City Nat. Bank of Charleston v. Wells

Citation181 W.Va. 763,384 S.E.2d 374
Decision Date02 August 1989
Docket NumberNo. 18409,18409
CourtSupreme Court of West Virginia
Parties, 10 UCC Rep.Serv.2d 798 The CITY NATIONAL BANK OF CHARLESTON v. Leonard B. WELLS v. TOYOTA MOTOR SALES, et al., and Bud Young Toyota, Inc.

Syllabus by the Court

1. "W.Va.Code, 46-2-608, requires several conditions to be met before a buyer may revoke his acceptance of goods for nonconformity to a contract of sale: (1) the nonconformity must have substantially impaired the value of the goods to the buyer; (2) the goods must have been accepted on the reasonable assumption that the nonconformity would be cured, and it was not, or accepted without discovery of the nonconformity, either because of the difficulty of discovery or because of the seller's assurances; (3) the revocation must have occurred within a reasonable time after discovery of the defect and before any substantial change in the condition of the goods; and (4) the revocation is not effective until the buyer has notified the seller. A buyer making a revocation after acceptance on these terms has the same rights and duties under the Uniform Commercial Code as one who had rejected the goods originally." Syllabus Point 1, Kesner v. Lancaster, 180 W.Va. 607, 378 S.E.2d 649 (1989).

2. Where delay in revoking acceptance is attributable to efforts or promises to correct the defect or nonconformity in the goods, revocation even after a relatively lengthy period of time may still be timely within the statute. W.Va.Code, 46-2-608(2).

3. As a general rule, a buyer who justifiably revokes his acceptance of nonconforming goods is entitled to recover any incidental and consequential damages flowing therefrom. Consequential damages are described in W.Va.Code, 46-2-715(2):

"Consequential damages resulting from the seller's breach include

"(a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and

"(b) injury to person or property approximately resulting from any breach of warranty."

4. To recover consequential damages under W.Va.Code, 46-2-715(2), the buyer must establish: (1) causation, (2) foreseeability, (3) reasonable certainty as to amount, and (4) that he is not barred by mitigation doctrines. The burden of proving consequential damages is on the buyer.

5. W.Va.Code, 17A-6A-15, requires an automobile manufacturer or distributor to indemnify and hold harmless its dealers against any judgment for damages, including court costs and attorney's fees, resulting from defects in the design, assembly, or manufacture of a motor vehicle which are beyond the control of the dealer. Where, however, the dealer fails or refuses to correct easily remediable defects, he is not entitled to the benefit of this statutorily created indemnity right. Whether a dealer is entitled to indemnity in such circumstances is ultimately a question of fact for the jury.

6. A consumer who prevails on a claim for revocation of acceptance and cancellation of a contract of sale in an action for breach of the seller's warranties under the Uniform Commercial Code, W.Va.Code, 46-2-101, et seq., may recover reasonable attorney's fees under the Magnuson-Moss Warranty--Federal Trade Commission Improvement Act, 15 U.S.C. § 2310(d)(2) (1975).

7. "In an action founded on contract, a claimant is entitled to have the jury instructed that interest may be allowed on the principal due, W.Va.Code, 56-6-27 [1923], but is not entitled to the mandatory award of interest contemplated by W.Va.Code, 56-6-31 [1981], since this statute does not apply where the rule concerning interest is otherwise provided by law." Syllabus Point 4, Thompson v. Stuckey, 171 W.Va. 483, 300 S.E.2d 295 (1983).

Gregory E. Elliott, Hann & Elliott, Charleston, for Bud Young.

Otis O'Connor, Charleston, for City Nat. Bank.

C. Page Hamrick, III, Charleston, for Leonard Wells.

G.W. Lavendar, III, Charleston, for Mid Atlantic Toyota Distr. and Toyota Motor Sales.

MILLER, Justice:

This is an appeal by Bud Young Toyota, Inc. (defendant) from a final order of the Circuit Court of Kanawha County, dated June 29, 1987, which upheld a jury verdict in the amount of $10,333.00 in favor of Leonard B. Wells (plaintiff) in a breach of warranty action. The dispute between these parties arose out of the plaintiff's purchase of an allegedly defective automobile. The defendant asserts on appeal (1) that the trial court erred in not ruling that the plaintiff was not entitled to cancel the contract of sale, (2) that the trial court erred in allowing the jury to consider the alleged impairment of the plaintiff's credit rating as an element of consequential damages, (3) that the verdict was excessive, and (4) that the trial court erred in not ordering the vehicle manufacturer and distributor to indemnify the defendant. On cross-assignment of error, the plaintiff asserts that the trial court erred in refusing to award him prejudgment interest on the verdict and attorney's fees. We find no error warranting reversal of the jury's verdict, but we remand for an award of attorney's fees.

