Jensvold v. Town & Country Motors, Inc.

JENSVOLD_V_TOWN_AND_COUNTRY_MOTORS.93-186; 162 Vt. 580; 649 A.2d 1037


[Filed:  14-Oct-1994]

 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
 as well as formal revision before publication in the Vermont Reports. Readers
 are requested to notify the Reporter of Decisions, Vermont Supreme Court, 109
 State Street, Montpelier, Vermont 05609- 0801 of any errors in order that
 corrections may be made before this opinion goes to press. 


                              No. 93-186


 Chris Jensvold and Fred Abraham           Supreme Court
 d/b/a Brook Auto
                                            On Appeal from
        v.                                  Washington Superior Court

 Town & Country Motors, Inc.,               March Term, 1994
 Charles S. Breckenridge

 Stephen B. Martin, J.
 
 Stephen S. Blodgett of Blodgett, Watts & Volk, Burlington, for
 plaintiffs-appellees 
 
 Leighton C. Detora of Valsangiacomo, Detora & McQuesten, P.C., Barre, for
 defendant- appellant 
 
 
 
 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.
 
 
 
 
 Johnson, J.   This case involves the sale of a used car by Town & Country
 Motors to Chris Jensvold and Fred Abraham doing business as Brook Auto, an
 automobile wholesaler. After the purchase, plaintiffs discovered the car was
 "clipped," which means it was made up of parts of two vehicles welded together
 to form one vehicle after each of the composite vehicles had suffered damage. 
 The car consisted of the front of one Audi welded to the back of another. The
 parties appeal from both the trial court judgment for the buyers and the
 damages award. 

 

 Seller argues that the court erroneously found it liable for damages to the
 buyers for fraud and breach of the implied warranty of merchantability.  9A
 V.S.A.  2-314 (implied warranty of merchantability). Buyers argue the court
 should have found seller liable for damages under the Salvage Title Act, 23
 V.S.A.  2093.  We affirm in part, reverse in part, and remand for
 redetermination of damages. 

 On December 27, 1988, Town & Country sold Jensvold, on behalf of Brook Auto, a
  used Audi for $4,500.  Town & Country had taken the Audi as a trade-in from a
 third-party, who told Town & Country that the vehicle was clipped but that the
 title was "clean" in that it did not indicate that the car was salvaged or
 clipped.  Although Town & Country knew the vehicle was clipped, it did not
 disclose the fact to Jensvold.  After looking over the vehicle, Jensvold
 purchased it "as is." 
 
 When Jensvold purchased the car it had visible body damage from an accident
 that had occurred after the car was clipped.  Jensvold repaired the damage for
 $1,300 and began marketing the car.  In January 1989, a prospective
 purchaser's mechanic discovered a dent in the floor and a seam between the two
 halves.  The prospect declined to purchase the car and explained why.  In
 response, Jensvold called the Motor Vehicle Department to check the title's
 status and confirmed that the title was clean. 
 
 In April 1989, Jensvold took the Audi to a dealer to have it shown to
 prospective purchasers.  This dealer informed Jensvold that the Audi was, in
 fact, clipped.  Jensvold then took the car back to Town & Country and demanded
 an immediate refund of the purchase price along with the cost of his repairs. 
 At that time, Jensvold had driven the car 7,000 miles.  The trial court found
 that Jensvold, "not obtaining satisfaction," left Town & Country and took the

 

 car with him.  On May 4, 1989, Jensvold's lawyer wrote a letter to Town &
 Country stating that Jensvold was revoking his acceptance of the car, and that
 Jensvold would return it to Town & Country at a place and time that was
 mutually convenient.  Jensvold's lawyer also stated that unless arrangements
 were made in ten days, Jensvold would, at his election, either return the
 vehicle and tender title to it, or take such action as was deemed appropriate.
 Town & Country did not agree to take the Audi back.  Jensvold stopped
 marketing the car, but used it personally, driving it an additional 20,000
 miles. 
 
 The trial court found that Town & Country had misrepresented the condition of
 the car, breached the implied warranty of merchantability, misrepresented the
 odometer reading, and failed to comply with 23 V.S.A.  2093(b), which
 requires the seller of any salvaged, rebuilt, or totaled vehicle to disclose
 that fact to the purchaser.  The trial court concluded, however, that buyers
 were not entitled to a refund of the purchase price pursuant to 23 V.S.A. 
 2093(c) because they elected to keep the automobile rather than return it. 
 The court awarded plaintiffs damages consisting of the difference between the
 purchase price paid and the actual value of the vehicle in its clipped
 condition, plus the cost of repair, lost profits, and costs. 

                                 I.

