Kelynack v. Yamaha Motor Corp., USA

• Decision Date: 08 October 1986
• Docket Number: Docket No. 84835
• Citation: 2 UCC Rep.Serv.2d 166,152 Mich.App. 105,394 N.W.2d 17
• Parties: David KELYNACK, Plaintiff-Appellee, v. YAMAHA MOTOR CORPORATION, USA, Defendant-Appellant, and Anderson's Vehicle Sales, Inc., Defendant. 152 Mich.App. 105, 394 N.W.2d 17, 2 UCC Rep.Serv.2d 166
• Court: Court of Appeal of Michigan — District of US

Page 17

394 N.W.2d 17

David KELYNACK, Plaintiff-Appellee, v. YAMAHA MOTOR CORPORATION, USA, Defendant-Appellant and Anderson's Vehicle Sales, Inc., Defendant.

Docket No. 84835.

152 Mich.App. 105, 394 N.W.2d 17, 2 UCC Rep.Serv.2d 166

Court of Appeals of Michigan.

Submitted April 1, 1986.

Decided May 21, 1986.

Released for Publication Oct. 8, 1986.

[152 MICHAPP 107] Alvis Phillip Easter, Fraser, for plaintiff.

Maxwell, Smith, Hanson & Mulroy by William C. Hanson, Bloomfield Hills, for defendant.

[152 MICHAPP 108] Before CYNAR, P.J., and WAHLS and BORRADAILE, ^* JJ.

PER CURIAM.

Defendant Yamaha Motor Corporation, USA, appeals as of right the decision of a Macomb County Circuit Court judge granting plaintiff damages for breach of warranty, plus attorney fees pursuant to M.C.L. Secs. 440.2714, 440.2715; M.S.A. Secs. 19.2714, 19.2715.

The events giving rise to the present action are provided in the following stipulated statement of facts:

On May 28, 1981, plaintiff purchased a motorcycle from defendant Anderson's Vehicle Sales, Inc. which was manufactured by defendant Yamaha Motor Corporation, USA. Payment was partially made in cash and partially financed. The National Bank of Detroit (NBD), as assignee of the purchase agreement, was also a codefendant at the trial court level but is not a party to this appeal.

The vehicle carried a six-month limited warranty which provided in part:

"During the period of warranty any authorized Yamaha dealer will provide:

"1. The replacement of any part adjudged defective by Yamaha due to faulty workmanship or material from the factory.

"2. Any repairs made necessary by faulty workmanship or material from the factory."

On August 15, 1981, while the vehicle was still under warranty, it developed a tapping noise in the engine. At this time the vehicle had been driven only 3,115 miles. Plaintiff immediately stopped operating the vehicle and returned it to Anderson's several days later. The acting service [152 MICHAPP 109] manager examined the bike and prepared a service order.

On August 20, 1981, Anderson's informed plaintiff that the engine had seized up while a mechanic had been operating it. Plaintiff was also told at that time not to worry because the problem was not serious and would be covered by warranty. An employee of Anderson's who was not a licensed mechanic diagnosed what he thought to be the problem and immediately ordered the necessary parts for repair. Although replacement parts could usually be obtained within one week, it took approximately three weeks to obtain these parts.

When the parts were delivered, a second Anderson's employee (a licensed mechanic) began working on the bike. It was discovered that the problem had been misdiagnosed and was more serious than first believed. The oil pump had failed causing serious engine damage, requiring replacement of nearly every major engine component. Plaintiff was not immediately notified of this finding.

On October 12, 1981, plaintiff wrote NBD a letter advising it that he was stopping payment because of the alleged breach of warranty. He also stated that a complaint was filed with the Attorney General's office and that an action was pending on the matter. Anderson's responded to an inquiry from the Attorney General's office by a letter dated October 19, 1981, stating in part:

"Upon receipt of these parts our mechanic started work on this vehicle, only to find that the entire lower end (crankshaft) was completely destroyed, due to oil pump failure. At this time we are waiting to hear from the Yamaha factory representative to get their approval on a complete new engine. We feel that this would be the best way to repair this vehicle. We will do everything [152 MICHAPP 110] in our power to rectify this problem as soon as possible"

Plaintiff subsequently received from the Attorney General's office a copy of Anderson's letter. This was the first information he was given that the engine was seriously damaged.

On October 26, 1981, Anderson's wrote to plaintiff that they had received Yamaha's permission to repair the engine and that the parts would be ordered that day. Anderson's estimated that delivery of the parts would take two weeks and repairs would be completed in an additional week. Plaintiff responded by letter on October 29, 1981, stating that he would accept only a new engine with a new warranty, not a rebuilt engine.

