Man Engines & Components, Inc. and Man Nutzfahrzeuge Aktiengesellschaft v. Doug Shows
434 S.W.3d 132
| Tex. | 2014Background
- Shows bought a used yacht (the Caliente) in 2002; its engines were manufactured by MAN. Shows had the engines inspected by an authorized MAN dealer before purchase and the broker’s sales form stated the vessel was sold “as is.”
- After engine failures in 2004 and 2005, Shows sued MAN for negligence, fraud, negligent misrepresentation, breaches of express and implied warranties, and DTPA violations. The jury found only breach of the implied warranty of merchantability and awarded damages; the trial court rendered JNOV in MAN’s favor.
- MAN relied post-trial on a 2003 MAN warranty document that created express warranties while expressly disclaiming implied warranties (the “express disclaimer”), which MAN had not pleaded as an affirmative defense at trial.
- The court of appeals reversed, holding that an implied warranty of merchantability can pass to subsequent purchasers of used goods and that MAN waived its express-disclaimer defense by failing to plead it.
- The Texas Supreme Court affirmed: (1) disclaimer of implied warranties is an affirmative defense that must be pleaded under Tex. R. Civ. P. 94, and MAN waived that defense; (2) absent a valid disclaimer, an implied warranty of merchantability born at first sale passes to downstream purchasers of used goods.
Issues
| Issue | Plaintiff's Argument (Shows) | Defendant's Argument (MAN) | Held |
|---|---|---|---|
| Whether MAN’s express disclaimer could be raised after trial | MAN’s express disclaimer did not apply to Shows because MAN failed to plead it | The express disclaimer (2003 warranty) defeats Shows’s implied-warranty claim | Disclaimer is an affirmative defense under Rule 94; MAN waived it by not pleading it, so court did not consider it |
| Whether an implied warranty of merchantability survives resale of a used good | The implied warranty created at first sale passes with the goods and can be enforced by subsequent buyers | Resale or buyer’s knowledge that goods are used terminates any implied-warranty obligation | The implied warranty, unless properly disclaimed, passes to subsequent purchasers — privity is not required |
| Effect of a pre-purchase inspection on implied-warranty claims | Inspection by an authorized dealer did not eliminate Shows’s warranty claim because defect was not discovered | A knowing purchase of used goods following inspection waives implied warranties | Inspection can limit claims as to patent defects under UCC §2.316(c)(2), but here inspection by an authorized dealer did not waive the warranty |
| Whether an “as is” clause in the broker’s sale bars Shows’s claim against the manufacturer | The broker’s “as is” form does not automatically nullify the manufacturer’s implied warranty absent MAN raising it at trial | The “as is” sale to Shows negates any implied warranties and bars recovery against MAN | Court could not reach the issue: MAN did not timely plead or press the “as is” clause on appeal, so the argument was waived |
Key Cases Cited
- Nobility Homes of Texas, Inc. v. Shivers, 557 S.W.2d 77 (Tex. 1977) (privity not required for implied-warranty recovery against manufacturer)
- Chaq Oil Co. v. Gardner Machinery Corp., 500 S.W.2d 877 (Tex. Civ. App.—Houston [14th Dist.] 1973) (holding buyer’s knowledge a defense to implied warranty for used goods — court here disapproved that extension against remote manufacturers)
- Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442 (Tex. 1989) (plaintiff must prove goods were defective when they left the manufacturer)
- Garcia v. Texas Instruments, Inc., 610 S.W.2d 456 (Tex. 1980) (abolished privity requirement for implied-warranty personal-injury actions)
- Mid Continent Aircraft Corp. v. Curry Cnty. Spraying Serv., Inc., 572 S.W.2d 308 (Tex. 1978) ("as is" language shifts risk of quality to buyer when circumstances do not indicate otherwise)