Grosse Pointe Law Firm, PC v. Jaguar Land Rover North America, LLCGrosse Pointe Law Firm, PC v. Jaguar Land Rover North America, LLC
Lead
This case requires us to examine the distinction between warranties and remedies under Michigan’s Uniform Commercial Code (UCC), MCL 440.1101 et seq. Plaintiff, The Grosse Pointe Law Firm, PC, appeals by leave granted
I. BACKGROUND FACTS
Plaintiff purchased a vehicle from Rover Motors on December 30, 2005. The vehicle was manufactured by JLRNA. At the time of purchase, JLRNA issued a document titled “Vehicle Warranties,” which stated the following:
Land Rover North America, Inc., warrants that during the warranty period, if a Land Rover vehicle is properly operated and maintained, repairs required to correct defects in factory-supplied materials or factory workmanship will be performed without charge upon presentment for service; any component covered by this warranty found to be defective in materials or workmanship will be repaired, or replaced, without charge.
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The warranty period for the vehicle begins on the date of the first retail sale, or on the date of entry into demonstrator service. The basic warranty period is for four (4) years or until the vehicle has been driven 50,000 miles, whichever occurs first.
Plaintiff brought the vehicle to Rover Motors and Land Rover of Macomb for repairs several times. In 2011 and 2012, plaintiff attempted to negotiate for JLRNA to repurchase the vehicle, but the parties failed to reach an agreement regarding the price. On November 28, 2012, plaintiff traded in the vehicle and filed the instant lawsuit.
In its lawsuit, plaintiff raised, among others, claims for breach of warranty and violation of the Magnuson-Moss Warranty Act (MMWA), 15 USC 2301 et seq. Defendants moved for summary disposition under MCR 2.116(C)(7),
II. STANDARDS OF REVIEW
We review de novo a trial court’s decision on a motion for summary disposition. King v Reed,
We also review questions of statutory interpretation de novo. Grimes v Mich Dep’t of Transp,
III. DISCUSSION
Article 2 of the UCC, MCL 440.2101 through MCL 440.2725, governs the relationship between parties involved in contracts for the sale of goods. - MCL 440.2102; Neibarger v Universal Coops, Inc,
(1) An action for breach of any contract for sale must be commenced within 4 years after the cause of action has accrued. By the original agreement the parties may reduce the period of limitation to not less than 1 year but may not extend it.
(2) A cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.
Therefore, a cause of action for breach of a sales contract under Article 2 accrues when the breach occurs, unless the cause of action is for breach of warranty, in which case the claim accrues either on tender of delivery or, if the warranty explicitly extends to future performance of the goods, when the breach is, or should have been, discovered.
The trial court concluded that the repair-or-replace provision at issue in this case constituted a warranty for purposes of MCL 440.2725(2), but determined that the warranty did not “explicitly extend [] to future performance of the goods,” so plaintiffs cause of action accrued on tender of delivery. For a warranty to extend to future performance, it must expressly define the future period to which it applies. Sherman v Sea Ray Boats, Inc,
The repair-or-replace provision in this case does not expressly state that plaintiffs vehicle will be free from defects, but rather states that the manufacturer will repair or replace any defects that arise during the specified period. Accordingly, we agree with the trial court that the provision does not “explicitly extend [] to future performance of the goods.” However, the question remains whether a repair-or-replace provision, standing alone, is a “warranty” for purрoses of MCL 440.2725(2).
In Centennial Ins Co v Gen Electric Co, 74 Mich App 169, 170-171;
“The Company warrants to the Purchaser that the equipment to be delivered hereunder will be free from defects in material, workmanship and title and will be of the kind and quality designated or described in the contract. ... If it appears within one year from the date of shipment by the Company that the equipment delivered hereunder does not meet the warranties specified above and the Purchaser notifies the Company promptly, the Company shall thereupon correct any defect, including non-conformance with the specifications, at its option, either by repairing any defective рart or parts or by making available at the Company’s plant, a repaired or replacement part.” [Id. at 171 n 1 (emphasis omitted).][4 ]
Rejecting the buyer’s claim, this Court held that the one-year repair-or-replace provision did not constitute “a warranty for future performance, but rather, a specification of the remedy to which [the] buyer is entitled should breach be discovered within the first year.” Id. at 171. Accordingly, the Court held that the buyer’s claim was time-barred by MCL 440.2725. Id. at 172.
