Opinion
No. WD 61179, Consolidated with WD 61210 and WD 61245
June 30, 2003
Appeal from the Circuit Court of Jackson County, Missouri, Honorable Forest W. Hanna, Judge.
John Edmund Turner, Esq., Kansas City, MO, Jerrold Kenter, Esq., Kansas City, MO, for Appellant/Respondent.
M. Courtney Koger, Esq., Overland Park, KS, for Respondent/Appellant.
Before Howard, P.J., Lowenstein and Hardwick, JJ.
On February 20, 1997, defendant, K.C. Auto Salvage Co., Inc., ("K.C. Auto"), through employee John Tyson, bought a 1993 Toyota Forerunner ("car") at an auction held by defendant, Copart of Kansas, Inc. ("Copart") in Kansas City, Kansas. The price was $14,500. Before buying the car, Tyson asked a Copart employee whether the title had "checked out." The employee said it had. Tyson testified he did not ask whether Copart had run a "Carfax," a title search for cars. K.C. Auto having paid a $99 buyer's fee to Copart for the cost of running such a search. When the Copart employee said the title had "checked out," Tyson took this to mean that the Carfax gave the car's title clean bill of health. Before the sale, Copart had given Tyson and the other bidders a bid sheet that included a "T" code, meaning that the car had clean title, and also with language which said: "ALL VEHICLES SOLD 'AS IS' — 'WHERE IS.'" Copart had also passed out handbooks with the following language to the bidders:
Copart, and the clients who provide with salvage, offer No guarantee as to the accuracy of any Copart or Client Information provided. This information includes but is not limited to:
Vehicle: year, make, model, condition, damage, accessories, mileage, VIN #, etc.
Unless a Buyer notifies Copart in writing, via FAX or the next business day following receipt of title documents, buyer waives any and all claims as to the title, status or accuracy of title documents for vehicle(s) purchased through a Copart sale. . . . You the customer are responsible for the verification of all vehicles you purchase from Copart. Make sure you check the I.D. #, year, make, model and mileage of the salvage you purchase.
Signs posted at the auction said that all sales were "as is, where is."
On March 11, 1997, the Werremeyers, plaintiffs, bought the car, which had passed both a Missouri and California safety inspection, from K.C. Auto for $17,500. Unknown to them, the car was the product of a "full frame off" or "body swing" — i.e., the combination of the chassis from one car (which had been in an accident in Nebraska), and the body from another (which had been stolen in California). Before the Werremeyers bought the car, Mr. Werremeyer noticed that the vehicle identification numbers ("VIN numbers") apparently had been partially scratched out and asked salesman Tyson, whether it had ever been wrecked or rebuilt, because he did not want to buy a salvaged vehicle. Tyson responded with a series of falsehoods: He said the car had not been rebuilt or wrecked (though he did not know whether the car had been rebuilt or wrecked), that the scratch marks were made by the former owner in an attempt to prevent the repossession of the car, and that the car had a clean title. He also said that K.C. Auto procured the car at an action held by Metro Auction. He thought, but did not tell Mr. Werremeyer, that the car should have had a repossession title if it had been wrecked.
Werremeyer testified he did not trust Tyson, nor did he trust used car salesmen in general. Werremeyer checked the certificate of title against the scratched VIN numbers; they matched. Werremeyer took the car to a mechanic to be inspected. The mechanic reported no problems, except that the car was out of alignment. (K.C. Auto paid for a wheel alignment.) Twice, Werremeyer took the car for a test drive. Mr. Werremeyer then bought the car.
The Werremeyers took the car to a Toyota dealer for minor repairs. The dealer's computer sent notice to the former owner of the Nebraska car, the source of the chassis in the Werremeyers' car. The former owner called the dealership's service manager, Tom Turner, and told him that there must be some kind of mistake: His car had been totaled in a car accident. The former owner sent pictures of the car to Mr. Turner, who had twenty years experience in auto repair field. Turner testified as follows:
Unaware to Mr. Werremeyer, I went ahead and looked [the car] over as closely as I could to determine whether it had been rebuilt. After looking at the pictures, I found it hard to believe that it was rebuildable. But again, you know, some of these body men are pretty amazing. I couldn't see any indications it had been repainted, any body panels replaced, anything that was alerting.
Turner contacted the Missouri Highway Patrol, which impounded the car (for five or six weeks) because Farmer's Insurance had paid the theft victim in California for his vehicle. To get their car back, the Werremeyers had to pay $2000 to Farmer's.
On Nov. 9, 1998, the Werremeyers sent a certified letter to K.C. Auto, in which they offered to settle their claim for $20,000. The letter stated that the offer was made pursuant to Section 408.040, RSMo. 2000, and would remain open for sixty days. Tyson received the letter the next day. K.C. Auto did not accept the offer.
The Werremeyers filed suit against K.C. Auto for common law fraud and negligence per se for violating Missouri's statutory declaration against selling a motor vehicle on which the original VIN has been altered, as contained in Section 301.390, RSMo. (2000), seeking punitive damages and prejudgment interest. When K.C. Auto filed a third party claim against Copart, the Werremeyers amended their petition to include a count for fraudulent misrepresentation from Copart. The Werremeyers sought compensatory and punitive damages against Copart.
All statutory references are to RSMo. (2000) unless indicated otherwise.
A jury returned a verdict of $9,000 in compensatory damages against both Copart and K.C. Auto. It also asserted $200,000 in punitive damages against Copart and $20,000 in punitive damages against K.C. Auto. After entry of judgment on the verdicts, the Werremeyers, pursuant to Section 408.040(2), moved to amend to add prejudgment interest on both the compensatory and punitive damages portion of the judgment against only K.C. Auto. K.C. Auto's opposition to the motion, arguing that the trial court did not err in denying the Werremeyers' motion because: (1) they did not prove that K.C. Auto benefited from its misrepresentations; (2) the amount of their offer did not exceed the amount of the jury's award; and (3) equity counseled against awarding prejudgment interest in this case.
