257 N.C. App. 590
N.C. Ct. App.2018Background
- In March 2015 Kenneth and Mary McBride bought a new 2015 Ford Transit Connect from dealer Randy Marion and financed it; the retail installment contract was later assigned to Ford Motor Credit Company (Ford Credit).
- Within 24 hours the McBrides discovered the passenger seat would not stay upright; they returned to the dealer several times in late March 2015 and allege the dealer refused to inspect or repair the vehicle.
- The McBrides returned the vehicle to the dealer on March 27, 2015 and later informed Ford Motor Company they revoked acceptance.
- Ford Credit sued the McBrides for breach of contract and sought a deficiency; it alleged a remaining balance of $7,709.67.
- The McBrides counterclaimed for breach of implied warranty of merchantability, breach of implied warranty of fitness for a particular purpose, breach of express warranty, and revocation of acceptance.
- The trial court dismissed the counterclaims with prejudice under Rule 12(b)(6) and awarded summary judgment to Ford Credit; the Court of Appeals reversed both rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court erred by denying defendants' motion to join necessary parties (Randy Marion and Ford Motor Co.) | Ford Credit did not concede that those parties were required; impliedly, the suit against assignee was proper without joinder | Randy Marion and Ford Motor Co. are necessary and indispensable parties to the McBrides' claims against the seller/ manufacturer | Waived — McBrides failed to obtain a trial-court ruling on their Rule 12(b)(7)/joinder motion, so appellate review of joinder issue is waived |
| Whether counterclaims (breach of implied warranty of merchantability) survive a Rule 12(b)(6) motion | Plaintiff argued the counterclaims were legally insufficient | McBrides alleged merchantability defect, prompt notice and attempted repair; assertions are sufficient when taken as true | Reversed — allegations state a plausible claim; dismissal was erroneous |
| Whether counterclaims (breach of implied warranty of fitness / breach of express warranty) survive Rule 12(b)(6) | Plaintiff contended claims lacked necessary factual support | McBrides alleged dealer made representations about suitability and condition and reliance on those statements; also alleged written warranty breach | Reversed — pleadings sufficiently allege express and fitness warranties and reliance to survive dismissal |
| Whether counterclaim for revocation of acceptance is viable | Plaintiff argued revocation was not timely or supported | McBrides alleged defect existed at sale, discovery was delayed by concealment/assurances, timely return and notice to dealer/manufacturer | Reversed — allegations satisfy UCC revocation elements to survive 12(b)(6) |
| Whether Ford Credit was entitled to summary judgment on its breach/deficiency claim | Ford Credit relied on business records/affidavit showing assignment, repossession and deficiency to defeat triable issues | McBrides’ verified answer and counterclaims (treated as an affidavit) create genuine factual dispute about the vehicle’s condition and warranty/revocation defenses | Reversed — genuine issue of material fact exists; summary judgment for Ford Credit was improper |
Key Cases Cited
- Stanback v. Stanback, 297 N.C. 181 (tests legal sufficiency on Rule 12(b)(6))
- Leary v. N.C. Forest Prods., 157 N.C. App. 396 (de novo review of pleadings on dismissal)
- Commercial Credit Equip. Corp. v. Thompson, 48 N.C. App. 594 (assignee of seller subject to buyer's claims under Retail Installment Sales Act)
- Ismael v. Goodman Toyota, 106 N.C. App. 421 (elements for breach of implied warranty of merchantability)
- Harbour Point Homeowners’ Ass’n v. DJF Enters., 206 N.C. App. 152 (elements for breach of express warranty)
- Whitehurst v. Corey, 88 N.C. App. 746 (verified pleadings may operate as affidavits opposing summary judgment)
- Schoolfield v. Collins, 281 N.C. 604 (Rule 56(e) and verified pleadings as affidavits)
- Dalton v. Camp, 353 N.C. 647 (moving party’s burden on summary judgment)
- In re Will of Jones, 362 N.C. 569 (standard of review for summary judgment)