Court Opinion

ID: 4374284
Source: CourtListenerOpinion
Date Created: 2019-03-06 16:05:17.280622+00
Date Added: 2024-06-11T12:03:43.802021
License: Public Domain

FILED
                                                                       Mar 06 2019, 9:11 am

                                                                            CLERK
                                                                        Indiana Supreme Court
                                                                           Court of Appeals
                                                                             and Tax Court

ATTORNEYS FOR APPELLANT                                    ATTORNEYS FOR APPELLEES
James P. Buchholz                                          Robert E. Duff
Dana K. Carlson                                            INDIANA CONSUMER LAW GROUP
TOURKOW, CRELL, ROSENBLATT &                               THE LAW OFFICE OF ROBERT E. DUFF
JOHNSTON, LLP                                              Fishers, Indiana
Fort Wayne, Indiana
                                                           Ryan R. Frasher
                                                           THE FRASHER LAW FIRM, P.C.
                                                           Greenwood, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Gasbi, LLC d/b/a Michiana                                  March 6, 2019
Chrysler Dodge Jeep Ram Fiat,                              Court of Appeals Case No.
Appellant-Defendant,                                       18A-PL-1865
                                                           Appeal from the St. Joseph Circuit
        v.                                                 Court
                                                           The Honorable John E. Broden,
Tatiyana Sanders, et al.,                                  Judge
Appellees-Plaintiffs.                                      Trial Court Cause No.
                                                           71C01-1705-PL-189

Bailey, Judge.

Court of Appeals of Indiana | Opinion 18A-PL-1865 | March 6, 2019                               Page 1 of 13
                                            Case Summary
[1]   In this interlocutory appeal, Gasbi, LLC d/b/a Michiana Chrysler Jeep Dodge

      Ram Fiat (“Michiana”) challenges an order denying Michiana’s motion to

      dismiss a class action complaint alleging deceptive acts,1 brought by Tatiyana

      Sanders (“Sanders”), Shalonda Vida (“Vida”), and Robert Sheppard

      (“Sheppard”), on behalf of themselves and others similarly situated (hereinafter,

      “Consumers”). Michiana presents the restated and consolidated issue of

      whether Michiana was entitled to dismissal pursuant to Indiana Trial Rule

      12(B)(6) because Consumers failed to state a claim that Michiana committed a

      deceptive act within the meaning of the Indiana Deceptive Consumer Sales Act,

      Indiana Code Section 24-5-0.5-1 et seq. (the “Consumer Act”). We affirm.

                             Facts and Procedural History
[2]   On July 14, 2017, Consumers filed their First Amended Class Action

      Complaint, seeking relief under the Act and alleging the following. On April

      25, 2016, Vida purchased a vehicle from Michiana, a for-profit Indiana

      corporation located in Mishawaka. On August 12, 2016, Sheppard purchased a

      vehicle from Michiana. On January 28, 2017, Sanders purchased a vehicle

      from Michiana. In each instance, the consumer was charged a document

      1
       See Indiana Trial Rule 23. See also Indiana Code § 24-5-0.5-4(b), stating: “Any person who is entitled to
      bring an action under subsection (a) on the person’s own behalf against a supplier for damages for a deceptive
      act may bring a class action against such supplier on behalf of any class of persons of which that person is a
      member and which has been damaged by such deceptive act.”

      Court of Appeals of Indiana | Opinion 18A-PL-1865 | March 6, 2019                                Page 2 of 13
      preparation fee (“Doc Fee”) that had not been “affirmatively disclosed” and

      “was not negotiated.” (App. Vol. II, pg. 10.) The amount of the Doc Fee

      exceeded actual expenses incurred for preparation of the documents. The

      Complaint further alleged that all persons purchasing a vehicle from Michiana

      in the prior two years had been charged a Doc Fee.

