Hyundai Motor America, Inc. v. Goodin, No. 82S05-0406-CV-279.

Docket NºNo. 82S05-0406-CV-279.
Citation822 N.E.2d 947
Case DateFebruary 22, 2005
CourtSupreme Court of Indiana

822 N.E.2d 947

HYUNDAI MOTOR AMERICA, INC., Appellant (Defendant below),
v.
Sandra GOODIN, Appellee (Plaintiff below)

No. 82S05-0406-CV-279.

Supreme Court of Indiana.

February 22, 2005.


822 N.E.2d 948
Julia Blackwell Gelinas, Robert B. Thornburg, Indianapolis, IN, Attorneys for Appellant

Scott M. Cohen, John D. Barker, Chicago, IL, Attorneys for Appellee.

ON PETITION TO TRANSFER FROM THE INDIANA COURT OF APPEALS; NO. 82A05-0303-CV-155.

BOEHM, Justice.

We hold that a consumer may sue a manufacturer for economic loss based on breach of the implied warranty of merchantability even if the consumer purchased the product from an intermediary in the distribution chain. There is no requirement of "vertical" privity for such a claim.

Facts and Procedural Background

On November 18, 2000, Sandra Goodin test drove a Hyundai Sonata at AutoChoice Hyundai in Evansville, Indiana. The car was represented as new and showed nineteen miles on the odometer. Goodin testified that when she applied the brakes in the course of the test drive she experienced a "shimmy, shake, pulsating type feel." The AutoChoice salesperson told her that this was caused by flat spots on the tires from extended inactivity and offered to have the tires rotated and inspected. After this explanation, Goodin purchased the Sonata for $22,710.00.

The manufacturer, Hyundai, provided three limited warranties: 1 year/12,000 miles on "wear items;" 5 years/60,000 miles

822 N.E.2d 949
"bumper to bumper;" and 10 years/100,000 miles on the powertrain.1 Hyundai concedes that brake rotors, brake calipers, and brake caliper slides were subject to the 5 year/60,000 mile warranty covering "[r]epair or replacement of any component originally manufactured or installed by [Hyundai] that is found to be defective in material or workmanship under normal use and maintenance." To claim under this warranty, a vehicle must be serviced by an authorized Hyundai dealer who is then reimbursed by Hyundai for any necessary parts or labor

Three days after the car was purchased, Goodin's husband, Steven Hicks, took it back to AutoChoice for the promised tire work. Goodin testified that she continued to feel the shimmy but did nothing further for a month. On December 22, she took the car to a different Hyundai dealer, Bales Auto Mall, in Jeffersonville, Indiana, for an unrelated problem and also made an appointment six days later for Bales to inspect the brakes. Bales serviced the brake rotors for warping, but on May 1, 2001, Goodin returned to Bales complaining that the vehicle continued to vibrate when the brakes were applied. Bales found the rotors to be out of tolerance and machined them. Eighteen days later Goodin again returned to Bales, reporting that she still felt vibrations and for the first time also heard a "popping" noise. Goodin told the service advisor at Bales that she thought there may be a problem with the suspension, and Bales changed and lubed the strut assembly. Eleven days later Goodin once more brought the car to Bales reporting continued shimmy and also a "bed spring type" noise originating from the brakes. The Bales mechanic was unable to duplicate the brake problem, but balanced and rotated the tires as Goodin had requested. One week later Goodin returned to Bales where she and Jerry Hawes, Bales's Service Manager, test drove the Sonata. The brake problem did not occur during the test drive, but Hawes identified a noise from the direction of the left front tire and repaired the rubber mounting bracket.

Goodin told Hawes that the brake problem had occurred about seventy percent of the time. The problem was worse when it was wet or cool, was consistently occurring when she drove down a steep hill near her home, and was less frequent when a passenger's weight was added. Goodin made arrangements to leave the car with Hawes at Bales, but, according to Hawes, over a several day period he could not duplicate the symptoms Goodin reported.

On August 24, 2001, Goodin took her car back to her original dealer, AutoChoice, reporting that the brakes "squeak and grind when applied." Goodin left the car with AutoChoice where the left front rotor was machined and loose bolts on the front upper control arm were tightened. Goodin testified that after this five-day procedure the brakes began to make the same noises and vibrations even before she arrived home.

