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McLeod v. A Better Way Wholesale Autos, Inc.

Court of Appeals of Connecticut

October 24, 2017

BRENDA MCLEOD
v.
A BETTER WAY WHOLESALE AUTOS, INC.

          Argued April 10, 2017

          Kenneth A. Votre, for the appellant (defendant).

          Louis E. Faiella, with whom, on the brief, was Scott Jackson, for the appellee (plaintiff).

          DiPentima, C. J., and Prescott and Beach, Js.

         Syllabus

         The plaintiff sought to recover damages from the defendant for, inter alia, breach of the implied warranty of merchantability in connection with her purchase of an automobile from the defendant. The case was tried to the court, and, at the close of the plaintiff's case, the defendant moved for a judgment of dismissal on all counts of the complaint, which the trial court granted as to certain counts, including count one alleging breach of the implied warranty of merchantability. Thereafter, the defendant presented its evidence, and the trial court subsequently rendered judgment for the plaintiff on counts one through four of the complaint, from which the defendant appealed to this court. Subsequently, the trial court granted the plaintiff's motions for attorney's fees, and the defendant filed an amended appeal. On appeal, the defendant claimed, inter alia, that the trial court improperly rendered judgment for the plaintiff on count one because the court previously had dismissed that count. The defendant also claimed that, in light of the trial court's dismissal of count one, the court improperly determined that the defendant had violated the Magnuson-Moss Act (15 U.S.C. § 2310 [d]), as alleged in count two of the complaint, which violation was based on the defendant's alleged failure to comply with its obligations under the implied warranty of merchantability.

         Held:

         1. The trial court improperly rendered judgment for the plaintiff on count one of the complaint; that court clearly and unequivocally rendered a judgment of dismissal as to count one, and, once it did so, the count was effectively removed from the case, and the court had no authority to address the merits of that dismissed count in its final decision or to award damages on the basis of the dismissed cause of action; moreover, even though a trial court has the authority to correct clerical errors in a prior judgment or to clarify or interpret an ambiguous judgment, the trial court never indicated to the parties that it had determined that its prior dismissal of count one was in error, and its subsequent ruling on the merits could not be construed as an implicit reversal, sua sponte, of its prior determination that the plaintiff had failed to present a prima facie case on that count, as that could have unfairly prejudiced the defendant, which did not have an opportunity to present evidence in defense of that count, it having believed that it was dismissed.

         2. The trial court improperly rendered judgment for the plaintiff on count two of the complaint alleging a violation of the Magnuson-Moss Act: because the plaintiff's general theory of recovery with respect to count two hinged on her state law claim in count one, which alleged a violation of the implied warranty of merchantability, the court's dismissal of count one for failure to make out a prima facie case precluded any finding that such a breach formed the basis of a violation of the Magnuson-Moss Act; moreover, the court could not have found that the plaintiff proved a violation of that act on the basis of its finding of a breach of an express warranty, as alleged in count three of the complaint, because the plaintiff never pleaded such a violation.

         3. The trial court improperly awarded the plaintiff attorney's fees as a component of damages under count two of the complaint for the defendant's purported violation of the Magnuson-Moss Act, which contains an express statutory exception to the general rule that a successful party may not recover attorney's fees and ordinary expenses of litigation in the absence of a contractual or statutory exception; in light of this court's determination that the trial court improperly rendered judgment for the plaintiff on count two, the plaintiff could not reasonably rely on the express statutory grant of authority for attorney's fees under the Magnuson-Moss Act as a legal basis for upholding the trial court's award of attorney's fees under that count.

         4. The trial court's finding that the defendant had committed fraud was legally and logically correct and supported by the evidence; the court's finding that the defendant made a false statement by failing to disclose an accurate odometer reading was supported by the evidence and was not clearly erroneous, and the court properly found, on the basis of the evidence presented and inferences reasonably drawn therefrom, that the mileage of the vehicle purchased by the plaintiff was not accurately recorded by the defendant's representatives, the recording failures were a deliberate attempt to record lower mileage, that deceit and misrepresentation were to the detriment of the plaintiff because they impacted her ability to take full advantage of the warranty period, the defendant's actions were intended to induce the plaintiff's reliance on its representations, and the plaintiff purchased the vehicle believing the sale included warranty coverage for 3000 miles, when in fact, due to the defendant's actions, the vehicle warranty would expire after fewer miles, lowering the value of the vehicle and reducing the defendant's potential liability for repairs.

         5. The trial court improperly awarded the plaintiff punitive damages of $15, 000 under count four, which alleged fraud; the court failed to explain the factual basis for its award and had no evidence before it regarding the plaintiff's total litigation expenses, as the plaintiff had submitted an affidavit from her attorney claiming attorney's fees of nearly $7000 but did not provide any evidence from which the court reasonably could have inferred an additional $8000 in nontaxable costs, and, although some award of punitive damages was permissible in conjunction with the fraud count, a new hearing was necessary to determine the actual amount of the plaintiff's litigation expenses, which, in addition to reasonable attorney's fees, would include other nontaxable costs.

