Opinion ID: 1591280
Heading Depth: 2
Heading Rank: 1

Heading: whether the circuit court erred in granting summary judgment as to the holmans' claims of negligence, misrepresentation and fraud.

Text: ¶ 7. Howard Wilson made three arguments in its motion for summary judgment: (1) It owed the Holmans no duty to disclose the damage to them due to Regulation One of the Mississippi Motor Vehicle Commission; (2) it had, in fact, disclosed the possibility of damage to them within the terms of the purchase contract; and (3) the Holmans suffered no damages due to the failure to disclose. It reiterates these arguments on appeal. The Holmans argue that the Consumer Protection Act and Regulation One of the Mississippi Motor Vehicle Commission are in direct conflict, and the regulation must give way. Miss.Code Ann. §§ 75-24-1 through XX-XX-XXX (Rev.2000); 50-014 Miss.Code R. § 003-2 (2005). [4] They claim a genuine issue of material fact remains to be tried: Whether Howard Wilson sold the Jeep demonstrator vehicle to them as new. ¶ 8. The Court of Appeals agreed Regulation One did not require [Howard Wilson] to disclose any damage. Holman, 972 So.2d at 647, 2005-CA-01154-COA at ¶ 7. It also concluded that the disclosure recited above fulfilled [Howard Wilson's] duty [to disclose] had there been one. Id. at ¶ 12. Finally, the Court of Appeals found the Holmans failed to show any connection with the prior damage to the damages they allegedly suffered. Id. ¶ 9. The duty to disclose is based upon a theory of fraud that recognizes that the failure of a party to a business transaction to speak may amount to the suppression of a material fact which should have been disclosed and is, in effect, fraud. Welsh v. Mounger, 883 So.2d 46, 49 (Miss. 2004) (discussing Guastella v. Wardell, 198 So.2d 227 (Miss.1967)). According to the Restatement (2d) of Torts: (2) One party to a business transaction is under a duty to exercise reasonable care to disclose to the other before the transaction is consummated . . . (b) matters known to him that he knows to be necessary to prevent his partial or ambiguous statement of the facts from being misleading; and . . . (d) the falsity of a representation not made with the expectation that it would be acted upon, if he subsequently learns that the other is about to act in reliance upon it in a transaction with him; and (e) facts basic to the transaction, if he knows that the other is about to enter into it under a mistake as to them, and that the other, because of the relationship between them, the customs of the trade or other objective circumstances, would reasonably expect a disclosure of those facts. Restatement (Second) of Torts § 551 (1977). See also Welsh, 883 So.2d at 50 (discussing Guastella, 198 So.2d 227, and Restatement (Second) of Torts § 551). ¶ 10. Howard Wilson indicated that its policy was to disclose whether a vehicle had been stolen, had flood damage, or had wreck damage. The Holmans state in their affidavit that they intended to buy a new vehicle when they purchased the Jeep and that they expressed this intention to the salesperson at Howard Wilson. Giving the Holmans the benefit of the doubt and all favorable inferences, their affidavit reflects that the salesperson told them the Jeep was new, as indicated in the title and sales documents. There is enough evidence in the record to find a genuine issue of material fact exists whether Howard Wilson owed the Holmans a duty to disclose the damage prior to the consummation of the sale of the Jeep. ¶ 11. Howard Wilson argues the language within the purchase contract met its duty to disclose: The Vehicle may have suffered damages and may have had repairs performed on it during prior ownership or usage, during transit or while in the control or possession of Howard Wilson. (Emphasis added). The Holmans bear the burden at trial of proving this language did not put them on notice of the damage to the vehicle done in the automobile accident and the further burden of demonstrating the knowledge of the damage would be material to their purchase of the automobile. We find the adequacy of this notice a question for the jury. See Hobbs Automotive, Inc. v. Dorsey, 914 So.2d 148, 154 (Miss.2005); Lane v. Oustalet, 873 So.2d 92, 95-98 (Miss.2004). See generally Davidson v. Rogers, 431 So.2d 483 (Miss.1983); Averitt v. State, 246 Miss. 49, 63, 149 So.2d 320 (1963) (an affirmative defense is a question of fact to be submitted to the jury). ¶ 