This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2006).
STATE OF MINNESOTA
IN COURT OF APPEALS
Pamela D. Hunt,
Filed December 24, 2007
Affirmed in part, reversed in part, and remanded
Hennepin County District Court
File No. 27-CV-03-000584
Nicholas P. Slade, Barry & Slade, LLC, 2021 East Hennepin Avenue, Suite 195, Minneapolis, MN 55413 (for appellant)
Robert A. O’Malley, 1304 University Avenue, Suite 201, Minneapolis, MN 55413 (for respondent)
Considered and decided by Lansing, Presiding Judge; Dietzen, Judge; and Ross, Judge.
Appellant challenges a district court order and resulting judgment denying her claims arising out of the purchase of a motor vehicle from respondent, arguing that the district court erred in its application of the law. We affirm in part, reverse in part, and remand.
Respondent Nosratollah Mazaharirvesh owns and operates P & N Auto Service, which is a car dealership and mechanic shop. In December 2001, respondent, acting on behalf of P & N, purchased a 1994 Dodge Caravan (Caravan) from Insurance Auto Auction. Prior to purchasing the Caravan, respondent received a list of the vehicles for sale, which categorized some vehicles as “salvage title.” The certificate of title to the Caravan was not stamped “salvage” but the front of the certificate of title indicated that the vehicle had sustained damage in excess of 70% of its actual cash value. But the back of the title, reflecting the assignment to P & N, was left blank. Respondent observed some damage to the rear tailgate and bumper. The Caravan was displayed on P & N’s lot for sale to the public, and in April 2002, appellant Pamela Hunt purchased the Caravan from P & N and signed a document entitled “Car Sales Agreement” (the agreement).
The agreement states that the purchase price is $3,500, that “car sold as is-she paid $1,000 down and pay $300 every month until payment down,” and that respondent would “replace rear door and rear bumper of ’94 Dodge because was damage[d].” In extra-large print in the middle of the page, it states “The car is sold as is!”
Appellant took possession of the Caravan and P & N retained possession of the title. Several weeks later, the transmission of the Caravan failed, but it was not related to the earlier damage to the vehicle. P & N arranged for the transmission repair, which cost $1,300; appellant made partial payment of the repair bill to respondent and the balance was added to the amount that appellant owed to respondent.
In June 2002, the Caravan’s registration tabs expired and appellant was unable to renew the registration because the certificate of title had not been transferred. Respondent then obtained the registration tabs, and appellant exchanged a check for the tabs. But appellant stopped payment on the check and made no further payments because respondent had not transferred the title.
In October 2002, appellant discovered that the Caravan had sustained significant damage in an accident, and appellant commenced this action. About a month later, respondent repossessed the Caravan without appellant’s knowledge or permission. Appellant then obtained a court order directing the Minnesota Department of Driver and Vehicle Services to transfer title of the vehicle to appellant. Several months later, appellant’s husband observed the Caravan being driven on the road and, with the assistance of law enforcement, had the vehicle stopped and returned to appellant. Appellant continues to store the vehicle.
At trial, appellant, her husband, and respondent testified. Following trial, the district court filed findings of fact and conclusions of law, and entered a judgment denying appellant’s claims and awarding respondent damages on his counterclaim for the unpaid balance under the car-sale agreement. Appellant moved for reconsideration, which the district court denied. This appeal follows.
D E C I S I O N
Appellant argues that the district court erred in its application of the law in denying her nine causes of action. The interpretation of a statute is a question of law, which we review de novo. Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 393 (Minn. 1998). When interpreting a statute, we give words their plain and ordinary meaning. Minn. Stat. § 645.08(1) (2006); All Metro Supply, Inc. v. Warner, 707 N.W.2d 1, 5 (Minn. App. 2005). Appellant does not challenge the district court’s findings of fact and adopts those findings as the facts of the case. Therefore, our review is limited to whether the conclusions of law are supported by the findings of fact, which is a question of law we review de novo. Ebenhoh v. Hodgman, 642 N.W.2d 104, 108 (Minn. App. 2002).
