Dieter v. Chrysler Corp.

• Decision Date: 26 May 2000
• Docket Number: No. 98-0958.,98-0958.
• Parties: Kerry S. DIETER and Donna D. Hermes, Plaintiffs-Appellants-Petitioners, v. CHRYSLER CORPORATION, a foreign corporation, Defendant-Respondent.
• Court: Wisconsin Supreme Court

234 Wis.2d 670

2000 WI 45

610 N.W.2d 832

Kerry S. DIETER and Donna D. Hermes, Plaintiffs-Appellants-Petitioners, v. CHRYSLER CORPORATION, a foreign corporation, Defendant-Respondent.

No. 98-0958.

Supreme Court of Wisconsin.

Oral argument February 9, 2000.

Decided May 26, 2000.

For the plaintiffs-appellants-petitioners there were briefs by William S. Pocan, Vincent P. Megna, Terrence M. Polich and Jastroch & LaBarge, S.C., Waukesha, and oral argument by Vincent P. Megna.

For the defendant-respondent there was a brief by Shawn M. Govern and Petrie & Stocking, S.C., Milwaukee, and oral argument by Shawn M. Govern.

Amicus Curiae brief by Stephen E. Meili and Lawrence A. Towers, Madison, for the Center for Public Representation, Inc.

¶ 1. DIANE S. SYKES, J.

This is a "lemon law" case. The issue is whether consumers who are aware of defects in a motor vehicle at the time they accept delivery may nevertheless sue the vehicle manufacturer under the lemon law when repair efforts fail. Kerry Dieter and Donna Hermes purchased a Chrysler truck and ordered some accessories installed before delivery. The dealer damaged the truck in the process of installing the accessories, but assured the buyers that the damage—scratches in the truck's finish—would be repaired. Dieter and Hermes accepted delivery, and when repair attempts were unsuccessful, sought relief from Chrysler under the lemon law.

¶ 2. The court of appeals held that because the lemon law was meant to protect consumers from hidden defects discovered after delivery of a new vehicle, Dieter and Hermes, who knew about the paint scratches before delivery of the truck, could not recover. The lemon law, however, contains no "hidden defect" limitation on its applicability. It also specifically provides that its protections cannot be waived. So we reverse.

¶ 3. The relevant facts are undisputed. On December 12, 1995, Kerry Dieter and Donna Hermes signed a contract to purchase a 1996 Dodge Ram pickup truck from Frascona Chrysler-Plymouth-Dodge, an authorized Chrysler dealership. The contract also provided for the purchase and installation of several after-market accessories for the truck, including a tonneau (truck box) cover, bug deflector, fender shield, and rust-proofing. These accessories were all Chrysler-approved MOPAR¹ parts. Frascona was to install the accessories before Dieter and Hermes took delivery of the truck. At the time of sale, the truck's finish was not scratched.

¶ 4. During the installation of the accessories, the truck's paint finish was scratched in many places, apparently by Frascona's technician. On December 16, 1995, when Dieter and Hermes returned to pick up their truck, they discovered the scratches and announced their intention to cancel the sale. A Frascona representative informed them that if they cancelled the sale, they would forfeit their deposit.² The representative assured them that the damage to the truck's finish would be repaired. After weighing their options, Dieter and Hermes took delivery of the truck.

¶ 5. In April of 1996, Frascona arranged for B&G Body Repair, Inc. to repaint the truck, at Chrysler's expense. Dieter and Hermes told B&G not to "buff" the finish after repainting, but B&G did so anyway. The buffing left "swirls" in the truck's finish and Dieter and Hermes were unhappy with the result. The record reflects that Frascona made at least three more attempts to fix the truck's finish (again at Chrysler's expense), the last in October 1996.

¶ 6. Dissatisfied with the unsuccessful attempts to solve the problem, Dieter and Hermes sought relief under the lemon law. On November 19, 1996, their attorneys issued a demand letter to Chrysler stating that the truck qualified as a "lemon" under Wis. Stat. § 218.015 (1993-94)³ and asked that Chrysler repurchase the vehicle as provided by the lemon law. Chrysler refused. On February 3, 1997, Dieter and Hermes sued Chrysler in Waukesha County Circuit Court, claiming: 1) violation of the lemon law, Wis. Stat. § 218.015; 2) violation of Wis. Stat. § 402.608; 3) relief under Wis. Stat. § 402.719; 4) breach of contract; and 5) violation of the Magnuson-Moss Warranty Act (15 U.S.C. §§ 2301-2312).

¶ 7. The warranty on the truck provided coverage for "any item on [the] vehicle...that's defective in material, workmanship, or factory preparation." The warranty contained exclusions for damage to the truck due to accidents, abuse, negligence, misuse, repairs necessitated by improper maintenance, modification of the truck, or the installation of non-Chrysler parts. There was an exception to the exclusion, however, for "genuine MOPAR accessories approved by Chrysler for dealer installation."

