Opinion ID: 2428959
Heading Depth: 2
Heading Rank: 1

Heading: the meaning of actual damages

Text: The particular section of the Federal Odometer Fraud Act at issue is 15 U.S.C. § 1989, which provides in part that: (a) Amount of damages Any person who, with intent to defraud, violates any requirement imposed under this subchapter shall be liable in an amount equal to the sum of (1) three times the amount of actual damages sustained or $1,500, whichever is the greater; and (2) in the case of any successful action to enforce the foregoing liability, the costs of the action together with reasonable attorney fees as determined by the court. There is no statutory definition of actual damages as used in section 1989. However, the landmark case interpreting that term has stated that: Although `actual damages' is not defined in the statute, it seems reasonable to give it the meaning commonly applied to fraud cases. This is the difference between the amount paid by the plaintiffsnot the value of the car if it had been as representedand the fair market retail value of a vehicle of the type purchased with the number of miles actually traveled by the car, plus such outlays as are legitimately attributable to the acts of the defendants.  Duval v. Midwest Auto City, Inc., 425 F.Supp. 1381 (D.Neb.1977) (emphasis added), aff'd, 578 F.2d 721 (8th Cir.1978). The task before us then is to point out those damages that are commonly awarded for fraud. See Duval, 425 F.Supp. 1381. This court has recognized the elements of both tort and contract that constitute an action for common law fraud and has accordingly applied two measures of damages, both of which are characterized as affirmance remedies because they are awarded when the contract is affirmed. The benefit of the bargain measure is the difference in value of the property as represented and the property's actual value at the time of the purchase. The out-of-pocket measure is the difference between the price paid for the property and the property's actual value when received. As an alternative to affirmance remedies, this court has allowed a defrauded party the remedy of restitution. This alternative remedy brings in the doctrine of election of remedies. Restitution is characterized as a disaffirmance remedy because it is awarded when the contract is revoked, rescinded, or disaffirmed. However, restitution differs from the two types of affirmance remedies just discussed. Damages refers to a money award compensating a plaintiff for losses. Dan B. Dobbs, Law of Remedies, § 1.1 (2d ed. 1993). Although an award of restitution may in fact provide compensation for the plaintiff in some cases, [t]he restitutionary goal is to prevent unjust enrichment of the defendant by making him give up what he wrongfully obtained from the plaintiff. Id. Restitution is thus measured by the defendant's gain, not by the plaintiff's loss. Id. In the traditional view, the affirmance remedies are regarded as inconsistent with the disaffirmance remedies. However, Professor Dobbs has observed that Contemporary thinking seems to be departing from the old conceptual thinking involved in election doctrine. With the contemporary concern chiefly to avoid duplicated remedies, some courts have flatly said that restitution and punitive damages should be permitted. Dan B. Dobbs, Law of Remedies, § 9.4 (2d ed. 1993). Among the cases cited for that statement is Thomas Auto Co. v. Craft, 297 Ark. 492, 763 S.W.2d 651 (1989). The Thomas Auto Co . case dealt with fraud in the sale of a car. This court followed the contemporary view and held that the plaintiffs were entitled to receive both a restitutionary award (return of the purchase price) and incidental and consequential damages. In so holding, this court made it clear, however, that it would be double recovery to allow a plaintiff to receive damages calculated on the basis of both the benefit of the bargain and restitution. In addition, Thomas Auto Co . allowed for recovery of punitive damages on condition that there be a showing of all the elements of the tort of deceit. That, of course, would not duplicate either compensatory damages or restitution. We conclude that a defrauded party may recover either affirmance damages or disaffirmance damages, but is prohibited from recovering both. Thomas Auto Co. v. Craft, 297 Ark. 492, 763 S.W.2d 651 (1989). Obviously, when determining which type of damages is appropriate, it is helpful to determine who has possession of the property. Generally, if the buyer has possession, affirmance remedies are appropriate; if the seller has possession, disaffirmance remedies are appropriate. See Howard W. Brill, Arkansas Law of Damages § 35-7 (2d ed. 1990) (and cases cited therein). We also conclude that, in addition to either affirmance or disaffirmance remedies, a defrauded party may recover consequential damages and punitive damages, depending on the facts of each case. Id.; Thomas Auto Co., 297 Ark. 492, 763 S.W.2d 651. Our conclusions are consistent with those of other courts interpreting the Act. For example, one court has stated that although the Duval measure of damages is the favored approach, when the market value of the car is unavailable (e.g., when the odometer is non-functional and the actual mileage cannot be determined) then the appropriate remedy is to award the $1,500.00 statutory minimum damages. Williams v. Toyota of Jefferson, Inc., 655 F.Supp. 1081 (E.D.La.1987). Yet another court has stated that when there is no evidence of market value, the case is appropriate for rescission. Jones v. Fenton Ford, Inc., 427 F.Supp. 1328 (D.Conn.1977). The Fenton Ford court reasoned that when the mileage is unknown, it is unreasonable to make the plaintiff keep the car and take the difference in value as damages; it is more equitable to allow the defendant to keep the car and give the plaintiff his payments back. The Fenton Ford court awarded restitution, but did not treble it; instead, it awarded the statutory minimum $1,500.00 because the consequential damages remaining after the restitution award was excluded were less than the $1,500.00 minimum. The Fenton Ford court also allowed attorneys fees under the Act. We continue with our analyses of the damages issues and apply the foregoing measures of damages that we have determined are commonly awarded for fraud.