Opinion
C.A. No. 00C-08-299 HLA
Date Submitted: November 12, 2002
Date Decided: February 28, 2003
Upon Defendants' Motions for Summary Judgment and Other Relief
GRANTED
Darryl K. Fountain, Esq., Wilmington, Attorney for Plaintiffs.
Michael J. Carlson, Esq., Anderson, Coe King, Baltimore, Attorney for Defendants.
ORDER
On this 28th day of February 2003, upon consideration of DaimlerChrysler Corporation, Baker Chrysler-Plymouth-Jeep-Eagle, Inc. and Chrysler Financial Company, L.L.C.'s ("Defendants") Motions for Summary Judgment and Other Relief, Goran Fatovic and Preciosa Fatovic's ("Plaintiffs") Response, and the oral argument heard on November 12, 2002, it appears to the Court that:
FACTS
This is a claim under various warranty and fraud theories against DaimlerChrysler Corporation, sued as Chrysler Corporation, ("Chrysler"), Baker Chrysler-Plymouth-Jeep Inc. ("Baker"), and Chrysler Financial Corporation ("CFC") based on alleged defects existing in a 1999 Jeep Wrangler Sport ("Jeep") purchased by Plaintiffs. On or about August 7, 1998, Chrysler sold the Jeep to Butler. Co-defendant Baker subsequently obtained the Jeep from Butler in a swap of vehicles. Plaintiffs purchased the Jeep on or about May 26, 1999 from Baker. Plaintiffs previously owned two Jeep products, which they had purchased from Baker and went to Baker again knowing that they wanted to buy another Jeep. Plaintiffs do not remember anything about their dealings with Baker other than generally having a conversation with a Baker salesman and having taken a Jeep for a test drive. Plaintiffs purchased the Jeep for $21,935.00. Taxes and registration fees were $649.00. Plaintiffs made a cash deposit of $10,100.00 and received a credit of $3,435.00 on the trade-in of an old vehicle. Plaintiffs financed the balance owed ($9,049.00) with Co-Defendant CFC. The Jeep was sold with a limited express warranty, which requires Chrysler to bear the cost of repair of any defect in material, workmanship or factory preparation.
Plaintiffs state that they returned the Jeep to Baker the same day that they purchased it and told the dealer that there was an air leak. This problem was solved by simply re-fastening the removable top to the Jeep properly. On June 14, 1999, Plaintiffs brought the Jeep to Baker, complaining that there was a water leak onto the right front floor. Baker identified and repaired an open seam in the cowl (a barrier between the engine compartment and the passenger area of the Jeep). There was no charge to the Plaintiffs. On June 21, 1999, Plaintiffs brought the Jeep to Baker, complaining that water was leaking under the heater duct. Baker identified the problem as a leaking evaporator box and repaired it. There was no charge to the Plaintiffs. On August 24, 1999, Plaintiffs brought the Jeep to Baker, complaining that the Jeep still had a water leak. Baker identified an apparent problem from the engine area into the passenger compartment and fixed it. There was no charge to the Plaintiffs. The last three leaks were from different parts of the firewall, or the area between the engine and the passenger compartment. Subsequently, Plaintiffs discovered that water had leaked into the back of the Jeep, allegedly at the point where the removable hard top roof meets the body of the Jeep.
At some point prior to November 4, 1999, Plaintiffs decided to rescind the sales contract and surrendered the Jeep for voluntary repossession. On November 15, 1999, the Jeep was picked up by Hatfield Auto Auction ("Hatfield"). Hatfield cleaned the Jeep for a charge of $70.00, but did no other work on the Jeep. On November 23, 1999, Plaintiffs, by their counsel, provided notice of Plaintiffs' recission of the sales contract. On December 2, 1999, the Jeep was sold at Auction for $16,600.00 to the Loman Auto Group ("Loman"), a dealership in Parsippany, New Jersey. Loman did a used car check on the Jeep to determine any problems and found none. On January 15, 2000, Loman sold the Jeep to Margaret O'Sullivan for the pretax amount of $19,539.00. With taxes and other fees, the cost was $21,019.14.