 It is first necessary to determine whether there is a basis of liability on
 any of the disputed grounds -- violation of the Salvage Title Act, fraud, and
 breach of warranty of merchantability. (FN1) We will then address the parties'
 arguments regarding damages. 

 

                                 A.

 Vermont's Salvage Title Act requires "[a]ny person who sells . . . or offers
 for sale . . . any interest in a salvaged, salvaged and rebuilt or totaled
 vehicle [to] disclose the fact that the vehicle has been salvaged, salvaged
 and rebuilt or totaled to a prospective purchaser both orally and in writing
 before a sale, trade or transfer is made."  23 V.S.A.  2093(b).  If a seller
 fails to comply with the notice requirements of the Salvage Title Act, "the
 seller [is] required, at the option of the buyer, to refund to the buyer the
 purchase price, including taxes, license fees and similar governmental
 charges."  Id.  2093(c).  The statute imposes strict liability for violation
 if the buyer opts for a refund. 

 The trial court held that while defendant had violated the Salvage Title Act,
 plaintiffs were not entitled to recover the purchase price under that statute
 because plaintiffs elected to keep the vehicle rather than return it.  The
 court's conclusion that plaintiffs elected to keep the car cannot be
 reconciled with the findings and must be reversed.  Dartmouth Savings Bank v.
 F.O.S. Assocs., 145 Vt. 62, 66, 486 A.2d 623, 625 (1984) ("misapplication of
 law to supported . . .  findings is subject to correction on appeal"); Stevens
 v. Cross Abbott Co., 129 Vt. 538, 544, 283 A.2d 249, 253 (1971) ("when
 conclusion of law is inconsistent with facts that underlie such conclusion,
 [it will] fail to stand").  The trial court found that Jensvold "took the Audi
 back to Town & Country and demanded an immediate refund of the purchase price
 together with the cost of his repairs."  The court further found that "not
 obtaining satisfaction, Jensvold left Town & Country taking the Audi with
 him."  In addition, the court found that buyers' lawyer wrote to Town &
 Country and advised that they were revoking acceptance and that buyers would
 return the Audi at a time and place that was mutually convenient.  Jensvold's
 visit to Town & 

 

 Country and the attorney's letter were each independently sufficient to notify
 the seller that the buyers did not want the vehicle and did not desire to
 retain it.  In both cases, seller rejected the offer to return the vehicle. 

 The trial court's conclusion that buyers elected to keep the car was
 undoubtedly based on Jensvold's personal use of the car.  The Salvage Title
 Act does not, however, condition a buyer's remedy on anything more than an
 implied offer to return the vehicle for a refund of the purchase price.  See
 23 V.S.A.  2093(c).  If this Court were to read any greater obligation into
 the statute, we would undermine  2093(c), which provides the buyer with the
 option of requiring a refund.  In many cases, because of economic
 circumstances, a seller's refusal to refund the purchase price would force the
 buyer to retain and use the vehicle.  Thus, if we were to adopt the trial
 court's reading, any seller could deprive a buyer of this statutorily created
 remedy by refusing to refund the purchase price and forcing the buyer to
 retain the vehicle.  In light of the strict liability imposed by the statute
 and our concern that any other interpretation would frustrate the purpose of
 the statute, we conclude that after an offer to tender the vehicle for a
 refund is rejected, a buyer's use of the vehicle does not nullify the offer. 
 In this case, plaintiffs are entitled to a refund of their purchase price,
 $4,500, and taxes, license fees and similar governmental charges.  Id. 
 2093. 

 Plaintiffs' continued use of the vehicle, however, is not without consequence.
 Seller is entitled to a setoff equivalent to the value of the use of the
 vehicle under general equitable principles even though  2093 is silent on
 the subject.  See Tom Bush Volkswagen, Inc. v. Kuntz, 429 So. 2d 398, 399
 (Fla. Ct. App. 1983) (setoff for use of automobile before revocation proper);
 McCullough v. Bill Swad Chrysler-Plymouth, 449 N.E.2d 1289, 1294 n.4 (Ohio
 1983) 

 

 (setoff for use of automobile after revocation proper if reasonable). The
 burden of proof is on the seller to prove its damages as a result of the use. 
 Jones v. Abriani, 350 N.E.2d 635, 644 (Ind. 1976).  We also note that "[w]here
 the decrease in the value of the goods is due to their own defects, rather
 than the use of the goods by the buyers, there would be little provable
 damage."  Id.  Neither should the buyer be charged with the reduction in the
 value of the vehicle attributable to the passage of time, because it was the
 seller's refusal to accept the vehicle that led to that damage.  In no event
 should the amount of the offset exceed the market value of the vehicle when
 sold to the buyer, taking into account its undisclosed salvaged or rebuilt
 condition. Accordingly, we must remand the case to the trial court for a
 determination of the setoff. On remand, our holding will require the trial
 court to redetermine the market value of the automobile in its clipped
 condition.  In this case, the court found the market value to be $3000, but
 after plaintiffs had spent $1300 for body work.  Seller challenges that amount
 on appeal.  Both parties presented methods to determine the vehicle's actual
 value in its clipped condition, but the trial court did not explain how it
 derived the $3,000 figure.  Where the evidence conflicts, the tribunal must
 state clearly what evidence it credits and why, so that the parties and this
 Court will know how the decision was reached.  Corrette v. Town of St.
 Johnsbury, 140 Vt. 315, 316, 437 A.2d 1112, 1113 (1981). 