[3]   The Complaint alleged that Michiana’s charging of Doc Fees was an “unfair,

      abusive, or deceptive act, omission, or practice in connection with a consumer

      transaction.” I. C. § 24-5-0.5-3(a). Although Consumers alleged a violation of

      the Consumer Act, the Complaint described the alleged unfair practice by

      quoting a statutory provision from the Indiana Motor Vehicle Dealer Services

      Act, Indiana Code Section 9-32-13-7. That statute, which may be enforced by

      the Indiana Secretary of State, provides:

              It is an unfair practice for a dealer to require a purchaser of a
              motor vehicle as a condition of the sale and delivery of the motor
              vehicle to pay a document preparation fee, unless the fee:

              (1) reflects expenses actually incurred for the preparation of
                  documents;

              (2) was affirmatively disclosed by the dealer;

              (3) was negotiated by the dealer and the purchaser;

              (4) is not for the preparation, handling, or service of documents
                  that are incidental to the extension of credit; and

      Court of Appeals of Indiana | Opinion 18A-PL-1865 | March 6, 2019           Page 3 of 13
              (5) is set forth on a buyer’s order or similar agreement by a means
                  other than preprinting.

[4]   On September 7, 2017, Michiana filed a motion to dismiss the Complaint,

      asserting that Consumers had no private right of action under Indiana Code

      Section 9-32-13-7, and had failed to state a claim for relief pursuant to the

      Consumer Act, with its thirty-seven enumerated categories of deceptive acts.

      The trial court conducted a hearing on October 31, 2017, at which argument of

      counsel was heard. Consumers conceded that they had no private cause of

      action under Indiana Code Section 9-32-13-7 but argued that the reference to

      that statute was merely descriptive of an unfair consumer practice prohibited by

      the Consumer Act. The trial court concluded that a “catch-all” provision

      embodied in I.C. 24-5-0.5-3(a) permitted the claim of non-disclosure, denied

      Michiana’s motion to dismiss and certified the order for interlocutory appeal.

      Appealed Order at 3. This Court accepted jurisdiction.

                                  Discussion and Decision
                                         Standard of Review
[5]   A Trial Rule 12(B)(6) motion to dismiss for failure to state a claim upon which

      relief can be granted tests the legal sufficiency of a claim, not the supporting

      facts. Kitchell v. Franklin, 997 N.E.2d 1020, 1025 (Ind. 2013). Accordingly, we

      view the complaint in the light most favorable to the non-moving party and

      draw every reasonable inference in favor of that party. Thornton v. State, 43

      N.E.3d 585, 587 (Ind. 2015). We stand in the shoes of the trial court and must

      Court of Appeals of Indiana | Opinion 18A-PL-1865 | March 6, 2019          Page 4 of 13
      determine if the trial court erred in its application of the law. Godby v.

      Whitehead, 837 N.E.2d 146, 149 (Ind. Ct. App. 2005), trans. denied. A motion to

      dismiss is proper if “it is apparent that the facts alleged in the challenged

      pleading are incapable of supporting relief under any set of circumstances.”

      City of E. Chicago, Indiana v. E. Chicago Second Century, Inc., 908 N.E.2d 611, 617

      (Ind. 2009). In making this determination, we look only to the complaint and

      may not resort to any other evidence in the record. Godby, 837 N.E.2d at 149.

[6]   Michiana’s asserted grounds for dismissal invoke statutory interpretation. If the

      language of a statue is clear and unambiguous, we need not apply rules of

      construction other than to require that words and phrases be given their plain,

      ordinary, and usual meaning. City of Carmel v. Steele, 865 N.E.2d 612, 618 (Ind.

      2007). If a statute is open to more than one interpretation, it is deemed

      ambiguous and subject to judicial construction. Dobeski v. State, 64 N.E.3d

      1257, 1259 (Ind. Ct. App. 2016). The purpose of statutory construction is to

      implement the legislature’s intent. Richardson v. Town of Worthington, 44 N.E.3d

      42, 45 (Ind. Ct. App. 2015).

                                                   Analysis
[7]   The Consumer Act is a “remedial statute.” Kesling v. Hubler Nissan, Inc., 997

      N.E.2d 327, 332 (Ind. 2013). It “shall be liberally construed and applied to

      promote its purposes and policies.” Id. (quoting I.C. § 24-5-0.5-1.) The stated

      purposes and policies are to:

      Court of Appeals of Indiana | Opinion 18A-PL-1865 | March 6, 2019            Page 5 of 13
              (1) simplify, clarify, and modernize the law governing deceptive
                  and unconscionable consumer sales practices;

              (2) protect consumers from suppliers who commit deceptive and
                  unconscionable sales acts; and

              (3) encourage the development of fair consumer sales practices.

