Thomassen Lincoln-Mercury, Inc. v. Goldbaum

Wilner, J., delivered the opinion of the Court. One day, near the end of September, 1975, John Booher walked into the showroom of Thomassen Lincoln-Mercury, Inc., in Rockville, saw a sporty new Lincoln Continental that he thought his wife might like, and agreed to buy it. Everything was all arranged, except that he was told by the salesman and sales manager that he would be unable to take delivery until October 4, 1975. 1 Booher returned on October 4, completed all the paperwork, and took delivery of the car. The window sticker, containing the relevant price information, showed the "list” price to be $10,305.50.

The actual price paid by Booher was $2,000 less. The documents evidencing the sale show a selling price of $8,305.50, plus $391.50 for taxes, tags, and credit life insurance, or a total of $8,697.00. Booher made a down payment of $3,697 and financed the balance via an installment sale agreement under date of October 6, 1975. When he took delivery of the car, Mr. Booher received a temporary registration certificate showing him and his wife as purchasers.

He also received an "Ownercard” with his name on it and an Owner’s Manual. As Mr. Booher was ²⁹⁹ buying the car for his wife, he went through the Owner’s Manual and underlined a number of passages in it with a green felt pen to call them especially to her attention. From the beginning, Mr. Booher experienced trouble with the car. It overheated when he drove it home from the Thomassen showroom.

The next day, he drove it to Thurmont (from Wheaton), and it again overheated. On October 6, 1975, he took it back to the dealer, but was told that "it was the new Ralph Nader attachments that made the car hot.” After additional episodes of overheating, Booher returned the car again on October 14, 1975. As he was explaining the problem, the wiring suddenly caught fire, damaging not only the wiring but also the air conditioner. Thomassen replaced the wiring and the air conditioner motor, the repair invoice of October 16, 1975, showing the mileage on the car then to be 276.

At this point, Booher said that he no longer wanted the car. Through the sales manager, George Parker, Thomassen agreed to take the car back and refund all but $300 of the money Booher had paid. As to the $300 deduction, Booher said: "I was told that they could not, that they would have to sell the car back as a used car and they could not give me any more money back for the car than that amount.” (Emphasis supplied.) After Booher executed a release, Parker "did at that time tell me and for the first time that the car would be put back in stock and sold as a new car.” (Emphasis supplied.) Curiously, a month later, Booher received a letter from George Thomassen, President of the dealer company, congratulating him for purchasing the car. Some time later, he received a card from Ford Motor Company reminding him that it was time for the 10,000-mile checkup.

On November 20, 1975 — a month after Mr. Booher returned the car — Henry Goldbaum wandered into the Thomassen showroom looking for the car of his dreams, and, lo and behold, saw the selfsame Continental. He noticed that the odometer registered 375 miles, that the Owner’s Manual was marked up, and that the Ownercard had Mr. Booher’s ³⁰⁰ name on it. He inquired about these things of one Larry Epstein, a salesman for Thomassen, and was told that (1) the car was new and had not been previously owned, (2) the mileage came from driving the car back and forth from a storage lot and from "demonstration” rides, (3) Epstein had marked up the Owner’s Manual in order to call attention to the important things, and (4) the car had been sold before but the deal had fallen through, which explained why Mr. Booher’s name was on the Ownercard. These explanations seemed reasonable to Goldbaum and he accepted them.

Goldbaum noticed that the price information, required by Federal law (see 15 U.S.C. §§ 1232 , 1233) to be attached to the window was missing; but he did not question the omission. Goldbaum had a 1973 Volvo to trade. Epstein had it appraised and offered Goldbaum the Continental for the Volvo plus $5,000. Goldbaum accepted and the deal was closed on that basis.

The invoice described the vehicle as new and showed a purchase price of $10,600.50 plus tax and tags of $354, or a total of $10,954.50. Of this, $5,606.50 was allocated to the trade-in and Goldbaum paid $5,348 in cash. Goldbaum was never told what his Volvo had been appraised for and didn’t care. He was interested only in how much cash would be required and was delighted to learn that it was an amount he could afford.

Like Booher, Goldbaum received a temporary registration permit. In one of those rare "it’s a small world” coincidences, Mr. Booher spotted the Continental as he was driving somewhere one day in December, 1975. He followed the car onto a post office parking lot, checked the serial number on the top of the dashboard after the car was parked, and waited for its driver to return. The driver was Mr. Goldbaum; and Booher not only told him of his prior interest in the car but showed him the invoice and other documents he had received from Thomassen pertaining to it.

