United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 03-2128

___________

Chae Kon Chong, *

*

Appellant, *

* Appeal from the United States

v. * District Court for the Western 

* District of Missouri.

Roscoe Parker; Rick A. Parker; * 

Wood and Huston Bank, *

*

Appellees. *

___________

Submitted: January 16, 2004

Filed: March 9, 2004

___________

Before WOLLMAN, MORRIS SHEPPARD ARNOLD, and COLLOTON, Circuit

Judges.

___________

MORRIS SHEPPARD ARNOLD, Circuit Judge.

Chae Kon Chong appeals two rulings entered against him in his action against

Rick Parker (Rick), Roscoe Parker (Mr. Parker), and Wood and Huston Bank. The

district court granted summary judgment to the bank and, in the trial involving the

Parkers, refused to submit punitive damages to the jury. We affirm the summary

judgment and reverse and remand with respect to the matter of punitive damages. 

 
-2-

I.

This case arises out of the sale of a car by Mr. Parker for his son, Rick, to

Mr. Chong for the use of his daughter, Sunhee. The sale was conducted at the bank,

which was Mr. Parker's place of employment. At the time of the sale, Mr. Chong did

not speak or understand English, and his daughter discussed the car's history and

negotiated the terms of the sale with Mr. Parker. Rick had previously informed

Mr. Parker that the vehicle had been declared salvage following an accident involving

the car's original owner, but Mr. Parker misrepresented to Sunhee (and thus to

Mr. Chong) that the car had not been in any accidents. When the car began

malfunctioning, Sunhee learned from a mechanic that the car had been rebuilt.

Through the internet, she found out that the car's history included a salvage title.

 

Mr. Chong sued the Parkers and the bank for common-law fraud and violations

of the Federal Odometer Act, see 49 U.S.C. §§ 32701-32711, and Missouri's

Merchandising Practices Act (MMPA), see Mo. Rev. Stat. §§ 407.010-407.307. The

district court granted the bank summary judgment on the claims against it. A jury

found for the Parkers on the Federal Odometer Act claim but could not reach a verdict

on the common-law fraud or MMPA claims. A second trial was conducted on the

MMPA claim against the Parkers; the jury found for Mr. Chong and awarded him

$2000 in actual damages. The trial court refused to submit punitive damages to the

jury.

II. 

Mr. Chong alleged in his complaint that the bank participated in Mr. Parker's

fraudulent misrepresentations about the car. The car was parked in the bank's parking

lot with a "For Sale" sign on it when Mr. Chong first saw it and inquired about taking

a test drive. While Sunhee was aware that Mr. Parker (and not the bank) was selling

the car, Mr. Chong believed that the bank owned it. Mr. Parker negotiated the terms

of sale with Sunhee, and Mr. Chong signed the documents pertaining to the purchase
-3-

of the car at the bank. Mr. Parker also secured a car loan for Mr. Chong from the

bank to pay for the car. 

While all these activities took place at the bank, there is no evidence that the

bank participated in the fraud. Mr. Chong's daughter and translator, Sunhee, knew

that the bank was not selling the car. Mr. Parker specifically told Sunhee that he was

selling the car for his son, but Sunhee did not believe that this information was

important enough to pass on to her father before he bought the car. Sunhee was

aware that Mr. Parker was speaking for himself and not for his employer, which had

no relationship with the car. 

Mr. Chong argues that even though his mistake about the car seller's identity

was the result of his daughter's failure to inform him and not due to any

misrepresentation by Mr. Parker or the bank, the bank still benefitted from

Mr. Parker’s fraud through the interest payments on the loan and thus participated in

the fraud. The loan documents, however, were filled out after the sale was complete.

The loan was an entirely separate transaction from the sale of the car, and there was

no misrepresentation within the loan documents. If anything, the bank was injured

by the use of the car as collateral because the car's selling price (and thus the loan

amount) was too high due to Mr. Parker's misrepresentation. Mr. Parker's fraud had

the potential to injure the bank as well as Mr. Chong. 

Mr. Chong maintains that "a party not actually making the fraudulent

representation is liable if he accepted the benefits of the transaction and had either

actual or constructive knowledge at the time of the fraud, or at the time he accepted

the benefits, that fraud had been committed." Fallert Tool & Eng'g Co. v. McClain,

579 S.W.2d 751, 756 (Mo. Ct. App. 1979). But there is no evidence here that the

bank had actual knowledge of Mr. Parker's misrepresentation, nor could the fraud be

imputed to the bank under Missouri agency law. " 'While a corporation ordinarily is

bound by the knowledge of its agents ..., the agent's knowledge of his own
-4-

unauthorized act, not brought home to the authorized corporate board, officer or

agent, cannot be imputed to the corporation.' " Motor Transp. Springfield v. Orval

Davis Tire Co., 585 S.W.2d 195, 202 (Mo. Ct. App. 1979) (quoting Trice v.

Lancaster, 270 S.W.2d 519, 524 (Mo. Ct. App. 1954). The bank did not authorize

Mr. Parker to defraud Mr. Chong or even to sell his son's car at the bank during

business hours. Mr. Parker acted only on his own behalf, outside the scope of his

employment, and extended no benefits of his fraud to the bank. The district court

therefore did not err in granting the bank summary judgment.

III.

