Summary
awarding $35,000 in punitive damages, seven times the actual damages
Summary of this case from Hernandez v. Saybrook Buick GMC, Inc.Opinion
No. CV020459418S
November 26, 2003
MEMORANDUM OF DECISION
The plaintiff Ellen Benham seeks damages from the defendant Wallingford Auto Park, Inc. based on a violation of the Connecticut Unfair Trade Practices Act, General Statutes § 42-110a et seq. (CUTPA).
The plaintiff also sought damages based upon revocation of acceptance under General Statutes § 42a-2-608 and fraud. It is, however, not necessary to reach these issues because in this case damages under those causes of action would be duplicative of those awarded under CUTFA.
The plaintiff, a Wallingford resident, who is the assistant director of athletics and physical education for the Hartford school system, sought to purchase an automobile which was reliable and economical to operate. After doing research on the reliability and economics of several automobiles, she decided to purchase a late model Toyota or Honda. The defendant sold used cars and the plaintiff visited its used car lot. The plaintiff met with Tim Lestor, a salesman employed by the defendant. During the initial meeting with Lestor, a pamphlet published by the defendant was made available to the plaintiff. It provided in relevant part the following:
30 DAY 1,500 MILE EXCHANGE PROGRAM
If you're not completely satisfied with your purchase, just exchange it within 30 days, or 1,500 miles for another vehicle in stock.
SATISFACTION
is your right and I intend to see that you get it!
Total satisfaction with your purchase at Wallingford Auto Park is your right. It is our obligation to see that you get it. You have the right to get quality . . . a valuable warranty . . . easy finance plans . . . honest and courteous assistance . . . professional service and repairs . . . a safe vehicle . . . and to address grievances. We pledge to support your right so that you can enjoy the best total car or truck owning experience possible.
[signed]
John P. Gargano, Pres.
(hereinafter referred to as the "exchange program")
The plaintiff found a 1997 Toyota on the defendant's used car lot that appeared to meet her needs. The Toyota had a window sticker which included the following:
CITY MPG 21 [picture of fuel pump] HWY MPG 31
(hereinafter referred to as the "window sticker"). Under this representation of the mileage per gallon to be expected appeared the following (in print measuring approximately one-sixteenth of an inch in height compared to the mileage representation which was approximately three-sixteenth of an inch in height). "Actual mileage will vary with options, driving conditions, driving habits and vehicle's condition. Gas mileage information is based on EPA rating at time of manufacturing." When the plaintiff read the bold print, she commented to Lestor that it was good mileage. Failing to call to the plaintiff's attention the small print on the window sticker which set forth conditions, Lestor merely agreed with her that the mileage was good.
The plaintiff, relying on the exchange program and the window sticker representations, on September 25, 2001 purchased the Toyota for $15,130 ($16,474.14 including various fees and taxes). She paid the defendant $5,000 and signed a retail installment contract for the balance which was eventually sold to Citizen's Bank of Connecticut.
Citizen's Bank of Connecticut was also a named defendant. The plaintiff withdrew her complaint as to Citizen.
From the day of delivery, the Toyota turned out to be a nightmare. First, the interior light malfunctioned and then the brakes squealed very badly. The car emitted blue smoke from the exhaust and it consumed for highway mileage a gallon of gasoline for every 23 to 24 miles (25 percent less than the sticker representation on the window).
On October 18, 2001, within the 1500 miles and time limit of 30 days of the exchange program, the plaintiff returned the Toyota to the defendant. She spoke to Lestor and explained she wanted another car because she was not satisfied with the Toyota. Lestor referred her to Ted Lipkin, the general manager of the defendant.
There is a subjective test for "satisfaction." Even though the dissatisfaction manifested is unreasonable, the plaintiff's dissatisfaction controls. Hartford Accident Indemnity Co. v. Hunt, 12 Conn. Sup. 154, 155 (1943). Put that apart, the court finds that the plaintiff's dissatisfaction was reasonable.
Lipkin refused to abide by the exchange program and explained that the defendant's policy was to repair the vehicle. The plaintiff refused and left the car and the keys with Lipkin. Thereafter, the plaintiff made several calls to Lestor attempting to enforce her rights under the exchange program.
Eventually, Lipkin offered a Honda as an exchange, with a sales price of $12,000, but would only give the plaintiff the trade in value for the Toyota she originally purchased. According to Lipkin, the trade in value of the Toyota was $11,000 which would have required the plaintiff to pay to the defendant an additional $1,000. The plaintiff refused.