                                    B.

 The trial court also found seller liable for misrepresentation and awarded
 buyers damages for fraud.  The only argument seller makes on appeal against
 liability on a misrepresentation theory is that because Jensvold is a merchant
 and had a reasonable opportunity to inspect the car, he should be deemed to
 have accepted the car with full knowledge of the defect pursuant to 9A 

 

 V.S.A.  2-606(1). 

 Seller's argument, based on  2-606(1),(FN2) appears to be that Jensvold had
 an equal opportunity to discover the clipping and therefore seller is not
 liable for misrepresentation.  See Union Bank v. Jones, 138 Vt. 115, 121, 411 A.2d 1338, 1342 (1980) (no action lies for fraud if misrepresentation was
 "open to the defrauded party's knowledge").  The trial court found that
 because of the way Audis are built, the presence of a seam would not alone
 indicate the vehicle was clipped.  It also found that it was not necessary
 Jensvold to check whether the Audi was clipped because clipped automobiles are
 rare in Vermont and that Jensvold had no reason to believe Town & Country
 would sell him a clipped vehicle.  The trial court did not err in rejecting
 seller's argument.  Accordingly, buyers are entitled to damages for fraud.
 This Court has adopted a flexible approach to calculating damages in fraud
 cases. Kramer v. Chabot, 152 Vt. 53, 57, 564 A.2d 292, 294 (1989).  In
 general, it is within the trial court's discretion to determine the best
 measure of damages to compensate the injured party. Id.  Here, the trial court
 awarded plaintiffs $1,300 for the repair of the vehicle's body damage, and
 $1,200 for lost profits.  Under the circumstances of this case, the award was
 reasonable. Recovery for the cost of repair to the vehicle was reasonable as
 consequential damages.  See Mitchell v. White Motor Credit Corp., 627 F. Supp. 1241, 1252 (D. Tenn. 1986) ("The purchaser who has been the victim of fraud or
 mistake . . . may recover, in addition to the 

 

 purchase price, other damages which he or she incurred in good faith by reason
 of the fraud or mistake, such as the cost of improvements.").  Award of lost
 profits was also proper.  Under 9A V.S.A.  2-721, which provides that
 "[r]emedies for material misrepresentation or fraud include all remedies
 available under [Article 2 of the Uniform Commercial Code] for non- fraudulent
 breach," plaintiffs are entitled to their lost profits.  See Deerfield
 Commodities v. Nerco, Inc., 696 P.2d 1096, 1112 (Or. Ct. App.), reh'g denied,
 702 P.2d 1111 (Or. 1985) (lost profits proper since Oregon codified U.C.C.
 provision extending all remedies for fraud and misrepresentation).  Moreover,
 because plaintiffs were wholesalers, lost profits were foreseeable and
 compensable. 3 E. Farnsworth, Farnsworth on Contracts  12.11 at 218, 
 12.14, at 250 (1990). 

 Buyers also argue on appeal that the trial court should have awarded punitive
 damages for seller's fraud.  Seller argues that buyers abandoned their claim
 for punitive damages by failing to raise it in their Requests to Find.  Buyers
 respond that they requested punitive damages in their complaint and trial
 memorandum and that this was sufficient to preserve the claim.  The claim for
 punitive damages, even though it was not raised in the buyers' requests to
 find, is not abandoned.  See Lewis v. Cohen, 157 Vt. 564, 572, 603 A.2d 352,
 356 (1991) (issue is preserved if plaintiff fairly presented issue when it
 pleaded claim and briefed claim to the court). Plaintiff included the claim
 for punitive damages in both the Complaint and in the Plaintiff's Trial
 Memorandum.  The trial court did not address the issue of punitive damages in
 its final order.   While the court denied numerous specific damage requests in
 its conclusions of law, it did not resolve the claim for punitive damages. 
 Therefore, we must remand the issue of punitive damages for a proper
 determination by the trial court.  See Id. ("Where a trial court has failed

 

 to resolve a claim made to it, the proper remedy is for us to remand."). 

                                   C.

