Frank Griffin Volkswagen, Inc. v. SmithFrank Griffin Volkswagen, Inc. v. Smith
William H. Folsom, Jr., of William H. Folsom, Jr., P.A., Jacksonville, for appellee.
ALLEN, Judge.
The appellant, Frank Griffin Volkswagen, Inc. (Griffin), and the appellee, Jerry T. Smith (Smith), were respectively the seller and buyer of a Volkswagen automobile. Following several unsuccessful efforts to correct mechanical problems with the automobile, Smith filed suit against Griffin and others. The parties challenge various rulings of the trial court during the course of the lawsuit. We affirm each of the rulings except the denial of Griffin‘s motion for a directed verdict on the count alleging Smith‘s right to revoke his acceptance under
On September 2, 1987, Smith bought a new 1987 Volkswagen automobile from Griffin, an authorized Volkswagen dealer. At the time of purchase, Smith received and signed various documents indicating that Griffin was selling the automobile “as is” and that Griffin was disclaiming all warranties, express or implied, including the warranty of merchantability. The documents clearly indicated that the only warranties on the automobile were those of the manufacturer. Griffin‘s salesman gave Smith a warranty booklet identifying the warrantor as Volkswagen, and indicating that warranty service was available from any authorized Volkswagen dealer in the United States. The salesman also accurately told Smith that warranty service was available at any Volkswagen dealership. The relevant testimony from Smith was as follows:
Q. Now, concerning the ... warranty booklet ... [,] were you tendered that with respect to the purchase of this vehicle?
A. Yes, sir, I was.
Q. And who gave you that document?
A. The salesman, I believe.
Q. All right. Now, concerning the performance of the warranty, were there any conferences you had with the salesman concerning who would perform that warranty?
A. Yes, sir. They said any authorized Volkswagen dealer could perform warranty work on the car.
Q. And did they indicate to you what you should do if you had any problems with the vehicle within that warranty period?
A. Yes, sir. They said ... take it to any Volkswagen — authorized Volkswagen dealer and they would correct the problem.
Several weeks later, Smith began to experience mechanical problems with the automobile. He took it first to another Volkswagen
After numerous repair efforts proved unsuccessful, Smith filed suit against Griffin, Volkswagen, and others. The suit resulted in a jury verdict against Volkswagen for breach of Volkswagen‘s warranties, and against Griffin on various theories, including revocation of acceptance pursuant to
Griffin argues that the trial court erred in denying its motion for a directed verdict on the count alleging Smith‘s right to revoke his acceptance.
The buyer may revoke his acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to him if he has accepted it:
(a) On the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or
(b) Without discovery of such nonconformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller‘s assurances.
(Emphasis supplied). The first requirement for application of this section is that the goods be “nonconforming.” Goods are conforming when they are in accordance with the obligations under the contract.
First, Smith contends that when Griffin‘s salesman advised him that warranty service was available at any authorized Volkswagen dealership, Griffin thereby incurred a contractual obligation to successfully repair any defects covered under the Volkswagen warranty. We reject this argument. While oral representations will sometimes create contractual obligations, Seekings v. Jimmy GMC of Tucson, Inc., 130 Ariz. 596, 638 P.2d 210 (1981), the salesman‘s representations here provide no basis for obligating Griffin under the manufacturer‘s warranty. The salesman‘s statements can only be interpreted as an explanation of the manufacturer‘s warranty. Where a dealer has properly disclaimed all warranties, the delivering, presenting, or explaining of a manufacturer‘s warranty, without more, does not render the dealer a co-warrantor by adoption, Motor Homes of America, Inc. v. O‘Donnell, 440 So. 2d 422, 427 (Fla. 4th DCA 1983), rev. denied, 451 So. 2d 849 (Fla. 1984), nor does it create a contractual obligation which can serve as a basis for a buyer‘s later revocation of acceptance. Should we hold otherwise, an automobile dealer would effectively be precluded from disclaiming responsibility for the warranties of the manufacturer, despite the fact that
We are also unpersuaded by Smith‘s contention that Griffin adopted Volkswagen‘s warranty as a result of certain language in the dealer agreement existing
In Henningsen, for example, the dealer disclaimed all warranties in the purchase contract, but in the same document “agree[d] to promptly perform and fulfill all terms and conditions of the owner service policy.” The owner service policy, given to the buyer at the time of delivery of the automobile, repeated the manufacturer‘s warranty set out in the purchase contract and added a paragraph by which the dealer extended that warranty to the buyer in the same manner as if the word “Dealer” appeared in place of the word “Manufacturer.” The court concluded that the dealer‘s intent was to incorporate the provisions of the owner service policy into the purchase contract. It went on to hold that because the disclaimer in the purchase contract was inconspicuous and the limited remedy afforded by the manufacturer was unconscionable, both the disclaimer and the manufacturer‘s limited remedy were void as against public policy. Henningsen, 161 A.2d at 96-97. Similarly, in Ventura, the dealer disclaimed all warranties in its sales contract but, at the same time, agreed “to promptly perform and fulfill all terms and conditions of the owner service policy.” The court concluded that, even assuming that the dealer‘s disclaimer was conspicuous and not unconscionable, the dealer‘s reference in the sales contract to the manufacturer‘s warranty amounted to the dealer‘s “written warranty” under the Magnuson-Moss Warranty — Federal Trade Commission Improvement Act,