         Procedural History

         Action to recover damages for, inter alia, breach of the implied warranty of merchantability, and for other relief, brought to the Superior Court in the judicial district of Waterbury and tried to the court, Brazzel-Massaro, J.; thereafter, the court granted in part the defendant's motion for a judgment of dismissal and rendered judgment for the plaintiff, from which the defendant appealed to this court; subsequently, the court, Brazzel-Massaro, J., granted the plaintiff's motions for attorney's fees, and the defendant filed an amended appeal. Vacated in part; reversed in part; judgment directed; further proceedings.

          OPINION

          PRESCOTT, J.

         In this action for damages arising out of the purchase of a used automobile, the defendant, A Better Way Wholesale Autos, Inc., appeals, following a trial to the court, from the judgment rendered in favor of the plaintiff, Brenda McLeod, on counts one through four of her six count complaint.[1] Counts one through four alleged, respectively, that the defendant breached the implied warranty of merchantability, violated the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act (Magnuson-Moss Act), 15 U.S.C. § 2301 et seq., breached an express statutory warranty, and committed common-law fraud. In total, the court awarded the plaintiff $5435 in actual damages, $15, 000 in punitive damages, and $7045.35 in attorney's fees. The defendant claims on appeal that the court improperly (1) determined that the defendant had breached the implied warranty of merchantability as alleged in count one because that count previously had been dismissed along with counts five and six at the close of the plaintiff's case-in-chief pursuant to Practice Book § 15-8; (2) determined that the defendant had violated 15 U.S.C. § 2310 (d) of the Magnuson-Moss Act, despite the plaintiff's having pleaded that the alleged violation arose from the defendant's breach of the implied warranty of merchantability as alleged in count one, which the court had dismissed because the plaintiff had failed to establish a prima facie case; (3) awarded the plaintiff attorney's fees; (4) determined that the defendant committed common-law fraud without clear and convincing evidence of either a false statement or intent to defraud; and (5) awarded the plaintiff punitive damages on the fraud count.[2] We agree with the defendant as to all but the fourth claim and, accordingly, reverse in part the judgment of the court and remand the case with direction to render judgment in accordance with this opinion and for a new hearing in damages. We otherwise affirm the court's judgment.

         The following facts, as found by the court, and procedural history are relevant to our resolution of the defendant's claims on appeal. The plaintiff lived in Waterbury and commuted to work in Monroe. In September, 2012, she determined that she needed a more reliable automobile, and she visited the defendant's used car dealership and met with one of its sales representatives. During that first visit, she expressed an interest in buying a Jeep that she saw on the sales lot and provided a $500 deposit to hold the vehicle. She returned to the dealership on October 1, 2012, and looked at other vehicles. On that date, she test-drove a 2008 Saab. She expressed her interest in purchasing the Saab and changed her deposit to that vehicle. A retail purchase order was completed and signed by the plaintiff on October 1, 2012. The purchase order indicated that the mileage on the Saab's odometer was 65, 738.

         The vehicle was serviced by the defendant on October 5, 2012. At that time, a repair order was completed that listed the vehicle's mileage as 65, 743.

         The plaintiff returned to the defendant's business on October 10, 2012-this time with her fiancé. They test-drove the Saab for a second time. After the plaintiff indicated that she wanted to purchase the Saab, the defendant prepared the necessary paperwork, which included an invoice, loan documents, registration, an odometer statement, and a new retail purchase order listing the total cash price for the vehicle as $16, 267.67. The October 10, 2012 odometer statement indicated that the Saab had 65, 738 miles. That mileage was identical to the odometer reading listed on the October 1, 2012 retail purchase order, despite the additional test drive that occurred on October 10, 2012. The mileage was also less than the mileage recorded on the October 5, 2012 repair order.

         The plaintiff finalized the purchase and took possession of the Saab on October 17, 2012. When she returned that day, she noted that the car had been returned to the sales lot rather than placed in a secure location. Her understanding was that the vehicle would be separated from other inventory so that it would not be test-driven by other potential customers. She noticed that the Saab had additional miles on the odometer since she first expressed her interest in purchasing it.[3] The defendant did not prepare a new odometer reading on October 17, 2012, when the plaintiff completed the purchase documents and accepted delivery of the Saab. Included among the various purchase documents was a limited express warranty, mandated by statute, covering specified parts for sixty days or 3000 miles, whichever occurred first.[4] See General Statutes § 42-221 (b). The warranty, which was dated October 17, 2012, did not contain a specific odometer reading. In fact, none of the purchase documents indicated the odometer reading as of October 17, 2012, the day of delivery. Although the plaintiff noted a chemical smell coming from the vehicle that day, she was told that this would burn off.