 Town & Country argues that it should not be held liable for breaching the
 implied warranty of merchantability.  We agree, but not for the reasons argued
 by seller.  In this case, because buyers are returning the vehicle for refund
 of the purchase price, breach of warranty damages, which are acceptance
 damages, are not applicable.  See Costa v. Volkswagen of America, 150 Vt. 213,
 220, 551 A.2d 1196, 1201 (1988) ("Acceptance damages are not applicable where
 acceptance has been revoked."), overruled on other grounds by Goochey v.
 Bombardier, Inc., 153 Vt. 607, 613, 572 A.2d 921, 925 (1990). The order of the
 Washington Superior Court, dated February 25, 1993, to the extent that it
 denied plaintiffs recovery under 23 V.S.A.  2093(c), and granted recovery
 for breach of implied warranties of merchantability under 9A V.S.A.  2-314
 is reversed; the cause is remanded for the purpose of determining damages
 consistent with this opinion.  In all other respects the order is affirmed. 


                                         
                                         _______________________________
                                         Associate Justice


         
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                               Footnotes

FN1.    Plaintiffs may have been able to state a claim that they revoked
 acceptance under 9A V.S.A.  2-608; but, they did not raise it, and the trial
 court did not find liability on that theory. We, therefore, do not address
 defendant's arguments against liability under that statute. 

FN2.    Section 2-606(1) states in relevant part:
                                                                               
        Acceptance of goods occurs when the buyer        

    (a)  After a reasonable opportunity to inspect the goods signifies to
 the seller that the goods are conforming or that he will take or retain them
 in spite of their non- conformity. 

------------------------------------------------------------------------------
 

                            Concurring and Dissenting

 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
 as well as formal revision before publication in the Vermont Reports.  Readers
 are requested to notify the Reporter of Decisions, Vermont Supreme Court, 109
 State Street, Montpelier, Vermont 05609- 0801 of any errors in order that
 corrections may be made before this opinion goes to press. 


                                No. 93-186


 Chris Jensvold and Fred Abraham           Supreme Court
 d/b/a Brook Auto
                                           On Appeal from
   v.                                      Washington Superior Court
 
 Town & Country Motors, Inc.,              March Term, 1994
 Charles S. Breckenridge


 Stephen B. Martin, J.
 
 Stephen S. Blodgett of Blodgett, Watts & Volk, Burlington, for plaintiffs-    
  appellees 
 
 Leighton C. Detora of Valsangiacomo, Detora & McQuesten, P.C., Barre, for     
  defendant- appellant 
 
 
 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


 MORSE, J., concurring in part, dissenting in part.    While I agree with the
 most of the Court's opinion, I respectfully dissent to the holding that
 buyers' claim for punitive damages was preserved. 

 It is fairly obvious why the issue of punitive damages was not addressed by
 the trial court. First, any claim of "malice" was exceedingly thin and I doubt
 the court would have awarded punitive damages in any event.  Second, punitive
 damage claims are routinely included in fraud complaints and mentioned in
 boiler plate fashion in a trial memorandum submitted before trial. In this
 case, the buyers mentioned punitive damages without any discussion or
 analysis.  The 

 

 word "punitive" occurred once in the seventeen-page trial memorandum.  After
 that point, plaintiff never pursued the issue.  I cannot fault the trial court
 for concluding plaintiffs were not interested in a ruling on punitive damages.
 Plaintiffs had abandoned the damage claim.  If, however, plaintiffs, despite
 their lack of enthusiasm for the issue, had merely overlooked the claim after
 trial in their requests -- which seems like a rather significant issue for a
 mere oversight -- I think it incumbent on them to make that known to the trial
 court initially. 

 The reason for informing the trial court of any misunderstandings or mistakes
 is to avoid the waste of time and resources inherent in pursuing the issue
 through the appellate process. Failure to bring the issue to the trial court's
 attention is also an affront to the cardinal rule of appellate procedure that
 a lower court is not to be reversed for error it did not have a chance to
 correct.  In sum, if the issue of punitive damages had been raised below, it
 probably would have gone against the buyers and saved nearly two years of
 time. 

 Lewis v. Cohen, 157 Vt. 564, 572, 603 A.2d 352, 356 (1991), relied on by the
 Court, may be distinguished.  There, apparently plaintiffs-appellants brought
 to the trial court's attention after trial the issue raised on appeal.  A
 brief containing argument on the issue had been submitted to the court along
 with the proposed findings.  Consequently, the trial court's attention was
 focused on the pertinent issue.  To the extent Lewis absolves an appellant
 from making a post-trial motion pointing out omission of any claim, I would
 overrule it.  All too often, a disappointed party refrains from pointing out
 to a trial court an oversight in hopes of gaining a new trial or other
 technical advantage unrelated to the oversight, such as delay.