Jacobs v. Rosemount Dodge-Winnebago South

• Decision Date: 06 October 1981
• Docket Number: No. 51346.,51346.
• Citation: 310 NW 2d 71
• Parties: George JACOBS, et al., Appellants, v. ROSEMOUNT DODGE-WINNEBAGO SOUTH, Respondent, Midas-International Corporation, Respondent, General Motors Corporation, Chevrolet Motors Division, Defendant.
• Court: Minnesota Supreme Court

310 N.W.2d 71 (1981)

George JACOBS, et al., Appellants, v. ROSEMOUNT DODGE-WINNEBAGO SOUTH, Respondent Midas-International Corporation, Respondent General Motors Corporation, Chevrolet Motors Division, Defendant.

No. 51346.

Supreme Court of Minnesota.

September 11, 1981.

Rehearing Denied October 6, 1981.

Thiel, Sorenson, Thiel & Campbell and Russell A. Sorenson, Minneapolis, for appellants.

Cragg & Bailly, Gary J. Gordon and Christopher S. MacLennan, Minneapolis, for Rosemount Dodge-Winnebago South.

Stringer, Courtney & Rohleder and Owen L. Sorenson, St. Paul, for Midas Intern. Corp.

Heard, considered, and decided by the court en banc.

WAHL, Justice.

George and Laura Jacobs appeal from the judgment of the Dakota County District Court awarding them $3,309.77 in damages, instead of the $16,621 awarded by the jury, in an action for breach of warranty and fraudulent misrepresentation. The action arose because of defects in the Jacobs' new Midas motorhome and the failure of defendants Rosemount Dodge-Winnebago South (Rosemount Dodge) and Midas International Corporation (Midas) to repair those defects. We affirm in part, reverse in part, and reinstate the jury verdict.

In July 1977, the Jacobs saw a newspaper advertisement for a Midas motorhome on sale at Rosemount Dodge. They had a Diamond motorhome in which they took frequent weekend trips fishing, sightseeing, and visiting their children, as well as more infrequent cross-country trips. They were looking, however, for a newer, larger motorhome with more convenience features than the smaller one had because they were planning to winter in the South and to take a trip to the west coast before Laura Jacobs' eyesight failed completely. George Jacobs, 69 years old and semi-retired, needed an inner spring mattress for his back.

The Jacobs went to Rosemount Dodge on July 19, 1977, to see the motorhome which was advertised. Though some of the interior furnishings appeared to be damaged, the salesman assured them that the vehicle had never been in a trade show, a statement which later was ascertained to be false. The Jacobs agreed to purchase the Midas motorhome for $27,269, with $17,129 being allowed as the trade-in price on the Diamond motorhome the Jacobs already owned. The motorhome was delivered to the Jacobs' home on July 21, 1977. Mr. Jacobs signed the acceptance form and tendered a check for $10,000. Rosemount Dodge took possession of the Diamond motorhome. Mr. Jacobs asked the Rosemount Dodge salesman who delivered the new motorhome if it had been serviced. The salesman said no. He instructed the Jacobs to use the motorhome for the coming weekend, write down everything they found wrong with it, and return it with the list to Rosemount Dodge the following Monday so that the necessary repairs could be made.

From the initial trip, it was clear to the Jacobs that the motorhome was defective in a number of ways. In Mr. Jacobs' words, "We drove up to Brainerd and everything was going wrong. My wife, instead of sitting up on the passenger seat where she was supposed to, she had to be in the back closing doors and keeping things from falling off, making notes of everything that had to be done."

The Jacobs returned the vehicle to Rosemount Dodge for repairs the Monday after their first weekend trip and on at least four subsequent occasions as further defects were discovered. Some of the defects were major operational problems; others were of a more cosmetic nature but prevented the vehicle from being fully useful as a motorhome. The defects alleged in plaintiffs' complaint were as follows:

(a) the frame was defective;

(b) the roof needed to be fixed because it leaked;

(c) insulation and ceiling panel above the driving compartment needed replacement (air rushed through driving compartment when vehicle was moving);

(d) the wires under the coach were shorting out;

(e) water pump wires were shorting out and breaking the circuit (water pump had to be wired to night light switch);

(f) the furnace and water heater did not function properly;

(g) stripes were coming off the wheel housings, and trim pulling apart on exterior of coach,

(h) drawers had a tendency to slide out when the vehicle was moving;

(i) windows throughout the vehicle were drafty;

(j) screws came out where cabinets were fastened to the roof;

(k) front overhead bunk rattled excessively;

(l) spark plug wires frequently came off plugs;

(m) the carburetor did not open fully (the linkage is defective);

(n) the steering wheel is too high and the gear shift lever is too close to the dash to shift into some gears;

(o) the storage compartment door has no bracket to hold it open;

(p) the cruise control feature did not operate properly;

(q) water ran out of the air conditioner frequently;

(r) vacuum was not operable;

(s) the electrical outlets did not work;

(t) the ladder was defective;

(u) the rear springs and shock absorbers were defective.

