JEFFERSON CITY, Mo. (Legal Newsline) - The Missouri Supreme Court upheld the state's cap on punitive damages Tuesday in a case in which a jury awarded $1 million in damages and only $4,500 in compensation.
Chad Franklin, whose promotion at his Suzuki dealership in Kansas City drew the attention of former state Jay Nixon in 2008, was ordered by a Clay County jury to pay $1 million in punitive damages to Glenna Overbey and the estate of her late husband Max.
The trial court reduced the amount to $500,000, as required by the cap, and the Supreme Court affirmed, noting that the suit was brought under a statute (the Missouri Merchandising Practices Act) created by the legislature.
"(T)he legislature has the authority to choose what remedies will be permitted under a statutorily created cause of action," Judge Laura Denvir Stith wrote in the majority opinion.
The legislature put a cap on punitive damages of five times the amount of actual damages, unless the amount was less than $100,000. In those instances, it allowed punitive damages of up to $500,000.
The Overbeys had chosen to take part in Chad Franklin National Auto Sales North's payment-for-life program, which was promoted by the dealer in television ads. It allowed customers to buy a pre-owned vehicle at a monthly payment, then trade the vehicle in each year for a new one without the monthly payment ever changing.
The contract they signed required them to pay a total of $37,191.28 over 71 months, but a salesperson convinced them to pay $500 to join the payment-for-life, locking their monthly payment in a $49. National even paid them $3,253 to cover the difference between the two payments over six months.
When they attempted to switch cars at the end of the year, they were told the salesperson no longer worked there and no one was familiar with their contract. The dealership claimed the Overbeys were obligated to pay $719.52 a month for 65 more months.
The dealership itself was also ordered to pay $76,000 in actual damages and $250,000 in punitive damages.
The justices joining Stith in the majority were judges Mary Russell, Patricia Breckenridge, Zel Fischer and William Ray Price.
Chief Justice Richard Teitelman authored a dissenting opinion, which was joined by Judge George Draper. It says the legislature can't limit a plaintiff's right to trial by jury.
"Because the constitutional right to a civil jury trial is contingent on there being an action for damages, statutory limits on those damages directly curtails one of the most significant constitutional roles performed by the jury," Teitelman wrote.
"The analytical framework established by the principal opinion leaves the legislature free to limit punitive damages at $1 in even the most egregious cases."
From Legal Newsline: Reach John O'Brien by e-mail at email@example.com.