Taterka v. Ford Motor Co.

• Decision Date: 28 November 1978
• Docket Number: No. 76-230,76-230
• Citation: 271 N.W.2d 653,86 Wis.2d 140
• Parties: , 25 UCC Rep.Serv. 680 Steven A. TATERKA, Plaintiff-Appellant, v. FORD MOTOR COMPANY, Defendant-Respondent.
• Court: Wisconsin Supreme Court

Page 653

271 N.W.2d 653

86 Wis.2d 140, 25 UCC Rep.Serv. 680

Steven A. TATERKA, Plaintiff-Appellant, v. FORD MOTOR COMPANY, Defendant-Respondent.

No. 76-230.

Supreme Court of Wisconsin.

Submitted on Briefs Nov. 1, 1978.

Decided Nov. 28, 1978.

Steven A. Taterka, plaintiff-appellant, commenced an action against Ford Motor Company, defendant-respondent, for alleged breach of express and implied warranty arising out of the sale of a new automobile. The trial court granted the motion of Ford Motor Company for summary judgment and judgment was entered dismissing the action with prejudice. Taterka appeals from this judgment.

Steven A. Taterka, pro se.

Robert L. Binder and Foley & Lardner, Milwaukee, on brief, for defendant-respondent.

HANSEN, Justice.

On September 20, 1971, Taterka entered into a contract to purchase a 1972 Ford Mustang from a Milwaukee Ford dealer. Taterka took delivery of the car on January 14, 1972. At that time he was given an owner's manual and a Warranty Facts booklet. In October, 1974, Taterka discovered that the taillight assembly gaskets had been installed in a way which permitted water to enter causing rust to form. On November 7, 1974, Taterka notified Ford of this rust problem by calling Ford's Boston district office. Ford did not take any action to correct the problem and Taterka commenced this action on July 28, 1975.

The record reflects Ford had recognized that it had a rust problem with its 1969-1972 model cars. On August 25, 1972, General Field Bulletin No. 550 was issued by Ford authorizing Ford's regional and district managers to provide coverage for rust repairs in response to individual customer complaints. This service program would pay 100 percent of the repair costs up to 24 months and 75 percent from 24 to 36 months. Dealers were not notified of the program.

Taterka also introduced other Ford documents concerning the rust problem. On report dated October 19, 1973, indicated that the "General Product Acceptance Specification" (GPAS) permitted no "metal perforation on exterior appearance panels" for five years. The report observed that Ford's products seemed competitive for the one and two-year requirements but otherwise did not satisfy the GPAS in a "severe corrosion environment" because perforations developed one to two years earlier in Fords than in competitor's automobiles.

In its motion for summary judgment Ford relied on the expiration of the express warranty prior to Taterka's notice and the disclaimers of all implied warranties in the Warranty Facts booklet.

Taterka attacked the express warranty by contending that the 12 months/12,000 mile limit was manifestly unreasonable or unconscionable where a latent defect, such as one that causes rust, was not discoverable within that time. He also argued that the auto was unmerchantable and unfit for the intended use and that Ford's disclaimer of these implied warranties was ineffective because it was made subsequent to the contract of purchase.

In a decision dated June 15, 1976, granting Ford's motion for summary judgment, the trial court concluded that Taterka's claim was without merit because the auto was merchantable. The court stated:

". . . It seems to the Court that to state the facts is to dispose of the case. A manufacturer is not expected to manufacture an automobile that is perfect in every detail nor is he expected to manufacture an automobile that operates indefinitely. This automobile, having been driven 90,000 miles, has used up approximately most of its useful life. Certainly it cannot be claimed that the automobile was not merchantable at the time of purchase. Tracy v. Vinton Motors, Inc., 130 Vt. 512, 296 A.2d 269, 272 (1972)."

The dispositive issue on this appeal is whether the trial court abused its discretion in granting the motion for summary judgment.

We have held that summary judgment may be granted where there is no genuine issue as to any material fact and a party is entitled to judgment as a matter of law. Sec. 802.08(2), Stats. The trial court is to determine from the pleadings and affidavits whether a cause of action is alleged and whether any material issues of fact are presented. Krezinski v. Hay, 77 Wis.2d 569, 572, 573, 253 N.W.2d 522 (1977). Summary judgment may be granted where there is no factual dispute or where no competing inferences arise from undisputed facts and the law resolving the issues is clear. Lecus v. American Mut. Ins. Co. of Boston, 81 Wis.2d 183, 189, 260 N.W.2d 241 (1977); Matthew v. American Family Mut. Ins. Co., 54 Wis.2d 336, 339, 195 N.W.2d 611 (1972).

