P. G. ECONOMY MOTORS and its ) principal, Leland A. Taylor, )
Respondents. )
This matter came on for hearing in Pensacola, Florida, before the Division of Administrative Hearings by its duly designated Hearing Officer, Robert T. Benton, II, on September 29, 1983. Leland A. Taylor appeared on his own behalf and on behalf of his business. Petitioner was represented by counsel:
William P. White, Jr. Assistant State Attorney Post Office Box 12726 Pensacola, Florida 32501
By a complaint issued June 1, 1983, petitioner alleged that respondents do business in Pensacola, and in a single judicial circuit, and that:
Respondents are engaged in the business of selling used cars. On one or more occasions Respondents have represented that their automobiles were in good running condition when such was not the case and Respondents knew or should have known that such representations were inaccurate, deceptive and/or misleading. Respondents have further failed to honor their express and/or implied warranties for such automobiles and [are guilty of] other [unfair] practices . . .
The complaint alleges that these practices "violate the law and public policy of the United States and the State of Florida as established by Section(s) [sic] 501.204, Florida Statutes, common law and/or case law," and that they "constitute unfair and/or deceptive trade practices" in that they are unlawful, "unethical, immoral or unscrupulous . . . and . . . have damaged consumers, competitors or other businessmen," all in violation of Part II, Chapter 501, Florida Statutes.
Whether there is probable cause for petitioner to bring an action against respondents for violation of the Florida Deceptive and Unfair Trade Practices Act?
In March of 1983, Ms. Yvonne LeBerg purchased a green 1972 Pontiac Catalina from respondent MPG Economy Motors (MPG), after a conversation with respondent Leland A. Taylor. She told him she wanted to give her daughter and her family a car, and that her son-in-law could fix any minor problems. Mr. Taylor told her that the 1972 Pontiac (the car) had a hole in the trunk from rust; and there was some talk of "oil in the bottom"; but he assured her that the car was in "good running condition." Ms. Cardinale Williams, a friend of Ms. LeBerg who overheard discussions between Mr. Taylor and Ms. LeBerg, remembers Mr. Taylor's presentation that the car was in good running condition. Ms. LeBerg decided to buy the car, made a deposit against the purchase price, and left with Ms. Williams.
Wallace Carter, who is married to Ms. LeBerg's daughter Suzanne, picked the car up and closed the transaction on March 12, 1983. Neither he nor Ms. LeBerg drove the car beforehand, although he did start the engine and suggest a test drive. Mr. Taylor said he wanted to get home to supper. As far as the evidence shows, Mr. Carter was aware at the time that the rear view mirror had come unattached and needed regluing. At no time did Mr. Taylor or anybody else disclaim any warranty in writing or otherwise.
Boy scouts were in the car on an outing and Mrs. Suzanne Carter was driving, when the car caught fire; smoke billowed and everyone escaped unharmed. The fire is thought to have been caused by some electrical problem. The headlights have not worked since, and the car has hardly been driven since.
About three months later, the Carters asked Mr. Wayne Sturdivant a "service advisor" at the local Pontiac dealer, to make a visual inspection of the car and estimate the cost of repair. The exhaust system needed replacement. A power steering hose leaked fluid, as did the transmission, which required a new front pump seal. Valve cover gaskets needed replacement. In addition, the air conditioning compressor was out, and, of course, the headlights did not work. According to Mr. Sturdivant's uncontroverted testimony, only the power steering and exhaust problems were serious enough to affect safety. The record does not establish the reasonable cost of repairs necessary to put the car in good running condition.
The Carters brought their problems with the car to Mr. Taylor'S attention. They also complained of poor gas mileage and cracks at the edge of the windowshield that Mr. Carter uncovered when he removed some chrome trim. At one time Mr. Taylor offered to take the car back on consignment, do some repairs, and make the Carters whole (except for registration fees) if it could be sold for $100.00 more than Ms. LeBerg paid for it, and if Ms. LeBerg would withdraw her complaint. Negotiations faltered, however, and were eventually broken off, with Mr. Taylor declining to effect any repairs or rescind the sale.
THE IMPALA
The day the car she then had threw a rod, Ms. Barbara J. Blinz Wilson left it at the MPG lot, with Mr. Taylor's permission. On May 24, 1983, she
bought a 1963 Chevrolet Impala from MPG, after a friend had looked the car over for her, and after a test drive. The sale documents include a form warranty disclaimer signed by Ms. Wilson and her daughter, which states:
AS IS
THIS USED MOTOR VEHICLE IS SOLD AS IS WITHOUT ANY WARRANTY, EITHER EXPRESSED OR IMPLIED. THE BUYER WILL BEAR THE ENTIRE EXPENSE OF REPAIRING OR CORRECTING ANY DEFECTS THAT MAY PRESENTLY EXIST OR THAT MAY OCCUR IN THE VEHICLE. THE DEALER (SELLER) SHALL NOT HAVE ANY RESPONSIBILITY FOR CONSEQUENTIAL DAMAGES. DAMAGES TO PROPERTY, DAMAGES FOR LOSS OF USE, LOSS OF TIME, LOSS OF PROFITS, OR INCOME OR ANY INCIDENTAL DAMAGES WITH RESPECT TO ANY DEFE [sic] OR MALFUNCTION OR UNFITNESS OR OTHER DEFICIENCY OF THIS VEHICLE.
Petitioner's Exhibit No. 4.
Ms. Wilson understood that she was buying the Chevrolet as is. Mr. Taylor did not know that such forms existed at the time he sold Ms. LeBerg the Pontiac.
