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Hailey v. Motorsports
WELCH, J.
MEMORANDUM OPINION & ORDER Brian T.N. Jordan, Esq.
Jordan Law, LLC
704 N. King St., Ste. 600
Wilmington, DE 19801
Attorney for Plaintiff Douglas A. Shachtman, Esq.
The Shachtman Law Firm
1200 Pennsylvania Ave., Ste. 302
Wilmington, DE 19806
Attorney for Defendants WELCH, J.
On February 27, 2017, the plaintiff, Bernell Hailey ("Plaintiff"), filed a pro se Complaint against the defendants, Race Proven Motorsports, Inc. ("RPM"), Fran Schatz ("Fran"), and Bill Schatz ("Bill") (collectively "Defendants"), alleging that Defendants made unauthorized alterations and repairs to his vehicle, a 2006 Pontiac GTO ("GTO). Plaintiff contends that Defendants repairs "caused catastrophic damage to the engine," and Defendants improperly charged Plaintiff storage fees for his Pontiac GTO. On April 12, 2017, Defendants filed a Motion to Dismiss claiming res judicata barred Plaintiff's claims and that Fran and Bill were improper parties. On October 23, 2017, after supplemental briefing, this Court issued an opinion denying Defendants' Motion to Dismiss.
The parties stipulated to the fact that Plaintiff owned the 2006 Pontiac GTO.
Pl.'s Pro Se Compl. ¶¶ 5, 6, 10.
See generally Hailey v. Race Proven Motorsports, 2017 WL 5665161 (Del. Com. Oct. 23, 2017).
On November 8, 2017, Defendants filed an Answer, denying Plaintiff's substantive claims, and a Counterclaim, which sought $32,890.00 in "repair and storage costs." On December 12, 2017, Plaintiff filed his Answer denying Defendants' Counterclaim. On January 22, 2018, Plaintiff and Defendants submitted a joint Case Management Worksheet in which only an expert witness for Plaintiff was identified. On February 9, 2018, Plaintiff filed a Motion to Amend his pro se Complaint. arguing that the pro se Complaint needed to be updated with the proper legal claim titles under the Auto Repair Fraud Prevention Act ("ARFPA"), Negligence, and proper relief requested. On March 19, 2018, Defendants did not object to Plaintiff claiming an action in negligence, but vehemently objected to Plaintiff's claim under the ARFPA. Defendants main argument regarding ARFPA was that the act did not apply because RPM is not an "automotive repair facility" and does not perform "auto repair work" under 6 Del. C. § 4902A(4).
Pl.'s Answer, ¶¶1-3.
Pl.'s Mot. to Amend Compl. at 1-3.
Defs.' Resp. to Pl.'s Mot. at 2.
Id. at 3.
On April 6, 2018, this Court issued an oral bench ruling granting Plaintiff's motion and deeming Plaintiff's Amended Complaint filed. In Plaintiff's Amended Complaint, he specified that Defendants violated the ARFPA when: (1) Plaintiff was not given a written or oral estimate upon delivery of his GTO to RPM for an engine install and modifications pursuant to 6 Del. C. §4904A; (2) Defendants made unauthorized repairs to the Pontiac GTO pursuant to 6 Del. C. §4907A by installing a catch can, GM Rocker Arms, GM Rocker Arm Bolts, a GM Rocker Arm Stand, GM Hood Struts, and Trick-Flow 7/400 Pushrods; and (3) Defendants' charges in RPM's invoices violated 6 Del. C. §4905A. Plaintiff also claimed that Defendants breached their duty of care by using a poor fuel mixture in the Pontiac GTO that "caused detonation prior to [a] fuel system upgrade which caused...catastrophic engine failure." Defendants filed their Answer & Counterclaim. On May 8, 2018, Plaintiff filed his Answer to Defendants' Counterclaim.
Pl.'s Amended Compl.
Id. at 1-4.
Id. at 4.
