Lillian M. Lewellen, Appellant/Cross-Respondent v. Chad Franklin and Chad Franklin National Auto Sales North, LLC, Respondents/Cross-Appellants., 2014 Mo. LEXIS 211

Background

Lillian Lewellen (77-year-old widow) bought a 2002 Lincoln after recruiting advertising for a $49/month program from Chad Franklin and his dealership, Chad Franklin National Auto Sales North, LLC (National).
Dealer employees orally promised $49/month and that National would subsidize the difference; the written contract showed much higher monthly payments and added fees; National paid a subsidy check covering only nine months, then stopped; Lewellen defaulted and vehicle was repossessed.
Lewellen sued for common-law fraudulent misrepresentation and for violations of the Missouri Merchandising Practices Act (MMPA). The jury awarded $25,000 actual damages and $1,000,000 punitive damages against both Franklin and National (punitive on each claim).
The trial court reduced the punitive awards under Mo. Rev. Stat. § 510.265 to $500,000 (Franklin) and $539,050 (National) and imposed discovery sanctions striking defendants’ pleadings and limiting their trial participation for failure to appear for depositions.
Lewellen appealed the reduction as violating her Missouri constitutional right to a jury trial and other protections; Franklin and National cross-appealed on discovery-sanctions notice and on due-process grounds for the punitive awards.
The Missouri Supreme Court (en banc) held the statutory punitive-damages cap in § 510.265, as applied to common-law fraud, violates the Missouri Constitution’s jury-trial guarantee and reinstated the jury’s $1,000,000 punitive award against Franklin; it upheld the awards against due-process and sanction-ambiguity challenges.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether § 510.265’s punitive-damages cap violates Missouri right to jury trial	Lewellen: cap removes jury’s historic role to fix punitive damages for common-law fraud and thus violates Mo. Const. art. I, § 22(a)	Franklin: punitive damages are subject to due-process limits, so legislature may cap them	Court: Applying Watts, cap impermissibly alters jury’s 1820 common-law role for fraud; cap unconstitutional as applied to Franklin
Whether punitive awards violate federal/state due process	Lewellen: n/a (she challenges cap)	Franklin/National: awards (and reduced awards) are grossly excessive in violation of Due Process	Court: reviewing State Farm/BMW guideposts, awards (1M vs $25k; 40:1 Franklin, 22:1 National) not grossly excessive given reprehensibility and repeated deceptive targeting of vulnerable consumers
Whether discovery-sanctions order was vague and prejudicial	Lewellen: sanctions appropriate for willful discovery failures	Franklin/National: order ambiguous about defense participation, impairing preparation	Court: sanctions were specific about striking pleadings, limiting evidence to damages, admitting defendants’ produced documents against them; no shown prejudice; no abuse of discretion
Whether § 510.265 valid as applied to statutory MMPA claims	Lewellen: cap unconstitutional as to all claims	Franklin/National: n/a on this point	Court: did not revisit MMPA holding from Overbey; cap may be applied to statutory claims created post-1820 (Overbey control)

Key Cases Cited

Watts v. Lester E. Cox Med. Ctrs., 376 S.W.3d 633 (Mo. banc 2012) (statutory damage caps that alter jury’s 1820 role violate Missouri jury-trial guarantee)
Estate of Overbey v. Chad Franklin Nat’l Auto Sales N., LLC, 361 S.W.3d 364 (Mo. banc 2012) (application of punitive cap to statutory MMPA claim does not violate jury-trial right because MMPA is a post-1820 statutory cause of action)
State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003) (due-process guideposts for reviewing punitive-damages awards)
BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996) (factors for assessing excessiveness of punitive damages)
Scott v. Blue Springs Ford Sales, Inc., 176 S.W.3d 140 (Mo. banc 2005) (right to jury trial on punitive damages under Missouri law)