Gasbi, LLC d/b/a Michiana Chrysler Dodge Jeep Ram Fiat v. Tatiyana Sanders

FILED
Mar 06 2019, 9:11 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEES
James P. Buchholz Robert E. Duff
Dana K. Carlson INDIANA CONSUMER LAW GROUP
TOURKOW, CRELL, ROSENBLATT & THE LAW OFFICE OF ROBERT E. DUFF
JOHNSTON, LLP Fishers, Indiana
Fort Wayne, Indiana
Ryan R. Frasher
THE FRASHER LAW FIRM, P.C.
Greenwood, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Gasbi, LLC d/b/a Michiana March 6, 2019
Chrysler Dodge Jeep Ram Fiat, Court of Appeals Case No.
Appellant-Defendant, 18A-PL-1865
Appeal from the St. Joseph Circuit
v. Court
The Honorable John E. Broden,
Tatiyana Sanders, et al., Judge
Appellees-Plaintiffs. Trial Court Cause No.
71C01-1705-PL-189
Bailey, Judge.
Court of Appeals of Indiana | Opinion 18A-PL-1865 | March 6, 2019 Page 1 of 13
Case Summary
[1] In this interlocutory appeal, Gasbi, LLC d/b/a Michiana Chrysler Jeep Dodge
Ram Fiat (“Michiana”) challenges an order denying Michiana’s motion to
dismiss a class action complaint alleging deceptive acts,1 brought by Tatiyana
Sanders (“Sanders”), Shalonda Vida (“Vida”), and Robert Sheppard
(“Sheppard”), on behalf of themselves and others similarly situated (hereinafter,
“Consumers”). Michiana presents the restated and consolidated issue of
whether Michiana was entitled to dismissal pursuant to Indiana Trial Rule
12(B)(6) because Consumers failed to state a claim that Michiana committed a
deceptive act within the meaning of the Indiana Deceptive Consumer Sales Act,
Indiana Code Section 24-5-0.5-1 et seq. (the “Consumer Act”). We affirm.
Facts and Procedural History
[2] On July 14, 2017, Consumers filed their First Amended Class Action
Complaint, seeking relief under the Act and alleging the following. On April
25, 2016, Vida purchased a vehicle from Michiana, a for-profit Indiana
corporation located in Mishawaka. On August 12, 2016, Sheppard purchased a
vehicle from Michiana. On January 28, 2017, Sanders purchased a vehicle
from Michiana. In each instance, the consumer was charged a document
1
See Indiana Trial Rule 23. See also Indiana Code § 24-5-0.5-4(b), stating: “Any person who is entitled to
bring an action under subsection (a) on the person’s own behalf against a supplier for damages for a deceptive
act may bring a class action against such supplier on behalf of any class of persons of which that person is a
member and which has been damaged by such deceptive act.”
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preparation fee (“Doc Fee”) that had not been “affirmatively disclosed” and
“was not negotiated.” (App. Vol. II, pg. 10.) The amount of the Doc Fee
exceeded actual expenses incurred for preparation of the documents. The
Complaint further alleged that all persons purchasing a vehicle from Michiana
in the prior two years had been charged a Doc Fee.
[3] The Complaint alleged that Michiana’s charging of Doc Fees was an “unfair,
abusive, or deceptive act, omission, or practice in connection with a consumer
transaction.” I. C. § 24-5-0.5-3(a). Although Consumers alleged a violation of
the Consumer Act, the Complaint described the alleged unfair practice by
quoting a statutory provision from the Indiana Motor Vehicle Dealer Services
Act, Indiana Code Section 9-32-13-7. That statute, which may be enforced by
the Indiana Secretary of State, provides:
It is an unfair practice for a dealer to require a purchaser of a
motor vehicle as a condition of the sale and delivery of the motor
vehicle to pay a document preparation fee, unless the fee:
(1) reflects expenses actually incurred for the preparation of
documents;
(2) was affirmatively disclosed by the dealer;
(3) was negotiated by the dealer and the purchaser;
(4) is not for the preparation, handling, or service of documents
that are incidental to the extension of credit; and
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(5) is set forth on a buyer’s order or similar agreement by a means
other than preprinting.
[4] On September 7, 2017, Michiana filed a motion to dismiss the Complaint,
asserting that Consumers had no private right of action under Indiana Code
Section 9-32-13-7, and had failed to state a claim for relief pursuant to the
Consumer Act, with its thirty-seven enumerated categories of deceptive acts.
