STATE OF MINNESOTA

IN COURT OF APPEALS

C8-02-837

Robert Dickson, et al.,

Appellants,

vs.

Les Lundquist, et al.,

d/b/a Riverview Sports & Marine, and/or Riverview Sports,

Respondents.

Filed December 17, 2002

Reversed and Remanded

Randall, Judge

Sherburne County District Court

File No. C5-01-2067

Robert V. Espeset, Barry L. Blomquist, Jr., Suite 255, Broadway Place East, 3433 Broadway Street Northeast, Minneapolis, MN 55413 (for appellants).

Damon Highly, William M. Hart, Michael D. Hutchens, 4200 Multifooods Tower, 33 South Sixth Street, Minneapolis, MN 55402 (for respondents).

Considered and decided by Randall, Presiding Judge, Willis, Judge, and Mulally, Judge.*

U N P U B L I S H E D O P I N I O N

RANDALL, Judge

Appellants challenge the district court's grant of summary judgment to respondents alleging that (1) the district court erred by requiring a showing of intent to deceive under the consumer-fraud statutes; (2) genuine issues of material fact exist whether respondents knew or had reason to know about the ownership history of the boat; and (3) there are genuine issues of material fact as to the amount of appellant's damages. We reverse and remand.

FACTS

Respondents Les and Caryn Lundquist own Riverview Sports & Marine/Riverview Sports (Riverview). In November 1998, Riverview purchased a 1998 Stratos 285 Proelite boat, a trailer, and a motor (collectively, "the boat") from the boat's manufacturer, Stratos/Javelin Boats, Inc. (Stratos) in Tennessee for $16,574.74. At the time Riverview purchased the boat there were North Carolina registration decals on it. However, Stratos's statement of origin, which was given to Riverview, stated that the boat was new. The certificate of origin for the trailer listed the trailer as new. Stratos's invoice showed that Riverview received a promotional discount on the boat. Stratos filed for bankruptcy and went out of business in 2000.

On February 6, 1999, appellants Robert and Phyllis Dickson purchased the boat from Riverview for $22,515. The price of a comparable new boat was approximately $30,000. Mike Rizner, a Riverview salesman, told appellants that the boat was a "promotional" boat and that there were just nine hours of use on the motor. On the day of delivery to appellants, Riverview performed a computer test on the boat that showed the motor had nine hours of use on it.

In August 1999, appellants contacted Stratos because they had not received warranty cards for the boat. Appellants also contacted Outboard Marine Corporation (OMC), the motor's manufacturer, and were told that the motor had been titled, registered, and warranted to a previous owner. Tracing the origin of the boat revealed that on February 7, 1998, Charles Hull, a North Carolina resident, purchased the boat from a North Carolina dealer but later returned it because he was dissatisfied with its performance and drivability. Stratos was unable to correct the problems and refunded Hull the full purchase price. None of this was disclosed to appellants before their purchase. When appellants bought the boat from respondents, it had no North Carolina decals on it.

Appellants brought an action alleging that respondents are liable under the Consumer Fraud Act and Unlawful Trade Practices Act. The district court granted summary judgment to respondents, finding the presence of registration stickers on the boat when respondents bought it did not create an issue of material fact whether respondents knew or should have known that the boat had been purchased, titled, and registered by a previous consumer. The district court also concluded that appellants failed to allege damages with sufficient specificity. This appeal follows.

D E C I S I O N

Appellants argue that the district court erred by granting summary judgment, claiming that the North Carolina registration stickers on the boat created a genuine issue of material fact of whether respondents knew or should have known that the boat was purchased, titled, and registered by a previous consumer. Respondents allege that the district court correctly ruled that registration stickers on the boat do not raise a genuine issue of material fact about respondents' knowledge of the boat's ownership history.

On appeal from summary judgment, this court asks two questions: "(1) whether there are any genuine issues of material fact and (2) whether the lower courts erred in their application of the law." State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990) (citation omitted). The evidence is viewed in the light most favorable to the party against whom judgment was granted. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).

We agree with appellant that the district court erred by granting summary judgment to the respondents because the court applied the incorrect standard. When the district court granted summary judgment, it improperly viewed the evidence in a light most favorable to the moving party instead of the nonmoving party.

