Judge Henley died on October 18, 1997. This opinion is consistent with his

1

vote at the panel's conference following oral argument on September 11, 1997.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

_______________

Nos. 96-3266/3457

_______________

Vicki Grabinski, *

*

Appellee/Cross-Appellant, *

 *

v. * Appeals from the United States

 * District Court for the

Western

Blue Springs Ford Sales, Inc.; Blue * District of

Missouri.

Springs Ford Wholesale Outlet, Inc.; *

Don Isom; Fred Graham; and Bob *

Dudley, *

*

Appellants/Cross-Appellees. *

_______________

Submitted: September 11, 1997

 Filed: February 12, 1998

_______________

Before BOWMAN, Circuit Judge, HENLEY, Senior Circuit Judge, and MORRIS

1

SHEPPARD ARNOLD, Circuit Judge.

_______________
-2-

MORRIS SHEPPARD ARNOLD, Circuit Judge.

Blue Springs Ford Sales, Inc. (BSF), Blue Springs Ford Wholesale

Outlet, Inc. (Outlet), and three Outlet employees, Don Isom, Fred Graham,

and Bob Dudley, appeal from a judgment entered on jury verdicts in favor

of Vicki Grabinski on her claims based on the common law and on the

Missouri Merchandising Practices Act, see Mo. Rev. Stat. §§ 407.010-

407.1020. The jury awarded Ms. Grabinski $7,835 in actual damages and

$210,000 in punitive damages. Ms. Grabinski cross-appeals from the trial

court's denial of her motion for attorney fees. We affirm the judgment as

to liability and actual damages, reverse and remand as to punitive damages,

and dismiss the cross-appeal as moot. 

I.

Bob Balderston is the owner and president of BSF, Mark Talbott is the

vice-president and general manager of BSF, and Tom Riddings is the

president and general manager of the Outlet. Mr. Balderston, Mr. Talbott,

and Mr. Riddings own the Outlet in equal shares. About seventy percent of

the Outlet's cars come from BSF. 

Early in 1993, BSF took a 1984 GMC Jimmy truck as a trade-in, and

Steve Lotspeich, BSF's used-car manager, examined it. As a general rule,

Mr. Lotspeich looked at vehicles for about ten to fifteen minutes and took

them for a short drive at speeds of up to thirty-five miles an hour.

Because the Jimmy was to be wholesaled, however, Mr. Lotspeich probably

spent less time examining it. Mr. Lotspeich then called Mr. Isom, the

Outlet's business manager, to offer the Jimmy for sale. Mr. Lotspeich, who

expected his descriptions of vehicles to be passed along to the Outlet's

customers, described the Jimmy as "very nice" and stated that it was

"driving fine" and needed only a cleanup and standard servicing.

A few days later, Ms. Grabinski called the Outlet and spoke to

Mr. Graham, a salesman, about buying a dependable four-wheel-drive

vehicle. Mr. Graham told her
-3-

about the Jimmy. Later that day, Ms. Grabinski and her fiancé, Matt

Walker, went to the Outlet. Mr. Graham showed them the Jimmy, telling them

that except for an obvious crack in the windshield it was in "A-1"

condition. He also stated that it had never been in a wreck, had had only

one owner, and ran perfectly. After a short test drive and some

negotiations, Ms. Grabinski agreed to pay $5,500 for the Jimmy. When

Ms. Grabinski talked to Mr. Isom about financing, he assured her that she

was getting a good deal because the Jimmy was dependable and in "excellent

condition." Ms. Grabinski then put a deposit on the Jimmy.

After obtaining financing from a bank, Ms. Grabinski and Mr. Walker

returned to the Outlet the next week to close the deal. Mr. Graham told

her that she had to sign a "tow-away" affidavit, which, in relevant part,

stated:

I understand that the [Jimmy] which I purchased from [the

Outlet] has not been Missouri State inspected and is considered

to be in an unsafe mechanical condition. This vehicle is being

purchased for the purpose of rebuilding, salvage, or junk. I

understand that the vehicle cannot be operated in its present

condition[;] therefore I agree that the vehicle be towed or

hauled from its place of purchase. 

