An SCM subscriber, whom we’ll call Bill, has been a car guy for a long time and has owned a Ferrari Daytona, a 289 Cobra, and a 1960 Jaguar XK 150. After he had owned the 3.8-liter drophead coupe for about 20 years, he decided it needed a restoration. He was referred to a restoration shop to do the work. He visited it twice, received an estimate of $16,165 and three months for completion, developed confidence in the owner, and gave him the car to restore. Bill received a monthly bill in each of the next nine months, and paid a […]
An SCM subscriber, whom we’ll call Bill, has been a car guy for a long time and has owned a Ferrari Daytona, a 289 Cobra, and a 1960 Jaguar XK 150. After he had owned the 3.8-liter drophead coupe for about 20 years, he decided it needed a restoration. He was referred to a restoration shop to do the work. He visited it twice, received an estimate of $16,165 and three months for completion, developed confidence in the owner, and gave him the car to restore.
Bill received a monthly bill in each of the next nine months, and paid a total of about $30,000. Told the Jaguar was ready, he was very disappointed when he went to pick it up and saw that the work was not really finished. After another two months and another bill, this time for $5,900, he got tired of the whole thing and insisted on getting the job finished promptly. When he went to pick it up, he was forced to pay the $5,900 before the car would be released to him. When he got home, he saw that the work had either been done poorly or not at all, and he stopped payment on the check.
Sometime later, Bill took the car to another repair shop to get some of the work completed. While the car was at the second shop, the original shop somehow managed to take possession of it, claiming a mechanic’s lien for the $5,900 unpaid work. The original restorer then refused to release it to Bill unless he paid the $5,900, with interest and attorney’s fees. He then threatened to sell the Jaguar at auction to settle the debt, so Bill met his demand.
After further discussions, the restorer agreed to honor his warranty, and Bill took the Jaguar back to him. In spite of the warranty, the shop then charged Bill for additional work.
Call in the lawyers
That was the last straw. Bill was well aware that litigation is no fun and was willing to do most anything to avoid it. But he just didn’t believe that it was right for people to get away with this type of conduct. So he paid the last bills, took possession of the Jaguar, and filed suit. Once he got the restorer’s attention, he offered to settle for a refund of the $5,900 and the additional bills, but the restorer refused the offer and insisted on fighting.
Bill then filed suit under his home state’s Deceptive Trade Practices and Consumer Protection Act. Like most states’ similar acts, it provides a consumer remedy for a broad category of deceptive trade practices. Most importantly, these laws generally allow the consumer to recover his attorney fees if the claim is successful, but do not make the consumer responsible for the shop’s attorney fees if the shop wins.
That fact alone makes it tough for businesses to defend relatively small claims, as they essentially lose even if they win. His state’s act, however, goes further than most, and imposes personal liability on the representative of the business who misrepresents matters to the consumer, adding even more leverage.
Bill charged that the shop engaged in deceptive practices by overstating its abilities, exaggerating how quickly the work would be done, charging far more than the estimate, promising a warranty it did not honor, charging multiple times for the same work, and charging for work that was not done.
Overcharged by $17,000
Bill retained an expert witness who concluded the invoices appeared to be “made up to look pretty,” that he had been charged for work that had already been charged for, and also charged for unnecessary work. He examined the Jaguar and concluded that much of the work was substandard. His conclusion was that Bill had been overcharged by at least $17,000.
The restoration shop’s expert did not appear, citing scheduling difficulties. He tried to get the court to delay the trial, but the court refused.
The jury saw things Bill’s way, and awarded him $17,000 for the overcharges, $25,000 for the shop’s knowing violations of the law, and $34,000 in attorney fees.
When in hole, stop digging
The shop owner was now in a $76,000 hole, not counting his own attorney’s fees. Not content to leave bad enough alone, he filed an appeal. That’s where he learned another (expensive) lesson in how the law works.
An appeal is not the same as a “redo.” It’s not like when we were kids and Mom said no, so we went to Dad and started from scratch, faked him out and got a yes, then ran off to wherever we wanted to go while Mom yelled at Dad.
The appeals court gives great deference to the jury. It reviews the record of the trial and asks only whether or not there was any evidence the jury could have accepted to justify its result. Whether the appeals court would have reached the same conclusion is irrelevant. All that matters is that the jury’s decision was essentially within the range of reason, based on the evidence presented.
The appeals court was courteous to the shop owner, and gave a point-by-point explanation of its decision, but upheld the jury’s verdict completely. And, it added $12,500 to Bill’s judgment for his additional attorney fees on appeal.
Asset maneuver can backfire
Still unwilling to accept defeat, the restorer decided to attempt to outsmart Bill by transferring all of his and the shop’s assets to several trusts. That way, there wouldn’t be anything against which Bill could enforce his judgment.
It’s a clever idea, but not clever enough. The law treats any transfer of assets that is intended to defraud, hinder, or delay one’s creditors as a “fraudulent conveyance.” The creditor can sue to get the assets back, and can also recover damages from everyone who participates or assists in the fraudulent conveyance. That includes not only the recipient of the assets, but also the attorneys and other advisors who advise the debtor in connection with the fraudulent conveyance. So Bill filed another lawsuit, which named everyone, including the shop owner’s attorney.
With interest on the judgment, the shop owner was now in a hole about $100,000 deep, still not counting his own attorney’s fees. Now advised by a new attorney, the restorer apparently saw little hope of defending the fraudulent conveyance lawsuit, and just paid the $100,000. That’s certainly not a very good outcome in a case that initially could have been settled for a refund of $5,900 and the last bills.
In a telephone conversation with the restorer, he still maintained that all his invoices were fair, none of the work was defective, and that Bill had signed off on all the work. He stated that his attorney’s terminal illness caused numerous errors that prevented him from adequately presenting his case, and that Bill’s claims were bogus. But when asked the question, he acknowledged that he should have settled.
Stood up for his principles
Bill figures he came out okay. The money he paid the shop and his own attorney was about equal to what he had recovered from the shop. He hired another shop to re-restore the Jaguar, at a total cost of about $25,000, and it came out beautifully. Since then, he has given the Jaguar to his son, and he visits them both often.
“Legal Files” always points out that it’s very hard to come out a winner in litigation. But this case gives us two added insights into this truism. From Bill’s perspective, he really didn’t have any choice. He could either take the poorly-restored Jag and pay another $25,000 to have it made right, or he could file suit and stand up for his rights and principles. Fortunately, he persevered, and he came out pretty well, all things considered.
From the restorer’s perspective, it was a complete disaster. By refusing to pay a small amount to put all this behind him, it ended up costing him well over $100,000.
The lesson here is this: When you’re wrong, or when there’s a reasonable chance that a jury might think you’re wrong, acknowledge the reality of the situation. Give up on trying to be “right,” make the best deal you can, and move on. Fighting a losing battle in court to avoid acknowledging your errors is just going to magnify your losses. In this case, by a multiple of almost 20.