Grosse Pointe Law Firm, PC v. Jaguar Land Rover N. Am., LLC.

• Decision Date: 22 September 2016
• Docket Number: Docket No. 326312.
• Citation: 317 Mich.App. 395,894 N.W.2d 700
• Parties: The GROSSE POINTE LAW FIRM, PC, v. JAGUAR LAND ROVER NORTH AMERICA, LLC.
• Court: Court of Appeal of Michigan — District of US

317 Mich.App. 395

894 N.W.2d 700

The GROSSE POINTE LAW FIRM, PC,

v.JAGUAR LAND ROVER NORTH AMERICA, LLC.

Docket No. 326312.

Court of Appeals of Michigan.

Submitted Aug. 10, 2016, at Detroit.

Decided Sept. 22, 2016, at 9:10 a.m. Leave to appeal sought.

O'Reilly Rancilio, PC (by Lawrence M. Scott ), and Alan H. Broad for plaintiff.

The Erskine Law Group, PC, Rochester (by Scott M. Erskine and Melissa Trpcevski ), for defendants.

Before: BECKERING, P.J., and CAVANAGH and GADOLA, JJ.

OPINION OF THE COURT

GADOLA, J.¹

This case requires us to examine the distinction between warranties and remedies under Michigan's Uniform Commercial Code (UCC), MCL 440.1101 et seq. Plaintiff, The Grosse Point Law Firm, PC, appeals by leave granted¹ orders granting the motions for summary disposition filed by defendants Jaguar Land Rover North America, LLC (JLRNA), Rover Motors of Farmington Hills LLC (Rover Motors), and Jaguar/Land Rover of Macomb, LLC (Land Rover of Macomb). We reverse and remand for further proceedings.

I. BACKGROUND FACTS

Plaintiff purchased a vehicle from Rover Motors on December 30, 2005. The vehicle was manufactured by JLRNA. At the time of purchase, JLRNA issued a document titled "Vehicle Warranties," which stated the following:

Land Rover North America, Inc., warrants that during the warranty period, if a Land Rover vehicle is properly operated and maintained, repairs required to correct defects in factory-supplied materials or factory workmanship will be performed without charge upon presentment for service; any component covered by this warranty found to be defective in materials or workmanship will be repaired, or replaced, without charge.

* * *

The warranty period for the vehicle begins on the date of the first retail sale, or on the date of entry into demonstrator service. The basic warranty period is for four (4) years or until the vehicle has been driven 50,000 miles, whichever occurs first.

Plaintiff brought the vehicle to Rover Motors and Land Rover of Macomb for repairs several times. In 2011 and 2012, plaintiff attempted to negotiate for JLRNA to repurchase the vehicle, but the parties failed to reach an agreement regarding the price. On November 28, 2012, plaintiff traded in the vehicle and filed the instant lawsuit.

In its lawsuit, plaintiff raised, among others, claims for breach of warranty and violation of the Magnuson–Moss Warranty Act (MMWA), 15 U.S.C. 2301 et seq. Defendants moved for summary disposition under MCR 2.116(C)(7),² arguing that plaintiff's breach of warranty claims were time-barred by MCL 440. 2725, which provides a four-year limitations period for claims involving breach of any contract for the sale of goods. MCL 440.2725(2) states that a breach of warranty claim accrues "when tender of delivery is made, except ... where a warranty explicitly extends to future performance of the goods...." MCL 440.2725(2). Plaintiff responded that "[p]romises to repair or replace refer to the future performance of the warrantor manufacturer, not to the future performance of the vehicle," so a claim for breach of a repair-or-replace warranty accrues when the warrantor fails to repair a defect, rather than on tender of delivery. The trial court granted defendants' motion under MCR 2.116(C)(7), concluding that plaintiff's claims were time-barred under MCL 440.2725. In doing so, the court acknowledged that other jurisdictions "recognize[ ] a separate repair and replace limited warranty that accrues at the time the repair is attempted," but reasoned that without precedential caselaw on the subject in Michigan, plaintiff's claims accrued on tender of delivery.

II. STANDARDS OF REVIEW

We review de novo a trial court's decision on a motion for summary disposition. King v. Reed, 278 Mich.App. 504, 513, 751 N.W.2d 525 (2008). MCR 2.116(C)(7)"permits summary disposition where the claim is barred by an applicable statute of limitations." Nuculovic v. Hill, 287 Mich.App. 58, 61, 783 N.W.2d 124 (2010). When reviewing such a motion, we "must accept all well-pleaded factual allegations as true and construe them in favor of the plaintiff, unless other evidence contradicts them." Dextrom v. Wexford Co., 287 Mich.App. 406, 428, 789 N.W.2d 211 (2010). If the parties submit any affidavits, depositions, admissions, or other documentary evidence, we "consider them to determine whether there is a genuine issue of material fact." Id. at 429, 789 N.W.2d 211. Only if no facts are in dispute and reasonable minds could not differ regarding the legal effect of those facts should the trial court grant a motion for summary disposition under MCR 2.116(C)(7). Id.

