New Jersey Odometer Fraud Cases and Statutes
keywords, odometer rollback, statute, odometer case, federal odometer law,
odometer fraud, odometer rollback claim.
Cogar v. Monmouth Toyota, 331 N.J.Super. 197, 331 N.J.Super. 197, (App. Div. 2000)
(Calculation of damages in odometer fraud/ odometer tampering claim)
This appeal requires us to address, among other issues, the question of whether
multi-defendant liability under the Federal Odometer Law (FOL), 49 U.S.C.A. ��
32701-32711, is joint and several or individual and separate. The trial judge
concluded that such liability was individual and separate; we disagree, reverse
and conclude that such liability is joint and several. We further conclude that
consistent with the Supreme Court's decision in Wanetick v. Gateway Mitsubishi,
N.J. (2000), on a retrial of this matter, the trial judge should instruct the
jury as to the ultimate outcome of both a finding of liability on the FOL claim
as well as plaintiff's claim for damages pursuant to the New Jersey Consumer
Fraud Act, N.J.S.A. 56:8-1 to -91 (CFA).
[13] These are the facts adduced during the jury trial of plaintiff's cause of
action. On October 28, 1993, plaintiff Michelle J. Roepke Cogar and her husband
purchased a 1986 Buick Regal from defendant T & R Motors. Plaintiff was informed
that the vehicle had low mileage of approximately 46,000 miles because it had
been owned by an elderly woman whose husband had died. In fact, the vehicle had
originally been owned by defendant Steven Maglio, who commuted, using the Buick,
from Hazlet, New Jersey to New York City every other week for a period of six
years. In 1992, he negotiated a trade-in of the vehicle with defendant Monmouth
Toyota, receiving a trade-in value of $1000. When Maglio traded in the car,
Monmouth Toyota inquired about the accuracy of the mileage. Maglio responded
that the mileage was accurate stating: "Yes, it has to be. Whatever's on the
clock has to be, has to be the mileage." The Monmouth Toyota salesman later told
Maglio that mechanics had inspected the car and questioned whether the odometer
accurately reflected the number of miles on the car. In fact, when Monmouth
Toyota's mechanic, Kevin Andreach, inspected the vehicle he wrote, "Horrible,
life threatening to drive," and, accordingly, refused to take the car for a test
drive. Maglio indicated that he "[n]ever had cause to" look at the odometer
while he owned the car. He admitted signing an odometer disclosure statement for
the Buick along with at least a "dozen" other documents at the time of the
trade-in, but indicated he did not really understand all the papers he signed.
Approximately a year after he traded in the Buick, someone called Maglio to
inquire about its mileage:
And he said well, was the mileage, I think he said, I think I said 37,000. And I
said I don't think so, it doesn't sound like enough because I had the car for a
while. He said could it have been 137. And I said that sounds more likely,
sounds more reasonable. I said why don't you just look at the clock and it will
tell you how many miles are on it.
And he said that the clock was showing 37. He said was it possible that the
clock could be going around a second time. And I didn't know what he meant. And
he explained to me that on some cars it doesn't show the 100,000 miles. That the
clock goes around twice and I didn't know that. Maglio indicated that
after this conversation he looked at the odometer disclosure statement and
realized it was wrong because it indicated that the Buick had approximately
37,000 miles on it when he traded it in to Monmouth Toyota.
Approximately a week after purchasing the car in 1993, plaintiff received advice
from a family friend who indicated that the Buick had significantly more than
the 46,000 miles which showed on the odometer and had been represented to her by
T & R Motors as the amount of mileage on the car. T & R Motors, through one of
its owners, defendant Tom Scibeck, and an employee, defendant Lee Colefield,
told plaintiff that they would return her deposit if she could prove that the
car had more than 46,000 miles on it. Plaintiff obtained "proof" in the form of
a report from a mechanic; however, when presented with this report, T & R Motors
refused to return the deposit.
Plaintiff attempted, unsuccessfully, to return the car one more time. At that
same time, she learned that T & R had obtained the car from defendant Tom's
Ford. Plaintiff drove the car for approximately two weeks after she
purchased it but then stopped driving it because she "did not feel safe" as the
"car was smoking terribly," and the doors were difficult to close. Additionally,
she could not register it because she refused to pay the balance of the deposit.
