NISSAN MOTOR ACCEPTANCE CORPORATION v. DALE L. HAWKINS
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RENDERED:
October 19, 2001; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1999-CA-002623-MR
NISSAN MOTOR ACCEPTANCE CORPORATION
APPELLANT
APPEAL FROM TRIMBLE CIRCUIT COURT
HONORABLE DENNIS A. FRITZ, JUDGE
ACTION NO. 96-CI-00054
v.
DALE L. HAWKINS
APPELLEE
OPINION
AFFIRMING IN PART AND REVERSING IN PART
** ** ** ** **
BEFORE:
GUDGEL, CHIEF JUDGE; EMBERTON, AND McANULTY, JUDGES.
McANULTY, JUDGE.
Nissan Motor Acceptance Corporation (NMAC)
appeals from a jury verdict in favor of appellee Dale L. Hawkins
(Hawkins).
The jury verdict rejected NMAC’s breach of contract
claim for damages arising out of the purported lease of a 1996
Nissan Maxima, and awarded damages to Hawkins in his counterclaim
against NMAC under the Kentucky Consumer Protection Act (KRS
367.110 et. seq.) based upon the acts and conduct of NMAC in
conjunction with its efforts to enforce and collect upon the
purported lease.
This is an appeal from a judgment entered upon a jury
verdict, and, consequently, in our review of the facts, all
evidence which favors Hawkins is taken as true, and, further,
Hawkins is given the benefit of all reasonable inferences which
may be drawn from the evidence.
Ky., 6 S.W.3d 829, 830 (1999).
Smith v. Wal-Mart Stores, Inc.,
Pursuant to this standard, the
facts are as follows.
On February 6, 1996, Hawkins took his Nissan pickup
truck to Freedom Nissan in Madison, Indiana, for repair work.
While waiting for the truck repairs, a Freedom Nissan salesman,
Earl Pruitt, approached Hawkins and attempted to interest him in
purchasing a showroom quality gold 1996 Nissan Maxima SE with .2
miles on the odometer, no dents, floormats, and a new car smell.
After test driving the car, Hawkins signed a blank form and put
down a $100.00 deposit for Freedom Nissan to hold the car.
That
night, Pruitt called Hawkins at home and attempted to interest
Hawkins in leasing, rather than purchasing, the vehicle.
The next day, February 7, Hawkins returned to Freedom
Nissan.
Hawkins was met by a Freedom employee who took
possession of Hawkins’ pickup truck.
The employee told Hawkins
that his Nissan Maxima was ready at the front door, that they had
previously filled out the wrong paperwork, and that new paperwork
needed to be filled out on the car.
Hawkins met with Freedom
finance manager Ron Lewis and was again induced into signing
blank forms.
Following that, Hawkins inspected the Nissan he had
supposedly leased and discovered that unlike the one he had test
driven the day before, this Maxima had 200 miles on the odometer,
was dented, had no floor mats, and reeked of cigar smoke.
Recognizing the switch, Hawkins objected and a dispute occurred.
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Lewis then told Hawkins that he had “no choice” and that the car
was “his baby.”
As Freedom had taken possession of his pickup
truck, Hawkins left with the Nissan Maxima.
Prior to leaving, Hawkins was given a copy of the lease
contract.
Upon comparison of Hawkins’ copy of the lease with the
copy Freedom Nissan eventually sent to NMAC upon its assignment
of the lease to NMAC, it is evident that Freedom Nissan made
alterations to the lease documents, crossed out entries, made new
entries, and forged Hawkins’ initials alongside the changes.
The
changes were of sufficient substance and quality as to have put
NMAC on notice that the documents had been materially altered,
thereby vitiating any claim by NMAC to holder in due course
status.
The next day, February 8, Hawkins contacted an
attorney, who advised him to return the car to Freedom Nissan and
park it.
Upon returning to Freedom Nissan, however, Hawkins
discovered that Freedom had ceased operations, all vehicles,
inventory and salespersons were gone, and his own pickup truck
was nowhere to be found.