The trial judge denied the plaintiff's motion for pre-judgment interest; overruled K.C. Auto's motions for new trial and judgment J.N.O.V.; and granted a remittitur on Copart's punitive damages to $125,000, which the plaintiffs accepted. All parties have appealed. Defendant Copart's point will be first addressed.
Copart's Appeal A.
Copart contends the trial court erred in denying its motions for directed verdict and for J.N.O.V. because the Werremeyers did not present sufficient evidence to prove fraudulent misrepresentation. Review of the denial of a motion for directed verdict and J.N.O.V. is to ascertain whether a party made a submissible case. Ozark Employment Specialists, Inc. v. Beeman , 80 S.W.3d 882, 889 (Mo.App. 2002). To determine whether a party made a submissible case, this court reviews the evidence in the light most favorable to the jury's verdict, ignoring all evidence that undermines the verdict. See Harvey v. Washington , 95 S.W.3d 93, 96 (Mo. 2003). Only if there was a complete absence of probative fact to support the verdict can this court find that there was no submissible case. Id .
The elements of a fraud are: (1) a representation; (2) its false; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of its truth or falsity; (5) the speaker's intent that it be relied upon; (6) the hearer's ignorance of the statement's falsity; (7) the hearer's reliance on the statement; (8) the hearer's right to rely on the statement; and (9) the hearer's consequent and proximate injuries. Botanicals on the Park, Inc. v. Microcede Corp. , 7 S.W.3d 465, 468 (Mo.App. 1999). According to Copart, there was insufficient evidence that Copart made a representation to the Werremeyers (as opposed to K.C. Auto), that it was reasonable for the Werremeyers to rely on Copart's representation, that Copart intended anyone to rely on any such representation, or that the Werremeyers were part of a limited group of people.
Copart does not deny that one of its employees made a representation about the condition of the title, but rather that this representation was made to an employee of K.C. Auto, not to the Werremeyers. Copart asserts it did not even know of the Werremeyers', nor the Werremeyers of Copart, until after this suit was filed. It further asserts, the Werremeyers never saw the buy list from the auction, and thought that the car came from a different auction. Copart, as auctioneer, transferred title from the owner to K.C. Auto, but, Copart argues, such a transfer of title is not a representation.
While transfer of title by itself does not necessarily amount to a representation, see Reeves v. Keesler , 921 S.W.2d 16, 20 (Mo.App. 1996), the Werremeyers did not have to prove Copart made a direct representation to them. Under Section 533 of the Restatement (Second) of Torts (1977), which was adopted by this court in Freeman v. Meyers , 774 S.W.2d 892, 894 (Mo.App. 1989):
The maker of a fraudulent misrepresentation is subject to liability for pecuniary loss to another who acts in justifiable reliance upon it if the misrepresentation, although not made directly to the other, is made to a third person and the maker intends or has reason to expect that its terms will be repeated or its substance communicated to the other, and that it will influence his conduct in the transaction or type of transaction involved.
See also Grabisnki v. Blue Springs Ford Sales, Inc. , 136 F.3d 565, 569 (8th Cir. 1998). Because Tyson was acting on behalf of K.C. Auto, because one of the first things Tyson does before buying a car is to check the title, because K.C. Auto had been buying cars at Copart's auctions for twenty years, because K.C. Auto's business includes selling used cars — for these reasons combined Copart had reason to expect its employee's representation to be repeated or its substance communicated to one of K.C. Auto's customers.
With respect to the other two elements, Copart argues that there was insufficient evidence to show that Copart intended anyone to rely on its employee's statement about the condition of the title and that any reliance by the Werremeyers was unreasonable. The bid sheet Copart gave to Tyson and the signs posted at the auction (the latter of which were excluded from evidence) say that all vehicles were sold "as is, where is." According to Copart, this also makes any reliance by the Werremeyers on the representation unreasonable.
If Copart's argument is that this precludes the Werremeyers' fraud action, it is mistaken, for "[a] party simply may not, by disclaimer or otherwise, contractually exclude liability for fraud in inducing the contract." Slater v. KFC Corp. , 621 F.2d 932, 935 (8th Cir. 1980) (citing Beshears v. S-H-S Motor Sales Corp., 433 S.W.2d 66, 71 (Mo.App. 1968)).
On the other hand, if Copart is claiming that the "as is, where is" language disclaimed the warranty of title or, at least, clearly indicated that Copart did not intend anyone to rely on its employee's representations, making the Werremeyers' reliance unreliable, it is doubly mistaken. It is mistaken, first, because the only way to disclaim the warranty of title is "by specific language or by circumstances which give the buyer reason to know that the person selling does not claim title in himself or that he is purporting to sell only such right or title as he or a third person may have." § 400.2-312. Copart's "as is, where is" language does not suffice. Second, "in Missouri, in an action for fraud, it is for the jury to decide whether a party is entitled to rely on the verbal representations that conflict with a written agreement." Slone v. Purina Mills, Inc. , 927 S.W.2d 373, 373 (Mo.App. 1996). A reasonable jury could conclude that the implication created by the Copart employee's representation of clean title (which Copart does not claim was ultra vires) trumped the inference created by the "as is" language. This is especially true here, because the written bid sheet supplied to K.C. Auto, far from contradicting the Copart employee's statement, represented that the title was good.
This language might have been adequate to disclaim the implied warranties of merchantability and fitness. See § 400.2-316(3)(a) ("[U]nless 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[.]")
In any event, an "as is" clause in used car sales contract is irrelevant to whether the buyer relied on the seller's representation. DeLong v. Hilltop Lincoln Mercury, Inc. , 812 S.W.2d 834, 840 (Mo.App. 1991); Slusher v. Jack Roach Cadillac, Inc. , 719 S.W.2d 880, 882 ("[A] defense to an action for fraud in the sale of an automobile could not be predicated upon the contract by which the sale was made.")