She subsequently had the car towed to the State Police in Bordentown for
inspection where it remained for four months.
The vehicle's chain of title was determined as a result of an investigation by
the State Police. The results of the investigation were as follows: Steven
Maglio purchased the vehicle with 15 miles on it in 1986; Monmouth Toyota then
received the title on November 6, 1992, with a represented 37,464 miles;
All-star Leasing Systems acquired it on December 4, 1992, with 37,473 miles;
Kathleen Conklin then obtained title to it on December 22, 1992, with 37,700
miles; Tom's Ford next assumed title to it in October 1993, with 46,600 miles;
and T & R Motors received it with 46,623 miles. After conducting an
investigation, Sergeant O'Malley of the State Police concluded that "the
odometer had actually rolled over once to where all zeros appeared on the
odometer." He additionally concluded that either Maglio or Monmouth Toyota was
responsible for the incorrect representation regarding the mileage.
The car remained in plaintiff's parents' yard for four years. She did not drive
it, but it was insured for two of those years. During that period, plaintiff
rented cars and secured transportation from friends. She purchased another car
within a month; however, that car was unreliable, and she claimed that she did
not have use of any car for a total of sixty-six days. Plaintiff made only two
loan payments to the company which had financed the purchase of the vehicle.
On April 21, 1994, plaintiff filed a complaint against defendants alleging
violations of both the CFA and FOL together with a claim for breach of contract.
The matter proceeded to trial at which time plaintiff's expert concluded that
when he inspected the car, he determined that it was unsafe and likely had been
driven well over 100,000 miles, perhaps as many as 145,000 miles. He opined that
"anybody with automobile knowledge would have known immediately that this car
couldn't possibly have such low mileage." Monmouth Toyota's mechanic, indicated,
however, that to determine the actual mileage of the car would be pure
speculation, and he did not recall whether or not he had thought the car had
significantly more mileage than reflected by the odometer when he had inspected
the car in 1992.
The jury held all defendants liable. Specifically, in response to jury
interrogatories, the jury found that T & R Motors breached its contract with
plaintiff. Additionally, the jury found that all defendants violated both the
CFA and FOL, which proximately caused plaintiff's loss. It allocated the
comparative responsibility of each defendant as follows: Maglio, 0%; Monmouth
Toyota, 35%; T & R Motors, 25%; Roy Rafes, 25%; Lee Colefield, 5%; defendant
Tom's Ford,*fn1 10%. The jury awarded damages in the amount of $6,231.
Post-judgment, the trial judge found that both the CFA and FOL require "the
trebling of compensable damages" and an award of counsel fees to successful
plaintiffs. In a written opinion, he concluded that under the CFA, "plaintiff
may only recover a total of three times her compensable damages" irrespective of
the number of defendants found responsible. However, the trial judge further
concluded that "each defendant found by the jury to have violated the Federal
Odometer Law is individually responsible to plaintiff in the sum of $18,693."
The judgment in favor of plaintiff amounted to $6,231, reduced by ten percent
(Tom's Ford, Inc.'s settlement) and trebled under the CFA to $16,823.70. Each
defendant was liable in the amount of their percentage of fault.*fn2 Each
defendant was also held individually liable for compensatory damages of $6,231,
trebled under the FOL to $18,693 for a total award to plaintiff under this count
of $56,079. Additionally, counsel fees in the amount of $28,328.40 were awarded
under both statutes although the judge refused to apportion the counsel fees
according to each defendant's percentage of liability, holding defendants
jointly and severally liable for the fee amount. Additionally, costs of
$1,813.45 were awarded. In sum, as a result of the jury's finding of $6,231 in
actual compensatory damages, plaintiff received $56,079 after reduction and
trebling under the CFA and FOL; together with counsel fees of $28,328.40, and
costs of $1,813.45.