The district court granted summary judgment, finding:

The mere presence of registration stickers from another state does not create a reasonable inference that Defendants should have known the boat had been used by a prior consumer rather than by the manufacturer (as a "demo"). Presumably, either type of owner would have had to register the boat for it to be in the water legally. After considering that the manufacturer represented the boat to be a "demo," the
registration provided little basis to believe that the boat was "used."

Rather, we conclude that, viewing the evidence in the light most favorable to the nonmoving party, as we must, the presence of registration stickers on the boat does create at least an inference to boat dealers that the boat may have been used by a prior customer, and was, thus, "used" rather than being a new manufacturer's boat, used only as a "demo," and never before sold.

As boat dealers, respondents can be charged with, at least, a general awareness of the laws requiring boat registration as to boats that they personally buy and sell. There is a reasonable inference that they should have been aware of the law regarding boat registration. Thus, they should have been aware when they purchased the boat and saw the registration stickers that there may have been a previous owner. In Minnesota, boat dealers are not required to register a boat provided that it is used only for demonstration purposes. Similar to automobiles, they can use dealer plates that are removable and can be used on any boat. See Minn. Stat. § 86B.405, subd. 2 (2000) (stating that watercraft owned by a dealer may be operated under a dealer's license for demonstration purposes). Tennessee, where the Stratos factory is located and where respondents saw the boat, has a similar provision. See Tenn. Comp. R. & Regs. 1660-2-1-.01(3)(b) (2002) (stating "[a] dealer and manufacturer certificate is to be used for demonstration and or testing purposes and may be transferred from boat to boat."). Respondents argue that North Carolina boating law is otherwise. North Carolina requires all boats to be registered, whether they are used for demonstration purposes by a manufacturer, dealer, or private consumer. See N.C. Gen. Stat. § 75A-4 (2000) (requiring every vessel on the waters of the state to be numbered).

Notwithstanding respondents' reference to North Carolina law, we conclude that respondents' knowledge of the presence of registration stickers on the boat when they purchased it creates a genuine issue of material fact regarding the boat's previous ownership status; specifically, whether respondents thought the boat was (a) "new," (b) used only for a short time as a demo, or (c) a "used" boat. The district court too quickly granted respondent's summary judgment motion on this issue.

Appellants also argue that the district court erred when it granted summary judgment, finding that appellants failed to allege their damages with sufficient specificity. Respondents argue that the district court correctly granted summary judgment because appellants failed to establish any injury. The district court stated:

Plaintiffs' claims also fail because they have not alleged their damages with any specificity. Plaintiffs claim only that new boats are worth more than "demo" boats and that "demo" boats are worth more than "used" boats. Plaintiffs' only submissions regarding this issue are Defendants' general admissions in their deposition testimonies (by Mr. Lundquist and Mr. Riznar) stating as such.

We agree that, at this point in the proceedings, the record is somewhat sparse on the issues of damages. Our remand does not reflect either way on the merits of appellants' claim for monetary damages. However, the record is clear that appellants' allege they were sold a "lesser boat" than what was bargained for. Respondents concede that the terms "new boat," "demo boat," and "used boat" are generally understood terms in the marine industry, and each indicates a different standard. Appellants insist they bargained and paid for a demo boat, but were really sold a used boat. If that claim can be proved, at least for purposes of avoiding summary judgment, it can be assumed that there is a reasonable disputed fact issue (involving money), as to whether they got what they bargained for. Generally, "used" boats of identical kind and condition to a "demo" boat are worth somewhat less than that "demo" boat, just as a perfectly new boat would be worth somewhat more than that same boat if it had been used for a short time as a "demo." Appellants retain the burden at all times on the issue of damages, but, we cannot say that appellants' pleadings fail, as a matter of law, to sufficiently allege damages.

We conclude that, on the record before us, enough disputed fact issues exist on liability and damages so that summary judgment should not have been granted.

Because general issues of material fact exist, we decline to address the issue of whether the district court applied the proper standard under the Minnesota Consumer Fraud Act.

Reversed and remanded.

* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.