Fode v. Capital RV Center, Inc.

• Decision Date: 26 March 1998
• Docket Number: No. 970240,970240
• Citation: 575 N.W.2d 682
• Parties: 36 UCC Rep.Serv.2d 696, 1998 ND 65 Albert and Birdie FODE, Plaintiffs, Appellees and Cross-Appellants, v. CAPITAL RV CENTER, INC., Coachmen Recreational Vehicle Company, Defendants, Appellants and Cross-Appellees, and Metropolitan Federal Bank, Defendant. Civil
• Court: North Dakota Supreme Court

Page 682

575 N.W.2d 682

36 UCC Rep.Serv.2d 696, 1998 ND 65

Albert and Birdie FODE, Plaintiffs, Appellees and Cross-Appellants, v. CAPITAL RV CENTER, INC., Coachmen Recreational Vehicle Company, Defendants, Appellants and Cross-Appellees and Metropolitan Federal Bank, Defendant.

Civil No. 970240.

Supreme Court of North Dakota.

March 26, 1998.

Robert V. Bolinske, Bismarck, for plaintiffs, appellees, and cross-appellants.

J. Philip Johnson, of Wold Johnson, P.C., Fargo, and Daniel E. Buchanan, of Buchanan Law Office, Jamestown, for defendants, appellants, and cross-appellees.

Sandstrom, Justice.

¶1 Coachmen Recreational Vehicle Co. and Capital RV Center, Inc., (defendants) appealed from a judgment entered upon a jury verdict granting Albert and Birdie Fode revocation of their acceptance of a motor home, finding Coachmen breached its warranty to Fodes, and awarding Fodes damages, and from an order denying the defendants' motion for judgment as a matter of law or for a new trial. Fodes cross-appealed from the judgment. We hold Fodes were entitled to revoke acceptance of the motor home against both defendants, and the jury verdict is supported by substantial evidence. We also hold the trial court abused its discretion in awarding Fodes attorney fees without affording the defendants an opportunity to be heard. We affirm the judgment, reverse the award of attorney fees, and remand for reconsideration of the amount of the attorney fee award.

I

¶2 In January 1992, Capital sold Fodes a motor home manufactured by Coachmen. Capital's sales contract with Fodes said the motor home was "sold new with sportscoach" manufacturer warranty and, in bold print included language stating Capital disclaimed all warranties:

"MANUFACTURER'S WARRANTY: ANY WARRANTY ON ANY NEW VEHICLE OR USED VEHICLE STILL SUBJECT TO A MANUFACTURER'S WARRANTY IS THAT MADE BY THE MANUFACTURER ONLY. THE SELLER HEREBY DISCLAIMS ALL WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ANY STATEMENT CONTAINED HEREIN DOES NOT APPLY WHERE PROHIBITED BY LAW."

¶3 Coachmen's "new recreational vehicle limited warranty" for the motor home said:

"COVERAGE PROVIDED

"Coachmen Recreational Vehicle Company will, for one year from the retail purchase date, or for the first 15,000 miles of use, whichever comes first, make repairs which are necessary because of defects in material or workmanship. We will repair or replace any defective part at no cost to you. Because of design changes and improvements, we may substitute parts or components of substantially equal quality. This warranty covers you, as the first retail purchaser of our new product, from an authorized Coachmen dealer.

"TO OBTAIN SERVICE

"For warranty service, take the product, at your expense, to an authorized Coachmen dealer or service center.

* * * * * *

"WE SHALL NOT BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES, such as expenses for transportation, lodging, loss or damage to person property, loss of use of your product, inconvenience, or loss of income. Some states do not allow exclusion or limitation of incidental or consequential damages, so the above limitation or exclusion may not apply to you.

" * * * * * *

"IMPLIED WARRANTIES, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ARE LIMITED IN DURATION TO THE TERM OF THIS WRITTEN WARRANTY. Some states do not allow limitations on how long an implied warranty lasts, so the above limitation may not apply to you.

"This warranty gives you specific legal rights, and you may also have other rights which vary from state to state."

Albert Fode and Capital signed a "warranty registration," which said the motor home was warranted in the name of Capital as the dealer and certified "all warranties [had been] clearly explained." Fodes, however, testified Coachmen's warranty was not delivered to them.

¶4 According to Fodes, they experienced numerous problems with the motor home, including several malfunctions of the electrical system, defective shocks and equalizer bar, and insufficient power to drive the vehicle faster than 65 miles per hour. They testified those problems effectively precluded them from using the motor home for their intended purpose. Finally, in January 1993, Fodes were unable to start the motor home for several days, and they requested revocation of their acceptance. The defendants refused Fodes' request.

¶5 Fodes sued Capital and Coachmen for revocation of acceptance and breach of warranty. The trial court granted Capital summary judgment on Fodes' breach of warranty claim against it. In Fodes' revocation of acceptance claim, a jury awarded them $9,600 plus interest from Capital and $20,000 plus interest from Coachmen. In Fodes' breach of warranty claim against Coachmen, the jury awarded them $5,000 plus $1,500 in incidental and $5,000 in consequential damages. The jury also decided Fodes were entitled to attorney fees on their breach of warranty claim against Coachmen.