Appellant argues that the district court erred in concluding that respondent did not violate the federal Motor Vehicle Information and Cost Savings Act when he failed to disclose the mileage of the vehicle on the title and that the violation was made with the intent to defraud appellant.
The Motor Vehicle Information and Cost Savings Act (the act), 49 U.S.C. §32701-32711 (2000), was enacted to prohibit tampering with motor vehicle odometers and to protect purchasers in the sale of motor vehicles with altered or reset odometers. 49 U.S.C. § 32701(b). The act requires, among other things, that a vehicle’s mileage be disclosed to the purchasing party in writing on the title. 49 U.S.C. § 32705(a)(2); 49 C.F.R. § 580.5 (2000). The act provides that a private party may bring a cause of action against a person who violates the act with intent to defraud and that the violator is liable for three times the actual damages or $1,500, whichever is greater. 49 U.S.C. § 32710(a).
The district court denied appellant’s claim, concluding that “[t]here was no proof that [respondent] failed to comply with The Motor Vehicle Information and Cost Savings Act with the intent to defraud [appellant]. The mileage is listed as 110,060 as of April 2002, on the sales agreement signed by both [respondent] and [appellant].” The district court also concluded, in denying appellant’s claim of common law fraud, that there was no proof that respondent “falsely represented the condition of the Caravan to [appellant].”
Appellant argues that the statute imposes liability for any violation of the act with intent to defraud regarding the general condition of a vehicle. Respondent contends that the act requires a finding of intent to defraud regarding the vehicle’s mileage. We agree with respondent. See Ioffe v. Skokie Motor Sales, Inc., 414 F.3d 708, 709 (7th Cir. 2005) (the act requires a showing that the defendant intended to defraud the purchaser regarding the vehicle’s mileage). The purposes of the act are focused on odometer readings and protecting consumers in the purchase of vehicles with altered or incorrect odometer readings. See 32 U.S.C. § 32701(b); Nabors v. Auto Sports Unlimited, Inc., 475 F. Supp. 2d 646, 651 (E.D. Mich. 2007) (rejecting more expansive intent requirement because of the “express and limited purpose of the statute”). We see nothing in the act that expands liability beyond intent to defraud a purchaser regarding a vehicle’s mileage. Thus, the district court did not err in dismissing the claim.
Appellant argues that the district court erred in denying her claim for relief under the Minnesota Odometer Act (the Minnesota act), Minn. Stat. §§ 325E.13-.16 (2000). Specifically, appellant argues that respondent violated the Minnesota act by failing to transfer title in violation of Minn. Stat. § 168A.11, failing to disclose the mileage on the certificate of title, and failing to obtain appellant’s signature on the title.
The Minnesota act provides that “[n]o person shall transfer a motor vehicle without disclosing in writing to the transferee the true mileage registered on the odometer reading,” and that the regulations contained in 49 C.F.R. §§ 580.1-.17 “prescribe the manner in which written disclosure must be made in this state and are adopted by reference.” Minn. Stat. § 325E.15. The federal regulations adopted by reference require, among other things, that the seller disclose the true mileage of the vehicle to the purchaser in writing on the certificate of title and that the seller obtain the purchaser’s signature on the title. 49 C.F.R. § 580.5 (1998). The Minnesota act provides that a private party may bring a cause of action against a violator, and that “[a]ny person injured by a violation of sections 325E.13 to 325E.16 shall recover the actual damages sustained together with costs and disbursements.” Minn. Stat. § 325E.16 (2000).
But liability under Minn. Stat. § 325E.15, requires a showing that the person has been “injured” and has “actual damages.” Bachovchin v. Stingley, 504 N.W.2d 288, 290 (Minn. App. 1993) (concluding that plaintiff was not “injured” and not entitled to costs and attorney’s fees because the jury found that he suffered no damages from defendant’s violation of the Minnesota act). Here, appellant has failed to show actual damages. Thus, the district court did not err in denying the claim.
