America Bruntaeger v. Al Zeller
Supreme Court of Vermont
147 Vt. 247; 515 A.2d 123; 1986 Vt. LEXIS 392
July 7, 1986, Opinion filed

OPINION BY: HAYES

OPINION: Defendant, Al Zeller, appeals a superior court judgment in favor of plaintiff, America Bruntaeger, for $ 2,700 plus interest and costs, and $ 1,692.40 in attorney's fees. Plaintiff cross-appeals for exemplary damages. We remand for an evidentiary hearing on the reasonableness of attorney's fees. In all other respects, we affirm.

Plaintiff purchased a fur coat from defendant at his temporary business address in the Sheraton-Burlington Inn in South Burlington, Vermont on November 27, 1982. Plaintiff gave defendant a $ 100 deposit on the coat. Defendant advised plaintiff that he would not alter the coat until he had received the full purchase price of $ 2,700. The day after the purchase, plaintiff sent defendant a check for $ 2,600. Approximately one week later, plaintiff received the coat in Vergennes, where it arrived by bus from defendant's regular place of business in St. Johnsbury. The package containing the coat was undamaged. Defects in the coat, however, were immediately apparent to plaintiff when she removed it from the package. She notified defendant within hours of receipt that the coat was defective and that she was rejecting it in its present condition. Defendant suggested that she bring the coat to the Sheraton-Burlington for him to examine. When plaintiff brought the coat to the Burlington motel, defendant told her that if he sent the coat to the manufacturer, she would have to accept it thereafter regardless of its condition.

Plaintiff then advised defendant that she was unconditionally rejecting the coat, and that defendant could pick it up at her home at any time upon return of the purchase price and sales tax. Defendant refused to refund plaintiff's money, and he did not pick up the coat. Plaintiff then filed suit, alleging in her complaint that the defects in the coat amounted to breach of contract, breach of express and implied warranties, and violated 15 U.S.C. §§ 2301-2312, the Magnuson-Moss Warranty Act. Plaintiff further alleged that the sale was a home solicitation sale within the meaning of 9 V.S.A. § 2451a, and that she was entitled to a written notice of her cancellation rights under 9 V.S.A. § 2454(b)(1). Plaintiff also claimed that a violation of 9 V.S.A. § 2454(b)(1) was a violation of Federal Trade Commission (FTC) regulation entitled "Cooling-Off Period For Door-To-Door Sales," 16 C.F.R. § 429.1, because it constituted an unfair act in commerce. Finally, plaintiff alleged that defendant failed to disclose his refund policy in violation of Vermont's Consumer Fraud Rule 106 (promulgated by the Attorney General, Consumer Fraud Division), and the Consumer Fraud Law, 9 V.S.A. § 2453(a).

After a bench trial, the court found that the sale was a home solicitation sale, and that defendant's failure to provide plaintiff with a written notice of her cancellation rights violated 9 V.S.A. § 2453. The court found that plaintiff had rejected nonconforming goods and ordered defendant to refund her money under 9 V.S.A. § 2454(c)(1). In awarding plaintiff damages, the court accepted as reasonable, without further evidence, and over defendant's objection, the bill submitted for plaintiff's counsel fees. The court did not grant plaintiff's request for exemplary damages.

Defendant appeals as error the following findings: (1) that the sale in this case comes within the home solicitation sales provision of 9 V.S.A. § 2451a(e); (2) that defendant had committed a prohibited practice under Vermont consumer fraud law as well as violating the Federal Trade Commission's Regulation entitled "Cooling-Off Period For Door-To-Door Sales"; (3) that defendant told plaintiff that she would have to accept the coat after return from the manufacturer whether a "cure" was effected or not; and (4) that attorney fees awarded in this case were reasonable. Plaintiff cross-appeals the denial by the court of her request for exemplary damages, and requests attorney fees incurred in connection with this appeal.

I.