Despite allegations made by Plaintiffs that the Jeep required major repairs, the facts reveal that the Jeep has been repurchased, without repair, and the current owner has experienced no leakage problems with the Jeep. Plaintiffs allege the following: Count 1) Breach of U.C.C. Express Warranty; Count II) Breach of U.C.C. Implied Warranty of Merchantability; Count III) Violation of the Magnuson-Moss Warranty Act-manufacturer's failure to fulfill its express warranty; Count IV) Violation of Magnuson-Moss Warranty Act — manufacturer's promise to repair most substantial nonconformities constitutes "deceptive warranties;" Count V) Violation of Magnuson-Moss Warranty Act-manufacturer's failure to comply with the implied warranty of merchantability; Count VI) Cancellation by Rejection; Count VII) Breach of Contract by failure to deliver and provide a vehicle fit for the ordinary purpose for which such goods are used; Count VIII) Breach of Contract-dealer's refusal or inability to effect proper repairs on said vehicle despite a multitude of service and repair visits; Count IX) Cancellation by Revocation of Acceptance; Count X) Rejection of Nonconforming Goods; Count XI) Vehicle sale has failed in its essential purpose, in violation of 6 Del. C. sec 2-719(2); Count XII) Violation of Title 6, Chapter 50 Automobile Warranties; Count XIII) Consumer Fraud; and Count IVX) Deceptive Trade Practices.
SUMMARY JUDGMENT
Summary judgment is appropriate when the moving party has shown that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. In considering such a motion, the Court must evaluate the facts in the light most favorable to the non-moving party. Summary judgment will not be granted under circumstances where the record reasonably indicates that a material fact is in dispute or if it seems desirable to inquire more thoroughly into the facts in order to clarify the application of law to the circumstances.
Moore v. Sizemore, 405 A.2d 679 (Del.Supr. 1979).
Id.
Ebersole v. Lowengrub, 180 A.2d 467 (Del.Supr. 1962).
ANALYSIS
Defendants first argue that they are entitled to judgment on all counts because (i) Plaintiffs do not have an expert to establish the existence of a defect in the Jeep and (ii) Plaintiffs made an election of remedies that excludes the possibility of an action against Defendants. Defendants argue that there is no material dispute of fact and therefore Defendants are entitled to judgment as a matter of law. Defendants state that it is undisputed that Ms. O'Sullivan still owns the Jeep and has never had problems related to water leaks of any sort. The Jeep now has 22,887 miles and has always been parked outside, either in her driveway or the commuter parking lot at the local train station. Defendants' expert will opine that the leakage was the result of the removable top being improperly placed or secured on the Jeep rather than as the result of any defect in the Jeep. Defendants state that while a manufacturing defect can sometimes be demonstrated by circumstantial evidence alone, this is permissible only where the manufacturer's fault is the only reasonable inference to be made from such evidence. Defendants contend that the circumstantial evidence does not rule out the possibility of other explanations for the problem, such as improper placement of the removable top.Plaintiffs argue that the fact that they do not have an expert does not bar their claims. The Delaware Supreme Court has held that some breach of warranty claims do not require expert testimony. If the matter in issue is one within the common knowledge of laymen, introduction of expert testimony is not required. However, the Superior Court's granting of Defendant's Motion for Summary Judgment in Reybold was affirmed by the Supreme Court which held that the Plaintiff could not maintain an action for breach of implied warranty of merchantability in the absence of expert testimony or circumstantial evidence that the product was defective. Plaintiffs attempt to distinguish Reybold stating that it is a personal injury case involving an automobile accident. However, Plaintiffs misstate the case. Reybold involves a possible building leak, subsequent repair of the brick work and resulting noxious odor from a water repellant product which was used. The Plaintiff suffered a disruption of business and out of pocket expenses as the company was forced to relocate, due to health concerns, for over two months while the odor dissipated. The Plaintiff in Reybold, failed to establish a prima facie case through circumstantial evidence of a defect. The Court emphasized that for circumstantial evidence to support a prima facie case that there was a breach of implied warranty of merchantability, then Plaintiff's evidence must, "tend to negate other reasonable causes of the injury sustained or there must be expert opinion that the product was defective."
Reybold Group, Inc., v. Chemprobe Technologies, Inc., 721 A.2d 1267, 1269 (Del.Supr. 1998).
Id.
Id.
Id.
Id. at 1270.