Copart's final argument shifts grounds, claiming that the Werremeyers did not satisfy all the elements of a negligent misrepresentation claim. That is, Copart claims the Werremeyers did not produce evidence that they were part of limited group, citing Miller v. Big River Concrete, L.L.C. , 14 S.W.3d 124, 132-33 (Mo.App. 2000). Thus, there was insufficient evidence to support the jury's verdict. However, the Werremeyers sued for fraudulent, not negligent, misrepresentation. See Kesselring v. St. Louis Group, Inc. , 74 S.W.3d 809, 813 (Mo.App. 2002). That "the information [relayed by the misrepresentation] was intentionally provided by the speaker for the guidance of a limited group" is not element of fraudulent misrepresentation. Id .
In its second point, Copart claims that the trial court erred in granting the Werremeyers' motion in limine barring the introduction into evidence, based upon relevancy of signs Copart posted at the auction and of the handbooks it gave the bidders. Had the jury known of the language in the handbook or the signs, Copart insists, the jury might have found that Copart did not intend for anyone to rely on these representations or that any reliance by the Werremeyers was unreasonable. Whether to admit evidence rests in the sound discretion of the trial court; the judgment must be reversed only if the exclusion amounts to an abuse of discretion. State v. Rose , 86 S.W.3d 99, 100 (Mo.App. 2002). An abuse of discretion exists when a trial court's ruling is clearly against the logic of the circumstances then before the court and is so arbitrary and unreasonable as to shock the sense of justice and indicate a lack of careful consideration. Id . at 99-100. In any event, no reversal is warranted if the exclusion did not prejudice the complaining party. Thornton v. Gray Auto. Parts Co. , 62 S.W.3d 575, 585 (Mo.App. 2001). "Evidence is relevant if it tends to prove or disprove a fact in issue or corroborates other relevant evidence which bears upon the principal issue." Carter v. Wright , 949 S.W.2d 157, 162 (Mo.App. 1997). Thus, the question is whether the exclusion of the "as is — where is" sign and the handbook was so arbitrary and unreasonable as to shock the sense of justice.
As discussed above, admission of "as is — where is" language is irrelevant to a determination of fraud. Slusher, 719 S.W.2d at 882. Thus, exclusion of such evidence cannot be arbitrary and unreasonable. Furthermore, other evidence was admitted which indicated that vehicles sold at the at the auction were sold "as is — where is." See State v. Uka, 25 S.W.3d 624, 627 (MO. App. 2000) (erroneous exclusion of evidence is harmless where other evidence of similar import has been admitted).
Nor can this court say that the exclusion of the handbook was arbitrary or unreasonable.
Copart has not argued that the handbook language precludes a suit for fraudulent misrepresentation, only that the contract created a factual implication that any reliance by the Werremeyers was unreasonable or that Copart never intended anyone to rely. But unless the Werremeyers knew of the handbook language, the reasonableness of their reliance — as opposed to K.C. Auto's — cannot be raised. Copart has not claimed that the Werremeyers knew of the handbook language when they bought the car. The notification provision presupposes that if the certificate of title is erroneous, as the title in this case was, that Copart would be on the hook. Otherwise, it would be pointless to urge buyers to contact Copart if the certificate of title were deficient. Far from implying that Copart did not intend anyone to rely on its representations as to title, the notification provision indicates that it did. Granted, the handbook did say that Copart did not guarantee client information, such as the "year, make, model, condition, damage, accessories, mileage, VIN #, etc." of any vehicles. All these items, save, perhaps, for the VIN numbers, relate to the condition or nature of the car. Reading the client information clause as including title information would also conflict with the notification provision. For these two reasons, the disclaimer as to client information could not have created a strong implication that Copart did not intend for anyone to rely on its representations as to title, because the disclaimer did not deal with the condition of title.
In addition, Copart claims the prejudice stemming from this language was compounded by the closing argument of the Werremeyers' counsel during the punitive damages stage of the trial, in which counsel stated that one of Copart's witnesses had brought documents to court (meaning the handbook and other excluded evidence), but that the jury was not allowed to see them. This insinuates that Copart had wrongly kept inculpatory documents from the jury, though it was the Werremeyers that had prevented the "as is, where is" language on the signs from being admitted into evidence. The Werremeyers' closing argument, of itself, mandates a new trial, according to Copart. This assertion is without merit for numerous reasons. First, the statements made in closing arguments came after the jury's verdict. Thus, these statements could not have impacted the jury's determination concerning Copart's intent for anyone to rely on the representations or the reasonableness of the reliance.
Second, Copart's claim (that the trial court should have declared a mistrial because of the Werremeyers' closing argument during the punitive damages phase of the trial) was not presented in the point relied on, nor in a separate point. Issues raised in the argument portion of a brief, but not in a point relied on, cannot be reviewed (except for plain error). State v. Rogers , 973 S.W.2d 495, 498 (Mo.App. 1998). Third, the context of the statement does not suggest it was referring to the exclusion of the sign or the handbook.
In its third point, Copart claims the trial court erred in submitting the Werremeyers' verdict director. Copart's contention is that the verdict director does not set forth the elements of any cognizable cause of action, but rather of a hybrid cause of action — part negligence, part deceit. If there is an applicable MAI verdict director, a trial court's failure to give it is presumptively prejudicial error. Lay v. PG Healthcare , 37 S.W.3d 310, 329 (Mo.App. 2000). If there is no applicable MAI director, a non-MAI director may be used. Rule 70.02(b). See also Crank v. Firestone Tire Rubber Co. , 692 S.W.2d 397, 401-02 (Mo.App. 1985) (modified MAI is "required" if no MAI director is available). If one was, the judgment must be affirmed unless (1) either the jury could not have understood the non-MAI verdict director or the verdict director did not follow the applicable substantive law by submitting the ultimate facts to sustain a verdict, and (2) the challenging party was prejudiced. Lashmet v. McQueary , 954 S.W.2d 546, 550 (Mo.App. 1997). See also Linton v. Mo. Highway Transp. Comm'n , 980 S.W.2d 4, 10 (Mo.App. 1998).