Also about this time, Hawkins looked in
the glovebox of the Nissan and found documents showing the
vehicle as being listed to Superior Nissan of Nicholasville,
Kentucky.
Hawkins also found in the glovebox a toll-free number
for Nissan Motor Acceptance Corporation, and on February 9, two
days after taking delivery of the vehicle, he made the first of
many calls to the company.
During the February 9 phone call, Hawkins notified NMAC
of the facts surrounding the purported lease of the Maxima,
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including that Freedom Nissan had switched vehicles on him, that
he had attempted to refuse acceptance of the vehicle, and that he
had accepted the vehicle only because Freedom Nissan had left him
no alternative.
Hawkins further informed Nissan that there was
no deal for him to lease the vehicle, that he did not intend to
honor the lease, that he was going to park the car, and that NMAC
could pick it up at their convenience.
In the subsequent weeks, Hawkins continued to call and
complain to NMAC, telling the company’s representatives that the
car was parked on his carport and for them to come and pick it
up.
NMAC, however, was unsympathetic to Hawkins’ problems, did
not accept his claim that there was no lease agreement, did not
accept his invitation to pick up the vehicle, and eventually
turned him in to three credit bureaus for defaulting upon the
lease agreement, resulting in serious damage to Hawkins’ credit
rating.
On June 25, 1996, NMAC filed a Complaint in Trimble
Circuit Court falsely stating that Hawkins was detaining the
Maxima in contravention of NMAC’s interest and seeking possession
of the vehicle.
The suit sought a personal judgment on the lease
agreement of $28,850.43, and a personal judgment for attorney
fees and costs related to the litigation.
On July 6, 1999, a
writ of possession for the Maxima was issued by the trial court,
and the vehicle was subsequently repossessed.
NMAC thereafter
sold the vehicle, applied the proceeds as a credit to Hawkins’
account, and eventually amended its complaint to reflect a demand
for $9,330.11.
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On July 27, 1996, Hawkins filed his answer to NMAC’s
complaint and denied liability under the claims.
Hawkins also
filed a counterclaim against NMAC alleging entitlement to damages
under the Kentucky Consumer Protection Act.
On June 16, 1999, the matter was tried before a jury.
On NMAC’s breach of contract claim against Hawkins, the jury
returned a verdict in favor of Hawkins and awarded NMAC no
monies.
On Hawkins’ counterclaim under the Consumer Protection
Act, the jury returned a verdict in favor of Hawkins and awarded
him damages of (1) $2,945.00 in compensatory damages representing
the difference in the retail value and the trade in value of his
1995 Nissan pickup truck; (2) $100.00 in compensatory damages
representing the deposit he had paid on February 6, 1996, to hold
the showroom Maxima; (3) $75.00 in compensatory damages
representing monies expended for insurance on the delivered
Maxima; and (4) $20,000.00 in punitive damages.
In addition, the
verdict form included the handwritten statement, “We the jury
require NMAC to restore Mr. Dale Hawkins’ credit record to good
standing.”
Judgment pursuant to the jury verdict was thereafter
entered, at which time the trial court additionally awarded
Hawkins $4,284.00 in statutory attorney fees.
KRS 367.220(3).
On July 29, 1999, NMAC filed a motion for a new trial, which was
denied by order dated October 11, 1999.
This appeal followed.
Upon review of the evidence supporting a judgment
entered upon a jury verdict, the role of an appellate court is
limited to determining whether the trial court erred in failing
to grant the motion for directed verdict.
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All evidence which
favors the prevailing party must be taken as true and the
reviewing court is not at liberty to determine credibility or the
weight which should be given to the evidence, these being
functions reserved to the trier of fact.
Kentucky & Indiana
Terminal R. Co. v. Cantrell, 298 Ky. 743, 184 S.W.2d 111 (1944),
and Cochran v. Downing, Ky., 247 S.W.2d 228 (1952).
The
prevailing party is entitled to all reasonable inferences which
may be drawn from the evidence.
