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Scenario; Mr. Jones comes to the dealership to purchase a used vehicle. Mr. Jones' credit is not the best. He puts $1,500.00 down to purchase a used truck. The dealership spot delivers the vehicle after Mr. Jones has executed the buyer's contract and financing documents. Later in the week, your finance manager calls Mr. Jones and indicates that the bank could not finance him at the annual percentage rate and terms. Mr. Jones is asked to come to the dealership to resign bank documents at a higher APR and monthly payment. Mr. Jones refuses to execute the new loan agreement and returns the truck. Further, Mr. Jones installed a new radio in the vehicle and requested that it be returned with his down payment. The dealership refused to return his down payment and did not return his radio for one month. The radio cost approximately $350.00. Mr. Jones was without a vehicle for several weeks until he could save enough money for a down payment. Subsequently, he filed a lawsuit. What is the outcome?
There is an old saying in the legal profession that bad facts make for bad law. The facts in this scenario are true. Unfortunately, the dealership did not refund the customer's deposit until after the lawsuit was filed. The radio, however, was returned at a much later date instead of within a couple of days. In the case of Whitaker vs. M.T. Automotive, Inc., 111 Ohio St.3d 177, 2006-Ohio-5481, the Supreme Court of Ohio greatly expanded the damages that a consumer can recover in a Consumer Sales Practices Act case. The court stated that the consumer who is harmed under R.C. 1345, et seq., specifically R.C. 1345.02 or 1345.03, can recover both economic and non-economic damages under R.C. 1345.09(B). After a trial, the jury found that the dealership violated eleven provisions of the Ohio Consumer Sales Practices Act. The plaintiff was seeking damages for expenses, public embarrassment, inconvenience and emotional distress. The jury awarded the plaintiff $105,000.00 in damages, plus legal fees. Pursuant to the damages section of the Consumer Sales Practices Act, the damage award was trebled to $315,000.00.
The dealership appealed the decision and the Appellate Court reversed the trial court's decision indicating that the plaintiff could only recover actual economic losses and not an award for emotional distress or other non-economic damage. The Appellate Court further stated that since there was insufficient evidence of actual economic damages, the case was remanded to the trial court with instructions that the trial court award only $200.00 to the Plaintiff. The Plaintiff then appealed the decision to the Ohio Supreme Court.
R.C. 1345.09 (A), specifically states "when the violation was an act prohibited by R.C. 1345.02 or 1345.03 of the Ohio Revised Code, the consumer may, in an individual action, rescind the transaction or recover his damages." Further, the Court stated that the intention of the Act was "to prevent unfair, deceptive, and unconscionable acts or practices, to provide strong and effective remedies, both public and private, to assure that consumers will recover any damages caused by such acts or practices..." The Supreme Court indicated that since there was not any type of modifying terminology regarding the word "damage", the Court had to take the plain meaning of the words in the statute. The Court stated that "damages" absent a restrictive modifier like "compensatory," "actual," "consequential" or "punitive" is an inclusive term embracing the terms of legally recognized pecuniary relief. The Court stated that it could not read into the plain language of the statute that damages are, in any way, restricted to only economic damages. Therefore, the Court determined that all forms of compensatory relief are permissible. This obviously includes non-economic damages. The Supreme Court quoted a 1929 decision which states that "actual damages is a term synonymous with compensatory damages and covers all loss recoverable as a matter of right." Therefore, the Court concluded that under the CSPA that damages that can be proven, whether economic or non-economic, can be awarded to the plaintiff and are subject to the trebling clause under the law.
Unfortunately, businesses found to have violated the CSPA are now subject to monetary damage awards for pain and suffering, exactly like those recoverable from medical professionals or in medical malpractice suits. The question remains as to how to place a value upon the consumer's emotional distress or public embarrassment. Obviously, plaintiffs' attorneys will be making outrageous demands for damages that cannot be quantified.
This author has never liked nor condoned spot deliveries. Even if the dealership uses a conditional delivery agreement or bailment agreement as a condition for the purchase of the vehicle, it leads to too many problems if the consumer cannot obtain financing on the terms and conditions that he or she believed they had when they left the dealership. In some states, like Michigan, an automobile dealer cannot deliver a vehicle to a consumer until such time as financing has been approved. Although the facts of this case involved a spot delivery, the holding of the court can be applied to any fact pattern that takes place at your business whether in sales or service.
Batten down the hatches, it will take a considerable amount of litigation to define how to interpret and quantify non economic damages applicable to a business situation. Further, be advised that the law not only applies to the automobile industry, but to any retailer of a service or product in the State of Ohio. And the politicians wonder why businesses are leaving the state of Ohio --- because it is perceived as being an unfriendly business environment.
As always, these are highlights of the law and are not to be construed as containing the entire law. This is not a legal opinion. Contact your attorney if you need specific information or advice. |