Copart has not preserved this point for review. Before the trial court submitted their verdict director to the jury, Copart objected to the director on the grounds that there was insufficient evidence to support it and that the director's requirement that Copart have acted negligently in making its representation to K.C. Auto. The Werremeyers offered to remove the negligence element of the director, but Copart demurred, saying "well, then leave it in."
Had Copart preserved the point for appeal, its argument would still fail. Copart has not claimed that the directors were too confusing for the jury to understand, so the only questions are: Was there an applicable MAI verdict director? If not, did the Werremeyers' verdict director misstate the law of fraudulent misrepresentation? If so, was Copart prejudiced?
The verdict director for fraudulent misrepresentation is MAI 23.05. MAI 23.05 presupposes the quotidian fraudulent misrepresentation case, in which the misrepresentation flows directly from defendant to plaintiff, with no intermediary. However, as the Werremeyers have noted, this case involves a misrepresentation by a defendant harming a third party — and thus a modification of MAI 23.05 was appropriate. Whether the Werremeyers modification was accurate is moot because Copart has not argued that the modification was inaccurate, only that any modification was error.
Moreover, the Werremeyers' modification of MAI 23.05 did not misstate the applicable substantive law. The substantive law requires, among other things, that the jury find that the "maker intends or has reason to expect that its terms will be repeated or its substance communicated to the other [here, the Werremeyers]," as required. Restatement (Second) of Torts § 533 (1977). Here, the second element of the verdict director required the jury to find that Copart had "intentionally provided the title for K.C. Auto . . . to use in the resale of the motor vehicle." If element two did misstate the law, Copart was not prejudiced, because there was evidence that Copart had reason to know that K.C. Auto would repeat the statement to another. K.C. Auto was a car dealership that had been buying cars from Copart for twenty years. Thus, a reasonable jury could infer that Copart had reason to know that K.C. Auto would retransmit Copart's representation that the vehicle in question had good title.
Alternatively, Copart argues that the Werremeyers' verdict director was flawed because, like MAI 23.05, it deviates from the substantive law. Under MAI 23.05, Copart claims, the jury could impose liability, though the defendant was not conscious of his ignorance about whether his representation was either true or false when he made it. The Werremeyers' verdict director suffers from the same flaw. To find Copart liable, the jury must conclude that Copart "did not know whether or not the representation of good title was true or false." In short, the jury could find Copart liable without finding evidence of scienter, in contravention of the law of fraudulent misrepresentation. Botanicals on the Park , 7 S.W.3d at 468 .
Courts of this state have repeatedly rejected this theory. See id . at 469-70; Maples v. Charles Bert Realtor, Inc. , 690 S.W.2d 202, 211 (Mo.App. 1985); Lindsay v. McMilian , 649 S.W.2d 491, 494 (Mo.App. 1983). And for good reason: To say that a defendant does not know whether what she is saying is true or false is to imply that the defendant knew she did not know. Lindsay , 649 S.W.2d at 494 . In this case, the jury could have reasonably concluded that Copart knew that the title had not "checked out," that it was not conveying a legitimate title, thus mooting Copart's point. Tyson testified that that Copart charged buyers ninety-nine dollars as a "buyer's fee," which covered the cost of a Carfax. Copart also charged sellers a fee for "title processing." Copart admitted that "[a] Carfax report would have disclosed that there was a problem with the vehicle because it would have shown the salvage title." From this, the jury could have concluded (1) Copart had run a Carfax on the Werremeyers' vehicle and (2), as a result, it discovered that the car should have had a salvage title, which it didn't.
Copart's next three points attack the punitive damages imposed against it. First, Copart claims that the trial court erred in denying Copart's motions for directed verdict and J.N.O.V. as to punitive damages because the Werremeyers were unable to show that Copart's conduct was tantamount to intentional wrongdoing.
For intentional tort cases, "[p]unitive damages may be awarded for conduct that is outrageous, because of the defendant's evil motive or reckless indifference to the rights of others." RESTATEMENT (SECOND) OF TORTS section 908(2) (1979); Burnett v. Griffith, 769 S.W.2d 780, 789 (Mo.banc 1989). Here, Copart represented that title to the car was good even though it clearly was not. It is not necessary that the Werremeyers show conduct that was intentional, but that exhibited a reckless indifference to the rights of others. There was sufficient evidence, which will be addressed in more detail below, to support submission of punitive damages to the jury.
Copart's second argument challenges the validity of the trial court's grant of a remittitur of $75,000. The granting of a remittitur is reviewed for abuse of discretion. Id . at 249. "The trial court will be deemed to have abused its discretion where the remitted judgment is still so grossly excessive as to shock the conscience of the appellate court." Id . The trial court's ruling is presumed correct. Anglim v. Mo. Pac. R.R. Co. , 832 S.W.2d 298, 302-03 (Mo.banc 1992). If reasonable persons could differ about the propriety of its ruling, the trial court did not abuse its discretion. Id . "In reviewing whether a verdict is excessive, [this court is] limited to a consideration of the evidence [that] supports the verdict[,] excluding that which disaffirms it." Lopez v. Three Rivers Elec. Co-op, Inc. , 92 S.W.2d 165, 175 (Mo.App. 2001).
Punitive damages have two functions — to punish and to deter. Propes v. Griffith , 25 S.W.3d 544, 550 (Mo.App. 2000). They should be imposed sparingly, Alcorn , 50 S.W.3d at 248. "For common law punitive damage claims, the evidence must meet the clear and convincing standard of proof." Rodriguez v. Suzuki Motor Corp ., 936 S.W.2d 104, 112 (Mo.banc 1996). The U.S. Supreme Court has instructed trial courts to look to three guideposts in reviewing punitive damage awards:
(1) the degree of reprehensibility of the defendant's conduct; (2) the disparity between the actual of potential harm suffered by the plaintiff and the punitive damage award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.