Upon completion of such an
evidentiary review, the appellate court must determine whether
the verdict rendered is "'palpably or flagrantly' against the
evidence so as 'to indicate that it was reached as a result of
passion or prejudice.'"
860 (1988).
NCAA v. Hornung, Ky., 754 S.W.2d 855,
If the reviewing court concludes that such is the
case, it is at liberty to reverse the judgment on the grounds
that the trial court erred in failing to sustain the motion for
directed verdict.
Otherwise, the judgment must be affirmed.
Lewis v. Bledsoe Surface Min. Co., Ky., 798 S.W.2d 459, 461-462
(1990).
First, NMAC contends that it did not violate the
Consumer Protection Act.
Specifically, NMAC alleges that (1) the
elements of a Consumer Protection Act violation were not proved,
and (2) the only actual damages incurred by Hawkins were caused
by Freedom Nissan, not by NMAC.
Throughout the trial proceedings NMAC has maintained
that the Consumer Protection Act was inapplicable to this
situation because any prohibited practices under the Act were
committed by Freedom Nissan and not by NMAC.
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Hawkins has stated
in rebuttal that his claim against NMAC was not based upon
Freedom Nissan’s conduct, but, rather, was based upon NMAC’s acts
and practices in its efforts to collect upon a lease that it
knew, or should have known, was bogus and fraudulent.
Among the
unfair practices that Hawkins alleges NMAC engaged in are (1)
filing suit against him to enforce an unenforceable lease; (2)
damaging his credit by reporting him for being in default on what
NMAC knew to be an unenforceable lease; (3) filing a false
affidavit in court stating that he was detaining the vehicle
when, in fact, Hawkins had stated to NMAC that it could pick up
the vehicle; and (4) following the sale of the repossessed
Maxima, filing a motion for summary judgment for an amount that
did not give him credit for the proceeds of the sale of the
vehicle.
KRS 367.220(1) provides the basic framework for a
lawsuit under the Consumer Protection Act.
The statute
authorizes a lawsuit for the recovery of money or property in the
case of a lease as follows:
Any person who . . . leases goods or services
primarily for personal, family or household
purposes and thereby suffers any
ascertainable loss of money or property, real
or personal, as a result of the use or
employment by another person of a method, act
or practice declared unlawful by KRS 367.170,
may bring an action . . . to recover actual
damages. The court may, in its discretion,
award actual damages and may provide such
equitable relief as it deems necessary or
proper. Nothing in this subsection shall be
construed to limit a person's right to seek
punitive damages where appropriate.
Unlawful acts are defined in the Act as "[u]nfair,
false, misleading, or deceptive acts or practices in the conduct
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of any trade or commerce[.]"
means unconscionable.
KRS 367.170(1).
KRS 367.170(2).
The term "unfair"
KRS 367.110(2) defines
“trade” and “commerce” as “the advertising, offering for sale, or
distribution of any services and any property, tangible or
intangible, real, personal, or mixed, and any other article,
commodity, or thing of value, and shall include any trade or
commerce directly or indirectly affecting the people of this
Commonwealth.”
(Emphasis added.)
Based upon the foregoing sections of the Consumer
Protection Act, the elements which Hawkins was required to prove
to maintain a suit against NMAC under the Consumer Protection Act
were as follows:
(1) That Hawkins leased a vehicle for
personal, family or household purposes;
(2) That NMAC was engaged in trade or
commerce with respect to Hawkins’ lease of
the vehicle;
(3) That NMAC engaged in unfair/
unconscionable, false, misleading, or
deceptive acts or practices in conjunction
with Hawkins’ lease of the vehicle; and
(4) That as a result of NMAC’s unfair/
unconscionable, false, misleading, or
deceptive acts or practices, Hawkins suffered
an ascertainable loss of money or property.
With respect to the first element, it is, of course,
undisputed that Hawkins leased, albeit under allegedly fraudulent
circumstances, a 1996 Nissan Maxima.
With respect to element
(2), we are persuaded that NMAC engaged in trade or commerce in
that, in the terminology of KRS 367.110(2), NMAC “distribut[ed]
. . . [a] service . . . directly or indirectly affecting the
people of this Commonwealth.”