      I.C. § 24-5-0.5-1(b).

[8]   Indiana Code Section 24-5-0.5-3 concerns “deceptive acts.” Subsection (a)

      provides:

              A supplier may not commit an unfair, abusive, or deceptive act,
              omission, or practice in connection with a consumer transaction.
              Such an act, omission, or practice by a supplier is a violation of
              this chapter whether it occurs before, during, or after the
              transaction. An act, omission, or practice prohibited by this
              section includes both implicit and explicit misrepresentations.

      Subsection (b), “without limiting the scope of subsection (a),” sets forth thirty-

      seven “deceptive acts.” Some of those categories pertain to particular

      representations (such as “that replacement or repair .. is needed, if it is not” in

      category five). Several categories provide that a violation of a specified

      statutory scheme is a deceptive act (for example, category twenty-one,

      concerning health spa services, and category twenty-three, concerning home

      consumer transactions).

[9]   A deceptive act is actionable only if it is “incurable” or “uncured.” I.C. § 24-5-

      0.5-4(a). To “cure,” as applied to a deceptive act, means to either “offer in

      Court of Appeals of Indiana | Opinion 18A-PL-1865 | March 6, 2019            Page 6 of 13
       writing to adjust or modify the consumer transaction to which the act relates to

       conform to the reasonable expectations of the consumer” or “to offer in writing

       to rescind such consumer transaction” and perform the offer if accepted. I.C. §

       24-5-0.5-2(5).

[10]   An incurable deceptive act is a deceptive act “done by a supplier as part of a

       scheme, artifice, or device with intent to defraud or mislead.” I.C. § 24-5-0.5-

       2(8). An “uncured deceptive act” is a deceptive act “with respect to which a

       consumer who has been damaged by such act has given notice to the supplier”

       and either “no offer to cure has been made to such consumer within thirty days

       after such notice” or “the act has not been cured as to such consumer within a

       reasonable time after the consumer’s acceptance of the offer to cure.” I.C. § 24-

       5-0.5-2(7). The buyer must give timely notice that “state[s] fully the nature of

       the alleged deceptive act and the actual damage suffered therefrom.” I.C. § 24-

       5-0.5-5(a). The “obvious reason” for the requirement of specific notice is “so

       that the supplier has an opportunity to correct the problem.” A.B.C. Home &

       Real Estate Inspection, Inc. v. Plummer, 500 N.E.2d 1257, 1262 (Ind. Ct. App.

       1986).

[11]   Thus, to state a claim under the Consumer Act, Consumers must have alleged

       that Michiana, a seller, committed an uncured or incurable deceptive act. The

       Complaint factually described the transactions between Michiana and

       Consumers and described conduct defined as an unfair practice in Indiana

       Code Section 9-32-13-7. The Complaint rested upon the premise that conduct

       that would constitute a violation of Indiana Code Section 9-32-13-7 would also

       Court of Appeals of Indiana | Opinion 18A-PL-1865 | March 6, 2019        Page 7 of 13
       be a deceptive act within the meaning of the Consumer Act. Consumers

       asserted that Michiana had engaged in both uncured and incurable acts.

[12]   At the hearing and in the memorandum of law in support of its motion to

       dismiss, Michiana argued that Consumers’ complaint should be dismissed

       because Consumers failed to allege a deceptive act within the meaning of the

       statutory scheme and further argued that Consumers had alleged an incurable

       deceptive act without facts supporting the requisite “scheme, artifice, or device

       with intent to defraud or mislead.” I.C. § 24-5-0.5-2(8). Michiana argued that

       the allegations of the Complaint did not fall into any of the thirty-seven

       enumerated categories of I.C. § 24-5-0.5-3(b) and further argued that

       Consumers were attempting to derive a private right of action from a statute

       solely entrusted to enforcement by the Indiana Secretary of State,2 I.C. § 9-32-

       13-7. Consumers conceded that they had no private right of action under that

       statute.

[13]   Michiana also directed the trial court’s attention to this Court’s decision in

       Lawson v. Hale, 902 N.E.2d 267, 274 (Ind. Ct. App. 2009) (concluding that a

       nondisclosure is not a “representation” of any fact). Consumers directed the

       trial court’s attention to the subsequent legislative amendment to the Consumer

       Act, perhaps in response to Lawson.

