Stokes v. TLCAS, LLC

348 P.3d 739

2015 UT App 98

Gary STOKES and Pauline Stokes, Plaintiffs and Appellees

v.TLCAS, LLC;

Gary Gee;

Nancy Gee;

and Auto–Owners Insurance Company, Defendants and Appellants.

Auto–Owners Insurance Company, Third-party Plaintiff and Appellee

v.Marva Gee, Third-party Defendant and Appellant.

No. 20130829–CA.

Court of Appeals of Utah.

April 23, 2015.

Denver C. Snuffer Jr., Steven R. Paul, Sandy, and Daniel B. Garriott, Salt Lake City, Attorneys for Appellants TLCAS, LLC; Gary Gee; Marva Gee; and Nancy Gee.

Richard K. Glauser and Michael W. Wright, Sandy, Attorneys for Appellee Auto–Owners Insurance Company.

P. Bryan Fishburn, Salt Lake City, Attorney for Appellees Gary Stokes and Pauline Stokes.

Judge KATE A. TOOMEY authored this Memorandum Decision, in which Judges J. FREDERIC VOROS JR. and MICHELE M. CHRISTIANSEN concurred.

Memorandum Decision

TOOMEY, Judge:

¶ 1 TLCAS, LLC, together with Gary Gee, Marva Gee, and Nancy Gee (collectively, TLCAS) appeals from the trial court's ruling that TLCAS engaged in deceptive and unconscionable practices under the Utah Consumer Sales Practices Act (the UCSPA) and is liable to Auto–Owners Insurance Company (Auto–Owners) for costs related to a dealer's bond and reasonable attorney fees under the terms of an indemnification agreement. Specifically, it contends the court erred by (1) relying on the lay opinions of Gary and Pauline Stokes to conclude that TLCAS had forged the Stokeses' signatures on a document; (2) finding TLCAS's sale of a truck with an odometer showing substantially different mileage from the actual mileage travelled was a deceptive practice; and (3) inappropriately considering hearsay evidence that the Stokeses paid for the truck. Finally, TLCAS argues Auto–Owners settled its claim with the Stokeses in bad faith and Auto–Owners' participation in the trial after the settlement was improper. We affirm.

¶ 2 TLCAS, LLC, a licensed used car dealership owned by Gary and Marva Gee, is bonded by Auto–Owners.¹ In May 2006, TLCAS bought a 1996 Dodge truck with certified mileage of 189,041. Sometime between May and August 2006, TLCAS replaced the truck's dashboard and instrument panel with one from another vehicle. The replacement odometer showed only 103,510 miles—at least 85,000 fewer miles than the truck had actually been driven.

¶ 3 In October 2006, Gary Stokes decided to purchase the truck—in part because of its relatively low mileage. Gary Stokes contacted an account manager at his bank for advice about whether he should pay for the truck by applying for a loan or with cash from the proceeds of a recent trailer sale. The account manager advised Gary Stokes to pay for the truck with cash.

¶ 4 On October 2, 2006, Gary Stokes drove to TLCAS where he negotiated the purchase of the truck. During negotiations, no one at TLCAS disclosed that the dashboard had been replaced or that the mileage on the odometer was inaccurate. After agreeing on a purchase price of $3,900, Gary Stokes informed Gary Gee that he would return with his wife later that day to purchase the truck.

¶ 5 That evening, the Stokeses met with Gary Gee to complete the purchase. With sales tax and fees, the purchase price totaled $4,548.74, but the Stokeses had only $4,500 in cash with them. Nevertheless, Gary Gee agreed to take this sum as payment in full. As part of the purchase, the Stokeses signed a number of documents, including a Motor Vehicle Contract of Sale, a Vehicle “As Is” Agreement, a customer-choice statement, and an “Odometer Disclosure Statement.” On the “As Is” Agreement, below the seller and buyer information boxes, the word “exempt” was typed in the box for noting the odometer reading. Moreover, the Odometer Disclosure Statement contained the typed word “exempt” in the odometer reading box.

¶ 6 After signing the documents, Pauline Stokes asked Gary Gee to give her a receipt for the $4,500 purchase. He replied that the contract was her receipt. Pauline Stokes insisted, but Gary Gee offered several excuses for not providing it and told her “a receipt written by hand on a piece of paper would not be legal.” Pauline Stokes then demanded the return of the $4,500 payment, before Gary Gee relented and “gave her a hand written receipt and included it with the copies of papers they had signed.” After they received the receipt, the Stokeses' “attention was diverted by another customer who was loudly airing a complaint.” A few days later Pauline Stokes noticed the receipt was no longer in the pile of papers.

¶ 7 The Stokeses left the dealership without the truck, explaining that Gary Stokes would return to pick it up. The next day, just after he took possession of the truck, its “tail pipe and muffler broke loose and dropped to the street.” While wiring the muffler and exhaust pipes in place to get home, Gary Stokes noticed they were heavily rusted and had holes in them.