Specifically, NMAC distributed the
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service of servicing an automobile lease contract which directly
affected Hawkins.
Contrary to NMAC’s position, assignees of
automobile lease contracts who thereafter service those leases to
citizens of the Commonwealth engage in “trade and commerce”
within the meaning of the Consumer Protection Act.
Element (3) was a factual issue for the jury.
The jury
determined that NMAC engaged in unfair, i.e., unconscionable,
false, misleading, or deceptive acts or practices in conjunction
with its attempts to enforce the lease.
The terms "false,
misleading and deceptive" has sufficient meaning to be understood
by a reasonably prudent person of common intelligence.
Dare to
be Great, Inc. v. Commonwealth, ex rel. Hancock, Ky., 511 S.W.2d
224 (1974).
Therefore, when the evidence creates an issue of
fact regarding whether any particular action is unfair, false,
misleading or deceptive, it is to be decided by a jury.
Stevens
v. Motorists Mut. Ins. Co., Ky., 759 S.W.2d 819, 820 (1988).
In
this case, the issue was referred to the jury in Instruction No.
2, and the jury decided this issue adversely to NMAC.
The jury’s
decision was not so palpably or flagrantly against the evidence
so as to indicate that it was reached as a result of passion or
prejudice, and must accordingly be upheld.
NCAA v. Hornung,
supra.
With respect to element (4), we are persuaded that two
components of the compensatory damages award must be reversed.
The jury awarded Hawkins compensatory damages of (1) $2,945.00,
which represents the difference in the retail value and trade-in
value of his trade-in 1995 Nissan pickup truck; (2) $100.00,
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which represented a $100.00 deposit paid to Freedom Nissan; and
(3) $75.00 in insurance costs Hawkins purchased for the Nissan
Maxima, which represents additional insurance costs in excess of
his insurance costs on the trade-in Nissan pickup.
KRS 367.220(1) provides for the recovery of damages for
“any ascertainable loss of money or property, real or personal,
as a result of the use or employment of another person of
[methods or practices which are]” read in conjunction with KRS
367.170(1), “unfair, false, misleading, or deceptive[.]”
(Emphasis added).
In summary, any monies recoverable by Hawkins
must be losses incurred “as a result of” NMAC’s improper debt
collection practices and, conversely, Hawkins may not recover for
losses solely caused by the unfair acts and practices of Freedom
Nissan.
We are unable to identify a nexus between the $2,945.00
in damages awarded in conjunction with Hawkins’ loss of his
trade-in vehicle and any unfair acts committed by NMAC following
its acceptance of the assignment of the lease.
We have a similar
difficulty with the award for the $100.00 deposit Hawkins paid to
Freedom Nissan in conjunction with the anticipated purchase of
the showroom Nissan Maxima.
These losses appear to be
exclusively associated with the improper acts of Freedom Nissan.
For purposes of reviewing the damages associated with
the trade-in vehicle and the deposit, it is beneficial to return
to the date of February 9, 1996, the day that Hawkins first
communicated with Nissan regarding the problem with the lease.
If, on that day, NMAC had acknowledged the invalidity of the
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lease, it would appear that all it was in a position to do, and
all that it would have been obligated to do, was to acknowledge
the rescission of the lease, retrieve the Maxima, and make no
further demands upon Hawkins with respect to the lease.
We fail
to comprehend the theory under which NMAC would be responsible
for any losses associated with Freedom Nissan’s absconding with
Hawkins’ trade-in pickup truck.
That conversion was committed
exclusively by Freedom Nissan, and was not related to the unfair
collection practices engaged in by NMAC on and after February 9,
1996.
Hawkins is not entitled to collect damages from NMAC
relating to his loss of the pickup truck, and we accordingly
reverse the jury verdict insofar as it awarded damages for this
loss.
Similarly, there is no nexus between Hawkins’ loss of
his $100.00 deposit and NMAC’s unfair collection practices.