We also review questions of statutory interpretation de novo. Grimes v. Mich. Dep't of Transp., 475 Mich. 72, 76, 715 N.W.2d 275 (2006). When construing statutory provisions, courts must interpret the words of the statute in light of their ordinary meaning and read them in context. Johnson v. Recca, 492 Mich. 169, 177, 821 N.W.2d 520 (2012). Likewise, courts must "give effect to every word, phrase, and clause in a statute and avoid an interpretation that would render any part of the statute surplusage or nugatory." State Farm Fire & Cas. Co. v. Old Republic Ins. Co., 466 Mich. 142, 146, 644 N.W.2d 715 (2002).

III. DISCUSSION

Article 2 of the UCC, MCL 440.2101 through MCL 440.2725, governs the relationship between parties involved in contracts for the sale of goods. MCL 440.2102 ; Neibarger v. Universal Coops, Inc., 439 Mich. 512, 519–520, 486 N.W.2d 612 (1992). MCL 440.2725 provides the limitations period for claims involving obligations arising under Article 2 and states, in pertinent part, the following:

(1) An action for breach of any contract for sale must be commenced within 4 years after the cause of action has accrued. By the original agreement the parties may reduce the period of limitation to not less than 1 year but may not extend it.

(2) A cause of action accrues when the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.

Therefore, a cause of action for breach of a sales contract under Article 2 accrues when the breach occurs, unless the cause of action is for breach of warranty, in which case the claim accrues either on tender of delivery or, if the warranty explicitly extends to future performance of the goods, when the breach is, or should have been, discovered.

The trial court concluded that the repair-or-replace provision at issue in this case constituted a warranty for purposes of MCL 440.2725(2), but determined that the warranty did not "explicitly extend[ ] to future performance of the goods," so plaintiff's cause of action accrued on tender of delivery. For a warranty to extend to future performance, it must expressly define the future period to which it applies. Sherman v. Sea Ray Boats, Inc., 251 Mich.App. 41, 57, 649 N.W.2d 783 (2002). Further, it must explicitly provide that the goods warranted will be free from defects for the specified period. See Executone Business Sys. Corp. v. IPC Communications, Inc, 177 Mich.App. 660, 667–669, 442 N.W.2d 755 (1989) (holding that a warranty extended to future performance when it "explicitly provided freedom 'from defects for a period of one year from the date of shipment' ").

The repair-or-replace provision in this case does not expressly state that plaintiff's vehicle will be free from defects, but rather states that the manufacturer will repair or replace any defects that arise during the specified period. Accordingly, we agree with the trial court that the provision does not "explicitly extend[ ] to future performance of the goods." However, the question remains whether a repair-or-replace provision, standing alone, is a "warranty" for purposes of MCL 440.2725(2).

In Centennial Ins. Co. v. Gen. Electric Co., 74 Mich.App. 169, 170–171, 253 N.W.2d 696 (1977),³ this Court seemingly treated a repair-or-replace provision in a contract for the sale of goods as a warranty within the scope of Article 2, but not as a warranty extending to future performance for purposes of MCL 440.2725(2). In Centennial, the buyer brought a breach of warranty claim against the seller more than four years after receiving the goods at issue. Id. at 170–171, 253 N.W.2d 696. The buyer argued that the limitations period for bringing its claim had not expired because the warranty contained a one-year repair-or-replace provision, which fell within the exception of MCL 440.2725(2) for warranties "explicitly extend[ing] to future performance of the goods." Id. at 171, 253 N.W.2d 696. The contract provision at issue in Centennial stated the following:

"The Company warrants to the Purchaser that the equipment to be delivered hereunder will be free from defects in material, workmanship and title and will be of the kind and quality designated or described in the contract.... If it appears within one year from the date of shipment by the Company that the equipment delivered hereunder does not meet the warranties specified above and the Purchaser notifies the Company promptly, the Company shall thereupon correct any defect, including non-conformance with the specifications, at its option, either by repairing any defective part or parts or by making available at the Company's plant, a repaired or replacement part." [id. at 171 n. 1 (emphasis omitted).] ^{[4 ]}

Rejecting the buyer's claim, this Court held that the one-year repair-or-replace provision did not constitute "a warranty for future performance, but rather, a specification of the remedy to which [the] buyer is entitled should breach be discovered within the first year." Id. at 171, 253 N.W.2d 696. Accordingly, the Court held that the buyer's claim was time-barred by MCL 440.2725. Id. at...