The trial court conducted a hearing on October 31, 2017, at which argument of
counsel was heard. Consumers conceded that they had no private cause of
action under Indiana Code Section 9-32-13-7 but argued that the reference to
that statute was merely descriptive of an unfair consumer practice prohibited by
the Consumer Act. The trial court concluded that a “catch-all” provision
embodied in I.C. 24-5-0.5-3(a) permitted the claim of non-disclosure, denied
Michiana’s motion to dismiss and certified the order for interlocutory appeal.
Appealed Order at 3. This Court accepted jurisdiction.
Discussion and Decision
Standard of Review
[5] A Trial Rule 12(B)(6) motion to dismiss for failure to state a claim upon which
relief can be granted tests the legal sufficiency of a claim, not the supporting
facts. Kitchell v. Franklin, 997 N.E.2d 1020, 1025 (Ind. 2013). Accordingly, we
view the complaint in the light most favorable to the non-moving party and
draw every reasonable inference in favor of that party. Thornton v. State, 43
N.E.3d 585, 587 (Ind. 2015). We stand in the shoes of the trial court and must
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determine if the trial court erred in its application of the law. Godby v.
Whitehead, 837 N.E.2d 146, 149 (Ind. Ct. App. 2005), trans. denied. A motion to
dismiss is proper if “it is apparent that the facts alleged in the challenged
pleading are incapable of supporting relief under any set of circumstances.”
City of E. Chicago, Indiana v. E. Chicago Second Century, Inc., 908 N.E.2d 611, 617
(Ind. 2009). In making this determination, we look only to the complaint and
may not resort to any other evidence in the record. Godby, 837 N.E.2d at 149.
[6] Michiana’s asserted grounds for dismissal invoke statutory interpretation. If the
language of a statue is clear and unambiguous, we need not apply rules of
construction other than to require that words and phrases be given their plain,
ordinary, and usual meaning. City of Carmel v. Steele, 865 N.E.2d 612, 618 (Ind.
2007). If a statute is open to more than one interpretation, it is deemed
ambiguous and subject to judicial construction. Dobeski v. State, 64 N.E.3d
1257, 1259 (Ind. Ct. App. 2016). The purpose of statutory construction is to
implement the legislature’s intent. Richardson v. Town of Worthington, 44 N.E.3d
42, 45 (Ind. Ct. App. 2015).
Analysis
[7] The Consumer Act is a “remedial statute.” Kesling v. Hubler Nissan, Inc., 997
N.E.2d 327, 332 (Ind. 2013). It “shall be liberally construed and applied to
promote its purposes and policies.” Id. (quoting I.C. § 24-5-0.5-1.) The stated
purposes and policies are to:
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(1) simplify, clarify, and modernize the law governing deceptive
and unconscionable consumer sales practices;
(2) protect consumers from suppliers who commit deceptive and
unconscionable sales acts; and
(3) encourage the development of fair consumer sales practices.
I.C. § 24-5-0.5-1(b).
[8] Indiana Code Section 24-5-0.5-3 concerns “deceptive acts.” Subsection (a)
provides:
A supplier may not commit an unfair, abusive, or deceptive act,
omission, or practice in connection with a consumer transaction.
Such an act, omission, or practice by a supplier is a violation of
this chapter whether it occurs before, during, or after the
transaction. An act, omission, or practice prohibited by this
section includes both implicit and explicit misrepresentations.
Subsection (b), “without limiting the scope of subsection (a),” sets forth thirty-
seven “deceptive acts.” Some of those categories pertain to particular
representations (such as “that replacement or repair .. is needed, if it is not” in
category five). Several categories provide that a violation of a specified
statutory scheme is a deceptive act (for example, category twenty-one,
concerning health spa services, and category twenty-three, concerning home
consumer transactions).
[9] A deceptive act is actionable only if it is “incurable” or “uncured.” I.C. § 24-5-
0.5-4(a). To “cure,” as applied to a deceptive act, means to either “offer in
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writing to adjust or modify the consumer transaction to which the act relates to
conform to the reasonable expectations of the consumer” or “to offer in writing
to rescind such consumer transaction” and perform the offer if accepted. I.C. §
24-5-0.5-2(5).
[10] An incurable deceptive act is a deceptive act “done by a supplier as part of a
scheme, artifice, or device with intent to defraud or mislead.” I.C. § 24-5-0.5-
2(8). An “uncured deceptive act” is a deceptive act “with respect to which a
consumer who has been damaged by such act has given notice to the supplier”
and either “no offer to cure has been made to such consumer within thirty days
after such notice” or “the act has not been cured as to such consumer within a
reasonable time after the consumer’s acceptance of the offer to cure.” I.C. § 24-
5-0.5-2(7). The buyer must give timely notice that “state[s] fully the nature of
the alleged deceptive act and the actual damage suffered therefrom.” I.C. § 24-
5-0.5-5(a). The “obvious reason” for the requirement of specific notice is “so
that the supplier has an opportunity to correct the problem.” A.B.C. Home &
Real Estate Inspection, Inc. v. Plummer, 500 N.E.2d 1257, 1262 (Ind. Ct. App.
