Opinion ID: 1102298
Heading Depth: 2
Heading Rank: 2

Heading: GMAC's Purchase of the Dealership's Retail Paper

Text: The dealership specifically alleged that GMAC's representatives had misrepresented to it that it was being treated the same as the Montgomery bypass dealers, because, it says, GMAC was buying less of its retail paper than it was buying from those Montgomery dealerships. This alleged disparate treatment also formed the basis for the dealership's suppression claim (that GMAC did not disclose that it was treating the Montgomery bypass dealerships more favorably by buying more of their retail paper), as well as its wantonness claim (that GMAC consciously disregarded the consequences of intentionally discriminating against the dealership in its retail paper purchasing policies). After carefully reviewing the briefs, and after an exhaustive review of the record, we conclude that there was insufficient evidence for a jury to reasonably find that Hall, or any other representative of GMAC, lied to Bell about GMAC's retail paper purchasing policies. The record discloses no contract requiring GMAC to buy any particular amount of the dealership's retail paper. To the contrary, the dealership's 1980 agreement with GMAC stated that GMAC would buy contracts acceptable to us [GMAC]. The dealership's misrepresentation claim is based, in part, on allegations that Gregory Bemister, Hall's assistant, had told Bell that GMAC was buying deeper into the pot and that GMAC was treating the dealership the same as the Montgomery bypass dealers. Bell testified as follows as to what was meant by buying deeper into the pot: Q. All right, sir. Are you saying to this jury, Mr. Bell, that GMAC did not repeatedly approve deals for you on paper where the ratings were `C' papers in many instances, `D' papers in many instances? And that GMAC did, in fact, buy not only deeper, but very, very deeper into the pot for Charles Bell Motor Company? Is it your sworn testimony that GMAC did not do that? A. I couldn't say that they bought deeper in the pot, because most of my customers they gave `D tier.' And, if that's deeper into the pot, I guess that's deeper into the pot. The plaintiffs' attorney explained the phrase during argument at trial, as follows: Deeper than what? The logical assumption is deeper than they [GMAC] would with other GM dealers who were not sending them all of their contracts like Mr. Bell was doing. Bemister testified as follows: What we're talking about when we're talking about `buying deeper in the pot' is that if you get a wide range of business from a particular dealer, one of the things that GMAC offers a dealer because we feel that we have such a good collection effort is that we can buy deals that our competitors can't buy. Because normally banks aren't staffed with a collection staff to go out and knock on doors or to call people. They have to buy more limited or narrower range of customers. So with GMAC if a dealer is sending us all of his business and its a good spread of business, a good mix, then we can go ahead and buy some of those deals that our competition normally wouldn't. Another GMAC employee, James Redden, testified that buying deeper to me just meant buying more marginal deals. Milton Edrington, who replaced Hall on January 1, 1991, testified that he told Bell later that year that the dealership was being treated like other dealers in his area and that the dealership was receiving the same considerations as all the dealers in his area. Edrington explained: If you mean was the relationship between his dealership and GMAC the same as it was with all dealerships, it was not. But the consideration he was given would have been the same, any difference in the treatment would have been based on the financial condition of the dealership and things like that. Edrington also answered in the affirmative when asked whether giving the dealership the same consideration as any other dealership... sometimes result[ed] in a different decision for the Bell dealership; however, he answered in the negative when asked whether GMAC ever made such a different decision that [GMAC] felt was not justified because of the financial condition. The dealership advertised across the country with a toll-free telephone number and ran a number of print media ads for customers with low credit, little money, no credit, weak credit. Bell understood, however, that GMAC would buy contracts with people who had low credit and little money only [i]f they [GMAC] found that it was a good customer. In July 1991, Bell began complaining to GMAC that it was not buying the dealership's retail paper at branch average. However, the record indicates that the dealership was sending GMAC an extraordinarily higher percentage of contracts rated in the worst category of very high risks than other dealers sent. GMAC nonetheless was buying the dealership's retail paper at branch average. As a result, GMAC experienced a repossession rate almost twice the branch average on the dealership's retail paper. Thus, it is clear that GMAC bought many marginal contracts from the dealership. Even with chargebacks under Modification C, the dealership's loss reserve was $200,000 in the negative as of mid-1991. Bell also complained in 1991 that the dealership's approval rate was low because GMAC's personnel in charge of approving the purchase of retail paper were not evaluating his contracts thoroughly. Because GMAC felt that