Lecates v. Hertrich Pontiac Buick Co.

• Decision Date: 24 January 1986
• Parties: 2 UCC Rep.Serv.2d 865 Janice M. LECATES and Bruce O. Lecates, her husband and Joyce Smart and Kenneth Smart, her husband, Plaintiffs, v. HERTRICH PONTIAC BUICK CO., a corporation of the State of Delaware, and General Motors Corporation, a corporation of the State of Delaware, Defendants. . Submitted:
• Court: Delaware Superior Court

Page 163

515 A.2d 163

2 UCC Rep.Serv.2d 865

Janice M. LECATES and Bruce O. Lecates, her husband and Joyce Smart and Kenneth Smart, her husband, Plaintiffs, v. HERTRICH PONTIAC BUICK CO., a corporation of the State of Delaware, and General Motors Corporation, a corporation of the State of Delaware, Defendants.

Superior Court of Delaware Sussex County.

Submitted: Jan. 24, 1986.

Decided: April 24, 1986.

Upon Defendant General Motors Corporation's Motion for Summary Judgment. Granted.

Upon Defendant Hertrich Pontiac Buick Company's Motion for Summary Judgment. Granted in part; Denied in part.

H. Clay Davis, III, Georgetown, for plaintiffs.

William F. Taylor, of Young, Conaway, Stargatt & Taylor, Wilmington, for defendant Hertrich Pontiac Buick Co.

Somers S. Price, and John E. James, of Potter, Anderson & Corroon, Wilmington, for defendant General Motors Corp.

OPINION

CHANDLER, Judge.

Plaintiffs seek compensatory and punitive damages for personal injuries. They charge the defendants with breach of implied warranties of fitness for a particular purpose and merchantability which allegedly applied to the automobile in which plaintiffs were injured. Pending are defendants' motions to dismiss. ¹

I. FACTUAL BACKGROUND

Plaintiffs ² were injured on February 27, 1982 when their 1980 Chevrolet Citation ("the Citation") spun out of control after its brakes suddenly "locked up". They claim the brake malfunction, assertedly a design defect known to both defendants, was a breach of the implied fitness and merchantability warranties that came with the Citation.

Plaintiffs were secondary owners of the Citation, having purchased it as a used vehicle from defendant Hertrich Pontiac Buick Co. ("Hertrich") on January 26, 1981. It was originally purchased on May 30, 1979, from a local new car dealer. On the date of original sale, the automobile was covered by a standard factory warranty of the defendant-manufacturer, General Motors Corporation ("GMC").

Defendants challenge the sufficiency of the complaint on alternative grounds. One, that all implied warranties were effectively modified or disclaimed. Two, that in any event all of plaintiffs' claims are barred by the statute of limitations. As I agree that the claims against GMC are time barred and that its implied warranties were effectively modified, summary judgment will be entered in GMC's favor. A contrary finding as to Hertrich causes its motion to be denied in part and granted in part.

II. SUMMARY JUDGMENT STANDARD

Summary judgment has been characterized as a "drastic remedy". Sunshine Books, Ltd. v. Temple University, 3rd Cir., 697 F.2d 90, 95 (1982). It is the moving party's burden to show the absence of a genuine issue as to any material fact. The Court must examine the movant's materials in the light most favorable to the opposing party. Adickes v. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1969); Moore v. Sizemore, Del.Supr., 405 A.2d 679 (1979). When a motion is made and supported, however, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response must set forth "specific facts showing that there is a genuine issue for trial." Sup.Ct.Civ.R. 56(e).

III. THE IMPLIED WARRANTY CLAIMS

At the heart of this lawsuit is plaintiffs' contention that GMC and Hertrich impliedly warranted the Citation as merchantable and reasonably fit and suitable for its general purpose and ordinary use as an automobile. These warranties, they say were breached. No claim or allegation is made regarding any express warranty.

A. GMC's Implied Warranties

A factory warranty, accompanying the Citation on its original sale, provided in boldface type:

"Any implied warranty of merchantability or fitness for a particular purpose applicable to this car is limited in duration to the duration of this written warranty."