The Honda had more mileage than the Toyota vehicle she originally purchased.
The plaintiff filed a complaint against the defendant with the Department of Consumer Protection. On November 13, 2001, Lipkin responded to the complaint which included the following: the return of the car "was over by 77 miles to qualify for benefits for the exchange program." As previously noted, based upon credible evidence, the court finds that the Toyota was returned to the defendant within 1500 miles and therefore was qualified for the exchange program.
Simply put, based on his evasive, inconsistent and contradictory courtroom testimony and his response to the Department of Consumer Protection, the court finds that Lipkin is not a credible person.
After the defendant was put on notice by the plaintiff's attorney that an action would be brought against the defendant, Lipkin wrote to him as follows: "[i]t is Wallingford Auto Park's position now and has always been that we agree to the exchange that Ms. Benham has requested. We will exchange the vehicle as per the terms and conditions of our 30 day or 1500 mile exchange program."
This litigation was commenced for damages, in part, under CUTPA, "No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." General Statutes § 42-110b.
The defendant, relying on Quimby v. Kimberly Clark Corp., 28 Conn. App. 660, 661 (1992) claims that the plaintiff must allege and prove that the defendant has committed wrongful acts with such frequency as to indicate a general practice. Quimby was wrongly decided on this point. In a recent Appellate Court decision, Justice Peters, writing for a unanimous court, held that a single incident can support a CUTPA violation. Johnson Electric Co. v. Salces Contracting Associates, Inc., 72 Conn. App. 342, 349-53 (2002), cert. denied, 262 Conn. 922 (2002).
"It is well settled that in determining whether a practice violates CUTPA we have adopted the criteria set out in the `cigarette rule' by the federal trade commission for determining when a practice is unfair: (1) [W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise — whether, in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers [competitors or other businessmen].
"All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three. Thus a violation of CUTPA may be established by showing either an actual deceptive practice, or a practice amounting to a violation of public policy. Furthermore, a party need not prove an intent to deceive to prevail under CUTPA. (knowledge of falsity, either constructive or actual, need not be proven to establish CUTPA violation)." (Citations omitted in part; internal quotations omitted.) Cheshire Mortgage Service Inc. v. Montes, 223 Conn. 80, 105-06 (1992).
The court finds that the defendant's failure to abide by its exchange program was immoral, unethical, oppressive, and unscrupulous which caused the plaintiff substantial injury. Combining this failure of the defendant to honor the exchange program in the context of Lipkin's stonewalling tactics, makes the defendant's conduct intolerable.
Furthermore, the defendant's conduct violated Conn. Agencies Regs. § 42-110b-28 which provides that it "shall be an unfair or deceptive act or practice for a new car dealer or used car dealer to make any representation or statement of fact in an advertisement if the dealer knows or should know that the representation or statement is false or misleading or if the dealer does not have sufficient information upon which a reasonable belief in the truth of the representation or statement could be based." When Lipkin finally offered to exchange the Honda for the Toyota, it was on the basis that the plaintiff would only be credited with wholesale value for the Toyota, which was never explained in the exchange program pamphlet.
The conduct of Lipkin and the defendant violate other Department of Consumer regulations that could be the basis for a CUTPA violation but it would serve no useful purpose to detail them. Suffice it to say that CUTPA was designed to protect the public including the plaintiff from practices employed by the defendant in selling its used cars.
Although the defendant's failure to honor the exchange policy constitutes a serious CUTPA violation which fully justifies the compensatory and punitive damages the court will award, the court feels compelled to comment on the window sticker that displayed the mileage per gallon a purchaser could expect in operating the Toyota. The advertising of the expected mileage in large print followed by the conditions for those expectations in smaller print (one third of size which was difficult to read) also constitutes a CUTPA violation. Combining the window sticker with the failure of Lestor to disclose these conditions, when the plaintiff comments to him obviously indicated she was relying on 21 miles a gallon for city driving and 31 miles a gallon for highway driving, also constitutes a CUTPA violation.
The plaintiff as compensatory damages is entitled to receive $5,000, the amount she paid to the defendant. In addition to compensatory damages, the plaintiff is entitled punitive damages and "reasonable attorneys fees based on the work reasonably performed by an attorney and not on the amount of recovery." General Statues, § 42-110g.
In order to award punitive damages, the "evidence must reveal a reckless indifference to the rights of others or an intentional and wanton violation of those rights." Tessmann v. Tiger Lee Construction Co., 228 Conn. 42, 54 (1993). (Internal citation omitted).