       2
           Indiana Code Section 9-32-13-31 provides that a violation is a Class A infraction.

       Court of Appeals of Indiana | Opinion 18A-PL-1865 | March 6, 2019                        Page 8 of 13
[14]   In Lawson, a prospective purchaser of a tractor had inquired about the tractor’s

       history and the seller had stated that it leaked oil and fuel and that he otherwise

       knew little about it. See id. at 273. After the sale, the purchaser discovered that

       the tractor had a cracked block and he sued, with one claim based upon the

       Consumer Act. He appealed a judgment in favor of the seller and we

       considered whether the seller’s omission was a deceptive act:

               Indiana Code section 24-5-0.5-3(a), which requires an oral or
               written act or representation, does not apply to non-disclosures.
               … Lawson’s claim that Hale committed a deceptive act under
               Indiana Code section 24-5-0.5-3(a)(2) must fail.

               But why? Hale is a supplier under the [Consumer Act], one
               purpose of the [Consumer Act] is to protect consumers from
               deceptive sales acts, and Hale arguably perpetrated a deceptive
               sales act by failing to tell Lawson of the crack in the tractor’s
               engine block. Yet, Hale is not liable under the [Consumer Act].
               Our holding is based purely on the language of the [Consumer
               Act]. That is, we are not saying that Hale’s acts were not
               deceptive … but only that the categories of deceptive acts giving
               rise to liability under the [Consumer Act] are very specifically
               defined. See I.C. §§ 24-5-0.5-3, -10. Unfortunately for Lawson,
               Hale’s acts do not fall into any of those categories; there is no
               general “fraud” category. Compare consumer protection acts in
               many other states, which either specifically refer to failure to state
               material facts or include “catch-all” clauses that could reach
               Hale’s actions in this case. The [Consumer Act] contains no
               such provisions. Our legislature may choose to revisit the Act at
               some point.

       Lawson, 902 N.E.2d at 274 (internal citation omitted).

       Court of Appeals of Indiana | Opinion 18A-PL-1865 | March 6, 2019           Page 9 of 13
[15]   Effective July 1, 2014, the Indiana Legislature amended the Consumer Act to

       add a “catch-all” provision such as that referred to in Lawson. It is now found

       in subsection (a) of Indiana Code Section 24-5-0.5-3. After the amendment,

       deceptive acts are broadly defined to include non-disclosures or omissions.

       Explicitly, subsection (b) provides that, “without limiting the scope of

       subsection (a),” thirty-seven deceptive acts are described. See id. Under the

       plain language of the amended statute, Michiana could not obtain dismissal of

       the Complaint on grounds that its allegations did not pertain to thirty-seven

       exclusive categories of deceptive acts.

[16]   Nor is dismissal justified on grounds that Consumers identified acts already

       addressed by Indiana Code Section 9-32-13-7, without providing a private cause

       of action. Given the breadth of the language in subsection (a) of Indiana Code

       Section 24-5-0.5-3 – that is, a prohibited act by a supplier includes “an unfair,

       abusive, or deceptive act, omission, or practice in connection with a consumer

       transaction” – conduct prohibited elsewhere in the Indiana Code could also be

       a deceptive act under the Consumer Act. That is not to say that a violation of

       the Motor Vehicle Dealer Services Act is a per se violation of the Consumer

       Act. The Consumer Act does not include violation of the Motor Vehicle Dealer

       Services Act within the express categories of deceptive acts of subsection (b).

[17]   The primary allegations of the Complaint – that Michiana charged an unfair

       consumer fee and did not state its intention as part of the bargaining process –

       assert conduct generally within the realm of the Consumer Act. That said,

       however, the Consumer Act allows recovery only for deceptive acts that are

       Court of Appeals of Indiana | Opinion 18A-PL-1865 | March 6, 2019          Page 10 of 13
       “incurable” or “uncured.” I.C. § 24-5-0.5-4(a). The Complaint alleged in

       paragraph 28 “an uncured deceptive act pursuant to Ind. Code § 24-5-0.5-

       2(a)(7).” (App. Vol. II, pg. 12.) In paragraph 29, the Complaint alleged “an

       incurable deceptive act done as part of a scheme, artifice, or device with intent

       to defraud or mislead pursuant to Ind. Code § 24-5-0.5-2(a)(8). Id. at pg. 13.

