Rogers Motors of Hermiston LLC v. Bartlett LLC
Filing
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ORDER DENYING MOTIONS FOR SUMMARY JUDGMENT AND MOTION TO COMPEL; denying 41 Motion for Partial Summary Judgment; denying 53 Motion for Partial Summary Judgment; denying 56 Motion to Compel. Signed by Judge Salvador Mendoza, Jr. (CV, Case Administrator)
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FILED IN THE
U.S. DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON
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Jan 29, 2018
SEAN F. MCAVOY, CLERK
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON
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ROGERS MOTORS OF
HERMISTON LLC, an Oregon
limited liability company,
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Plaintiff,
No. 2:17-CV-00338-SMJ
ORDER DENYING MOTIONS
FOR SUMMARY JUDGMENT
AND MOTION TO COMPEL
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vs.
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BARTLETT LLC, a Washington
limited liability company, and
TRAVELERS CASUALTY AND
SURETY COMPANY OF AMERICA,
a Connecticut corporation,
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Defendants.
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Rogers Motors purchased a 2007 Toyota Tundra (the Tundra) from Bartlett
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LLC (Bartlett) at an auction in 2014. Rogers Motors then sold the Tundra to a
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consumer. Several months later, the consumer discovered the odometer had not
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been registering miles since it was purchased at the auction. Rogers Motors brought
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this action against Bartlett alleging, among other things, violation of the Motor
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Vehicle Information and Cost Savings Act (Odometer Act), 49 U.S.C. §§ 32701–
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11, and Washington’s Consumer Protection Act (CPA), Wash. Rev. Code § 19.86
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et. seq. Rogers Motors alleges that Bartlett tampered with the Tundra’s odometer,
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ORDER - 1
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operated the Tundra with knowledge the odometer was dysfunctional, and
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fraudulently provided an inaccurate odometer statement at the time of sale.
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Bartlett moves for summary judgment on Rogers Motors’s Odometer Act
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claims. ECF No. 41. By separate motion, Bartlett also moves for summary judgment
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on Rogers Motors’s CPA claims. ECF No. 53. On January 23, 2018, the Court held
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a hearing on the motions for summary judgment and denied both motions. The
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Court also denied Bartlett’s motion to compel, ECF No. 56. This Order
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memorializes and supplements the Court’s oral ruling.
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FACTS
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Doug Bartlett is the sole owner of Bartlett LLC (Bartlett), a wholesale auto
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importer located in Spokane, Washington. In 2007, Bartlett, acting through an
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intermediary known as Northern Imports LLC (Northern Imports), purchased a
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2007 Toyota Tundra. Bartlett purchased the Tundra from Omar Hajar, the truck’s
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registered owner in Canada. ECF No. 41-2 at 2. When Bartlett purchased the
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Tundra, the odometer registered 137,213, the equivalent of 85,720 miles. ECF No.
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41-2.
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Before taking possession of the Tundra, Bartlett paid Northern Imports to
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convert the odometer from kilometers to miles. ECF No. 41 at 2. Northern Imports
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does not perform conversions itself, but works with outside vendors. ECF No. 50 at
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47. Northern Imports removed the odometer cluster from the Tundra and sent it to
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Kelowna Instruments for conversion. Id. at 48. Kelowna Instruments declined to do
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the work, telling Northern Imports that the odometer “had been opened and they
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weren’t going to touch it.” Id. Northern Imports relayed this information to Mr.
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Bartlett, and Mr. Bartlett told Northern Imports to find a different vendor to
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complete the work. Id. at 49.
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Northern Imports next sent the odometer to Tacoma Speedometer. Id. at 50.
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Tacoma Speedometer declined to convert the odometer due to signs of tampering.
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Id. Tacoma Speedometer sent the cluster back to Northern Imports in a box.
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Northern Imports again relayed this information to Bartlett, who again instructed
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Northern Imports to send the odometer to another vendor. Id. at 51.