Both Maglio and Monmouth Toyota appeal and raise similar issues. Both urge that
the trial judge erred in concluding that the FOL mandated separate and
individual liability urging that any liability should be joint and several
rather than separate and individual. Additionally, they argue that the trial
judge was obligated to instruct the jury as to the ultimate outcome of its
verdict also challenging the form of the verdict sheet presented to the jury
during its deliberations. Finally, Monmouth Toyota challenges the judge's
failure to apportion the attorneys' fees awarded to plaintiff.
We commence our analysis with a discussion of the FOL. The FOL imposes civil
liability on those who tamper with car odometers or fail to accurately disclose
the mileage of vehicles. 49 U.S.C.A. �� 32701-32711. In promulgating the FOL,
Congress recognized the heavy reliance of a buyer "on the odometer reading as an
index of the condition and value of a vehicle;" "as an accurate indication of
the mileage of a vehicle;" and "in deciding on the safety and reliability of the
vehicle." 49 U.S.C.A. � 32701(a)(1) - (3). To accomplish its objectives, the FOL
requires "a person transferring ownership of a motor vehicle [to] give the
tranferee a written disclosure - (A) of the cumulative mileage registered by the
odometer; or (B) that the mileage is unknown if the transferor knows that the
mileage registered by the odometer is incorrect." 49 U.S.C.A. � 32705 (a)(1)(A)
- (B).
The operative provision of the FOL relevant to the issue on appeal is 49 U.S.C.A.
� 32710(a), which provides:
A person that violates this chapter or a regulation prescribed or order issued
under this chapter, with intent to defraud, is liable for 3 times the actual
damages or $1,500, whichever is greater.
In interpreting this provision, various courts are of two minds as to whether
the liability is separate and individual or joint and several. Some courts
support the former view. See, e.g., Ferris v. Haymore, 967 F.2d 946, 956-57 (4th
Cir. 1992); Alley v. Chrysler Credit Corp., 767 F.2d 138, 141-42 (5th Cir.
1985); Saber v. Dileo, 723 F. Supp. 1167, 1167-68 (E.D. La. 1989); Mataya v.
Behm Motors, Inc., 409 F. Supp. 65, 70 (E.D. Wis. 1976); Majcher v. Laurel
Motors, Inc., 680 N.E.2d 416, 428-29 (Ill. App. Ct. 1997). Other courts support
the latter position. See, e.g., Rice v. Gustavel, 891 F.2d 594, 596-97 (6th Cir.
1989); Roberts v. Robert V. Rohrman, Inc., 909 F. Supp. 545, 553-57 (N.D. Ill.
1995); Yowell v. Boyd Chevrolet, Inc., 504 F. Supp. 77, 78 (W.D. Okla. 1980);
Duval v. Midwest Auto City, Inc., 425 F. Supp. 1381, 1388-89 (D. Neb. 1977),
aff'd, 579 F.2d 721 (8th Cir. 1978); Slaymaker v. Westgate State Bank, 739 P.2d
444, 453-57 (Kan. 1987); Chapotel v. Bailey Lincoln-Mercury, Inc., 363 So. 2d
451, 453-54 (La. 1978).
Those courts that have adopted the view that the statute imposes separate and
individual liability focus primarily on the language of the statute setting
forth that "a person" in the chain of title bears liability. The reasoning is
simply stated:
The statute provides that "[a]ny person"*fn3 who fraudulently violates its
provisions "shall be liable" for "three times the amount of actual damages
sustained or $1,500, whichever is the greater." 15 U.S.C. � 1989(a)(1). The
statute thus not only provides to victims of odometer fraud a cause of action
against each violator of the statute but also expressly provides that each
violator will be liable for treble or statutory damages. [Ferris, supra, 967
F.2d at 956.]
The Fourth Circuit in Ferris also observed that each fraudulent transfer of an
automobile is a separate violation of the federal odometer statute. Joint and
several liability applies only where multiple defendants are responsible for a
single tort, not where multiple defendants have each committed a separate tort.
In any event, when Congress has intended to impose joint and several liability
rather than separate and individual liability, it has so provided explicitly.
[Id. at 956-57 (citations omitted).]