12. Howard Wilson also argues it was under no duty to disclose the vehicle's prior damage to the Holmans at the time of purchase, due to Mississippi Motor Vehicle Commission Regulation One. The regulation reads: On any vehicle, corrected damage exceeding six percent (6%) of the manufacturer's suggested retail price, as measured by retail repair costs, must be disclosed in writing prior to dealer transfers and consumer deliveries. Damage to glass, tires and bumpers and any damaged components or options which can be replaced by identical components are excluded from the six percent (6%) regulation when replaced by identical manufacturer's original equipment. This regulation does not waive or alter any requirements or obligations which may be created by other Federal or State laws and regulations. 50-014 Miss.Code R. § 003-2 (2005). The retail repair costs associated with fixing the Holmans' car after the accident exceeded the six-percent retail repair costs discussed in the regulation. [5] By its own terms, the regulation required Howard Wilson to disclose this damage to the Holmans in writing, unless some of the costs were excluded from the calculation. The exception within the regulation simply removes the requirement imposed by the regulation that dealers and customers are to be notified in writing of corrected damage repairs performed on a particular vehicle. Nothing in the regulation indicates that Howard Wilson is relieved from its potential duty to disclose as examined above in Welsh. ¶ 13. Howard Wilson argues these repairs are excluded from the calculation as they were corrected damage to damaged components which were replaced by identical components. As noted above, the exception in the regulation merely removes the requirement that a purchaser be notified in writing of corrected damage. It does not relieve Howard Wilson of any other requirement under Mississippi law. Further, the regulation offers little guidance as to what constitutes a component of a vehicle. It specifically identifies glass, tires and bumpers as qualifying under its disclosure exemption, if replaced. The Motor Vehicle Commission Law offers only indirect guidance. Cf. Miss.Code Ann. § 63-17-55 (Rev.2000) (`Specialty vehicle' means a motor vehicle manufactured by a second stage manufacturer by purchasing motor vehicle components, e.g. frame and drive train. . . . ). ¶ 14. Howard Wilson identifies the purpose of Regulation One as protecting automobile dealers from being forced to disclose minor damage to vehicles sustained in transit. The Mississippi Automobile Dealers Association, as amici, similarly state this purpose: The vast movement and management of a fleet of automobiles in the delivery, sale and marketing to the public dictates there will be instances of damage to vehicles in the process. The Motor Vehicle Commission likewise offers this as the purpose of the regulation in its amicus brief. Automobiles often sustain minor damage in transit from the manufacturer to the dealer. Often times this damage is as simple as a cracked windshield or a scratch in the paint. As a result, Regulation One was enacted to protect both dealers and consumers. We see nothing in our case law or statutes that disagrees. ¶ 15. Assuming this is the purpose of Regulation One, we find the damage done to the Holmans' Jeep, which was corrected by repairs performed by Howard Wilson, falls outside the purpose of the regulation. This vehicle was involved in an automobile accident, not damaged in transit. The regulation appears to cover new vehicles. It was illegal for the Holmans' demonstrator vehicle to be represented and sold as a new car under the Mississippi Motor Vehicle Commission Act. Miss.Code Ann. § 63-17-73(1)(b)(2) (Rev. 2004). The very purpose of the act which gives the Commission the power to promulgate regulations is to prevent frauds, unfair practices . . . impositions and other abuses upon the citizens of the State of Mississippi. Miss.Code Ann. § 63-17-53 (Rev.2004). Since the purpose of the regulation and the Mississippi Motor Vehicle Commission Act would not be served by an interpretation of the regulation which allowed a demonstrator vehicle involved in a documented automobile accident to be sold as new after the accident damage is repaired, we find Regulation One offers no relief to Howard Wilson. The circuit court erred in relying upon this regulation to grant summary judgment for Howard Wilson; and therefore, its judgment is reversed.