The Centennial Court properly identified a distinction between a warranty extending to future performance, which promises that goods will be free from defects for a specified period of time, and a promise to repair or replace, which provides a remedy if any defects arise. However, the Court did not specifically address whether a repair-or-replace promise, standing alone, constitutes a warranty for
Defendants argue that a promise to repair or replace is a warranty for purposes of MCL 440.2725(2) because it falls within the definition of “express warranty” provided by MCL 440.2313. MCL 440.2313(1) states that express warranties by the seller are created in the following ways:
(a) An affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.
(b) A description of the goods which is made part of the bargain creates an express warranty that the goods shall conform to the description.
(c) A sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.
Defendants argue that the repair-or-replace provision in this case falls within the definition of “express warranty^’ under MCL 440.2313(l)(a) because it contains a promise to repair or replace made by JLRNA to plaintiff that relates to the vehicle and formed part of the basis of the sale. However, MCL 440.2313(l)(a) goes on to state that an applicable affirmation of fact or promise “creates an express warranty that the goods shall conform to the affirmation or promise.” (Emphasis added.)
In addition to express warranties under MCL 440.2313, which parties may include as a term of a contract of sale, Article 2 also defines a wide range of implied warranties that arise by operation of law. See Heritage Resources, Inc v Caterpillar Fin Servs Corp,
Accordingly, we adopt the approach that promises to repair or replace defective goods are contractual promises under Article 2, but are not warranties.
For the same reasons, the trial court erred by dismissing plaintiffs MMWA claim. Although plaintiffs claim for breach of the promise to repair or replace is not truly a “breach of warranty” claim under Article 2 for purposes of MCL 440.2725(2), the promise is a “written warranty” for purposes of the MMWA. See 15 USC 230K6XB). The MMWA specifically defines written warranties to include “any undertaking in writing in connection with the sale by a supplier of a consumer product to refund, repair, replace or take other remedial action with respect to such product in the event that such product fails to meet the specifications set forth in the undertaking.” 15 USC 2301(6)(B).
The MMWA does not provide a limitations period for filing a breach of written warranty claim. See Mydlach v DaimlerChrysler Corp, 226 Ill 2d 307, 316; 314 Ill Dec 760;
Reversed and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction. As the prevailing party, plaintiff may tax costs. MCR 7.219(A).
CAVANAGH, J., concurred with GADOLA, J.
Notes
The Grosse Pointe Law Firm, PC v Jaguar Land Rover North America, unpublished order of the Court of Appeals, entered September 17, 2015 (Docket No. 326312). This Court’s order granting plaintiff leave to appeal limited the appeal to “the issue of whether the circuit court erred by dismissing plaintiffs claim for breach of a warranty to repair based on the running of the statute of limitations.” Id.
JLRNA filed the motion for summary disposition under MCR 2.116(C)(7). Rover Motors and Land Rover of Macomb concurred in the motion.
We note that Centennial is not binding on this Court. See MCR 7.215(J)(1) (providing that cases decided by this Court before November 1, 1990, do not have precedential value).
The Executone Court distinguished Centennial by noting that the provision in Centennial did not “explicitly warrant that the goods would be free from defects for a specified period of time,” while the warranty provision in Executone “explicitly provided frеedom ‘from defects for a period of one year from the date of shipment’. .. .” Executone,
Indeed, the seller in Centennial arguably did create an express warranty by making a promise that the goods would be free from defects, albeit not for a specified period of time, in addition to a promise to repair or replace defective parts. See MCL 440.2313(l)(a). No such language appears in the contract provision at issue in this case.
Again, when interpreting statutes, we must give effect to every phrase, clause, and word in the statute, we must read the statutory language in context, and we must construe the statute as a whole. Potter v McLeary,
The implied warranties under Article 2 are as follows: the implied warranty of title and against infringement, which provides that “title conveyed shall be good, and its transfer rightful” and that “the goods shall be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge,” MCL 440.2312; the implied warranty of merchantability, which provides that goods must (a) “pass without objection in the trade under the contract description,” (b) “in the case of fungible goods, are of fair quality within the description,” (c) “are fit for the ordinary purpose for which the goods are used,” (d) “run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved,” (e) “are adequately contained, packaged, and labeled as the agreement may require,” and (0 “conform to the promises or affirmations of fact made on the container or label if any,” MCL 440.2314; and the implied warranty of fitness for a particular purpose, which provides that “[w]here the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is ... an implied warranty that the goods shall be fit for such purpose,” MCL 440.2315.