The Fifth Circuit, adopting the reasoning in Ferris, has also found liability to
be individual, concluding that "where separate odometer statements were issued,
each issuer is subject to separate and individual liability under the Act."
Alley, supra, 767 F.2d at 142; see also Saber, supra, 723 F. Supp. at 1167-68.
The Sixth Circuit has adopted a contrary view. In Rice, supra, the court
observed:
By providing that "any person" shall be liable, the statute allows the purchaser
to sue not only the immediate seller but any other persons in the chain of the
title who may have been involved in the fraud. The fact that each such person
shall be liable, however, does not necessarily preclude the conclusion that
liability is to be joint and several, rather than separate and individual.
[Rice, supra, 891 F.2d at 596.]
An appropriate analysis of the issue can be found in Duval, supra, where the
district court in Nebraska analyzed both the statute and its purpose:
The policy of the odometer statute is both to "prohibit tampering with odometers
on motor vehicles and to establish certain safeguards for the protection of
purchasers . . ." 15 U.S.C. s 1981. The goal of deterring those tempted to turn
back odometers, which is encompassed within the purpose of prohibiting
tampering, is effected in several ways: Having a minimum civil liability of
$1,500.00 payable to a victim; tripling the actual damages if that results in
more than $1,500.00; allowing of civil penalties payable to the United States of
up to $1,000.00 for each violation of the Act on suit by the Attorney General
(15 U.S.C. s 1990b); providing for criminal penalties (U.S.C. s 1990c);
authorizing inspections, investigations and administrative proceedings by the
Secretary of Transportation for the enforcement of the statute (15 U.S.C. ss
1990d and 1990e); and injunctive relief (15 U.S.C. s 1990). [Duval, supra, 425
F. Supp. at 1388.]
(keywords, odometer rollback, statute, odometer case, federal odometer law,
odometer fraud, odometer rollback claim.)
The court went on to conclude: The array of techniques for controlling violators
or potential violators militates against a holding that each violator should be
required to pay the full judgment and not receive a diminution of his liability
by reason of payment by another. If the statute depended entirely or primarily
upon the civil liability provision to deter incipient violators, or if the civil
liability provision were not itself punitive, the argument for requiring each
violator to pay without benefit of credit for payment by another would be
stronger.
All in all, I am unable to find that legislative history or policy would justify
a judicially declared exception to the rule quoted from the Restatement that
payment by one tortfeasor diminishes the amount of the claim against another
tortfeasor on account of the harm for which each is liable. [Id. at 1388-89.]
In concluding that liability was joint and several, the court referenced the
general rule expressed in the Restatement:*fn4 A payment by any person made in
compensation of a claim for a harm for which others are liable as tortfeasors
diminishes the claim against the tortfeasors, at least to the extent of the
payment made, whether or not the person making the payment is liable to the
injured person and whether or not it is so agreed at the time of payment or the
payment is made before or after judgment. [Restatement (Second) of Torts, �
885(3) (1979).]
We conclude that the more sound view is that liability is joint and several
rather than individual. We agree with the reasoning of the district court in
Duval that nothing is found in the legislative history of the statute to suggest
that liability should be anything other than joint and several; moreover, while
we recognize the punitive objective of the statute, that objective is served by
a trebling of the damages rather than providing a windfall to a successful
plaintiff. In this case, plaintiff established damages approximating $6000, and
defendants are liable for that amount together with an additional $12,000 as a
result of the punitive trebling. We seriously doubt that Congress intended a
damaged plaintiff to recover an additional $36,000 for a total recovery of
$54,000 on a proven damage claim of $6,000, with such multiple recovery a
function of the number of culpable prior owners in the chain of title. Indeed,
"since there was but one harm there can be but one satisfaction." Aljian v.
Schlossberg, 8 N.J. Super. 461, 467 (Law Div. 1950).
The New Jersey Supreme Court has noted that the trebling of damages represents a
legislative civil punishment of offenders, where as a matter of policy such
punishment is appropriate. See Lettenmaier v. Lube Connection, Inc., 162 N.J.