By contrast, the retail buyer‘s order and installment contract signed by Smith contain no language from which we can infer that the dealer intended to incorporate by reference the provisions of Volkswagen‘s warranty. Although Griffin‘s dealer agreement with Volkswagen obligates Griffin to make Volkswagen‘s warranty “part of its contracts for sale” of Volkswagen products, there is no indication in the record that Smith was made aware of the provisions of the dealer agreement at the time of the sale, or indeed, at any time prior to suit. Even if Smith had been furnished a copy of Griffin‘s dealer agreement at the time of sale, we do not construe that agreement to require Griffin to adopt Volkswagen‘s warranties as its own. The dealer‘s promise to make Volkswagen‘s warranty part of its sale contract would seem to be satisfied by the dealer‘s transmission of the warranty booklet to the buyer upon delivery of the automobile, and its promise to comply with the provisions of Volkswagen‘s warranty would seem to be satisfied by its performance of warranty service work. In sum, we can find no indication that Griffin became Volkswagen‘s co-warrantor by adoption. See Norman Gershman‘s Things to Wear, Inc. v. Mercedes-Benz of N. Am., Inc., 558 A.2d 1066, 1073 (Del. Super. Ct. 1989) (the dealer‘s delivery of the manufacturer‘s warranty to the buyer, which warranty said that “any authorized Mercedes-Benz dealer” would make necessary warranty repairs was not an undertaking on the part of the dealer to repair the product); and Lytle v. Roto Lincoln Mercury & Subaru, Inc., 167 Ill. App. 3d 508, 118 Ill. Dec. 133, 137, 521 N.E.2d 201, 205 (1988) (where the dealer “issued” the manufacturer‘s warranty to the buyer, but took no other steps that could be construed as an adoption of that warranty, it did not adopt the manufacturer‘s warranty within the meaning of the Magnuson-Moss Act); and cf. Simmons v. Taylor Childre Chevrolet-Pontiac, Inc., 629 F. Supp. 1030, 1032 (M.D.Ga. 1986) (“Nothing in the seller‘s invoice, the only writing [the dealer] itself extended to plaintiff, comes within the Magnuson-Moss definition of `written warranty.‘“).
Next, Smith argues that the salesman‘s statement that warranty service was available at any authorized Volkswagen dealer was a part of an unfair trade practice under
Smith further argues that Griffin‘s disclaimer of all warranties effectively created an exclusive remedy, Volkswagen‘s limited warranty. The argument continues that, when the remedy failed of its essential purpose due to Griffin‘s inability to repair the car, Smith became entitled to invoke all remedies provided in the Uniform Commercial Code.
Finally, Smith argues that Griffin‘s disclaimer of the implied warranty of merchantability is ineffective by virtue of
(a) No supplier may disclaim or modify ... any implied warranty to a consumer with respect to such consumer product if ... at the time of sale, or within 90 days thereafter, such supplier enters into a service contract with the consumer which applies to such consumer product.
... .
(c) A disclaimer, modification, or limitation made in violation of this section shall be ineffective for purposes of this chapter and State law.
A service contract under the Act must meet the definitions of [
15 U.S.C.A. § 2301(8) ]. An agreement which would meet the definition of written warranty in section [2301(6)(A) or(B) ] but for its failure to satisfy the basis of the bargain test is a service contract. For example, an agreement which calls for some consideration in addition to the purchase price of the consumer product, or which is entered into at some date after the purchase of the consumer product to which it applies, is a service contract. An agreement which relates only to the performance of maintenance and/or inspection services and which is not an undertaking, promise, or affirmationwith respect to a specified level of performance, or that the product is free of defects in materials or workmanship, is a service contract. An agreement to perform periodic cleaning and inspection of a product over a specified period of time, even when offered at the time of sale and without charge to the consumer, is an example of such a service contract.
To be sure, Griffin‘s repair order is not an ordinary service contract like the extended warranty discussed in Parsons, 465 So. 2d at 1293, the “extended service contract” referenced in Auburn Ford, Lincoln Mercury, Inc. v. Norred, 541 So. 2d 1077, 1080 (Ala. 1989), or the service contract outlined in Patton v. McHone, 822 S.W.2d 608, 617 (Tenn. Ct. App. 1991). Though we are mindful of the Commission‘s sweeping examples and the deference which must be shown to its comments, we remain unable to conclude that Griffin‘s 6-month or 6000 mile guarantee of the service work identified on the repair order constitutes a contract to “perform, over a fixed period of time ... services relating to the maintenance or repair (or both) of [Smith‘s automobile].” In sum, we do not believe that the term “service contract” encompasses those situations where a supplier merely guarantees his repair work on an isolated post-sale repair job. See Robin Towing Corp. v. Honeywell, Inc., 859 F.2d 1218, 1223 (5th Cir.1988) (where all repairs to the consumer‘s fire alarm device were obtained separately by oral request and none of the consumer‘s contracts with the supplier indicated that any maintenance service would be forthcoming, the supplier had extended no service contract as defined in the act); and
In conclusion, we agree with Griffin‘s contention that Smith proved no breach of a contractual obligation which rendered the automobile nonconforming. Therefore, we determine that the trial court erred in denying Griffin‘s motion for a directed verdict on the revocation of acceptance count. Because Smith‘s claim for revocation of acceptance was not proved, he is not entitled to an award of consequential damages under
Accordingly, those portions of the final judgment awarding damages against Griffin for Smith‘s revocation of acceptance, including the award of consequential damages, are reversed, and this cause is remanded for entry of a final judgment in accordance with this opinion. Because we find the parties’ other assertions of error to be without merit, in all other respects, the trial court is affirmed.