¶ 8 After unsuccessfully trying to convince TLCAS to pay part of the cost of a new muffler and repairs, Gary Stokes contacted the Utah Highway Patrol. A patrolman investigated First Choice Emissions, Gary Gee's other business, to determine how the truck had passed the most recent safety and emissions inspection in its unsafe condition. The patrolman concluded that the truck's “prior safety and emission inspection ... had been improperly conducted, and he gave a written warning to First [Choice] Emissions.”

¶ 9 In November 2006, claiming the Stokeses had failed to pay for the truck, TLCAS submitted to the Division of Motor Vehicles (the DMV) an Application for Certificate of Title for the truck (Application for Title). The application listed TLCAS as a lienholder. Nancy Gee, Gary and Marva Gee's daughter, completed the Application for Title. This document was purportedly signed by the Stokeses on October 2, 2006, but in contrast to all other documents signed by them on that date, the signatures were clearly in someone else's handwriting. The trial court noted that while the Stokeses' handwritten signatures on all other documents were “remarkably consistent,” the signatures on this application were “markedly different.” Moreover, Gary Stokes's name was misspelled “Gay R. Stokes.”

¶ 10 The DMV responded to TLCAS's Application for Title and notified it that the truck's title had already been issued to a local credit union as the lienholder.² Because it could not obtain the title, TLCAS obtained a duplicate title showing itself as a lienholder with an application completed by Marva Gee. Marva Gee signed the document “Gary R. Stokes by TLCAS Marva Gee” without Gary Stokes's permission.

¶ 11 In January 2007, the Stokeses filed a complaint against TLCAS, LLC, Gary Gee, Nancy Gee, and Auto–Owners³ alleging that they owned the truck free of any liens claimed by TLCAS. The Stokeses sought damages under various theories, including violations of the UCSPA for deceptive and unconscionable practices, breach of contract, and fraud. Moreover, the Stokeses sought payment from Auto–Owners under the dealer's bond.⁴ On February 26, 2007, when it filed its answer to the Stokeses' complaint, Auto–Owners filed a cross-complaint against TLCAS seeking enforcement of the terms of an indemnity agreement.⁵ Furthermore, on March 12, 2007, TLCAS filed a counterclaim against the Stokeses.⁶

¶ 12 A bench trial was held in May 2013, during which the Stokeses testified regarding their recollection of the events. They also testified that the signatures on the Application for Title were not theirs. Pauline Stokes testified about her dispute with Gary Gee over the receipt. The Stokeses called several witnesses, including their account manager, who described his discussion with Gary Stokes about using cash to make the purchase, and another witness, who testified that he purchased one of Gary Stokes's trailers for $8,500 cash on October 1, 2006. Likewise, Gary Gee, Marva Gee, and their children Nancy Gee and Dale Gee, testified regarding their recollections of the truck sale and subsequent events. Marva Gee testified that she signed Gary Stokes's name on the application for duplicate title without his permission.⁷ Moreover, Gary Gee testified that the Stokeses did not pay for the truck but did sign the Application for Title.

¶ 13 The trial court ruled in favor of the Stokeses and Auto–Owners. It concluded that TLCAS's sale of the truck with “an odometer that displayed approxima[tely] 85,000 miles less than actual miles, without disclosing to [the Stokeses] the discrepancy or its cause, is a deceptive act as well as an unconscionable practice.” The court also found that submitting a forged document to the DMV and requesting a lien on the truck notwithstanding the Stokeses' payment was an unconscionable practice. Moreover, the court concluded that Auto–Owners acted in good faith in settling its claim with the Stokeses.

¶ 14 Because the Stokeses were unable to provide proof of a substantial reduction in the truck's value as a result of TLCAS's conduct and calculating the damages was therefore problematic, the court awarded only statutory damages of $2,000 and reasonable attorney fees. See Utah Code Ann. § 13–11–19(2), (5)(a) (LexisNexis 2013). The court also ordered TLCAS to release the lien recorded on the duplicate title and surrender it to the Stokeses. Finally, consistent with the findings, the court entered judgment in favor of Auto–Owners against TLCAS, Gary Gee, and Marva Gee, “each of whom is jointly and [severally] liable for the debt,” including the $5,000 paid to the Stokeses and reasonable attorney fees, under the terms of the indemnity agreement. TLCAS appeals.

I. The Application for Title

¶ 15 The court found that the Stokeses had not signed the Application for Title and “that someone with TLCAS forged the signatures of Gary Stokes and Pauline Stokes that appear on the Application for Title.”⁸ TLCAS does not explicitly challenge the finding that the signatures were forged; instead it contends “the court erred by relying exclusively on the testimony of the Stokes [es] to...