ALVERY PACK, Plaintiff-Appellant, v. DAMON CORPORATION, Defendant-Appellee.
No. 04-2163
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
January 5, 2006
06a0013n.06
NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
O P I N I O N
Before: DAUGHTREY and MOORE, Circuit Judges, ALDRICH,* District Judge.
KAREN NELSON MOORE, Circuit Judge. This case involves state and federal claims for breach of express and implied warranties on a 2002 Damon Intruder Motor Home (“the motor home” or “the RV“) manufactured by Defendant-Appellee Damon Corporation (“Damon“) and purchased by Plaintiff-Appellant Alvery Pack. Primarily the parties dispute whether defects in the motor home continued to exist during the period under warranty, whether the claimed defects were covered under Damon‘s warranty, and the length of time the motor home was out of service for repairs.
Pack appeals the district court‘s order granting Damon‘s motion for summary judgment on his express- and implied-warranty claims under both state law and the Magnuson Moss Warranty
For the reasons set forth below, we REVERSE IN PART the district court‘s judgment with regard to the express-warranty claim and REVERSE the district court‘s judgment with regard to the implied-warranty claim. We REMAND to the district court for further proceedings consistent with this opinion.
I. BACKGROUND
On September 13, 2002, Plaintiff Alvery Pack purchased the subject motor home from General RV Center (“GRVC“) in Brownstown, Michigan. The cost of the RV, including financing, totaled $226,435.60.
The RV was accompanied by a limited warranty from Damon, under which Damon
warrants that this recreational vehicle . . . will be free from defects in material and workmanship attributable to Damon for a period of one (1) year or 12,000 miles. . . . This Limited Warranty covers only materials, components or parts of the RV manufactured and finally assembled by Damon. . . . In the event that a defect in materials or workmanship is found to exist, Damon will provide for the repair or replacement of such defective material(s) or workmanship at no charge. . . . Damon‘s obligation to repair or replace defective materials is the sole obligation of Damon under this Limited Warranty.
Pack began experiencing problems with the motor home immediately after the purchase date. He alleges that a variety of defects put the RV out of service for a total of 168 days in the first year and that it required nine separate service dates for repairs.
On September 19, 2003, Pack instituted this lawsuit against Damon and GRVC in Wayne County Circuit Court in Michigan, alleging breach of express and implied warranties under state law and the MMWA, violations of the MCPA, revocation of acceptance, breach of contract, and rescission. Defendants removed the case to the Eastern District of Michigan on the basis of the federal claim. The district court dismissed the claims against GRVC because Pack had a valid arbitration agreement with that defendant and granted both of Damon‘s motions for summary judgment, dismissing the claims against Damon as well. Plaintiff then timely commenced this appeal.
II. ANALYSIS
Plaintiff appeals the grant of summary judgment to Damon on his express- and implied warranty claims under state law and the MMWA and his claims for violations of the MCPA.
A. Standard of Review
We review a grant of summary judgment de novo. DiCarlo v. Potter, 358 F.3d 408, 414 (6th Cir. 2004). Summary judgment is appropriate “[i]f the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law.”
In evaluating a motion for summary judgment, the evidence must be viewed in the light most favorable to the nonmoving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). The nonmoving party, however, “may not rest upon [its] mere allegations . . . but . . . must set forth specific facts showing that there is a genuine issue for trial.”
B. Express Warranty
1. A Repair-or-Replace Warranty Is an Express Warranty under the Michigan Uniform Commercial Code
As the Michigan Supreme Court has not ruled on whether a repair-or-replace warranty constitutes an express warranty under the Michigan Uniform Commercial Code (“MUCC“), we look to decisions of the Michigan Court of Appeals, “which are binding authority in federal courts in the absence of any Michigan Supreme Court precedent.” Hampton v. United States, 191 F.3d 695, 702
The Michigan Supreme Court would likely also interpret a repair-or-replace warranty extended by a remote manufacturer to be an express warranty under the MUCC. Under the MUCC, an express warranty is created by “[a]n 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.”