822 N.E.2d 950
In October 2001 Goodin hired an attorney who faxed a letter to Hyundai Motor America giving notice of her complaint and requesting a refund of the purchase price. On November 13, 2001, Goodin filed a complaint against Hyundai Motor America, Inc. alleging claims under the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301-2312, for breach of express warranty, breach of implied warranty, and revocation of acceptance. On April 23, 2002, in anticipation of litigation, Goodin hired William Jones to inspect her car. Jones noted that the odometer read 57,918 miles and the car was still under warranty. Jones drove the car approximately five miles and found "severe brake pulsation on normal stops" which "was worse on high speed stops." Although he did not remove the tires to inspect the brake rotors, Jones opined that the rotors were warped and defective or there was "a root cause that has not been discovered and corrected by the repair facilities." His ultimate conclusion was that the "vehicle was defective and unmerchantable at the time of manufacture and unfit for operation on public roadways." Three weeks later, after the 5 year/60,000 mile warranty had expired, Goodin's husband, Hicks, replaced the rotors with new rotors from a NAPA distributor.2 After this repair, according to Hicks, the pulsation went from "very bad" to "mild" and "less frequent."

Steven Heiss, District Parts and Service Manager for Hyundai Motor America served as the liaison between Hyundai and the dealers and provided warranty training. If a dealer is not performing repairs correctly, Hyundai, through its liaisons, addresses the problem. Heiss inspected Goodin's Sonata on October 21, 2002. At that point the Sonata had been driven 77,600 miles. He testified that during his twenty-three mile test drive he neither heard the noise described by Goodin nor felt any vibration from the brakes. However, Heiss did hear a "droning noise" which he later concluded was due to a failed left rear wheel bearing. He regarded this as a serious problem and not one caused by abuse or misuse of the vehicle. The wheel bearing would have been covered by the 5 year/60,000 mile warranty. Before his inspection, Heiss had been told that the rotors had been changed by Hicks five months earlier, and when Heiss measured the rotors he found that they were out of standard.3 Heiss testified a miscast from the factory was one of a number of possible reasons for damaged rotors.

At the conclusion of a two day trial, the jury was instructed on all claims. Over defendants' objection, the instructions on implied warranties made no reference to a privity requirement. The jury returned a verdict for Hyundai on Goodin's breach of express warranty claim, but found in favor of Goodin on her claim for breach of implied warranty of merchantability. Damages of $3,000.00 were assessed and Goodin's counsel was later awarded attorneys' fees of $19,237.50 pursuant to the fee shifting provisions of the Magnuson-Moss Warranty Act.

Hyundai orally moved to set aside the verdict as contrary to law on the ground that Goodin purchased the car from AutoChoice and therefore did not enjoy vertical privity with Hyundai. The court initially denied that motion, but the following day set aside the verdict, holding lack of privity

822 N.E.2d 951
between Goodin and Hyundai precluded a cause of action for breach of implied warranty. Goodin then moved to reinstate the verdict, and, after briefing and oral argument, the trial court granted that motion on the ground that Hyundai was estopped from asserting lack of privity

Hyundai appealed, asserting: (1) it was not estopped from asserting a defense of lack of privity; and (2) lack of vertical privity barred Goodin's recovery for breach of implied warranty of merchantability. The Court of Appeals agreed on both points, holding that Hyundai was not estopped from asserting that privity was an element of Goodin's prima facia case, and, because privity was lacking, Goodin did not prove her case. Hyundai Motor Am., Inc. v. Goodin, 804 N.E.2d 775, 781 (Ind.Ct.App.2004). The Magnuson-Moss Warranty Act looks to state law for the contours of implied warranties. The Court of Appeals was "not unsympathetic" to Goodin's claims but regarded itself as bound by a footnote in Martin Rispens & Son v. Hall Farms, Inc., 621 N.E.2d 1078, 1084 n. 2 (Ind.1993), where this Court stated: "In Indiana, privity between the seller and the buyer is required to maintain a cause of action on the implied warranties of merchantability." Id. at 784. We granted transfer. Hyundai Motor Am., Inc. v. Goodin, 812 N.E.2d 808 (Ind.2004).