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Without opening the box from Tacoma Speedometer, Northern Imports next
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shipped the cluster to C&R Motors. ECF No. 50 at 51. When Richard MacKay, the
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owner of C&R Motors opened the box, he discovered it contained a note stating,
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“Cluster has been tampered with. Not doing.” ECF No. 52 at 7. McKay called
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Northern Imports regarding the note in the box and expressed his concerns in
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working on the odometer. Id. at 2. MacKay spoke to James Sandmire, the individual
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performing the odometer conversion. ECF No. 51 at 2. Sandmire agreed to convert
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the odometer but would not repair the odometer or warranty the work. Id. McKay
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relayed this information to Northern Imports. ECF No. 52 at 3. When MacKay
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returned the odometer, he included the note and marked the invoice as “special.”
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Id.
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After taking possession of the Tundra, Northern Imports employees and Mr.
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Bartlett drove the Tundra an unspecified number of miles. ECF No. 59 at 8 (“[T]he
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vehicle had 26, 27 miles on it tracked, which would be my employee driving it and
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then when it was released to Mr. Bartlett, him driving it back to his shop.”).
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April 1, 2015, Bartlett sold the Tundra to Rogers Motors. ECF No. 50 at 82.
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Bartlett sold the Tundra through Manheim Auto Auctions, a company that hosts
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automobile auctions in Western Washington. Id. Pursuant to a contractual
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agreement, Manheim Auctions has Doug Bartlett’s Power of Attorney on file, and
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Manheim fills out all paperwork when cars are bought at auction, including
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odometer disclosure statements. ECF No. 41-2 at 2. At the time of the purchase, the
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odometer shows the vehicle’s mileage as 85,720 miles. ECF No. 41-1 at 3.
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Later that month, Rogers Motors sold the vehicle to a consumer. ECF No. 50
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at 82. Several months later, the consumer contacted Rogers Motors to report that
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the odometer still read 85,720 miles, the same mileage listed on the date Rogers
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Motors bought the vehicle from Bartlett at auction. Bartlett repurchased the Tundra.
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ECF No. 59 at 2. It was later determined that the odometer was missing a few bytes
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of code causing it not to accumulate miles accurately. ECF No. 50 at 27.
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LEGAL STANDARD
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Summary judgment is appropriate if the “movant shows that there is no
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genuine dispute as to any material fact and the movant is entitled to judgment
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as a matter of law.” Fed. R. Civ. P. 56(a). Once a party has moved for summary
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judgment, the opposing party must point to specific facts establishing that there
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is a genuine dispute for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
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If the nonmoving party fails to make such a showing for any of the elements
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essential to its case for which it bears the burden of proof, the trial court should
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grant the summary judgment motion. Id. at 322. “When the moving party has
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carried its burden under Rule [56(a)], its opponent must do more than simply
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show that there is some metaphysical doubt as to the material facts. . . . [T]he
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nonmoving party must come forward with ‘specific facts showing that there is
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a genuine issue for trial.’” Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
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475 U.S. 574, 586–87 (1986) (internal citation omitted).
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When considering a motion for summary judgment, the Court does not
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weigh the evidence or assess credibility; instead, “the evidence of the non-
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movant is to be believed, and all justifiable inferences are to be drawn in his
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favor.” Sgt. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). “In short,
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what is required to defeat summary judgment is simply evidence ‘such that a
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reasonable juror drawing all inferences in favor of the respondent could return
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a verdict in the respondent’s favor.’” Zetwick v. Cty. of Yolo, 850 F.3d 436, 441
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(9th Cir. 2017) (quoting Reza v. Pearce, 806 F.3d 497, 505 (9th Cir. 2015)).
LEGAL STANDARD
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A.
A genuine issue of material fact precludes summary judgment on
Rogers Motors’s claim under 49 U.S.C. § 32703(3).
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Under 49 U.S.C. § 32703(3), a person may not, with intent to defraud, operate
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a motor vehicle on a street, road, or highway if the person knows that the odometer
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of the vehicle is disconnected or not operating. Bartlett contends that this statute’s
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intent requirement requires Rogers Motors to show that Bartlett had actual
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knowledge of the odometer defects. Without evidence that Bartlett had actual
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knowledge of the defects, Bartlett argues, Rogers Motors cannot show that Bartlett
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acted with intent to defraud. Bartlett’s argument fails for two, related reasons. First,
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a defendant may be liable under the Odometer Act even if he or she lacked actual
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knowledge if he or she acted with reckless disregard for the truth. Second, the
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question of intent is an issue of fact ordinarily reserved for the jury, and Rogers
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Motors has produced evidence which, taken in the light most favorable to its claims,
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could support the conclusion that Bartlett acted with intent.