WOLF, J., concurs.
ERVIN, J., concurs and dissents with opinion.
Although the majority‘s decision affirms all of appellant‘s issues except that relating to the award of damages on appellee‘s revocation of acceptance claim, which it has reversed, the effect of its reversal leaves appellee with no remedy whatsoever.2 As a consequence, appellee retains an essentially
The majority‘s holding moreover ignores a fundamental tenet of the UCC, stating that “[t]he remedies provided by this code shall be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed.”
On September 2, 1987, Jerry Smith purchased a new 1987 Volkswagen automobile from Frank Griffin Volkswagen (Griffin), having a listed price of $13,393. The sales contract, signed by Smith and Griffin‘s salesman, contained a statement representing that the only applicable warranties were those offered by the manufacturer, and that the dealer explicitly disclaimed all warranties, express or implied. The same disclaimers were also made in a separate document entitled “`As Is’ Dealer‘s Warranty,”4 again executed by Smith and Griffin‘s representative.
At the time of the sale, Griffin delivered to Smith the manufacturer‘s booklet, containing its limited new vehicle warranty, stating that the warranty period was for two years without mileage limitation, covering all repairs to correct defects in materials or workmanship, except defects in tires. The booklet also stated that the warranty would be honored by all authorized Volkswagen dealers in the United States, and that they would repair defective parts or replace them free of charge. These written representations were confirmed by Griffin‘s salesman who orally advised Smith that if he had any problem with the vehicle within the warranty period, he should bring it to any authorized dealer and the problem would be corrected.
Less than three months after the sale, Smith noticed that when he attempted to start the car, it “struggled and hesitated.” In Smith‘s words, it appeared to have a “cold start problem.” On November 23, 1987, with approximately 3800 miles on its odometer, the automobile was towed to Tom Bush Volkswagen, another authorized Volkswagen dealer, for repairs. On the service order were the words that the engine “runs rough in lower gear, won‘t
Following the December 1987 attempt at repairs, the same problems shortly resurfaced in a practically identical manner. After driving the car from the dealership to a nearby naval air base, Smith parked it for approximately 30 to 45 minutes, attempted to restart it, and the engine once again began hesitating and struggling. The automobile‘s hesitation problems were no longer confined to the starting of the engine; the car also began jerking as if it were not getting enough fuel even after the engine was “warmed up.” Frustrated, Smith returned the vehicle for the last time to Griffin on February 2, 1988 for repairs, complaining as well of other problems, specifically of water leaking into the rear of the automobile. On its repair order of February 2, 1988, Griffin represented that its service work was guaranteed for 3 months or 3,000 miles, whichever first occurred. Once again Griffin undertook repairs, and once again the repairs proved unavailing. Finally, on March 25, 1988, the vehicle was towed back to the Griffin dealership after it would not start, and Smith gave oral notice of revocation of acceptance to an employee of the dealer. Written notice of same was made by letter dated May 23, 1988 by Smith‘s attorney.
On June 2, 1988, Smith filed a multicount complaint against Griffin and the manufacturer, Volkswagen of America, Inc., and other persons not parties to this appeal, alleging in Count I, breach of implied warranty of merchantability; Count II, breach of express warranty; Count III, Florida Deceptive and Unfair Trade Practice Act violations (
Griffin raises the following points in its appeal from the judgment: (1) whether the trial court erred in admitting the testimony of a certain expert witness presented on behalf of Smith; (2) whether the trial court erred in denying Griffin‘s motion for directed verdict as to Count III of the complaint, alleging a Deceptive Trade Practice Act violation; (3) whether the trial court erred in denying Griffin‘s motion for directed verdict as to Count V of the complaint, seeking revocation of acceptance; (4) whether the trial court erred in refusing Griffin‘s jury instruction that any violation of
I concur with the majority in affirming all issues raised by appellant except that pertaining to the revocation of acceptance claim. As to the latter issue, as previously stated, I dissent and my reasons therefor are stated in Part I, sections A and B of this dissent. If the majority had affirmed this issue, I would not reach any of the issues raised in appellee‘s cross-appeal. Because, however, the majority has reversed, I agree with appellee/cross-appellant‘s argument that the trial court erred in dismissing Count II of Smith‘s complaint as to Griffin, which alleged breach of an express warranty, and my reasons therefor are stated under Part I, section A. I also agree with appellee/cross-appellant‘s point that the trial court erred in dismissing appellee‘s claim pertaining to breach of the dealer‘s obligations under the Magnuson-Moss Warranty Act, and I have addressed this issue in Part II of this dissent. As to the third issue raised on cross-appeal, I agree with the majority that Griffin effectively disclaimed all implied warranties — not express warranties — under the UCC, and therefore concur with the majority in affirming as to it.
