Zanakis-Pico v. Cutter Dodge, Inc.
98 Haw. 309, 47 P.3d 1222 (2002)
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Rule of Law:
A consumer does not need to complete a purchase to have a cognizable claim for damages under Hawaii's consumer protection statute (HRS § 480-13) for injuries sustained as a result of an unfair or deceptive act, such as responding to a misleading advertisement. Recoverable injuries may include actual out-of-pocket expenses incurred in reliance on the advertisement.
Facts:
- Cutter Dodge, Inc. (Cutter) published a newspaper advertisement for a 'NEW '97 GRAND CHEROKEE LAREDO.'
- The advertisement prominently stated the vehicle was available for '$0 Cash Down' and '$229 Month*'.
- In much smaller print, the ad disclosed that the advertised payment and price were subject to several rebates, including a '$400 Recent College Grad' rebate and a '$750 $1000 Loyalty Rebate'.
- In response to the advertisement, Mary Zanakis-Pico and Thomas M. Pico (the Picos) went to Cutter's dealership.
- The Picos test-drove the advertised vehicle and informed a sales agent they were ready to purchase it on the advertised terms.
- The sales agent informed the Picos they would have to make a $1,400 down payment.
- The agent explained that the '$0 cash down' offer was only available to recent college graduates who were also entitled to a 'loyalty rebate'.
- The Picos left the dealership without purchasing the vehicle.
Procedural Posture:
- The Picos sued Cutter Dodge in the Hawaii first circuit court (trial court).
- The trial court granted in part Cutter's motion for partial summary judgment, ruling that the Picos were not entitled to 'benefit-of-the-bargain' damages for their statutory claim.
- Subsequently, the trial court granted Cutter's motion to dismiss the Picos' statutory claims under HRS chapter 480, finding they failed to establish cognizable damages because they made no purchase and travel costs were not recoverable.
- The trial court ordered the Picos to file a more definite statement regarding their remaining common law claims.
- After the Picos filed their statement, the trial court granted summary judgment for Cutter on all remaining claims, ruling that there was no contract and that their travel costs did not constitute 'substantial pecuniary loss' for a fraud claim.
- An amended judgment was entered in favor of Cutter.
- The Picos, as appellants, appealed to the Supreme Court of Hawai'i, and Cutter, as appellee, filed a cross-appeal.
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Issue:
Does a consumer who responds to a misleading advertisement but does not complete a purchase have a cognizable claim for damages under Hawaii's unfair or deceptive acts or practices statute, HRS Chapter 480?
Opinions:
Majority - Levinson, J.
Yes, a consumer who is injured by an unfair or deceptive act does not need to complete a purchase to have a claim for damages under HRS Chapter 480. The plain language of the statute defines a 'consumer' as a person who 'purchases, attempts to purchase, or is solicited to purchase' goods or services. To deny a remedy to those who attempt to purchase but do not would generate an absurd result and contradict the statute's legislative intent, which is to deter deceptive business practices and encourage victimized consumers to prosecute claims. The court erred in concluding that the statute's purpose was solely to prevent unjust enrichment. Out-of-pocket expenses, such as the cost of travel, constitute cognizable damages. However, the Picos are not entitled to 'benefit-of-the-bargain' damages, as the advertisement was a non-binding invitation to deal, not a contractual offer, especially with the condition of 'on approved credit.' For the common law fraud claim, the trial court also erred by requiring a high threshold for 'substantial pecuniary loss'; any actual, definite, and non-speculative out-of-pocket loss, such as the cost of gasoline, is sufficient.
Concurring - Acoba, J.
Yes, I concur with the majority's conclusion and write separately to clarify the definitions of damages. The Picos' claim for gas money, though small, is for 'compensatory damages,' not 'nominal damages,' which are a trivial, symbolic sum. More importantly, the 'substantial pecuniary damage' requirement for a fraud claim does not establish a minimum monetary threshold. 'Substantial' in this context means the damage must be actual, real, and non-speculative, as opposed to imaginary or nominal. The trial court's interpretation that a few dollars was not 'substantial' enough was incorrect; any proven out-of-pocket loss is sufficient to sustain a fraud claim.
Analysis:
This decision significantly expands consumer protection in Hawaii by clarifying that an injury under HRS Chapter 480 can occur at the solicitation stage, even without a completed transaction. It validates 'bait-and-switch' claims where the consumer does not fall for the final switch, allowing for the recovery of reliance damages like travel costs. This lowers the barrier for consumers to hold businesses accountable for misleading advertising and strengthens the deterrent effect of the statute. The decision also provides important clarification on the nature of damages required for fraud claims, establishing that any real, non-speculative monetary loss is sufficient, regardless of its size.