Appellant argues that the district court erred in denying her claim under the Truth in Lending Act (TILA), 15 U.S.C. §§ 1601-1667f (2000), and Federal Reserve Board Regulation Z., 12 C.F.R. §§ 226.1-.36 (2000).
TILA was enacted “to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit card practices.” 15 U.S.C. § 1601(a). TILA and its regulations create a comprehensive scheme governing consumer credit transactions and impose a system of strict liability in favor of consumers. Wise Furniture v. Dehning, 343 N.W.2d 26, 28 (Minn. 1984) (citing Thomka v. A.Z. Chevrolet, Inc., 619 F.2d 246, 248 (3d Cir. 1980)). TILA provides that a person may bring a private cause of action against a “creditor” for failure to comply with any requirement under TILA and its regulations. 15 U.S.C. § 1640(a). TILA defines a creditor as a person who “regularly extends . . . consumer credit which is payable by agreement in more than four installments” and is the person to whom the debt is initially payable. 15 U.S.C. § 1602(f).
Under TILA, appellant must prove that respondent is a “creditor.” 15 U.S.C. § 1640(a). The district court did not find that respondent regularly extends consumer credit payable in more than four installments and did not conclude that respondent is a “creditor” under TILA. On this record, we see no error of law in denying the claim. See Robey-Harcourt v. BenCorp Fin. Co., Inc., 326 F.3d 1140, 1142 (10th Cir. 2003) (concluding that TILA is not applicable to defendant where plaintiff did not show, in opposing motion for summary judgment, any evidence that defendant regularly extended consumer credit).
Appellant argues that the district court erred in denying her claim under the Magnuson-Moss Warranty Act (MMWA), 15 U.S.C. §§ 2301-2310 (2000). Specifically, appellant argues that because the district court found that appellant did not display a “Buyer’s Guide” on the Caravan as required by law, it was required to award her damages.
MMWA provides that “a consumer who is damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under this chapter, or under a written warranty, implied warranty, or service contract, may bring suit for damages and other legal and equitable relief.” 15 U.S.C. § 2310(d)(1). MMWA imposes liability for failure to comply with statutory, contractual, and implied warranty obligations, and affords no cause of action absent a warranty. Anderson v. Newmar Corp., 319 F. Supp. 2d 943, 948 (D. Minn. 2004) (there can be no claim under the Magnuson-Moss Warranty Act when warranties have been disclaimed).
Here, the sales agreement stated specifically that the Caravan was being “sold as-is,” and, therefore, effectively disclaimed any warranty. See Scaffidi v. United Nissan, 425 F. Supp. 2d 1172, 1182 (D. Nev. 2005) (granting summary judgment to dealership on MMWA claim because auto sale contract stated vehicle was sold “as is” and, therefore, conveyed no warranty). Further, appellant failed to show any actual damages. Thus, we conclude that the district court did not err denying appellant’s claim under MMWA.
Appellant argues that the district court erred in denying her claim, under the Minnesota Consumer Fraud Act, Minn. Stat. §§ 325F.68-.70 (2000), on the ground that respondent misrepresented the vehicle’s salvage history.
The Minnesota Consumer Fraud Act provides:
The act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale of any merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby, is enjoinable as provided herein.
Minn. Stat. § 325F.69, subd. 1.
Initially, appellant contends that the district court misconstrued the statute to require proof that “[respondent] intended to misstate facts.” We disagree. Specifically, the district court found no evidence in the record that respondent “failed to disclose, with the intent to misstate, misrepresent to and/or deceive purchasers, the Caravan’s prior salvage history and therefore its condition and value.” Further, the district court found no evidence “that [respondent] falsely represented the condition of the Caravan to [appellant] . . . Nor did he hold out facts to be true that he did not know were true or not.” Thus, the conclusions of law are supported by the findings of fact.
