Hyundai Motor America, Inc. v. Goodin

Decision Date10 March 2004
Docket NumberNo. 82A05-0303-CV-155.,82A05-0303-CV-155.
Citation804 N.E.2d 775
PartiesHYUNDAI MOTOR AMERICA, INC., Appellant-Defendant, v. Sandra GOODIN, Appellee-Plaintiff.
CourtIndiana Appellate Court

Robert B. Thornburg, Locke Reynolds, LLP, Indianapolis, IN, Attorney for Appellant.

John D. Barker, Krohn & Moss, Ltd. Chicago, IL, Attorney for Appellee.

OPINION

BARNES, Judge.

Case Summary1

Hyundai Motor America appeals a judgment against it obtained by one of its customers, Sandra Goodin. We reverse.

Issues

The issues before us are:

I. whether Hyundai is estopped from asserting that Goodin could not recover economic damages from it for breach of an implied warranty of merchantability because Goodin was not in privity with Hyundai; and

II. if Hyundai is not so estopped, whether Goodin may recover from Hyundai where the traditional concept of privity is lacking.

Facts

On November 18, 2000, Goodin contracted to purchase a new 2000 Hyundai Sonata from AutoChoice Hyundai in Evansville. This was Goodin's third Hyundai. The Sonata came with a "bumper-to-bumper" five-year/60,000 mile express warranty from Hyundai that covered all components in the car with a few exceptions.

Over the next several months, Goodin brought the Sonata in to a dealership in Jeffersonville for service eight times complaining of brake-related problems. Hyundai paid for these service visits under its express warranty. As of August 24, 2001, Goodin's last visit to the dealership for service, she had driven the Sonata 32,865 miles.

On September 19, 2001, Goodin contacted Hyundai and asked them to repurchase the Sonata because of the alleged problems with the brakes. After Hyundai refused to do so, Goodin sued Hyundai on November 13, 2001, alleging breach of express warranty, breach of implied warranty, and revocation of acceptance. Hyundai filed its answer on January 17, 2002, in which it did not mention privity. The trial court set a trial date of December 2, 2002.

On November 15, 2002, during an unrecorded pre-trial conference to discuss jury instructions, Hyundai objected to Goodin's proposed jury instructions regarding implied warranties on the ground that she could not maintain an implied warranty of merchantability action against Hyundai due to lack of privity between her and Hyundai. The trial court overruled the objections, which were restated during another unrecorded conference during trial, and instructed the jury on implied warranty principles.

On December 3, 2002, the jury returned a verdict finding Hyundai had not breached its express warranty, but had breached an implied warranty of merchantability, and awarded Goodin damages of $3000. Before adjourning, the trial court denied Hyundai's motion to set aside the verdict because of the privity issue and entered judgment on the verdict. However, on December 4, 2002, the trial court reconsidered and vacated the judgment against Hyundai because there was no privity between Hyundai and Goodin. On February 6, 2003, the trial court again reconsidered, on Goodin's motion, and reinstated the judgment, finding that Hyundai was estopped from arguing lack of privity as a basis for setting aside the verdict. Hyundai now appeals.

Analysis
I. Estoppel

Goodin strongly urges us to affirm the trial court's decision that Hyundai was estopped from moving to set aside the jury verdict in Goodin's favor on the implied warranty claim by arguing her lack of privity of contract with Hyundai. Goodin contends that the alleged absence of privity between her and Hyundai was an affirmative defense that Hyundai was required to plead in its answer to Goodin's complaint. She also points out that Hyundai never filed any motions seeking to dispose of Goodin's implied warranty claim until after the jury returned its verdict in her favor on that claim.

Indiana Trial Rule 8(C) provides that "[a] responsive pleading shall set forth affirmatively and carry the burden of proving" various expressly stated affirmative defenses, "and any other matter constituting an avoidance, matter of abatement, or affirmative defense." Failure to raise an affirmative defense in a responsive pleading generally results in waiver of that defense at trial, unless it is tried by the express or implied consent of the parties. Van Bibber Homes Sales v. Marlow, 778 N.E.2d 852, 859 (Ind.Ct.App.2002), trans. denied (2003).

