Capitol Cadillac Olds, Inc. v. Roberts

• Court: Supreme Court of Kentucky
• Writing for the Court: LAMBERT; STEPHENS, C.J., LEIBSON, REYNOLDS and SPAIN, JJ., and FRANCIS D. BURKE; WINTERSHEIMER; WINTERSHEIMER
• Citation: Capitol Cadillac Olds, Inc. v. Roberts, 813 S.W.2d 287 (Ky. 1991)
• Decision Date: 06 June 1991
• Docket Number: Nos. 89-SC-367-D,89-SC-862-DG,s. 89-SC-367-D
• Parties: 15 UCC Rep.Serv.2d 1221 CAPITOL CADILLAC OLDS, INC., Appellant/Cross-Appellee, v. Gary H. ROBERTS and Angie Roberts, Appellees/Cross-Appellants.

Page 287

813 S.W.2d 287

15 UCC Rep.Serv.2d 1221

CAPITOL CADILLAC OLDS, INC., Appellant/Cross-Appellee, v. Gary H. ROBERTS and Angie Roberts Appellees/Cross-Appellants.

Nos. 89-SC-367-DG, 89-SC-862-DG.

Supreme Court of Kentucky.

June 6, 1991.

As Modified on Grant of Rehearing Aug. 29, 1991.

H. Foster Pettit, William B. Owsley, Wyatt, Tarrant & Combs, Lexington, for appellant/cross-appellee.

William P. Sturm, Frankfort, for appellees/cross-appellants.

M. Brooks Senn, M. Thurman Senn, Senn, Miller & Smith, David C. Pottinger, John T. McGarvey, Rebecca A. Clark, Morgan & Pottinger, P.S.C., Louisville, for amicus curiae.

LAMBERT, Justice.

This Court granted the motion of appellant, Capitol Cadillac Olds, Inc. (CCO) for discretionary review and the cross-motion for discretionary review of appellees, Gary H. Roberts and Angie Roberts. A number of issues have been raised with regard to the law of sales as it applies to new automobiles and the law relating to commercial financing and allowable recoveries upon default. We have been favored with amicus curiae briefs which argue particular phases of the case.

This saga began in January of 1985 when the Robertses purchased a new Oldsmobile Calais. Shortly after the purchase they discovered that when the car was stopped on a steep incline and the transmission placed in park, a grinding metal on metal sound could be heard. During the ensuing six months, on three separate occasions, the car was returned to CCO for repair of this problem and all such efforts were unsuccessful.

During the time the Robertses were in possession of the car and while it was in the CCO shop for routine maintenance, a light fixture fell on the front of the car and scarred the finish. Thereafter, CCO made five unsuccessful attempts to repaint the car to appellees' satisfaction.

On July 3, 1985, appellees returned the car to CCO, tendered their written revocation of acceptance, and demanded recision of the contract.

The Robertses filed suit against CCO, General Motors, and the bank to which the "with recourse" retail installment contract and security agreement had been assigned. They alleged breach of warranty, revocation of acceptance, and negligence. All defendants answered denying liability and the bank brought a counterclaim against the Robertses and a cross-claim against CCO for the amount of the note. Summary judgment was entered for the bank against CCO for the amount due plus interest at the contract rate and attorneys' fees of $900. No judgment in favor of the bank was entered against the Robertses as CCO paid the bank's judgment.

The trial court granted CCO and General Motors summary judgment on the revocation of acceptance claim and the breach of warranty claim. By amended complaint, the Robertses sought recovery against CCO of the amount they had paid the bank prior to their attempted revocation of acceptance, alleged that the retail installment contract was usurious and alleged that CCO had improperly used the car while it was in its custody by driving it hundreds of miles. A claim was also asserted under the Consumer Protection Act and punitive damages were demanded. General Motors and CCO were granted summary judgment on the amended complaint.

The only issue which went to trial was the Robertses' negligence claim against CCO which arose as a result of the fallen light fixture. When the evidence was heard by the jury, a verdict was returned in favor of the Robertses in the amount of $925 on the claim of negligence in damaging the car and failure to successfully repair the body damage. In the same order, the trial court determined that CCO should recover of the Robertses the amount due on the retail installment contract, the $900 attorney fee it had been required to pay the bank, plus interest at the contract rate on the entire amount until satisfaction of the judgment and its attorney fee of $2,000. The remainder of the Robertses' claims were dismissed and a final judgment entered.

On appeal to the Court of Appeals, the Robertses raised a number of issues and that Court affirmed in part and reversed in part. This Court has carefully reviewed the opinion of the Court of Appeals and determined that it is unnecessary to address each and every issue decided by that Court and raised by the parties on this appeal and cross-appeal. We will limit our decision to those issues which are of substantial public interest or necessary for an appropriate resolution of the controversy. Except as expressly modified herein, the decision of the Court of Appeals is affirmed.