State Farm Mutual , 538 U.S. at ___, 123 S.Ct. at 1520 (citing Gore, 517 U.S. at 575). While no factor is dispositive, "the most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant's conduct." Gore , 517 U.S. at 575. The reprehensibility of a defendant's conduct is measured by whether:
the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had financial vulnerability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident.
State Farm Mutual , 538 at ___, 123 S.Ct. at 1521. "[I]n practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process." 123 S.Ct. at 1524. Higher-than-single-digit multipliers might be appropriate where the injury is hard to detect. Id .; BMW , 517 U.S. at 582.
Other relevant factors include: aggravating and mitigating circumstances, the defendant's financial status, the character of both parties, the injuries suffered, the defendant's standing or intelligence, the age of the injured party, and the relationship between the two parties. Barnett v. La Societe Anonyme Turbomeca France , 963 S.W.2d 639, 666 (Mo.App. 1997). However, the wealth of the defendant cannot justify an otherwise unconstitutional punitive damages award. State Farm Mutual , 538 U.S. at ___, 123 S.Ct. at 1525.
This court holds that the trial court did not abuse its discretion in remitting the punitive damage award against Copart from $200,000 to $125,000. Reasonable persons could disagree about the propriety of the trial court's ruling. Nothing indicates that it was animated by improper motives or a "clear absence of honest exercise of judgment." See Call v. Heard , 925 S.W.2d 840, 849 (Mo.banc 1996).
First, consider the reprehensibility of the defendant's conduct. Copart argues that the trial court abused its discretion in remitting the punitive damage award against it by only $75,000. As reprehensibility baselines, Copart cites the defendants' conduct in Barnett , 963 S.W.2d 639 (Mo.App. 1997); Propes v. Griffith , 25 S.W.3d 544 (Mo.App. 2000); and Henderson v. Fields , 68 S.W.3d 455 (Mo.App. 2002).
In Barnett , this court described the defendant's conduct as "unparalleled," "unquestionably reprehensible," and "extreme." 963 S.W.2d at 663, 666, 667. Nevertheless, it ordered the punitive damage award reduced from $87.5 million to $26.5 million, and compensatory damages reduced from $25 million to $3.5 million. Id . at 667, 658. (This changed the damage multiplier from 3.5 to 7.57.) The ratio of punitive to actual damages in the original judgment did not cause this court to reduce the trial court's punitive damage award. Id . at 666. In Propes , the defendant killed two of the plaintiff's dogs. 25 S.W.3d at 546. The trial court awarded $2000 in compensatory damages and $4000 in punitive damages. Id . at 546. This court described the defendant's actions as "outrageous" and as evincing "reckless indifference" to the rights of others. In Henderson , the defendant had drunk a great deal of alcohol, got in a car and drove around 100 miles per hour, weaved in and out of traffic, passed other vehicles, and crossed the highway median, before colliding with another car, killing two parents and their baby. 68 S.W.3d at 463.
That a punitive damage award is valid, in part, because of the extreme reprehensibility of the defendant's conduct, does not mean that a defendant's conduct must be extremely reprehensible to support a punitive damage award. Reprehensible conduct, whether extreme or not, is also just one factor in evaluating the propriety of punitive damage awards. See supra.
While this court should look to other cases for guidance in reviewing punitive damage awards, they are often unhelpful because each punitive damage case is unique. Barnett , 963 S.W.2d at 661 . The cases cited by the Werremeyers — DeLong v. Hilltop Lincoln-Mercury, Inc. , 812 S.W.2d 834 (Mo.App. 1991), and Grabinski v. Blue Springs Ford Sales, Inc. , 203 F.3d 1024 (8th Cir. 2000) (applying Missouri law) — are more factually similar than Copart's and support the trial court's award. In DeLong , the defendant was found liable of intentionally misrepresenting that the car the defendant sold to the plaintiff was a local trade-in. 812 S.W.2d at 840. This court affirmed the trial court's award of $3000 in actual and $75,000 in punitive damages. Id . at 836-37, 841. A misrepresentation about whether one has clean title is, if anything, more material and hence more reprehensible than misrepresentation as to whether a car was an individual trade in, as opposed to a dealer trade in. In Grabinski , a misrepresentation case involving the Missouri Merchandising Practice Act, see §§ 407.010-.025, § 407.120, RSMo. (1994), the Eighth Circuit affirmed an award of $100,000 in punitives, which is close to the $125,000 in remitted punitives awarded here.
The factors relevant in the reprehensibility calculus, moreover, do not clearly favor Copart. The harm here was economic, not physical; however, Copart's misrepresentation led the Werremeyers to purchase a car that had been fabricated, presumably by a "chop shop," out of two different vehicles. Such a car, if only because the fabrication was not regulated, posed a danger to both the Werremeyers and to the public. Arguably Copart's misrepresentation, on two different occasions, evinced a reckless disregard for the safety of others. While there is no specific evidence that the Werremeyers are financially vulnerable, they are individual consumers. They are thus less able — and less likely — to initiate suits than many corporate or public defendants. Another name for deceit is fraudulent (or intentional) misrepresentation, Black's Law Dictionary 413 (7th ed. 1999), so the Werremeyers' harm was "the result of intentional malice, trickery, or deceit," not a mere accident. There is quite a difference between not disclosing a material fact because of a good faith belief that disclosure is not required and a "deliberate false statement." BMW , 517 U.S. at 579. Insofar as this factor does not strongly support the punitive damage award against Copart, the difficulty of detecting such misrepresentations as Copart's more than compensates. See infra.