See Garvin, Uncertainty and Error in the Law of Sales: The Article Two Statute of Limitations, 83 B U L Rev 345, 379 (2003) (“All [express and implied warranties] go to the quality of the goods at tender. None goes to the remedies, which come about only if a warranty is breached.”); DeWitt, Action Accrual Date for Written Warranties to Repair: Date of Delivery or Date of Failure to Repair ?, 17 U Mich J L Reform 713, 722 n 35 (1984) (“A repair provision relates not to the goods and their quality, but to the manufacturer and its obligation to the purchaser.”).
Defendants cite Kelynack v Yamaha Motor Corp, USA,
Defendants argue that our approach requires us to ignore the Supreme Court’s holding in Baker,
We decline to address plaintiffs equitable-estoppel claim because it was not part of the issue for which we granted leave to appeal. Therefore, the issue is not properly before this Court.
Concurrence Opinion
(concurring). I concur in the result reached by my colleagues and write separately to discuss how the Magnuson-Moss Warranty Act (MMWA), 15 USC 2301 et seq., provides a different path to the same result, while also providing logical and persuasive support for the majority’s decision.
Congress enacted the MMWA in 1974 to “improve the adequacy of information available to consumers, prevent deception, and improve competition in the marketing of consumer products.” 15 USC 2302(a). The MMWA does not require a consumer product to be warranted, 15 USC 2302(b)(2), but when a warranty is provided, it is subject to the MMWA’s regulatory scheme, 15 USC 2302(a); 16 CFR 700.1 et seq. If a product fails, the warrantor may elect repair, replacement, or refund as a remedy. 15 USC 2301(10). If the warrantor elects to repair the product, but it cannot be repaired after a reasonable number of attempts, the “warrantor must permit the consumer to elect either a refund for, or replaсement without charge of, such product or part (as the case may be).” 15 USC 2304(a)(4). Subject to provisions inapplicable to the case at bar,
As the majority points out, the MMWA has no statute of limitations. Where there is no federal statute of limitations expressly applicable to a suit, “courts apply the most closely analogous statute of limitations under state law.” DelCostello v Int’l Brotherhood of Teamsters,
Whereas the UCC refers to “express warranties” (which may be oral or written) and “implied warranties,” MCL 440.2313 to MCL 440.2315, the MMWA refers to “written warranties” (full or limited) and “implied warranties,” 15 USC 2301(6) and (7); 15 USC 2303. Broader than the UCC’s definition of “express warranty,” the MMWA’s definition of “written warranty” encompasses:
(A) any written affirmation of fact or written promise made in connection with the sale of a consumer product by a supplier to a buyer which relates to the nature of the material or workmanshipand affirms or promises that such mаterial or workmanship is defect free or will meet a specified level of performance over a specified period of time, or
(B) any undertaking in writing in connection with the sale by a supplier of a consumer product to refund, repair, replace, or take other remedial action with respect to such product in the event that such product fails to meet the specifications set forth in the undertaking, which written affirmation, promise, or undertaking becomes part of the basis of the bargain between a supplier and a buyer for purposes other than resale of such product. [15 USC 2301(6).]
For the reasons set forth by my colleagues, the warranty to repair or replace defective components at issue in the instant case does not meet the criteria of an “express warranty” under the UCC. However, it does meet the criteria of a “written warranty” under the quoted provision of the MMWA, 15 USC 2301(6)(B).
Some courts have elected to treat a written warranty under the MMWA the same as an express (or implied) warranty under the UCC for purposes of determining an accrual date if the written warranty does not fall within the recognized exception to the general rule that a breach accrues on the date of delivery. For example, one federal district court held that a repair-or-replace warranty does not extend the accrual date unless the warranty “(1) involves specific contractual obligations that can be deemed to accrue after delivery, or (2) explicitly extends particular obligations beyond the four year period of warranty.” Jackson v Eddy’s LI RV Ctr, Inc,
This approach has been criticized on the ground that a promise to repair or replace could be unenforceable if breach of the promise occurred near the end of the four-year limitations period. See Mydlach v DaimlerChrysler Corp, 226 Ill 2d 307, 324-325; 314 Ill Dec 760;
Without differentiating between warranty and remedy as the majority does today, other courts have acknowledged the distinction between an express warranty under the UCC and a written warranty under the MMWA, and they have referred to
Performance under a vehicle manufacturer’s promise to repair or reрlace defective parts is due not at tender of delivery, but only when, and if, a covered defect arises and repairs are required. In that event, if the promised repairs are refused or unsuccessful, the repair warranty is breached and the cause of action accrues, triggering the four-year limitations period. [Mydlach, 226 Ill 2d at 323.]