Three weeks after she purchased the car, Ms. Wilson spent $31 for a radiator repair, and a water hose sprung a leak the day before the hearing. She still used the car daily. Her principal complaint was that, until it was removed, the headliner tended to fall from the ceiling in swatches, obstructing her view.
CONCLUSIONS OF LAW
Under the Florida Deceptive and Unfair Trade Practices Act, Sections
501.201 et seq., Florida Statutes (1981), an "enforcing authority" is authorized to bring an action "to obtain a declaratory judgment that an act or practice violates [Chapter 501, Part II, Florida Statutes (1981)]," Section 501.207(1)(a), Florida Statutes (1981), or an "action on behalf of one or more consumers for . . . damages . . ." Section 501.207(1)(c), Florida Statutes (1981). Before instituting judicial proceedings for declaratory judgment or for damages, however, "the enforcing authority shall, pursuant to an administrative hearing, determine that there is probable cause to bring the action." Section 501.207(2), Florida Statutes (1981).
The "enforcing authority" is the Department of Legal Affairs when a violation "occurs in or affects more than one judicial circuit or if the Office of State Attorney fails to act upon a violation within 90 days after a written complaint has been filed with the State Attorney." Section 501.203(4), Florida Statutes (1981). Where the violation occurs solely within or affects only a single judicial circuit, as here, the Office of the State Attorney is the "enforcing authority," whether the complaint is filed directly with the Office of the State Attorney or whether it is referred by the Department of Legal Affairs.
On the merits, the question is whether there has been "adequate proof of probable cause for the institution of a civil suit." Kasha v. Department of Legal Affairs, 375 So.2d 43, 44 (Fla. 3d DCA 1979). The quantum of proof is less than a preponderance of the evidence. Id. There must be a showing only
that there is reason to believe that respondents have been guilty of "unfair or deceptive acts or practices." Section 401.204(1), Florida Statutes (1981). This language has been held not to apply to real estate transactions, State ex rel.
Herring v. Murdock, 345 So.2d 759 (Fla. 4th DCA 1977), and certain provisions have been limited to "consumer transactions." Black v. Department of Legal Affairs, 353 So.2d 655 (Fla. 2nd DCA 1977). Neither of these limitations pertain here.
In construing the language "unfair or deceptive acts or practices," due consideration and great weight shall be
given to the interpretations of the Federal Trade Commission and the federal courts relating to s. 5(1)(1) of the Federal Trade Commission Act (15 U.S.C. 45(a)(1)), as from time to time amended.
Section 501.204(2), Florida Statutes (1981).
The United States Supreme Court quoted with approval the following formulation by the Federal Trade Commission:
whether 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 (or competitors or other businessmen). Statement of Basis and Purpose of Trade Regulation Rule 408, Unfair or Deceptive Advertising and Labeling of Cigarettes in Relation to the Health Hazards of Smoking. 29 Fed Reg 8355 (1964).
FTC v. Sperry & Hutchinson Co., 405 v. S. 233,
244 n. 5 (1972). (quotation marks omitted)
The Department of Legal Affairs has adopted rules which specifically address sales of automobiles. Rule 2-19.05, Florida Administrative Code, provides in pertinent part:
It shall be an unfair or deceptive act or practice for a motor vehicle dealer to:
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Represent the previous usage or status of a motor vehicle to be something that, in fact, it was not; or make such representations
unless the dealer has proper information regarding the history of the vehicle to support the representations.
Represent the quality of care, regularity of servicing or general condition of any motor
vehicle unless known by the dealer to be true and supportable by material fact.
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Sell a motor vehicle without fully and conspicuously disclosing in writing at or before the consummation of sale any warranty or guarantee terms, obligations and conditions that the dealer or manufacturer has given to the buyer of the motor vehicle. If the warranty obligations are to be shared by both the dealer and the buyer then the method of determining the percentage of monetary repair costs to be assumed by both parties shall also be disclosed. If the dealer intends to disclaim or limit any express or implied warranty, such disclaimer shall be made in writing in a conspicuous manner and in laymen's terms in accordance with the requirements of Chapter 672, Florida Statutes, and the "Magnuson Moss Warranty--Federal Trade Commission Improvement Act."
Provide an express or implied warranty and fail to honor such warranty unless properly disclaimed in accordance with the written warranty requirements of subsection (6).
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(21) Engage in any other activity that is misleading or deceptive.
Respondent is a motor vehicle dealer within the meaning of the rules. Rule 2- 19.01(4), Florida Administrative Code.
Petitioners also contend that provisions of the Uniform Commercial Code, specifically Sections 672.313-316 and 672.318, Florida Statutes (1981), establish that respondent breached implied warranties that the car was fit for driving.
There is no probable cause to believe that respondents were guilty of unfair trade practices in connection with the sale of the Chevrolet to Ms. Wilson. Express and implied warranties were disclaimed in a writing that Ms. Wilson read and signed before she bought the car.
With respect to the sale of the Pontiac to Ms. LeBerg, however, Mr. Taylor made no written disclaimer and assured Ms. LeBerg that the car was in good running condition. The evidence established that the car was not in good running condition three months later. The headlights' failure to work was explained by the electrical fire which no evidence suggested could have been foreseen at the time of the sale. While the evidence did not establish that the leaks in the power steering hose or the transmission seal or the valve cover gaskets existed at the time of sale or that, if so, they were then of such a magnitude as to preclude the car's being in good running condition, there was evidence of some kind of leak at the time of the sale. The fact that the whole exhaust system required replacement three months after the sale does not prove conclusively that it was defective at the time of sale, but it definitely suggests that, and together with the other problems reported by Mr. Sturdivant gives probable cause to believe that respondents were guilty of unfair and