The
$100.00 deposit was remitted to Freedom Nissan on February 6,
1996, to hold the showroom Maxima in anticipation of a purchase.
Ultimately, apparently due to Freedom’s deception, the purchase
agreement was never consummated, and, instead, Hawkins was
deceived into entering into a fraudulent lease which was
eventually assigned to NMAC.
As the $100.00 loss was unrelated
to any unfair acts engaged in by NMAC in conjunction with its
unfair practices in attempting to enforce the lease, the award
for the $100.00 deposit must be reversed.
There is a sufficient nexus between the $75.00 award
for insurance costs and the acts of NMAC to sustain that award.
The $75.00 award represents the additional insurance Hawkins was
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required to pay over and above the insurance premiums on his
pickup truck.
Had NMAC timely complied with Hawkins’ request
that it retrieve the Maxima, conceded that the lease was obtained
by fraud, and ceased all collection efforts on the lease, it
appears that the additional insurance expense would have been
avoided.
Next, NMAC contends that permitting a consumer to bring
a counterclaim against an assignee of a debt would result in an
unnecessary and unwarranted expansion of the Consumer Protection
Act because Kentucky law already provides a remedy for the
wrongful conduct alleged in this case.
Specifically, NMAC
contends that in lieu of filing a counterclaim under the Consumer
Protection Act, Hawkins could have (1) filed a motion for summary
judgment and then sought sanctions under Civil Rule 11, or (2)
obtained dismissal of the case and then filed a malicious
prosecution action.
We disagree.
The availability of alternative litigation strategies
and theories is not a basis for barring a lawsuit under the
Consumer Protection Act.
In fact, had he chosen to, in addition
to his Consumer Protection Act claim, Hawkins may have also
decided to pursue the theories suggested by NMAC.
In his
pleadings, a plaintiff may assert alternative, or even
inconsistent, theories of recovery.
CR 8.05(2);
Smith v.
Isaacs, Ky., 777 S.W.2d 912, 915 (1989).
Next, NMAC contends that if the Consumer Protection Act
does apply in this case, then the section of the act which should
apply is KRS 367.610, the specific section addressing assignee
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liability, rather than the general sections relied upon by
Hawkins.
We disagree.
KRS 367.610 provides, in relevant part, as follows:
With respect to any consumer credit contract
taken in connection with any . . . lease of
goods or services . . . an assignee of the
rights of the . . . lessor is subject to all
defenses of the buyer against the . . .
lessor arising out of the . . . lease
notwithstanding an agreement to the contrary,
but the assignee's liability under this
section may not exceed the amount owing to
the assignee at the time the defense is
asserted against the assignee. Rights of the
. . . lessee under this section can only be
asserted as a matter of defense to or set off
against a claim by the assignee.
KRS 367.610 specifically addresses the assignment of a
consumer credit contract and provides the consumer with defenses
in a lawsuit brought by the assignee of the contract against the
consumer based upon acts which the assignor of the contract
committed irrespective of whether the assignee is a holder in due
course.
Nothing in the language of the statute, however,
precludes a consumer from using other provisions of the Act to
offensively bring a lawsuit as a plaintiff against the assignee
for acts which the assignee alone committed.
In this case, KRS 367.610, independent of the holder in
due course rules, would permit Hawkins to assert his defenses
with respect to Freedom Nissan against NMAC.1
However, the
limiting language of the statute, i.e., the reference to “the
assignee’s liability under this section,” does not preclude
1
For some reason Hawkins did not raise this issue in his
pleadings or at trial, and the jury instructions did not reflect
the existence of this statute.
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Hawkins from suing under the general provisions of the Consumer
Protection Act for violations of the Act committed by NMAC
independent of the violations committed by Freedom Nissan.
KRS
367.610 is intended to permit a consumer to assert defenses he
has with respect to the original lessor against the assignee of
the lease, regardless of whether the assignee is a holder in due
course.
It does not follow that the assignee of the lease is
thereby granted immunity from all other provisions of the Act,
which would be the result under the interpretation urged by NMAC.