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1.
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The Odometer Act does not require the plaintiff show the
defendant had actual knowledge of the odometer defect to
establish intent to defraud.
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As an initial matter, the Court must determine the intent required to trigger
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civil liability for violations of the Odometer Act. 49 U.S.C. § 32710 allows a civil
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action against “[a] person who violates this chapter, with intent to defraud . . . .”
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Bartlett argues that intent under the Odometer Act requires the plaintiff to show the
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defendant had actual knowledge of the odometer defects. Rogers Motors argues that
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actual knowledge is unnecessary because a dealer of used cars may be held liable
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in the absence of actual knowledge if he reasonably should have known that the
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odometer reading was incorrect. The interpretation advanced by Rogers Motors is
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consistent with that of the majority of courts interpreting this statute. Accordingly,
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the Court finds that Rogers Motors’s interpretation governs.
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The question of whether the transferor of an automobile may be held liable
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under the Odometer Act despite the fact that he lacked actual knowledge of the
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odometer defect is one of first impression in this district and in the Ninth Circuit.
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However, the circuit courts that have addressed this issue have unanimously
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concluded that intent under the statute does not require actual knowledge. Suiter v.
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Mitchell Motor Coach Sales, Inc., 151 F.3d 1275, 1282 (10th Cir. 1983); Tusa v.
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Omaha Auto. Auction Inc., 712 F.2d 1248, 1253 (8th Cir. 1983); Ryan v. Edwards,
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592 F.2d 756, 762 (4th Cir. 1979); Nieto v. Pence, 578 F.2d 640, 642 (5th Cir.
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1978). Courts appear “willing to infer an intent to defraud where the seller exhibited
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gross negligence or a reckless disregard for the truth.” Tusa, 712 F.2d at 1253. Thus,
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under the majority view, a dealer of used cars may be held liable in the absence of
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actual knowledge if he reasonably should have known that the odometer reading
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was incorrect.
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Bartlett argues that the Ninth Circuit’s decision in Bodine v. Graco Inc., 533
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F.3d 1145 (9th Cir. 2008), should guide this Court’s interpretation of the Odometer
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Act’s mens rea requirement. However, Bartlett’s reliance on Bodine is misplaced.
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In Bodine, the Ninth Circuit Court of Appeals considered whether a private right of
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action exists under the Odometer Act where the claim of fraud “relates to something
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other than the vehicle’s mileage.” Id. at 1147. The court acknowledged a split
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between the circuits: the Eleventh Circuit concluded that a plaintiff could maintain
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an action under the Odometer Act even if the defendant’s intent to defraud had
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nothing to do with the vehicle’s true mileage. Id. at 1150–51 (citing Owens v.
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Samkle Auto. Inc., 425 F.3d 1318 (11th Cir. 2005)). The Seventh Circuit held that
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the Odometer Act is limited to allegations of fraud “relating to a vehicle’s mileage.”
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Id. at 1150 (citing Ioffe v. Skokie Motor Sales, Inc., 414 F.3d 708 (7th Cir. 2005)).
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The Ninth Circuit sided with the Seventh Circuit in concluding that the Odometer
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Act provides a remedy only when the defendant intends to defraud the plaintiff with
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respect to the vehicle’s mileage. Here, Rogers Motors alleges Bartlett intended to
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defraud buyers as to the actual mileage of the Tundra, so the reasoning in Bodine
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does not apply.
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To the extent Bartlett attempts to use Bodine to illustrate that the Ninth
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Circuit construes the Odometer Act narrowly, this argument is unpersuasive. When
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interpreting the Odometer Act, the Bodine court looked to the statute’s purpose to
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shed light on Congress’ intent. 533 F.3d at 1151. Congress stated that the purpose
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of the Odometer Act is to prohibit tampering of motor vehicle odometers and protect
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purchasers from the sale of altered odometers. Id. at 1149 (citing 49 U.S.C.