GMC's warranty was limited to "12,000 miles or twelve months", whichever first occurred, after the original purchase. There is no dispute that the plaintiffs, as secondary purchasers nearly two years after its original sale, were outside the durational limit of GMC's factory warranty. Nor is there a dispute over whether GMC's implied warranty modification satisfies 6 Del.C. § 2-316. ³ The disclaimer is in writing, mentions the word merchantability and is conspicuous. ⁴

But plaintiffs argue that while GMC's modification may well be effective under § 2-316, it is not applicable to them because they never received a copy of the factory warranty. This is a curious argument, for had plaintiffs, as secondary purchasers, been given a copy of the factory warranty, they still would not be the beneficiaries of implied warranties, as GMC had effectively limited their duration. It is even more difficult to understand how plaintiffs are in any better position by not having received the factory warranty. As secondary purchasers, they have no greater rights than the party to whom the automobile was originally sold. To say otherwise would mean that a disclaimer or warranty modification loses its effectiveness upon resale of goods, with later purchasers receiving warranty rights denied to their sellers.

A secondary purchaser who claims the protection of a warranty is subject to the same disclaimers, modifications or remedy limitation clauses that were the basis of the underlying sales agreement between the original purchaser and seller. Although warranties that a seller extends to its immediate purchaser also reach any person "who may reasonably be expected to use" the goods, § 2-318, modifications or exclusions of warranty rights are equally operative against subsequent purchasers who claim to be beneficiaries of such warranties. See 1A Uniform Law Anno., Uniform Commercial Code, § 2-318 Official Comment 1, pp. 53-54. ("To the extent that the contract of sale contains provisions under which warranties are excluded or modified ... such provisions are equally operative against beneficiaries of warranties under this section").

The same point is made in General Motors Corp. v. Halco Instruments, Inc., Ga.App., 9 UCC Rep.Serv. 1193 (1971). Plaintiff sued GMC and its dealer for the purchase price and cost of repairs for a used automobile. Although GMC had disclaimed all implied warranties, plaintiff tried to recover under an implied warranty theory because it had not received a copy of the original factory warranty. Id., 9 UCC Rep.Serv. at 1194-96. The Georgia court rejected this argument. Noting that the factory warranty effectively disclaimed all implied warranties, it reasoned that the plaintiff could receive "no higher or greater rights than were held by the party" to whom the automobile was originally sold. Id., 9 UCC Rep.Serv. at 1197.

As secondary purchasers, plaintiffs in this case are equally subject to GMC's durational limitation of implied warranties and, thus, are in no position to urge a breach thereof by GMC.

B. Hertrich's Implied Warranties

Upon purchasing the used Citation from Hertrich, plaintiffs received two critical documents. First they received a document, captioned "USED VEHICLE GUARANTEE", which provided in relevant part:

"1. The automobile covered by this guarantee is warranted as defined by the dealer herein for the benefit of the purchaser for a period of 30 days from the date of delivery, or 1,000 miles, whichever occurs first. This fifty-fifty guarantee means that the dealer will make any necessary mechanical repairs in his shop at a cost to the buyer of only 50 percent of dealer's current list on both parts and labor, except where such repairs have become necessary by abuse, negligence, or collision."

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"5. No other guarantees, representations or agreements, expressed or implied, have been made to the buyer."

The "guarantee" was signed by a representative of Hertrich. In addition, plaintiffs received Hertrich's sales invoice which contained the following provisions in red lettering:

"DISCLAIMER OF WARRANTIES"

"The factory warranty constitutes all of the warranties with respect to the sale of this item/items. The seller hereby expressly disclaims all warranties, either express or implied including any implied warranty of merchantability or fitness for a particular purpose, and the seller neither assumes nor authorizes any other person to assume for it any liability in connection with the sale of this item/items."

Plaintiffs deny the effectiveness of Hertrich's disclaimers, saying that neither the "guarantee" nor the sales invoice meet the requirements of § 2-316.

(1). The Used Vehicle Guarantee

Plaintiffs note the language of the "guarantee" does not include the word "merchantability"; nor do any of its paragraphs appear distinguished by the use of contrasting type or color. Hertrich appears to concede these points, for it argues that the guarantee satisfies § 2-316(3)(a). Section 2-316(3) provides:

"(3) Notwithstanding subsection (2)

(a) Unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like "as is", "with all faults" or other language which in common understanding calls the buyer's attention to the exclusion of warranties and makes plain that there is no implied warranty ; and

(b) when the buyer before entering into the contract has examined the goods or the sample or model as fully as he desired or has refused to examine the goods there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him; and

(c) an implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade." 6 Del.C. § 2-316(3) (emphasis added).

Hertrich asserts that § 2-316(3)(a) sanctions the use of language which "calls the buyer's attention to the exclusion" of implied warranties and that paragraph 5 of the guarantee is such language. As I am not persuaded by Hertrich's...