Statutory cause of action caps punitive damages - Missouri
In Estate of Max E. Overbey v. Chad Franklin National Auto Sales North, L.L.C., and Chad Franklin, the Overbeys sued Chad Franklin National Auto Sales (National) for fraudulent representation in violation of the Missouri Merchandising Practices Act. The Overbeys enrolled in the "payment-for-life" membership plan at National. As a "Payment-for-Life" member, the Overbeys paid a $500 enrolment fee and National paid them $3253 which lowered the their monthly car note to $49. The salesman promised the Overbeys that they could trade the SUV in six months for another vehicle. The Overbeys returned to National in six months to trade the SUV and a National salesperson told the them that they were required to pay $719.52 per month for the remaining 65 months left on the contract.
The jury found in favor of the Overbeys and entered judgment against National for $76,000 in actual damages and $250,000 in punitive damages. The jury also awarded $4500 in actual damages and $1 million in punitive damages against Franklin but the trial judge reduced the punitive damages amount to $500,000 pursuant to a statutory punitive damages cap contained in 510.265, RSMo. Supp. 2010. The Overbeys appealed arguing that the trial court's reduction of punitive damages violated their right to a jury trial, due process and equal protection and violates the separation of powers doctrine. Mr. Franklin appealed on the basis that the Overbey's failed to make a submissible case and that the reduced amount of punitive damages was excessive.
The Overbey's overcame their burden of proof by proving that Mr. Franklin used deception, fraud, false pretense, misrepresentation, unfair practice or the concealment, suppression or omission of any material fact connected to the sale or advertisement of the sale of merchandise. The Court held that the following evidence was sufficient for a submissible case: (1) Mr. Franklin was the sole owner of National and Chad Franklin Suzuki; (2) Nationals commercials offering the "payment-for-life" program; and (3) Chad Franklin Suzuki's commercials advertising a similar program.
The Court relied on Missouri precedent that considered the egregiousness of conduct when awarding significant punitive damages in a case where there were minimal actual damages. The Court held that the $500,000 in punitive damages was reasonable and proportionate to the harm Mr. Franklin inflicted.
Furthermore, the Court held that the Overbey's decision to sue under a statutory cause of action subjected them to the remedies defined under the Missouri Merchandising Practices Act. As such the trial court's decision to cap the punitive damages did not violate the separation of powers doctrine or their right to a trial by jury or due process and equal protection.