134, 139 (1999) (noting that one of the three purposes of the Consumer Fraud Act
is "to punish the wrongdoer through the award of treble damages"); Cox v. Sears,
Roebuck & Co., 138 N.J. 2, 21 (1994) ("Although one purpose of the [Consumer
Fraud Act] is clearly remedial in that it seeks to compensate a victim's loss,
the Act also punishes the wrongdoer by awarding a victim treble damages,
attorneys' fees, filing fees, and costs."). The use of treble damages as an
appropriate punitive measure appears in other contexts where the Legislature has
concluded that certain statutory violations warrant the doubling or trebling of
damages. See, e.g., N.J.S.A. 46:8-21.1 (providing that a tenant who successfully
demonstrates to a trial court that a landlord wrongfully withheld his security
deposit is entitled to "double" the amount of the deposit); N.J.S.A.
58:10-23.11f (stating that a discharger of hazardous waste who fails to comply
with a directive to clean up such waste "shall be liable to the department in an
amount equal to three times the cost of such cleanup and removal"). Application
of separate and individual liability distorts any punitive scheme suggested by
legislation. The geometric increase in punitive impact results simply as a
function of the number of owners in the chain of title. The punitive civil
liability provisions cannot be allowed to become draconian through an
application which bears little relevance to the true intent of the statute. We
conclude that the trial judge erred in applying a rule which imposed separate
and individual liability and find that the appropriate rule is one of joint and
several liability.
II. Both defendants assert that the trial judge erred by failing to instruct the
jury as to the ultimate outcome as to both the CFA and the FOL. During his
instructions to the jury, the trial judge made no mention of the impact of its
award and the ultimate responsibility of the parties regarding the award.
At trial, Monmouth Toyota requested that the trial judge instruct the jury as to
"ultimate outcome" in order to inform them that under both the CFA and FOL any
damages awarded would be trebled and that plaintiff would be awarded counsel
fees and costs. The judge reserved decision on this request, and ultimately
refused to instruct the jury that any damages they awarded would be trebled.
After retiring for deliberations, the jury asked two questions of the court: 1)
"What is to be included, for example, legal fees and the amount of money which
will fairly and reasonably compensate the plaintiff?" and 2) "To what amount are
we limited?" Monmouth Toyota again requested the court to instruct the jury as
to the ultimate outcome of its award, which request the judge again refused. The
jury proceeded to award plaintiff $6,231 in compensable damages, which the judge
appropriately trebled.
At the time of trial, the issue of whether to inform the jury that any damages
it awarded under the CFA would be trebled had not been resolved in New Jersey.
Indeed, the Model Jury Charges-Civil, 4.23 at 16-17, as they existed at the time
of trial, noted that no New Jersey court had directly addressed the issue,
explaining the two differing viewpoints that had emerged on the question and
stating that the Committee on Model Civil Jury Charges took "no position on the
question." Compare Semke v. Enid Auto. Dealers Ass'n, 456 F.2d 1361, 1370 (10th
Cir. 1972) (noting in an antitrust case that the court should not have advised
the jury that its award would be trebled), with Roman v. Mitchell, 82 N.J. 336,
345-47 (1980) (holding that "a jury in a comparative negligence situation should
be given an ultimate outcome charge so that its deliberations on percentages of
negligence will not be had in a vacuum, or possibly based on a mistaken notion
of how the statute operates").
The Supreme Court has recently settled the conflict and has determined that
trial judges are to instruct juries as to the ultimate outcome of their verdicts
under the CFA. Wanetick v. Gateway Mitsubishi, N.J. (2000). The Court affirmed
our holding that an ultimate outcome charge was required under these
circumstances. In so holding, we stated:
In enacting the Consumer Fraud Act, the Legislature, presumably reflecting the
contemporary morality of our citizens, recognized that fraud in the marketplace
is particularly pernicious because of the wide disparity between the bargaining
power of the merchant and the consumer. As a result, it built into its remedy a
punitive damages component via treble damages and attorneys' fees. It is fair to
say that this sense of outrage over marketplace fraud is potentially present in
every case in which a Consumer Fraud Act violation is alleged. Thus, jurors,
like the Legislature, may well believe that something more than making the
consumer whole is warranted. It is important therefore for the jury to know that
its purely compensatory award will trigger an automatic punitive remedy. This
will insure that the jury's sense of outrage will not be reflected either in its
assessment of compensation or in some other aspect of the case. [Wanetick v. OCT
Partnership, 318 N.J. Super. 156, 165 (App. Div. 1999), aff'd in part and rev'd
in part, N.J. (2000).]
