Court Opinion

ID: 9893480
Source: CourtListenerOpinion
Date Created: 2023-10-27 14:07:15.58388+00
Date Added: 2024-06-11T09:04:18.675969
License: Public Domain

RENDERED: OCTOBER 20, 2023; 10:00 A.M.
                       NOT TO BE PUBLISHED

                Commonwealth of Kentucky
                          Court of Appeals

                            NO. 2023-CA-0141-MR

ROBERT J. LEEPER                                                  APPELLANT

               APPEAL FROM LIVINGSTON CIRCUIT COURT
v.               HONORABLE JAMES R. REDD, III, JUDGE
                        ACTION NO. 21-CI-00092

COAD AUTO SALES, INC. D/B/A
COAD TOYOTA PADUCAH; AND
RAY H. MULLEN MOTOR
COMPANY                                                            APPELLEES

                                   OPINION
                                  AFFIRMING

                                 ** ** ** ** **

BEFORE: EASTON, ECKERLE, AND JONES, JUDGES.

JONES, JUDGE: Robert J. Leeper appeals the Livingston Circuit Court’s

summary dismissal of various civil claims he asserted against the above-captioned

appellees stemming from his purchase of a damaged truck. Upon review, we

affirm.
                                   I. BACKGROUND

              On April 3, 2021, Leeper purchased a pre-owned truck with 283,444

miles on it “as-is” from appellee Ray H. Mullen Motor Company (“Mullen”) for

his personal use. While he was driving it several weeks later, the bumper and

receiver assembly fell off the truck. Thereafter, while Leeper was filling the truck

with gas, its gas tank fell off, too. Leeper had the truck towed back to Mullen,

whose welder performed an inspection and confirmed that it was beyond repair due

to the severely rusted and damaged condition of its frame. Leeper then requested a

refund, which Mullen – citing the “as-is” nature of his purchase of the truck –

refused. Afterward, he requested a refund from appellee Coad Auto Sales, Inc.

(“Coad”), the entity from which Mullen had purchased the offending truck (also on

an “as-is” basis), and Coad likewise refused. Dissatisfied, Leeper filed suit in

Livingston Circuit Court against Coad and Mullen, asserting claims against Coad

for negligence, negligence per se, and strict liability; and against Mullen for an

alleged violation of Kentucky’s Consumer Protection Act (KCPA) as codified in

Kentucky Revised Statutes (KRS) 367.110 et seq.

              Coad and Mullen defended1 on several bases that eventually

underpinned their respective motions for summary judgment. Among those bases,

1
 Mullen filed a conditional cross-claim against Coad for indemnity, which was dismissed and is
not at issue.

                                             -2-
Coad argued lack of privity; that the “economic loss rule” barred Leeper’s

negligence and strict liability claims; and that the basis of Leeper’s negligence per

se claim – its alleged violation of KRS 186A.540 – was unsupported by the

evidence. As for his KCPA claim, Mullen argued Leeper adduced no evidence it

had committed any kind of actionable unfair trade practice. Additional relevant

facts will be discussed in our analysis, below. The circuit court granted the

appellees’ summary judgment motions, and this appeal followed.

                          II. STANDARD OF REVIEW

             The proper standard of review on appeal when a trial
             judge has granted a motion for summary judgment is
             whether the record, when examined in its entirety, shows
             there is no genuine issue as to any material fact and the
             moving party is entitled to a judgment as a matter of law.
             The trial judge must view the evidence in a light most
             favorable to the nonmoving party, resolving all doubts in
             its favor. Because summary judgment does not require
             findings of fact but only an examination of the record to
             determine whether material issues of fact exist, we
             generally review the grant of summary judgment without
             deference to either the trial court’s assessment of the
             record or its legal conclusions.

Phoenix American Adm’rs, LLC v. Lee, 670 S.W.3d 832 (Ky. 2023) (internal

quotation marks and citations omitted).

                                  III. ANALYSIS

             We begin our analysis with Leeper’s KCPA claim against Mullen.

Leeper asserts the circuit court erred in dismissing this claim because Mullen

                                          -3-
essentially sold him a worthless vehicle and refused to give him his money back

afterward. He also asserts that Kentucky has recognized the validity of similar

claims in prior caselaw, citing Ford Motor Company v. Mayes, 575 S.W.2d 480

(Ky. App. 1978), and Myers v. Land, 314 Ky. 514, 235 S.W.2d 988 (1950).

