Opinion
C.A. No. 98C-12-029 JTV.
Submitted: February 4, 2000.
Decided: May 30, 2000.
Bradley S. Eaby, Esq., Dover, Delaware. Attorney for Plaintiffs.
Melvin Soll, Esq., Dover, Delaware. Attorney for Defendant.
ORDER
This case was heard as a bench trial. The Court's findings and conclusions are as follows:
(1) The plaintiff, Featherlite Credit Corporation ("Featherlite Credit"), initiated this action to replevy a horse trailer owned by the defendant, Juan R. Caride ("Caride"). Featherlite Credit financed Mr. Caride's purchase of the trailer and held a valid security interest. After the action was filed, Featherlite Credit managed to repossess the trailer privately. It's claim for replevin is, therefore, moot. Featherlite Credit still has a claim, however, for the sum of $5,900 as an alleged deficiency balance after the trailer was sold.
(2) The defendant asserted a counterclaim, alleging that Featherlite Credit fraudulently misrepresented material facts relating to the trailer when the defendant bought it. The defendant seeks compensatory and punitive damages.
(3) Most of the material facts are not in substantial dispute. The parties differ greatly, however, on the inferences to be drawn from those facts. In mid-1996 Caride contacted Carter Harstad, credit manager for Featherlite Credit, because Caride was interested in trading in a horse trailer which he owned at the time for a new, four horse living quarters trailer. He contacted Mr. Hardstad because Featherlite Credit had financed the one he owned at that time. The exact date that Caride and Harstad began communicating about a new trailer was never clearly established, but the first documented mention of Caride as a customer for the purchase of a new trailer appears to be a trailer quote dated June 3, 1996 which Featherlite Mfg., Inc. submitted to Twin Cities Featherlite.
(4) Featherlite Credit Corporation, Featherlite Mfg., Inc. and Twin Cities Featherlite are all separate but related corporations. Twin Cities Featherlite is a retail dealer. Featherlite Credit Corporation finances Twin Cities' sales. Featherlite Mfg., Inc. apparently manufactures the trailers sold by Twin Cities.
(5) Harstad contacted Gary Raak at Twin Cities and talked with him about Caride's interest in a new trailer. Raak indicated that he had a new 1997 four horse living quarters trailer in stock. Harstad got back in touch with Caride, and they negotiated a deal for Caride's purchase of the 1997 trailer. The price was $46,846. Caride was given a gross trade in allowance on his old trailer of $34,346, less the balance owed on that one of $16,664.78, which had been financed by Featherlite Credit, for a net trade in allowance of $17,681.22. He paid a $1,500 cash down payment. The balance was financed by Featherlite Credit. Harstad prepared the necessary paperwork and mailed it to Caride. He signed it and sent it back. The VIN number on the trailer was 4FGL33204VA917859.
(6) The trailer delivered to Caride, however, was not the one he had contracted to buy. After Raak had identified the 1997 trailer to Harstad as one that was available to sell to Caride, he apparently sold it to another customer. Twin Cities then shipped a different trailer to Caride, a 1996 trailer, VIN number 4FGL33206TA917701. Because the physical appearance of the 1996 trailer was the same or substantially the same as the 1997, there was no readily visible way that Caride could tell the difference and he reasonably concluded that the one that he had was the one he had ordered.
(7) The inference that the Court draws from the evidence is that a change from one model year to another for horse trailers, at least those of the type involved here, is similar to that for mobile homes. A change in model year is marked by little more than the passage of a particular calendar day. Those horse trailers which are manufactured in the days and weeks following a year change date are just like the ones that were manufactured in the days and weeks before the year change date. In this respect they are unlike motor vehicles which are frequently marked by stylistic and other material differences from one model year to another. Caride was placing his order at a point near time to the change over date.
(8) Sometime after Harstad had mailed the contract to Caride for his signature, Raak notified Harstad that the VIN number which he had given him initially was not correct. Whether Raak told Harstad that the original VIN number was "wrong" or whether he fully revealed to him that a different trailer was being shipped is not clear from the evidence. Harstad, however knew that the VIN number originally quoted was for a 1997 trailer and the second VIN number given was for a 1996 trailer because of the lettering in the VIN numbers (the difference between the "T" and the "V" in the two VIN numbers). In any event, Harstad "X'd" out the VIN number on the contract which Caride had signed and typed the new one above it. He did not change the year from 1997 to 1996. Harstad testified that he mailed a copy of the contract with the change back to Caride, but Caride denies receiving it. The Court accepts the testimony of Caride that he did not receive a copy of the contract with the alteration made by Harstad. The altered contract was subsequently signed by Twin Cities and assigned to Featherlite Credit.