I. THE REVOCATION OF ACCEPTANCE CLAIM.
A. In determining whether the vehicle‘s nonconformity substantially impaired its value to Smith, the trial court could reasonably take into consideration the dealer‘s statements, both written and oral, agreeing to make repairs, as well as its course of performance following the sale, in order to decide whether the dealer‘s agreement to repair was part of the basis of the bargain between the parties at the time of the sale, or whether a new warranty obligation arose following the contract‘s execution, notwithstanding the existence of the dealer‘s disclaimers of all warranties, express or implied.
Ordinarily, the issue of whether a warranty has been created is one of fact. Gladden v. Cadillac Motor Car Div., Gen. Motors Corp., 83 N.J. 320, 416 A.2d 394 (1980). Indeed, any attempt to show that a seller‘s affirmation is not part of the bargain must be supported by clear, affirmative proof. McGregor v. Dimou, 101 Misc. 2d 756, 422 N.Y.S.2d 806 (Civ.Ct. 1979). Nor need any demonstration be made in regard to whether the buyer relied on an affirmation. The essential determination is simply whether the representation was part of the basis of the bargain. Ewers v. Eisenzopf, 88 Wis. 2d 482, 276 N.W.2d 802 (1979).
Notwithstanding the above, I acknowledge that oral warranties are subject to the parol evidence rule.
The code provides that any written agreement may be explained or supplemented:
(1) By course of dealing or usage of trade ( s. 671.205 [UCC § 1-205] ) or by course of performance (s. 672.208 [UCC § 2-208] ); and(2) By evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.
A case decided by the Colorado Court of Appeals, O‘Neil v. International Harvester Co., 40 Colo. App. 369, 575 P.2d 862 (1978), well illustrates the interplay of the above statutory provisions. There the trial court had granted summary judgment against a buyer of a used diesel tractor and trailer in favor of the seller, based upon the following language contained in the retail installment contract:
Each USED motor vehicle covered by this contract is sold AS IS WITHOUT WARRANTY OF ANY CHARACTER expressed or implied, unless purchaser has received from seller a separate written warranty executed by seller.
Id., 575 P.2d at 864. Although the seller gave no written, express warranties to the buyer, the buyer stated in his deposition, submitted in opposition to the seller‘s motion for summary judgment, that he understood the above warranty-exclusion provision to mean that it would be consistent with the oral representation the defendant‘s salesman made to him, which, according to the buyer, was that the truck had been recently overhauled and would be suitable for his intended purpose, which was to haul firewood in the mountains.
In reversing the entry of summary judgment, and in remanding the case for trial on the buyer‘s claims for rescission of the contract and damages for breach of express and implied warranties, the Colorado Court of Appeals noted that the oral warranties the buyer relied upon were inconsistent with the warranty-exclusion clause, and therefore genuine issues of material fact remained unresolved:
Where, as here, the buyer alleges the existence of oral warranties prior to execution of the written contract, as well as conduct following the sale ... which tends to show that warranties were in fact made, there is a material issue of fact for resolution. That issue is whether the parties intended the written contract to be a final expression of their agreement, and if not, what the terms actually agreed upon by the parties consisted of. Further, we hold that, under such circumstances, evidence of both oral warranties and the conduct of the parties subsequent to signing the contract is admissible for purpose of resolving this issue. Thus, entry of summary judgment on this issue was error.
Id. at 865 (emphasis added).
In the case at bar, the buyer submitted evidence showing the existence of oral statements prior to or contemporaneous with the execution of the written sales contract, as well as conduct following the sale consistent with such statements, e.g., unsuccessful repairs of the vehicle, together
2. Paragraph (a) [(1)] makes admissible evidence of course of dealing, usage of trade and course of performance to explain or supplement the terms of any writing stating the agreement of the parties in order that the true understanding of the parties as to the agreement may be reached. Such writings are to be read on the assumption that the course of prior dealings between the parties and the usages of trade were taken for granted when the document was phrased. Unless carefully negated they have become an element of the meaning of the words used. Similarly, the course of actual performance by the parties is considered the best indication of what they intended the writing to mean.
19A Fla. Stat. Ann. 131 (1966) (emphasis added).
Even if the majority‘s interpretation of the salesman‘s oral statements, made at or about the time of the execution of the sales agreement, is correct, i.e., that they constituted only explanations of the manufacturer‘s warranty and were not express warranties themselves, such determination has no effect on whether the subsequent, written guarantees made by the dealer on each of the three repair orders, together with its conduct consistent therewith, were express warranties. Notwithstanding the parol evidence rule‘s bar of prior or contemporaneous expressions of a complete, unambiguous written contract, the rule does not, of course, bar the admission of a subsequent agreement that modifies a previous written agreement between the parties. The Race, Inc. v. Lake & River Recreational Properties, Inc., 573 So. 2d 409, 410-11 (Fla. 1st DCA 1991); Linear Corp. v. Standard Hardware Co., 423 So. 2d 966 (Fla. 1st DCA 1982).