1986).
[11] Thus, to state a claim under the Consumer Act, Consumers must have alleged
that Michiana, a seller, committed an uncured or incurable deceptive act. The
Complaint factually described the transactions between Michiana and
Consumers and described conduct defined as an unfair practice in Indiana
Code Section 9-32-13-7. The Complaint rested upon the premise that conduct
that would constitute a violation of Indiana Code Section 9-32-13-7 would also
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be a deceptive act within the meaning of the Consumer Act. Consumers
asserted that Michiana had engaged in both uncured and incurable acts.
[12] At the hearing and in the memorandum of law in support of its motion to
dismiss, Michiana argued that Consumers’ complaint should be dismissed
because Consumers failed to allege a deceptive act within the meaning of the
statutory scheme and further argued that Consumers had alleged an incurable
deceptive act without facts supporting the requisite “scheme, artifice, or device
with intent to defraud or mislead.” I.C. § 24-5-0.5-2(8). Michiana argued that
the allegations of the Complaint did not fall into any of the thirty-seven
enumerated categories of I.C. § 24-5-0.5-3(b) and further argued that
Consumers were attempting to derive a private right of action from a statute
solely entrusted to enforcement by the Indiana Secretary of State,2 I.C. § 9-32-
13-7. Consumers conceded that they had no private right of action under that
statute.
[13] Michiana also directed the trial court’s attention to this Court’s decision in
Lawson v. Hale, 902 N.E.2d 267, 274 (Ind. Ct. App. 2009) (concluding that a
nondisclosure is not a “representation” of any fact). Consumers directed the
trial court’s attention to the subsequent legislative amendment to the Consumer
Act, perhaps in response to Lawson.
2
Indiana Code Section 9-32-13-31 provides that a violation is a Class A infraction.
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[14] In Lawson, a prospective purchaser of a tractor had inquired about the tractor’s
history and the seller had stated that it leaked oil and fuel and that he otherwise
knew little about it. See id. at 273. After the sale, the purchaser discovered that
the tractor had a cracked block and he sued, with one claim based upon the
Consumer Act. He appealed a judgment in favor of the seller and we
considered whether the seller’s omission was a deceptive act:
Indiana Code section 24-5-0.5-3(a), which requires an oral or
written act or representation, does not apply to non-disclosures.
… Lawson’s claim that Hale committed a deceptive act under
Indiana Code section 24-5-0.5-3(a)(2) must fail.
But why? Hale is a supplier under the [Consumer Act], one
purpose of the [Consumer Act] is to protect consumers from
deceptive sales acts, and Hale arguably perpetrated a deceptive
sales act by failing to tell Lawson of the crack in the tractor’s
engine block. Yet, Hale is not liable under the [Consumer Act].
Our holding is based purely on the language of the [Consumer
Act]. That is, we are not saying that Hale’s acts were not
deceptive … but only that the categories of deceptive acts giving
rise to liability under the [Consumer Act] are very specifically
defined. See I.C. §§ 24-5-0.5-3, -10. Unfortunately for Lawson,
Hale’s acts do not fall into any of those categories; there is no
general “fraud” category. Compare consumer protection acts in
many other states, which either specifically refer to failure to state
material facts or include “catch-all” clauses that could reach
Hale’s actions in this case. The [Consumer Act] contains no
such provisions. Our legislature may choose to revisit the Act at
some point.
Lawson, 902 N.E.2d at 274 (internal citation omitted).
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[15] Effective July 1, 2014, the Indiana Legislature amended the Consumer Act to
add a “catch-all” provision such as that referred to in Lawson. It is now found
in subsection (a) of Indiana Code Section 24-5-0.5-3. After the amendment,
deceptive acts are broadly defined to include non-disclosures or omissions.
Explicitly, subsection (b) provides that, “without limiting the scope of
subsection (a),” thirty-seven deceptive acts are described. See id. Under the
plain language of the amended statute, Michiana could not obtain dismissal of
the Complaint on grounds that its allegations did not pertain to thirty-seven
exclusive categories of deceptive acts.
