Ames v. Commissioner of Motor Vehicles

Supreme Court of Connecticut
806 A.2d 1058 (2002)

ELI5:

Rule of Law:

The term 'any loss' in a statutory surety bond, such as the one required for automobile dealers under General Statutes § 14-52, is limited to actual, compensatory damages. It does not encompass awards for attorney's fees or punitive damages unless the statute explicitly provides for their recovery.

Facts:

In 1995, Roxann Ames purchased a motor vehicle from A.P.L. Auto Consulting, Inc., a used automobile dealer.
As required by state law, the dealer had obtained a $20,000 surety bond from Western Surety Company to indemnify customers for losses.
In 1997, the dealer repossessed the vehicle from Ames over her protest.
Subsequently, the dealer went out of business, leaving Ames unable to recover her losses directly from the dealership.

Procedural Posture:

Roxann Ames sued the dealer, A.P.L. Auto Consulting, Inc., in a state trial court.
The trial court entered a default judgment for Ames for $20,286.40, an amount which included treble (punitive) damages and $1,000 in attorney's fees.
After the dealer went out of business without paying, the Commissioner of Motor Vehicles invoked the dealer's surety bond but limited Ames's recovery to her actual damages of $5,650.
Ames appealed the Commissioner's decision to the Superior Court, which affirmed the Commissioner's ruling.
Ames, as appellant, then appealed to the Appellate Court of Connecticut, which affirmed the Superior Court's judgment.
The Supreme Court of Connecticut granted Ames's petition for certification to appeal from the judgment of the Appellate Court.

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Issue:

Does the term 'any loss' in General Statutes § 14-52, which requires automobile dealers to furnish a surety bond for indemnity, encompass attorney's fees and punitive damages awarded against the dealer?

Opinions:

Majority - Palmer, J.

No. The term 'any loss' in General Statutes § 14-52 does not encompass attorney's fees and punitive damages. The court reasoned that the term 'any loss' is ambiguous and must be interpreted in light of common law principles and legislative intent. Connecticut adheres to the 'American Rule,' which requires explicit statutory or contractual language to award attorney's fees, and § 14-52 lacks such language. Similarly, punitive damages are an extraordinary remedy that must be expressly authorized by statute. The court noted that another statute, § 14-176, explicitly includes attorney's fees, indicating the legislature's omission in § 14-52 was intentional. Furthermore, the legislative history suggests the bond was intended to provide 'some financial security' for 'money owed,' not to cover penalties and litigation expenses, which is consistent with the bond's relatively small amount.

Analysis:

This decision solidifies the principle of strict construction for statutes that operate in derogation of common law rules, particularly the 'American Rule' on attorney's fees. It establishes a clear precedent that general indemnity terms like 'any loss' in statutory surety bonds will be interpreted narrowly to cover only compensatory damages. The ruling clarifies that the legislature, not the courts, bears the responsibility to explicitly authorize the recovery of punitive damages or attorney's fees from such bonds. This impacts future consumer protection cases by requiring litigants to find express statutory authority for such awards rather than relying on broad statutory language.

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