On November 25, 1981, Anderson's called plaintiff and told him that his motorcycle was repaired and ready to be picked up. It is undisputed that the bike was in proper working order at this time. Plaintiff refused to accept the bike and attempted to revoke the sales contract on the grounds that the repairs were not made within a reasonable time and that his faith in the motorcycle had been destroyed.

On December 28, 1981, plaintiff instructed Yamaha to take the motorcycle back and return his purchase money. Yamaha refused this demand. The bike was subsequently sold on plaintiff's behalf. NBD was paid off and plaintiff received a partial refund of his purchase price.

Plaintiff then commenced this action based on the Consumer Protection Act, the Uniform Commercial Code (U.C.C.), and the Magnuson-Moss Warranty Act. He sought recovery for out-of-pocket expenditures, attorney fees and costs. The trial court held that the limited warranty of repair or replacement [152 MICHAPP 111] contained in the sales contract had failed in its essential purpose, thereby allowing plaintiff to seek remedies provided by the U.C.C., M.C.L. Sec. 440.2719(2); M.S.A. Sec. 19.2719(2), and that plaintiff had properly revoked his acceptance of the motorcycle because the nonconformity substantially impaired its value to him. M.C.L. Sec. 440.2608; M.S.A. Sec. 19.2608. Plaintiff was awarded the unrefunded balance of his purchase money, court costs, and attorney fees in the amount of $8,520. Defendant Yamaha argues that the trial court erred in finding that plaintiff properly revoked his acceptance of the motorcycle.

Under Sec. 2-719 of the U.C.C., M.C.L. Sec. 440.2719; M.S.A. Sec. 19.2719, the parties to a sales agreement may agree to limit remedies and damages for breach of the agreement. However, subsection (2) further provides that where the limited remedy fails in its purpose or operates to deprive either party of the value of the bargain, the parties may pursue other remedies provided elsewhere in the U.C.C.. Latimer v. William Mueller & Son, Inc., 149 Mich.App. 620, 386 N.W.2d 618 (1986); North American Steel Corp. v. Siderius, Inc., 75 Mich.App. 391, 254 N.W.2d 899 (1977), lv. den. 402 Mich. 810 (1977). One remedy available to a buyer for the seller's breach of warranty is revocation. M.C.L. Sec. 440.2608; M.S.A. Sec. 19.2608.

The purchase agreement between plaintiff and defendant contained a limited warranty that provides in part:

"During the period of warranty any authorized Yamaha dealer will provide:

"1. The replacement of any part adjudged defective by Yamaha due to faulty workmanship or material from the factory.

"2. Any repairs made necessary by faulty workmanship or material from the factory."

[152 MICHAPP 112] While the terms of this provision would generally restrict plaintiff's remedies to replacement of the defective part, we agree with the finding of the trial court that in this case the limited warranty failed in its essential purpose and plaintiff was therefore entitled to pursue other remedies. M.C.L. Sec. 440.2719; M.S.A. Sec. 19.2719.

Here, plaintiff had the motorcycle in his possession for only ten weeks before it became totally inoperable. He immediately returned it to the dealer where it remained for over three months. By the time the motorcycle was returned to him, it was late November and the weather precluded its use.

While we do not dispute defendant Yamaha's contention that it acted in good faith, its good faith efforts do not excuse its failure to have the motorcycle repaired and returned to plaintiff within a reasonable time. "Commendable efforts alone do not relieve a seller of his obligation to repair." Jacobs v. Rosemount Dodge-Winnebago South, 310 N.W.2d 71, 75 (Minn.1981). Where a manufacturer or dealer has limited its obligation under the sales agreement to repair or replace defective parts the seller does not have an unlimited time to make the repairs, but rather must repair or replace the parts within a reasonable time. See Anno: Construction and Effect of New Motor Vehicle Warranty Limiting Manufacturer's Liability to Repair or Replacement of Defective Parts, 2 A.L.R.4th 576, Sec. 5[d], pp. 602-604 and cases cited therein; 67A Am.Jur.2d, Sales, Sec. 923, pp. 326-327. Further, the manufacturer's or dealer's failure to make repairs need not be willfully dilatory or even negligent for the damage to the buyer is the same whether the seller acts in good faith or in bad. In either case, the buyer loses the substantial benefit of his bargain. Cayuga Harvester, Inc. v. [152 MICHAPP 113] Allis-Chalmers Corp., 95 App.Div.2d 5, 465 N.Y.S.2d 606 (1983).

What is a reasonable time for taking any action depends on the nature and circumstances of the case. Here plaintiff's motorcycle remained inoperable for more than three months. Moreover, the court found that the cause of the delay was the misdiagnosis by defendant's employee. Under the circumstances of this case, we are not persuaded that the court erred in finding the delay unreasonable. We...