Privity, or the lack thereof, is not expressly listed as an affirmative defense under Rule 8(C); therefore, we must determine whether it is "any other matter constituting an avoidance, matter of abatement, or affirmative defense" that Hyundai was required to plead in its answer. The determination of whether a defense is affirmative depends upon whether it controverts an element of a plaintiff's prima facie case, which is not an affirmative defense, or raises matters outside the scope of the prima facie case, which is. See Paint Shuttle, Inc. v. Continental Cas. Co., 733 N.E.2d 513, 524 (Ind.Ct.App.2000),

trans. denied (2001). An affirmative defense is one upon which the defendant bears the burden of proof and which, in effect, admits the essential allegations of the complaint but asserts additional matter barring relief. Id.

We conclude, after reviewing Indiana case law, that the existence of privity is an element of a consumer's prima facie case when he or she seeks recovery from a remote manufacturer under an implied warranty of merchantability. This court has said that in such a case, "privity must be shown, or facts must be present" that establish one of the recognized exceptions to the privity rule. Candlelight Homes, Inc. v. Zornes, 414 N.E.2d 980, 982 (Ind.Ct.App.1981) (emphasis added). The clear import of this statement is that a plaintiff bears the burden of demonstrating privity with a remote manufacturer, or an exception to the privity rule, before he or she may claim recovery under an implied warranty of merchantability. Thus, any claim by Hyundai that privity was lacking in this case went to attacking Goodin's prima facie case with respect to the implied warranty claim and did not raise issues outside of her prima facie case. As such, Hyundai was not required to list lack of privity as an affirmative defense in its answer to Goodin's complaint.2

Goodin also contends that Hyundai was required either to move to dismiss the implied warranty count of her complaint or seek summary judgment on that issue. To the extent Goodin seems to argue that Hyundai was required to file an Indiana Trial Rule 12(B) motion to dismiss because lack of privity was an affirmative defense, we have already concluded that lack of privity is not such a defense. As for Hyundai's failure to move for partial summary judgment on the implied warranty issue, Goodin cites no authority for the proposition that a party's failure to move for summary judgment on an issue before trial means that the issue is waived. Indiana Trial Rule 56(B) states that "[a] party against whom a claim ... is asserted... may, at any time, move ... for a summary judgment in his favor as to all or any part thereof." (Emphasis added). Clearly, a party is allowed to move for summary judgment if it feels the law and facts justify such a motion, but it certainly does not have to do so.

Finally, Goodin argues in her brief, "at no time during the litigation of this matter did Hyundai raise the issue of lack of privity until after the jury rendered its verdict in favor of Goodin." Appellee's Br. p. 4. This claim, which is made several times throughout the brief, does not accurately reflect the record. Specifically, on November 15, 2002, the trial court held a conference in its chambers to discuss jury instructions. This conference was not recorded; however, the court's chronological case summary ("CCS") indicates that it decided to give instructions to the jury during trial relating to implied warranties, over Hyundai's objections. The CCS does not reflect the nature of these objections. Because of this, Hyundai filed a request for a certified statement of what transpired at the November 15 conference, pursuant to Indiana Appellate Rule 31, at the same time that it filed its notice of appeal. The trial court granted Hyundai's request, meaning that it accepted the affidavit of Hyundai's counsel that he had specifically objected at the November 15 conference to the giving of any jury instructions regarding implied warranties on the basis that there was a lack of privity between Goodin and Hyundai. At the same time, the trial court denied Goodin's competing motion for certification in which she argued that privity was not mentioned at the November 15 conference.

Additionally, during the trial the court held another unrecorded conference in chambers to discuss final instructions. However, Hyundai's successful motion for a certified statement of the evidence also indicates that it renewed its objections to the giving of any implied warranty instructions on the basis that privity between it and Goodin was not established. A trial court's certification of the evidence becomes part of the clerk's record for purposes of appeal. Ind. Appellate Rule 31(C). Therefore, contrary to Goodin's argument, the record indicates that Hyundai did raise the issue of privity before trial and before the jury retired to deliberate, and it did in fact attempt to keep the implied warranty issue out of the hands of the jury. We also observe that when Hyundai moved to set aside the jury's verdict on the implied warranty claim, Goodin's counsel stated that he "actually addressed the arguments of Privity" in the trial brief that he had previously submitted. Tr. p. 421. Thus, it seems to us, again contrary to Goodin's claims, that she was aware that Hyundai might attempt to claim lack of privity as a barrier to her recovering on an implied warranty theory.3

Counsel for Hyundai walked a fine line here by failing to expressly indicate until a little over two weeks before trial, at the earliest, that he would attack...

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