Roadmaster Auto Sales, Inc. v. McSweeney, No. S1344-10 CnC (Tomasi, J., Mar. 30, 2011)

[The text of this Vermont trial court opinion is unofficial. It has been reformatted from the original. The accuracy of the text and the
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                                                STATE OF VERMONT

SUPERIOR COURT                                                                             CIVIL DIVISION
Chittenden Unit                                                                            Docket No. S1344-10 CnC

                                                                         )
James and Paula McSweeney,                                               )
                                                                         )
                           Plaintiffs/Appellees,                         )
  v.                                                                     )
                                                                         )
Roadmaster Auto Sales, Inc.,                                             )
                                                                         )
                            Defendant/Appellant.                         )



           Defendant/Appellant Roadmaster Auto Sales, Inc. appeals from a

judgment entered against it in the Small Claims Court in the amount of

$4,859.16 in damages, $103.44 in service fees, and $75.00 in filing fees. The

lower court concluded that Roadmaster had violated Vermont’s Consumer

Fraud Act (the “CFA”) in connection with its failure to return a $100.00

deposit that the McSweeneys had placed on a vehicle. See 9 V.S.A. § 2453.

Based upon that violation, it awarded the McSweeneys their damages,

including attorney’s fees, and their costs of suit. Id. § 2461(b).

           On appeal, Roadmaster challenges the conclusions of the Small Claims

Court contending that the parties entered into a written contract that

entitled Roadmaster to retain the deposit as liquidated damages. It also

asserts that the attorney’s fees are not reasonable, inter alia, because the

billing entries are not set out in sufficient particularity and detail as to time

increments and because the hourly rate charged by the McSweeneys’ counsel
is not appropriate for small claims practice. The McSweeneys counter that

the provisions of the written contract cannot overcome the oral

representations made by Roadmaster that the deposit would be returned to

them, that the provision of the contract purportedly entitling Roadmaster to

retain the deposit as “liquidated damages” is not enforceable under Vermont

law, that Roadmaster waived any arguments regarding attorney’s fees by not

raising them below or in its statement of issues on appeal, and that, in any

event, the billing entries and hourly rate are reasonable.

      On March 16, 2011, the matter came before the Court for a hearing.

The Court entertained the arguments of counsel and afforded the parties the

opportunity to submit post-argument memoranda on the issue of waiver.

Roadmaster submitted a brief memorandum on that point. For the reasons

that follow, the Court affirms the decision below.

                             Standard of Review

      An appeal from a small claims judgment is heard and decided “based

on the record made in the small claims procedure.” 12 V.S.A. § 5538. The

“appeal is limited to questions of law.” V.R.S.C.P. 10(d). If the Small Claims

Court has applied the correct law, this Court will affirm its “conclusions if

they are reasonably supported by the findings.” Maciejko v. Lunenburg Fire

Dist. No. 2, 171 Vt. 542, 543 (2000) (mem.).




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                                  Analysis

      In this case, the lower court correctly applied the provisions of the

CFA. To establish liability under the CFA, a plaintiff must establish: (1) a

misrepresentation or omission that was likely to mislead consumers; (2) that

the consumers at issue reasonably interpreted the statements/omissions

under the circumstances; and (3) that the statements/omissions were

“material,” i.e., they influenced the consumer’s conduct or decision making.

See Jordan v. Nissan N. Am., Inc., 2004 VT 27 ¶5, 176 Vt. 465, 468.

      Here, based upon this Court’s review of the statements and findings of

the lower court, each of the above elements has been established. The Small

Claims Court found that the McSweeneys gave Roadmaster a $100.00 deposit

on a vehicle in order to “hold” the car from a Wednesday to a Friday. During

that period, the McSweeneys were to determine whether they could obtain

the funds necessary to purchase the car. They called Roadmaster on

Thursday to say that they could not obtain the necessary funds, but

Roadmaster refused to return the full amount of the deposit.

      As to the deposit, the Small Claims Court found that the oral

agreement entered into between the McSweeneys and Roadmaster “clearly”

contemplated that if the McSweeneys did not obtain financing and informed

Roadmaster in advance of the Friday deadline, they would “get it back.” That

conclusion is well supported by the consistent hearing testimony of the both

of the McSweeneys.




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      After making such an oral agreement, Roadmaster then required the

McSweeneys to sign a “contract” that contains a directly contrary provision.

The contract states, in reduced print, that the deposit will be retained by

Roadmaster as “liquidated damages” should the customer fail to consummate

the transaction.

