A dealership that forged customers' names on an installment sales contract can be forced to pay both punitive and triple damages, an Ohio appeals court has ruled.
The state Court of Appeals unanimously upheld an award of $14,191 in triple compensatory damages and $20,000 in punitive damages against Bill Swad Chevrolet Inc. of Columbus.
The decision 'follows Ohio law, which says the remedies available are not exclusive when a consumer is defrauded and abused by a violation of the Consumer Sales Practices Act,' said the plaintiffs' lawyer, James Connors of Columbus. 'It's fair because it puts disreputable, defrauding companies on notice that their misconduct will be punished.'
The dealership's lawyer, Joel Mirman of Columbus, said his client is appealing further.
In December 1997, Patricia Crawford bought a 1993 Dodge Caravan from Swad.
With her mother signing as co-maker, she signed an installment contract and security agreement that required 18 monthly payments of roughly $200 each, the court said.
A month later, the Crawfords received a second loan agreement in the mail, requiring 42 smaller payments but totaling about $1,100 more, the court said. Connors said the Crawfords continued making payments after discovering the fraud because 'they were concerned about their credit.'
They sued Swad and the salesman in Franklin County Court of Common Pleas, alleging that their signatures had been forged on the second contract.
They sought damages on several theories, including fraud, forgery and violations of the Ohio consumer protection and installment sales laws.
The dealership failed to answer the complaint by the deadline and lost a default judgment on the issue of its liability. Mirman said, 'We never got to argue the merits.'
The salesman, who is no longer employed by Swad, also lost a default judgment.
After separate hearings, both defendants were ordered to pay triple compensatory damages as well as punitive damages. Only the dealership appealed, arguing that it is improper to award both types of damages. In addition, Mirman said that the amount of triple compensatory damages awarded was much too high because 'if you look at the total amount charged in the two contracts, there was barely any difference.'
The three-judge appeals court affirmed the award because the dealership had been found liable for both fraud and consumer protection violations in the default judgment.
The state legislature didn't intend for the triple-damages provision of the consumer protection law to preclude punitive damages for fraud, the court ruled.
It ordered a hearing to determine how much, if any, the Crawfords' lawyer is entitled to as attorney fees from Swad.
You can e-mail Eric Freedman at [email protected]