Trial was convened on July 18, 2018 and July 19, 2018, and the Court reserved its decision. Both parties agreed to submit supplemental closing arguments. On October 10, 2018, Plaintiff submitted his Closing Written Memorandum of Law. On October 31, 2018, Defendants filed their Answering Memorandum of Law. And, on November 14, 2018, Plaintiff submitted his Cross-Reply Brief. This is the Court's Final Memorandum Opinion and Order after consideration of the oral and documentary evidence submitted at trial, arguments made at trial, supplemental briefing, and the applicable law. For the reasons discussed below, the Court finds in favor of the Plaintiff.
Pl.'s Closing Brief.
Defs.' Closing Brief.
Pl.s' Cross-Reply Brief
II. FACTUAL HISTORYThe Court heard testimony in this matter from Plaintiff, Plaintiff's expert, Al Coluzzi ("Coluzzi"), Bill and Fran. Based on the testimony and evidence presented at trial, the Court finds the relevant facts to be as follows.
In 2014, Coluzzi of Al's Custom Engines built a custom engine for Plaintiff's GTO. Coluzzi testified to possessing fifty years of experience as a "professional engine builder." He testified that he invests months into the building of an engine and builds approximately only twenty engines per year. He testified that he builds the engine based on exact measurements and will "rotate" the engine by hand. Coluzzi does not own an "engine dynamometer" ("dyno"), which is used directly on an engine to give a horsepower and torque reading. Coluzzi testified that it is not an industry standard to test the engine's ability to function prior to it leaving the engine builder's shop. Hence, he did not test the engine with any method to determine whether it would function when placed into GTO. He also did not witness any visible problems with the engine when it left Al's Custom Engines.
While Al Coluzzi ("Coluzzi") does not possess formal education certificates, he has garnered vast experience relating to engines and engine building. Before going into business as "Al's Custom Engines" in 1971, he was an apprentice in a machine shop in Washington, D.C. where he was educated in building various engine components. Coluzzi then opened up a one-man shop after his apprenticeship. Importantly, Coluzzi noted that he has built "hundreds" of GM engines and is familiar with GM's "LS" type engine at issue in this case.
On July 28, 2014, Plaintiff took his 2006 Pontiac GTO to RPM, to have the customized engine built by Coluzzi and a supercharger installed. After he dropped off the GTO, Plaintiff testified that he received an email from the RPM with a $11,810.00 estimate. In agreement to the estimated amount, Plaintiff paid RPM $7,750.00 up front to have the work started.
Joint Exhibit 1, Tab 2.
Id.
Throughout the course of the project, RPM notified Plaintiff that additional parts were required to install the engine. Bill testified that he notified the Plaintiff that the rocker arms in the engine were hitting the rocker valve covers. Bill testified that the Plaintiff instructed him to call Coluzzi regarding the issue; however, Defendant and Coluzzi never spoke. Bill testified that he discussed a solution to the rocker arm issue with the Plaintiff and Plaintiff approved the solution. Conversely, Plaintiff testified that he did not approve any solution. RPM removed race rocker arms installed by Coluzzi and replaced it with stock rocker arms. At trial, Coluzzi testified that he inspected the engine prior to giving it to the Plaintiff and that the rocker arms and valve covers were "barley kissing." In addition to rockers arms, Plaintiff testified that he did not authorize several other charges. Plaintiff testified that he did not authorize RPM to install a catch can, which RPM installed did at a cost of $350.00 in parts and labor; install GM rocker arms, which it did at a cost of $240.00; install GM rocker arm bolts, which RPM installed at a cost of $80.00; install GM rocker arm stands, which RPM installed at a cost of $15.00; install a trick flow 7/400 push rod, which RPM installed at a cost of $110.00; and install GM hood struts, which RPM installed at a cost of $100.00.
Once RPM had all the parts required for installation, Bill testified that he informed the Plaintiff that a specialized fuel system was required to deliver an adequate amount of fuel to the engine. Bill testified that the previous fuel tank could not supply the right composition of fuel that the GTO required, so RPM fabricated a separate fuel system with Plaintiff's approval.
