Jаime R. PETERSON, Plaintiff-Appellant, v. VOLKSWAGEN OF AMERICA, INC., Defendant-Respondent.†
No. 03-0955
Court of Appeals of Wisconsin
Decided March 31, 2004
2004 WI App 76 | 679 N.W.2d 840
Submitted on briefs November 18, 2003. † Petition for review granted 6-8-04.
On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Gregory H. Moss, Scott M. Cohen, and Matthew J. McClenahan of Krohn & Moss, Ltd., of Chicago, Illinois.
On behalf of the defendant-respondent, the cause was submitted on the brief of Bruce D. Huibregtse and Drew J. Cochrane of Stafford Rosenbaum LLP of Madison.
Before Brown, Nettesheim and Snyder, JJ.
¶ 1. BROWN, J. Jaime R. Peterson appeals from an order dismissing her claim for breach of warranty brought pursuant to the Magnuson-Moss Warranty Act,
¶ 2. This case comes to us as an appeal from a grant of a motion to dismiss. A motion to dismiss a complaint for failure to state a claim tests the legal sufficiency of the complaint. Wausau Tile, Inc. v. County Concrete Corp., 226 Wis. 2d 235, 245, 593 N.W.2d 445 (1999). The facts set forth in the complaint must be taken as true and the complaint dismissed only if it appears certain that no relief can be granted under any set of facts the plaintiffs might prove in support of their allegations. Northridge Co. v. W.R. Grace & Co., 162 Wis. 2d 918, 923, 471 N.W.2d 179 (1991). The reviewing court must construe the facts set forth in the complaint and all reasonable inferences that may be drawn from those facts in favor of stating a claim. Id. at 923-24. Whether a complaint states a claim for relief is a question of law which this court reviews de novo. Wausau Tile, Inc., 226 Wis. 2d at 245.
¶ 3. This dispute concerns the lease of an automobile, a 1999 Volkswagen Beetle, manufactured by Volkswagen of America, Inc. The complaint states that North Shore Bank purchased the Beetle from Ernie Von Schledorn Pontiac Buick Volkswagen, an authorized Volkswagen dealer, in order to facilitate the lease of the Beetle to Peterson. In consideration for the sale of the Beetle, Volkswagen issued and supplied to North Shore Bank its written warranty, which included two-year or twenty-four-thousand mile bumper-to-bumper coverage, as well as other warranties outlined in the Vehicle
¶ 4. Pursuant to Volkswagen‘s warranty, Peterson tendered the Beetle to Volkswagen‘s authorized dealerships for repair on numerous occasions. Specifically, Peterson tendered the Beetle for repair due to defects in its engine as evidenced by intermittent illumination of the check engine light, intermittent illumination of the check oil light, the vehicle not running, and problems with the keyless entry system and windows. Volkswagen, through its authorized dealerships, attempted to repair the Beetle on at least four occasions. Volkswagen, however, was unable to remedy the defects in the car.
¶ 5. In August 2002, Peterson revoked her acceрtance of the vehicle in writing. Volkswagen refused Peterson‘s attempt to revoke acceptance of the Beetle. Thereafter, Peterson filed a three-count complaint
¶ 6. Volkswagen filed a motion to dismiss Peterson‘s complaint pursuant to
¶ 7. The sole issue we address on appeal is whether Peterson has standing to pursue her claim under the Magnuson-Moss Act. The Act allows a “consumer” to bring a suit where he or she claims to be “damaged by the failure of a supplier, warrаntor, or service contractor to comply with any obligation under this [Act] or under a written warranty, implied warranty, or service contract.”
¶ 8. For purposes of the Act, a “supplier” is “any person engaged in the business of making a consumer product directly or indirectly available to consumers.”
¶ 9. We now turn to the question of whether Peterson qualifies as a “consumer” under the Act. The Act defines three categories of “consumer”3: a category one consumer is “a buyer (other than for purposes of resale) of any consumer product“; a category two consumer is “any person to whom such product is transferred during the duration of an implied or written warranty (or service contract)“; and, a category three consumer is “any other person who is entitled by the terms of such warranty (or service contract) or under applicable State law to enforce against the warrantor (or service contractor) the obligations of the warranty (or service contract).”
¶ 10. A written warranty is defined as:
(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 workmanship and affirms or promises that such material or workmanship is defect free оr 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.