Appellant also argues that respondent engaged in “deceptive practices,” as defined by 16 C.F.R. § 455.1 (2000), by failing to display a “Buyer’s Guide” on the Caravan and failing to transfer the title as required by section 168A.11. A “deceptive practice” must “misrepresent the mechanical condition of a used vehicle,” the terms of a warranty, or that a vehicle is sold with a warranty when it is not. 16 C.F.R. § 455.1.
Here, the district court specifically found that respondent did not misrepresent the mechanical condition of the Caravan and that the sales agreement stated that the Caravan was sold without a warranty. Based on its findings, the district court did not err in denying the claim.
Appellant argues that the district court erred in denying her claim for breach of contract. To establish a breach-of-contract claim, a plaintiff must show that (1) a contract was formed; (2) the plaintiff performed any conditions precedent; and (3) the defendant breached the contract. Indus. Rubber Applicators, Inc. v. Eaton Metal Prods. Co., 285 Minn. 511, 513, 171 N.W.2d 728, 731 (1969), overruled on other grounds by Standslast v. Reid, 304 Minn. 358, 231 N.W.2d 98 (1975). Also, a plaintiff must prove damages arising from the breach. D.H. Blattner & Sons, Inc. v. Firemen’s Ins. Co. of Newark, N. J., 535 N.W.2d 671, 675 (Minn. App. 1995), review denied (Minn. Oct. 18, 1995).
The district court concluded that “the evidence indicates that it was plaintiff who altered the original contract between the parties and who failed to abide by the agreed upon payment schedule for the Caravan.” Initially, appellant argues that the payment schedule was modified by mutual consent of the parties and, therefore, no breach occurred. We disagree. The district court found that appellant breached the contract by failing to make the payments on the dates agreed upon by the parties. The district court’s conclusion that appellant breached the contract is supported by the findings of fact. Ebenhoh, 642 N.W.2d at 108.
Appellant argues that respondent breached the contract by not executing the assignment of title to appellant and submitting it to the registrar within ten business days. We agree that respondent failed to transfer the title as required by Minn. Stat. § 168A.11, and that doing so may be an implied condition of the contract. See Minn. Stat. § 336.2-401(2) (2000). But to prevail in a breach-of-contract claim, appellant must also prove damages. D.H. Blattner & Sons, 535 N.W.2d at 675. Here, the transfer of title was delayed by respondent. But appellant failed to establish actual damages arising from the delay. Thus, the district court did not err in dismissing her claim.
Appellant argues that respondent wrongfully repossessed the Caravan in violation of Article 9 of the Uniform Commercial Code. See Minn. Stat. § 336.9-609 (2002). Specifically, appellant argues that respondent was not a secured party with the right to repossess the vehicle. Respondent argues that he was the owner of the Caravan, that appellant was in breach of the contract, and, therefore, he had the right to repossess the vehicle.
The Uniform Commercial Code (UCC), as adopted by Minnesota, provides that “[a]fter default, a secured party: (1) may take possession of the collateral,” and may do so “without judicial process, if it proceeds without breach of the peace.” Minn. Stat. § 336.9-609(a)-(b). Section 336.9-609 clearly limits the right of repossession to a “secured party.” A “secured party” is defined as “a person in whose favor a security interest is created or provided for under a security agreement” or “a person that holds a security interest arising under section 336.2-401.” Minn. Stat. § 336.9-102(72)(A), (F) (2002).
The district court concluded that respondent had the right to repossess the Caravan, but made a contradictory finding that he had no security interest in the Caravan. Absent a security interest in the Caravan, respondent lacked the authority to repossess the Caravan. See Kadlec Motors, Inc. v. Knudson, 383 N.W.2d 342, 345-46 (Minn. App. 1986) (affirming district court’s conclusion that creditor did not have a “security interest” and that repossession was therefore wrongful). Therefore, we reverse the district court’s judgment denying appellant’s wrongful repossession claim and remand the claim to the district court.