Copart's claim that "[n]ot one shred of evidence was presented at trial that the Toyota was in any way unsafe or dangerous, or that anyone driving it might be at risk of personal injury because of a chop shop's body work" is somewhat accurate, but misses the mark. True, no expert testified about the safety, in general, of cars created by body swings or about the safety of the Werremeyers' car in particular. A reasonable jury could still find that a car created by a body shop was not as safe as an ordinary car, legally manufactured in compliance with state and federal regulations. That no one was injured because of the unique way the Werremeyers' car was put together is beside the point. Often, safety flaws take a long while to manifest. While the car had passed both a California and Missouri inspection, the record is silent about whether these inspections are aimed at ferreting out cars created by chop shops.
The second Gore factor, the disparity between the actual or potential harm suffered by the plaintiff and punitive damage award, does not clearly favor Copart, either. The ratio between punitive and actual damages in this case was 13.9. (The remitted punitive damages against Copart were $125,000, and the actual damages were $9,000.) This ratio is suspect under State Farm Mutual , 538 at ___, 123 S.Ct. at 1521, but State Farm Mutual did acknowledge that non-single-digit damage multipliers were probably constitutional if the harm suffered by the defendant is difficult to detect. 538 at ___, 123 S.Ct. at 1524. Cf. Harmelin v. Michigan , 501 U.S. 957, 989 (1991) ("[S]ince deterrent effect depends not only upon the amount of the penalty but upon its certainty, crimes that are less grave but significantly more difficult to detect may warrant substantially higher penalties.") (Scalia, J.).
This is such a case. The laws of chance would crack under the weight of a claim that the average consumer could have detected the kind of fraud perpetrated in this case. (In general, "[f]rauds often escape detection." Perez v. Z Frank Oldsmobile, Inc. , 223 F.3d 617, 621 (7th Cir. 2000). Consider all the precautions taken by the Werremeyers, none of which unearthed any hint of a problem. Mr. Werremeyer checked the certificate of title; it appeared valid; in fact, it was valid — for half the car. The VIN numbers on the title matched those on the car's window. Sure, the Werremeyers' car had secret VIN numbers that would have revealed the problem with the certificate of title and the falsity of Copart's representation. But, they were just that — secret — and not even a member of the Highway Patrol was able to locate them on the Werremeyers' car. Hence, consumers cannot be expected to find them. (Nor would it be in the public interest if consumers could, for then so could car thieves and chop shops.) Yes, the VIN numbers on the car's window were partially defaced; still, the salesman's explanation, that the previous owner had attempted to scratch out the VIN numbers to prevent repossession of the vehicle, was plausible. In any event, as already pointed out, the VIN numbers on the title and car did match, so no reasonable purchaser would have a reason to question the story Copart proffered. Here, the Werremeyers had the car inspected twice, the only result of which was the discovery that the car was out of alignment. Tom Turner, the Toyota mechanic with over twenty years of experience, could not tell that the Werremeyers' car was the product of a body swing. In sum, an average consumer is unlikely to be able to detect a misrepresentation about title by a dealership where the car was fabricated through an expert body swing. Had the former owner of the chassis portion of the car not contacted Turner, Copart's deceit in all likelihood would have gone undetected.
Other cases involving suits for fraudulent misrepresentation vis-a-vis vehicles also support the damage multiplier applied here. In DeLong , a twenty-five-to-one damage multiplier was affirmed. Grabisnki upheld a ninety-nine-to-one multiplier. The net award was not grossly excessive. Point denied.
K.C. Auto
In its first point, K.C. Auto argues that the trial court erred in not granting K.C. Auto's motion for directed verdict and J.N.O.V. as to the fraud count.
K.C. Auto claims that the Werremeyers did not present sufficient evidence to prove two of the elements of fraudulent misrepresentation — reliance and materiality. It claims that the Werremeyers did not rely on the statement of Tyson that the car had not been wrecked because (1) the Werremeyers did not trust Tyson and asked to see the certificate of title, (2) Mr. Werreymer admitted that he relied on the title in purchasing the vehicle, (3) that the last act before purchasing the car was Mr. Werremeyer checking the VIN numbers on the certificate of title, and (4) if there was anything wrong with the title or if the VIN numbers did not match, he would not have purchased the vehicle.
Although the Werremeyers might have taken additional steps to protect themselves in the purchase of this vehicle, this is not fatal to their claim of fraudulent misrepresentation against K.C. Auto. It is not necessary that the misrepresentation was the sole inducement to act; it is only necessary that it is a material factor in the decision to act. See Mfrs. Am. Bank v. Stamatis , 719 S.W.2d 64, 70 (Mo.App. 1986). Furthermore, a party may make a partial investigation and still rely on the misrepresentation without defeating their action for fraud. Wasson v. Schubert , 964 S.W.2d 520, 527 (Mo.App. 1998). The fact that a car has or has not been wrecked is clearly a material factor in the decision to purchase. Tyson even admitted this at trial. Here, there were sufficient facts to submission of the claim for fraudulent misrepresentation to the jury. Without repeating all the facts favorable to the verdict, suffice it to say Werremeyer's checking the VIN with the numbers of the certificate only showed the numbers corresponded to part of the car they purchased, and the basis of this count was on the sellers representation the car had not been wrecked. Further, Werremeyer was entitled to rely on K.C. Auto's representations the VIN numbers were scratched because of the purported attempt to prevent repossession.
K.C. Auto claims that the Werremeyers did not present sufficient evidence to prove two elements of fraudulent misrepresentation — reliance and materiality. See supra. The theory is that the Werremeyers could not or did not rely on K.C. Auto's representation that their car "had not been previously wrecked" (in the words of their verdict director) because: (1) the Werremeyers did not trust the salesman who made the false representation, as evidenced by their request to see the certificate of title; (2) Mr. Werremeyer admitted, in his testimony, that he relied on the title in purchasing the vehicle; (3) that the last act he did before purchasing the car is to check the VIN numbers on the certificate of title; and (4) that if there was anything wrong with the surface of the title or if the VIN numbers did not match, he would not have purchased the vehicle.
K.C. Auto next argues that the trial court should have granted its motion for directed verdict or J.N.O.V. on the Werremeyers' negligence per se claim based on Section 301.390.