Defendant first argues that the trial court erred when it found that the sale in this case came within the definition of a home solicitation sale pursuant to 9 V.S.A. § 2451a(e). Defendant's argument relies on the nature and character of his business rather than on the location of the sale. He suggests that the statute is intended to protect consumers from "fly by night" transient merchants and not someone like himself, who otherwise has a stationary business address. We disagree.

A home solicitation sale is defined in 9 V.S.A. § 2451a(e) as

the sale or lease, or the offer for sale or lease, of goods or services with a purchase price of $ 5.00 or more, whether under single or multiple contracts, where the sale, lease, or offer thereof is either personally solicited or consummated by a seller at the residence or place of business or employment of the consumer, or at a seller's transient quarters. Transient quarters includes hotel or motel rooms, or any other place utilized as a temporary business location.

The evidence reveals that defendant's regular place of business is in St. Johnsbury. From time to time, however, he sells fur coats out of motel rooms. Under the statute, it is the location of the sale and not whether the merchant maintains a regular business address which is controlling. The South Burlington motel room used by defendant in this case constituted "transient quarters" or "a temporary business location," as those terms are used in 9 V.S.A § 2451a(e). Thus, the court did not err when it found that the sale came within the definition of 9 V.S.A. § 2451a(e).

IV.

Plaintiff claims the trial court erred in concluding that it could not award exemplary damages in a consumer case without proof of actual malice.

In Gramatan Home Investors Corp. v. Starling, 143 Vt. 527, 535-36 (1983), we held that, under 9 V.S.A. § 2461(b), once a violation of the Consumer Fraud Law has been established, an award of attorney's fees is a statutory element of damages. We did not address in that case whether a showing of a statutory violation mandates an award of exemplary damages. Plaintiff contends that because the language concerning attorney's fees and exemplary damages is in the same clause, it necessarily follows that the prevailing consumer is entitled to exemplary damages. We disagree. The statute requires an award of exemplary damages only where malice, ill will, or wanton conduct is demonstrated.

The phrase "exemplary damages" has historically implied some malice or willful conduct on the part of the defendant. Although early courts did not condition approval of exemplary damages on the existence of offensive or aggravated conduct, such conduct was present in cases awarding exemplary damages. The law developed a basic rule that, to obtain exemplary damages, the claimant is required to prove the existence of aggravated circumstances. "Exemplary damages typically flow from proof by the plaintiff that the act complained of was malicious, wanton or reckless with regard to the plaintiff's rights or interests."

Under our case law, an award of exemplary damages has consistently been predicated on a finding of malice, ill will, or wanton conduct. See Murray v. J & B International Trucks, Inc., 146 Vt. 458, 465,  (1986) (punitive damages may be awarded in actions of conversion, if conversion is characterized by malice, willfullness, or reckless and wanton disregard of one's rights); Hilder v. St. Peter, 144 Vt. 150, 163 (1984) ("Although punitive damages are generally not recoverable in actions for breach of contract, there are cases in which the breach is of such a willful and wanton or fraudulent nature as to make appropriate the award of exemplary damages.").

In construing the legislative intent behind the language of 9 V.S.A. § 2461(b), we are mindful that, "[while] the [Consumer Protection] Act must be construed liberally in order to serve its remedial purpose, we cannot so freely stretch its meaning as to evade the Legislature's intent." Wilder v. Aetna Life & Casualty Insurance Co., 140 Vt. 16, 19 (1981). We hold that the legislature, by its use of the phrase "exemplary damages," imposed a proof of malice requirement on the consumer.

The court is required, under 9 V.S.A. § 2461(b), to consider whether a plaintiff is entitled to exemplary damages, and must award them upon a showing of actual malice. In this respect, the consumer fraud law differs from ordinary civil law where an award of exemplary damages is discretionary with the fact finder even where malice is present. Under our consumer fraud statute, exemplary damages may be appropriate in certain circumstances. They are not, however, mandated merely upon a showing of a statutory violation. In this case, the evidence supports the trial court's finding that defendant's conduct, however wrongful, was not malicious.