2. Breach of the Express Warranty
Pack alleges several continuing defects for which Damon is responsible and which Damon failed to repair or replace, as well as one defect, the leaning of the motor home, that was not repaired within a reasonable time, thus causing the warranty to fail of its essential purpose.
Damon‘s limited warranty on the RV ran for one year from the date of purchase, September 13, 2002. Pack claims that there were eight defects that arose during this period that remained uncorrected: rust; loose slide-out gasket; rear monitor malfunctions; dashboard clock and cigarette lighter malfunction; outside shower does not work properly; fog light fills with water and is corroded; bedroom slide-out does not close completely; and abnormal popping noise from front end while driving.1 At his deposition, Pack testified that both the clock and the fog light had been corrected.2 As to the other problems, namely the rust, loose slide-out gasket, rear monitor, outside shower, bedroom slide-out, and the popping noise, Pack‘s deposition testimony and affidavit indicate that these defects persisted despite Damon‘s repairs.
To rebut these contentions, Damon puts forth an affidavit from Jason Quillen, GRVC Service Manager, and an expert report from Michael Bukowski, GRVC Service Shop Foreman. Although the district court relied on both the Bukowski Report and the Quillen Affidavit, the Bukowski Report is unsworn and thus is hearsay, which may not be considered on a motion for summary judgment. See Sutherland v. Mich. Dep‘t of Treasury, 344 F.3d 603, 619-20 (6th Cir. 2003). Moreover, Quillen‘s credentials as an expert as to either RV mechanics or the Damon limited warranty are not clear from the record. In any event, Quillen‘s affidavit does not defeat Pack‘s contentions. First, Quillen does not deny the existence of the popping noise, the rust, or the shower problem. Second,
Given that circumstantial evidence suffices to prove a defect, see Caldwell v. Fox, 231 N.W.2d 46, 51 (Mich. 1975), and that the facts should be viewed in the light most favorable to the nonmoving party, Pack has come forward with sufficient evidence to raise a question of material fact regarding failure to cure the following defects: the slide-out gasket, the bedroom slide-out, the rear monitor, the popping noise, the rust, and the shower.
b. Questions of material fact exist as to whether some of the continuing defects are covered under the Damon warranty.
Damon‘s repair-or-replace warranty covers “materials, components or parts of the RV manufactured and finally assembled by Damon.” J.A. at 53 (Damon Warranty). The warranty specifically excludes from coverage “[i]tems added or changed after the RV leaves . . . Damon“; damage resulting from “[n]ormal wear and usage“; damage to otherwise warranted components or parts caused by environmental corrosion; and “[a]ny material, component, or part of the RV that is warranted separately by its manufacturer, including . . . the chassis. . . .” Id. at 53-54.
Of the defects for which a question of material fact exists regarding Damon‘s failure to cure — the two slide-outs, the rear monitor, the popping noise, the rust, and the shower — a question of material fact regarding coverage under the warranty has been raised as to the slide-outs and the rust. The shower problem is caused by a restricter that Pack added to the RV from a prior motor home, and thus it is excluded from coverage. As for the monitor, the warranty exempts from coverage component parts that are separately warranted and includes a nonexhaustive list of such parts. Although the monitor is not named on the list, it is of the same kind as the excluded items listed, and
Damon has failed to meet its burden to show that the slide-outs are not under Damon‘s warranty.4 Neither slide-out appears to fall under any exception to Damon‘s warranty. The Damon warranty claim form noting that Damon fixed the loose slide-out gasket on the RV in March 2002 before Pack bought the unit also tends to show that the slide-outs are covered under warranty. Finally, although the warranty excludes coverage of damage resulting from “[n]ormal wear and usage” and environmental corrosion, which typically might exclude rust, the rust problem existed prior to Pack‘s purchasing the RV. This indicates that there might be a defect beyond corrosion or normal usage, and thus Pack has raised a genuine issue of fact as to the warranty‘s coverage of the rust.
