrue, and without any intent to deceive, may be chargeable with actual fraud in equity. 2 Pom. Equity Jurisprudence, § 884-885.

Id. at § 932.

This Court many years ago observed in the case of Hartnett v. Doyle, 16 Tenn. App. 302-311, 64 S.W.2d 227 (1932):

"Fraud, it needs scarcely be said, is never presumed, and must be proved. It is true, it does not require positive and direct proof to establish it. It may be implied from circumstances. In fact, circumstances may be more conclusive and satisfactory than positive expression of opinion. Tarbox v. Tonder, 1 Tenn. Chancery 163; Noel &Co. v. Hendrixson,. . ."

In my view, the evidence does not preponderate against the Chancellor's finding of fraud. T.R.A.P. Rule 13(d).

Herschel P. Franks, J.


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