the dealership's high employee turnover was causing incomplete applications to be presented to GMAC, GMAC created a special system to increase the likelihood that the dealership's retail paper would be approved. Under this system, a contract that might otherwise have been rejected was to be reviewed to identify any important missing information that the dealership might be able to supply. In addition, before the responsible GMAC employee informed the dealership that GMAC was rejecting or conditioning a dealership contract, it had to be reviewed by management. The evidence showed that some contracts were approved by GMAC that otherwise would not have been. At the dealership's request, it was taken off Modification C in the fall of 1991. Despite the dealership's large negative loss reserve balance, there is no indication that GMAC adjusted its purchase policy or decreased its buy rate for the dealership. The dealership called an economist, Charles Carter, to testify in support of its allegations that GMAC had falsely represented that it was buying deeper into the pot and that it was treating the dealership just like all the rest of the dealerships. Carter performed a computer analysis of GMAC's purchases of retail paper from the dealership. However, Carter did not compare GMAC's purchases from the dealership with the branch average of GMAC's purchases from the other GM dealerships in the branch. Nor did Carter compare GMAC's purchases of retail paper from the dealership with GMAC's purchases from all those dealerships that were not sending all or most of their contracts to GMAC. Furthermore, Carter did not analyze the extent to which GMAC agreed to buy contracts from the dealership that GMAC's competition [other banks or financial institutions] normally wouldn't have bought. Instead, Carter compared GMAC's purchases of retail paper from the dealership with its purchases from three dealerships on the eastern bypass in Montgomery by comparing the MAPS scores of a number of applications submitted to GMAC for approval. Carter made this comparison even though he had no evidence that the financial condition, repossession rate, or other circumstances of any of the bypass dealerships were comparable to those of Bell's dealership. Carter concluded that between 1986 and 1993 GMAC rejected approximately 52% of the dealership's applications and that GMAC would have approved about 25% of the dealership's rejected applications if GMAC had purchased contracts from the dealership at the same rate and with the same MAPS scores that it did from the three bypass dealerships. [7] (This would have amounted to 25% of the 52% that were rejected, or approximately 13% with respect to the total number of applications submitted.) Carter concluded that the discrepancy between the rate at which GMAC purchased retail paper from the dealership and the rate at which GMAC purchased retail paper from the dealership's Montgomery bypass competitors was statistically significant; however, he offered no opinion as to why there should have been a difference between the amount of retail paper purchased from the dealership and the amount purchased from the other three dealerships. Although Bell testified that he had been told by Hall and others that GMAC had no discretion to override the MAPS scoring with respect to a credit application, GMAC presented witnesses who explained, without contradiction, that a contract's MAPS odds score was only the beginning of GMAC's analysis and that MAPS odds and reports were only a tool for GMAC to use in deciding whether to agree to purchase a contract. [8] An additional important factor for GMAC concerned how much it was being asked to finance above the collateral's wholesale value. The undisputed evidence suggested that the greater the spread between the amount financed and the collateral's wholesale value the higher GMAC's risk was and the less likely it would be to agree to buy a given contract. Customers with identical MAPS odds scores could be turned down at one dealership but approved at another, if one dealership charged the customer more for the same vehicle than the other dealership did or if the information contained in the two applications with respect to the two customers was different. [9] The dealership's gross profits per new car sold were higher than the average for other dealerships in its zone. A former manager of the dealership testified that a number of its potential retail sales had too much profit built into them to get approved by GMAC and that he had had to restructure some of the dealership's deals in order to get them approved by GMAC. Carter did not take this into account. In fact, Carter's data showed that even the Montgomery bypass dealerships experienced different rates of acceptance and rejection of retail paper that MAPS had scored the same. To sum up, the dealership's evidence (Carter's testimony) did show that GMAC had declined to purchase a statistically significant percentage of the dealership's retail paper, in comparison to GMAC's purchase of retail paper from the Montgomery bypass dealerships. However, the basic issue presented by the dealership's misrepresentation claim was not whether the dealership had had a statistically significant amount of its retail paper rejected by GMAC, as compared to the bypass dealerships, or whether the dealership would have possibly made more money had GMAC purchased more of its retail paper. The dispositive