Goldbaum, Booher said, "was dumbfounded.” He was "like a man that has just attended a funeral of his very best friend.” At the time, Goldbaum had been having no trouble with ³⁰¹ the car, and thus made no complaint to anyone about the apparent deception. In 1977, however, he moved to Frederick, and had to commute between there and his employment in Wheaton. This provided the first opportunity to drive the car any long distance, and he then began to notice that it overheated. He ultimately replaced the radiator, but still made no complaint to Thomassen.

Its first indication that Goldbaum was dissatisfied came sometime in November, 1977, when the sheriff delivered a copy of Goldbaum’s multi-count Declaration charging it with breach of contract and fraud. After trial in the Circuit Court for Montgomery County, the jury was permitted to consider whether Goldbaum had, on the evidence recounted above, made out a case of actionable fraud. 2 The jury believed he had, and accordingly returned a verdict in Goldbaum’s favor for $37,000 — $2,000 compensatory damages and $35,000 punitive damages. After some post-trial proceedings, the court "ordered” a remittitur of $15,000 in the punitive damage award and ultimately entered judgment for $22,000. Thomassen, feeling aggrieved, appeals, raising the following issues: "I. Did the Court err in not directing a verdict for appellant due to insufficient evidence as to allegations that defendant was liable for fraud in misrepresenting (a) that the car in question was new, (b) that the mileage on the odometer resulted exclusively from the car being moved on the lot, and (c) that it had no previous owner?

"II. Was there sufficient evidence of scienter to warrant the Court’s allowing the jury to consider the alleged misrepresentation that the vehicle was new? "HI. Did the Court err in not directing a verdict in favor of appellant due to insufficient evidence of pecuniary damages directly caused by the alleged misrepresentations? ³⁰² "IV.

Did the Court err in permitting the jury to reach the issue of punitive damages when there was insufficient evidence of outrageous conduct apart from the fraudulent misrepresentation itself? "V. Was it error for the Court to refuse to instruct the jury that it must consider the statutory definition of new vehicle in determining whether the appellant made a knowingly false representation that the vehicle was new? "VI. In view of the fact that appellee failed to accept the remittitur within the time prescribed by the Court’s ruling, should the case be remanded for a new trial?

"VII. Was it error for the Court to refuse to grant a new trial on the ground of newly discovered evidence? "VIII. Did the Court err in refusing to permit the testimony of the Director of Licensing and Consumer Services for the Motor Vehicle Admini stration?” (1) Sufficiency of the Evidence: Fraud The first three issues raised by appellant may be considered together.

They question whether the evidence sufficed to show one or more of the required elements of actionable fraud — whether, in other words, the court erred in denying the motion for directed verdict. In order to recover under his fraud count, it was incumbent upon Mr. Goldbaum to prove: (1) that a representation made by appellant was false; (2) that its falsity was known to appellant or that the representation was made with reckless indifference as to its truth or falsity; (3) that the representation was made for the purpose of defrauding Mr. Goldbaum; (4) that Goldbaum not only relied upon the misrepresentation, but had the right to do so and would not have done the thing from which the damage resulted if it had not been made; and (5) that Goldbaum suffered an injury directly resulting from appellant’s ³⁰³ misrepresentation that is subject to being redressed by compensatory damages. See James v. Weisheit, 279 Md. 41 (1977); Wedeman v. City Chevrolet Co., 278 Md. 524, 532 (footnote 5) (1976). The test for determining the sufficiency of evidence necessary to overcome a motion for directed verdict in civil cases has been stated many times.

In considering a motion for directed verdict, both the trial court and, on review, the appellate court, "assumes the truth of all credible evidence on the issue and of all inferences fairly deducible therefrom, and considers them in the light most favorable to the party against whom the motion is made. ... If there is any legally relevant and competent evidence, however slight, from which a rational mind could infer a fact in issue, then a trial court would be invading the province of the jury by declaring a directed verdict. In such circumstances, the case should be submitted to the jury and a motion for a directed verdict denied.” Impala Platinum v. Impala Sales, 283 Md. 296, 328 (1978). In this appeal, appellant attacks the evidence as to elements (1), (2), and (5): falsity of the representation, knowledge of the falsity, and actual resulting damage.