The first issue we will review is the Court of Appeals' reversal of the summary judgment in favor of CCO and against appellees on their revocation of acceptance claim. This Court has recently addressed the standard by which motions for summary judgment are to be measured in Steelvest v. Scansteel, Ky., 807 S.W.2d 476 (1991), and reaffirmed our previous view that such motions should not be granted unless it appears to be impossible for the party against whom the motion is made to produce evidence at trial which would warrant a judgment in his favor. Paintsville Hospital v. Rose, Ky., 683 S.W.2d 255 (1985). When the facts or the reasonable inferences to be drawn from those facts are in dispute, summary judgment is improper and the issue should be tried.

Revocation of acceptance is a remedy contained in the Uniform Commercial Code to be utilized when the nonconformity of the goods is substantial and impairs its value to the buyer. KRS 355.2-608. Revocation of acceptance may be predicated upon discovery of a latent defect, as in this case, and must occur within a reasonable time after the purchaser discovered or should have discovered the grounds for it. The statute contains an element of subjectivity by focusing on whether the nonconformity "substantially impairs its value to him."

"However, it is said the test of impaired value is a subjective one which must be evaluated by objective standards. Furthermore, the question of whether a defect substantially impairs the value of an automobile is a question of fact to be determined by a jury." R. Billings, Handling Automobile Warranty and Repossession Cases, Sec. 522 (1984).

"The substantial impairment test is subjective in that the needs and circumstances of the buyer must be examined. The buyer's personal belief as to the reduced value of the automobile is not determinative. However, the trier of fact must make an objective determination that the value of the goods to the particular buyer, and not the average buyer, has in fact been substantially impaired." Id. at Sec. 5.23.

It is undisputed by the parties that the grinding noise did exist and that the Robertses gave timely notice of their election to revoke their acceptance. The only question is whether the grinding noise which occurred only in unusual circumstances substantially impaired the value of the new automobile to the purchaser of it. While the underlying facts are not seriously disputed, the inferences to be drawn therefrom are disputed matters. CCO contends that the grinding noise was nothing more than an annoyance. The Robertses contend, on the other hand, that it caused them to be apprehensive about their safety while driving the car and apprehensive about the durability of the car.

The seminal Kentucky decision which addresses the right of the purchaser of an automobile to revoke his acceptance is Ford Motor Company v. Mayes, Ky.App., 575 S.W.2d 480 (1979). In the Mayes decision, the Court of Appeals quoted with approval from Zabriskie Chevrolet, Inc. v Smith, 99 N.J.Super. 441, 240 A.2d 195, 205 (1968), as follows:

"For a majority of people the purchase of a new car is a major investment, rationalized by the peace of mind that flows from its dependability and safety. Once their faith is shaken, the vehicle loses not only its real value in their eyes, but becomes an instrument whose integrity is substantially impaired and whose operation is fraught with apprehension."

Each year vendors of automobiles spend millions of dollars to persuade potential customers to purchase their products. Customers are told that if they purchase a particular brand or type of vehicle they will achieve newfound happiness and peace of mind in the knowledge that their vehicle is of superior quality, safety and styling. Great expectations are created and reinforced to persuade the customer to part with his money to make the purchase. In view of this, it is not unreasonable to require the vendor to deliver all or substantially all of that which has been promised.

We conclude that whether the grinding noise substantially impaired the value of the vehicle to the Robertses was an issue of fact which should have been determined by the trier of fact. On this issue we affirm the Court of Appeals.

Our decision on the revocation question resolves one of the issues raised by the Robertses in their cross-appeal: whether CCO improperly used the car by driving it hundreds of miles after redelivery by the Robertses. The Court of Appeals succinctly and accurately stated "If the jury had found that revocation was proper, then CCO's use of its own vehicle was not improper. If the jury had found that revocation was improper, then CCO improperly used the appellants' vehicle" and compensation would be required.

At the time the automobile was sold, appellee, Gary H. Roberts, signed an instrument denominated "Dealer Warranty Disclaimer" in which CCO purported to sell the vehicle "as is" and "with all faults." Appellee, Angie Roberts, did not sign this instrument. CCO insists on enforcement of the Disclaimer and asserts that it made no express warranties and disclaimed any implied warranties.

First, it is clear that this writing has no applicability to General Motors as it is in favor of only the automobile dealer, CCO. Thus appellees' warranty claim against General Motors for breach of its express warranty and any implied warranties which may...