Horton Homes v. Brooks, 100346

Decision Date13 July 2001
Docket Number100346
PartiesHorton Homes, Inc., and Southern Manufactured Homes, Inc. v. Scott Brooks 1000346 SPECIAL TERM, 2001 SUPREME COURT OF ALABAMA 0
CourtSupreme Court of Alabama

Appeal from Elmore Circuit Court (CV-98-238)

HOUSTON, Justice.

In July 1998, Scott Brooks sued Southern Manufactured Homes, Inc., and Horton Homes, Inc. (hereinafter together referred to as "Horton Homes"), seeking damages based on claims that arose out of his purchase of a manufactured home. The case proceeded to trial, and the jury awarded Brooks compensatory damages of $150,000 and punitive damages of $600,000.

Horton Homes appeals from the judgment entered on the jury's verdict, raising several issues: (1) whether the trial court erred in allowing the breach-of-implied-warranty claim to go to the jury; (2) whether the court erred in allowing the wanton-repair claim and the related punitive-damages issue to go to the jury; (3) whether the court erred in allowing Brooks's attorney to question the Horton Homes representative about other lawsuits and consumer complaints that had been filed against Horton Homes; (4) whether the $150,000 award of compensatory damages was excessive; (5) whether the court erred in assessing, against Horton Homes, attorney fees in the amount of $34,612.50 and costs in the amount of $5,340.03; and (6) whether the $600,000 award of punitive damages was excessive.

In August 1997, Brooks specially ordered a manufactured home from Factory Direct Homes, Inc. ("Factory Direct Homes"), a dealer in Montgomery. Horton Homes manufactured the home for Brooks. In September 1997, the home was delivered. Brooks executed a purchase contract and financed the purchase of the home. The purchase price was $63,414.90.

In October 1997, Brooks and his family moved into the home. They immediately began experiencing problems -- for example, water from the washer would back up into the kitchen sink when it was discharged from the washer; water dripped under the house; floors were not level; and the shower stall cracked. Additional problems soon developed -- when the kitchen cabinets began to warp and come apart, Brooks investigated and found that the dishwasher was leaking because a hole had been drilled through it; the floor buckled near the washer; plasterboard and floor covering in the utility room turned different colors; water leaked in the wall between the kitchen and the utility room; and the furnace was leaning.

Brooks reported the problems to Factory Direct Homes, which corrected some of the problems (replacing the shower stalls and the dishwasher) and attempted to correct the other problems. In the spring of 1998, Factory Direct Homes went out of business, and in early May 1998 Brooks contacted Horton Homes directly regarding the problems he was continuing to have with the home. On two occasions (May 30, 1998, and June 20, 1998), Horton Homes sent service crews to the Brooks home to correct the problems. However, the service crews were unsuccessful in completing the necessary repairs, and, in fact, according to Brooks's testimony, the home was in worse condition after the service crew left on June 20, 1998, than when they arrived.

Brooks testified that when he arose on the morning after the repairs, i.e., on Sunday, June 21, 1998, which was Father's Day, furnishings were still where the service crew had moved them -- the kitchen table was still in the den, the refrigerator was still in the dining room, and the freezer was still outside. He said that the dishwasher no longer worked because it had been damaged when a cabinet fell on it; that the stove had a gas leak; that canned goods were stacked on the kitchen counters; that the new floor covering was wrinkled and had big gouges around the perimeter; that the new flooring was soft and that a hole had been accidentally drilled in the new flooring and had been filled with wood putty; that the trim had not been replaced; and that debris was stacked by the side of the house. Brooks testified that he telephoned Horton Homes on several occasions, but that no one returned to complete the repairs that were begun on June 20, 1998, until after he had sued.

On July 14, 1998, Brooks filed a multi-count complaint against Horton Homes. 1 After a trial, the jury awarded damages to Brooks, and the trial court entered a judgment on the verdict. The court denied Horton Homes' motion for a judgment as a matter of law. This appeal followed.

