Anthony's Auto Sales, Inc. v. Shephard

• Court: Court of Appeal of Louisiana
• Writing for the Court: VICTORY
• Citation: Anthony's Auto Sales, Inc. v. Shephard, 600 So.2d 125 (La. App. 1992)
• Decision Date: 13 May 1992
• Docket Number: No. 23492-CA,23492-CA
• Parties: ANTHONY'S AUTO SALES, INC., Plaintiff-Appellant, v. Linda SHEPHARD, Defendant-Appellee. 600 So.2d 125

Page 125

600 So.2d 125

ANTHONY'S AUTO SALES, INC., Plaintiff-Appellant, v. Linda SHEPHARD, Defendant-Appellee.

No. 23492-CA.

600 So.2d 125

Court of Appeal of Louisiana Second Circuit.

May 13, 1992.

J. Philip Goode, Jr., Shreveport, for plaintiff-appellant.

Desmond McGinn, Shreveport, for defendant-appellee.

Before NORRIS, LINDSAY and VICTORY, JJ.

VICTORY, Judge.

This suit was instituted by Anthony's Auto Sales, Inc. (Anthony's) in the form of an executory process on a used car sold to Linda Shephard (Shephard). The foreclosure was based on Shephard's alleged breach of the security agreement to provide full insurance coverage. Following seizure of the car, Shephard reconvened seeking damages for wrongful seizure and rescission of the sale based on redhibition. The trial court denied damages, but granted rescission of the sale, and Anthony's appealed. We affirm.

FACTS

On March 23, 1990, Shephard bought a 1981 Lincoln Mark VI automobile from Anthony's Auto Sales, Inc. At the time of purchase, the car had an odometer reading of 107,827 miles. The purchase price plus tax and license totaled $5,443.60 on which she paid $1,400 as a downpayment and applied her trade-in value of $700. The balance, $3,343.60, was financed through the seller, as evidenced by the Security Agreement and Promissory Note executed by the parties.

The sales agreement required Shephard to maintain insurance on the vehicle in order to protect Anthony's, the lien holder. Jimmy Anthony, brother of Charles Anthony, the owner of the car dealership, sold insurance from an office on the premises of the dealership. Following the sale of the car, Jimmy sold Shephard liability insurance with comprehensive and collision coverage.

The next day, March 24, the engine stalled in traffic and Shephard immediately contacted Anthony's. Herbert Pullman, Shephard's ex-boyfriend, took the car back to the dealer for repairs on March 28, and picked it up on April 4. On April 6, Shephard experienced the same problems and took it back for repair. According to Shephard, she brought the car back to Anthony's a total of eleven times before they refused to perform any more repairs.

Meanwhile, Shephard failed to pay her insurance premiums, and as a result, her policy was cancelled on May 3. Although Shephard subsequently purchased a liability policy with another agent, she obtained no comprehensive or collision coverage. When Charles Anthony, the owner of the dealership, realized the car was not properly insured, he filed suit to foreclose on the car for breach of the security agreement and had the car seized. Shephard then filed a reconventional demand for wrongful seizure, injunctive relief, and rescission of the sale on grounds of redhibition. A preliminary injunction was subsequently granted enjoining the sale pending trial.

TRIAL COURT'S RULING

This case was tried in Shreveport City Court on December 7, 1990. The trial judge found a redhibitory vice which manifested itself within three days of the sale, and which rendered the vehicle so imperfect and inconvenient that the buyer would not have purchased it had she known of the defect. The judge also found Anthony's to be a good faith seller, and rejected damages for wrongful seizure because Shephard failed to maintain insurance on the car as required by the security agreement. The court's judgment rescinded the sale and ordered Anthony's to return the purchase price to Shephard, less the remaining balance on the loan and subject to a credit of $500 payable to Anthony's for her use of the car.