¶ 11. Peterson contends that Volkswagen‘s warranty was given “in connection with a sale” of the car and the sale was “for purposes other than resale.” She points out that in her complaint she alleges that a sale oсcurred between North Shore Bank and the Ernie Von Schledorn dealership and this sale was for the nonresale purpose of facilitating and financing the lease of the car. Volkswagen responds that, under the Act, a sale to a consumer with a passage of title is required in order for there to be a “written warranty.” Volkswagen suggests that because the Act does not define “buyer” or “sale,” we must look to the UNIFORM COMMERCIAL CODE to define those terms. Under the UCC, the definition of “sale” demands a “passing of title.” UNIFORM COMMERCIAL CODE § 2-106(1) (1989). “Buyer” is defined as “a person who buys or contracts to buy goods.” UNIFORM COMMERCIAL CODE, § 2-103(1)(a) (1989). According to Volkswagen, Peterson was neither a “buyer” nor a party to a “sale” because there is no transfer of title in a lease transaction. Thus, Volkswagen contends, Peterson has no standing to pursue her claim under the Act.
¶ 12. As both parties recognize, no Wisconsin court has addressed the question of whether an automobile lessee is entitled to enforce a written warranty
¶ 13. In DiCintio v. DaimlerChrysler Corp., 768 N.E.2d 1121, 1122–23 (N.Y. 2002), the New York Court of Appeals held that the Act did not apply to a thirty-six-month lease with an option to buy. The court held that a lessee was not a “consumer” because he was neither a buyer, a transferee nor a person entitled to enforce the warranty. Id. at 1124. The court determined that no “written warranty” was in effect during the lease period because no “sale” had occurred as that term is defined in the UCC. Id. The court reasoned that the lessee enjoyed a different bundle of rights than a buyer, could have chosen not to buy, and paid less than a buyer who opts for a monthly payment plan. Id. at 1125. The court also noted that congress‘s inclusion of leases in other consumer protection statutes, such as the Truth in Lending Act, is evidence that congress knew how to draft legislation to protect leases and opted not to include such protection in the Magnuson-Moss Warranty Act. Id. at 1125–26. Other courts have also held that the Act does not cover leases. See Sellers v. Frank Griffin AMC Jeep, Inc., 526 So. 2d 147, 155-56 (Fla. Dist. Ct. App. 1988) (holding that the Act‘s provisions did not apply to a pure automobile lease that offered no purchase option because leases and sales give rise to very different legal obligations); D.L. Lee & Sons, Inc. v. ADT Sec. Sys., Mid-South, Inc., 916 F. Supp. 1571, 1580 (S.D. Ga. 1995) (concluding “[t]here must be an identifiable purchase and sale before the provisions of the Magnuson-Moss Act apply“).
¶ 14. On the other hand, in Cohen, 264 F. Supp. 2d at 618, 621, the United States District Court for the Northern District of Illinois held that the Act applied to
The Act does not require us to look at the bundle of rights acquired by the purchaser and the lessee. Instead, a plain reading of the Act forces us to simply look for a warranty exchange in connection with a sale. Defendаnt clearly sold the vehicle to Mister Leasing and, when doing so, made a series of promises in connection with this sale. This is enough for the warranty to meet the first part of the definition of “written warranty” in
15 U.S.C. § 2301(6) .
Cohen, 264 F. Supp. 2d at 620. Other courts are of a similar mind. Szubski, 796 N.E.2d at 88 (holding that the Act does not require the sale to be made to an ultimate consumer with a passage of title to that party); Dekelaita v. Nissan Motor Corp. in USA, 799 N.E.2d 367, 373 (Ill. App. Ct. 2003) (holding that the Act does not limit a “sale” to transactions between the warrantor and the ultimate consumer); Voelker v. Porsche Cars North Am., Inc., 353 F.3d 516, 524-25 (7th Cir. 2003)
¶ 15. We agree with the courts that have held that where the sale of a vehicle is merely to facilitate a lease, the issuance of the warranty accompanies this sale, and the lessor explicitly transfers its rights in the warranty to the lessee—the lessee is protected by the Magnuson-Moss Act. The interpretations in DiCintio and cases that concur with it are not required by the language of the Act, as Cohen, Szubski and other opinions show. See Szubski, 796 N.E.2d at 87-88; Dekelaita, 799 N.E.2d at 373; Cohen, 264 F. Supp. 2d at 619-20. The statutorily defined term “written warranty” does not dictate that the sale be made to an ultimate consumer with a passage of title to the party. The language of the Act demands only that we find a warranty exchange between a buyer and a supplier in connection with a sale made for purposes other than resale.