Under Missouri law, if a purchaser of a vehicle executes an affidavit

stating that the vehicle is being purchased for "junk, salvage, or for

rebuilding," the seller is exempt from a state requirement that "[a]t the

seller's expense [the] vehicle ... shall immediately prior to sale be

fully inspected regardless of any current certificate of inspection and

approval, and an appropriate new certificate of inspection and approval ...

shall be obtained." See Mo. Rev. Stat. § 307.380. 

 After Ms. Grabinski refused to sign the affidavit, Mr. Graham,

contrary to the law, told her that Missouri law required buyers of all

vehicles to sign such an affidavit because until the vehicle was inspected

it was considered unsafe. Ms. Grabinski still refused to sign, asking why

she had to sign the affidavit since she needed a dependable
-4-

vehicle and did not have any more money to put into the Jimmy. Mr. Isom

and Mr. Dudley, another salesman, then came into Mr. Graham's office.

During a fifteen-minute discussion, Mr. Graham, Mr. Isom, and Mr. Dudley

tried to persuade Ms. Grabinski to sign the affidavit, claiming that use

of the affidavit was "universal" in sales of vehicles in Missouri. They

also assured her that the Jimmy was not a "piece of junk." Mr. Dudley and

Mr. Isom told her the only reason that it would not pass inspection was the

cracked windshield and reiterated that it had never been wrecked.

Ms. Grabinski then signed the affidavit and completed the sale, and, after

the Outlet's mechanic replaced the spark plugs, she drove the Jimmy off the

lot.

 About a week later, while Mr Walker was driving the Jimmy back from

Oklahoma, the engine began overheating. Mr. Walker had the vehicle towed

back to the Outlet. Mr. Isom told Ms. Grabinski that the engine heads were

cracked and offered to repair them for $360. Ms. Grabinski had the repair

done elsewhere. After the repair, the Jimmy continued to experience

difficulties, including lack of power, swaying, and low gasoline mileage.

Ms. Grabinski soon undertook an investigation of the Jimmy's history.

She discovered that one James Cox had bought the vehicle in 1986 from a

wrecking company, which had obtained it as salvage after it sustained

considerable damage in a roll-over accident. Mr. Cox then spent about two

or three months rebuilding the Jimmy. When Ms. Grabinski and Mr. Walker

went back to the Outlet and confronted Mr. Isom about what she had learned,

Mr. Isom offered to repurchase the Jimmy, but at a substantial reduction

from the price that Ms. Grabinski had paid because it needed repair.

Mr. Isom told them that if the Jimmy was not in good condition, BSF had

"screwed" the Outlet because BSF had represented that it was in "good

shape." 

Ms. Grabinski then filed suit, raising claims under the common law

of fraud and under the Missouri Merchandising Practices Act, the latter of

which provides that the "use or employment by any person of any deception,

fraud, ... misrepresentation, [or]
-5-

unfair practice ... in connection with the sale ... of any merchandise in

trade or commerce ... is declared to be an unlawful practice." See Mo.

Rev. Stat. § 407.020.1. 

Ms. Grabinski subsequently replaced the Jimmy's engine, and the

defendants then offered to repurchase the Jimmy for the sale price and

certain costs but less depreciation. The offer was not contingent on

Ms. Grabinski's dismissal of her lawsuit. Ms. Grabinski rejected the offer

and eventually traded the Jimmy.

At trial, in addition to presenting evidence relating to the sale and

the history of the Jimmy, Ms. Grabinski presented the expert testimony of

Richard Diklich, an instructor in automotive technology. Mr. Diklich

testified that based on his examination of the Jimmy there were signs of

wreck damage, such as repainting and poor door fit, which should have been

obvious to a vehicle appraiser on a visual examination. He also opined

that the power difficulty should have been obvious to an appraiser during

a test drive. According to Mr. Diklich, had the condition of the Jimmy

been as represented, it would have been worth $8,000 but at the time of

purchase was worth $2,500 to $3,000. 

