Title: DEAN BAILEY OLDS, INC. v. RICHARD PRESTON MOTOR CO.

State: oklahoma

Issuer: Oklahoma Supreme Court

Document:

DEAN BAILEY OLDS, INC. v. RICHARD PRESTON MOTOR CO.  DEAN BAILEY OLDS, INC. v. RICHARD PRESTON MOTOR CO. 2000 OK 89 32 P.3d 816 71 OBJ 2916 Case Number: 92141 Decided: 11/07/2000 Mandate Issued: 10/04/2001 Supreme Court of Oklahoma DEAN BAILEY OLDS, INC. Plaintiff-Appellant v. RICHARD PRESTON MOTOR COMPANY, INC., an Oklahoma corporation, Defendant-Appellee, and OLD REPUBLIC SURETY COMPANY, Defendant. [32 P.3d 817] CERTIORARI TO THE OKLAHOMA COURT OF CIVIL APPEALS, DIVISION NO. 1 ¶0 Plaintiff, Dean Bailey Olds, Inc., claimed that defendant, Richard Preston Motor Company, Inc. had sold it a car with an odometer that understated the car's true mileage and sued for common law fraud, violation of the Truth-in-Mileage Act, 49 U.S.C. §§32710, et seq., and negligent representation of facts. At the conclusion of plaintiff's evidence, plaintiff abandoned its fraud and Truth-in-Mileage Act claims and elected to rely solely on its negligent representation of facts claim. The trial court, Hon. Sharron M. Bubenik, District Judge, District Court of Tulsa County, then granted defendant's motion for directed verdict and later awarded attorneys' fees to defendant on the ground that plaintiff's case was "an onerous suit." Plaintiff appealed from the trial court's attorneys' fees award but not from the trial court's decision to grant defendant's motion for directed verdict. The Court of Civil Appeals set aside the attorneys' fee award and remanded the matter to the trial court. We granted certiorari on April 3, 2000. CERTIORARI PREVIOUSLY GRANTED, COURT OF CIVIL APPEALS' OPINION VACATED, JUDGMENT OF THE DISTRICT COURT AFFIRMED Thomas G. Marsh, David T. Marsh, MARSH & MARSH, Tulsa, Oklahoma, for Plaintiff-Appellant. Bradley K. Beasley, Sheila M. Powers, BOESCHE, McDERMOTT & ESKRIDGE, L.L.P. Tulsa, Oklahoma, for Defendant-Appellee. OPINION Watt, J: ¶1 The issues in this appeal are (1) whether the trial court erred in granting attorneys' fees for defendant, Richard Preston Motor Company, Inc., and against plaintiff, Dean Bailey Olds, Inc and, if the trial court did not err, (2) whether the attorneys' fees award was excessive. ¶2 There were originally other parties to the suit, none of which are parties to this appeal. Because the issues before us involve only plaintiff and defendant, our statement of the facts and procedural background will ignore the fact that Preston's surety company and a dealer who had owned the car in question in this matter before Preston bought it were defendants in the trial court but are not parties to this appeal. Similarly, we will not identify or further mention others whom Preston joined as third-party defendants but also are not parties to this appeal. FACTS AND PROCEDURAL BACKGROUND ¶3 This case arose from the sale by Preston Motor Company of a 1991 Oldsmobile Cutlass car to Dean Bailey Olds. Both Preston Motor Company and Dean Bailey Olds are located in Tulsa. Preston bought the car from Malone Motor Company, a Cadillac-Oldsmobile dealer in Bartlesville, on June 8, 1995. The Oklahoma certificate of title, which Malone Motor Company assigned to Preston Motor Company when it sold the car, stated that the odometer read "43368 ACTUAL." On the back of Oklahoma titles is the following certification : I certify that to the best of my knowledge that the ODOMETER READING is the ACTUAL MILEAGE of the vehicle unless one of the following statements is checked: _____________________ [no tenths] ODOMETER READING [ ] 1. The amount of mileage stated is in excess of mechanical limits. [ ] 2. The odometer reading is NOT the actual mileage. WARNING ODOMETER DISCREPANCY. A Malone Motor Company employee, Steven Viles, entered "43529" as the odometer reading and left both check boxes blank, thereby certifying that the mileage was accurate to the best of his knowledge. ¶4 Richard Preston of Preston Motor Company had once worked for Dean Bailey Olds and had done considerable business with it and with Malone Motor Company. Preston Motor Company bought the car after Malone Motor Company's sales manager, [32 P.3d 818] Steven Viles, had asked Richard Preston if Preston thought he could sell it wholesale for $9,000.00. After Viles asked Preston if he thought he could sell the car, Preston called Dean Bailey Olds and discussed the car with its used car sales manager, Dennis Farquar. Farquar told Preston that Dean Bailey Olds would pay $9,000.00 for the car "if it's a nice car and drives right." On the