Reybold Group, Inc., v. Chemprobe Technologies, Inc., 721 A.2d 1267, 1270 (Del.Supr. 1998) (quoting American Family Mutual Ins. Co. v. Sears, Roebuck Co., 998 F. Supp. 1162, 1164 (D.Kan. 1998).
In the instant case, Plaintiffs have presented no evidence negating other reasonable causes, such as misplacement of the removable top. Plaintiffs argue that they owned two other Jeeps and therefore know how to properly place the top and that this circumstantial evidence rules out the Defendants' proposed explanation for the leak. However, during his deposition, Mr. Fatovich stated that he had never taken the roof off of the previous Jeeps. Also, the Plaintiffs initial complaint regarding an air leak, was easily remedied when the top was simply re-fastened at the dealership. Plaintiffs return to the dealership for the "repair" of this air leak indicates a lack of knowledge by the Plaintiffs on how to properly place the Jeep top. Furthermore, the present owner has never had a leak problem, despite the fact that the Jeep was not repaired since the voluntary repossession. Here, as Defendants argue, Plaintiffs have failed to establish an essential element of its cause of action for a breach of implied warranty of merchantability through the use of either circumstantial evidence or expert testimony. A manufacturing defect in the Jeep has not been successfully established through the circumstantial evidence presented by Plaintiffs, and no expert has been provided.
Additionally, as Chrysler points out, Plaintiffs rescinded their purchase contract with Baker and did so prior to notifying Chrysler. Thus, Plaintiffs made an election of remedies and may not pursue other remedies against Chrysler that are inconsistent with this choice. The Supreme Court has stated that the, "doctrine of election of remedies is based on `any decisive act of a party, with knowledge of his rights and of the facts, indicating an intent to pursue one remedy rather than the other.'" This doctrine can be used to bar claims against other parties, or additional claims against the same party. In the instant case, Plaintiffs made a decisive act by rescinding the purchase contract and thus, are barred from pursuing other claims based on their ownership of the Jeep or their rights under the rescinded purchase contract. Plaintiffs argue that an election of remedies is not required under the UCC and the Lemon Law in Delaware as the remedies are cumulative. However, Plaintiffs have not established the existence of a defect in order to enable Plaintiffs recourse under these statutes. With regard to the express warranty claims (Count I) Chrysler and CFC had no contact with the Plaintiffs at or before the purchase of the Jeep, and thus no express warranties were provided other than the written, limited warranty provided with the Jeep. Defendants further separate arguments are discussed below.
Stoltz Realty Co. v. Raphael, 458 A.2d 21, 23 (1983) (citation omitted).
Id.
Simmons v. Brooks, 66 A.2d 519 (D.C. 1949).
Id.
Defendant Chrysler's Arguments
With regard to the Magnuson-Moss Act claims (Counts III-V) Chrysler argues that 1) Plaintiffs failed to use Chrysler's dispute resolution system and, thus, have no right to pursue an action under the Act; 2) There is no private cause of action for deceptive warranties under the Act; and 3) Chrysler did not violate its express warranty or the implied warranty of merchantability and, thus, did not violate the Act in any event. Plaintiff argues that there is not a qualifying arbitration mechanism for the dispute resolution under Delaware Law. The Court finds that Chrysler did not violate either the express or implied warranties as noted above, since a defect has not been sufficiently established by the Plaintiff.
Chrysler correctly contends that Count X XI should be stricken because they are based on title 6, sections 2711 and 2719(2) of the Delaware Code, which provide for no cause of action, but rather describes remedies available to the Plaintiffs.
Chrysler argues that it is entitled to judgment on Plaintiffs' Lemon Law Claim (Count XII). Under Delaware's Lemon Law, Title 6, Chapter 50, four attempts for the same problem are required to create a presumption that the consumer can recover. Further, the consumer cannot benefit from such a presumption unless the manufacturer has received "prior direct written notice." In the present case, although Plaintiffs allege that the vehicle was brought in for repair four times for the same defect, the first time was on the day of purchase for an air leak and the last three times were for water leaks. Defendants argue that the water and air leaks are separate issues. However, despite this factual dispute, Plaintiffs never sent the required notice, until after the Jeep was voluntarily repossessed.
See DEL. CODE ANN. tit 6 ¶ 5004(b).
