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09/02/94 RICHARD E. HINES AND LINDA D. HINES v.

September 2, 1994

RICHARD E. HINES AND LINDA D. HINES
v.
RIVERSIDE CHEVROLET-OLDS, INC., ET AL.



Appeal from Elmore Circuit Court. (CV-92-206). John B. Bush, TRIAL JUDGE.

As Corrected October 7, 1994. Second Correction. Third Correction. Rehearing Overruled January 13, 1995. Released for Publication April 22, 1995.

Almon, Hornsby, C. J., and Shores, Kennedy, Ingram, and Cook, JJ., concur. Maddox, J., concurs in part and Dissents in part.

The opinion of the court was delivered by: Almon

ALMON, JUSTICE.

The plaintiffs Richard E. Hines and Linda D. Hines appeal from a summary judgment in favor of General Motors Corporation, Riverside Chevrolet-Olds, Inc. ("Riverside Chevrolet"), and Tommy Hatchett, a salesperson employed by Riverside Chevrolet. The Hineses brought this action for compensatory and punitive damages, alleging claims of intentional suppression and fraudulent misrepresentation in connection with their purchase of a 1991 Oldsmobile Calais automobile from Riverside Chevrolet. The issues are (1) Whether the defendants owed a duty to the Hineses to disclose that the left rear quarter panel of the Oldsmobile Calais had been repainted and intentionally breached that duty; (2) Whether the Oldsmobile Calais, whose left rear quarter panel had been repainted by the manufacturer, was a "new" car as a matter of law, and (3) Whether § 6-11-20, Ala. Code 1975, required the Hineses to present "clear and convincing" evidence creating a genuine issue of material fact as to their claims of intentional suppression and fraudulent misrepresentation.

In October 1991, the Hineses bought a 1991 Oldsmobile Calais from Riverside Chevrolet in Wetumpka. The Oldsmobile Calais was sold with a General Motors warranty providing repair and replacement in regard to defects in the material or workmanship of the car for a period of three years or 50,000 miles, whichever came first. In the glove compartment of the Oldsmobile Calais was an owner's manual entitled "1991 Warranty and Owner Assistance Information," which, among other things, contained the terms of the warranty. This manual contains a "pre-delivery service" clause:

"Defects in or damage to the mechanical, electrical, sheet metal, paint, trim, and other components of your vehicle may occur at the factory or while it is being transported to the dealership. Normally, any defect or damage occurring during assembly is detected and corrected at the factory during the inspection process. In addition, dealerships are obligated to inspect each vehicle before delivery. They repair any uncorrected factory defects or damage and any transit damage detected before the vehicle is delivered to you.

"Any defects still present at the time the vehicle is delivered to you are covered by the warranty. If you find any such defects when you take the delivery, please advise your dealership without delay."

(Emphasis added). In his deposition, Richard Hines testified that after he bought the car, he "glanced" through the contents of this manual.

After owning the Oldsmobile Calais for several months, Richard Hines noticed a slight discrepancy in hue between the paint on the left rear quarter panel and that of the rest of the car. The paint on the left rear quarter panel was darker than the paint on the rest of the car. He had the Oldsmobile Calais examined by employees of three automobile body shops; they all told him that in their opinion the left rear quarter panel had been repainted. No one at any of these body shops, however, expressed the opinion that the Oldsmobile Calais had been damaged in a wreck or a collision.

Richard Hines confronted Terry Styron, owner of Riverside Chevrolet, about the matter. Styron denied that the Oldsmobile Calais had been damaged and repaired or that the car had been repainted while it was in the possession of Riverside Chevrolet. According to Riverside Chevrolet, after receiving the Oldsmobile Calais from General Motors, its manufacturer, employees of Riverside Chevrolet inspected the car and later "buffed out" some "beaded" or rough paint on the left rear quarter panel. Styron offered to repaint the entire car to cure the discrepancy in hue, but Richard Hines refused, stating that a repainted car is worth less than one with the original factory paint finish and that he wanted a car with the original factory paint finish. Styron offered to replace the Oldsmobile Calais with another car, but because Riverside Chevrolet could not find a replacement with the same interior color, Mr. Hines declined the offer.

The Hineses brought this action against Riverside Chevrolet and Tommy Hatchett, the Riverside Chevrolet salesperson who sold them the Oldsmobile Calais, and numerous fictitiously named defendants, alleging that the defendants had intentionally suppressed the fact that the car had been repaired and repainted and that that fact was a material one. The Hineses subsequently amended their complaint, to substitute General Motors for one of the fictitiously named defendants and to add a claim of fraudulent misrepresentation against all the defendants. With regard to the claim of fraudulent misrepresentation, the Hineses alleged that the defendants had represented the Oldsmobile Calais as a "new" car and alleged that, because the left rear panel had been repainted, that representation was false. Based on information obtained during discovery, the Hineses also alleged that the Oldsmobile Calais had been repainted before Riverside Chevrolet received the car and while it was in the possession of General Motors.