strength of his own assessment of the car and Farquar's representation, Preston bought the car from Malone Motor Company for $9,000.00. ¶5 Preston then drove the car from Bartlesville to Dean Bailey Olds's premises in Tulsa. After Farquar and another Dean Bailey Olds employee, John Rogne, inspected the car Dean Bailey Olds bought it from Malone Motor Company for $9,000.00. Preston Motor Company had owned the car for only two hours. Preston Motor Company signed an odometer certification showing an odometer reading of 43,580 miles. It is undisputed that Malone Motor Company's sales manager, Richard Preston, and the two Dean Bailey Olds employees who also inspected the car are experienced in buying and selling used cars and that none of them had any reason to suspect that the car might have been driven more miles than showed on its odometer. ¶6 Dean Bailey Olds did some work on the car and sold it in July to a retail purchaser, Joan Mitchell, for $11,292. Dean Bailey Olds provided to Ms. Mitchell an odometer certification like the one Malone Motor Company had given to Preston Motor Company. That odometer certification reflected a mileage on the car of 43,630 miles. Ms. Mitchell had considerable trouble with the car and, after she had owned it for several months, Dean Bailey Olds agreed to buy it back from her for the amount she had paid, less a discount for the mileage Ms. Mitchell had added to the car. ¶7 After Dean Bailey Olds repurchased the car from Ms. Mitchell, it sent the car to an auction company in Oklahoma City for sale. Dean Bailey Olds requested that the auction company obtain a Carfax report on the car because of the trouble Ms. Mitchell had with it. For a fee, Carfax will provide a history of a car. Because of the Carfax report an employee of the auction company told the Dean Bailey Olds representative that he believed the car had over 100,000 miles on it and refused to present it for sale because of the possibility that its odometer understated the car's actual mileage. ¶8 After learning that there was some indication that the odometer on the car was wrong, Dean Bailey Olds obtained copies of the Kansas title records - the car had been titled in Kansas before it was re-titled in Oklahoma. The Kansas authorities had issued a title on the car, dated May 27, 1994, which showed mileage of "114179 ACTUAL." But the Kansas records also showed that in July 1994, the then owner of the car, Robert P. Thomas, executed a Kansas Motor Vehicle Bureau form of affidavit and an odometer disclosure statement reflecting that the actual mileage on the car was 41,121. A new Kansas title, dated July 14, 1994 and showing that the actual mileage of the car was 41,121, was then issued. ¶9 Upon receiving the information described above from the Kansas authorities, Dean Bailey Olds demanded that Preston Motor Company buy back the car for the original $9,000.00 purchase price. Preston Motor Company refused and Dean Bailey Olds brought suit. Dean Bailey Olds claimed that Preston Motor Company "knew or should have known that the odometer reading was false," and that it had, thereby, (1) violated the federal Truth in Mileage Act, 49 U.S.C. §§32710,1 (2) committed common law fraud, and (3) negligently misrepresented facts. [32 P.3d 819] ¶10 At the trial, Dean Bailey Olds' owner, Horace V. Noe, admitted that at the time Dean Bailey Olds bought the car from Preston Motor Company Noe "had every belief" that the odometer statement Preston had signed "was correct." Noe also testified on cross-examination by Preston Motor Company's counsel: ¶11 On June 16, 1998, at the conclusion of the presentation of its evidence, Dean Bailey Olds dismissed its Truth in Mileage Act claim and its common law fraud claim, and elected to solely rely on its claim that Preston Motor Company had negligently misrepresented facts. The trial court then granted Preston Motor Company's motion for directed verdict. ¶12 Preston Motor Company moved for an attorneys' fee under the Truth in Mileage Act, and under 12 O.S. 1991 §1101.2 On August 14, 1998, the trial court entered its order declaring that Preston Motor Company was entitled to attorneys' fees.3[Emphasis by the trial court.] ¶13 After a hearing, the trial court ordered that Dean Bailey Olds pay Preston Motor Company an attorneys' fee of $22,060.50. The trial court's award was based on the time records and testimony of Preston Motor Company's counsel and computed at a rate of $165.00 per hour. Dean Bailey Olds appealed from the trial court's attorneys' fee order but did not appeal from its order