Ms. Grabinski also presented evidence that BSF knew that the Outlet

used tow-away affidavits in sales of vehicles, in violation of Missouri

law. Mr. Talbott, vice-president and general manager of BSF and vicepresident of the Outlet, read from a July, 1990, automobile association

bulletin advising its members, which included BSF, that the "Missouri

Attorney General's Office had published guidelines concerning the proper

use of the 'junk, salvage or rebuilding affidavit.' " The bulletin warned:

"You CANNOT substitute a 'junk affidavit' for a motor vehicle safety

inspection" if "[t]he vehicle is operable and is driven rather than towed

or hauled away." Mr. Talbott testified that shortly before trial the

Outlet stopped using the affidavits.
-6-

The jury awarded actual damages of $7,835. It also awarded punitive

damages of $100,000 against the Outlet, of $50,000 against BSF, of $30,000

against Mr. Isom, of $20,000 against Mr. Dudley, and of $10,000 against

Mr. Graham. 

After the verdicts, the trial court informed the parties that because

under state law the matter of statutory punitive damages was left to the

discretion of the court, the court would not enter judgment until it heard

argument on the matter of punitive damages and on Ms. Grabinski's request

for statutory attorney fees. Before argument, the defendants filed a

memorandum asserting that the jury's punitive damages awards were

excessive, and, with the exception of BSF, they submitted affidavits of

their net worth in support. The trial court did not rule on the matters

at the conclusion of argument, but later held that it would not consider

the net-worth affidavits and could not "second guess" the jury's verdicts

because of "equitable considerations." The trial court also denied

Ms. Grabinski's request for attorney fees on the ground that the punitive

damages awards were "generous." The trial court entered judgment in

accordance with the verdicts. The defendants filed a postjudgment motion

for judgment as a matter of law; in the alternative, they requested a new

trial or remittitur, asserting that the punitive damages awards were

excessive under state law and the United States Constitution.

II.

The defendants first argue that the trial court erred in denying

their motion for judgment as a matter of law; they assert that

Ms. Grabinski failed to prove that they made misrepresentations as to

existing facts. See State ex rel. Danforth v. Independence Dodge, Inc.,

494 S.W.2d 362, 368 (Mo. Ct. App. 1973). In particular, BSF argues that

Mr. Lotspeich's representation that the Jimmy was "very nice" was merely

an expression of opinion and thus not actionable. We disagree. 

"A given representation can be an expression of opinion or a

statement of fact depending upon the circumstances surrounding the

representation." Carpenter v.
-7-

Chrysler Corp., 853 S.W.2d 346, 358 (Mo. Ct. App. 1993). In the

circumstances here, we believe that Mr. Lotspeich's representation that the

Jimmy was "very nice" could reasonably be taken as a statement of fact as

to the condition of the Jimmy. See id. (salesperson's statement that car

was "good" and "reliable" was misrepresentation of fact). In addition, as

Ms. Grabinski points out, Mr. Lotspeich also stated that the Jimmy was

"driving fine" and "only needed a clean-up and standard service," which

were clearly misrepresentations as to facts. 

Contrary to BSF's argument, moreover, the fact that Mr. Lotspeich's

statements were not made "directly to" Ms. Grabinski is not a defense to

her damage claim. Freeman v. Myers, 774 S.W.2d 892, 894 (Mo. Ct. App.

1989). BSF is liable to Ms. Grabinski because Mr. Lotspeich expected his

representations "to extend to and be relied upon by a retail purchaser of

the car from the automobile dealership to whom [BSF] sold the car." Id.

at 893-94. Not only did Mr. Lotspeich testify that he knew that the Outlet

relied on his expertise in examining vehicles and "expected [the Outlet]

to be able to pass on things that [he] represented," there was evidence

from which a jury could reasonably have concluded that the Outlet had in

fact passed on Mr. Lotspeich's representations about the Jimmy to

Ms. Grabinski. Mr. Isom and Mr. Dudley both testified that the information

that they received about the Jimmy came from Mr. Lotspeich and that they

relied upon him to disclose problems, such as if the Jimmy had been

wrecked. Especially significant, we think, is Mr. Isom's statement to

Ms. Grabinski that if the Jimmy was in bad shape when she bought it, BSF

had "screwed" the Outlet by representing that it was in "good shape." 