NMAC’s interpretation of the section produces an irrational
result, and we reject its interpretation.
Next, NMAC contends that, pursuant to the holding in
Ford Motor Company v. Mayes, Ky. App. 575 S.W.2d 480 (1978), the
Consumer Protection Act does not provide an independent basis for
punitive damages, and because Hawkins’ counterclaim was based
exclusively upon liability under the Consumer Protection Act,
Hawkins was required to specifically, in his pleadings, demand
punitive damages.
NMAC argues that since Hawkins did not, in his
pleadings, specifically demand recovery of punitive damages, then
he was not entitled to an instruction on punitive damages.2
We
disagree.
NMAC is correct that Ford Motor held that the Consumer
Protection Act does not provide an independent claim for punitive
damages, and that in his answer and counterclaim, Hawkins did not
specifically request punitive damages.
2
However, in his answer
While this provision is contained in Chapter 367, it is not part of the Consumer
Protection Act, see 367.120(2), and this is a mischaracterization by NMAC.
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and counterclaim Hawkins requested that the court “grant him
judgment against [NMAC] on his Counterclaim herein, together with
such other relief to which he may be entitled[.]” (Emphasis
added).
Moreover, subsequent to Ford Motor the legislature
enacted KRS 411.186, which provides statutory authority for the
awarding of punitive damages.
We are persuaded that Hawkins’
counterclaim, the relief requested therein, and KRS 411.186
entitled him to a punitive damages instruction.
See CR 54.03(2);
Fergerson v. Utilities Elkhorn Coal Co., Ky., 313 S.W.2d 395
(1958).
Next, NMAC contends that the punitive damages
instruction violated the holdings of Pacific Mutual Life
Insurance Co. V. Haslip, 499 U.S. 1, 111 S.Ct. 1032, 113 L.Ed. 1
(1991), and Hanson v. American National Bank, Ky., 865 S.W.2d 302
(1993).
Haslip and Hanson hold that instructions to the jury
must define the purpose of punitive damages as punishment to the
wrongdoer and as a deterrent to wrongdoers and others from such
activities in the future.
While NMAC did oppose the giving of a
punitive damages instruction, in its brief, NMAC does not cite us
to its objection to the exclusion of a Haslip instruction or its
tendering of such an instruction as required by CR
76.12(4)(c)(iv) (requiring an argument to contain "a statement
with reference to the record showing whether the issue was
properly preserved for review and, if so, in what manner.”
argument is accordingly not preserved for our review.
This
CR 51(3);
Owens-Corning Fiberglas Corp. v. Golightly, Ky., 976 S.W.2d 409,
416 (1998).
It is well established that error must be precisely
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preserved and identified in the trial court before it can be
considered by an appellate tribunal.
S.W.2d 947 (1986).
Skaggs v. Assad, Ky., 712
This rule has arisen because the appellate
court is under no duty to search the record for errors of law,
Ventors v. Watts, Ky. App., 686 S.W.2d 833 (1985), and as such,
the appellant must identify the alleged error with specificity.
Young v. Newsome, Ky., 462 S.W.2d 908 (1971).
In conjunction with the above argument, NMAC contends
that the $20,000.00 punitive damages award was excessive.
We
disagree.
A reviewing court may not substitute its judgment for
that of the jury as to the appropriate amount of exemplary
damages.
Hanson v. American National Bank and Trust Company,
Ky., 865 S.W.2d 302, 311 (1993).
The question of whether a
jury's verdict is excessive is within the trial court's
discretion, and an award will be overturned only if there has
been an abuse of discretion.
928, 932-933 (1984).
Davis v. Graviss, Ky., 672 S.W.2d
In this case, there was no such abuse.
The
purpose of punitive damages is to punish an entity for engaging
in impermissible conduct.
See KRS 411.184(1)(f) (punitive
damages are "awarded against a person to punish and to discourage
him and others from similar conduct in the future").
In this case, Hawkins described a three-year pattern of
oppression by NMAC.