For example, in Weiss v. Keystone Mack Sales, Inc., 310 Pa. Super. 425, 456 A.2d 1009 (1983), the Superior Court of Pennsylvania reversed the entry of summary judgment in favor of the seller in an action for damages brought by the buyer of a used truck. The trial court‘s summary judgment was based upon a warranty-exclusion clause prominently displayed on the face of the purchase order stating:
“THIS TRUCK SOLD `AS IS.’ `WHERE IS.’ NO WARRANTY OR GUARANTEE IS OFFERED OR IMPLIED.”
Id., 456 A.2d at 1010. Immediately thereafter the following statement was made: “`Company specifically disclaims any implied warranty of merchantability or fitness for a particular purpose.‘” Id. In the buyer‘s answer to the seller‘s interrogatories, however, he alleged that the salesman had orally advised him that the truck was the “`best-running truck that Keystone Mack had purchased from [its supplier] and ... that ... [it] was in excellent condition.‘” Id. The buyer also placed in evidence a handwritten note on a repair order following the vehicle‘s purchase, stating: “`30 day warranty 50/50 on the 250 Cummings engine. If a problem develops, have the truck brought back to us. We certify that the engine is in excellent running condition.‘” Id.
The Superior Court of Pennsylvania, as did the Colorado Court of Appeals in O‘Neil, reversed the entry of summary judgment in favor of the seller, noting that the lower court did not consider whether the seller had effectively disclaimed express warranties under 13 Pennsylvania Consolidated Statutes Section 2316(a) (UCC § 2-316(1)), requiring that “`[w]ords or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be
Also, the lower court confined its view of the case to the purchase order. The record suggests, however, that the events on which appellant‘s claim is based did not end with the signing of the purchase order. As we have discussed, when appellant complained that the engine was emitting smoke, appellee undertook to repair it, and gave appellant a “30 day warranty 50/50” on the engine, and “certif[ied]” that the engine was “in excellent running condition.” Then, when it was discovered that the engine in fact had a cracked block, appellee replaced it, taking some sixty-seven days to do so. It is by no means clear — and the lower court did not consider — whether appellee‘s conduct subsequent to the execution of the purchase order resulted in a new contractual or warranty obligation coming into being, either as a proper modification of the purchase order, or as an obligation created later than and distinct from the purchase order.
Id. (emphasis added).
Thus, as the above cases indicate, a court may properly examine the parties’ conduct subsequent to the execution of a written contract to determine whether such conduct clarifies what the parties intended, or to decide whether a new contractual warranty later came into existence, notwithstanding an earlier disclaimer of all warranties in the contract.
The majority, ante at 599, cites a number of opinions, including McCormick Machinery, Inc. v. Julian E. Johnson & Sons, Inc., 523 So. 2d 651 (Fla. 1st DCA 1988), and Crume v. Ford Motor Co., 60 Or. App. 224, 653 P.2d 564 (1982), recognizing the rule that an effective disclaimer of all warranties eliminates any claim that goods are nonconforming, and thereby precludes revocation of acceptance. While this court in McCormick did so state, it distinguished the line of cases so holding (including Crume) from Seekings v. Jimmy GMC of Tucson, Inc., 130 Ariz. 596, 638 P.2d 210 (1981), stating that in the latter case, “[t]he seller‘s oral representations were part of the contract and as such were not negated by a written disclaimer.” McCormick, 523 So. 2d at 656 (emphasis added). As previously stated in this dissent, there was abundant evidence below from which the jury could properly decide that the seller‘s oral representations were part of the basis of the parties’ bargain and therefore could not have been negated by the dealer‘s written disclaimers.
In Crume, unlike the present case, there were neither any oral statements nor subsequent written guarantees of repair, which, in my judgment, make the circumstances at bar clearly distinguishable. Indeed, the Court of Appeals of Oregon in Young v. Hessel Tractor & Equipment Co., 99 Or. App. 262, 782 P.2d 164 (1989), review denied, 309 Or. 522, 789 P.2d 1387 (1990), distinguished the facts before it from those existing in Crume, by noting that the dealer in Young had disclaimed all warranties, except a limited warranty against defects in the equipment for 12 months or 1500 hours. Despite the dealer‘s reliance upon Crume, the court noted that the dealer in Crume had disclaimed all warranties and that the vehicle conformed to the contract; thus, there was no possible nonconformity of the dealer‘s obligations which could serve as a basis for revoking acceptance. The court in Young observed, however, that “[n]othing in Crume suggests that a failure of essential purpose of a limited warranty provided by a dealer would not restore other remedies as provided by ORS 72.7190(2) [UCC § 2-719(2)].” Id., 782 P.2d at 168 (footnote omitted).