Plaintiffs also argue that under the Lemon Law, the issue before the Court is whether there's been reasonable opportunity to repair. The Bouchard court held that the principal question is whether the automobile continually malfunctions. The court stated, "[i]t matters not that Defendants now claim that the vehicle has been fixed and is in superior condition." However, in the instant case, Defendants are not claiming that the Jeep has been fixed. They are stating that it has not been fixed subsequent to Plaintiffs' ownership, that there have been no reported leakage problems, and the evidence suggests that the problem could likely be an improper fastening of the removable top.
Bouchard v. Savoca, D/B/A R-S Motor Sales, 493 N.Y.S.2d 417 (N.Y.Sup.Ct. 1985).
Id. at 418. See, also, Muzzy v. Chevrolet Division, General Motors Corp., 571 A.2d 609 (Vt. 1989), Pecor v. General Motors Corp., 150 Vt. 23, 547 A.2d 1364 (1988).
Chrysler also argues that there is no evidence to support Plaintiff's claim of consumer fraud (Count XIII). The Consumer Fraud Act, title 6, section 2513 of the Delaware Code, makes it unlawful for any person to engage in any "deception, fraud, false pretense or concealment, suppression or omission, in connection with the sale or advertisement of any merchandise. . ." Plaintiffs have shown no evidence that Chrysler had any knowledge of any problems prior to selling the Jeep.
Finally, Chrysler argues that the evidence does not support Plaintiff's Deceptive Trade Practices Claim (Count XIV). There is no evidence that Chrysler engaged in any deception in this case, let alone a pattern of deception, as would be required to create a cause of action. Plaintiff concedes that this count is "probably not within the mainstream of the law."
Wald v. Wilmington Trust Co., 552 A.2d 853 (Del Super.Ct. 1988).
Transcript of November 12, 2002, Summary Judgment Motions at 7.
Defendant Baker's Arguments
Baker also alleges that it made no express warranty to the Plaintiff. Alternatively, Baker points out that Delaware law permits an express warranty to be disclaimed by the seller of a product. In this case, the sales contract stated the Jeep was being sold "as is." Thus, Baker argues that there are no facts to support an express warranty claim against Baker. Baker also argues that it is entitled to judgment as to Plaintiff's claim for breach of implied warranty of merchantability. In order to establish a breach of implied warranty of merchantability under section 2-316 Plaintiffs must initially establish that the Jeep was 1) sold by a merchant, 2) the Jeep was not merchantable at the time of sale, 3) the Plaintiffs suffered an injury, 4) proximately caused by a defect, and 5) Plaintiffs provided notice to seller of injury. Baker does not agree that the Jeep was defective, however, even if a defect were present, Baker was not put on notice of the problem and thus was given no opportunity to cure.Baker argues that Counts VI, IX and XI should be dismissed or stricken as they do not state a cause of action. As discussed above, the code sections relied upon are merely remedies available to Plaintiffs in the event they establish a cause of action under a section in the U.C.C. Additionally, Counts VI and IX allege a defect which has not been established in the instant case.
Baker asserts that it is entitled to judgment on Plaintiffs claims for breach of contract, Counts VII and VIII, because Plaintiffs made an election of remedies to rescind the contract and in any event there was no breach.
Baker argues that the Lemon law claim, Count XII, should be dismissed as it relates to Baker because the law provides a remedy for purchasers of defective vehicles against the manufacturer, not the automobile dealership.
Baker again agrees with Chrysler in stating that Baker is also entitled to summary judgment on plaintiffs' claims of consumer fraud, Count XIII, and deceptive trade practices, Count XIV.
Defendant CFC`s Arguments
CFC asserts that any alleged liability on its part is premised on the Federal Trade Commission's Holder in Due Course Rule. This Rule allows a plaintiff to pursue a claim against CFC for up to the amount of any payment made by the plaintiff to CFC. CFC will be deemed liable under the same circumstances as the seller of the vehicle; in this case Baker. CFC realleges and incorporates all the above arguments for summary judgment.
Conclusion
Underlying all of Plaintiffs' claims against all of the Defendants is the premise that the Jeep was defective in some material way. As the alleged defect has not been established through the circumstantial evidence presented by Plaintiffs, and no expert has been provided, there is no basis for any of the claims. Thus, as a matter of law, Plaintiffs cannot prove a defect.
For the aforementioned reasons, Defendants' Motions for Summary Judgment are GRANTED.
IT IS SO ORDERED.