Bill testified that after RPM installed the engine and supercharger into the GTO and ran it on the dyno, they heard a knocking sound. RPM informed Plaintiff of the noise and the Plaintiff, after speaking with Coluzzi, requested his engine be removed from the GTO for inspection by Coluzzi. RPM pulled out the engine and on January 5, 2015, requested the Plaintiff to pay $3,500.00 toward his invoice balance. Plaintiff responded to RPM's email later that day to inform them that he would pick up the engine the following Monday and to not charge his card. On January 12, 2015, Plaintiff picked up the engine and paid RPM $2,000.00 towards his invoice balance. On January 16, 2015, RPM requested the Plaintiff pay $3,000.00 towards the invoice balance. RPM continued to email Plaintiff asking for updates on the motor. On April 13, 2015, RPM sent Plaintiff an email demanding an update on the motor, because they could not have his vehicle continue to sit in the shop. On April 13, 2015, Plaintiff notified Defendants that they would hear from his attorney and that he could pick up the vehicle the following week if it was in the way. RPM responded that Plaintiff could pick up his vehicle once the remaining balance was paid and that if they were going to hear from Plaintiffs attorney, RPM would be charging him storage fees at $35.00 a day as of that date. Plaintiff testified that Defendants never mentioned storage fees prior to the email it sent on April 13, 2015.
Joint Exhibit 1, Tab 13 & 14.
Id.
Joint Exhibit 1, Tab 15.
Joint Exhibit 1, Tab 15, 16, 18 & 19.
Joint Exhibit 1, Tab 20.
Id.
Id.
After the initial payment of $2,000.00, Plaintiff made five additional payment totaling $7,400.00. However, the credit card receipts do not provide a breakdown of the work charged to Plaintiff.
Id.
III. PARTIES' CONTENTIONSPlaintiff contends that Defendants are liable for violations of the ARFPA Act and costs of the engine and supercharger Defendants negligently destroyed. Specifically, Plaintiff contends that the ARFPA Act applies to Defendants and they violated the act by failing to provide the Plaintiff with estimations, failing to meet invoice requirements, performing unauthorized repairs and refusing to release the Plaintiff's vehicle to him when he refused to pay for unauthorized repairs. Moreover, Plaintiff argues that Defendants destroyed the engine when they used an improper fuel mixture, which sent more power to the engine than it could handle. Plaintiff is claiming $34,092.99 in damages for Defendants violation under the Act and negligence: $10,552.14 for the engine; $8,390.99 for the supercharger and $15,150.00 for the violation.
Id. at 2-10
Id. at 10.
Id. at 14.
Defendants maintain they are not an auto repair shop and are therefore not subject to the Act. Defendant also contends that Plaintiff did in fact receive estimates and authorized all charges. Moreover, Defendants contend that they took reasonable action in working on Plaintiff's GTO; thus, Plaintiff has failed to prove any negligence. Ultimately, Defendants contend that they established entitlement to proceeds under the Garageman Lien statue in Justice of the Peace Court. Defendants argue that Plaintiff left his vehicle at RPM for months, knowing that he was being charged storage fees, and occupying space that could not be used for other vehicles.
Id. at 10-13.
Id. at 1.
Id. at 17-15.
Id.
IV. STANDARD OF REVIEWAs trier of fact, the Court is the sole judge of the credibility of each fact witness and any other documents submitted to the Court for consideration. If the Court finds that the evidence presented at trial conflicts, then it is the Court's duty to reconcile these conflicts—if reasonably possible—in order to find congruity. If the Court is unable to harmonize the conflicting testimony, then the Court must determine which portions of the testimony deserve more weight in its final judgment. In ruling, the Court may consider the witnesses' demeanor, the fairness and descriptiveness of their testimony, their ability to personally witness or know the facts about which they testify, and any biases or interests they may have concerning the nature of the case.