According to Hawkins’ testimony, NMAC
arrogantly refused to listen to his reasonable request to rescind
the contract based upon Freedom Nissan’s fraud, destroyed his
credit under false pretenses, and filed a lawsuit into the public
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records in which it falsely accused Hawkins of detaining the
vehicle, though in fact Hawkins had invited and encouraged NMAC
to pick up the vehicle within a few days of his forced possession
of it.
In view of this conduct, we will not disturb the jury’s
punitive damages award.
Next, NMAC contends that the trial court erred when it
failed to direct a verdict in its favor on its breach of contract
claim, and that the trial court improperly instructed the jury on
the claim.
We disagree.
Construing the evidence presented at trial in the light
most favorable to Hawkins, the lease contract submitted by
Freedom Nissan to NMAC contained sufficient alterations and
changes to place NMAC on notice that the contract had been
materially altered by Freedom Nissan.
It follows that NMAC was
not a holder in due course, and that Hawkins was entitled to
assert any defenses to the lease contract he had with respect to
Freedom against NMAC.
F.D.I.C. v. Gamaliel Farm Supply, Inc.,
Ky. App., 726 S.W.2d 709, 711 (1987).
Since the evidence further
showed that Freedom obtained the lease contract by fraud, Hawkins
was entitled to assert fraud in the inducement as a defense
against NMAC.
Gamaliel at 712.
Based upon the fraud committed
by Freedom Nissan, it was not palpably and flagrantly against the
evidence for the jury to return a verdict in favor of Hawkins,
and NMAC was not entitled to a directed verdict.
In conjunction with the above argument, NMAC also
complains that the trial court improperly instructed the jury
regarding the effect of a finding that NMAC was not a holder in
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due course.
NMAC contends that in the event that it was found
not to be a holder in due course, then the jury should have been
further instructed regarding any affirmative defenses Hawkins had
against Freedom Nissan assertable against NMAC.3
NMAC, however, has failed to provide citations to the
record demonstrating that it requested and tendered to the trial
court such an instruction.
issue on the merits.
Therefore, we will not address this
See CR 51(3); CR 76.12(4)(c)(iv); Owens-
Corning Fiberglas v. Golightly, supra; Skaggs v. Assad, supra;
Ventors v. Watts, supra; and Young v. Newsome, supra.
Finally, NMAC contends that it is entitled to a new
trial because the trial court improperly restricted its access to
discovery from Hawkins.
According to NMAC, the only pretrial
information it was able to obtain directly from Hawkins about the
case was through a telephone deposition on March 25, 1999, and
that as a result of a tape recorder malfunction, it was unable to
record the deposition.
NMAC further contends that Hawkins failed
to respond to certain written discovery requests until the day
before trial.
The standard of review on appeal of a trial
court’s rulings regarding sanctions for a discovery violation is
whether the trial court abused its discretion.
Greathouse v.
American Natl. Bank & Trust Co., Ky. App., 796 S.W.2d 868, 869870 (1990).
3
Jury Instruction No. 1 stated “If the jury reasonably
believes according to the evidence that Nissan Motor Acceptance
Corp. took the assignment of the written lease, for value, in
good faith and without notice that the lease contains
unauthorized signatures or contains material alterations such as
to call into question its authenticity then you are to find for
Nissan, otherwise you are to find for Dale Hawkins.”
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This case was filed in June 1996; trial was held in
June 1999.
NMAC, in other words, had three years to pursue a
deposition.
It appears that NMAC did depose Hawkins
telephonically in March 1999, but because of its own
technological errors, it did not receive the full benefit of the
deposition.
Regarding the written discovery, it does not appear
that NMAC filed a motion to compel discovery pursuant to CR
37.01, and, upon considering the circumstances of the case, we
are not persuaded that the trial court abused its discretion in
its rulings with respect to the discovery issues raised by NMAC.
The judgment is affirmed in part and reversed in part.
EMBERTON, JUDGE, CONCURS.
GUDGEL, CHIEF JUDGE, CONCURS IN PART AND DISSENTS IN
PART.