1. No person shall sell, or offer for sale, or shall knowingly have the custody or possession of a motor vehicle, vehicle part, boat, outboard motor, trailer, motor vehicle tire, piece of farm machinery, farm implement, or piece of construction equipment on which the original manufacturer's number or other distinguishing number has been destroyed, removed, covered, altered or defaced, and no person shall sell, offer for sale, or knowingly have the custody or possession of a motor vehicle or trailer having no manufacturer's number or other original number, or distinguishing number assigned by the manufacturer.
2. Every peace officer who has knowledge of a motor vehicle, vehicle part, boat, outboard motor, trailer, motor vehicle tire, piece of farm machinery, farm implement, or piece of construction equipment, the number of which has been removed, covered, altered, destroyed or defaced, and for which no special number has been issued shall immediately seize, take possession of such construction equipment, and may arrest the supposed owner or custodian thereof and cause prosecution to be begun in a court of competent jurisdiction
* * *
According to K.C. Auto, the jury could not have found a violation of Section 301.390, so the Werremeyers' negligence per se claim must fail. K.C. Auto gives three reasons why: (1) because the Werremeyers' verdict director did not require the jury to find that K.C. Auto knowingly had possession of a vehicle with altered VIN numbers, as required by Section 301.390; (2) because K.C. Auto did not know the true history of the vehicle; and (3) because the Werremeyers' car did not have an original manufacturer's number, but rather two different VIN numbers, thus meaning there was not an original (meaning: one) manufacturer's number.
The elements of negligence per se are: (1) the defendant violated the statute; (2) the plaintiff was a member of the class of persons the statute was designed to protect; (3) the plaintiff's injury was of the type the statute was designed to prevent; and (4) the violation of the statute proximately caused the injury. K.C. Auto admits that elements two through four were proven in this case. The only issue, then, is: Could a reasonable jury conclude that K.C. Auto violated Section 301.390.
Section 301.390 provides that:
No person shall sell, or offer for sale, or shall knowingly have the custody or possession of a motor vehicle, vehicle part, . . . on which the original manufacturer's number or other distinguishing number has been destroyed, removed, covered, altered or defaced[.]
The plain language of the statute does not create a scienter requirement to convict a person for selling or offering to sell a motor vehicle with a "destroyed, removed, covered, altered[,] or defaced" manufacturer's number. State v. Smith , 972 S.W.2d 476, 478-79 (Mo.App. 1998). Cf. State v. Sollars , 706 S.W.2d 485, 496 (Mo.App. 1986) ("[S]ome requirement of criminal intent or guilty knowledge must be read into the statute . . . [M]ere possession is not sufficient to sustain a conviction under the law.") While there can be no violation for unknowingly possessing such a motor vehicle, the Werremeyers did not sue K.C. Auto for possessing a car with altered VIN numbers, but rather for selling them a car with altered VIN numbers. So much for K.C. Auto's first and second claims.
Unlike K.C. Auto's first two claims, its third finds purchase in the language of Section 301.390, which speaks of " the original manufacturer's number or other distinguishing number" (emphasis added). Here, the Werremeyers' car was the combination of the chassis from one car and the body from another. Strictly speaking, this car did not have an original manufacturer's number. However, Section 301.390 also applies where the defacement was of a "distinguishing number." The VIN numbers on the window of the Werremeyers' car was a distinguishing number. In addition, K.C. Auto's reading of the statute belies one of its overriding purposes — to prevent car thieves and chop shops from profiting from their wrongdoing. Adopting K.C. Auto's reasoning would mean a chop shop could buy two stolen cars, switch the chassis from car two to car one, then erase the visible VIN numbers and sell each car to a dealership without violating the statute.
Section 301.090 also prohibits the sales of parts with defaced identification numbers. In this case, there arguably was a sale of a vehicle part with a defaced id number, namely, body of the Werremeyers' car. The Werremeyers' verdict director refers to the sale of a "motor vehicle," not a part, however.
In its last point, K.C. Auto contends that the trial court erred in denying K.C. Auto's motion for directed verdict and J.N.O.V.
K.C. Auto posits that punitive damages are unavailable unless the plaintiff can prove by clear and convincing evidence that the defendant had an "evil mind or intent" — that is, an evil motive. According to K.C. Auto, all the evidence showed quite the contrary. K.C. Auto allowed Mr. Werremeyer to test drive the car and to have it inspected by a mechanic, paid for an alignment of the car, and, when notified by the Missouri Highway Patrol about the suspect provenance of the car, attempted to reach a settlement with the Werremeyers; and K.C. Auto cooperated fully with the Highway Patrol in trying to trace the car. In short, K.C. Auto claims that the Werremeyers were harmed by the criminal acts of others, not by K.C. Auto. Additionally, K.C. Auto claims that the trial court overlooked the fact that all three mitigation factors promulgated in Alcorn v. Union Pacific Railroad Co. , 50 S.W.3d 226, 248 (Mo.banc 2001), were present. K.C. Auto does not argue the validity of the amount of punitives.
In intentional tort cases, such as this one, "[p]unitive damages may be awarded for conduct that is outrageous, because of the defendant's evil motive or reckless indifference to the rights of others." Restatement (Second) of Torts, § 908(2) (1979); Burnett v. Griffith , 769 S.W.2d 780, 789 (Mo.banc 1989). Thus, K.C. Auto's claim (explicit in its point relied on and implicit in the conclusion of the argument section) that the Werremeyers must prove a K.C. Auto had an evil motive to recover punitive damages is false. And there was clear and convincing evidence that K.C. Auto exhibited reckless indifference toward the Werremeyers' rights. At trial, its salesman, John Tyson, admitted that he did not know the history of the car; yet he falsely told Mr. Werremeyer that the car had clean title (this despite his admission at trial that had the car been repossessed, the title should have been a repossession title). Tyson admitted he did not know whether the car had been wrecked; yet he told the Werremeyers that it had not, which the jury could have attributed to Tyson's belief (supported by his testimony) that if he told the Werremeyers the truth, they wouldn't have purchased the car. Tyson told the Highway Patrol that the car had been "recovered stolen"; yet he told the Werremeyers that the car had been repossessed. The jury could have reasonably concluded that Tyson was willing to say whatever it took to sell a car, whether it was true or not.