       Paragraph 30 asserted that the Consumer Act violation was “willful.” Id.

[18]   Michiana argues that a deceptive scheme, artifice, or device with intent to

       defraud is something akin to fraud and Consumers did not state facts to support

       a fraud claim.3 There is an exception to Indiana’s liberal notice pleading

       requirements when a claim involves fraud. Indiana Trial Rule 9(B) requires

       that “[i]n all averments of fraud or mistake, the circumstances constituting

       fraud or mistake shall be specifically averred.” This means that, generally, “to

       allege fraud sufficiently, the pleadings must state the time, the place, the

       substance of the false representations, the facts misrepresented, and

       identification of what was procured by fraud.” Kapoor v. Dybwad, 49 N.E.3d

       108, 120 (Ind. Ct. App. 2015), trans. denied. However,

       3
         The elements of common law fraud are (1) a material misrepresentation of past or existing fact which (2)
       was untrue, (3) was made with knowledge or in reckless ignorance of its falsity, (4) was made with the intent
       to deceive, (5) was rightfully relied upon by the complaining party, and (6) which proximately caused injury.
       Boots v. D. Young Chevrolet, LLC, 93 N.E.3d 793, 799 (Ind. Ct. App. 2018). Fraud may include the failure to
       disclose all material facts. Id. When a buyer makes inquiry about the condition, qualities, or characteristics
       of property, the seller must fully declare any problems associated with the subject of the inquiry, or else risk
       liability for fraud. Id. (citing Lawson, 902 N.E.2d at 275.)

       Court of Appeals of Indiana | Opinion 18A-PL-1865 | March 6, 2019                                  Page 11 of 13
                the exact level of particularity that is required will necessarily
                differ based on the facts of the case. [W]hile we require a
                plaintiff claiming fraud to fill in a fairly specific picture of the
                allegations in her complaint, we remain sensitive to information
                asymmetries that may prevent a plaintiff from offering more
                detail.

       Id. at 132 (internal quotations and citations omitted) (quoting Cincinnati Life Ins.

       Co. v. Beyrer, 722 F.3d 939, 948 (7th Cir. 2013). For example, where “the heart

       of a constructive fraud claim based on a fiduciary duty is non-disclosure, … [it]

       is not an event that can be pled with specificity[; i]t is therefore sufficient simply

       to plead that the disclosure did not occur.” Id. at 135.

[19]   We find the general allegations of uncured and incurable acts adequate to

       withstand dismissal. The question before the trial court was whether the

       complaint stated a claim as opposed to whether the plaintiffs would likely

       prevail on the merits. At the pleading stage, a party may assert alternative and

       even inconsistent theories of recovery; it is sufficient to plead the operative facts

       of the case so that the defendant is put on notice of the expected trial evidence.

       Cahoon v. Cummings, 734 N.E.2d 535, 542 (Ind. 2000).4 “A complaint is

       sufficient and should not be dismissed so long as it states any set of allegations,

       no matter how unartfully pleaded, upon which the plaintiff could be granted

       4
         Indiana Trial Rule 8(E)(2) provides in part, “A pleading may set forth two [2] or more statements of a claim
       or defense alternatively or hypothetically, either in one [1] count or defense or in separate counts or defenses.
       When two [2] or more statements are made in the alternative and one [1] of them if made independently
       would be sufficient, the pleading is not made insufficient by the insufficiency of one or more of the alternative
       statements.”

       Court of Appeals of Indiana | Opinion 18A-PL-1865 | March 6, 2019                                  Page 12 of 13
       relief.” Graves v. Kovacs, 990 N.E.2d 972, 976 (Ind. Ct. App. 2013). The

       Complaint survives this level of scrutiny.

                                                Conclusion
[20]   Consumers did not fail to state a claim upon which relief could be granted. The

       trial court properly denied Michiana’s motion to dismiss the Complaint.

[21]   Affirmed.

       Bradford, J., and Brown, J., concur.

       Court of Appeals of Indiana | Opinion 18A-PL-1865 | March 6, 2019    Page 13 of 13