Plaintiffs here fit squarely within the definition of “consumer” in that they are entitled to enforce the
warranty by the terms of 15 U.S.C. § 2301(3) . If we then determine that this warranty does not qualify as a written warranty under the Act, there is nothing for the plaintiffs to enforce. Moreover, when selling the [consumer product to the lessor], [the manufacturer] was aware that [the lessor] was facilitating a lease and transferring possession of the vehicle to plaintiffs. It knew that plaintiffs would be the users of the vehicle and the only party who would likely seek to enforce the warranty. If they are unable to do so, the assurances of the manufacturer are empty—no party would be able to enforce the warranty.
Cohen, 264 F. Supp. 2d at 621.
¶ 16. In reaching our conclusion, we observe that in Voelker, the Seventh Circuit conducted a thorough and painstaking analysis of the Act as it applies to automobile lessees claiming breach of written warranty. There, Porsche, the manufacturer, sold the automobile to one of its dealerships, which then took title to the vehicle and leased it to Voelker. Voelker, 353 F.3d at 520. As part of the lease agreement, Porsche and the dealership providеd Voelker with a written warranty. Id. Before determining that Voelker qualified as a category three consumer, the Seventh Circuit rejected Voelker‘s claims that he could proceed as either a category one or a category two consumer. The court maintained that Voelker was not a buyer “for purposes other than resale” because the term “buyer,” presupposes that a “sale” take place and the only “sale” in that case, which occurred between Porsche and its dealership, was for the purposes of resale. Id. at 523. The court next determined that he failed to allege facts that would show that the automobile was transferred to him “during the duration of [the written warranty.]” Id. at 524. The court explained that the warranty by its own terms did not begin until after possession of the car was transferred
¶ 17. Unlike the court in Voelker, we need not reach the question of whether Peterson qualifies as a category three consumer by virtue of Wisconsin law because the facts as alleged are different. Peterson‘s complaint alleges the vehicle came with Volkswagen‘s manufacturer‘s warranty, which was in effect at the time it was sold to North Shore Bank, and North Shore Bank assigned its rights in the warranty to Petersоn when it leased her the vehicle. The complaint further states that the terms of the warranty were part of the bargain between Ernie Von Schledorn, who is alleged to be a supplier by virtue of its status as a Volkswagen dealership, and North Shore Bank, the alleged buyer to whom title of the vehicle passed. It is doubtful that North Shore Bank and Peterson would have agreed to the sale if it were not for the warranty. Additionally, contrary to Volkswagen‘s assertions, this sale was for purposes other than resale. The complaint states that North Shore Bank would not have purchаsed the Beetle if it were not for the leasing agreement with Peterson. Nothing in the complaint suggests that North Shore Bank ever intended to add the Beetle to its inventory or advertise it for sale to other parties. Put simply, taking
¶ 18. SNYDER, J. (dissenting). The majority opinion reverses the order dismissing Peterson‘s complaint and concludes that she is a consumer under the Magnuson-Moss Warranty Act. I respectfully dissent from the majority opinion conclusion “that Peterson is a category two consumer permitted under the Act to enforce Volkswаgen‘s written warranty.” That conclusion is premature and unfair to the trial court and to the parties. I would vacate the order and remand for further consideration of the motion to dismiss by the trial court and the parties.
¶ 19. Peterson is a lessee of the Volkswagen vehicle. The majority opinion acknowledges that at the time of the dismissal order, February 26, 2003, existing case law supported the trial court‘s holding that a “lessee” was not a “consumer” under the Act. DiCintio v. DaimlerChrysler Corp., 768 N.E.2d 1121, 1124 (N.Y. 2002); Sellers v. Frank Griffin AMC Jeep, Inc., 526 So. 2d 147, 156 (Fla. Dist. Ct. App. 1988); and D.L. Lee & Sons, Inc. v. ADT Sec. Sys., Mid-South, Inc., 916 F. Supp. 1571, 1580 (S.D. Ga. 1995). Our primary function is error correcting, see Cook v. Cook, 208 Wis. 2d 166, 188, 560 N.W.2d 246 (1997), and normally that would
¶ 20. The Cohen decision was released on March 10, 2003. The trial court was not aware of the Cohen analysis on February 26, 2003, when it applied DiCintio (issued February 13, 2002) and dismissed Peterson‘s complaint as not being cognizable under the Act. The parties have briefed Cohen‘s impact on the appellate issue and we can review the Cohen argument even though the argument was not available to the trial court. See Harvest Sav. Bank v. ROI Invs., 209 Wis. 2d 586, 596, 563 N.W.2d 579 (Ct. App. 1997). Cohen concludes that “the purpose of the transaction between [the buyer/lessor] and the [manufacturer] was not for resale, but for the lease of the vehicle to [the lessee].” Cohen, 264 F. Supp. 2d at 619. Cognitively, Cohen then concedes that “other courts have disagreed with this interpretation.” Id.