Some of the defects were repaired by Rosemount Dodge, others were not, and still other items appeared to be in worse condition after being in the shop for repairs. Mr. Jacobs, a mechanic by trade, repaired some of the defects with the help of his son and had others repaired at his own expense. The nature of the problem with the motorhome design was such, however, that permanent repairs were not possible. As the trial court stated in its memorandum, from the statements of Midas' national service manager, "it could be unquestionably inferred that the motorhome as designed could not be repaired no matter how many times repairs were attempted on it * * * because the vehicle literally `shook itself apart' on short trips."

The Jacobs considered the motorhome unsafe and virtually unusable. They did not winter in the South. They did not take the trip to the west coast, nor did they take their weekend trips to visit their children as frequently as before.

The motorhome was covered by two warranties: one from Midas, covering the body or coach, and one from General Motors Corporation-Chevrolet Motor Division (Chevrolet), covering the chassis. Plaintiffs knew of the two different warranties but believed all warranty work would be done by the dealer, Rosemount Dodge. Midas, the manufacturer of the motorhome body, requested that the vehicle be brought to the Midas factory in Elkhart, Indiana for repairs on March 6, 1978. An employee of Rosemount Dodge drove the motorhome to Elkhart and back, a trip accounting for approximately 1,000 miles of the odometer reading. It was returned to the Jacobs on April 15, 1978, with many defects still uncorrected. In May 1978, the Jacobs returned the motorhome to Rosemount Dodge, where it remained for most of the summer of 1978. Mr. Jacobs sent a letter to Rosemount Dodge revoking his acceptance on July 12, 1978. The complaint in this suit was filed July 28, 1978. The motorhome was returned to the Jacobs in September 1978, and they had possession of it at the time of trial. At the request of Chevrolet, the motorhome was taken to Jay Kline Chevrolet in April of 1979, and inspection and repair of the chassis were made. The Jacobs considered the vehicle to be safer after this repair, since the steering and alignment problems seemed to be improved. They drove the motorhome about 900 miles after the letter of revocation. The odometer showed 5594.6 miles at the date of trial. Plaintiffs had paid all insurance and licensing fees plus the installment loan payments on the motorhome to the date of trial.

The jury made the following findings by special verdict: that the motorhome was defective in material and workmanship at the time of delivery to the Jacobs and that Rosemount Dodge and Midas failed to seasonably cure the defects; that the Jacobs gave timely notice to Rosemount Dodge of revocation of acceptance of the motorhome and did not by their subsequent conduct reaccept it; and that the Jacobs had sustained incidental and consequential damages in the amount of $16,621. The jury also found Chevrolet free from fault in that the chassis was not defective in any way at the time of delivery to Midas.

The trial court initially entered judgment for the Jacobs in the amount found by the jury. On post-trial motions by defendants, the court concluded it had erred in allowing argument of loss of use to the jury, amended the verdict, and reduced the damages to $3,309.77. In addition, the court denied the Jacobs' motion for attorneys' fees on the ground that such fees are not permitted as a separate item under the Uniform Commercial Code (U.C.C.) and are not included as part of incidental or consequential damages. The Jacobs appeal the reduction of damages and denial of attorneys' fees. Midas filed a notice of review with regard to the issues of revocation and indemnity.

1. We consider first whether the Jacobs are limited to the remedies provided by the two warranties they received, one for the body and one for the chassis of the Midas motorhome. These warranties limit remedy to repairs necessary to cure defects and specifically deny recovery for consequential damages, such as loss of use of the vehicle, or other items not specified. Midas argues that the warranties provide adequate protection and are the Jacobs' exclusive remedy.

The exclusiveness of the warranty remedy is limited by Minn.Stat. § 336.2-719(2) (1980), which provides: "Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided by this chapter." In Durfee v. Rod Baxter Imports, Inc., 262 N.W.2d 349 (Minn.1977), we found that "an exclusive remedy fails of its essential purpose if circumstances arise to deprive the limiting clause of its meaning or one party of the substantial value of its bargain." 262 N.W.2d at 356. If the seller refuses to repair or replace within a reasonable time, the buyer is deprived of the exclusive remedy. Commendable efforts alone do not relieve a seller of his obligation to repair. Id.

In this case, the...