Krack v. Action Motors Corp.

• Decision Date: 01 March 2005
• Docket Number: No. 24876.,24876.
• Citation: 87 Conn.App. 687,867 A.2d 86
• Court: Connecticut Court of Appeals
• Parties: Laura Ann KRACK v. ACTION MOTORS CORPORATION.

867 A.2d 86

87 Conn.App. 687

Laura Ann KRACK v. ACTION MOTORS CORPORATION.

No. 24876.

Appellate Court of Connecticut.

Argued November 15, 2004.

Decided March 1, 2005.

Neal P. Rogan, Newtown, with whom, on the brief, were Joseph DaSilva, Danbury, and Marc J. Grenier, Norwalk, for the appellant (defendant).

Richard F. Wareing, Hartford, with whom, on the brief, was Daniel S. Blinn, Rocky Hill, for the appellee (plaintiff).

DRANGINIS, McLACHLAN and STOUGHTON, Js.

McLACHLAN, J.

The novel issue in this appeal is whether a dealer that sells used automobiles breaches the implied warranty of merchantability¹ when it innocently sells a vehicle with a salvage history, charging the buyer the price of a nonsalvaged used vehicle. We conclude that General Statutes § 42a-2-314 places the risk of loss associated with such an occurrence squarely on the seller and, accordingly, respond in the affirmative.

When the plaintiff, Laura Ann Krack, realized that the defendant, Action Motors Corporation of Danbury, had sold her a salvaged vehicle without her knowledge, she sued, pro se, in the small claims session of the Superior Court. The defendant transferred the case to the regular civil docket pursuant to Practice Book § 24-21, and the plaintiff, who hired an attorney, prevailed. What began as a small claims matter limited to $3500 in damages ultimately was transferred to the complex litigation docket of the Superior Court, and resulted in awards of $9715.10 in damages² and $38,626 in costs and attorney's fees after trial to the court. The defendant claims on appeal that the court (1) improperly concluded that the defendant had breached the implied warranty of merchantability and (2) abused its discretion in awarding unreasonably high attorney's fees. We affirm the judgment of the trial court.

Following the transfer to the regular civil docket, the plaintiff filed an amended, three count complaint alleging a breach of the implied warranty of merchantability, and violations of the Magnuson-Moss Warranty-Federal Trade Commission Act³ and the Connecticut Unfair Trade Practices Act (CUTPA).⁴ The matter was tried to the court, which found in the plaintiff's favor as to the first two counts and in the defendant's favor as to the CUTPA count.⁵ In its memorandum of decision, the court made the following relevant findings of fact. "On February 23, 1999, the plaintiff purchased a 1994 General Motors Corporation Suburban station wagon from the defendant for $19,688. The defendant disclosed in the purchase contract that the vehicle had previously been driven 73,610 miles.... Unbeknownst to the plaintiff, an insurance company had acquired the Suburban in Illinois as a salvage vehicle.⁶ At the time, the car had been driven 47,902 miles. The car was rebuilt and a salvage title [was] issued to it. An automobile dealer in New York then purchased the car and sold it to an individual in New Jersey. The state of New Jersey deleted or `washed' the salvage history of the car and issued a clean title. The New Jersey owner sold the car to a New York resident in 1997, and the state of New York issued another clean title. The New York owner sold the car to the defendant in early February, 1999.

"The defendant's policy is not to sell vehicles that it knows have branded, salvaged or otherwise infirm titles. In this case, the defendant had no actual knowledge that the car had been salvaged. As a general rule, the defendant would have its finance department review the title documents of any vehicle it obtains. The title conveyed to the defendant by the New York owner for the Suburban was clean. Two people working for or contracted by the defendant appraised the car. There were no problems with the body work or painting, or any other evidence during the appraisal process, that gave the appraisers any indication of the car's salvage history....

"In August, 2001, the plaintiff brought the car for servicing to a General Motors Corporation dealer in New York in response to a General Motors Corporation service bulletin. Apparently because of the vehicle's blemished title, the New York dealer would not cover the $47.10 charge for maintenance. It was as a result of this incident that the plaintiff first learned of the car's salvage history.... Although the car has run well, as a salvaged vehicle it has a stigma attached to it because subsequent purchasers would not know the reason for its salvage history. This stigma diminishes its fair market value. Generally, the fact that a car has a salvage history, without more, reduces its value by 50 percent. The reasonable fair market value at the time of purchase for the vehicle in this case was $10,000."