¶ 21. One other court that is not in lockstep with Cohen is Voelker v. Porsche Cars North America, Inc., 353 F.3d 516 (7th Cir. 2003).2 Voelker (released Decem-
¶ 22. In denying category two consumer standing, the Voelker court asked “[H]as Voelker alleged facts that would show that he is ‘any person to whom such product is transferred during the duration of [a] written warranty (or service contract) applicable to the product?‘” Voelker, 353 F.3d at 524 (citing to
That warranty, however, did not begin until after possession of the car was transferred to Voelker, and not “during [the warranty‘s] duration.” By its own terms, the warranty did not take effect until one of four antecedents occurred: “the date the car [was] first delivered to the first retail purchaser, or the date it [wa]s first used as a demonstrator, lease, or company car, whichever c[ame] first.” The only triggering event that Voelker identifies is the date that the car was first used—by himself—as a lease car. Because the warranty did not begin until the date the car was “first used as a ... lease” car, the warranty did not begin until after [the lessee] took possession. Thus, Voelker has failed to allege that the car was “transferred [to him] during the duration” of the New Car Limited Warranty, and,
accepting all of the allegations in his complaint as true, he does not qualify as a category two consumer.
¶ 23. Peterson‘s complaint alleges that she took possession of the vehicle on May 27, 1999. Peterson further alleges that she is “a lessee of a consumer product who received the [Volkswagen vehicle] during the duration of a written warranty period applicable to the [vehicle] and who is entitled by the terms of the written warranty to enforce against Manufacturer the obligations of said warranty.” (Emphasis added.) Unlike Voelker, however, Peterson neither attaches the Volkswagen written warranty to her complaint, nor provides the specific term(s) of the warranty that she relies upon in her complaint, to establish the factual support for her conclusory allegation. Even under Wisconsin‘s liberal pleading rules, Peterson has failed to present the critical facts in her complaint that would allow her to claim standing as a category two consumer under the Act.
¶ 24. A motion to dismiss for failure to state a claim tests whether the complaint is legally sufficient to state a claim for which relief may be granted. Doe v. Archdiocese of Milwaukee, 211 Wis. 2d 312, 331, 565 N.W.2d 94 (1997). If the written warranty of the Peterson vehicle commenced when it was “first used” as a lease car, as did Voelker‘s warranty, the complaint is not legally sufficient for Peterson to state a claim for relief as a category two consumer under the Magnuson-Moss Warranty Act, and that is the only issue presented in this appeal.3
¶ 25. Wisconsin‘s liberal
¶ 26. Voelker directs that whether Peterson is a category two consumer under the Act turns upon the language of the Volkswagen written warranty itself. The warranty was never provided to the trial court, nor is the warranty even in the appellate record. Liberal “notice pleading” does not equate to misleading, clever or inadequate pleading. Discovery is not necessary here to establish the written warranty upon which the totality of Peterson‘s claim for relief is based.
Notes
Our response to the dissent is twofold. First, the dissent‘s rationale implies that in order to withstand a motion to dismiss, a complainant under the Act must provide proof of the facts alleged in the complaint by attaching the written warranty. This conclusion is contrary to the law. In assessing the sufficiency of the complaint, the court does not evaluate whether the plaintiff can prove the allegations of the complaint. See, e.g., Vogel v. Liberty Mut. Ins. Co., 214 Wis. 2d 443, 447, 571 N.W.2d 704 (Ct. App. 1997); Riedy v. Sperry, 83 Wis. 2d 158, 165–66, 265 N.W.2d 475 (1978). The purpose of the complaint is to give notice of the nature of the claim; and, therefore, it is not necessary for the plaintiff to set out in the complaint all the facts which must eventually be proved to recover. Energy Complexes, Inc. v. Eau Claire County, 152 Wis. 2d 453, 463, 449 N.W.2d 35 (1989). Second, bearing this in mind, our conclusion is not premature.