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§ 32701(b)). A narrow interpretation of the Act’s intent requirement is at odds with
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the remedial goals underlying the Odometer Act’s civil suit provision. See Ryan,
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592 F.2d at 760 (observing that the Odometer Act is a remedial statute which should
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be construed broadly); Tcherepnin v. Knight, 389 U.S. 332, 336 (1967) (recognizing
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the “familiar cannon of statutory construction that remedial legislation should be
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construed broadly to effectuate its purposes”). While the Bodine court found the
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intent did not extend to fraud regarding subjects other than odometer tampering, it
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is likely that the court would adopt a broad interpretation of the intent requirement
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because it is directly related to curbing odometer-related fraud.
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2.
Rogers Motors has generated a genuine issue of material fact as
to Bartlett’s intent.
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Intent to defraud may be inferred if a person lacks knowledge only because
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he “displayed a reckless disregard for the truth.” Tusa, 712 F.2d 1253–54. Bartlett
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argues that summary judgment is appropriate on this claim because Rogers Motors
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“has not provided any evidence that Bartlett intended to defraud [Rogers Motors]
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when the vehicle in question was being driven prior to sale.” ECF No. 41 at 7.
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Rogers Motors counters that the record presents a genuine issue of material fact as
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to whether Bartlett “closed its eyes to the truth and consciously avoided learning
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what, if anything, was wrong with the odometer.” ECF No. 49 at 12. Taken in the
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light most favorable to Rogers Motors, there is a sufficient issue of material fact to
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preclude summary judgment on this claim.
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The record shows that Bartlett was on notice of potential issues with the
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odometer. After Kelowna Instruments refused to convert the odometer, Northern
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Imports contacted Mr. Bartlett and told him about the issues with the odometer.
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ECF No. 50 at 49. Bartlett was also aware that a second vendor, Tacoma
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Speedometer, refused to work on the odometer, and that the third vendor, C&R
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Motors refused to warrantee work done on the odometer. Id. at 51–52. Based on
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these facts, a reasonable juror could infer that Bartlett had constructive knowledge
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that the odometer was defective and deliberately failed to take further steps to
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investigate or correct the issue. A juror could also conclude that Bartlett’s failure to
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investigate or repair the odometer constitutes a reckless disregard for the truth
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evidencing intent to defraud.
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There is also conflicting evidence in the record regarding whether the
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odometer was functional after Northern Imports performed the mileage conversion.
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Caroline DeLuca, a Northern Imports employee, asserts that, after the conversion,
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the odometer registered “26 or 27 miles.” ECF No. 50 at 54. She attributes these
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miles to a Northern Imports employee driving a few miles to test the odometer and
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Mr. Bartlett driving the car about 20 miles back to his shop in Spokane. Id.
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However, this statement conflicts with other evidence in the record. In his
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declaration, Mr. Bartlett stated that he paid Northern Imports to convert the
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Tundra’s odometer from 137,213 kilometers to 85,720 miles. ECF No. 41-2 at 2.
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The work was completed, and the odometer was shipped to Northern Imports on
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March 13, 2015. ECF No. 41-1 at 5. On April 1, 2015, Bartlett executed an
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odometer disclosure statement for the Tundra reflecting a mileage of 85,720 miles.
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On April 17, 2015, Rogers Motors sold the vehicle to a consumer, and the odometer
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still reflected a mileage of 85,720 miles. On these facts, a juror could infer that
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Bartlett either concealed or recklessly failed to discover the fact that the odometer
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was inoperable and that this conduct was motivated by an intent to defraud.
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B.
Rogers Motors has produced evidence from which a reasonable juror
could infer that Bartlett violated 49 U.S.C. § 32705.
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Bartlett next argues that Rogers Motors cannot make out a prima facie case
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under 49 U.S.C. § 32705. Section 32705 requires a person transferring the
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ownership of a motor vehicle to provide the transferee either a disclosure of the
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cumulative mileage registered on the vehicle’s odometer, or a disclosure that the
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actual mileage is unknown if the transferor knows the odometer reading is different
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from the amount of miles the vehicle has actually travelled. For the same reasons
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articulated above, a reasonable juror could conclude that Bartlett knew—or
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deliberately failed to discover—that the Tundra’s odometer did not accurately
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reflect its mileage and that this conduct evidences an intent to defraud purchasers.
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Accordingly, Bartlett is not entitled to summary judgment on this claim.
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C.
