Opinion
CAUSE NO. 3:19-CV-334 DRL
2023-06-30
Heather MASSEY and Ivor Massey, Jr., Plaintiffs, v. NEXUS RVS, LLC, Defendant.
Elizabeth Ahern Wells, Scarlett M. Steuart, Matthew E. Stubbs, Ronald L. Burdge, Burdge Law Office Co. LPA, Dayton, OH, for Plaintiffs. Brent E. Inabnit, Christopher S. Riley, Sopko Nussbaum Inabnit & Kaczmarek, South Bend, IN, for Defendant.
Elizabeth Ahern Wells, Scarlett M. Steuart, Matthew E. Stubbs, Ronald L. Burdge, Burdge Law Office Co. LPA, Dayton, OH, for Plaintiffs. Brent E. Inabnit, Christopher S. Riley, Sopko Nussbaum Inabnit & Kaczmarek, South Bend, IN, for Defendant.
OPINION AND ORDER
Damon R. Leichty, Judge
Ivor and Heather Massey traveled from their Virginia home to purchase a 2018 Nexus Bentley 34B recreational vehicle from Nexus RVs, LLC in Indiana in 2017. They experienced various issues with the unit that required several stints in repair shops. Dissatisfied still, they sued Nexus for breach of express and implied warranties, consumer fraud, and bailment. Today Nexus moves for summary judgment on all claims and certain remedies. The court grants the motion only in part.
BACKGROUND
Ivor and Heather Massey purchased a 2018 Nexus Bentley 34B in October 2017. Before buying the unit, the Masseys went to a Nexus factory in Elkhart, Indiana. They asked a Nexus owner why they should purchase directly from the company rather than a dealer. The owner told them that it would cost $20,000 more to purchase from a dealer. The Masseys saw several three-to-four-minute promotional videos created by Nexus. They say these videos were the "selling point" and "influential."
Through discussions with Nexus personnel, the videos, and other promotional materials, the Masseys heard several representations. The Nexus owners claimed to have an effective network of repair systems throughout the country. The videos and sales process emphasized the unit's quality. They were told that Nexus had adequate personnel either in repair shops or the warranty department to meet consumer demand. Nexus represented that the Masseys would get a fully functional and operational unit.
The Masseys purchased the unit directly from Nexus for $195,579. The Masseys also signed a one-year limited warranty [ECF 63-5]. The warranty covered "defects in Nexus materials and/or workmanship in construction of the recreational vehicle." The warranty also identified several items not covered by the warranty, including a failure caused by or related to accident and transportation to and from service centers.
While enroute home from a campground, Ms. Massey reversed the unit into a transformer. She says the backup cameras weren't functioning "real well" and they "weren't pointed down," though the Masseys never reported to Nexus an issue with the backup cameras. The accident "splintered a little bit of the fiberglass" in the rear of the unit.
During their stay at the campground, the Masseys discovered that the Bigfoot leveling system in the unit was inoperable. The leveling system wouldn't retract. Using tools from fellow campers and instructions from a Bigfoot technician over the phone, the Masseys physically retracted the leveling system. Ms. Massey recalls that while they were in contact with Bigfoot Leveling Systems, the company suggested the system was installed incorrectly.
When the Masseys arrived home in Virginia, they looked for other issues. On October 16, 2017, the Masseys sent a list of repairs to Nexus [ECF 65-22]. This list identified several issues, including the screen door's alignment, central vacuum's operation, holes behind a couch, construction debris, issue with the shower seal, peeling paint, inoperable water system, lack of pillows, Bigfoot leveling issue, coolant sensor issue, "whirring" in the ceiling, low water pressure, compartment alignments, and loose wiring hanging inside the coach.
This notice never mentioned the accident at the campground, but the Masseys informed Nexus that Bigfoot suggested the leveling system was installed incorrectly. The Masseys recount that a Nexus customer service manager (Lori Kaler), who set up the repairs, "snorted dismissively" and told the Masseys that the leveling system was recalled. She sent the list of defects to RV Services in Virginia, and Nexus coordinated to replace the recalled leveling system.
The unit arrived at RV Services on October 30, 2017. At the Masseys' request, RV Services inspected the unit. RV Services was not a Nexus repair facility but was authorized by Nexus to diagnose problems and create estimates. RV Services created a list of defects: holes in the wall behind the television and where a shelf used to be, broken and missing batten strip by the television, dash trim misaligned and missing screws, battery disconnect not mounted to the frame, construction debris in the coach, central vacuum disconnected, shower not sealed, water system inoperable, cargo doors with little clearance when slide room was extended, misaligned doors and fenders, loose wiring hanging off rear bumper, kitchen drawer that would not latch, water lines leaking, no signal to GPS, wrinkled front cap trim, and coolant light illuminated.
RV Services reached out to Nexus by email a few times during October and November 2017 to seek authorization for repairs. There was no immediate response from Nexus (at least on this record); but, at some point, Nexus notified RV Services that Nexus would perform the repairs at its factory. RV Services otherwise performed preventative maintenance work. Nexus paid for this work.
Nexus arranged for Hoosier Transit to transport the unit to Nexus. Hoosier Transit picked up the unit on December 6 and delivered the unit to Nexus on December 8, 2017. Along the way, the front corners of the unit hit barrels on the highway. This caused damage to the fiberglass on the front and rear caps and the baggage and entrance doors. The damage totaled $8,000. Hoosier Transit paid for repairs.
Nexus had a list of 17 items to repair once the unit arrived at its Indiana shop. On January 31, 2018, Nexus transported the unit to True Colors Paint Shop to paint the cargo doors and the rear and front cap entry doors.