In considering a motion for summary judgment the trial court may decide a point of law not previously decided, but is not required to. United Farm Agency, Inc. v. Niemuth, 47 Wis.2d 1, 6, 176 N.W.2d 328 (1970). It is an abuse of discretion to decide a legal issue incorrectly or to decline to consider a legal issue capable of resolution in a factual vacuum. Ceplina v. South Milwaukee School Board, 73 Wis.2d 338, 340, 243 N.W.2d 183 (1976).

Therefore in order to determine whether there was an abuse of discretion we must consider the issues presented, which are:

1. Whether a substantial fact issue exists regarding merchantability which would preclude granting a motion for summary judgment?

2. Whether the disclaimer of implied warranties was untimely and therefore ineffective?

3. Whether the 12 months/12,000 mile limit on Ford's express warranty was manifestly unreasonable when applied to a latent defect?

Taterka first contends that the trial court abused its discretion in granting summary judgment because a material issue of fact existed regarding the auto's merchantability.

Merchantability is defined in sec. 402.314, Stats.:

"402.314 Implied warranty: merchantability; usage of trade.

". . . .Imp

"(2) Goods to be merchantable must be at least such as:

"(a) Pass without objection in the trade under the contract description; and

". . . . wi

"(c) Are fit for the ordinary purposes for which such goods are used; and . . ."

A finding of merchantability requires an examination of the defects alleged to exist in the particular product in light of the standard of quality expected for that product.

The issue of merchantability presents a question of fact. The question to be answered is whether conflicting inferences can be drawn from the undisputed facts.

Taterka alleged manufacturing defects including improper corrosion treatment and installation of taillight assembly gaskets. This allegation was supported by a newspaper article on the Ford rust problem, an affidavit from a body shop owner and Ford's own research reports on the rusting. Ford denied this allegation of manufacturing defects but did not respond with counter-affidavits. Ford also argues that the automobile's merchantability and fitness were demonstrated by the fact that it was driven as a personal vehicle in excess of 75,000 miles.

Where automobiles are concerned the term "unmerchantable" has only been applied where a single defect poses a substantial safety hazard or numerous defects classify the car as a "lemon." See, e. g., Zabriskie Chevrolet, Inc. v. Smith, 99 N.J.Super. 441, 240 A.2d 195 (1968); Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 161 A.2d 69 (1960); Anno., 83 A.L.R.3d 694, sec. 5(b) (1978). The ordinary purpose for which a car is intended is to provide transportation. Where a car can provide safe, reliable transportation it is generally considered merchantable. 83 A.L.R.3d 694, sec. 5(a) (1978).

Ford also directs our attention to Murray v. Holiday Rambler, Inc., 83 Wis.2d 406, 265 N.W.2d 513 (1978), for the proposition that the auto here is merchantable. In Murray the motor home had numerous defects which rendered it virtually useless and the court held that the limited remedy of repair or replacement of defective parts would be unconscionable under these circumstances. The case does not discuss merchantability but does, to some extent, demonstrate the nature of defects that will render a manufacturer's warranty unconscionable.

The automobile here involved had been driven for 33 months and in excess of 75,000 miles without a serious misadventure. In fact, it had been driven 90,000 miles at the time of the hearing on the motion for summary judgment in 1976. The only inference that can reasonably be drawn from the undisputed facts is that the rust problem described in this case did not render the car unfit for the purpose of driving and therefore unmerchantable. Since conflicting inferences did not arise from the undisputed facts, summary judgment was appropriate.

Taterka next contends that Ford's disclaimer of implied warranties was ineffective because it was given to him at the time of delivery and therefore subsequent to the execution of the sales contract. No argument is made that the disclaimer did not meet the requirements of sec. 402.316(2), Stats.

The trial court did not address the issue of whether an implied warranty existed. Its decision seems to rest on the determination of merchantability. We construe the decision to imply that the disclaimer was ineffective. However, we deem it necessary to consider the issue.

Sec. 402.316(2), Stats., provides for disclaimer of implied warranties. The statute is silent as to when the disclaimer must be made. Taterka cites authorities in which dealers have endeavored to protect themselves using the manufacturer's disclaimer. Because of significant factual distinctions, they are not of material assistance in the instant case. ¹

Other jurisdictions have held that a disclaimer contained in materials which are provided to the purchaser subsequent to the sale cannot relieve the manufacturer of the implied warranty of merchantability. In Dougall v. Brown Bay Boat Works and Sales, Inc., 287 Minn. 290, 178 N.W.2d 217 (1970), an owner's manual which contained the disclaimer was given to the purchaser after the sales transaction was completed but before the motorboat was...