Nor, contrary to its arguments, can BSF be shielded from liability

because Mr. Lotspeich's brief visual inspection and test drive might not

have provided him with knowledge of the Jimmy's defects. It is sufficient

that Mr. Lotspeich "made the representations with the consciousness that

[he] was without knowledge as to their truth or falsity, when, in fact,

they were false." Scott v. Car City Motor Co., Inc., 847 S.W.2d 861, 865

(Mo. Ct. App. 1992). In any event, the jury could reasonably have
-8-

concluded that Mr. Lotspeich, as an experienced vehicle appraiser, knew

or should have known that the Jimmy had been in a wreck because of obvious

signs of damage and knew or should have known of its power problems during

the test drive. 

The statements of Mr. Isom, Mr. Graham, and Mr. Dudley that the Jimmy

was in excellent condition, had had one owner, and had never been wrecked

were likewise actionable misrepresentations. We reject Mr. Dudley's

argument that because he did not speak to Ms. Grabinski until a week after

she put down her deposit on the Jimmy, she could not have relied on his

representations in deciding to buy the Jimmy. The defendants' evidence was

that Mr. Dudley told Ms. Grabinski that if she was "uncomfortable" with

signing the tow-away affidavit, the Outlet would be "happy to return her

money to her and just end the sale right then." Ms. Grabinski testified

that she completed the sale only because she relied on the

misrepresentations, including Mr. Dudley's, that use of the affidavit was

"universal" in sales of vehicles in Missouri and that despite what the

affidavit said, the Jimmy was not a "piece of junk" and was, in fact, in

excellent condition. 

The defendants also argue that there was insufficient evidence to

support the jury's award of $7,835 in actual damages. We disagree. At

a minimum, Ms. Grabinski was entitled to "the difference between the actual

value of the property and what its value would have been if it had been as

represented." Sunset Pools v. Schaefer, 869 S.W.2d 883, 886 (Mo. Ct. App.

1994) ("benefit-of-bargain" rule applies to fraud and Merchandising

Practices Act claims). Here Mr. Diklich testified that the Jimmy was

worth $2,500 to $3,000 but would have been worth $8,000 as represented.

Ms. Grabinski was also entitled to recover other expenses of which there

was evidence, including interest charges, repair costs, lost time from

work, excessive gasoline costs, towing charges, and other costs relating

to "problems arising from the fraudulent transaction." Hughes v. Box, 814

F.2d 498, 503 (8th Cir. 1987) (applying Missouri law); see also Carpenter,

853 S.W.2d at 361. The jury's award thus finds ample support in the

record.
-9-

III.

We turn now to the defendants' arguments concerning the punitive

damages awards. They contend that the trial court erred in instructing the

jury as to a mitigating circumstance, in rejecting their postverdict

affidavits of net worth, and in failing to review the verdict for

excessiveness. 

The trial court instructed the jury that it could consider the

defendants' offer to repurchase the Jimmy as mitigating evidence with

respect to punitive damages, but also instructed the jury that

Ms. Grabinski "reasonably rejected the offer because of uncertain details"

and because her acceptance "would indirectly create risks" for her lawsuit.

The defendants contend that whether Ms. Grabinski's rejection of the offer

was reasonable was a question of fact for the jury. 

In Missouri, evidence of a defendant's conduct subsequent to that

defendant's wrongful acts is admissible to mitigate punitive damages if it

is " 'so connected with the particular acts as tending to show defendant's

disposition, intention, or motive in the commission of the particular acts

for which damages are claimed.' " Maugh v. Chrysler Corp., 818 S.W.2d 658,

663 (Mo. Ct. App. 1991), quoting Charles F. Curry and Co. v. Hedrick, 378

S.W.2d 522, 536 (Mo. 1964). Because Ms. Grabinski was not obligated to

accept the repurchase offer and because her reasons for rejecting the offer

are irrelevant to the defendants' state of mind at the time of the

transaction, see Maugh, 818 S.W.2d at 664, any error in the instruction is

harmless. Given all of the circumstances of this case, including the fact

that the offer was made after the filing of the complaint and testimony

that the offer was intended "to avoid the expense of litigation," the

defendants, as the trial court noted, "got more mileage out of the

[evidence] than they were entitled to." 