Therefore, in both Young and the present case, express, limited written warranties of repair were provided by the dealer: in Young, at the time of the execution of the contract; and here, on three separate occasions following the sale. Additionally, in both cases the evidence disclosed that the limited remedies provided failed of their essential purpose. Because of the failure of the specific remedy furnished
After the purchase of an automobile, the same should be put in good running condition; that is the seller does not have an unlimited time for the performance of the obligation to replace and repair parts. The buyer of an automobile is not bound to permit the seller to tinker with the article indefinitely in the hope that it may ultimately be made to comply with the warranty. At some point in time, if major problems continue to plague the automobile, it must become obvious to all people that a particular vehicle simply cannot be repaired or parts replaced so that the same is made free of defect.
Id. at 320-21 (citations omitted).
B. Notwithstanding a clause generally disclaiming all warranties, such clause has no effect on a buyer‘s right to revoke acceptance, if the goods sold can otherwise be shown not to conform to the contract, and the buyer is able to meet the remaining requirements of section 672.608 (UCC § 2-608).
Even if the majority‘s draconian interpretation of the contract is correct, that the dealer‘s disclaimers effectively excluded the oral statements agreeing to repair, made before or contemporaneously with the execution of the written contract, as well as evidence of any consistent course of performance conducted by the dealer subsequent thereto, the majority‘s conclusion does not preclude a decision that the automobile was shown to be nonconforming to other portions of the written contract, thereby permitting the buyer to pursue his revocation of acceptance remedy. In so deciding, the majority has apparently overlooked that provision of the code recognizing that a dealer‘s statement on the face of a retail sales contract that an automobile sold as new8 may itself be considered an express warranty and provide a means for seeking revocation of acceptance.
An excellent case exemplifying the application of the above provision is Blankenship v.
Northtown Ford, Inc., 95 Ill. App.3d 303, 50 Ill.Dec. 850, 420 N.E.2d 167 (1981), wherein the buyer of a new automobile brought an action to rescind the sales contract and recover the purchase price, resulting from the dealer‘s failure to repair the automobile on 11 different occasions during a five-month period following the vehicle‘s purchase. Although the dealer‘s disclaimer of all warranties in the contract was deemed ineffective, because it was not drafted in compliance with the UCC, the court observed that even if the disclaimer were considered valid, the dealer could not avoid revocation of acceptance, because such remedy is not limited to goods which are unmerchantable, but that revocation “may be sought if the non-conformity of the goods substantially impairs their value to the buyer.” Id. 50 Ill.Dec. at 853, 420 N.E.2d at 170. Relying upon the warranty of merchantability, the court noted that the automobile purchased by the buyer did not conform to the contract‘s description of
The logical extension of the dealer‘s argument in this case is that delivery by the dealer of anything which it referred to as a “new car,” even an automobile without an engine, would bar plaintiffs’ action for rescission based upon an implied warranty of merchantability. We agree with that comment to the UCC which specifically rejects this interpretation of the disclaimer provision and which states:
“4. In view of the principle that the whole purpose of the law of warranty is to determine what it is that the seller has in essence agreed to sell, the policy is adopted of those cases which refuse except in unusual circumstances to recognize a material deletion of the seller‘s obligation. Thus, a contract is normally a contract for a sale of something describable and described. A clause generally disclaiming `all warranties, express or implied’ cannot reduce the seller‘s obligation with respect to such description and therefore cannot be given literal effect under Section 2-316.
This is not intended to mean that the parties, if they consciously desire, cannot make their own bargain as they wish. But in determining what they have agreed upon good faith is a factor and consideration should be given to the fact that the probability is small that a real price is intended to be exchanged for a pseudo-obligation.”
Ill.Annot.Stat., ch. 26, par. 2-313 , Uniform Commercial Code Comment (4) at 219-20 (Smith-Hurd 1963).
Id. (emphasis added).
The Blankenship result appears to have been approved by Professors White and Summers, who state:
What are the reasonable expectations of a buyer who has paid money and signed a document that disclaims all warranties but promises to deliver a new “automobile“? We believe that the buyer can reasonably believe that the word “automobile” is an express warranty that the machine purchased will behave in a certain way, namely, that it will carry him around town for at least a few thousand miles.
1 James J. White & Robert S. Summers, Uniform Commercial Code § 9-4 at 448 (3d ed. 1988).
That a remedy will be furnished to a buyer whose reasonable expectations have been frustrated due to a substantial impairment in the value of the goods purchased is apparent from an examination of many precode decisions. For example, in Regula v. Gerber, 34 O.O. 206, 70 N.E.2d 662 (Ct. Com.Pl. 1946), the seller of a used car sold “as is” brought an action against the buyer for the balance of the purchase price. The buyer answered, alleging that the car was worthless, and that he was therefore entitled to rescind the contract. Although the court observed that property purchased “as is,” without warranty, was not returnable except in cases involving fraud, imposition, or other similar circumstances, the court concluded that the sale of the car in a severely defective condition caused an imposition to be placed upon the buyer, and that rescission therefore was proper. In so ruling, the court found an implied warranty, notwithstanding the sale of the car “as is.” In the court‘s view the buyer paid a substantial price and, as a result, had the right to assume that the car was in running condition “even though there could be no implied warranty as to the length of time it would remain in a running condition.” Id. at 212, 70 N.E.2d at 666.