            We disagree. The applicable law relative to KCPA claims was

explained in Capitol Cadillac Olds, Inc. v. Roberts, 813 S.W.2d 287, 291 (Ky.

1991):

            Not every failure to perform a contract is sufficient to
            trigger application of the Consumer Protection Act. The
            statute requires some evidence of “unfair, false,
            misleading or deceptive acts” and does not apply to
            simple incompetent performance of contractual duties
            unless some element of intentional or grossly negligent
            conduct is also present. Dare to Be Great, Inc. v.
            Commonwealth, ex rel. Hancock, Ky., 511 S.W.2d 224
            (1974). There is an analogy between the Consumer
            Protection Act claim asserted here and a tort claim for
            bad faith based on an insurer’s failure to pay the amount
            due its policyholder. In Feathers v. State Farm Fire and
            Casualty Co., Ky.App., 667 S.W.2d 693 (1983), the
            validity of which was recently reaffirmed in Curry v.
            Fireman’s Fund Ins. Co., 784 S.W.2d 176 (1989), the
            Court of Appeals said: “[T]he allegations [of the
            complaint] show substantial wrongs committed against a
            clearly protected interest and rights. We are not talking
            about bad manners or mere breakdowns in
            communications resulting in irritations injuring pride.”
            Feathers at 696.

            Here, Leeper was asked during his deposition to describe any unfair,

false, misleading, or deceptive acts Mullen committed against him. In response, he

                                        -4-
did not contend Mullen violated any contractual, statutory, or common law duty.

He did not contend that Mullen uttered any misrepresentation that induced him to

purchase the truck. The only response he gave was to repeat the essence of his

claim set forth above. In other words, he simply took issue with the operative

effect of the “as-is” clause in the purchase agreement.

               However, “as-is” clauses are not an unfair trade practice; rather, they

are consistent with the Uniform Commercial Code (UCC) as adopted by Kentucky

law. KRS 355.2-316(3)(a) provides that “unless the circumstances indicate

otherwise, all implied warranties are excluded by expressions like ‘as is,’ ‘with all

faults,’ or other language which in common understanding calls the buyer’s

attention to the exclusion of warranties and makes plain that there is no implied

warranty[.]”

               As for the two cases Leeper cites in support of his claim, they are

distinguishable and undermine it. In Ford, 575 S.W.2d 480, the “unfair trade

practice” at issue, deemed violative of the KCPA, was Ford’s conduct with respect

to its warranty on a vehicle purchased by the claimants. Its warranty was limited

to vehicle repairs, but evidence demonstrated that the claimants’ vehicle could not

be repaired within a reasonable time or at all. Nevertheless, Ford insisted that the

claimants had no remedy other than to allow it and its dealer to continue

indefinitely in their efforts to correct the problem; and in so doing, Ford followed a

                                           -5-
warranty policy which refused to recognize the rights of buyers under the UCC to

rescind when the only remedy afforded by its limited warranty failed of its

purpose. Id. at 486. Here, the holding of Ford has no bearing upon the validity of

Leeper’s claim against Mullen because Mullen gave him no warranty at all. The

Ford Court also recognized, consistent with what is set forth above, that warranties

may be validly disclaimed in this context. Id. at 483.

             As for Myers, 235 S.W.2d 988, this pre-UCC case involved claimants

who were able to successfully rescind their purchase of defective concrete block

manufacturing equipment from a seller – notwithstanding a full disclaimer of

virtually all warranties in the purchase agreement – because evidence of record

demonstrated their purchase was induced by the seller’s misrepresentations, id. at

989; and because the disclaimer of warranties was “found in a long and formidable

document prepared by the seller and that it was doubtless unnoticed or its import

uncomprehended by the buyer.” Id. at 990. Certainly, misrepresentations and

hidden disclaimers are examples of unfair trade practices. In the case at bar,

however, Leeper has identified no misrepresentation uttered by Mullen; nor has he

ever claimed that he failed to notice or comprehend the “as-is” clause in his

purchase agreement.

             In sum, Leeper has failed to demonstrate that Mullen committed any

substantial wrong against his clearly protected interests or rights. See Roberts, 813

                                         -6-
S.W.2d at 291. Accordingly, the circuit court committed no error in summarily

dismissing his KCPA claim against that entity.