The Masseys hired Robert Wilhelm from Professional RV Inspections, LLC to inspect the unit before they would accept it back. The Masseys "didn't trust [Nexus] to do an adequate job of making the repairs." The parties arranged for Mr. Wilhelm to perform his inspection on March 7, 2018.
Mr. Wilhelm issued an 87-page report on March 8, 2018 [ECF 63-10]. He divided his findings into three categories: life safety issues, major issues, and minor issues. The only life safety issue was the need to relocate the fire extinguisher closer to the unit's main entrance of the unit. Mr. Wilhelm found seven major issues: areas needing sealant in the front and rear caps, sealant needed on bathroom vent, sealant needed where the roof ladder mounted on the roof, loose wires hanging from the rear of the coach, a cable broken on the slide rail, and damage to the upper rear slide sweep. He also found ten minor issues: entrance door condition, right headlight out, oil needed in generator, mold on interior freezer walls and refrigerator walls, wires hanging from ceiling near windshield, corner trim too short in one corner, an unattached window screen, unsealed hole behind the recliners, and damage to the cabinet behind the television. He also found other issues not falling into these categories. The Masseys informed Nexus of Mr. Wilhelm's report.
Nexus's records reflect that the unit thereafter remained in the shop for 18 repairs. When Nexus believed the unit was ready, the Masseys arranged to pick it up on March 16, 2018. Upon arrival, the Masseys noticed that the Bigfoot leveling system recall kit hadn't been installed, the windshield was cracked, a 5,000-mile chassis service had not been performed (as represented by the customer service manager), the entry door locks were misaligned, the bedroom door was missing a latch and pull, there was still mold in the refrigerator and freezer, and the license plate was missing screws. The Masseys left the unit at Nexus to address these repairs.
Even in April 2018, when Mr. Massey returned, the Bigfoot leveling system wasn't installed and the chassis service wasn't performed. On April 12, 2018, Nexus extended the limited warranty for 90 days to December 5, 2018.
Bennett Transportation delivered the unit to the Masseys on April 27, 2018. When the unit was delivered, the Masseys wrote on the acceptance form that they did not verify the checklist, which includes items such as no damage to the interior or exterior. In May 2018, the Masseys took the unit on a "shakedown cruise." The main salon air conditioning broke during the trip. Nexus located an air conditioning specialist in Ashland, Virginia for the Masseys. Ms. Massey described the repair as "temporary."
On June 6, 2018, the Masseys took a 10,000-mile trip through Canada, Washington, and Montana. Toward the beginning of the trip, the Masseys discovered issues with a lug nut, air compressor hose, rear taillight, Blu-Ray player, missing instruction manuals, icemaker, rear mudflap, and stovetop burner. The Masseys took the unit to a repair shop in Quebec, Canada to repair the Blu-Ray player, the ice maker, the kitchen outlet, and the mud flap. The Masseys notified Nexus about these repairs and other issues on June 20, 2018. During the trip, the Masseys had another accident that cracked the fiberglass.
The Masseys returned to Virginia in August 2018. This time, because Nexus was unable to service the vehicle at its shop, the company recommended that the Masseys take the unit to American Family RVs in Fredericksburg, Virginia, which they did on August 27, 2018. Nexus paid for the warranty repairs, and the Masseys' insurance paid for the body work.
In a September 6, 2018 letter, an attorney for the Masseys wrote that the Masseys were "entitled" to revoke acceptance and a refund of the purchase price [ECF 65-6]. But "[d]espite their legal rights" as outlined in the letter, the Masseys remained "willing to discuss an amicable resolution with" Nexus. Further, if "no resolution [could] be reached by the end of [that] month, the Masseys [would] have no alternative but to institute proceedings to enforce their legal rights." The Masseys filed a complaint against Nexus on April 29, 2019.
The Masseys went to pick up the unit on June 21, 2019. They left the unit with American Family to repair inoperable entrance door steps. Nexus didn't cover this repair because the limited warranty had expired. The Masseys paid for this repair. The Masseys picked up the unit from American Family on August 23, 2019.
In November 2019, the Masseys hired Tom Bailey, a Class A general contractor trained and certified in Florida, to inspect the unit. Mr. Bailey identified 59 defects about which the Masseys complained. He concluded that 15 defects were not repaired. He was unable to verify or test 30 issues. He also concluded that the Hoosier Transit repairs created a unit width of 102.25 inches. The Masseys say the legal width of 102 inches to drive on a highway in Virginia. Mr. Bailey opined that the unit's value at the time of purchase was $21,200 and would have been worth $209,079 if the unit had been delivered as warranted. The Masseys sold the unit on October 7, 2020 for $26,000.
STANDARD
Summary judgment is warranted when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The non-moving party must present the court with evidence on which a reasonable jury could rely to find in his favor. Weaver v. Speedway, LLC, 28 F.4th 816, 820 (7th Cir. 2022). The court must construe all facts in the light most favorable to the non-moving party, viewing all reasonable inferences in that party's favor, Bigger v. Facebook, Inc., 947 F.3d 1043, 1051 (7th Cir. 2020), and avoid "the temptation to decide which party's version of the facts is more likely true," Payne v. Pauley, 337 F.3d 767, 770 (7th Cir. 2003); see also Joll v. Valparaiso Cmty. Schs., 953 F.3d 923, 924-25 (7th Cir. 2020).
In performing its review, the court "is not to sift through the evidence, pondering the nuances and inconsistencies, and decide whom to believe." Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 920 (7th Cir. 1994). Instead, the "court has one task and one task only: to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial." Id. The court must grant a summary judgment motion when no such genuine factual issue—a triable issue—exists under the law. Luster v. Ill. Dep't of Corr., 652 F.3d 726, 731 (7th Cir. 2011).
DISCUSSION
The court has federal question jurisdiction. The MMWA provides a means to assert state law warranty claims in federal court, though the claims remain informed by state law. See 15 U.S.C. § 2310(d)(1); Anderson v. Gulf Stream Coach, Inc., 662 F.3d 775, 781 (7th Cir. 2011); Priebe v. Autobarn, Ltd., 240 F.3d 584, 587 (7th Cir. 2001). The parties stipulate to Indiana law on the warranty claims and revocation remedy, and then Virginia law for the consumer protection and bailment claims. Seeing no reason to apply another state's law, and presented with no conflict that would require analysis, the court applies the applicable state law as stipulated. See Auto-Owners Ins. Co. v. Websolv Computing, Inc., 580 F.3d 543, 547 (7th Cir. 2009); see also McCoy v. Iberdrola Renewables, Inc., 760 F.3d 674, 684 (7th Cir. 2014); Simon v. United States, 805 N.E.2d 798, 805 (Ind. 2004).
A. Express Warranty.
Under Indiana law, to prevail on an express warranty claim, a plaintiff must prove (1) the existence of a warranty, (2) a breach, (3) causation, and (4) damages. Celina Ins. Co. v. Indianapolis Roofing & Sheet Metal Corp., 953 N.E.2d 679, 679 (Ind. Ct. App. 2011); Litsinger v. Forest River, Inc., 536 F. Supp.3d 334, 364 (N.D. Ind. 2021). "Any affirmation of fact or promise made by the seller to the buyer [that] 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." Ind. Code § 26-1-2-313(1). A seller breaches an express warranty when the goods do not conform to the warranty. See Martin v. Thor Motor Coach Inc., 602 F. Supp.3d 1087, 1094-95 (N.D. Ind. 2022). In addition, when circumstances cause a warranty's remedy to fail of its essential purpose, the warranty can be breached. Ind. Code § 26-1-2-719(2). A warranty's remedy fails of its essential purpose when application of the remedy will not further the warranty's purpose. Martin, 602 F. Supp.3d at 1093-94; Martin Rispens & Son v. Hall Farms, Inc., 621 N.E.2d 1078, 1085 (Ind. 1993).
"Timely notice of a breach of warranty is a substantive condition precedent to recovery." McClure Oil Corp. v. Murray Equip., Inc., 515 N.E.2d 546, 554 (Ind. Ct. App. 1987). The warrantor must be given a reasonable opportunity to cure, often viewed as a reasonable time or a reasonable number of attempts at necessary repairs. Zylstra v. DRV, LLC, 8 F.4th 597, 603, 606 (7th Cir. 2021); Litsinger, 536 F. Supp.3d at 364-65. "Under Indiana law, two chances is not a reasonable opportunity to cure the defects such that the warranty failed of its essential purpose." Mathews v. REV Recreation Grp., Inc., 931 F.3d 619, 622 (7th Cir. 2019) (citing Gen. Motors Corp. v. Sheets, 818 N.E.2d 49, 53 (Ind. Ct. App. 2004)). A "reasonable opportunity to cure, at least in cases where the defects are somewhat minor, and not affecting full use of the vehicle, means at least three chances." Zylstra, 8 F.4th at 603.
Mr. Bailey's report lists 59 alleged defects and the number of repair attempts for each, with none involving more than three repair opportunities. Nexus first argues that because it didn't receive more than three repair attempts on any defect, it didn't have a reasonable opportunity to repair the defects. But the law isn't more than three chances, but at least three chances. See Zylstra, 8 F.4th at 603. If an issue persists after three chances, then there may be a breach of warranty claim. The court won't simply rule in Nexus's favor as a matter of law when a reasonable jury could find that certain defects remained after the company had three opportunities to correct them.
The Masseys lump together all defects into five total repair visits, but their opinion witness separates the defects into the number of repair attempts for each particular defect [ECF 65-18 at 16-37]. The defects must be analyzed individually. See Zylstra, 8 F.4th at 602 ("What the Zylstras seem to want, from their long list of itemized problems with the RV, is a ruling that takes into account not just the number of attempts and the number of days out of service, but instead also looks at the sheer quantity of repair issues, even if they are timely repaired. It is an understandable position, but one without current legal support.").
That said, two attempts at relatively minor repairs aren't enough as a matter of law. Mathews, 931 F.3d at 622. The Masseys afforded two (or fewer) repair opportunities for 48 issues on this record [see ECF 65-18 at 16-37]. The Masseys argue that three defects fall within the category of major defects or defects that made the unit unusable: the inoperable brake lights, inoperable Bigfoot leveling system, and the Blu-Ray player. See Zylstra, 8 F.4th at 602-03 (reserving this question). The Blu-Ray player and brake lights were presented for repair three times, so already they are not part of the 48 issues and need not be forced into this arguable exception. These issues remain for trial on this record.
The Bigfoot leveling system was presented for repair two times [ECF 65-18 at 36-37]. To support the argument that this issue rendered the vehicle unusable, the Masseys cite the deposition of American Family representative Karen Arnold. Ms. Arnold was asked if the leveling jacks not working properly would prevent full use of the unit [ECF 63-11 at 90]. She responded, "It wouldn't necessarily prevent full use; you just wouldn't be able to level the unit." She said it wasn't recommended to use the unit at a location without leveling it first and then agreed that the jacks not working correctly would prevent full use of a recreational vehicle. This testimony doesn't permit a reasonable jury to find that this issue rendered the unit unusable, just unusable at times, particularly when the Masseys took the recreational vehicle on a 10,000-mile trip after discovering the issue [ECF 63-4 at 48].
The Masseys offer no argument as to the other 47 issues presented for repair less than three times. Thus, "these single and double presentations cannot form the basis of a claim of breach of warranty." Zylstra, 8 F.4th at 604. That leaves 11 alleged defects that were presented three times: the Bigfoot jack system tripping the circuit breaker [ECF 65-18 at 16], construction debris [id. 17], air conditioning [id. 26], deformed compartment containing the waste valve [id. 28], refrigerator not cooling on propane [id. 28-29], Blu-Ray player [id. 29-30], passenger side rear mud flap damaged [id. 30], passenger side dash vent broken [id. 31], broken struts in cabinet [id. 31-32], driver side brake light not working properly [id. 32-33], and cable television not working [id. 33-34].
Nexus argues that six of these remaining defects cannot support a warranty claim because they were fixed. Mr. Bailey's report says the Bigfoot jack system tripping the circuit breaker, air conditioning, passenger side vent, and driver side brake light were fixed [ECF 62 at 15; 65-18 at 16-17, 26, 31-33], and Mr. Massey testified that the construction debris was fixed [ECF 63-1 at 32; ECF 1 ¶ 34]. Mr. Bailey couldn't verify whether the waste valve was fixed but documented that the repair orders reflected that it was [ECF 65-18 at 29]. The law gives Nexus three chances to fix warranty defects, and Nexus did. Zylstra, 8 F.4th at 603. These issues cannot support a breach of warranty claim for a reasonable jury.
The Masseys also argue that Nexus failed to repair defects in a reasonable time such that the limited warranty's remedy failed of its essential purpose. Whether a defect was repaired in a reasonable amount of time is a "fact-intensive analysis." Zylstra, 8 F.4th at 606. It is not a mere day-for-day calculation because "[u]nlike an automobile, many RVs spend the majority of their time in storage." Id. at 606-07. The court may consider the combined time out of service for the defects. Id. at 606. The calculation of time out of service includes only warranty work. See id. at 608. The "time when an RV was undergoing both warranty and non-warranty service should be discounted from the reasonable time calculus given the key consideration is the time only for warranty related repairs." Pattee v. Nexus RVs LLC, 2022 WL 834330, 13, 2022 U.S. Dist. LEXIS 49490, 37 (N.D. Ind. Mar. 21, 2022) (citing Zylstra, 2020 WL 2526491, 3, 2020 U.S. Dist. LEXIS 86341, 8 (N.D. Ind. 2020)); Zylstra, 8 F.4th at 607; see also Litsinger, 536 F. Supp.3d at 370 (discounting time spent on non-warranty repairs, time spent during winterization, and time spent in the shop when vehicle not needed).
The Masseys must show their work. See Zylstra, 8 F.4th at 606-07. For example, the Zylstra plaintiffs calculated 230 days before the court whittled it down to 153 days and concluded that this time out of repair could not have caused the warranty's remedy to fail its essential purpose. See id. at 606-09; see also Pattee, 2022 WL 834330 at 13, 2022 U.S. Dist. LEXIS at 36; Litsinger, 536 F. Supp.3d at 370.
The Masseys, citing Mr. Bailey's report [ECF 65-18 at 16-37] and declaration [ECF 65-17 ¶ 19], argue that a jury could find that 29 defects weren't repaired within a reasonable amount of time. Their proposed expert couldn't dispute that the rest had been repaired on time. The court thus considers only the time spent on these 29 defects. The Masseys confine their argument to the first fourteen months of ownership (October 5, 2017 to December 5, 2018) as the time period for analysis. The court likewise limits its review of the record to this period.
The Masseys say they experienced 245 days out of service during the first fourteen months of ownership, arguing that this time out of service caused the warranty's remedy to fail its essential purpose. In deposition, both of the Masseys believed that 245 days out of service was accurate [ECF 63-1 at 126, 63-4 at 50]. But when asked what number of days of the 245 total was attributable to body repair versus warranty repair, Ms. Massey did not know. Her affidavit only says "to the best of her knowledge" the 245 days were for warranty repair work, albeit for a slightly different time period than the one in question now [ECF 65-2 ¶ 20]. The Masseys never identify the time out of service specific to the 29 issues of concern on this record. The Masseys otherwise cite Mr. Bailey's report and declaration.
The Masseys subtract all days between the time they received the unit from Nexus on April 27, 2018 and the time they took it to American Family on August 27, 2018 [ECF 65-2 ¶ 17]. But they don't account for any time attributable to their several accidents. They don't account for the time spent on the non-warranty Hoosier Transit repairs beginning January 31, 2018 [ECF 65-11 at 6 (Nexus 00156)] and running at least until the next date on this record that the vehicle was at Nexus on March 7, 2018 [ECF 65-13 at 6-7 (Nexus 00091-00092)]. They also don't account for the extra time spent in the shop for Mr. Wilhelm to inspect the unit before they would accept the unit back from Nexus [ECF 63-1 at 43].
Nexus argues that 96 days should be taken out due to time spent on the Hoosier Transit body repairs [ECF 67 at 9]. This is based on Mr. Bailey's report, but the report used 2019 dates, so these 96 days seem not to apply to the Masseys' calculation [ECF 65-18 at 36]. Nonetheless, Hoosier Transit repairs were performed during this period in question.
Nor can all the days out of the Masseys' possession be attributed to just warranty repairs, much less for the issues they view as unreasonably delayed. The Masseys took the unit to RV Services of Virginia and asked the shop to inspect the unit with a fine-tooth comb. RV Services identified damage from a prior accident. Time spent solely for their benefit and at their request isn't properly included in the calculus. See Zylstra, 8 F.4th at 609. That said, though the unit remained at the shop for more than a month, the shop only performed 11.7 hours of work (based on its invoice divided by the $124 per hour charge) for diagnosis work and maintenance service, so only about half of this was actually warranty work (diagnosis). Mr. Bailey seems to account for this handful of hours over the course of several days.
American Family also performed both warranty and non-warranty body repairs and spent more labor hours on body work (64) than warranty work (17) [ECF 63-11 at 11-12, 88]. The Masseys cite Nexus work orders, which contain handwritten notes about certain issues that were fixed in as little as 5-20 minutes [ECF 65-11 at 2-5, 7-10].
Mr. Bailey's report already accommodates this time on warranty work. Looking to the 29 issues that he concludes were not fixed in a reasonable time, and during the 14-month period argued by the Masseys, only 43 days were spent on these repairs. The time period for these repairs includes October 30, 2017 to November 8, 2017; November 29, 2017; December 6 to December 14, 2017; March 8, 2018; August 27 to September 7, 2018; and October 30, 2018 to November 8, 2018 [ECF 65-18 at 16-36]. No reasonable jury could say 43 days spent addressing 29 issues was unreasonable or caused the warranty's remedy to fail its essential purpose, not for a nearly $200,000 unit. This is particularly true when this time period is far less than the time spent in service in Zylstra, 8 F.4th at 608-09.
Two defects (interior wall panels and battery disconnect) were in the shop from November 29, 2017 to an unknown date. Mr. Bailey concludes that he doesn't know how many days these defects were serviced, but a reasonable jury could not conclude that such minor issues took any more than a day.
That leaves only the issues with the refrigerator, Blu-Ray player, mud flap, cabinet struts, and cable television as unrepaired after three attempts and, for purposes of summary judgment, as issues on which a reasonable jury could find a breach of express warranty.
Nexus also argues that Mr. Bailey's report confirms that Nexus repair orders stated that all 59 defects were repaired. Nexus doesn't explain how this changes the analysis. Even if Nexus's work orders say the defects were fixed, Mr. Bailey's conclusions in the inspection report are evidence that at least some of the defects weren't fixed.
B. Implied Warranty.
"Unless excluded or modified (IC 26-1-2-316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind." Ind. Code § 26-1-2-314(1). "As we have interpreted Indiana law in the past, just as with a claim for breach of an express warranty, a buyer must give the warrantor a reasonable opportunity to cure any alleged defect in order to make a claim of breach of an implied warranty." Zylstra, 8 F.4th at 608 (citing Mathews, 931 F.3d at 623). The Masseys argue that the unit was unmerchantable when purchased and that Nexus never contends otherwise. The court reaches the same conclusion here as with the express warranty claim. To the extent the remaining defects fall under the implied warranty umbrella, Nexus may argue these alone.
Nexus otherwise argues that the implied warranty duration was limited to one year in the limited warranty agreement. The parties dispute this fact due to its bizarre language: "any such remedy, including, but not limited to, implied warranties of fitness, use, merchantability or purpose, is limited to one (1), but not limited to, any implied WARRANTY OF MERCHANTIBILITY" [ECF 63-5 at 1]. Nexus argues that obviously this document left out the word "year," and the warranty specialists in the room will know that readily; but that does not mean that a consumer will know this, and the court's role is not to rewrite the warranty. As written, it is still as "vague and non-sensical" as the last time the court read it. See Smith v. Nexus RVs, 468 F. Supp.3d 1012, 1024 (N.D. Ind. 2020).
Nexus doesn't argue that the unit was merchantable. But Nexus does battle the Masseys' assertion that the Hoosier Transit accident supports an implied warranty of merchantability claim. The Hoosier Transit accident appears unrelated to the remaining defects. Even so, the implied warranty of merchantability inheres in a sale of goods. Ind. Code § 26-1-2-314(1). Nexus didn't sell the Masseys the unit with collision damage. That is not its avenue for recovery on this issue. Thus, the implied warranty claim survives, albeit limited.
C. MMWA.
The MMWA "does not provide an independent basis for liability; it only provides for federal jurisdiction for [the] state claims." Priebe v. Autobarn, Ltd., 240 F.3d 584, 587 (7th Cir. 2001). An MMWA claim rises and falls with the underlying state law claim. Id. This federal avenue survives for the same reasons as the state law warranty claims. See 15 U.S.C. § 2310(d) (a consumer who is damaged by a supplier or warrantor's failure to comply with "any obligation under [the MMWA], or under a written warranty, implied warranty, or service contract, may bring suit for damages").
D. Revocation of Acceptance.
Under Indiana Code § 26-1-2-608(1), a buyer "may revoke his acceptance of a lot or commercial unit whose non-conformity substantially impairs its value to him if he has accepted it." Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the basis for it. Ind. Code § 26-1-2-608(2). Nonwritten notice or equivocal notice of revocation isn't sufficient. DeVoe Chevrolet-Cadillac, Inc. v. Cartwright, 526 N.E.2d 1237, 1240 (Ind. Ct. App. 1988). Merely complaining about the quality of the goods, without more, doesn't adequately inform the seller the buyer has revoked. Id.; see also Smith, 468 F. Supp.3d at 1027.
According to the commentary to Indiana Code § 26-1-2-608, the content of the notice "is to be determined in this case as in others by considerations of good faith, prevention of surprise, and reasonable adjustment." More than "mere notification of breach" is required. Id. At minimum, the notice should clearly indicate that the buyers view their contractual obligations as having been terminated because of the product's nonconformity and that the buyers wish to return the product. See White, Summers, & Hillman, Uniform Commercial Code § 9:19 (6th ed.) ("The notice must inform the seller that the buyer does not wish to keep the goods . . . [but] it need not be 'formal.' "). Revocation of acceptance purports to thrust the product back on the seller and thus triggers an altogether different remedy than mere damages—rescission—so the notice should be commensurate with the remedy's significance and avoid undue surprise or equivocation. See Smith, 468 F. Supp.3d at 1027.
The Masseys argue that reasonable jurors could conclude that they attempted to revoke acceptance in a September 6, 2018 letter [ECF 65-6]. Nexus argues that this letter is at best an offer to negotiate. An early point is that revocation is not an attempt, but an unequivocal act. The characterization of the letter as an "attempt" to revoke is thus telling.
Moreover, in the letter, an attorney for the Masseys says the Masseys are "entitled" to revoke acceptance and a refund of the purchase price. But "[d]espite their legal rights" as outlined in the letter, the Masseys remained "willing to discuss an amicable resolution with" Nexus. Further, if "no resolution [could] be reached by the end of [that] month, the Masseys [would] have no alternative but to institute proceedings to enforce their legal rights." No reasonable jury could find an unequivocal revocation of acceptance in this letter. Accordingly, the court grants Nexus's motion on this revocation remedy.
E. Limitation on Damages.
Under Indiana Code §§ 26-1-2-715(1 & 2), a buyer may normally recover, in addition to warranty damages, incidental and consequential damages resulting from a seller's breach. See Michiana Mack, Inc. v. Allendale Rural Fire Prot. Dist., 428 N.E.2d 1367, 1372 (Ind. Ct. App. 1981). A seller may limit the buyer's remedies, including consequential and incidental damages. Ind. Code § 26-1-2-719(1-3). When a warranty's remedy fails of its essential purpose, regardless of the limitation, a plaintiff is often entitled to all remedies available to him under the commercial code. Ind. Code § 26-1-2-719(3); Rheem Mfg. Co. v. Phelps Heating & Air Conditioning, 746 N.E.2d 941, 947 (Ind. 2001).
The limited warranty here includes a section titled, "WHAT IS NOT COVERED BY LIMITED WARRANTY" [ECF 63-5 § 3]. Included in the list is "[t]ransportation to and from service center or manufacturing locations, [or] any consequential and/or incidental expenses such as, but not limited to, loss of time, commercial loss, loss of use, towing charges, lodging food, phone calls, inconvenience, bus or plane fares, rental charges or storage fees" [id.]. Nexus argues that this limitation bars the Masseys from recovering consequential or incidental damages on all claims. The Masseys argue that the language makes clear that this exclusion applies to the limited warranty only.
This court has considered the same limitation language in another Nexus contract before, saying "this warranty isn't written to exclude consequential damages under any theory of recovery as some warranties are—only what is recoverable or not recoverable 'by limited warranty.' There is no language in the warranty that excludes consequential damages based on another theory, including tort." Smith v. Nexus RVs, 2021 WL 1207580, 2, 2021 U.S. Dist. LEXIS 61538, 4 (N.D. Ind. 2021). This warranty operates no differently—the exclusion only applies to incidental or consequential damages recoverable under a warranty theory. Smith permitted the argument for consequential damages to proceed on a tort-based theory alone, not one based on the UCC. See id. at 1-2, 2021 U.S. Dist. LEXIS 61538, 3-4.
As for the limited warranty, the Masseys argue that they can seek a refund or reimbursement of the recreational vehicle's full purchase price under the MMWA, and they argue that there are questions of fact as to whether the unit's defective condition and repair history justify equitable relief in the form of a complete refund. This doesn't really address consequential damages, but equitable relief. Still, the point on the seeming merits is erroneous too. As the mere vehicle for pursuing state law claims, the MMWA would need this remedy of a full refund to be grounded in state law. The Masseys might seek a full refund through revocation (and the rescission that follows), but that remedy is out; and the Masseys point to no other avenue for rescission.
The Masseys have not explained why this damage limitation is unconscionable. See Guideone Ins. Co. v. U.S. Water Sys., 950 N.E.2d 1236, 1247 (Ind. Ct. App. 2011). Accordingly, as it is written, the Masseys may pursue incidental and consequential damages only to the extent that such damages are recoverable on non-UCC theories, including the Virginia Consumer Protection Act where that claim survives. The court grants Nexus's motion to enforce this limitation on damages as to any warranty claim.
F. Virginia Consumer Protection Act (VCPA).
The parties agree that Virginia law applies to the consumer protection claim. The VCPA was enacted with "the intent of the General Assembly that [it] shall be applied as remedial legislation to promote fair and ethical standards of dealings between suppliers and the consuming public." Abi-Najm v. Concord Condo., LLC, 280 Va. 350, 699 S.E.2d 483, 489 (2010). "To state a cause of action under the VCPA, a plaintiff must allege (1) fraud, (2) by the supplier, (3) in a consumer transaction." Enomoto v. Space Adventures, Ltd., 624 F. Supp.2d 443, 456 (E.D. Va. 2009) (citing Va. Code Ann. § 59.1-200(A)). The VCPA is remedial in nature, so the court construes the statute in favor of the injured party. Ballagh v. Fauber Enters., 290 Va. 120, 773 S.E.2d 366, 369 (2015). A supplier in a consumer transaction may not misrepresent "that goods or services have certain quantities, characteristics, ingredients, uses, or benefits," or "that goods or services are of a particular standard, quality, grade, style, or model," or "that repairs, alterations, modifications, or services have been performed or parts installed." Va. Code. Ann. §§ 59.1-200(A)(5), (A)(6), (A)(10). A supplier also may not use "any other deception, fraud, false pretense, false promise, or misrepresentation in connection with a consumer transaction." Va. Code. Ann. § 59.1-200(A)(14).
Nexus first argues the economic loss doctrine as a defense and in doing so raises a choice of law question—whether Indiana or Virginia law applies. Nexus cites only Indiana law in its opening brief. The Masseys point out that the parties agreed that this claim would be governed by Virginia law. The Masseys never explain why this law, which by stipulation governs the claim and on which they have the burden, should translate to a defense, on which Nexus bears the burden; but, in fairness, Nexus never contests the choice-of-law issue in reply or continues to advance its position under Indiana law. Under such circumstances, the court will presume for summary judgment purposes that the parties intended Virginia law to apply to this claim and related defense, all the while noting that stipulations should be worded precisely.
And there, the law says the economic loss doctrine is not a defense to a VCPA claim. See Zuberi v. Hirezi, 2017 WL 436278, 7, 2017 U.S. Dist. LEXIS 14150, 19 (E.D. Va. Jan. 30, 2017) (citing Abi-Najm, 699 S.E.2d at 489). In general, "[t]ort law is not designed . . . to compensate parties for losses suffered as a result of a breach of duties assumed only by agreement." Sensenbrenner v. Rust, Orling, & Neale, Architects, Inc., 236 Va. 419, 374 S.E.2d 55, 58 (1988). "[L]osses suffered as a result of the breach of a duty assumed only by agreement, rather than a duty imposed by law, remain the sole province of the law of contracts" Filak v. George, 267 Va. 612, 594 S.E.2d 610, 613 (2004). But a "single act or occurrence can, in certain circumstances, support causes of action both for breach of contract and for breach of a duty arising in tort, thus permitting a plaintiff to recover both for the loss suffered as a result of the breach and traditional tort damages." Dunn Constr. Co. v. Cloney, 278 Va. 260, 682 S.E.2d 943, 946 (2009). A duty under the VCPA is "not one existing between the parties solely by virtue of the contract" and is not barred by the economic loss doctrine. Abi-Najm, 699 S.E.2d at 489.
Nexus next argues that any so-called misrepresentation advanced by the Masseys was mere puffery. "The VCPA clearly does not require the consumer to prove in every case that misrepresentations were made knowingly or with the intent to deceive, because of its additional provision that damages may be trebled, but only in cases where the court finds that the violation was 'willful.' " Owens v. DRS Auto. Fantomworks, Inc., 288 Va. 489, 764 S.E.2d 256, 260 (2014). That said, a "misrepresentation of fact is [still] a necessary element of proof." Lambert v. Downtown Garage, 262 Va. 707, 553 S.E.2d 714, 716 (2001). "It is well settled that a misrepresentation, the falsity of which will afford ground for an action for damages, must be of an existing fact, and not the mere expression of an opinion." Tate v. Colony House Builders, 257 Va. 78, 508 S.E.2d 597, 599 (1999). An "action based upon fraud must aver the misrepresentation of present pre-existing facts, and cannot ordinarily be predicated on unfulfilled promises or statements as to future events. Were the general rule otherwise, every breach of contract could be made the basis of an action in tort for fraud." Abi-Najm, 699 S.E.2d at 490.
The Masseys argue that Nexus violated the VCPA in four ways. First, they say Nexus represented that certain repairs or services had been performed when they either had not been or had been performed inadequately. See Va. Code. Ann. § 59.1-200(A)(10). The only repair the Masseys cite for this point is to the Bigfoot leveling system, and the only service cited is the 5,000-mile chassis service. Nexus argues that the Masseys never identified these alleged misrepresentations during their deposition testimony—a point that would matter if the Masseys had been confined in their testimony to these misrepresentations—but Mr. Massey, for example, testified that there could be others in the records. Nexus never argues that these representations occurred outside the advertisement or sale of goods and services, despite the definition of "consumer transaction" in the VCPA, see Va. Code Ann. § 59.1-198, so the court only addresses whether a reasonable jury could find these representations by Nexus to have been false statements of past or current fact rather than puffery.
As to the Bigfoot leveling system, Nexus coordinated the system's repair after the Masseys alerted Nexus to the problem. Nexus subsequently told the Masseys that their unit was ready for pickup. Nexus doesn't dispute that the leveling kit wasn't installed when the Masseys arrived. Just because a supplier says a product, even if unrepaired, is ready to be picked up doesn't mean a supplier has committed fraud. Were this all it was, it would not likely provide a reasonable jury a basis to find fraud; but here a reasonable jury could find that Nexus did it twice, and a reasonable jury could then determine that the supplier was knowingly or willfully misrepresenting the unit's present condition for customer retrieval. The analysis of the 5,000-mile chassis engine service is simpler because the Masseys offer evidence that Nexus actually said the Freightliner maintenance schedule had been performed when it had not been. A reasonable jury could thus find that Nexus misrepresented that this service was performed. Nexus offers no evidence to show indisputably that it acted in a way that was other than willful or knowing.
Second, the Masseys argue that Nexus told them it had an effective network of repairing dealers, but they struggled to find a Nexus dealership that was willing or able to perform necessary repairs. See Va. Code. Ann. § 59.1-200(A)(14). Nexus argues that no evidence shows that the company lacked a nationwide network or could not authorize non-Nexus service providers to perform repairs. The Masseys have not presented evidence from which a reasonable jury could say this was a false statement of fact or anything but puffery.
Third, the Masseys argue that Nexus represented that it had adequate personnel in the repair shop or warranty department to meet market demand, yet Nexus turned the Masseys away from service at its own factory due to a staffing shortage. See Va. Code. Ann. §§ 59.1-200(A)(5), (14). They cite as evidence the service at American Family in Virginia rather than at Nexus's Indiana factory. The statement on personnel was made several months before that, however. The Masseys have presented no evidence that the statement was a misrepresentation of an existing fact at the time the statement was made. See Tate, 508 S.E.2d at 599. Nor have they shown it to be anything but puffery. Staffing for a business waxes and wanes over the course of time and with market demands, so this statement was at most puffery.
Fourth, the Masseys argue that Nexus misrepresented that the unit was a fully functional and operational recreational vehicle at the time of purchase. See Va. Code. Ann. §§ 59.1-200(A)(5), (6), (14). They cite Mr. Massey's testimony that the sales process and Nexus website emphasized quality and that they "expected" to get a fully functional unit. This won't suffice for a VCPA claim. "Merely stating that property is in excellent condition, without more, is clearly a matter of opinion in the manner of puffing" and does "not constitute fraud or violate the Consumer Protection Act." Lambert, 553 S.E.2d at 717; see also Tate, 508 S.E.2d at 600 (phrase like "highest quality" is "more in the nature of puffing or opinion and cannot form the basis of an action for constructive fraud").
Accordingly, the court grants Nexus's motion except as to the Bigfoot repair and chassis service issues remaining under this VCPA claim.
G. Bailment.
Under Virginia law, a bailment "has been broadly defined as 'the rightful possession of goods by one who is not the owner.' " Aufforth v. Aufforth, 72 Va.App. 617, 851 S.E.2d 77, 82 (2020). "To have lawful possession, an alleged bailee 'must have both physical control over the property and an intent to exercise that control.' " Id. A bailee who enters the bailment for pay owes a duty of "reasonable or ordinary care." Morris v. Hamilton, 225 Va. 372, 302 S.E.2d 51, 53 (1983). "If the bailee fails to use ordinary care, he is liable to the bailor for any loss or damage to the property resulting from the bailee's failure." Volvo White Truck Corp. v. Vineyard, 239 Va. 87, 387 S.E.2d 763, 766 (1990).
Like the VCPA claim, Nexus initially argued Indiana law on the bailment claim before referencing Virginia law in reply.
The Masseys argue that Nexus breached its bailment duties during the Hoosier Transit accident. The Masseys entrusted the unit to Nexus for repairs. Nexus coordinated transportation through Hoosier Transit. The unit was damaged in an accident. Although Hoosier Transit paid the cost of repairs, the Masseys argue that the repairs increased the unit's width to 102.25 inches, based on the survey of a registered independent surveyor (cited by Mr. Bailey). They say the extra quarter-inch exceeds the legal width acceptable in Virginia. See, e.g., Va. Code § 46.2-1105(A)(4). The Masseys contend that this quarter-inch made the vehicle "worthless" and they should receive the difference between the purchase price and the price they sold the vehicle for—what they term "salvage value."
This is a quarter-inch stretch of an argument too far for Virginia law. A vehicle "may exceed 102 inches if such excess width is attributable to an appurtenance that extends no more than six inches beyond the body of the vehicle." Va. Code § 46.2-1105(B). An "appurtenance" includes "any appendage that is installed by the manufacturer or dealer intended to be an integral part of a motor home or travel trailer." Id. Nexus provides a proposed expert opinion—on this record unchallenged in fact and admissibility—that the fender responsible for this quarter-inch is just such an appurtenance. No evidence, not even Mr. Bailey, places this opinion in dispute for a reasonable jury, so the measurement from the Masseys (though 102.25 inches at a particular bulge) accounts for something Virginia law would not call problematic.
That said, Mr. Bailey also cites a spreadsheet from the Recreational Vehicle Industry Association that identifies the 102-inch requirement among other states within the contiguous 48 states; and, though certain of these states may also exclude safety equipment or other accoutrements, Nexus has not established with undisputed facts or legal authority that the unit would be usable in these other states.
Instead, Nexus argues that there is no evidence linking the unit's reduction in market value to its conduct from this accident—that Nexus's conduct caused the damage. Hoosier Transit paid True Colors Custom Paint to repair the damage from the accident ($8,000), and it believes directly [ECF 63-8 at 23; ECF 65-11 at 6 (Nexus 00156)]. True Colors also repaired damage from another accident by the Masseys (over $3,000) [ECF 63-8 at 22]. Mr. Bailey attributes the increased width to the Hoosier Transit accident repairs, but Nexus didn't perform these repairs. Whether Nexus may be responsible under a bailment theory during the accident, nothing establishes that Nexus failed to exercise reasonable care over the unit when it was repaired, much less at a time when it had physical control. Hoosier Transit paid for the repairs, and True Colors performed the repairs. The record doesn't permit a reasonable jury to link Nexus's conduct to the increased width of the unit, and the repairs were intervening in any event. See Vineyard, 387 S.E.2d at 766 (requiring failure to use ordinary care to cause the damage). The court grants summary judgment on this bailment claim.
CONCLUSION
Accordingly, the court GRANTS IN PART and DENIES IN PART Nexus's motion for summary judgment [ECF 61]. The claims and remedies survive as limited in this order.
SO ORDERED.