The defendant in this case seeks to avoid punitive damages on the basis that the defendant's conduct in this case did not evidence a reckless indifference. The defendant attempts to distinguish Larobina v. Home Depot USA, Inc., 76 Conn. App. 586 (2003) pointing out that in response to the attorney for the plaintiff it offered on December 1, 2001 to abide by the exchange program. Larobina, however, is right on point. The court in Larobina at 596 held: "Moreover, we disagree with the court's implication that if there was a CUTPA loss, it was caused not by the conduct of the defendant, but rather by the conduct of the plaintiff, himself, because he simply could have taken back his $100 deposit and walked away from the transaction rather than initiate a CUTPA claim. Encouraging a claimant to walk away after a business has subjected him to an unfair or deceptive act is not the aim of CUTPA. On the contrary, CUTPA is aimed at eliminating or discouraging unfair methods of competition and unfair or deceptive acts or practices. To achieve that result, CUTPA seeks to create a climate in which private litigants help to enforce the ban on unfair or deceptive trade practices or acts. Encouraging claimants to walk away from unfair or deceptive practices does not serve to help enforce the ban on unfair trade practices and prevents CUTPA from achieving the remedial effect which the legislature desired." (Internal citation and quotation marks omitted.)
Furthermore, the defendant's conduct in this case evidences a reckless indifference to the rights of the plaintiff. Just as the defendant had attempted to stonewall the plaintiff in Tessmann, supra, Lipkin and the defendant did the same to the plaintiff. Not only was it egregious conduct to fail to honor its exchange program which induced the plaintiff to purchase a vehicle from the defendant, but to falsely state to the Department of Consumer Protection that the "vehicle does not qualify for the exchange program because of mileage" is conduct that clearly calls for punitive damages. This was simply "reckless and intentional conduct by the defendants" to the plaintiff's detriment. Tessmann at 55.
Furthermore, conduct by Lipkin in attempting to extract more money from the plaintiff by claiming that the plaintiff was only eligible to receive the "trade-in" value was reprehensible. Not only was he seeking to exchange the Honda automobile which had a price of $12,000 in exchange of the Toyota which had a price tag of $15,130 by allowing only the Toyota's trade in value but he attempted to extract another $1,000 from the plaintiff by claiming the exchange program would only credit the purchaser with wholesale price of the car being traded which, as previously noted, was never disclosed in the pamphlet describing the exchange program.
In his closing sentence to the Department of Consumer Protection in response to the complaint filed against the defendant, Lipkin stated: "[u]nfortunately car dealers have a bad reputation . . ." If car dealers have a bad reputation, it is because of used car dealers like Lipkin and the defendant.
In awarding punitive damages the court is well aware that an excessive amount can offend the Due Process Clause of United States Constitution. State Farm Mutual Automobile Ins. Co. v. Cambell, 123 S.Ct. 1513, 1524 (2003). ("Few awards [of punitive damages] exceeding a single-digit-ratio between punitive and compensatory damages, to a significant degree, will satisfy due process.") But see Mathas v. Accor Economy Lodging, 03-1010 (7th Cir. 2003). In Mathas, plaintiffs brought an action against defendant who operates "Motel 6" and "Red Roof Motels" in which the plaintiffs rented a room and were bitten by bedbugs. The Seventh Circuit held that the Supreme Court did not lay down a "single-digit-ratio rule" but merely stated "there is a presumption against an award that has a 145 to 1 ratio." In other words, punitive damages are to punish and "this punishment should fit the crime." Id. In Mathas, the 7th Circuit Court of Appeals approved $186,000 for each of two plaintiffs which amounted to 37 times theft compensatory damages.
More than likely, an excessive amount would also offend the Due Process Clause of the Connecticut Constitution.
Here, the plaintiff argues that the amount of punitive damages must be sufficient to punish and deter the defendant from repeating its actions. The plaintiff argues that they should receive ten times the amount of compensatory damages using Larobina as her barometer. In Larobina, the compensation damages were $100 and the court allowed $1000 as punitive damages. The multiplier of 10 times, the compensation damages in this case would result in punitive damages of $50,000. Although the conduct of the defendant in this case was egregious, the court is not of the opinion that it requires ten times the compensatory damage.
In awarding punitive damages, the court takes into consideration that the plaintiff is also entitled to recover her attorneys fees and other costs. The court awards punitive damages in the amount of $35,000, a ratio of 7 to 1.
There will be an evidentiary hearing on attorneys fees for the plaintiff on December 15, 2003 at 10:00 A.M.
BERDON, JUDGE TRIAL REFEREE