The Supreme Court agreed, concluding that "jurors sitting in a consumer fraud
case should be informed of the legal effect of their actions so that their
deliberations 'will not be had in a vacuum, or possibly based on a mistaken
notion of how the statute operates.'" Wanetick, supra, N.J. at (quoting Roman v.
Mitchell, 82 N.J. 336, 345 (1980)). This reasoning and result apply with equal
force to the FOL as the ultimate impact of any award is the same as that of the
CFA. The punitive intent of the FOL is consistent with that of the CFA and the
result should be no different.
Finally, we recognize that in Wanetick the Supreme Court stated that the
requirement of an ultimate outcome instruction is prospective in application;
however, since this matter must be remanded for trial, the trial judge should
instruct the jury as to the ultimate outcome of both the CFA and FOL.
III. Lastly, defendants claim that the trial judge erred in refusing to
apportion the counsel fees according to each defendant's percentage of
liability, and also for failing to reduce the fee amount by the percentage of
fault allocated to the defendant who settled. We conclude that the trial judge
did not err in failing to apportion the fees and further did not err in reducing
the fees by one-third of the Ford settlement.
Consumer Fraud Allocation of Counsel Fees
Defendants assert that Gennari v. Weichert Co. Realtors, 148 N.J. 582 (1997)
should be logically extended to require that counsel fees are apportioned
according to the percentage of fault determined by the jury. In Gennari, the
Supreme Court held that those jointly liable defendants whose liability is less
than sixty percent are only required to pay that percentage of treble damages
awarded under the CFA. Id. at 609. Defendants assert that this principle should
be extended to an award of counsel fees under the FOL and CFA. Plaintiff
contends, however, that the Supreme Court's silence on this issue indicates no
desire on its part to apportion fees accordingly. Plaintiff also states that
apportioning fees would not promote the goals of either statute because it would
be contrary to the legislative policy of encouraging attorneys to take cases
that involve only small losses.
In support of their position, defendants note that we have found that
responsibility for an award of interest should be apportioned among defendants
according to their percentage of negligence. Lee's Hawaiian Islanders, Inc. v.
Safety First Prods., Inc., 195 N.J. Super. 493, 507 (App. Div.), certif. denied,
99 N.J. 205 (1984).
We are of the view that the fees should not be apportioned according to
percentage of liability. We have previously observed that the provision for
attorneys' fees under the CFA is mandatory as a result of the legislation's
intent to encourage attorneys to take small claims in order to serve the
important public policy behind the statute. Wisser v. Kaufman Carpet Co., 188
N.J. Super. 574, 579 (App. Div. 1983). To now impose a limitation on the amount
of fees recoverable based on allocation would dilute the significant policy
underpinnings of the fee provision of the legislation.
As for defendants' claim that the counsel fees should be reduced by the
percentage of the settling defendant's liability, we conclude that the trial
judge did not abuse his discretion by reducing the counsel fee award by a
percentage of the settlement with Tom's Ford.[61] We reverse and remand this
matter for a new trial in accordance with this opinion.
--------------------------------------------------------------------------------
Opinion Footnotes
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[62] *fn1 Tom's Ford, Inc. settled with plaintiff prior to trial.
[63] *fn2 For purposes of the FOL, defendants T & R Motors, Roy Rafes and Lee
Colefield were considered one defendant and therefore were collectively, jointly
and severally liable to plaintiff for the total sum. No one challenges this
determination.
[64] *fn3 The statute has been amended to state that "a person" who violates the
statute is liable, rather than "any person." This statutory amendment does not
change our decision in this case.
[65] *fn4 The Duval court cited the first version of the Restatement, which was
current at the time. Although the language and phrasing was changed in the
second Restatement, the principle remains the same.
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