issue was whether GMAC had provided the dealership with the same benefits or had treated the dealership the same, vis-à-vis the Montgomery bypass dealerships. The evidence simply did not show that Hall's representations that GMAC was buying deeper into the pot and that the dealership had the same benefits that all the other dealerships had were false. The only reasonable inference one could draw from the evidence is that GMAC based its purchasing decisions primarily on the financial risks involved in accepting a particular dealership's retail paper. Our examination of the record, including Carter's testimony, has revealed no evidence from which one could reasonably infer that GMAC discriminated against the Bell dealership and in favor of any dealership on the eastern bypass in Montgomery by deliberately buying more retail paper from those dealerships than it did from the Bell dealership. To the contrary, the record is replete with testimony indicating that GMAC worked diligently with the dealership to ensure that those contracts that could, from a sound business perspective, be purchased were in fact purchased. Therefore, we conclude that the evidence was insufficient to support the dealership's misrepresentation and suppression claims, for they were based on allegations that GMAC either misrepresented that it was treating the dealerships the same as the Montgomery bypass dealerships or did not disclose that it was treating the bypass dealerships more favorably by buying more of their paper. As to the wantonness claim, the dealership argues in its brief that it established from the evidence that `with knowledge of the danger or [with] a consciousness that injury was likely to result from an act or omission to act,' GMAC nevertheless purposefully and intentionally defrauded [it] with regard to the matter of retail paper buying policies, procedures, and actual practice. According to the dealership, [t]here clearly was a `conscious appreciation of the wrong' because Bennett Hall, [Milton] Edrington and Greg Bemister all, separately and severally, made the same misrepresentations and suppressed the same information from Charles Bell. This argument suggests that there is a cause of action in Alabama for wanton intentional fraud. The legislature has defined wantonness as [c]onduct which is carried on with a reckless or conscious disregard of the rights or safety of others. See Ala. Code 1975, § 6-11-20(b)(3). This definition is consistent with our basic understanding of the difference between willfulness and wantonness. See, e.g., Dixie Electric Co. v. Maggio, 294 Ala. 411, 414, 318 So.2d 274, 276 (1975), wherein Justice Shores, writing for this Court, noted: `Wantonness is the conscious doing of some act or the omission of some duty under the knowledge of the existing conditions, and conscious that from the doing of such act or omission of such duty injury will likely or probably result....' Kilcrease v. Harris, 288 Ala. 245, 251, 259 So.2d 797, 801 (1972); Culpepper & Stone Plumbing & Heating Co. v. Turner, 276 Ala. 359, 162 So.2d 455 (1964). One may be guilty of wanton misconduct without actual intent to [injure] anyone. Birmingham Railway, Light & Power Co. v. Murphy, 2 Ala.App. 588, 56 So. 817 (1911). In this sense, `... A willful or intentional act is not involved in wantonness....' Atlantic Coast Line R. Co. v. Brackin, 248 Ala. 459,461, 28 So.2d 193,194 (1946). See, also, Rosen v. Lawson, 281 Ala. 351,356, 202 So.2d 716, 720 (1967) ([i]n wantonness, the party doing the act or failing to act, is conscious of his conduct, and without having the intent to injure, is conscious, from his knowledge of existing circumstances and conditions, that his conduct will likely or probably result in injury). The dealership has made it very clear in its written and oral arguments to this Court that its fraud claims were based on allegations that GMAC set out intentionally to put it out of business. Thus, we find unpersuasive any suggestion that the dealership can piggyback its wantonness claim on its fraud claims. A concept of a wanton intentional fraud would be an unacceptable contradiction in the law. However, as we understand the complaint, the dealership's wantonness claim was actually based on allegations that GMAC had consciously treated the dealership differently from other GM dealerships (namely, those on the Montgomery bypass) by buying on average more retail paper from those other dealerships. According to the dealership, GMAC knew that this alleged disparate treatment was likely to result in financial loss to the dealership. In this regard, we note that GMAC was under no contractual obligation to buy any particular amount of the dealership's retail paper. To the contrary, the dealership's 1980 agreement with GMAC stated that GMAC would buy contracts acceptable to us [GMAC]. Thus, GMAC owed no duty to the dealership, outside the confines of its agreement with the dealership, to purchase the same amount of retail paper that it was purchasing from other GM dealerships, including those on the Montgomery bypass. See Cahaba Seafood, Inc. v. Central Bank of the South, 567 So.2d 1304 (Ala.1990). And, as previously noted, the evidence was insufficient to show that GMAC did not, relatively speaking, treat the dealership the same as the Montgomery bypass dealerships, insofar as purchasing retail paper was concerned. The wantonness claim should not have been submitted to the jury.