Therefore, there are issues of material fact regarding defects related to the slide-out gasket, the bedroom slide-out, and the rust, and thus the grant of summary judgment on the breach of express warranty as to those claims was inappropriate.
Further, Pack argues that he is not required to prove continuing defects because Damon‘s limited warranty failed of its essential purpose, which would allow him relief beyond the limited warranty. Although the MUCC allows a warranty agreement to “limit or alter the measure of damages recoverable,”
a. Repairs or replacements must be completed within a reasonable time.
Pack is entitled to relief on his claim of failure of essential purpose if he can show that Damon failed to repair or replace defects in the RV for which it was responsible within a reasonable time. See Kelynack, 394 N.W.2d at 20 (holding that where a manufacturer extends a repair-or replace warranty, it “does not have an unlimited time to make the repairs, but rather must repair or replace the parts within a reasonable time“). In Kelynack, the Michigan Court of Appeals found that the repair-or-replace warranty on a motorcycle had failed of its essential purpose due to unreasonable delay where the motorcycle became completely inoperable after ten weeks in the plaintiff‘s possession, then remained at the dealer for over three months, and was finally returned to the plaintiff when the weather precluded its use. Id.; see also Krupp, 530 N.W.2d at 149 (holding that a repair-or-replace warranty failed of its essential purpose because the item was out of service for eighteen months and was not entirely repaired for three years).
b. Time out of service raises a disputed issue of material fact.
Although the record is not clear on the number of days the motor home was out of service, a view of the record in the light most favorable to the nonmoving party reveals that the motor home
Damon attempts to rebut Pack‘s claims by arguing that the repairs that took the most substantial amount of time were not covered under Damon‘s warranty. Damon alleges that the leaning problem that led Pack to have his truck serviced at least twice and led to the longest servicing, from April 28, 2003 until August 6, 2003, was caused by the chassis, and thus was not covered by the warranty. However, Pack has raised a question of material fact as to the cause of this defect by producing evidence that the defect was a coach problem, and thus under warranty. A Ford work order states: “right side sitting about 3 [inches] lower th[a]n left” and “conversion package is all on [right] side bathroom, tanks etc. No suspension problem.” J.A. at 112 (Gorno Ford invoice). This indicates that the problem is with the coach, which is covered by the warranty, and not the suspension, which is part of the chassis. A GRVC work order indicates that this was a
C. Implied-Warranty Claims Do Not Require Privity Under Michigan Law
The Michigan Supreme Court has not yet ruled on whether privity is required to bring an implied-warranty claim under the MUCC. Where a federal court is deciding an issue of state law that has not been decided by the state‘s highest court, the federal court should determine how the state‘s highest court would decide the issue were it faced with it. See Meridian Mut. Ins. Co., 197 F.3d at 1181. The federal court should heed the decisions of the intermediate appellate state courts except where the federal court is persuaded that the highest court of the state would not so decide, id. (citing Comm‘r v. Estate of Bosch, 387 U.S. 456, 465 (1967)), and the federal court may consider applicable dicta of the state‘s highest court, Angelotta v. Am. Broad. Corp., 820 F.2d 806, 807 (6th Cir. 1987).
Michigan law has not settled whether privity is required to bring an implied-warranty claim under the MUCC. In 1958, prior to the adoption of the MUCC,8 the Michigan Supreme Court reversed its traditional privity requirement for implied-warranty claims in an opinion that criticized the privity requirement at length. Spence v. Three Rivers Builders & Masonry Supply, Inc., 90 N.W.2d 873 (Mich. 1958). The Michigan Supreme Court followed Spence‘s repudiation of privity in several subsequent decisions. See Hill v. Harbor Steel & Supply Co., 132 N.W.2d 54, 56 (Mich. 1965); Piercefield v. Remington Arms Co., 133 N.W.2d 129, 136 (Mich. 1965); Manzoni v. Detroit Coca-Cola Bottling Co., 109 N.W.2d 918, 922 (Mich. 1961).