See Nat'l Grange Mut. Ins. Co. v. Davis, 2000 WL 33275030, at *4 (Del. Com. Pl. Feb. 9, 2000) (Welch, J.).
See id.
See id.
See State v. Westfall, 2008 WL 2855030, at *3 (Del. Com. Pl. Apr. 22, 2008).
In civil actions, the burden of proof is by a preponderance of the evidence. "The side on which the greater weight of the evidence is found is the side on which the preponderance of the evidence exists."
See Gregory v. Frazer, 2010 WL 4262030, at *1 (Del. Com. Pl. Oct. 8, 2010).
See Reynolds v. Reynolds, 237 A.2d 708, 711 (Del. 1967).
V. DISCUSSIONBased on the evidence produced at trial, the Court finds that the Plaintiff has proven that by a preponderance of the evidence RPM violated the Act and is negligent and therefore liable for damages to Plaintiff's engine and supercharger.
A. Personal Liability for Individual Defendants
As a preliminary matter, the issue of personal liability for Bill Schatz ("Bill") and Fran Schatz ("Fran") must be addressed. The Plaintiff has named Bill and Fran as individual defendants throughout the course of litigation. However, Delaware law is clear on the issue of piercing the corporate veil. The Court of Common Pleas has no jurisdiction over issues in equity. The Court of Chancery alone has jurisdiction to make such a finding; therefore, the Court will proceed with PRM as the sole Defendant in this case.
See Sonne v. Sacks, 314 A.2d 194, 197 (Del. 1973).
Id.
Id.
B. 6 Del. C. § 49A: The Auto Repair Fraud Prevention Act
The purpose of the Auto Repair Fraud Prevention Act is to "safeguard the public against fraudulent auto repair practices thereby enhancing public confidence in legitimate auto repair facilities and mechanics."
Section 4902A defines an "automobile repair facility" as "any person who performs auto repair work on a motor vehicle for financial profit." A "person" under the statute includes "an individual, corporation, statutory trust, business trust, estate, trust, partnership, association, 2 or more persons having a joint or common interest or any other legal or commercial entity." The Act further defines "auto repair work" as "performing or attempting to perform repairs and/or maintenance on a motor vehicle for financial profit."
6 Del. C. § 4902A(5).
6 Del. C. § 4902A(2).
First, the Court must determine whether RPM is an auto repair facility as defined by the statue. RPM performs repairs and maintenance on vehicles to increase horsepower. Bill admitted that RPM diagnoses and repairs blown out engines. Therefore, it is clear that RPM falls within the definition of an automobile repair facility as described in the statute.
Pl.'s Closing Brief at 3-4.
Section 4904A of the Act requires an auto repair facility to, "before beginning any auto repair work and/or transmission repair diagnosis on a motor vehicle, give a customer a written statement" containing the estimated completion date; the estimated price for the auto repair work, including parts and labor, and the estimated surcharge, if any. However, if a customer "waives his or her right to a written estimate, the automotive repair facility is required to orally provide an estimated price and completion date before beginning any auto repair work to the engine. In this situation, the person giving the oral estimate is required to make a written record of the requirement set forth above, sign or initial the written document and retain the documentation for no less than two years.
6 Del. C. § 4904A(b).
Id.
Here, the trial record indicates that RPM failed to provide Plaintiff with written or oral estimates and authorizations for the repair work made to the GTO. While the Plaintiff did receive an original estimate for the installation of the engine and supercharger, the estimate did not include a completion date. Throughout the course of the project, RPM added repairs to the running invoice without providing the Plaintiff with estimates. There is also no evidence in the trial record that Plaintiff waived his right to receive written estimates. Bill testified that when Plaintiff appeared in the shop, RPM would provide him with updates on the GTO and what additional work needed to be done; however, no signed or initialed written documents were entered into evidence supporting this argument. Thus, the Court finds that RPM violated Section 4904A of the Act.