We next consider the defendants' argument that the trial court erred

in refusing to consider their postverdict affidavits of net worth. The

defendants contend that
-10-

because the purposes of punitive damages are punishment and deterrence,

net worth is an essential consideration. They concede that in Missouri

"[w]hile the net worth of a party is admissible on the issue of punitive

damages, there is no requirement that the net worth be shown." Mullen v.

Dayringer, 705 S.W.2d 531, 536 (Mo. Ct. App. 1985). The defendants

suggest, however, that as a matter of federal constitutional law a trial

court in its postverdict review must consider evidence of a defendant's net

worth. Ms. Grabinski responds that the defendants' failure to put on

evidence of their net worth at trial constitutes a waiver. 

We agree with Ms. Grabinski. In Kemezy v. Peters, 79 F.3d 33, 34

(7th Cir. 1996), the Seventh Circuit held that as a matter of federal law

it is a defendant's burden to introduce evidence of net worth before a jury

for purposes of minimizing a punitive damages award. The court noted that

none of "the purposes that are served by the awarding of punitive damages

... depends critically on proof that the defendant's income or wealth

exceeds some specified level." Id. at 35 (emphasis in original). Although

the court acknowledged "that losing $1 is likely to cause less unhappiness

(disutility) to a rich person than to a poor one," id., the court likened

an award of punitive damages to a fine. Id. at 36. The court observed

that "[t]he usual practice with respect to fines is not to proportion the

fine to the defendant's wealth, but to allow him to argue that the fine

should be waived or lowered because he cannot possibly pay it." Id. In

the context of punitive damages, we agree with the Seventh Circuit that

"[t]he defendant who cannot pay a large award of punitive damages can point

this out to the jury so that they will not waste their time ... by awarding

an amount that exceeds his ability to pay." Id. Accord Smith v. Lightning

Bolt Productions, Inc., 861 F.2d 363, 373 (2d Cir. 1988) ("it is the

defendant's burden to show that his financial circumstances warrant a

limitation of the [punitive damages] award"). 

The defendants also argue that the trial court erred in failing to

review the jury's award of punitive damages, as required by Pacific Mut.

Life Ins. Co. v. Haslip, 499 U.S. 1, 20 (1991). Ms. Grabinski suggests,

however, that the trial court conducted an
-11-

adequate review because it held postverdict argument on the matter of

punitive damages. Cf. TXO Prod. Corp. v. Alliance Resources Corp., 509

U.S. 443, 464-65 (1993) (plurality opinion). In this case, however, the

trial court heard postverdict argument not because of due process concerns,

but because it believed that under state law statutory punitive damages

were a matter for the court, not the jury. (Although the issue was not

raised on appeal, we note that, contrary to the trial court's belief, in

a diversity case "[f]ederal law controls the issue" of the right to a jury

trial, "even in cases ... where the federal court is enforcing a statecreated right and 'even when a state statute ... would preclude a jury

trial in state court.' " Kampa v. White Consol. Indus., Inc., 115 F.3d

585, 587 (8th Cir. 1997), quoting Gipson v. KAS Snacktime Co., 83 F.3d 225,

230 (8th Cir. 1996). Where, as here, the state statute " 'allows, and the

plaintiff seeks, at least in part a legal remedy,' " the plaintiff has a

right to a federal jury trial. Kampa, 115 F.3d at 586, quoting Gipson, 83

F.3d at 231.) 

Even though the trial court heard postverdict argument for a purpose

other than reviewing the verdicts as required by Haslip, if at that

argument the court had rejected the defendants' excessiveness arguments and

indicated its agreement with the jury's verdicts, a remand would perhaps

be unnecessary. At that argument, however, the trial court stated that it

would take the matter under advisement, and in its opinion, the court did

not treat the jury verdicts as advisory and review them for excessiveness,

as it indicated it would do. To the contrary, the trial court held that

it was bound by "equitable considerations" to enter judgment in accordance

with the verdicts, relying on the principle that a court is collaterally

estopped from relitigating a jury's factual findings when the court later

considers equitable remedies on the same claim. See, e.g., Brownlee v.