Spence and its progeny have been cited with approval after the adoption of the MUCC to hold that privity is not required to sustain an implied-warranty claim for economic losses. See, e.g., Southgate Cmty. Sch. Dist. v. W. Side Constr. Co., 247 N.W.2d 884, 886 n.1 (Mich. 1976); Williams v. Polgar, 215 N.W.2d 149, 153-55 (Mich. 1974); Cova v. Harley Davidson Motor Co., 182 N.W.2d 800, 802 (Mich. Ct. App. 1970); Gauthier v. Mayo, 258 N.W.2d 748, 749 (Mich. Ct. App. 1977); Reid v. Volkswagen of Am., Inc., 512 F.2d 1294, 1298 (6th Cir. 1975); Michels v. Monaco Coach Corp, 298 F. Supp. 2d 642, 646-50 (E.D. Mich. 2003). Michigan courts have continued to apply the
In Cova, the Michigan Court of Appeals held that although the Michigan Supreme Court had not expressly declared that a consumer may recover from a manufacturer on implied-warranty claims for economic losses without privity of contract, “we are persuaded from our review of the foregoing decisions of our Supreme Court and from the trend of authorities in other jurisdictions that a consumer can sue a manufacturer directly for economic loss resulting from a defect in a product attributable to the manufacturer. . . .” 182 N.W.2d at 804. In our opinion in Reid, we similarly concluded that “Michigan‘s rejection of the privity requirement in products liability cases is, as we see it, both sweeping and complete,” and “is not limited to tort actions as opposed to actions based on warranty whether express or implied.” 512 F.2d at 1298.
Despite these numerous authorities abandoning the privity requirement, in Auto Owners Insurance Co. v. Chrysler Corp., 341 N.W.2d 223 (Mich. Ct. App. 1983), the Michigan Court of Appeals departed from these cases without explanation and held that privity was required to bring a claim for breach of an implied warranty for economic loss. However, in Great American Insurance Co. v. Paty‘s, Inc., decided just a few years later, the Michigan Court of Appeals shed
under Michigan law, vertical privity is not required even where the damages at issue consist solely of economic losses. . . . While the UCC takes no official position on the issue of vertical privity, the practice commentary . . . notes that the Michigan decisions on the question of privity are not affected by the Code. The Michigan cases which have considered the question have held that it is unnecessary to establish vertical privity, even where the loss is solely economic.
397 N.W.2d 853, 856-57 (Mich. Ct. App. 1986) (citing Cova and Piercefield). The Great American court, however, allowed the implied-warranty claim to proceed on alternate grounds, and thus despite its criticism of Auto Owners, it avoided overturning Auto Owners‘s approach to the privity requirement.9 A subsequent case by the Michigan Court of Appeals then formally adopted the reasoning of the Auto Owners‘s dissent. Sullivan Indus. v. Double Seal Glass Co., 480 N.W.2d 623, 629 (Mich. Ct. App. 1991).10
Although Damon cites several district courts that require privity to sue for breach of an implied warranty, see, e.g., Parsley v. Monaco Coach Corp., 327 F. Supp. 2d 797 (W.D. Mich.
Based on the foregoing, we conclude that Michigan has abandoned the privity requirement for implied-warranty claims and thus that the district court erred in dismissing Pack‘s implied warranty claims for lack of privity.12
III. CONCLUSION
For the foregoing reasons, we REVERSE IN PART the district court‘s dismissal of plaintiff‘s state-law express-warranty claims, REVERSE the district court‘s dismissal of plaintiff‘s state-law implied-warranty claim, and REVERSE the district court‘s dismissal of plaintiff‘s claims