             We turn next to what Leeper asserted against Coad, beginning with

his negligence and strict liability claims. It is unclear whether Leeper is appealing

the circuit court’s dismissal of these claims because, over the course of his opening

and reply briefs, he omits any mention of the words “negligence” and “strict

liability,” and instead simply faults the circuit court for dismissing his “Claim

Against Coad for Violation of KRS 186A.540.” Regardless, his negligence and

strict liability claims were legally precluded by Kentucky’s economic loss rule

because his alleged damages have always been limited to the losses he sustained

due to the difference between what he believed the truck’s value should have been

and what it turned out to be. As held by our Supreme Court,

             [T]he parties’ allocation of risk by contract should
             control without disturbance by the courts via product
             liability theories borne of a public policy interest in
             protecting people and their property from a dangerous
             product. . . . Thus, costs for repair or replacement of the
             product itself, lost profits and similar economic losses
             cannot be recovered pursuant to negligence or strict
             liability theories but are recoverable only under the
             parties’ contract, including any express or implied
             warranties.

Giddings & Lewis, Inc. v. Indus. Risk Insurers, 348 S.W. 3d 729 (Ky. 2011)

(citation omitted).

                                         -7-
              This, in turn, leads to Leeper’s “Claim Against Coad for Violation of

KRS 186A.540” – a claim he asserted in his complaint under the ambit of

“negligence per se.” Coad defended against this claim by asserting (1) the

economic loss rule;2 (2) that the statute was inapplicable for want of privity (i.e.,

because Coad did not directly sell the truck to Leeper); and (3) even if the statute

was applicable, no evidence demonstrated its disclosure requirements were

triggered.

              In summarily dismissing this claim, the circuit court found Coad’s

second and third defenses dispositive. For purposes of our analysis, we will focus

only upon the third. KRS 186A.540 provides:

              (1) An individual, or a dealer required to be licensed
              pursuant to KRS Chapter 190, shall disclose all damages
              to a motor vehicle:

                     (a) Of which the individual or the dealer has
                     direct knowledge;

                     (b) Which result in repairs, for items other
                     than wheels, tires, or glass, that exceed two
                     thousand dollars ($2,000); and

                     (c) That occur while the motor vehicle is in
                     the individual’s or the dealer’s possession
                     and prior to delivery to a purchaser.

2
 “Negligence per se” is not the only way, and is perhaps not the most appropriate way, to
characterize a violation of KRS 186A.540. Such violations have, for example, been regarded as
an “unfair trade practice” capable of sustaining a KCPA claim. See Royal Auto Sales, LLC v.
Price, No. 2021-CA-0731-MR, 2022 WL 879763 (Ky. App. Mar. 25, 2022) (cited herein for
purposes of illustration, rather than persuasive value).

                                             -8-
             (2) Disclosure under this section shall be in writing and
             shall require the purchaser’s signature acknowledging the
             disclosure of damages.

             What Leeper adduced in support of his claim relative to this statute

was as follows. First, Leeper cited an affidavit from Cherrie Roan, the individual

who originally sold the truck to Coad. Roan indicated that shortly after she

brought her truck to Coad on October 15, 2020, for “routine service,” a

representative from Coad told her, “[I]t was unsafe to drive because they had found

major tie rod problems, and that [she] had to get a loaner to get home or to go

anywhere.” Shortly afterward, “the same Coad employee who had helped [her]

during the October 15 visit called and told [her] that when the Coad mechanics put

[her] truck up on the rack to start repairs, they found that the framework had major

cracks in it. He also told [her] that the Coad mechanics had said they found [her]

truck to be totally unrepairable and unsafe to drive.” Thereafter, she purchased

another vehicle from Coad, and Coad took her truck as a trade-in.

             Second, Leeper cited a “Toyota Quality Vehicle Inspection” form

document – a document that is undated and includes no information linking it to

the truck, but which Leeper claims Coad produced during discovery. In the

“require immediate attention” column, a box is checked next to: “Steering Gear

Box/Linkage and Boots/Ball Joints/Dust Covers.” The “comments/estimates”

section also includes the following notations:

                                         -9-
              Replace Steering rack
              Steering rack bushings
              cutter[?] tie rod ends
              M/B of tires
              Align

              Third, he cited the affidavit of Barry Miller, a mechanic who

inspected the truck shortly after Mullen’s representatives inspected it. Miller

averred that when he “inspected the undercarriage of the truck, [he] found major

deterioration in the frame at multiple locations” and that the cost of parts and labor

to repair the problems “would far exceed $2,000.”