Yellow Freight Syst., Inc., 921 F.2d 745, 749 (8th Cir. 1990). That

reliance was misplaced. Not only are punitive damages a legal remedy, but

the trial court had a duty under state and federal law to review the awards

for excessiveness. 

Alternatively, Ms. Grabinski urges us to conduct a review on our own

by applying the principles laid out in BMW of North America, Inc. v. Gore,

517 U.S. 559,
-12-

116 S. Ct. 1589 (1996). In Gore, the Supreme Court held that in

determining whether a punitive damages award was so "grossly excessive,"

517 U.S. at _____, 116 S. Ct. at 1592, as to violate federal due process

rights, a court should consider "the degree of reprehensibility of the

defendant's conduct," 517 U.S. at _____, 116 S. Ct. at 1599, the ratio of

punitive damages to compensatory damages, 517 U.S. at _____, 116 S. Ct. at

1601-02, and "the civil or criminal penalties that could be imposed for

comparable misconduct," 517 U.S. at _____, 116 S. Ct. at 1603. 

We believe, however, that Gasperini v. Center for Humanities, Inc.,

116 S. Ct. 2211 (1996), controls this case. In Gasperini, the Second

Circuit had vacated a jury's damages award pursuant to a state statute

providing that an appellate court "shall determine" whether a verdict is

excessive. Id. at 2216. Although the Supreme Court held that the relevant

state's excessiveness standard applies in diversity cases, id. at 2221, the

Court was concerned that the application of the statute might conflict with

the reexamination clause of the Seventh Amendment, which provides that "no

fact tried by a jury, shall be otherwise reexamined in any Court of the

United States, than according to the rules of the common law." 

After reviewing the common law, the Court concluded that "Seventh

Amendment constraints ... lodge[d] in the district court, not the court of

appeals, primary responsibility" for review of a jury's verdict for

excessiveness. Gasperini, 116 S. Ct. at 2225. The Court also believed

that practical considerations supported its holding, noting that "[t]rial

judges have the 'unique opportunity to consider the evidence in the living

courtroom context,' " id., quoting Taylor v. Washington Terminal Co., 409

F.2d 145, 148 (D.C. Cir. 1969), cert. denied, 396 U.S. 835 (1969), "while

appellate judges see only the 'cold paper record,' " Gasperini, 116 S. Ct.

at 2225, quoting Gasperini v. Center for Humanities, Inc., 66 F.3d 427, 431

(2d Cir. 1995), vacated, 116 S. Ct. 2211 (1996). 

The Court went on to hold that appellate review of the trial court's

determination in this regard is limited to an abuse of discretion.

Gasperini, 116 S. Ct. at 2225. In our
-13-

case, since there has been no review by the trial court we can hardly

decide whether the court abused its discretion in the award of punitive

damages. We therefore remand the case to the trial court for a review of

the punitive damages awards under state and federal excessiveness

standards. 

IV.

In her cross-appeal, Ms. Grabinski argues that the trial court abused

its discretion in denying her claim for statutory attorney fees for the

sole reason that it believed that the punitive damages awards were

"generous." She also challenges the trial court's refusal to enter

judgment as of the date of the jury verdicts. In light of our remand on

the punitive damages issue, we need not address her arguments and dismiss

the cross-appeal as moot . 

On remand, Ms. Grabinski can bring to the district court's attention

the cases of O'Brien v. B.L.C Ins. Co., 768 S.W.2d 64, 71 (Mo. 1989) (en

banc), and Moore v. City of Park Hills, 945 S.W.2d 1, 2-3 (Mo. Ct. App.

1997), which deal with attorney fees, and AT&T v. United Computer Syst.,

Inc., 98 F.3d 1206, 1211 (9th Cir. 1996), which deals with the entry of

judgment after remand. 

V.

Accordingly, we affirm in part and reverse in part the judgment of

the trial court. We dismiss the cross-appeal as moot and remand the case

for further proceedings consistent with this opinion. 

A true copy.

Attest:

 CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.