Appellant contends that respondent wrongfully converted the Caravan when he repossessed it. Conversion is “an act of willful interference with personal property, done without lawful justification by which any person entitled thereto is deprived of use and possession.” DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997) (quotation omitted). “To make out a prima facie claim for conversion, a party must show it had a right to the use, possession, or ownership of the property converted.” Gen. Cas. Co. of Wisc. v. Mid-Continent Agencies, Inc., 485 N.W.2d 147, 149 (Minn. App. 1992), review denied (Minn. July 16, 1992).
The district court denied the claim on the ground that appellant failed to establish that she owned the Caravan at the time of the repossession. We disagree.
Appellant agreed to pay $3,500 in exchange for the possession of the Caravan. Thus, appellant had lawful possession of the Caravan. Respondent had no security interest in the Caravan and, therefore, wrongfully repossessed the Caravan without lawful justification. Respondent’s remedy for appellant’s failure to pay was to sue appellant for damages. Consequently, we reverse the district court’s judgment denying appellant’s claim for conversion and remand the claim to the district court. See Kadlec Motors, Inc., 383 N.W.2d at 345-46 (affirming district court’s conclusion that repossession absent security interest constituted conversion).
Appellant argues that the district court erred in denying her fraud claim. To prove fraud, a party must show that (1) the offending party made a false representation of a past or existing material fact susceptible of knowledge; (2) the representation was made with knowledge of the falsity of the representation, or made without knowing whether it was true or false but with intention to induce another to act in reliance on it; and (3) the representation caused the other party to act in reliance thereon to his pecuniary damage. Hous. & Redevelopment Auth. of St. Paul v. Alexander, 437 N.W.2d 97, 101 (Minn. App. 1989), review denied (Minn. May 24, 1989). A party must also show fraudulent intent, which is “dishonesty or bad faith.” Florenzano v. Olson, 387 N.W.2d 168, 173 (Minn. 1986).
The district court concluded:
There is no proof that [respondent] was aware of the prior damage to the Caravan outside the damage to the rear tailgate and bumper mentioned in the sales agreement. Nor is there proof that he falsely represented the condition of the Caravan to [appellant]. . . Nor did he hold out facts to be true that he did not know were true or not.
We conclude that the district court’s conclusion is supported by the findings. Ebenhoh, 642 N.W.2d at 108. The district court specifically found that appellant “came across as not credible” and that “[t]he court believed the testimony given by [respondent] and did not believe [appellant].”
Appellant argues that the district court erred in denying her claim for punitive damages. Minn. Stat. § 549.20 provides that “[p]unitive damages shall be allowed in civil actions only upon clear and convincing evidence that the acts of the defendant show deliberate disregard for the rights or safety of others.” Minn. Stat. § 549.20, subd. 1(a) (2000). Deliberate disregard for the rights or safety of others requires that the defendant “has knowledge of facts or intentionally disregards facts that create a high probability of injury to the rights or safety of others and: (1) deliberately proceeds to act in conscious or intentional disregard of the high degree of probability of injury to the rights or safety of others; or (2) deliberately proceeds to act with indifference to the high probability of injury to the rights or safety of others.” Minn. Stat. § 549.20, subd. 1(b) (2000). Further, our review must focus on the underlying torts proven by appellant. Molenaar v. United Cattle Co., 553 N.W.2d 424, 428 (Minn. App. 1996) (when evaluating punitive damages, “[t]he focus falls on the underlying tort, rather than the nature of damages or the specific legal pleadings”), review denied (Minn. Oct. 15, 1996).
The district court concluded that “[t]here is no proof that [respondent] acted with deliberate disregard for [appellant’s] rights.” We agree.
Here, appellant has proven that respondent’s repossession of the Caravan was wrongful. While the district court erred in concluding that respondent had the right to repossess, we cannot say that the court erred in concluding that respondent did not act with deliberate disregard of appellant’s rights. On this record, the district court did not err in denying the claim.
Affirmed in part, reversed in part, and remanded.