In support of their motion for a summary judgment, General Motors and Riverside Chevrolet introduced the affidavit of Troy Martin, the body shop manager of Riverside Chevrolet; the affidavit of Mike Warren, the body shop manager of the Capitol Chevrolet dealership in Montgomery; and excerpts from the depositions of Richard and Linda Hines. In his affidavit, Martin stated that when the Oldsmobile Calais was inspected after delivery, an approximately one-inch-wide rough spot in the paint on the left rear quarter panel was discovered and "buffed out." According to Martin and Warren, "buffing out" involves an "automatic" waxing and polishing of the exterior of a vehicle, which is performed as a routine part of a dealer's preparation of any vehicle for sale to the public. Martin and Warren stated that "buffing out" does not affect the "newness" of a vehicle and that neither Riverside Chevrolet nor any other automobile dealership, of which they were aware, disclosed such work on a new car before selling it. Both Martin and Warren also stated that the left rear quarter panel of the Oldsmobile Calais appeared to have been repainted but that the car did not appear to have been damaged in a wreck or a collision. Both Martin and Warren expressed the opinion that the Oldsmobile Calais had been repainted at the factory to correct a scratch or other minor imperfection in the paint.

In opposition to the motion for a summary judgment, the Hineses introduced the delivery receipt, the receipt for the "buffing out" performed on the Oldsmobile Calais, excerpts from Richard Hines's deposition, the affidavit of an expert named Steve Johnsen, answers to interrogatories, and a General Motors guideline for repair and disclosure regarding vehicles damaged while still in the possession of the assembly plant.

The delivery receipt from Commercial Carriers, Inc., which delivered the Oldsmobile Calais to Riverside Chevrolet, read "Left Rear Quarter Panel Beaded Paint." The invoice for the "buffing out" performed by employees of Riverside Chevrolet read "Paint on left quarter panel rough. Finish, sand, & buff quarter."

In his affidavit, Steve Johnsen stated that if a car on an assembly line has a defect or blemish in its paint, the manufacturer does not refinish it on the assembly line; rather, he said, the car is refinished off the assembly line by a method essentially similar to that used by a body shop, and he said that method creates an inferior paint finish:

"The factory uses a 750-gallon paint drum, and it is constantly agitated by mixing pistons. The paint is sprayed in a 14-foot-wide swath by a computer-instructed pressure cup in a temperature- and humidity-controlled room. By contrast, the hand painter uses a quart re-fill jar and sprays an approximately 14-inch area. Also, the pressure used in the paint guns at the factory is much higher. With the higher pressure, the metallic particles hit the surface and bounce back; the more reflective particles at the surface cause the color to appear lighter. At a lower pressure the paint is darker because the metallic flakes sink to the bottom of the paint surface.

"In any case, one cannot use the same paint which the factory uses in its system. The factory process uses a water-borne paint which is an acrylic enamel-latex base. Due to the vast quantities of painting at the factory, the Environmental Protection Agency has directed that they use this type in contrast to the compounds used for smaller jobs.

"In the factory system an electric charge is put on the metal to be coated and the opposite electric charge is put into the air surrounding it. As the paint sprays through the air it picks up the charge and ionically bonds to the metal surface with the opposite charge.

"A repaint layer is not as durable as the original paint surface. The second layer increases the total thickness of the paint layer. As the brittle paint surface expands and contracts in response to temperature changes, the thicker layers are more affected and therefore begin to flake and crack much sooner."

The General Motors guideline contains rules governing the repair of vehicles damaged while still in the possession of the assembly plant and governing the disclosure of such repairs to prospective customers. The guideline establishes three categories of vehicle damage incurred in the production process. The first category, entitled "Category A," applies to damage "which can be satisfactorily repaired to meet applicable government regulations; [General Motors'] customer's expectations; and General Motors quality standards." If the damage to the vehicle is within a prescribed $500 "current repair limit," then it falls within Category A, and General Motors will repair the damage, but will not disclose it. The guideline states that "All 'paint only' (Paint, labor and materials) repairs, including fluid damage and minor scratches" are not included in the calculation of the $500 current repair limit.

"Category B" applies generally to damage that is repairable but whose cost of repair exceeds the $500 current repair limit. Damage falling within Category B requires disclosure. As with Category A, the current repair limit is calculated without regard to the cost of labor and material necessary to repair paint damage. "Category C" applies to damage so extensive that it affects the marketability, safety, durability, or reliability of the automobile. *fn1

In his deposition, Richard Hines stated that if he had known that the Oldsmobile Calais had been repainted he would not have bought it. Further, he stated that, based on his experience in buying and selling cars, he understood that a repainted car has a significantly lower value than one that has not been repainted, regardless of who repainted it.

In its judgment, the circuit court held that, as a matter of law, the Oldsmobile Calais was a "new" car and that, therefore, the defendants had not misrepresented that it was a "new" automobile. The circuit court also held that the defendants had not suppressed or concealed any material fact, because the fact allegedly suppressed, i.e., the repainting of the car, was not a material fact. Last, the circuit court held that the evidence was insufficient to support a "claim for punitive damages" because, it held, the plaintiffs had not presented "clear and convincing" evidence that the defendants had had an intent to deceive or had committed gross, oppressive, or malicious conduct.

A summary judgment, under Rule 56, Ala. R. Civ. P., is proper only when the trial court determines that there is no genuine issue of material fact and that the movant is entitled to a judgment as a matter of law. Dodd v. Nelda Stephenson Chevrolet, Inc., 626 So. 2d 1288 (Ala. 1993). On a motion for a summary judgment, when the movant makes a prima facie showing that no genuine issue of material fact exists, the burden shifts to the nonmovant to present substantial evidence creating a genuine issue of material fact. Cobb v. Southeast Toyota Distributors, Inc., 569 So. 2d 395 (Ala. 1990); Bean v. Craig, 557 So. 2d 1249, 1252 (Ala. 1990); Rule 56(e), Ala. R. Civ. P.; ยง 12-21-12, Ala. Code 1975. The evidence is viewed most favorably to the nonmovant, and all ...


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