      A business that provides customers with two such divergent

statements regarding whether a refund is or is not refundable is certainly

likely to mislead consumers. At a bare minimum, as the lower court found, it

would been incumbent on the business to make clear to the customers that

the deposit was not refundable and any failure to do so would be a misleading

omission on the part of the business.

      Similarly, there is no error in the Small Claims Court’s conclusions:

(1) that the McSweeneys reasonably interpreted Roadmaster’s statements to

indicate that the deposit was refundable, and (2) that the McSweeneys

decision to provide the deposit turned on whether it was, in fact, refundable.

Each of those points was supported by the testimony of the McSweeneys and

the lower court’s assessment of what an objectively reasonable customer

would have thought under the circumstances of this very short deposit

period. As a result, the Small Claims Court’s ultimate determination that




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Roadmaster violated the CFA is more than adequately supported by the

record.1

      As to Roadmaster’s challenge to the reasonableness of the award of

attorney’s fees, the Court concludes that any such contention has been

waived. The McSweeneys offered a billing sheet from their attorney as an

exhibit below in support of their claim for attorney’s fees. The claim was also

set out in the Complaint. Counsel for the McSweeneys explained in detail to

the lower court why the fees were higher than one might usually see in Small

Claims Court. Much of that explanation focused on the litigation activities of

Roadmaster, which had required the parties to brief and address a number of

procedural issues to a number of different courts. Roadmaster was given an

opportunity to examine the exhibit, object to its admissibility, ask questions

about it or challenge the requested fee in any way. Roadmaster did not object

to the fees or challenge them as excessive, either as to hours spent or rate

charged. Just prior to entering judgment, the lower court, again, offered

Roadmaster the opportunity to submit any additional evidence or say

anything else. Roadmaster remained silent. In addition, Roadmaster’s

Notice of Appeal, see V.R.S.C.P. 10(a), lists a number of issues it wished to

contest on appeal, but attorney’s fees was not listed among them.


1
 As the Court finds a violation of the CFA based on the findings described, it
does not reach the issue of whether the liquidated damages provision of the
contract at issue may provide an independent basis to claim a violation of the
CFA.

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      As the Vermont Supreme Court has consistently held in an analogous

context: “Failure to raise an issue before the trial court precludes raising it

on appeal.” Adams v. Adams, 2005 VT 4 ¶15, 177 Vt. 448, 454; see Fyles v.

Schmidt, 141 Vt. 419 422-23 (1994). In Burton v. Jeremiah Beach Parker

Restoration & Construction Management Corporation, the Court applied that

rule to reject both a challenge to an award of litigation costs where the costs

had not been challenged below, and a request for a hearing as to attorney’s

fees where the challenging party had not requested such a hearing in the

trial court. 2010 VT 55, ¶¶12-13 (mem.); see Boston Old Colony Ins. Co. v.

Lumbermens Mut. Cas. Co., 889 F.2d 1245, 1248 (2d Cir. 1989) (failure timely

to challenge attorney’s fee request precludes appellate review).

      Roadmaster’s contention that the above rule should not be applied in

this case, because it was unrepresented below and because the rule is not

consistent with the informal small-claims process, is not persuasive. The

Court is not suggesting that an unrepresented party must speak with the

precision or knowledge of an attorney. It does not violate the spirit of the

small claims process, however, simply to require that a party alert the Court

and the opposing party when it disagrees with or wishes to challenge a

particular position or point. To hold otherwise would permit a litigant to

obtain multiple small claims hearings as a result of matters that should have

been, but were not, raised at prior hearings. Such a result invites

gamesmanship and multiple bites at that apple, both of which are in




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contravention of V.R.S.C.P. 1’s admonition that the Rules should be

interpreted to “secure the simple, informal, and inexpensive disposition of

every action.”2

                                 Conclusion

      In light of the foregoing, the ruling of the Small Claims Court is

AFIRMED.

      Dated at Burlington, Vermont this 30th day of March, 2011.



                                              -------------------------------
                                              Timothy B. Tomasi
                                              Superior Court Judge




2
 While it does not affect the Court’s determination, the Court is also mindful
that a remand solely on the issue of attorney’s fees would likely generate a
claim for additional fees covering both the appeal and the remanded
proceeding. See, e.g., Gagne v. Maher, 594 F.2d 336, 344 (2d Cir. 1979)
(awarding fees for time spent defending attorney’s fee application), aff'd on
other grds, 448 U.S. 122 (1980). The Court is confident that any possible
downward adjustments to the claimed fees that might result from a remand
likely would be more than eclipsed by such a claim for additional fees.


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