(9) Caride didn't actually receive the trailer until September. After taking delivery of his new trailer, he began making the monthly payments in the amount of $700.98 per month. In early October, shortly after receiving the trailer, Caride took it to "Congress", apparently a large trade event. While there, it caught fire because of a problem with the hot water heater. The fire rendered the trailer inoperable, and it apparently took until approximately April 1997 for repairs to be completed and the trailer restored to Caride' s possession. It was at that time that he learned that the trailer was actually a 1996 model. Caride immediately expressed his strong objection over the discrepancy concerning the year of the trailer and ceased making payments.
(10) Thereafter, Caride used the trailer on only two occasions. On two occasions he used the trailer to go on trips to Oklahoma. He testified that he felt that he had to use the trailer to make those two trips out of necessity. He further testified that on these two trips were each about ten days. Even taking these two trips into account, the Court finds Caride made little significant use of the trailer from the time he bought it.
(11) The Court finds that under the circumstances of this case Caride was entitled to revoke his acceptance of the trailer. In order to have the right to revoke an acceptance, the buyer must show that the product has a nonconformity which substantially impairs its value to him. The fact that the trailer was a 1996 rather than a 1997 is clearly a nonconformity. Substantial impairment is a question of fact. It has both a subjective and an objective element. The Court is satisfied that the fact that the trailer was a model year older than that represented substantially impaired the value of the trailer to Caride. For example, although the condition of a trailer may arguably be the most important factor in determining its trade-in value, the model year of the trailer affects that value as well. The plaintiff's evidence tended to show that the specific model year of the trailer was not mentioned in the negotiations, but the Court is persuaded that to Caride it was a material term of the transaction. Caride notified Featherlite Credit as soon as he became aware of the difference in the model year. The Court finds that this was sufficient to constitute an immediate attempt to revoke acceptance. The Court further finds that Caride' s use of the trailer after he became aware of the non-conformity is sufficiently limited and explained that it does not nullify his revocation of acceptance.
6 Del. C. § 2-608.
Id.
Freedman v. Chrysler Corp., Del. Super., 564 A.2d 691 (1989).
Id. at 699.
(12) The retail installment contract specifically provides that the assignment to Featherlite Credit was subject to all claims which Caride could assert against the seller. It limits Featherlite Credit's liability, however, to amounts paid by the debtor. The amounts paid under the contract consist of the down payment of $1,500, seven monthly payments totaling $4,906.86, and the trade-in of the old trailer. While there was evidence that the cash value of the trade-in was less than the amount allowed in the retail installment contract, the Court finds that the value of a trailer includes not only its cash value, but the value that the owner can realize by using it as a trade-in on a new trailer, in this case $17,681.22. Accordingly, the Court finds that the amount paid by Caride was $24,088.08. This figure represents the amount which will be awarded to Caride as compensatory damages. Some evidence was presented of alleged consequential damages, but the Court does not think that an adequate basis exists for awarding such damages.
In these respects, the contract is in conformity with 16 C.F.R. § 433.2.
(13) Caride's claim for punitive or treble damages, however, is denied. The Court is not persuaded that Harstad's conduct rises to the level of fraud or willful and wanton misconduct which would support an award of punitive damages. Harstad's conduct can also be attributed to negligence or poor business practice on his part. The Court rejects Caride's contention that Featherlite Credit should be treated as the seller or the agent of the seller. The Court does not believe that treble damages sought by Caride under Subchapter III of Chapter 25 of Title 6 are recoverable under the facts of this case.
THEREFORE, judgment will be entered in favor of defendant and against plaintiff in the amount of $24,088.08, together with interest at the lawful rate from April 1, 1997, the approximate date of the discovery of the nonconformity. Counsel for the defendant should determine the legal rate as of that date and submit a form of final order of judgment accordingly. Plaintiff's claim for a $5,900.00 deficiency balance is dismissed with prejudice.