Aubrey's R.V. Center, Inc. v. Tandy Corp.

• Court: Washington Court of Appeals
• Writing for the Court: MUNSON; McINTURFF, C.J., and THOMPSON
• Citation: Aubrey's R.V. Center, Inc. v. Tandy Corp., 731 P.2d 1124, 46 Wn.App. 595 (Wash. App. 1987)
• Decision Date: 22 January 1987
• Docket Number: No. 7072-7-III
• Parties: , 3 UCC Rep.Serv.2d 105 AUBREY'S R.V. CENTER, INC., a Washington corporation, Respondent, v. TANDY CORPORATION, a foreign corporation, Appellant.

Page 595

46 Wn.App. 595

731 P.2d 1124, 3 UCC Rep.Serv.2d 105

AUBREY'S R.V. CENTER, INC., a Washington corporation, Respondent, v. TANDY CORPORATION, a foreign corporation, Appellant.

No. 7072-7-III.

Court of Appeals of Washington Division 3, Panel Three.

Jan. 22, 1987.

Reconsideration Denied March 3, 1987.

West Harrison Campbell, J. Tappan Menard, Gavin, Robinson, Kendrick, Redman & Pratt, Yakima, for appellant.

Wade E. Gano, Donald E. Templeton, Thorner, Kennedy, Gano & Rowley, P.S., Yakima, for respondent.

MUNSON, Judge.

Aubrey's Recreational Vehicle Center, Inc. (Aubrey's) purchased a computer system from Tandy Corporation to perform certain functions. When the system failed to perform those functions, Aubrey's brought this action; the trial court rescinded the contract, awarded Aubrey's damages, and found Tandy had violated the Consumer Protection Act (CPA). Tandy appeals. We affirm in part and reverse in part.

The facts are, for the most part, undisputed. In April 1983, Aubrey Reeves, Jr., president and owner of Aubrey's, contacted the Radio Shack Computer Center about purchasing a computer system for his business. Radio Shack is the local retailer for products sold by Tandy, its parent company. Mr. Reeves communicated his desire to purchase an integrated computer system which, among other functions, could: (1) maintain an inventory for over 3,000 different items while also operating as a point-of-sale recorder; (2) maintain a customer list; (3) compute and print retail installment sales contracts; (4) compute and maintain accounts payable and receivable; and (5) maintain a general ledger. Negotiations ensued thereafter between Mr. Reeves and Larry Momo, a Radio Shack salesman.

After Mr. Reeves explained the extent of Aubrey's inventory control needs, Mr. Momo determined Tandy did not have the necessary software to perform the required inventory tracking functions. He referred Mr. Reeves to the Application Software Source Book (Source Book) which catalogs various programs manufactured by third parties and compatible with Tandy computers. Because Tandy neither reviews nor tests those programs, it has a policy of not supporting or servicing such software. A disclaimer to this effect is printed in the Source Book. At trial, Mr. Momo was unable to recall whether he showed Mr. Reeves the disclaimer; however, he testified he informed Mr. Reeves several times that Tandy would not support any programs purchased from the book. Mr. Reeves, on the other hand, testified he was never told Tandy "wouldn't stand behind" the Source Book's software.

In any event, after consulting the Source Book, Messrs. Momo and Reeves discovered Lizcon Trading Company of Salt Lake City, Utah, manufactured an inventory control program compatible with Tandy computers. Mr. Momo obtained a brochure from Lizcon outlining the capabilities of the inventory software.

During these negotiations, Aubrey's arranged financing for the computer system through Dolsen Leasing Company on a lease-purchase contract. Dolsen agreed to purchase the system from Tandy; Aubrey's agreed to make regular payments (including interest) to Dolsen; at the end of the lease, Aubrey's was given the option of purchasing the system, an option Mr. Reeves intended to exercise. Mr. Reeves discussed this financing arrangement with Mr. Momo prior to the sale; thus, Tandy knew Aubrey's financed the sale through the lease arrangement with Dolsen.

On April 30, 1983, Mr. Momo sent Mr. Reeves a written proposal; Tandy was to supply the hardware (computers) and substantially all of the software necessary for Aubrey's needs; the point-of-sale/inventory control functions were to be performed by software acquired from Lizcon.

Aubrey's accepted Tandy's proposal; Dolsen purchased the computer hardware and software, except for the Lizcon program, from Tandy for $10,887.55. Aubrey's acquired the inventory program directly from Lizcon for $499 with Mr. Momo acting as agent. The equipment was delivered directly from Tandy to Aubrey's in late May.

Upon delivery, Mr. Reeves' wife and daughter, both novices with respect to computers, attempted to bring the various programs on line. They immediately encountered problems with the retail installment contract and Lizcon programs. The Lizcon program was unable to inventory more than approximately 600 items at one time; it would not act as a point-of-sale recorder. Likewise, the program designed to compute the retail sales contracts did not work; it could not perform exponential calculations. Both the general ledger and the accounts payable programs worked as represented.