The case was submitted to the jury on the claims of breach of express warranty, breach of implied warranty, violation of the Magnuson-Moss Warranty Act, 2 and wanton repair. 3

First, Horton Homes contends the trial court erred when it allowed the breach-of-implied-warranty claim to go to the jury. Generally, implied warranties apply only to the seller, not the manufacturer. See Ex parte General Motors Corp., 769 So. 2d 903, 910 (Ala. 1999). However, implied warranties can apply to the manufacturer when, as in this case, the product has been specially manufactured for a particular customer and the manufacturer can reasonably expect the customer to be affected by any problems with the product. See Liberty Homes, Inc. v. Epperson, 581 So. 2d 449, 453 (Ala. 1991). The evidence indicates Brooks specially ordered the manufactured home and that his name appeared on the paperwork that accompanied the home as it moved along the manufacturing line.

In its "Limited One-Year Warranty" contained in the "Home Owner's Manual," Horton Homes, by conspicuous language, purported to exclude all implied warranties. 4 Horton Homes argues that this fact distinguishes the present case from Epperson because, it says, in Epperson the manufacturer did not exclude any implied warranties. However, while the Epperson opinion, 581 So. 2d at 453, notes that the "Home Owner's Manual" included a limitation of warranty, it does not indicate the wording of that limitation of warranty. Therefore, Epperson does not indicate whether the manufacturer excluded implied warranties. Additionally, no issue regarding the effect of an exclusion of implied warranties on Epperson's claim alleging breach of implied warranties was raised or addressed in this Court's opinion in Epperson. 5

The issue we now must address is whether Horton Homes' purported exclusion of implied warranties in the "Limited One-Year Warranty" contained in the "Home Owner's Manual" precludes Brooks's breach-of-implied warranty claim. In the portion of his complaint alleging a breach of implied warranty, Brooks referred to 15 U.S.C. § 2308(a), a portion of the Magnuson-Moss Warranty Act:

"§ 2308. Implied warranties

"(a) Restrictions on disclaimers or modifications

"No supplier may disclaim or modify (except as provided in subsection (b) of this section) any implied warranty to a consumer with respect to such consumer product if (1) such supplier makes any written warranty to the consumer with respect to such consumer product, or (2) at the time of sale, or within 90 days thereafter, such supplier enters into a service contract with the consumer which applies to such consumer product."

(Emphasis added.) The term "written warranty" is defined in 15 U.S.C. § 2301(6):

"(6) The term 'written warranty' means--

"(A) any written affirmation of fact or written promise made in connection with the sale of a consumer product by a supplier to a buyer which relates to the nature of the material or workmanship and affirms or promises that such material or workmanship is defect free or will meet a specified level of performance over a specified period of time ....

"....

"which written affirmation, promise, or undertaking becomes part of the basis of the bargain between a supplier and a buyer for purposes other than resale of such product."

In this case, Brooks specially ordered a double-wide manufactured home. When Horton Homes manufactured this home for Brooks, in September 1997, its policy was for the production-line manager and the final-finish supervisor on the line where the home was manufactured to sign a "Certificate of Quality Assurance"; that certificate included the statement "Your new home has been carefully inspected to ensure quality and cleanliness" and included the phrase "Built for a Lifetime!" This certificate was also signed by the cleaning-crew supervisor and by crew members.

Horton Homes manufactured Brooks's home on September 2, 1997. On that date, two "Certificates of Quality Assurance" were signed for the Brooks home (one for each section of the double-wide), and they were placed on the kitchen counter of the home. The first time Brooks saw the home was approximately September 8, 1997, when the home was delivered to his lot. Brooks testified that when he entered the kitchen, he saw the certificates and read them and that he relied on the certificates when he executed the paperwork to purchase the home. Brooks testified that if he had known that the production-line manager had signed the certificates in blank, he would have made further inspection before purchasing the home. Thus, we conclude that these "Certificates of Quality Assurance" are "written warranties" within the meaning of the Magnuson-Moss Warranty Act and that Horton Homes' purported disclaimer of implied warranties is ineffective. 6 Thus, the trial court properly submitted the breach-of-implied-warranty claim to the jury.

Second, Horton Homes contends the trial court erred when it submitted to the jury the wanton-repair claim and the related claim for punitive damages. Horton Homes argues that Brooks is not entitled to recover damages for mental anguish under a wanton-repair claim because, it argues, the only "injury" was to the product itself and Brooks failed to show that he suffered "a physical injury as a result of [Horton Homes'] negligent conduct, or [that he was] placed in immediate risk of physical harm by that conduct." Ex parte Grand Manor, Inc., 778 So. 2d 173, 179 (Ala. 2000).

While our review of the evidence does show that Brooks failed to prove he...

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