Anthony's appealed the judgment claiming the trial court erred in failing to find that defendant waived her right to claim redhibition when she executed a waiver of warranty agreement at the time of sale. In the alternative, appellant claims the trial court erred in finding sufficient evidence of a redhibitory vice. ¹

WAIVER OF WARRANTY

In Louisiana, the seller is bound by an implied warranty that the thing he sold is free of hidden defects and is reasonably fit for the product's intended use. LSA-C.C. Arts. 2475, 2476, 2530; Rey v. Cuccia, 298 So.2d 840 (La.1974). This warranty is applicable to the sale of used, as well as, new merchandise. Although the warranty is not as extensive for used merchandise, it does require that the merchandise operate reasonably well for a reasonable period of time. Hob's Refrigeration & Air Conditioning, Inc. v. Poche, 304 So.2d 326 (La.1974); Karageorge v. Cole, 565 So.2d 502 (La.App.2d Cir.1990).

The parties are free to limit or diminish, by express agreement, the warranty imposed by law. Hendricks v. Horseless Carriage, Inc., 332 So.2d 892 (La.App.2d Cir.1976). In order for a waiver of warranty to be effective, three elements must be present:

1. The waiver must be clear and unambiguous;

2. The waiver must be contained in the sale and mortgage document; and

3. The waiver must either be brought to the attention of the buyer or explained to him.

Sanders v. Sanders Tractor Co., Inc., 480 So.2d 913 (La.App.2d Cir.1985); Prince v. Paretti Pontiac Co., Inc., 281 So.2d 112 (La.1973). The seller bears the burden of proving that the warranty has been waived. Monk v. Oakdale Motors, Inc., 544 So.2d 98 (La.App. 3d Cir.1989).

The evidence revealed that six documents were executed in relation to the sale of the vehicle. In a document entitled "Auto Sales Disclaimer of Warranty," the dealer disclaimed all warranties including any implied warranty of fitness for a particular purpose. Jeri Byrd, Anthony's sales manager, referred to this document as the Bill of Sale. It lists the make and model of the vehicle sold, the sales price, the amount to be financed, and is signed by Shephard. The parties also executed a "Non-guarantee Used Car Agreement" in which Shephard accepted the car without guaranty as to year, model, or mechanical condition and agreed not to hold the dealer liable for future problems. Another document entitled "Combination Promissory Note, Truth in Lending Disclosure Statement and Security Agreement" evidences the sale of the car and the financing terms applicable to the balance, but contains no waiver of warranty language.

After viewing the foregoing documents, it is apparent that (1) the waiver of warranty provisions were in clear and unambiguous terms, and that (2) the waiver was contained in the sale document. At issue is whether the waiver was brought to Shephard's attention or explained to her.

Shephard testified that she did not read the waiver of warranty provisions, but instead was presented with a stack of documents which she signed without reading. She claimed neither Byrd nor the salesman, Jay Hopkins (now deceased), explained the warranty provisions to her. Instead, she stated that both Byrd and Hopkins repeatedly assured her that the warning of no warranty meant nothing because Anthony's "stands behind their cars" and would take care of any problems she might have. According to Shephard, she would not have bought the car had she known Anthony's would not be liable for any defects.

On the other hand, Jeri Byrd testified she prepared all the documents and explained each to Shephard. During trial the following colloquy took place between defense counsel and Byrd:

Q. Excuse me. On the first form P-1 ["Auto Sales Disclaimer of Warranty"], did you read the language to her where it says Anthony's Auto Sales, all warranties on this vehicle or the manufacturer--

A. What I said is what I say to everybody. This paragraph right here is an "as is statement." You will need to read it before you sign it. And hopefully they read it before they sign it.

Q. Did you specifically ask her, "do you understand everything contained in this document"?

A. No sir, I probably didn't.

From the record, it is clear that Byrd was testifying as to her common practice when executing sales documents, not as to her specific recollection of this particular sale. The person listed on all the documents as a witness to the transaction, Joah Jett, was not called to prove the warranty was explained or brought to the attention of the buyer. According to the above testimony of Byrd, the warranty provisions on the bill of sale were not explained to Shephard, and she did not know if Shephard understood them.

Although the trial court, in its written reasons, did not make reference to the waiver of warranty, we find that the judge rejected Anthony's affirmative defense of waiver. In the absence of an express reservation, the silence of the trial court on an issue raised by the pleadings and on...