Following their attempts to solve the various problems, Aubrey's contacted Mr. Momo about 2 months after delivery of the system. His attempt to rectify the various problems throughout the summer and into the fall was to no avail. Mr. Momo then retrieved the Lizcon program with the intent to send it to Lizcon for alteration. By March 1984, Tandy had failed to return the Lizcon program to Aubrey's.

On March 13, Aubrey's sent a letter to Tandy, asking for rescission of the contract and return of the purchase price. Aubrey's was contacted by the manager of Tandy's customer relations for the computer service division. Following the ensuing negotiations, Tandy agreed to exchange the hardware supplied to Aubrey's for a different model. Tandy also agreed to resolve the continuing problems with the Lizcon program and to create a program to handle Aubrey's requirements with regard to the retail installment sales contracts. Mr. Momo subsequently informed Mr. Reeves that Tandy had authorized him to create a new retail sales contract program, which would also meet Aubrey's needs.

The Lizcon program was apparently modified, but never returned to Aubrey's. When Mr. Momo inquired into the program's status, he was instructed "that the Legal Department out of Fort Worth [Tandy's headquarters] [would] handle it," and he was not to "have any more contact". He was also ordered to cease working on the retail sales program. Neither Mr. Momo nor any other Tandy representative informed Aubrey's that it had chosen to stop attempts at resolving the system's problems.

By June 1984, realizing Tandy was no longer attempting to rectify the computer system's problems, Aubrey's filed this action for rescission and damages. Following a bench trial, the court entered findings of fact, conclusions of law, and judgment in favor of Aubrey's. Specifically, the court rescinded the contract and awarded Aubrey's damages in the amount of $29,981.28, which included the purchase price of the computer hardware and software, finance charges incurred to Dolsen, various other expenses incurred by Aubrey's in its attempts to bring the system on line, plus attorney fees. The court also found that Tandy's actions constituted a breach of the CPA and awarded Aubrey's an additional $1,000 damages. Tandy appeals.

I. Revocation of Acceptance

Tandy's first assignment of error essentially incorporates four issues: (1) whether rescission is available as a remedy under the Uniform Commercial Code (UCC), RCW 62A; (2) whether the defects in the Lizcon and retail sales contract programs "substantially impaired" the value of the computer system to Aubrey's; (3) whether Aubrey's gave timely notice of revocation of acceptance; and (4) if Aubrey's notice of revocation was timely, whether it waived such revocation by continuing to use part of the hardware and software up until the date of trial. We analyze these issues separately.

A. Rescission as a Proper Remedy

Tandy maintains the UCC does not recognize rescission as a remedy and, thus, it is not available in this action. Both parties agree the provisions of the UCC are applicable. See RCW 62A.2-102. Although Tandy correctly contends the term "rescission" is not found in the UCC, RCW 62A.2-608 provides for revocation of acceptance, i.e., the "Code's version of the common-law remedy of rescission." Computerized Radiological Servs., Inc. v. Syntex Corp., 595 F.Supp. 1495, 1510 (E.D.N.Y.1984); see also J. White & R. Summers, Uniform Commercial Code § 8-1, at 293-95 (2d ed. 1980). That RCW 62A.2-608 encompasses the concept of rescission is supported by Official Comment 1 to .2-608 as well as past Washington decisions. ¹

Although the prior basic policy is continued, the buyer is no longer required to elect between revocation of acceptance and recovery of damages for breach. Both are now available to him.... The section no longer speaks of "rescission," a term capable of ambiguous application either to transfer of title to the goods or to the contract of sale and susceptible also of confusion with cancellation for cause of an executed or executory portion of the contract. The remedy under this section is instead referred to simply as "revocation of acceptance" of goods tendered under a contract for sale and involves no suggestion of "election" of any sort.

(Italics ours.) Official Comment 1, RCWA 62A.2-608. Although section .2-608 reflects a liberalization of the common law remedy of rescission, the function of rescission lives on under the phrase "revocation of acceptance." Although technically Aubrey's should have asked for revocation of acceptance, refusal to grant that remedy simply because the buyer alleged rescission is excessively technical and overly formalistic. Aubrey's request for "rescission" is essentially an allegation of "revocation of acceptance." See Testo v. Russ Dunmire Oldsmobile, Inc., 16 Wash.App. 39, 48, 554 P.2d 349, 83 A.L.R.3d 680 (1976).

B. Substantial Impairment

Tandy contends even if the court granted the proper remedy, the requirements for a revocation of acceptance were not met. RCW 62A.2-608(1) provides:

The 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

(a) on the reasonable assumption that its non-conformity would be cured and it has not...