              Absent from the record, however, is evidence that the truck sustained

any damage or was actually repaired to any extent – let alone to the extent of

$2,000 – while Coad had it in its possession. Leeper therefore failed to

demonstrate that the mandatory reporting requirements of KRS 186A.540 were

triggered; and consequently, Leeper could not have premised any kind of claim

against Coad upon a violation of that statute even if his lack of direct privity with

Coad was wholly irrelevant.

              As an aside, we have emphasized “evidence” and “of record” above

for a reason. Leeper insists on appeal3 that KRS 186A.540 was effectively

3
  Coad argues Leeper’s contention that it “repaired” the truck was never raised below because
Leeper did not make that contention in the response he filed to its summary judgment motion.
Coad is correct that Leeper made no such written argument, but he did make an oral argument to
that effect – for the first time – during the December 21, 2022 summary judgment hearing.
Regardless, it is unnecessary to discuss whether Leeper effectively preserved this argument
because, as discussed, the evidence he adduced was insufficient to support it.

                                             -10-
triggered because Coad did make over $2,000 in repairs to the truck. To this point,

he makes references in his opening and reply briefs to an ostensible document

which, from his telling of it, originated from Coad and included the following

statements regarding the truck while the truck was in Coad’s possession: “Steering

gear loose and leaking, attempted replacement [sic] of steering gear, steering shaft

seized to steering gear, power [sic] steering pressure line started to twist apart

during removal. Stopped repair spoke with customer on concern with vehicle.

Customer traded vehicle in to dealer.”

             Relying upon this ostensible document, Leeper surmises Coad must

have ultimately repaired the truck’s steering mechanism before selling it to Mullen.

Further, Leeper surmises the value of these “repairs” would have exceeded $2,000;

and in support, he cites a “supplemental expert disclosure,” which he filed of

record on the date of the summary judgment hearing, December 21, 2022. There,

Leeper stated that he expected his expert mechanic, Barry Miller “to opine that

based on his experience and research, the cost of replacing the steering rack, inner

tie rods and bushings on the subject vehicle would have exceeded $2,000 at

relevant times, independent of the cost of replacing the vehicle’s frame.”

             With that said, no evidence of record supports Leeper’s argument in

this vein. The ostensible document discussed above is not of record, nor did

Leeper designate it as part of the record, and we accordingly cannot consider any

                                         -11-
claim or contention based upon it. See Kentucky Rule of Appellate Procedure

(RAP) 25(B). Indeed, while Leeper claims it appears in the appellate record at

“225-227,” those cited pages only encompass the “itemization of damages” filed

by his attorney and the “Toyota Quality Vehicle Inspection” form document

previously discussed. Additionally, the “supplemental expert disclosure” valuing

the surmised repairs in excess of $2,000 was not signed or sworn by Barry Miller,

the proffered expert, and was thus nothing more than a promise of forthcoming

evidence from Leeper’s counsel. Representations of counsel are not the

affirmative evidence required to defeat a motion for summary judgment. They are

not evidence at all. See Mason v. Commonwealth, 331 S.W.3d 610, 624-25 (Ky.

2011).

                               II. CONCLUSION

             In its order of summary judgment, the Livingston Circuit Court

sympathized with Leeper and provided an apt summation of this case with which

we agree: “Although there may be ethical considerations, the Court believes under

Kentucky law there is no liability for Mullen or Coad.” In light of the foregoing,

we AFFIRM.

             ALL CONCUR.

                                        -12-
BRIEFS FOR APPELLANT:     BRIEF FOR APPELLEE RAY H.
                          MULLEN MOTOR COMPANY:
C. Thomas Miller
Paducah, Kentucky         Edwin A. Jones
                          Paducah, Kentucky

                          BRIEF FOR APPELLEE COAD
                          AUTO SALES, INC. D/B/A COAD
                          TOYOTA PADUCAH:

                          James A. Sigler
                          Paducah, Kentucky

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