I

The defendant claims that its innocent⁷ sale of a salvaged vehicle to the plaintiff could not have constituted a breach of the implied warranty of merchantability because the plaintiff did not prove that the defendant was at fault in failing to discover the salvage history. Whether a plaintiff must prove fault in order to prevail in an action for a breach of the implied warranty of merchantability is an issue that has never been squarely decided by an appellate court of this state. It is a question of law over which our review is plenary. See, e.g., Gilbert v. Beaver Dam Assn. of Stratford, Inc., 85 Conn.App. 663, 672, 858 A.2d 860 (2004), cert. denied, 272 Conn. 912, 866 A.2d 1283 (2005).

In Prishwalko v. Bob Thomas Ford, Inc., 33 Conn.App. 575, 636 A.2d 1383 (1994), this court stated: "In Connecticut, strict liability for innocent misrepresentation in the sale of goods is well established." (Internal quotation marks omitted.) Id., at 588, 636 A.2d 1383. Although the defendant correctly distinguishes Prishwalko as a case involving an express rather than an implied warranty, the defendant ends its examination of the issue there, failing to support its claim that the implied warranty of merchantability ought to be regarded differently in that respect from an express warranty. The authorities on the subject do not support the defendant's claim. To the contrary, it is clear that the purpose of the implied warranty of merchantability is not to assign blame, but to assign risk and that, accordingly, fault is not an element of the plaintiff's case for breach of that warranty.

"[Uniform Commercial Code] § 2-314 imposes warranty liability for the protection of buyers. The purpose behind ... § 2-314 is to hold a merchant seller responsible when inferior goods are passed along to an unsuspecting buyer. Thus, whether or not the defects could, or should, have been discovered by the merchant seller, the merchant seller is liable to the buyer whenever the goods are not, at the time of delivery, of a merchantable quality.... The Uniform Commercial Code is designed to protect the buyer from bearing the burden of loss where merchandise does not live up to normal commercial expectations...." 3 L. Lawrence, Anderson on the Uniform Commercial Code (3d Ed.2002) § 2-314:5. "The effort has been made by some to force warranty liability into the category of liability based on fault. This effort is misguided. In the case of the implied warranty of merchantability, there is liability without fault. Although the goods must be nonconforming [for a breach to occur], no distinction is made in terms of the `fault' of the defendant. The implied warranty of merchantability is breached whether or not the seller could have prevented the nonconformity.... The only practical and logical conclusion is that the warrantor is made liable, although free from moral or personal fault, because society for one reason or another wants to place the burden of harm resulting from nonconforming products upon the warrantor rather than upon the buyer...." Id., § 2-314:11; see also 1 J. White & R. Summers, Uniform Commercial Code (4th Ed.1995) § 9-7, pp. 510-11 (listing elements required to prove breach of implied warranty of merchantability without mention of fault or negligence on part of seller); cf. Schenck v. Pelkey, 176 Conn. 245, 254-55, 405 A.2d 665 (1978) (noting similarities between strict liability for sale of unreasonably dangerous products and implied warranty of merchantability). We note, finally, that Connecticut's long history of a "very strong public policy in favor of protecting purchasers of consumer goods"; Fairfield Credit Corp. v. Donnelly, 158 Conn. 543, 551, 264 A.2d 547 (1969); is in line with the national authorities on the Uniform Commercial Code.

The defendant argues that this decision places on automobile dealers the additional onerous burden of researching the history of facially clean titles, which is in contravention of General Statutes § 14-174(d). In so arguing, the defendant injects the language of the law of negligence into a situation in which it has no place. In fact, we do not hold that the defendant was negligent in failing to research the title for a history of salvage. See footnote 7. Instead, we hold that the defendant seller rather than the plaintiff buyer bore the risk that the vehicle was salvaged. Section 14-174(d) does not, as the defendant claims, conflict with our holding today. It provides in relevant part: "A certificate of title issued by the commissioner [of motor vehicles] is prima facie evidence of the facts appearing on it...." The defendant essentially asks us to interpret that subsection to mean that it can rely on the nonexistence of all facts not appearing on the title. That is not a logical reading of the statute.⁸ The title at issue contained no affirmative representations as to whether the vehicle had a salvage history. Most importantly, in light of the no-fault liability imposed by § 42a-2-314, the appropriateness of the defendant's reliance on the certificate of title is irrelevant.⁹ We accordingly conclude that fault is not an element of a plaintiff's case under the implied warranty of merchantability. See General Statutes § 42a-2-314.

II

We next consider whether the court's award of...