As indicated before, Alcorn was a negligence case, and the three mitigation factors relied on by K.C. Auto (whether similar occurrences by the defendant have been infrequent, whether the injurious event would not have happened but-for the negligence of another party, and whether the defendant did not knowingly violate a rule designed to prevent injury) are unique to negligence cases. 50 S.W.3d at 248. Moreover, even if these mitigation factors were present, the question is not whether the punitive damage award was against the weight of the evidence, but whether the Werremeyers made a submissible case — i.e, Was there a complete absence of probative fact to support the jury's punitive damage award? The three Alcorn factors are not germane; neither is the other mitigation evidence adduced by K.C. Auto.
The DeLong case refutes K.C. Auto's claims that the jury could not have reasonably awarded punitive damages to the Werremeyers because of K.C. Auto's behavior. In that case, the plaintiff was awarded $3,000 in actual and $75,000 in punitive damages against a dealership because of its salesman's misrepresentation that a car the plaintiff purchased from the dealership was not a dealer trade in. 812 S.W.2d at 841. The defendant, appealed, arguing, among other things, that the punitive damages were excessive. Id . This court affirmed. Id .
Werremeyers' Appeal
The Werremeyers have appealed from the trial court's denial of their motion for prejudgment interest on their total judgment of $29,000 against K.C. Auto. The issue here is whether the trial court misapplied the prejudgment interest statute, Section 408.040, so review is de novo. See State v. Bass , 81 S.W.3d 595, 602 (Mo.App. 2002). Section 408.040(2) provides that:
[i]n tort actions, if a claimant has made a demand for payment of a claim or an offer of settlement of a claim, to the party, parties or their representatives and the amount of the judgment or order exceeds the demand for payment or offer of settlement, prejudgment interest . . . shall be calculated from a date sixty days after the demand or offer was made, or from the date the demand or offer was rejected without counter offer, whichever is earlier. Any such demand or offer shall be made in writing and sent by certified mail and shall be left open for sixty days unless rejected earlier.
If the prevailing party satisfies these conditions, the trial court must award prejudgment interest. McHaffie by and through Wieland v. Bunch , 951 S.W.2d 340, 342 (Mo.App. 1997); Hurst v. Jenkins , 908 S.W.2d 783, 786 (Mo.App. 1995). Cf. Midwest Asbestos Abatement Corp. v. Brooks , 90 S.W.3d 480, 486 (Mo.App. 2002). (The statute does not directly mandate an award of prejudgment interest. It directs that interest "shall be calculated" if the statutes' requirement have been met.)
On November 9, 1998, the Werremeyers sent by certified mail a letter to K.C. Auto, offering to settle their suit for $20,000. (The letter also referred to Section 408.040.) K.C. Auto received the letter the next day. K.C. Auto did not accept the Werremeyers' offer, and the case went to trial more than sixty days later. The actual damages awarded in this case, were $9,000. In reality, the Werremeyer's were asking the trial court for prejudgment interest on the punitive damages awarded them by the jury.
This court has just ruled in Hoskins v. Businessmen's Assurance (#61744 June 30, 2003) that punitive damages do not qualify under the statute for prejudgment interest. Section 408.040(2) does not define what prejudgment interest includes — in particular, whether it includes interest on punitive damages. However, the goal of punitive damages is to deter and to punish, Propes v. Griffith , 25 S.W.3d 544, 550 (Mo.App. 2000), whereas prejudgment interest, when awarded, is an element of compensatory damages. Benoit v. Mo. Highway Transp. Comm'n , 33 S.W.3d 663, 674 (Mo.App. 2000) ("[Prejudgment] interest is awarded on the theory that it is necessary to give full compensation for the loss sustained and is considered a part of the judgment for damages."); Pollock v. Wetterau Food Distrib. Group , 11 S.W.3d 754, 771 (Mo.App. 1999). See also West Va. v. United States , 479 U.S. 305, 310 n. 2 (1987) ("Prejudgment interest serves to compensate for the loss of use of money due as damages from the time the claim accrues until judgment is entered, thereby achieving full compensation for the injury those damages are intended to redress."). To award prejudgment interest on the punitive damages would result in overcompensating the prevailing party; nor is it necessary to achieve the deterrence function of punitive damages. See Anthony E. Rothschild, Prejudgment Interest: Survey Suggestion, 77 Nw. U. L. Rev. 192, 220 (1982). There are no Missouri cases in which prejudgment interest on punitive damages has been awarded. Cf. Knopke v. Knopke , 837 S.W.2d 907, 913, 922 (Mo.App. 1992) ("All the awards bore prejudgment interest except the punitive damages awards and the award of plaintiffs' attorneys' fee."). For the most part, and as acknowledged in Hoskins, supra at 38-39 of the slip opinion, other jurisdictions have refused to allow prejudgment interest on punitive damages. Dobbs, 1 Law of Remedies § 3.11(13), at 528-29 (2nd ed. 1993). See, e.g. , Massey v. Farmers Ins. Group , 986 F.2d 1428, at *13 (10th Cir. 1993) (table decision); Lakin v. Watkins Associated Indus. , 863 P.2d 179, 192 (Cal. 1993) ("To award prejudgment interest on punitive damages arising from personal injury actions would therefore give a windfall to the plaintiffs in those actions."); Cavnar v. Quality Control Parking , Inc. , 696 S.W.2d 549, 555-56 (Tex. 1985). For these reasons, this court holds that Section 408.040(2) does not allow recovery of prejudgment interest on punitive damages. This point is denied.
The judgment is in all respects affirmed.
All concur.