Court Opinion

ID: 159909
Source: CourtListenerOpinion
Date Created: 2010-08-14 06:34:06+00
Date Added: 2024-06-11T08:41:49.541015
License: Public Domain

F I L E D
                                                                   United States Court of Appeals
                                                                           Tenth Circuit
                     UNITED STATES COURT OF APPEALS
                                                                           JUL 17 2000
                            FOR THE TENTH CIRCUIT
                                                                      PATRICK FISHER
                                                                               Clerk

    DAVID MAULE; TRACI MAULE,

                Plaintiffs-Appellants,

    v.                                                   No. 99-5218
                                                    (D.C. No. 98-CV-84-C)
    SOONER TRUCK SALES; GEORGE                           (N.D. Okla.)
    CORNELISON; SOONER
    EQUIPMENT & LEASING INC., an
    Oklahoma Corporation,

                Defendants-Appellees.

                            ORDER AND JUDGMENT            *

Before TACHA , PORFILIO , and EBEL , Circuit Judges.

         After examining the briefs and appellate record, this panel has determined

unanimously to grant the parties’ request for a decision on the briefs without oral

argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore

ordered submitted without oral argument.

*
      This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
      Plaintiffs David and Traci Maule appeal from the district court’s judgment

entered in favor of defendants following a trial to the bench. We affirm.

      Plaintiffs arranged to obtain a dump truck from defendant Sooner Truck

Sales for use in Mr. Maule’s Colorado business. The salesman,         although he had

been personally told by    the prior owner that the truck had   1,034,995 miles on it,

represented to Mr. Maule     that the truck had only 330,000 miles. Mr. Maule

wanted the truck because of the low milage and agreed to purchase it. His

application for financing was denied and Sooner referred him to Appleway

Equipment & Leasing which agreed to purchase the truck and lease it to him.

The lease agreement included an option to purchase at the end of the term.

      Before Mr. Maule drove the truck off the lot, problems were discovered.

Those were repaired, Mr. Maule drove the truck to Colorado, and undertook his

first job. Thereupon, the engine overheated and the truck broke down. He was

advised that the engine needed major work and that the erosion on the engine was

consistent with a mileage of 600,000 to 700,000 miles. Mr. Maule told

Appleway he was going to stop payment on the check to Sooner and suggested

that Appleway do the same. Appleway did. The lease agreement was terminated

and defendant George Cornelison, owner of Sooner, agreed to rescind the sale

and transport the truck and engine parts back to Tulsa.

                                            -2-
       However, Mr. Maule decided he wanted to keep the truck and he

authorized the necessary repairs. Mr. Maule, Sooner, and Appleway entered into

a new agreement which provided that Sooner would pay $6,000 of the repair

costs. Appleway advanced $4,500 of the costs and incorporated that amount into

its new lease agreement with Mr. Maule. Mr. Maule paid $1,500 outright.

       During this time, Mr. Maule met with the prior owner of the truck and

learned of the actual mileage on the truck.         Plaintiffs then commenced this action

alleging violations of the federal   Odometer Act, 49 U.S.C.       §§ 32701-32711, and

state claim s of fraud, breach of contract, and breach of warranty.

       The district court entered judgment for        defendants . 1 The court found that

Mr. Maule knew the mileage on the truck had been misrepresented at the time he

negotiated the new agreement with Sooner. Thus, as he had notice of the

fraudulent conduct and false representations prior to entering into the new

agreement, he did not rely on any false representations from Appleway or Sooner

in negotiating the terms of that agreement. The court held that plaintiffs did not

retain any cause of action under the original agreement.

       On appeal, plaintiffs argue that   the district court erred in not finding

defendants liable for fraud under Oklahoma law. They contend that they did not

1
      Default judgment was entered against the salesman in the amount of
$235,686. He is not a party to this appeal.

                                              -3-
have notice of the actual mileage on the truck before the engine was overhauled

and that the transfer of the truck was covered by the Odometer Act. Finally, they

assert the agreement with Appleway was actually a sale that was not rescinded.

       On appeal from a bench trial, we review the district court’s “findings       of

fact for clear error and the court’s conclusions of law    de novo .” EEOC v. WilTel,

Inc. , 81 F.3d 1508, 1513 (10th Cir. 1996);     see also Salve Regina College v.

Russell , 499 U.S. 225, 231 (1991) (issues governed by state law are reviewed de

novo by the appellate court ). “A finding of fact is not clearly erroneous unless it

is without factual support in the record, or if the appellate court, after reviewing

all the evidence, is left with the definite and firm conviction that a mistake has

been made.” Las Vegas Ice & Cold Storage Co. v. Far West Bank          , 893 F.2d

1182, 1185 (10th Cir. 1990) (quotation omitted). Further, “due regard shall be

given to the opportunity of the trial court to judge [] the credibility of the

witnesses.” Fed. R. Civ. P. 52(a).

       We agree that plaintiffs have not stated a claim under the Odometer Act as

it applies to purchases of vehicles.   See 49 U.S.C. § 32705 (setting forth

disclosure requirements on transfer of motor vehicles); § 32702(8) (providing that

a “transfer” occurs by change of “ownership by sale, gift, or other means”).

Plaintiffs’ attempts to establish that they were purchasers are disingenuous. An

                                              -4-
option to purchase a vehicle at the close of the lease term does not convert a lease

agreement into one for sale.

       To pursue a claim of fraud under Oklahoma law, plaintiffs must show

defendants, knowingly or recklessly, made a material representation that was

false, without regard for its truth, intending that plaintiffs act upon it.      See

Roberson v. PaineWebber, Inc. , 998 P.2d 193, 197 (Okla. Ct. App. 1999),               cert.

denied (2000). Plaintiffs must also show that they suffered injury as a result.            See

id.

       The salesman deliberately misrepresented the mileage of the truck.

Although they may not have known the actual mileage, nonetheless, plaintiffs

knew the mileage had been misrepresented. Any claims plaintiffs may have had

were thus extinguished when they entered into the new agreement.              Cf. Fudge v.

United Urban Indian Council, Inc.       , 803 P.2d 268, 271 (Okla. Ct. App. 1990)

(Means, J. dissenting) (party may waive a right by acts which indicate an intent to

relinquish it); see also Fiedler v. McKea Corp ., 605 F.2d 542, 545 (10th Cir.

1979) ( party discovering evidence of fraud after contract performance begins is

entitled to affirm contract and sue for fraud         only absent some expressed intention

to waive the fraud).

       The district court’s finding that the original agreement had been rescinded

is not clear error. Both plaintiffs and Appleway stopped payment on their checks.

                                                -5-
Sooner agreed to retake possession of the truck. Thereafter, plaintiffs decided to

keep the truck and have it repaired and entered into a new agreement dividing the

repair costs between plaintiffs and Sooner.

      The judgment of the United States District Court for the Northern District

of Oklahoma is AFFIRMED.

                                                    Entered for the Court

                                                    John C. Porfilio
                                                    Circuit Judge

                                        -6-