[16] Nor is dismissal justified on grounds that Consumers identified acts already
addressed by Indiana Code Section 9-32-13-7, without providing a private cause
of action. Given the breadth of the language in subsection (a) of Indiana Code
Section 24-5-0.5-3 – that is, a prohibited act by a supplier includes “an unfair,
abusive, or deceptive act, omission, or practice in connection with a consumer
transaction” – conduct prohibited elsewhere in the Indiana Code could also be
a deceptive act under the Consumer Act. That is not to say that a violation of
the Motor Vehicle Dealer Services Act is a per se violation of the Consumer
Act. The Consumer Act does not include violation of the Motor Vehicle Dealer
Services Act within the express categories of deceptive acts of subsection (b).
[17] The primary allegations of the Complaint – that Michiana charged an unfair
consumer fee and did not state its intention as part of the bargaining process –
assert conduct generally within the realm of the Consumer Act. That said,
however, the Consumer Act allows recovery only for deceptive acts that are
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“incurable” or “uncured.” I.C. § 24-5-0.5-4(a). The Complaint alleged in
paragraph 28 “an uncured deceptive act pursuant to Ind. Code § 24-5-0.5-
2(a)(7).” (App. Vol. II, pg. 12.) In paragraph 29, the Complaint alleged “an
incurable deceptive act done as part of a scheme, artifice, or device with intent
to defraud or mislead pursuant to Ind. Code § 24-5-0.5-2(a)(8). Id. at pg. 13.
Paragraph 30 asserted that the Consumer Act violation was “willful.” Id.
[18] Michiana argues that a deceptive scheme, artifice, or device with intent to
defraud is something akin to fraud and Consumers did not state facts to support
a fraud claim.3 There is an exception to Indiana’s liberal notice pleading
requirements when a claim involves fraud. Indiana Trial Rule 9(B) requires
that “[i]n all averments of fraud or mistake, the circumstances constituting
fraud or mistake shall be specifically averred.” This means that, generally, “to
allege fraud sufficiently, the pleadings must state the time, the place, the
substance of the false representations, the facts misrepresented, and
identification of what was procured by fraud.” Kapoor v. Dybwad, 49 N.E.3d
108, 120 (Ind. Ct. App. 2015), trans. denied. However,
3
The elements of common law fraud are (1) a material misrepresentation of past or existing fact which (2)
was untrue, (3) was made with knowledge or in reckless ignorance of its falsity, (4) was made with the intent
to deceive, (5) was rightfully relied upon by the complaining party, and (6) which proximately caused injury.
Boots v. D. Young Chevrolet, LLC, 93 N.E.3d 793, 799 (Ind. Ct. App. 2018). Fraud may include the failure to
disclose all material facts. Id. When a buyer makes inquiry about the condition, qualities, or characteristics
of property, the seller must fully declare any problems associated with the subject of the inquiry, or else risk
liability for fraud. Id. (citing Lawson, 902 N.E.2d at 275.)
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the exact level of particularity that is required will necessarily
differ based on the facts of the case. [W]hile we require a
plaintiff claiming fraud to fill in a fairly specific picture of the
allegations in her complaint, we remain sensitive to information
asymmetries that may prevent a plaintiff from offering more
detail.
Id. at 132 (internal quotations and citations omitted) (quoting Cincinnati Life Ins.
Co. v. Beyrer, 722 F.3d 939, 948 (7th Cir. 2013). For example, where “the heart
of a constructive fraud claim based on a fiduciary duty is non-disclosure, … [it]
is not an event that can be pled with specificity[; i]t is therefore sufficient simply
to plead that the disclosure did not occur.” Id. at 135.
[19] We find the general allegations of uncured and incurable acts adequate to
withstand dismissal. The question before the trial court was whether the
complaint stated a claim as opposed to whether the plaintiffs would likely
prevail on the merits. At the pleading stage, a party may assert alternative and
even inconsistent theories of recovery; it is sufficient to plead the operative facts
of the case so that the defendant is put on notice of the expected trial evidence.
Cahoon v. Cummings, 734 N.E.2d 535, 542 (Ind. 2000).4 “A complaint is
sufficient and should not be dismissed so long as it states any set of allegations,
no matter how unartfully pleaded, upon which the plaintiff could be granted
4
Indiana Trial Rule 8(E)(2) provides in part, “A pleading may set forth two [2] or more statements of a claim
or defense alternatively or hypothetically, either in one [1] count or defense or in separate counts or defenses.
When two [2] or more statements are made in the alternative and one [1] of them if made independently
would be sufficient, the pleading is not made insufficient by the insufficiency of one or more of the alternative
statements.”
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relief.” Graves v. Kovacs, 990 N.E.2d 972, 976 (Ind. Ct. App. 2013). The
Complaint survives this level of scrutiny.
Conclusion
[20] Consumers did not fail to state a claim upon which relief could be granted. The
trial court properly denied Michiana’s motion to dismiss the Complaint.
[21] Affirmed.
Bradford, J., and Brown, J., concur.
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