Vertical Privity

A. The Relationship Between Federal and State Law in Claims Based on Implied Warranty of Merchantability

This case is brought under a federal statute. The Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301-2312 (2000), provides a federal right of action for consumers to enforce written or implied warranties where they claim to be damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under that statute or under a written warranty, implied warranty, or service contract. The Act also limits the extent to which manufacturers who give express warranties may disclaim or modify implied warranties, but looks to state law as the source of any express or implied warranty. Schimmer v. Jaguar Cars, Inc., 384 F.3d 402, 405 (7th Cir.2004). As the Seventh Circuit recently put it: "Because §§ 2308 and 2304(a) do not modify, or discuss in any way, a state's ability to establish a privity requirement,...

To continue reading

Request your trial
62 practice notes
  • In re Nexus 6P Prods. Liab. Litig., Case No. 17–cv–02185–BLF
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • March 5, 2018
    ...for a consumer to bring an implied warranty of merchantability claim against a manufacturer. See Hyundai Motor Am., Inc. v. Goodin , 822 N.E.2d 947, 959 (Ind. 2005).Under these precedents, the Court concludes that Indiana Plaintiff Beheler's implied warranty claim is not barred by failure t......
  • Harris Moran Seed Co., Inc. v. Phillips, 2040746.
    • United States
    • Alabama Court of Civil Appeals
    • June 23, 2006
    ...otherwise. See Martin Rispens & Son v. Hall Farms, Inc., 621 N.E.2d 1078 (Ind.1993), abrogated by Hyundai Motor America, Inc. v. Goodin, 822 N.E.2d 947 (Ind.2005)(acknowledging the existence of the "economic-loss rule" under prior law, but abolishing vertical privity in actions against a ma......
  • In re Allergan Biocell Textured Breast Implant Prods. Liab. Litig., Case No. 2:19-md-2921-BRM-ESK
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • March 19, 2021
    ...against the manufacturer for breach of the manufacturer's implied warranty of merchantability." Hyundai Motor Am., Inc. v. Goodin, 822 N.E.2d 947, 959 (Ind. 2005). Therefore, Plaintiffs may pursue UCC-based implied warranty claims against Allergan. In contrast, express warranty claims, even......
  • In re Conagra Foods, Inc., No. CV 11–05379 MMM (AGRx).
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
    • February 23, 2015
    ...Pizel v. Monaco Coach Corp., 364 F.Supp.2d 790, 793 (N.D.Ind.2005) (stating that the holding in [Hyundai Motor America, Inc. v.] Goodin, [822 N.E.2d 947 (Ind.2005),] was limited to abolishing the vertical privity requirement for claims of breach of the implied warranty of merchantability) .......
  • Request a trial to view additional results
62 cases
  • In re Nexus 6P Prods. Liab. Litig., Case No. 17–cv–02185–BLF
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • March 5, 2018
    ...for a consumer to bring an implied warranty of merchantability claim against a manufacturer. See Hyundai Motor Am., Inc. v. Goodin , 822 N.E.2d 947, 959 (Ind. 2005).Under these precedents, the Court concludes that Indiana Plaintiff Beheler's implied warranty claim is not barred by failure t......
  • Harris Moran Seed Co., Inc. v. Phillips, 2040746.
    • United States
    • Alabama Court of Civil Appeals
    • June 23, 2006
    ...otherwise. See Martin Rispens & Son v. Hall Farms, Inc., 621 N.E.2d 1078 (Ind.1993), abrogated by Hyundai Motor America, Inc. v. Goodin, 822 N.E.2d 947 (Ind.2005)(acknowledging the existence of the "economic-loss rule" under prior law, but abolishing vertical privity in actions against a ma......
  • In re Allergan Biocell Textured Breast Implant Prods. Liab. Litig., Case No. 2:19-md-2921-BRM-ESK
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • March 19, 2021
    ...against the manufacturer for breach of the manufacturer's implied warranty of merchantability." Hyundai Motor Am., Inc. v. Goodin, 822 N.E.2d 947, 959 (Ind. 2005). Therefore, Plaintiffs may pursue UCC-based implied warranty claims against Allergan. In contrast, express warranty claims, even......
  • In re Conagra Foods, Inc., No. CV 11–05379 MMM (AGRx).
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
    • February 23, 2015
    ...Pizel v. Monaco Coach Corp., 364 F.Supp.2d 790, 793 (N.D.Ind.2005) (stating that the holding in [Hyundai Motor America, Inc. v.] Goodin, [822 N.E.2d 947 (Ind.2005),] was limited to abolishing the vertical privity requirement for claims of breach of the implied warranty of merchantability) .......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT