Opinion
NO. 2014-CA-000470-MR
05-01-2015
C.A.R.S. PROTECTION PLUS, INC. APPELLANT v. JORDAN MAMRAK APPELLEE
BRIEF FOR APPELLANT: Mark B. Wallace Louisville, Kentucky BRIEF FOR APPELLEE: David S. Sprawls Louisville, Kentucky
NOT TO BE PUBLISHED APPEAL FROM OLDHAM CIRCUIT COURT
HONORABLE KAREN A. CONRAD, JUDGE
ACTION NO. 12-CI-00513
OPINION
AFFIRMING
BEFORE: COMBS, JONES, AND MAZE, JUDGES. COMBS, JUDGE: This is a contract case involving an application for a vehicle service agreement. C.A.R.S. Protection Plus, Inc., (CARS) appeals from separate summary judgments of the Oldham Circuit Court entered in favor of Jordan Mamrak. The court held that pre-printed language appearing below the signature line on an application for a vehicle service contract was not part of the parties' agreement. However, it held that the language that remained was sufficient to create a contract. After our review, we affirm.
On October 11, 2011, Mamrak purchased a used BMW from AS Automotive Solutions. The odometer read 130,269 miles. At the same time, Mamrak signed an application for a vehicle service contract. The application was prepared by CARS and purported to provide -- upon its acceptance by CARS -- a "limited warranty" for the vehicle's power train for three months or 4,500 miles. Mamrak signed the application and paid $99 for the service contract. Subsequently, CARS issued a "warranty coverage card" that indicated its acceptance, stating that coverage would begin on October 20, 2011, and that it would expire on January 20, 2012. The card listed the "In Service Mileage" as 130,269 and the "Expiration Mileage" as 134,769 - or 4500 miles over the odometer reading.
According to Mamrak, on the day after the purchase, the car's temperature gauge indicated that the engine was overheating. Mamrak stopped the car, let the engine cool, and checked the coolant level. Mamrak had the thermostat replaced, and the car ran fine for several days. However, the car overheated again, and Mamrak replaced the car's thermostat for a second time as well as the water pump on October 25, 2011. CARS paid a portion of Mamrak's repair bill. But these repairs did not resolve the underlying problem. Mamrak eventually had the vehicle towed to a garage. He was told that the car's motor would have to be replaced.
In November 2011, the car's engine, clutch, and some other parts were replaced at a total cost to Mamrak of $7,785.93. CARS paid $63.48 toward the repair bill and refused to pay more. It contended that this work was necessary as a result of the engine problems that had manifested on October 12, 2011--immediately after Mamrak had purchased the vehicle -- but before the vehicle service contract's effective date of October 20, 2011.
On June 25, 2012, Mamrak filed an action against CARS in Oldham Circuit Court. He attached a copy of the one-page application and vehicle service contract to the complaint. Mamrak alleged that the document included additional terms which were not part of the parties' agreement and that CARS breached the agreement by failing to pay for repairs -- after due notice -- during the contract period. CARS answered the complaint and denied the allegations.
The verified complaint bears a date stamp indicating that it was filed on June 25, 2011. However, there is no dispute between the parties that the complaint was actually filed on June 25, 2012.
On July 31, 2012, Mamrak filed a motion for partial summary judgment. He asked the circuit court to declare that pre-printed language appearing below the signature line of the application for the service contract was not part of the parties' agreement. Mamrak indicated that the signature line appeared at the top one-third of a single-page document. He argued that nothing appearing above the signature line incorporated into the agreement additional terms that appeared in the remaining lower two-thirds of the page. In part, these additional terms provide that "[c]omponent failures that occur before [CARS] approves this limited warranty application are not covered." He argued that none of the additional terms was properly included in the parties' agreement.
In response, CARS contended that the agreement specifically and clearly indicated that it would become effective "when this application is received with payment and approved by [CARS]." CARS argued that the initial coverage period began on October 20, 2011, and continued for three months or 4,500 miles -- whichever occurred first. CARS argued that the location of Mamrak's signature on the application was irrelevant to the operation of the vehicle service contract. It contended that even if Mamrak's signature had been required to make an enforceable contract, language sufficient to incorporate all the terms of the agreement was immediately proximate or adjacent to his signature. Finally, CARS contended that if Mamrak's position were accepted, and only those terms found above his signature are part of the agreement, then the service contract is utterly meaningless since all of the operative terms (including the coverage description) are included below his signature on the application. It argued that no agreement could exist under these circumstances.
The purchase of an upgraded version of the power train limited warranty on October 31, 2011, extended coverage to October 20, 2012 (twelve months) or 18,000 miles, whichever occurred first.
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On January 15, 2013, the Oldham Circuit Court entered an order granting partial summary judgment. The court concluded that the language appearing below Mamrak's signature on the application for the vehicle service contract was not part of the parties' agreement. The court based this conclusion upon the provisions of Kentucky Revised Statute[s] (KRS) 446.060(1) requiring subscription at the end or close of a writing where the contract is required by law to be signed by a party. The matter was set for trial.
On June 20, 2013, Mamrak filed another motion for summary judgment. He contended that he was entitled to judgment as a matter of law since the cost and necessity of the repairs to the vehicle were undisputed.
CARS resisted the motion and filed its own motion for summary judgment. CARS reiterated that Mamrak's application for the warranty and his payment of $99.00 had been received on October 20, 2011, and that the Power Train Limited Warranty coverage began on that date and no earlier. However, CARS acknowledged the entry of partial summary judgment in favor of Mamrak. In light of the trial court's legal conclusion that the terms beneath Mamrak's signature were not part of the parties' agreement, CARS argued that no valid contract had been created. It claimed that the document -- as redacted by the court -- lacked definite and essential terms and did not reflect any actual agreement between the parties. CARS sought summary judgment on the basis that no contract had been formed between the parties. In the alternative, CARS argued that the terms of the contract were ambiguous requiring an opportunity for both parties to present proof of the agreement to a fact-finder.
Summary judgment was denied by order of the court on September 2, 2013. The court concluded that its decision to strike the language that followed Mamrak's signature did not render the vehicle service contract unenforceable. It concluded that the essential terms of the contract were included in the language that appeared on the application above Mamrak's signature and that the only possible ambiguity in the parties' contract concerned the scope of the agreement. It observed that the agreement provided sufficiently that it was a "power train limited warranty" and concluded that CARS had agreed to repair or replace the vehicle's power train parts as necessary within three months of October 20, 2011, or 4,500 miles. Despite these observations, the trial court concluded that a genuine issue of material fact precluded summary judgment because it was unable to determine from the affidavits which repairs involved the vehicle's power train. After the parties submitted additional affidavits to clarify the repairs with respect to the power train, a final order was entered on February 25, 2014.
In its final order, the Oldham Circuit Court concluded that the cost of the engine replacement and the expenses related to its installment totalling $5,519.61 were covered by the terms of the agreement. This appeal followed.
On appeal, CARS contends that the trial court erred in two respects: first, by striking the language that followed Mamrak's signature on the application; and next, by concluding that the language that remained was sufficient to create a binding contract. Mamrak disagrees with these contentions. In the alternative, he contends that CARS is not entitled to summary judgment since a genuine issue of material fact exists with respect to whether the repairs became necessary before or after CARS purportedly accepted the vehicle service contract on October 20, 2011. In addition, he argues that he is entitled to assert claims based upon provisions of the Commonwealth's Consumer Protection Act and the federal Magnuson-Moss Act.
Upon our review of the trial court's summary judgment, we must decide whether the court correctly determined that there are no genuine issues as to any material facts and that the moving party is entitled to judgment as a matter of law. Kentucky Rule[s] of Civil Procedure (CR) 56.03. "The record must be viewed in a light most favorable to the party opposing the motion for summary judgment and all doubts are to be resolved in his favor." Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480 (Ky. 1991).
This matter can be resolved without reference to the location of the signature line and dispute over terms appearing above or below it. Quite simply, Mamrak signed and paid for a vehicle service contract. It was a binding agreement subscribed (regardless of whether it was required to be signed) pursuant to KRS 446.060(1). It became effective by its own terms on October 20, 2011.
Some trouble with the car became manifest shortly after purchase and arguably prior to October 20, 2011. However, the car continued to operate without incident. The bulk of the necessary repairs occurred on October 25 and again in November of 2011. The vehicle service agreement standing alone was in effect and covered the cost of repairs. As properly noted by the trial court, the only issue of fact in dispute was the proper scope of the agreement; i.e., whether the necessary repairs involved the power train. The court duly required additional affidavits to determine this issue and entered its final order on February 25, 2014.
Mamrak relies upon the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, 15 U.S.C. §§ 2301, et seq., which was enacted with the aim of making warranties on consumer products more easily understood and more readily enforceable. It established a procedural mechanism by which consumers could enforce warranty and service claims and was meant to supplement state-law remedies.
The Magnuson-Moss Act defines a "service contract" as a "contract in writing to perform, over a fixed period of time or for a specified duration, services relating to the maintenance or repair (or both) of a consumer product." 15 U.S.C. §§ 2301(8). The "warranty" provided by CARS is a vehicle service contract governed by the Magnuson-Moss Act. Mamrak is entitled to enforcement of the vehicle service contract under both the spirit and the letter of the act.
We affirm the trial court - albeit for reasons other than those upon which it relied.
ALL CONCUR. BRIEF FOR APPELLANT: Mark B. Wallace
Louisville, Kentucky
BRIEF FOR APPELLEE: David S. Sprawls
Louisville, Kentucky