directing a verdict for Preston Motor Company. DISCUSSION ¶14 We infer from the trial court's order granting Preston Motor Company attorneys' fees against Dean Bailey Olds, set out in note 3, that the trial court rejected Preston Motor Company's claims that it was entitled to such fees under either the Truth in Mileage Act or 12 O.S. 1991 §1101. It appears that the trial court based its order granting attorneys' fees on its conclusion that Dean Bailey Olds's conduct in prosecuting its case against Preston Motor Company was "onerous." For the reasons set forth in the balance of this opinion we hold that the trial court's order granting Preston Motor Company an attorneys' fee because Dean Bailey Olds' conduct was onerous was supported by [32 P.3d 820] the law and the evidence.4 ¶15 In City National Bank & Trust Co. v. Owens, 1977 OK 86 ¶15, 565 P.2d 4 , we recognized an exception to the "American Rule" that in the absence of a statute or a contract that provides for attorneys' fees, the parties to litigation bear their own attorneys' fee. In Owens we said, . . . one of the exceptions to the general rule recognized at common law and in modern practice, is the court's inherent equitable power to award attorney fees regardless of the fact that an award is not authorized by statute or contract, whenever overriding considerations, such as oppressive behavior on the part of a party, indicate the need for such a recovery. [Emphasis added.] In Owens we affirmed an attorneys' fee awarded by the trial court because plaintiff had dismissed his case without prejudice on the fourth day of trial. We noted that the fees were not awarded because of any right to recover such fees during the course of litigation. "Rather," we held, "we are concerned with the court's power to tax as costs, any necessary expenditures including attorney fees, against a party who causes the necessary expenditures to be wasted." 1977 OK 86 at ¶6. ¶16 We note that the word "oppressive," which we used in Owens to describe the type of behavior that will support an award of an attorneys' fee is a synonym of the word "onerous," used by the trial court to support its attorneys' fee order. The Oxford English Dictionary (2d Ed. on CD-ROM) defines "onerous" as, "Of the nature of a burden; burdensome; oppressive, troublesome." [emphasis added.] ¶17 In Gorst v. Wagner, 1993 OK 50, 865 P.2d 1227 , we held that Owens had, in effect, been modified by an act of the legislature, 23 O.S. Supp. 1986 §103 which provided, In . . . any action for damages to personal rights the court shall, subsequent to adjudication on the merits and upon motion of the prevailing party, determine whether a claim or defense asserted in the action by a nonprevailing party was asserted in bad faith, was not well grounded in fact, or was unwarranted by existing law or a good faith argument for the extension, modification, or reversal of existing law. Upon so finding, the court shall enter a judgment ordering such nonprevailing party to reimburse the prevailing party an amount not to exceed Ten Thousand Dollars ($10,000.00) for reasonable costs, including attorney fees, incurred with respect to such claim or defense. We held in Gorst that §103 applied in a case in which a conspiracy to fraudulently induce the breach an employment contract was alleged and that attorneys' fees and costs could not, therefore, exceed $10,000. We so held based on our conclusion that plaintiff's conspiracy claim was "an action for damages to personal rights." ¶18 Dean Bailey Olds has cited to neither Gorst nor §103 in any of its filings in this appeal. In any event we hold that neither Gorst nor §103 is applicable here because the misrepresentation of the car odometer's reading involved damage to Dean Bailey Olds' business property, not personal rights. ¶19 In Rainbow Travel Service Inc. v. Hilton Hotels Corporation, 896 F.2d 1233 (10th Cir. 1990) the court interpreted what is now 12 O.S. 1991 § 727(E). Section 727(E) is similar to 13 O.S. §103, in that it provides for prejudgment interest, as §103 provides for attorneys' fees, where a verdict has been rendered "for damages by reason of injuries ... to personal rights." In Rainbow Travel the court denied plaintiff's claim for prejudgment [32 P.3d 821] interest for fraudulent damage to the good will of its business saying, Clearly, the statute [12 O.S. §727] only allows prejudgment interest where the damages arise by reason of 'personal injuries or injury to personal rights.' In this case, the damages arose because of injury to a business asset: good