We find that the evidence was more than sufficient to establish these elements. The relevant representations were that the car was new and had not been previously owned. Goldbaum’s testimony certainly sufficed to establish that these representations were made. Appellant does not seriously contest that.

Its claim is that the representations were not shown to be false. It bases this assertion upon the fact that the Booher deal was annulled before the car had actually been titled in his name by the State Motor Vehicle Administration, that the car, at all times prior to the sale to Goldbaum, thus remained titled in appellant under a manufacturer’s certificate of origin, and that it was sold to Goldbaum on the manufacturer’s ³⁰⁴ certificate of origin. Relying then upon the definition of "new vehicle” in Md. Ann. Code, Transportation article, § 11-138, and the procedures set forth in § 13-104.1 of that article for obtaining a certificate of title for a "new vehicle,” appellant contends that, when sold to Goldbaum, the car was in fact "new” and had not been previously owned. This interesting argument rests upon a strained and inappropriate construction of the statutory definition of "new vehicle,” however.

Section 11-138 defines "new vehicle” as a vehicle: "(1) The owner of which is a manufacturer, distributor, or licensed dealer; and (2) That never has been used to destroy its newness or to convert it into or make it a used or secondhand vehicle, as these terms are commonly used or understood in trade or business.” (Emphasis supplied.) Expert testimony is hardly necessary to permit a fair and rational inference that a car that has been previously sold, previously driven by the person who bought it for a period of nearly two weeks, and previously damaged by fire "has been used to destroy its newness” and has been converted into a "used or secondhand vehicle, as these terms are commonly used or understood in trade or business.” The fact that an MVA certificate of title was never issued to Mr. Booher may be relevant in terms of how MVA processed the subsequent transfer to Mr. Goldbaum, but it cannot erase or detract from the far more significant circumstance that the car was in fact previously sold, previously used, and previously damaged. The evidence supplied by Mr. Booher more than sufficed to establish the falsity of appellant’s representations. 3 The same evidence also suffices to establish that the misrepresentation was a knowing one. Clearly, the sales manager was aware of the Booher transaction; and Epstein, the salesman with whom Goldbaum dealt, knew full well ³⁰⁵ that his responses to Goldbaum’s inquiries about the Ownercard and Owner’s Manual were absolutely untrue. Turning now to the question of compensatory damages, the list price of the car, as sold to Goldbaum, was $10,600.50 (nearly $300 more than the price paid by Mr. Booher two months earlier, when the car was really new).

William Brewer, offered by Goldbaum and accepted by the court as an expert witness, testified that the fair market value of the Continental when sold to Goldbaum was $6,550. This was based upon the hypothesis that the car had been previously sold, driven 375 miles, had a fire under the hood, and had continuing overheating problems. This would, if believed, certainly support the jury’s determination that Goldbaum suffered $2,000 (or more) in actual pecuniary loss. Appellant’s attack on this is a multiple one.

It challenges Mr. Brewer’s status as an expert witness as well as the validity of his opinion. Extended discussion is unnecessary. Given Brewer’s extensive background and familiarity with automobile values derived from 13 years experience as a bank officer involved in making auto loans, the court was well within a proper exercise of its discretion in qualifying him as an expert. Appellant’s complaints about the manner in which Brewer derived and stated his opinion as to value go to the weight to be accorded his testimony rather than to its admissibility.

(2) Sufficiency of the Evidence: Punitive Damages The Court of Appeals made clear in Wedeman v. City Chevrolet Co., supra, 278 Md. 524 , that punitive damages are recoverable in an action of fraud where "conduct of an extraordinary nature characterized by a wanton or reckless disregard for the rights of others” is evident. Id. at 532 . Appellant acknowledges Wedeman , but, by taking certain language in the Opinion wholly out of context, ascribes to it a meaning that was neither intended nor warranted. Mrs. Wedeman purchased a "new” demonstrator from City Chevrolet upon the express assurance that it had never been involved in an accident or damaged in any way.

A week ³⁰⁶ later, the car was in an accident, and, as a result, Mrs. Wedeman learned that the car had been involved in a prior accident, i.e., that the dealer’s representation had been a false one. She returned the car to City and requested that it repair all the damage. City refused unless she agreed to retract her assertion that the car had been previously damaged.