The court thus created an implied warranty — despite the existence of an “as is” warranty disclaimer, and the absence of any evidence showing that the seller had actual knowledge of the automobile‘s problems — on the theory that the buyer was the recipient of a worthless car for which he had paid a substantial sum of money. Accord Woods v. Secord, 122 N.H. 323, 444 A.2d 539 (1982), involving the buyer‘s right to revoke acceptance of a used car sold “as is,” which became inoperative before it was driven home. In Woods, the seller did not
In the case at bar, the appellee first had the vehicle towed by wrecker truck to Tom Bush Volkswagen on November 23, 1987, less than three months after he had purchased it, and after he had driven it a little more than 3800 miles. I think it obvious that Mr. Smith‘s reasonable expectations were frustrated following his payment of and future obligation to pay a substantial sum of money for an automobile that the dealer had represented to him as new. Clearly, he did not intend to pay a substantial price in exchange for a pseudo-obligation; or, as more graphically stated in Gardner v. Gray, 171 Eng.Rep. 46, 47 (1815): “[T]he purchaser cannot be supposed to buy goods to lay them on a dunghill.” (Quoted in Manning G. Warren III & Michelle Rowe, The Effect of Warranty Disclaimers on Revocation of Acceptance Under the Uniform Commercial Code, 37 Ala.L.Rev. 307, 336 & n. 150 (1986) [hereinafter Warren & Rowe].)
The Arizona Supreme Court used an approach similar to that used in Blankenship in Seekings v. Jimmy GMC of Tucson, Inc., 130 Ariz. 596, 638 P.2d 210 (1981), wherein the buyers of a new motor home, following unsuccessful efforts by the dealer to cure defects pursuant to the manufacturer‘s limited warranty, were allowed to revoke acceptance despite the dealer‘s disclaimer of all warranties. There the court rejected the dealer‘s contention that because it gave no warranties, it could not have sold nonconforming goods. In the court‘s view, the nonconformity language provided in
The Arizona Supreme Court‘s interpretation of
The fact that a warranty is not stated in the written memorandum does not mean it is not part of the contract. Section 1201, subdivision (11) of the Commercial Code itself defines “contract” broadly to include anything which affects the legal obligation of the parties. The parties’ “total legal obligation” may be a composite of written terms, oral expression and responsibilities implied by law. All may be enforced by an “action on [the] contract.”
(Footnote omitted.)
The above statement is consistent with the following comments: “These `obligations’ include the total mix of terms, conditions and warranties which form the
[T]he UCC‘s use of “non-conformity” in its remedial provisions for both damages and revocation, in contrast to the breach of warranty requirement in the Uniform Sales Act, indicates that the remedy of revocation is not limited to actions for breach of warranty. Rather, it is available in any case in which the goods do not conform to the contract, and in which the buyer is able to meet the remaining requirements of section 2-608. This conclusion is underscored by the UCC‘s mandate to the courts that its remedies be liberally administered.
Id. at 327 (footnote omitted).
The above comments are supported by a number of decisions in which courts have recognized that the remedy of revocation of acceptance is independent and separate from that of breach of warranty. See, e.g., Ford Motor Credit Co. v. Harper, 671 F.2d 1117, 1122 (8th Cir.1982) (“They are ... separate remedies treated in entirely different sections of the Code and they offer separate forms of relief.“); O‘Neal Ford, Inc. v. Earley, 13 Ark. App. 189, 681 S.W.2d 414, 417 (1985) (“[A]ppellee‘s [buyer‘s] agreement to limit her warranty rights under the Code did not affect her right to revoke acceptance.“); Lytle v. Roto Lincoln Mercury & Subaru, Inc., 167 Ill. App.3d 508, 118 Ill.Dec. 133, 139, 521 N.E.2d 201, 207 (1988) (even if a defendant has effectively disclaimed all implied warranties, a plaintiff may nonetheless have a cause of action on a revocation of acceptance claim, and summary judgment as to same was improper);9 Blankenship v. Northtown Ford, Inc., 95 Ill. App.3d 303, 50 Ill.Dec. 850, 853, 420 N.E.2d 167, 170 (1981) (“[T]he evidence ... demonstrated that the substantially defective nature of the vehicle ... impaired its value to the plaintiffs and thus revocation of acceptance is appropriate even if the dealer has properly disclaimed all implied warranties.“); Capitol Cadillac Olds, Inc. v. Roberts, 813 S.W.2d 287, 290 (Ky. 1991) (claims for revocation of acceptance and damages for breach of warranty are mutually exclusive remedies; therefore, while the buyer had no action against the dealer for breach of implied warranties due to the dealer‘s warranty disclaimer, the disclaimer had no effect on the buyer‘s right to revoke acceptance).