Joint Exhibit 1, Tab 2.
Joint Exhibit 1, Tab 22 & 23.
Under Section 4905A of the Act, an auto repair facility is required to prepare an invoice containing the auto repair work done, including all warranty work, all parts supplied and all labor performed. If the labor is not based on hours worked, the invoice must specify the flat rate labor charge.
Id.
Plaintiff's assertion that RPM violated 4905A three times is without merit. After a careful review of the evidence, the Court finds that the invoices given to Plaintiff meet the statutory language required under the Act. Each invoice includes a description of the work (parts supplied and labor performed), the quantity, rate and total amount. It is clear that the invoice category titled "rate" refers to flat rate labor charges and work included in that category is based on a flat rate, as opposed to work by the hour.
Pl.'s Closing Brief at 9.
Joint Exhibit 1, Tab 22 & 23.
To safeguard against fraudulent repairs, Section 4907A of the Act prohibits automotive repair facilities from charging customers "for repairs not originally authorized or requested by the customers...unless the automotive repair facility receives written or oral permission from the customer." Further, under Section 4903A, the Act has made it an unlawful practice to refuse to return a customer's motor vehicle because the customer has refused to pay for unauthorized auto repair work in violation of Section 4907A of the Act.
6 Del. C. § 4903A(b)(1).
Here, the Court finds that the evidence presented supports Plaintiff's position that RPM violated 4907A by a preponderance of the evidence. Testimony demonstrated that RPM made repairs without authorization from Plaintiff. Plaintiff received no estimations for additional work added to the invoices; therefore, Plaintiff was unaware of the work that was being done. RPM could not prove by a preponderance of the evidence that Plaintiff gave written or oral permission to make these repairs. RPM continued to add charges to the running invoice without authorization from Plaintiff and therefore, violated the statute. Bill testified that Plaintiff authorized all repairs made to the GTO. However, RPM offered no evidence to establish this claim at trial. The Court finds it interesting that Plaintiff's receipt for completed work failed to provide a list or break down of the work being charged to Plaintiff's credit card. Given these fact, I cannot find that Plaintiff authorized these additional charges.
RPM offered no documentation or written email exchange showing Plaintiff approved the installation of GM rocker arms, GM rocker arm bolts, GM rocker arm stand, GM hood struts and a trick flow 7/400 push rod.
Joint Exhibit 1, Tab 28.
In addition, testimony from the parties supports Plaintiff's argument that RMP violated 4903A by refusing to return Plaintiff's GTO after Plaintiff refused to pay for the unauthorized repairs. The evidence shows that the Plaintiff refused to make any additional payments towards the invoice balance. Once he informed RPM of this and that he obtained legal counsel, they refused to release his GTO until the balance was paid and threatened to charge him storage fee's at $35.00 a day for retaining legal counsel.
Id.
RPM failed to provide Plaintiff with written or oral estimates, charged him for unauthorized repairs, and refused to return his vehicle when he refused to pay for the unauthorized repair work. As a result, RPM has violated Section 4903A, 4904A and 4907A of the APFRA and Plaintiff is entitled to damages. A violation of the Act requires damages in "twice the amount of any consideration obtained...the costs of the actions...and reasonable attorney's fees." The first consideration obtained in violation of the Act was on July 28, 2014, when Plaintiff paid $7,750.00 towards the first invoice that violated Section 4904A of the Act. In addition, RPM obtained consideration when it made additional payments for charges that violated Section 4904A and 4907A of the Act. Finally, RPM obtained consideration when they refused to release Plaintiff's vehicle to him in violation of 4903A of the Act. Thus, RPM is liable for twice the amount of $15,150.00, plus the cost of this action and reasonable attorney's fees.
6 Del. C. § 4909A(c).
See McNair v. Automart, LLC, 2017 WL 6477028, at *7 (Del. Com. Nov. 2, 2016) (finding that "consideration can mean a vehicle an auto repair facility wrongfully possesses in violation of this statue).