Mr. Chong also appeals the trial court's refusal to submit the issue of punitive

damages to the jury. Under the MMPA, "[t]he court may, in its discretion, award

punitive damages" against defendants who employ fraudulent selling practices. Mo.

Rev. Stat. § 407.025.1. Our case law is clear that this language does not allow a

judge (as opposed to a jury) in a jury trial in federal court to fix the amount of

punitive damages awards, as the Parkers mistakenly argue. See Grabinski v. Blue

Springs Ford Sales, Inc., 136 F.3d 565, 571 (8th Cir. 1998).

To determine whether the trial court erred by refusing to submit punitive

damages to the jury, we must apply Missouri law. Only outrageous conduct

stemming from an "evil motive or reckless indifference" can give rise to an award of

punitive damages. Burnett v. Griffith, 769 S.W.2d 780, 789 (Mo. 1989). "In

reviewing the submissibility of the issue of punitive damages, we review the evidence

in the light most favorable to submissibility." Carpenter v. Chrysler Corp.,

853 S.W.2d 346, 364 (Mo. Ct. App. 1993).

In Carpenter, the trial court had refused to submit punitive damages to the jury

because it believed that the plaintiff had failed to present substantial evidence that the

defendant's conduct was outrageous. Id. The defendant had made repairs to a car

before the plaintiff-buyers took possession of it but did not inform the buyers. Id. at
-5-

353, 364. The appeals court reversed the trial court's refusal to submit the issue of

punitive damages, saying "that the jury could reasonably infer that [the defendant's]

actions were taken with reckless indifference to the rights of the [plaintiffs] or were

evil, motivated solely by [the defendant's] desire to make a sale regardless of the

repairs [that the defendant] had undertaken but had not disclosed." Id. at 364.

Mr. Chong's case is like Carpenter because, in both cases, the seller made

intentional misrepresentations in order to induce the buyer to pay a higher price than

he would have if he had known the truth. We believe, in fact, that Mr. Chong's case

is on all fours with Carpenter in every relevant particular. Mr. Parker lied about the

car's title and history to Sunhee and Mr. Chong to get a better price for the car. Since

Sunhee had asked Mr. Parker twice about whether the car had a salvage title or had

been involved in any accidents, it should have been apparent to him that the car's

accident history was important to Sunhee and her father. Mr. Parker misled Sunhee

and Mr. Chong to induce them to buy a car that they would otherwise not have

bought.

The Parkers argue that a punitive damages instruction would have been

inappropriate in the present case because, unlike the sellers in Carpenter, the Parkers

were unaware that the car that they were selling was in need of repair. In Moore v.

Courtesy Chevrolet, Inc., 854 S.W.2d 13, 13-14 (Mo. Ct. App. 1993), however, the

Missouri Court of Appeals reversed a trial court's refusal to submit punitive damages

to the jury where the plaintiffs were misled about who had driven a car previously,

even though "[t]he car never gave plaintiffs any trouble, and they ... never claimed it

was not a good car." The defendant did not need to disregard the plaintiffs' safety in

order to justify a punitive damages instruction. The court found that "the jury could

have believed that defendant intentionally misrepresented the history of the

automobile; that the misrepresentation was a material misrepresentation; that the

defendant made the misrepresentation with the purpose of inducing the unsuspecting

plaintiffs to buy the automobile and pay an excessive price." Id. at 14. 
-6-

We believe that Mr. Chong has as strong an argument as the plaintiffs in Moore

had for submitting punitive damages to the jury because Sunhee asked about the car's

history at least twice and the question of whether a car is rebuilt relates directly to

whether it is safe and to its price. From the evidence presented at trial, "[t]he jury

could have inferred defendant[s'] evil motive or reckless indifference to the rights of

[Mr. Chong], and on that basis could have considered defendant[s'] conduct

outrageous." Id. (internal quotations omitted).

Lastly, the trial judge believed that "it [was] significant ... that neither

Mr. Roscoe Parker nor Mr. Rick Parker [was] generally in the business of buying and

selling cars, more specifically buying and selling salvage cars or rebuilt cars." The

MMPA, however, applies to anyone selling merchandise in Missouri; the statute does

not differentiate between merchants and non-merchants. While Mr. Parker's status

as a private seller suggests that a punitive damages award might not create the same

kind of deterrence as would a punitive damages award against a car dealership, the

purpose of the MMPA is to protect consumers from all fraudulent sellers, be they

merchants or not. Given Missouri case law, it is for the jury, not the court, to

determine whether punishing the Parkers with a punitive damages award is

appropriate where Mr. Parker was not a professional seller but disregarded

Mr. Chong's rights and interests. 

On remand, the district court should try the matter of punitive damages and

submit it to the jury. Viewing the evidence in the light most favorable to

submissibility, a reasonable jury could conclude "that the defendants' conduct was

egregious and that it demonstrated a clear and disturbing disregard for [Mr. Chong's]

safety and ... economic interests." See Grabinski v. Blue Springs Ford Sales, Inc.,

203 F.3d 1024, 1027 (8th Cir. 2000), cert. denied, 531 U.S. 825 (2000). 
-7-

IV.

For the reasons stated, we affirm the district court's grant of summary judgment

in favor of the bank but reverse and remand with respect to its failure to submit the

matter of punitive damages to the jury. 

______________________________