A Formula for Pain

by Nicole Frush Munro | Hudson Cook, LLP

Here we are going to describe how one dealership experienced a formula for pain. The formula begins with an angry customer, one or more bad actors, and a violation of the law. It ends with the following damages calculation: actual damages x 3 + statutory damages + punitive damages + attorneys’ fees. This formula, applied all over the country under unfair and deceptive practices acts or other type of consumer protection laws = OUCH! Take a look.

Billy Cook traded a 1997 Ford Aspire and a 1993 Ford Thunderbird as part payment for a 1999 Cougar. When the dust settled, he claimed that the dealer, Newman Motor Sales, inflated the amount financed by several thousand dollars over and above the sale price by among other things, imposing a $1,000 dealer processing fee. The dealer then refused to transfer title to Cook.

“Use this time to decide if you have the right staff for your operations, and to help take your business where you want to go next year.”

Unhappy with this turn of events, Cook refused to pay. The dealer then repossessed and sold the Cougar along with over $1,000 of Cook’s personal tools and other property.

Cook eventually sued the dealership and its two principals, the Newman brothers. After some discovery, during which one of the Newman brothers refused to be deposed, Cook moved for summary judgment, asserting that the dealership and the Newman brothers engaged in fraud and deception that caused him damages. He claimed that the Newmans violated the Ohio Certificate of Motor Vehicle Title Law, the Ohio Consumer Sales Practices Act, and the federal Truth in Lending Act.

The trial court granted summary judgment to Cook. The trial court awarded damages to Cook under the CSPA for the loss of the Aspire, the Thunderbird, and Cook’s personal tools and property. The trial court also awarded Cook consequential damages arising from the wrongful repossession (transportation and work-related expenses, pain and suffering, aggravation and stress), an additional sum for humiliation (the Newmans conveyed Cook’s license plates to a drug dealer), an additional sum for anxiety caused by death threats made by the Newman brothers, and other amounts. Cook’s CSPA damages totaled $23,981, but the CSPA provides for treble damages, so the court increased the CSPA award to $71,945.

Not done yet with piling on the pain, the trial court also awarded Cook punitive damages of $12,500 because the Newmans’ actions were malicious, statutory damages under TILA of $4,000, and attorneys’ fees of $29,899.52.

If your Radio Shack calculator hasn’t run out of zeroes, your total should now be $118,344.52. That’s a lot of ouch.

The dealership and the Newmans appealed, claiming there were genuine issues of material fact that would preclude summary judgment. In the alternative, they argued that the trial court misapplied the damage rules and should not have allowed punitive damages or attorneys’ fees.

The Court of Appeals of Ohio upheld the trial court’s decision. The appellate court found that the record supported each of the factual determinations the trial court made. The Newmans apparently refused to participate in the discovery process. The appellate court rejected the Newmans’ argument that the trial court was not allowed to award treble damages under the CSPA and also award punitive damages, noting that Cook was entitled to punitive damages because the Newmans acted maliciously. The appellate court also found that Cook was entitled to attorneys’ fees under the CSPA and TILA.

This case is a perfect illustration of why customer complaints against dealers can be so costly. Most states have “unfair or deceptive acts or practices” laws that provide for doubling or, as here, tripling, of the plaintiff’s actual damages. Many consumer protection laws provide that the successful plaintiff can recover attorneys’ fees. Add punitive damages to the mix, and a defendant can take a serious hit.

You might want to highlight these dollar amounts and tape a copy of this article to the door of the F&I office.

– Cook v. Newman Motor Sales, 2010 Ohio App. LEXIS 1664 (Ohio App. May 7, 2010) –

Nicole Frush Munro is a partner in the Maryland office of Hudson Cook, LLP. She represents motor vehicle dealers, sales finance companies, and lenders engaged in motor vehicle finance transactions. Nikki can be reached at 410.865.5430 or by e-mail at nmunro@hudco.com. Based on an article that will appear in Spot Delivery, single print publication rights only to AutoStar Solutions. HC# 4847-1163-0854.

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