The advantages to this interpretation, the Illinois Supreme Court noted, are that it ensures enforceability of a warranty even when a breach occurs late in the warranty period and supports the MMWA’s purpose to prevent deception. See id. at 324-325. I find the analysis in Mydlach to be on point and persuasive.
In claims brought under the MMWA, a repair-or-replace warranty is a promise not regarding the quality, character, description, sample, or model of the goods—as it does not “warrant” the quality of the vehicle or its performance, and the goods cannot “conform” to the promise to repair
The similarities between the MMWA path and the approach taken by my colleagues are clear: in both, repair-or-replace promises are not “express warranties” as defined by the UCC, non-UCC law dictates that claim accrual for a breach of a repair-or-replace promise occurs when the promised repair or replacement is not made, and, once the promise is breached, the UCC’s four-year statute of limitations governs the limitations period. However, whereas the majority relies on Michigan caselaw to differentiate between “warranty’ and “remedy,” the MMWA includes repair- or-replace promises in its definition of “written warranties.” The significance of this difference in nomenclature is that even when repair-and-replace promises are not distinguished from warranties under the UCC, persuasive authority still exists to hold that plaintiffs claim under the MMWA survived.
See 15 USC 2310(a)(3) and (e), addressing alternative dispute resolution and class actions, respectively.
MCL 440.2725 provides in pertinent part:
(1) An action for breach of any contract for sale must be commenced within 4 years after the cause of action has accrued. By the original agreement the parties may reduce the period of limitation to not less than 1 year but may not extend it.
(2) A cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.
“Although lower federal court decisions may be persuasive, they are not binding on state courts.” Abela v Gen Motors Corp,
E.g., a 6-year/60,000-mile warranty on a vehicle’s powertrain. See, e.g., Cosman v Ford Motor Co, 285 Ill App 3d 250, 257; 220 Ill Dec 790;
This Court is not bound by cases from other jurisdictions; it may, however, find the analyses contained in those cases to be helpful and persuasive. See Ammex, Inc v Dep’t of Treasury,
See Cosman, 285 Ill App 3d at 259.
As stated in Cosman, “A promise to repair parts ... for six years is a promise that the manufacturer will behave in a certain way, not a warranty that the vehicle will behave in a certain way.” Cosman, 285 Ill App 3d at 257. “A promise to repair is simply not a promise of performance. On the contrary, in the arms length [sic] atmosphere of the market place, a promise to repair can more honestly be rеad as an admission that the thing sold might break, rather than a legally enforceable prediction that it will never need tending to.” Id. at 260. Thus, the promise is “not breached until the seller fails to repair.” Id. at 261. Finding that a repair-or-replace warranty qualifies as a written warranty under the MMWA that is breached when the seller fails to repair
does the least violence to two legislative acts—the Uniform Commercial Code and the Magnuson-Moss Act—drafted without an eye on the other. It preserves a four year statute of limitations for promises that are part of a contract for the sale of goods, while recognizing that the Magnuson-Moss remedy for breach of a promise to repair cannot ripen until the promise is broken and has nothing to do with the inherent quality of the goods or their future performance. [Id.]
Contrary to this Court’s perception in Centennial Ins Co v Gen Electric Co,
Because the promise to repair or replace defective parts is only good during the warranty period, the latest a breach of warranty can occur is at the very end of that period. Accordingly, the statute of limitations will expire, at the latest, four years after the warranty period has run. If breach of a repair warranty occurs earlier in the warranty period, the limitations period for that breach will expire sooner, but in no event will the warrantor’s exposure extend beyond the warranty period, plus four years. [Mydlach, 226 Ill 2d at 325-326.]
Regardless, as noted by the majority, Centennial is not binding on this Court. MCR 7.215(J)(1).