GUDGEL, CHIEF JUDGE, CONCURRING IN PART AND DISSENTING
IN PART: The majority opinion sanctions the maintenance of a
cause of action against appellant under the Consumer Protection
Act (act) for false, misleading, and deceptive acts and practices
in the conduct of trade or commerce, even though appellant’s
business activities simply do not fall within the plain meaning
of the language used to define the words “trade” and “commerce”
for purposes of liability under that act.
See KRS 367.110(2).
Because the majority opinion impermissibly expands the act’s
scope of liability in disregard of sound principles of statutory
construction and without the citation of any supporting
authority, I must respectfully dissent in part from that opinion.
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KRS 367.220 confers a right upon consumers to bring
actions for damages against persons who have employed methods,
acts, or practices declared unlawful by KRS 367.170.
KRS
367.170(1) specifies that unlawful acts include “[u]nfair, false,
misleading, or deceptive acts or practices in the conduct of any
trade or commerce . . . .”
For purposes of KRS 367.170, “trade”
and “commerce” are defined by KRS 367.110(2) as meaning
the advertising, offering for sale, or
distribution of any services and any
property, tangible or intangible, real,
personal or mixed, and any other article,
commodity, or thing of value, and shall
include any trade or commerce directly or
indirectly affecting the people of this
Commonwealth.
KRS 367.120 provides that the act is intended to apply to
“sellers of goods and services.”
Given these statutory provisions, it is clear that
unless the assignment of the lease contract between appellee and
the car dealer amounted to either the sale of goods and services
by appellant, or the “advertising, offering for sale, or
distribution of any services and any property,” appellant can
have no liability to appellee under KRS 367.170.
367.110(2).
See KRS
Unlike the majority, I am convinced that for
purposes of the act, appellant’s business activities as a matter
of law did not amount to either the sale of goods or services, or
the conduct of trade or commerce.
The record shows that appellant basically is a finance
company which engages in the business of acquiring discounted car
loans and leases from car dealers by assignment, and that it
purchased the disputed lease herein from the car dealer which
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leased a vehicle to appellee.
In a nutshell, the majority
concludes that for purposes of KRS 367.110(2), appellant
distributes services to the public and therefore engages in
“trade” or “commerce” by conducting a finance company business
which purchases discounted car loans and leases from car dealers.
I find nothing in the statute’s language to justify such a
conclusion.
Unlike a company which sells pest control, plumbing, or
other services to consumers, appellant merely provides the risk
capital used by car dealers to finance sales and leases of
automobiles to consumers.
In my opinion, by no stretch of the
imagination can such a process be deemed to constitute the sale
or distribution of services to consumers.
The majority not only
fails to cite any authorities to support its views, but its
conclusions are unwarranted as extending the scope of the act far
beyond its intended purpose.
This is especially true here since,
unlike the typical situation between a consumer and a seller of
goods or services, the parties had no direct dealings with one
another until after appellant was assigned the car lease.
Further, the absence of applicable citations of authority to
support the majority’s view suggests that no other courts have
reached conclusions similar to the majority’s, even though the
marketplace includes numerous finance companies which operate
businesses like appellant’s.
Even more important is the fact
that, in a subsection entitled “Consumer Credit Contracts,”
Chapter 367 specifically addresses the type of contract now
KRS
before us.
See KRS 367.600 and KRS 367.610.
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A review of the
statutes in that subsection clearly shows that they, rather than
KRS 367.170, govern the parties’ rights herein.
Because I believe that KRS 367.170 as a matter of law
does not apply to appellant’s business, I would reverse so much
of the court’s judgment as awards compensatory damages, punitive
damages, and attorney fees against appellant with regard to
appellee’s KRS 367.220(1) claims.
However, I agree that the
court’s judgment should be affirmed insofar as it adjudges that
appellant is not entitled to recover the balance due on the lease
contract itself.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Peter M. Gannott
Charlie Gordon
Mapother & Mapother
Louisville, Kentucky
Ruth H. Baxter
Crawford & Baxter, P.S.C.
Carrollton, Kentucky
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