¶6 Judgment was entered against Capital for $12,225.45 "plus attorney's fees to be determined by the court" and against Coachmen for $33,139.75 "plus attorney's fees to be determined by the court." ¹ The defendants moved for judgment as a matter of law, or, alternatively, for a new trial. Fodes asked the trial court to decide the amount of their attorney fee award. The trial court concluded some of the jury instructions were erroneous, but allowed Fodes to elect either to accept the jury's verdict, or to receive a new trial. Fodes accepted the jury verdict. At the defendants' request, the court deferred ruling on the amount of Fodes' attorney fee award pending resolution of the defendants' appeal. The defendants appealed, and Fodes cross-appealed.

¶7 We entered a limited remand to the trial court for an expedited decision on the amount of Fodes' attorney fee award, and we retained jurisdiction of the appeal under N.D.R.App.P. 35(b). The trial court awarded Fodes $27,358.69 in attorney fees for proceedings through this appeal and certified the record back to this Court.

¶8 The trial court had jurisdiction under N.D. Const. Art. VI, § 8, and N.D.C.C. § 27-05-06. The appeal was timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const. Art. VI, §§ 2 and 6, and N.D.C.C. § 28-27-01.

II

¶9 The defendants contend Fodes were not, as a matter of law, entitled to revoke acceptance against Coachmen. The defendants argue Coachmen is not a "seller" under the Uniform Commercial Code (N.D.C.C. Title 41), and a buyer generally may revoke acceptance of goods only against an immediate seller under N.D.C.C. § 41-02-71 (U.C.C. § 2-608).

¶10 Section 41-02-71, N.D.C.C., authorizes a buyer to revoke acceptance of nonconforming goods:

"Revocation of acceptance in whole or in part.

"1. The buyer may revoke his acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to him if he has accepted it:

"a. On the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or

"b. Without discovery of such nonconformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller's assurances.

"2. Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. It is not effective until the buyer notifies the seller of it.

"3. A buyer who so revokes has the same rights and duties with regard to the goods involved as if he had rejected them."

¶11 Under N.D.C.C. § 41-02-71, a buyer may revoke acceptance of nonconforming goods if "the seller's" assurances induced the buyer's acceptance, and revocation is not effective until the buyer notifies "the seller." Section 41-02-03(1)(d), N.D.C.C. (U.C.C. § 2-103(1)(d)), defines seller as "a person who sells or contracts to sell goods."

¶12 Under those U.C.C. provisions, a buyer generally may revoke acceptance of goods only against its own seller. See Voytovich v. Bangor Punta Operations, Inc., 494 F.2d 1208, 1211 (6th Cir.1974); Seekings v. Jimmy GMC of Tucson, Inc., 130 Ariz. 596, 638 P.2d 210, 214 (1981); Conte v. Dwan Lincoln-Mercury, Inc., 172 Conn. 112, 374 A.2d 144, 149-50 (1976); Edelstein v. Toyota Motors Dist., 176 N.J.Super. 57, 422 A.2d 101, 104-05 (1980); Henderson v. Chrysler Corp., 191 Mich.App. 337, 477 N.W.2d 505, 508 (1991); Wright v. O'Neal Motors, Inc., 57 N.C.App. 49, 291 S.E.2d 165, 169 (1982); Noice v. Paul's Marine & Camping Center, Inc., 5 Ohio App.3d 232, 451 N.E.2d 528, 532 (1982); Gasque v. Mooers Motor Car Co., Inc., 227 Va. 154, 313 S.E.2d 384, 390 (1984). See generally 1 White & Summers, Uniform Commercial Code, § 8-4 (4th ed.1995); 4 Anderson, Uniform Commercial Code § 2-608:46 et seq. (1997); 67A Am.Jur.2d Sales, § 1195 (1985).

¶13 Under different formulations of an exception to the general rule, however, some courts have allowed a buyer to revoke acceptance against a non-privity manufacturer if the manufacturer has expressly warranted goods to the ultimate buyer. See Durfee v. Rod Baxter Imports, Inc., 262 N.W.2d 349 (Minn.1977); Volkswagen, Inc. v. Novak, 418 So.2d 801 (Miss.1982); Ventura v. Ford Motor Corp., 180 N.J.Super. 45, 433 A.2d 801 (1981); Gochey v. Bombardier, Inc., 153 Vt. 607, 572 A.2d 921, 924 (1990). See generally 1 White & Summers at § 8-4; 67A Am.Jur.2d Sales at § 1195.

¶14 This Court has not directly addressed whether a buyer may revoke acceptance of goods against a non-privity manufacturer. See Haggard v. OK RV Sales, 315 N.W.2d 475, 477 (N.D.1982) (reversing directed verdict for seller because there were issues of fact about alleged defects in motor home); Erling v. Homera, Inc., 298 N.W.2d 478, 484 (N.D.1980) (affirming judgment allowing buyers of mobile home to revoke...