The defendant was a retail automobile dealership located in Nitro, Kanawha County. On September 28, 1982, the plaintiff purchased a 1982 four-wheel-drive Toyota truck from the defendant for $8,520.00. Before purchasing the truck, the plaintiff, a stonemason, advised the salesman that he needed the vehicle for use in his business. The plaintiff gave a $1,000.00 downpayment, and the remainder of the transaction was financed by the defendant. The defendant and the plaintiff executed a document entitled "MOTOR VEHICLE CONTRACT, SECURITY AGREEMENT, NOTE AND DISCLOSURES," which listed the plaintiff's total obligation, with finance and other charges, as $11,242.56. On September 30, 1982, the defendant assigned this instrument to the City National Bank of Charleston (Bank).

The truck was protected by a limited twelve-month/12,500-mile warranty issued by the manufacturer, Toyota Motor Sales, U.S.A., Inc. (Toyota). The evidence at trial shows that shortly after the plaintiff took possession of the truck, the engine began to "miss," and the vehicle began to emit heavy, blue smoke when driven uphill. As required under the terms of the warranty, the plaintiff returned the truck to the defendant for repairs. The defendant's employees cleaned and tested the spark plugs and made a number of minor adjustments to the engine. The problems persisted, however, and the plaintiff testified that he returned to the defendant on at least two other occasions seeking to have them corrected. The plaintiff testified that on the last occasion, one of the defendant's employees had become rude and that he had left without further repairs.

In March, 1983, the plaintiff took the truck to another dealership, Tag Galyean Imports, for repairs. The Tag Galyean mechanics corrected the problem of the engine "missing" by replacing the spark plugs, but were unable to correct the smoke emissions. After another unsuccessful attempt to have the vehicle repaired, the plaintiff left the truck at Tag Galyean Imports on June 2, 1983, with instructions to "call me when it is fixed." The truck had been driven approximately 12,000 miles at that time.

The plaintiff testified that when he checked with the Tag Galyean service manager in the following weeks, he was told that parts would have to be ordered from Japan, that the wrong parts had been sent, and that repairs would require authorization from the manufacturer or distributor. The plaintiff testified that he telephoned the distributor, Mid-Atlantic Toyota Distributors, Inc. (Mid-Atlantic), several times without getting authorization and that it was only after officers of the Bank interceded on his behalf that the repairs were authorized.

At the end of June, 1983, upon being advised that the truck would not be repaired in the near future, the plaintiff purchased a new vehicle. The plaintiff advised the Bank that he intended to cease payments on the Toyota truck.

At the end of August, 1983, Tag Galyean Imports advised the plaintiff that the Toyota truck had been repaired. The work order indicated that the engine had been rebuilt and that the oil rings and guides in the cylinder heads had been replaced.

By letter dated September 3, 1983, the Bank advised the plaintiff that it had repossessed the vehicle and that it would be sold to satisfy the outstanding indebtedness of $7,418.09. By a subsequent letter dated September 27, 1983, the Bank advised the plaintiff that the vehicle had been sold for $6,200.00, leaving a deficiency of $1,329.57 for which he was responsible.

In November, 1983, the Bank instituted proceedings against the plaintiff in the Circuit Court of Kanawha County to recover the deficiency. The plaintiff responded by filing a third-party complaint against Toyota, Mid-Atlantic, and the defendant, seeking cancellation of the contract of sale and damages for breach of express and implied warranties under the Uniform Commercial Code (UCC), W.Va.Code, 46-2-101, et seq., and the Magnuson-Moss Warranty--Federal Trade Commission Improvement Act (Magnuson-Moss Act),15 U.S.C. § 2310 (1975). The plaintiff also filed a counterclaim against the Bank on similar grounds on the authority of W.Va.Code, 46A-2-103. 1 The defendant, Bud Young Toyota, Inc., subsequently filed a cross-claim against Toyota and Mid-Atlantic, alleging that any injury or damage suffered by the plaintiff was a result of a defect in the design or manufacture of the vehicle and seeking indemnification from them for any judgment entered in favor of the plaintiff.

Prior to trial, the Bank, Toyota, and Mid-Atlantic settled their claims with the plaintiff and were dismissed from his case with prejudice. On April 6, 1987, the case proceeded to trial on the plaintiff's claims against the defendant. The jury returned a verdict in favor of ...

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