Rogers Motors has produced evidence from which a reasonable juror
could infer that Bartlett violated 49 U.S.C. § 32703(2).
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Although articulated briefly, Bartlett also argues that Rogers Motors cannot
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produce any evidence in support of its claim under 49 U.S.C. § 32703(2). ECF No.
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41 at 9. Section 32703(2) prohibits a person from disconnecting, resetting, altering,
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or causing the disconnection, resetting, or alteration of the odometer of a vehicle
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with intent to change the mileage registered by the odometer. Despite Bartlett’s
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claims to the contrary, Rogers Motors has produced evidence that, when taken
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together with inferences drawn therefrom in Rogers Motors’s favor, are sufficient
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to support a prima facie claim under this section.
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The record shows that Bartlett directed Northern Imports to remove the
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odometer. Because the odometer was converted from kilometers to miles, there is
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at least some evidence that portions of the odometer were altered. As discussed
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above, the evidence in the record also suggests that the odometer did not accumulate
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miles after Bartlett directed Northern Imports to convert the odometer to miles. The
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record also shows that, upon inspection of the odometer, Rogers Motors discovered
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that the odometer was missing several bites of code, which prevented it from
ORDER - 12
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properly recording mileage. Based on this evidence, a juror could infer that Bartlett
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caused the odometer to be tampered with in an effort to defraud buyers. Summary
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judgment on this claim is therefore improper.
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D.
Because Rogers Motors’s Odometer Act claims survive summary
judgment, so do its CPA claims.
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To prevail on a CPA claim, Rogers Motors must show: 1) an unfair or
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deceptive act or practice; 2) in trade or commerce; 3) which affects the public
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interest; 4) that injured the plaintiff's business or property; and 5) that the unfair or
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deceptive act complained of caused the injury suffered. Hangman Ridge Training
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Stables, Inc. v. Safeco Title Ins. Co., 719 P.2d 531, 532–33 (Wash. 1986). Bartlett
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argues that Rogers Motors “failed to provide any evidence that Bartlett LLC
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committed a deceptive act or practice.” ECF No. 53 at 6. Bartlett also asserts that
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Rogers Motors cannot establish causation. However, for the reasons already
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discussed, Bartlett’s argument fails.
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A claim under the Washington CPA requires the plaintiff to show that the
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defendant committed either a per se violation of a statute or engaged in an unfair or
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deceptive practice unregulated by statute but involving public interest. Watkins v.
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Peterson Enters., Inc., 57 F. Supp. 2d 1102, 1109 (E.D. Wash. 1999). As discussed
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above, Rogers Motors has produced evidence from which a reasonable juror could
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infer that Bartlett violated the Odometer Act. Because a per se violation of a statute
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is sufficient to maintain a CPA claim, this evidence is also sufficient to defeat
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Bartlett’s motion for summary judgment.
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Bartlett also argues that “it cannot accurately be said that Bartlett LLC is the
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cause of [Rogers Motors’s] damages when Bartlett LLC had no reason to believe
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that anything was wrong with the Tundra.” ECF No. 53 at 6. This statement
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constitutes Bartlett’s entire argument challenging the causation element of Rogers
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Motors’s CPA claim. Rogers Motors has produced evidence that the consumer to
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whom it sold the Tundra returned the Tundra after discovering the defects with the
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odometer. ECF No. 41-1. Rogers Motors settled this dispute with the consumer.
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This evidence, taken in the light most favorable to Rogers Motors, raises a genuine
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issue of material fact as to whether alleged odometer tampering was the cause of
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Rogers Motors’s harm.
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Accordingly, IT IS HEREBY ORDERED:
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1.
DENIED.
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Defendant’s Motions for Summary Judgment, ECF No. 41 & 53, are
2.
Defendant’s motion to compel, ECF No. 56, is DENIED. Rogers
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Motors’s objection to Defendant’s Request for Admission No. 3 is
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reasonable, and the qualified answer is sufficient to provide Bartlett
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with the information it seeks without requiring Rogers Motors to make
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an overbroad admission.
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IT IS SO ORDERED. The Clerk’s Office is directed to enter this Order and
provide copies to all counsel.
DATED this 29th day of January 2018.
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__________________________
SALVADOR MENDOZA, JR.
United States District Judge
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