will. We agree with the Tenth Circuit's conclusion in Rainbow Travel that "personal rights" are not violated by actions that cause damage to business property. Here Dean Bailey Olds sued Preston Motor Company for damages arising from damage to Dean Bailey Olds' business asset: the 1991Oldsmobile Cutlass car. Thus, neither Gorst nor 23 O.S. 1991 §103 applies here. We hold, therefore, that our reasoning in Owens applies here without limitation. ¶20 In its brief in chief, Dean Bailey Olds cited to several cases under the Truth in Mileage Act, which stand for the proposition that a reckless disregard for the truth of the mileage on a vehicle constitutes a violation of the Act. In support of this proposition Dean Bailey Olds cited to, among other cases, Suiter v. Mitchell Motor Coach Sales, Inc. 151 F.3d 1275 (10th Cir. 1998). While the proposition that reckless disregard for the truth is actionable is correct as far as it goes, Dean Bailey Olds failed to explain that there is more to the rule: "Where a defendant could reasonably conclude, upon inspection of a vehicle, that the mileage on the odometer of the vehicle was incorrect, the defendant has a duty to inform the potential purchaser that the actual mileage of the vehicle is unknown." 151 F.3d at 1284. In Suiter, defendant failed to look at the service records, which were in the glove box of the motor home in question and which, if examined, would have shown that the odometer had been replaced and that the mileage shown on the current odometer was understated. ¶21 In contrast to Suiter, in the case before us used car experts at Malone Motors, from whom Preston bought the car and at Dean Bailey Olds, itself, to whom Preston sold the car, unanimously concluded that the condition of the car was consistent with the mileage shown on its odometer. Thus, it is undisputed that there was nothing about the car that could have reasonably alerted Preston to the possibility that the mileage shown on its odometer might have been understated and there was no factual basis to support Dean Bailey Olds' claim that Preston Motor Company had been guilty of negligent misrepresentation. ¶22 Despite the lack of any evidentiary support for its claims that Preston Motor Company knew or should have known that the car's odometer was in error, Dean Bailey Olds prosecuted its suit for more than two years, from May 1996 until the trial court granted Preston Motor Company motion for directed verdict in June 1998 after two days of trial. The record supports the trial court's conclusion that Dean Bailey Olds' "onerous" conduct made an attorneys' fee award appropriate. We hold that the trial court's characterization of Dean Bailey Olds's conduct as "onerous" was the functional equivalent of a finding that such conduct was "oppressive," as we used the term in Owens. Thus, our reasoning in Owens applies here, as well. ¶23 Finally, Dean Bailey Olds claims in its brief in chief that the trial court's attorneys' fee award was excessive because, "The Oklahoma Legislature in the consumer protection statutes limits the right of recovery to bad faith, groundless claims to a maximum of Ten Thousand Dollars ($10,000.00)." That statute, 15 O.S. Supp. 1991 §761.1, does not apply here. Section 761.1 calls for attorneys' fees for "aggrieved consumers." Clearly, then the statute does not apply here, as the trial court awarded the fees because of Dean Bailey Olds' "onerous" conduct in prosecuting this litigation, not because Preston Motor Company was an "aggrieved consumer." Further, Dean Bailey Olds fails to address the fact that the attorneys' fee awarded by the trial court was granted after a hearing in which there was undisputed testimony supporting the amount awarded. The record supports the trial court's attorneys' fee award of $22,060.50. CONCLUSION ¶24 The record supports the trial court's finding that Dean Bailey Olds's conduct in prosecuting this suit was "onerous." We [32 P.3d 822] hold that this finding was the equivalent of a finding that Dean Bailey Olds had acted "oppressively." Thus, the record supports the trial court's order imposing attorneys' fees. We further find that the evidence adduced at the attorneys' fee hearing supports the trial court's decision to set the amount of attorneys' fees at $22,060.50. CERTIORARI PREVIOUSLY GRANTED, COURT OF CIVIL APPEALS' OPINION VACATED, JUDGMENT OF THE DISTRICT COURT AFFIRMED ¶25 SUMMERS, C.J., HODGES, KAUGER, WATT, and WINCHESTER, JJ. - concur. ¶26 BOUDREAU, J. - concurs in result. ¶27 HARGRAVE, V.C.J., LAVENDER, and OPALA, JJ. - dissent. FOOT