The total mix of the parties’ legal obligations resulting from their agreement, as affected by the UCC, demonstrates that Griffin Volkswagen, in exchange for the purchase price Smith paid, agreed to deliver to Smith a new Volkswagen automobile and orally assured Smith, at the same time, that if any defect occurred in the automobile during the manufacturer‘s warranty period, it would attempt to remedy the defect and make repairs thereto in accordance with such warranty. It unsuccessfully undertook to make repairs on three separate occasions following the purchase of the automobile. As a result of the dealer‘s failure to repair, the automobile sold as new, together with the reasonable expectations of the buyer ensuing therefrom, did not conform to the total legal obligations (express or implied by law) derived from the parties’ agreement. Obviously, a new car which is inoperative does not meet the buyer‘s expectations that he is purchasing a new car, in operating condition, free from any substantial defects which would affect its operation as an automobile described by the seller as new. Consequently, a car which does not reasonably conform to such expectations is not what the buyer bargained to obtain, that is, it does not conform to the description of the automobile in the contract which was part of the basis of the parties’ bargain. Therefore, the vehicle‘s nonconformity substantially impaired its value to Smith following its acceptance by him and frustrated his reasonable assumption that the nonconformity
II. THE MAGNUSONMOSS WARRANTY ACT CLAIM.
Although I would not reach the above point, which appellee raised in his cross-appeal, if the majority had affirmed the issue pertaining to the revocation of acceptance claim, in that I consider the damages which are available to the buyer under the Magnuson-Moss Act to be no less than those under the UCC,10 the majority‘s reversal of such claim requires that I address as well this issue. I agree with Smith that the lower court erred in granting the motion to dismiss. I think it clear from the recitation of the particular provisions of the Act, as stated in the majority‘s opinion, that the repair order, executed by Griffin within 90 days from Smith‘s purchase of the automobile, was precisely that as defined in the Act: “[A] contract in writing to perform, over a fixed period of time or for a specified duration, services relating to the maintenance or repair (or both) of a consumer product.”
The facts in Robin Towing Corp. v. Honeywell, Inc., 859 F.2d 1218 (5th Cir.1988) — an opinion the majority relies on in reaching its decision that the repair order at bar does not constitute a service order as defined by the Act — are clearly distinguishable from those at bar. In Robin Towing Corp., all service relating to a home security, burglary, and fire alarm system installed by Honeywell, Inc., at Robin‘s residence was obtained separately by oral request, and not, as required by the act, in writing. Moreover, the three printed forms signed by Robin, which were the contracts for installation of the system and indicated the type of contract or the service to be furnished, each contained a blank entitled “maintenance,” yet none of the three blanks was checked. Id. at 1223. Significantly, unlike the case at bar, Robin Towing fails to show that any written warranties were given at the time of the contract or that any written repair orders were executed by the seller and the buyer subsequent thereto. In contrast, the written statement Griffin made within 90 days of the sale guaranteeing its repairs for a fixed period of time, together with the services then performed, involving the replacement of a defective part (an idle stabilizer valve), which was necessary to repair a consumer product, must be considered a service contract under the Act.
The majority also refers to that portion of
As explained in
Therefore, the statement made in
To conclude, I would affirm the judgment entered in its entirety; however, if it is necessary to reach the issues raised in Smith‘s cross-appeal, I would reverse the trial court‘s order in dismissing Count II of the complaint, relating to breach of an express warranty, and in dismissing Count IV of the complaint, relating to the breach of obligations under the Magnuson-Moss Warranty Act, and would remand the cause for trial as to those two claims.
NOTES
Notes
1 The Commission‘s views concerning the scope of the act are entitled to great weight. Boelens v. Redman Homes, Inc., 748 F.2d 1058, 1063 n. 6 (5th Cir.1984).
2 Notwithstanding the majority‘s affirmance of appellant‘s issue contending that the lower court erred in not directing verdict on appellant‘s Deceptive Unfair Trade Practice claim, it is my understanding that the jury‘s verdict in favor of appellee on same was precluded by reason of appellee‘s prejudgment election to proceed solely against the dealer on the revocation of acceptance claim. Thus, by reversing the final judgment as it relates to the revocation of acceptance award, appellee recovers nothing, although he is entitled to an automobile which is virtually inoperable.
3 Because the sales price was financed, appellant has a total financial obligation of $18,970.17, which included his down payment of $2,066.25.
4 An “as is” disclaimer means that goods are sold “with all faults” and has the effect of excluding all implied warranties, but not express warranties created in the same transaction. See
5 Count VI was brought solely against the “distributor,” Volkswagen of America, Inc.
6 Empire of America FSB, the financier, was joined in Counts I, II, IV, and V of Smith‘s complaint as a party defendant and subsequently filed a counterclaim against Smith, alleging his failure to make payments under the retail installment contract and security agreement executed by him in connection with his purchase of the vehicle. The trial court granted judgment on the pleadings in favor of Empire and also on Empire‘s counterclaim against Smith. Subsequent to the jury‘s return of the verdict, Smith filed a motion requesting that the trial court assess against Griffin any attorney‘s fees awarded against Smith and in favor of Empire as to Empire‘s counterclaim for breach of the retail installment contract. In the final judgment, the court granted the motion, stating that all attorney‘s fees and costs awarded to Empire would be thereafter assessed against Griffin.
7 Although the oral statements made by the salesman to Smith did not include the word “warrant” or “guarantee” or words of similar import, this is not essential. See
8 Although there was no textual language to that effect in the sales contract at bar, the box marked “new” was checked on the contract.