¶ 8. Chrysler moved for summary judgment, claiming initially that the accessories installed by Frascona were not Chrysler MOPAR parts covered by the warranty, and therefore the lemon law was not applicable under Malone v. Nissan Motor Corp., 190 Wis. 2d 436, 442, 526 N.W.2d 841 (Ct. App. 1994).⁴ The circuit court, the Honorable Marianne E. Becker, initially granted summary judgment for Chrysler. Counsel for Dieter and Hermes objected that Chrysler had not proven that the accessories were not Chrysler MOPAR parts. The circuit court asked for affidavits on the issue and scheduled a second hearing. ¶ 9. At the second hearing, the circuit court concluded that whether or not the parts in question were Chrysler MOPAR parts, the warranty and thus the lemon law were still inapplicable because the parts were not the problem, the installation was, and that was the responsibility of the dealer, not the manufacturer. The circuit court again granted summary judgment for Chrysler, and Dieter and Hermes appealed.⁵

¶ 10. On appeal, Chrysler conceded that the accessories were in fact MOPAR parts, but continued to argue that it was not responsible for damage caused by their negligent installation by the dealer. The court of appeals ordered supplemental briefs on the issue of the applicability of the lemon law when the consumer is aware of the defect at the time of delivery.

¶ 11. The court of appeals affirmed, but decided the case on different grounds than the circuit court. Dieter v. Chrysler Corp., 229 Wis. 2d 481, 600 N.W.2d 201 (Ct. App. 1999). The court of appeals rejected Chrysler's argument under Malone, apparently because it was now established that the accessories were MOPAR parts covered by the warranty, and Malone was thus distinguishable. Id. at 484.

¶ 12. However, the court of appeals concluded that the purpose of the lemon law is to protect consumers from hidden defects in their new vehicles and therefore the lemon law is not applicable where the consumer is aware of nonconformities before delivery, but accepts the vehicle anyway. Id. at 484-86. Because Dieter and Hermes knew about the scratches when they took delivery of the truck, the court concluded that the lemon law did not apply. Id. at 485. The court suggested that any remedy under these circumstances was with the dealer, not the manufacturer. Id. at 488.⁶

¶ 13. We accepted review. Dieter and Hermes argue that the court of appeals has added a "hidden defect" or "lack of knowledge" element to the lemon law that is not contained in its language and not consistent with its purpose.

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¶ 14. This case was decided on summary judgment, which we review independently, guided by the same methodology as the circuit court. Malone, 190 Wis. 2d at 441. Summary judgment is appropriate where there is no genuine issue of material fact in dispute and the moving party is entitled to judgment as a matter of law. Wis. Stat. § 802.08(2).

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¶ 15. Our first task is to determine whether Chrysler's express warranty covers the scratches to the truck that resulted from the dealer's installation of the MOPAR parts, since the lemon law comes into play only where there is manufacturer warranty coverage. Wis. Stat. § 218.015(2)(a); Malone, 190 Wis. 2d at 442. We review the interpretation of a warranty or any other contract de novo, and in doing so, our primary purpose is to ascertain and give effect to the intent of the parties. Gorton v. Hostak, Henzl & Bichler, 217 Wis. 2d 493, 502, 577 N.W.2d 617 (1998). We look first for that intent in the plain language of the warranty. Where the terms are unambiguous, we must construe the warranty as it is written. Dykstra v. Arthur G. McKee & Co., 92 Wis. 2d 17, 38, 284 N.W.2d 692 (Ct. App. 1979), affirmed,100 Wis. 2d 120, 301 N.W.2d 201 (1981). Contractual language is ambiguous only when it is "reasonably and fairly susceptible to more than one construction." Jones v. Jenkins, 88 Wis. 2d 712, 722, 277 N.W.2d 815 (1979). If the language is ambiguous, we construe the ambiguities against the drafter. Strong v. Shawano Canning Co., 13 Wis. 2d 604, 609, 109 N.W.2d 355 (1961).

¶ 16. Chrysler's warranty provides:

WHAT'S COVERED...The `Basic Warranty' covers the cost of all parts and labor needed to repair any item on your truck...that's defective in material, workmanship, or factory preparation. You pay nothing for these repairs. The `Basic Warranty' covers every Chrysler supplied part of your truck EXCEPT its tires and cellular telephone.

There is an exclusion for non-Chrysler parts and repairs occasioned by the installation of non-Chrysler parts:

WHAT'S NOT COVERED...[Y]our Chrysler Warranties don't cover any part which is not a Chrysler supplied part. These warranties also don't cover the costs of any repairs or adjustments that might be caused by or needed because of the use or installation of non-Chrysler parts, equipment, materials or additives.

(Emphasis added.) But there is an exception to the exclusion:

Examples of the types of alterations that are not covered include, but are not limited to the installation of accessories (except for genuine MOPAR accessories approved by Chrysler for dealer installation) such as sun roofs, window tinting, trailer hitches, theft alarm systems, rustproofing or other

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