         On Friday, December 7, 2012, during her commute to work, the plaintiff began experiencing problems with the vehicle's operation. The next day, she called the defendant to alert it to the problems and, later that same day, brought the vehicle to the defendant's business. A representative of the defendant drove the vehicle to determine if there was a problem, but the plaintiff was told that the service department was not open on that Saturday and that she needed to return with the vehicle at a later date. No paperwork was completed by the defendant on that date to memorialize the nature of the plaintiff's complaint, the condition of the vehicle, or the vehicle's mileage as of that date.

         The plaintiff returned with the vehicle on the following Monday, December 10, 2012. At that time, a repair order was completed. Although the typed portion of the repair order form indicated that the ‘‘current mileage'' was 65, 743, in the next box designating ‘‘mileage out, '' there is a handwritten indication that the mileage was 68, 931. The form also listed incorrectly the ‘‘delivery date'' as October 3, 2012. Handwritten notes on the form indicated ‘‘needs engine'' and estimated repairs totaling $5000.

         At some point, the defendant informed the plaintiff that the vehicle would need a new engine and that the repairs would not be covered by her warranty because the car was 188 miles over the mileage warranty limit of 3000 miles. The defendant attempted to convince the plaintiff to enter into a new contract with it to replace the vehicle. The plaintiff retained counsel, who, on April 9, 2013, sent a letter to the defendant revoking acceptance of the vehicle and demanding that the defendant return all moneys paid in connection with the purchase of the Saab. The plaintiff filed the present action on January 31, 2014, challenging, inter alia, the defendant's denial of her warranty claim.

         The complaint contained six counts. Count one alleged a breach of the implied warranty of merchantability and asserted that the vehicle was not in merchantable condition when sold to the plaintiff and was not fit for the ordinary purpose for which a car is used. See General Statutes § 42a-2-314 (1) (‘‘[u]nless excluded or modified as provided by section 42a-2-316, a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind'').

         Count two alleged a violation of the Magnuson-Moss Act. Specifically, the plaintiff alleged that the vehicle was a consumer product as defined by the act and that the defendant, as a warrant or under the act, had ‘‘failed to comply with its obligations under the implied warranty of merchantability'' and, thus, was liable to her for ‘‘her damages, reasonable attorney's fees and costs pursuant to 15 U.S.C. § 2310 (d).''[5] (Emphasis added.)

         Count three alleged a violation of the express warranty, in accordance with § 42-221, that she was provided at the time of the sale.[6] In particular, she claimed that the vehicle had been sold with the statutorily required warranty that it would be mechanically operational and sound for at least sixty days or 3000 miles, and that she possessed and controlled the vehicle for less than sixty days and operated the vehicle for less than 3000 miles at the time she reported her operational problems to the defendant.

         Count four alleged that the defendant committed fraud by registering the sale of the vehicle to her with the Department of Motor Vehicles using an odometer reading that was significantly lower than the actual odometer reading on the vehicle as of the date of delivery. The defendant allegedly then used that fraudulently disclosed odometer reading to deny her claim for repairs under the warranty.

         Count five alleged that she had ‘‘justifiably and effectively'' revoked her acceptance of the Saab on April 9, 2013, and that the defendant had refused to return all amounts paid by the plaintiff. See General Statutes § 42a-2-608.[7]

         Finally, count six alleged that the defendant's actions violated the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq. According to the plaintiff, the defendant had engaged in unfair and deceptive acts or practices by, inter alia, committing fraud with respect to the odometer readings and then using that fraud to deny the plaintiff warranty coverage; failing to abide by any implied warranties; and failing to recognize the plaintiff's revocation of acceptance. In addition to damages, the plaintiff sought attorney's fees, costs, and punitive damages pursuant to CUTPA.

         The matter was tried to the court, Brazzel-Massaro, J., on September 16, 2015. At the close of the plaintiff's case, the defendant moved for a judgment of dismissal as to all counts of the complaint on the ground that the plaintiff had failed to make out a prima facie case. See Practice Book § 15-8.[8]

         With respect to count one, the defendant argued that in order to prove a breach of the implied warranty of merchantability, the plaintiff needed to have produced some evidence that the vehicle was not in a merchantable condition at the time the vehicle was sold to her. According to the defendant, the only evidence before the court demonstrated that the vehicle was in proper working condition when it was sold and that it was utilized thereafter by the plaintiff, without difficulties, for a considerable period of time.

         As to count two alleging a violation of the Magnuson-Moss Act, the defendant argued that the act was designed primarily to ensure that warranties were properly disclosed and explained to consumers, and that the plaintiff had presented no evidence demonstrating any disparity or disagreement as to the terms of the ...


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