C. Negligence in Installing the Engine and Supercharger
Plaintiff also brings a negligence claim against RPM for damages to his engine and supercharger. To prevail on a claim for negligence, "a plaintiff must prove, by a preponderance of the evidence, that: (1) the defendant owed the Plaintiff a duty of care; (2) the defendant breached that duty of care; (3) the defendant's breach proximately caused the plaintiff's harm, and; (4) the plaintiff suffered damages." The existence of duty "depends, in part on the legal relationship between the parties."
Atlantic States Ins. Co. V. Charles C. Connell Co., 2015 WL 3540387, at *3 (Del. Com. June 4, 2015).
Id.
The Court finds that Plaintiff has shown by a preponderance of the evidence that RPM breached its duty of care owed to Plaintiff. The agreement between Plaintiff and RPM required RPM to install the engine and supercharger reasonably. The record shows that there was damage to Plaintiff's engine after RPM removed parts from the engine and used a new fuel system to supply more power to the engine. RPM argues that the engine was damaged prior to the work done by RPM; however, the testimony and evidence presented at trial indicates that the damage for which Plaintiff seeks recovery occurred after RPM, without first consulting the engine builder, tampered with the engines parts and installed a new fuel system. Coluzzi, who has been building engines for over fifty years, found no issues with Plaintiff's engine upon completion of its construction. The magnitude of damages to the engine when it ran on the dyno would not have occurred if RPM had not taken out and replaced the race rocker arms with stock rocker arms and used a new fuel system to deliver more power to the engine. Coluzzi testified that he used a racing style connecting rods rather than a stock connecting rod, because it could handle higher horsepower; however, a bad fuel mixture that delivers more power than an engine can handle can cause a connecting rod to break. At trial, RPM acknowledged that higher quality race rocker arms can handle more power, whereas lower quality rocker arms can break, because they are too weak to handle a higher level of power. Further, RPM admitted that the main reason a connecting rod would break is because it could not handle the power and pressure that the engine is making. Therefore, the fault lies not in the construction of the engine, but in RPM's action in swapping higher quality rocker arms for lower quality rocker arms, using a different fuel delivery system and not communicating with the engine builder before these major changes.
Based on this evidence, the Court finds that Plaintiff has suffered $18,943.13 in damages due to RPM's negligence.
D. RPM's Counterclaim for Storage Fees
RPM has failed to establish its entitlement to any amount in storage fees. On June 20, 2016, RPM filed an application in the Justice of the Peace Court to sell Plaintiff's GTO to satisfy a garage keepers lien. They attested that storage fees were $55.00 per day, for a total of $27,775.00
Id.; Def.'s Closing Brief at 14-15.
However, there is no foundation to support RPM's claim for storage fees. At no point before the work, during the work or months after the work was completed did RPM communicate to Plaintiff that there would be storage fees. It was not until April 13, 2015, about three month after RPM took the engine out of the GTO for Plaintiff to pick up, when Plaintiff notified RPM that he would be seeking out counsel that RPM informed Plaintiff that there would be a storage fee as of that date at the rate of $35.00 a day. Further, while Plaintiff arguably had notice of the storage fee starting on April 13, 2015, RPM wrongfully prevented the Plaintiff from retrieving his vehicle. Thus, Plaintiff could not prevent the accrual of storage fees and Defendant's space and storage problem was self-created. Therefore, Defendants' counterclaim for $32,890.00 in storage fees is denied.
This evidence is inconsistent with Defendant claim that storage fees were $55 a day. --------
VI. CONCLUSIONFor all the foregoing reasons, the Court hereby enters judgment and award of $34,092.99, plus pre- and post-judgment interest at the legal interest rate according to 6 Del. C. § 2301, et seq.
IT IS SO ORDERED this 4th day of December, 2018.
/s/_________
John K. Welch, Judge cc: Ms. Brenda Guerrero, Judicial Case Processor III
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