Lidstrand v. Silvercrest Industries

• Decision Date: 02 February 1981
• Docket Number: No. 7707-4-I,7707-4-I
• Parties: , 31 UCC Rep.Serv. 978 Norman LIDSTRAND and Sherry Lidstrand, his wife, Respondents, v. SILVERCREST INDUSTRIES, a corporation, Appellant.
• Court: Washington Court of Appeals

Page 359

28 Wn.App. 359

623 P.2d 710, 31 UCC Rep.Serv. 978

Norman LIDSTRAND and Sherry Lidstrand, his wife, Respondents, v. SILVERCREST INDUSTRIES, a corporation, Appellant.

No. 7707-4-I.

Court of Appeals of Washington, Division 1.

Feb. 2, 1981.

As changed Feb. 19, 1981.

Clinton, Fleck, Glein & Brown, Michael E. Jacobsen, Seattle, for appellant.

Barney, Cromwell, Weiner & Mendoza, Richard M. Barney, Jr., Gregory F. Cromwell, Seattle, for respondents.

JAMES, Judge.

Plaintiffs Norman and Sherry Lidstrand brought this action to recover damages claimed to have been sustained because of defects in a mobile home manufactured by defendant Silvercrest Industries. Silvercrest appeals the trial judge's award of damages and attorney's fees in favor of the Lidstrands on theories of defective manufacture, breach of warranty, and violation of the Washington Consumer Protection Act. RCW 19.86. We affirm the judgment for actual damages and reverse the judgment for punitive damages and attorney's fees under the Consumer Protection Act.

In November, 1973, Mr. and Mrs. Roy Kosanke took delivery of a mobile home manufactured by Silvercrest and sold by Budget Mobile Homes of Edmonds, Washington. The home was expressly warranted free from defects in material and workmanship for 12 months from delivery, but otherwise was sold "as is." The warranty purported to be "in lieu of" all other state and federal warranties. Exhibit No. 14. Soon after the Kosankes purchased the home, the bathroom ceiling began to leak near an overhead fixture. Kosanke informed Silvercrest about the leak. Kosanke also requested that the State Department of Labor and Industries inspect the home. The state inspector found 15 specific violations of state standards on his first visit in July, 1974, although none of the cited violations specifically referred to the leaky bathroom ceiling. Silvercrest sent repair crews to correct these violations, but they did not initially repair the bathroom ceiling leak.

The Kosankes, who sold the home to the Lidstrands on October 21, 1974, informed the Lidstrands of the bathroom ceiling leak. After the sale, the bedroom ceiling began leaking. Silvercrest sent a repair crew which fixed this leak and the one in the bathroom. Other repairs were made to bring the home into compliance with state standards. By the final inspection on March 6, 1975, all original violations were cleared. During this time, Silvercrest did not advise the Lidstrands that, because they were not the original owners, the mobile home was not covered by warranty.

In June, 1975, the Lidstrands moved the home to Westport, Washington. When the 1975 fall rainy season began, numerous additional leaks appeared in the front bedroom, the kitchen, dining room, family room, living room, and front entry. The carpeting was soaked and drapes and clothing in the home were damaged or ruined. When the Lidstrands again requested repairs, Silvercrest refused and informed the Lidstrands the express warranty did not extend to second owners. By its terms, however, the warranty was not limited to the original purchaser.

After prompting from the state, Silvercrest agreed to inspect the home in December, 1975, and one of its repair crews again attempted repairs. Lidstrand and a private repairman also attempted repairs without success. This action was then filed.

The trial judge awarded damages for ruined clothing and other articles inside the home, for rental of alternative housing, and for the cost of repairs to the mobile home. He also awarded $1,000 punitive damages and $5,000 attorney's fees under the Consumer Protection Act.

Silvercrest contends the Lidstrands' action is one founded on theories of breach of implied warranties of merchantability and fitness for a particular purpose. Citing Berg v. General Motors Corp., 87 Wash.2d 584, 555 P.2d 818 (1976), and Daughtry v. Jet Aeration Co., 91 Wash.2d 704, 592 P.2d 631 (1979), Silvercrest argues the Lidstrands cannot recover because there is no privity of contract between them. The Lidstrands respond that theories of express warranty, negligence, and strict liability support the trial judge's decision.

Washington courts have consistently required privity of contract between the parties in actions founded upon warranty. Daughtry v. Jet Aeration Co., supra. The requisite privity may be established for an intended third party beneficiary of a warranty, however, without showing a direct contractual relationship between seller and ultimate user. Schroeder v. Fageol Motors, Inc., 12 Wash.App. 161, 528 P.2d 992 (1974), rev'd in part on other grounds, 86 Wash.2d 256, 544 P.2d 20 (1975); Chandler v. Hunter, 340 So.2d 818 (Ala.App.1976). Here, an express warranty was extended by Silvercrest to the Kosankes, the original purchasers of the mobile home. If, however, the Lidstrands were intended third party beneficiaries of the warranty, they may recover.

The trial judge found that "said mobile home was 'covered' by a warranty of defendants' based upon their acts, conduct, and documents." Finding of fact No. 15. Both Silvercrest's express warranty and numerous warranty work order forms were introduced by the Lidstrands. Silvercrest's warranty promises the purchaser that "THE COMPONENT PARTS IN YOUR NEW MOBILE HOME ARE WARRANTED FOR twelve (12) months after delivery to you ... to be free from defects in material and workmanship." Exhibit No. 14. Silvercrest does not qualify this promise by adding language which restricts the warranty to the original owners. The sole reference to "original purchaser" is the requirement that the "original purchaser" mail the warranty card within 30 days of the date of purchase. Exhibit No. 14.

In Schroeder v. Fageol Motors, Inc., supra 12 Wash.App. at 165, 528 P.2d 992, we found that a warranty that an engine would be free of defects " 'for two years or 100,000 miles or 3,600 hours of operation ' " was "(o)bviously ... for the benefit of the operator " or end-user of the engine. There, the end-user purchased the product in used condition from a dealer, but the manufacturer was held liable to the purchaser who was an intended beneficiary of the manufacturer's warranty. Given a passive anticipated product use such as shelter, a manufacturer would not be expected to refer to operation or use of its product. On its face, a warranty that the home will be defect free for 12 months is a promise there will be no defects during that time, regardless of who happens to own the product. We conclude that any owner of the mobile home during the 1-year warranty period was intended to benefit from Silvercrest's warranty.

The trial judge concluded "(t)hat defendant had notice of defective (sic ) construction defects almost immediately after the Kosankes, the original owners, took possession" and that "defendant had further and timely notice of defects in the construction of said mobile home soon after plaintiffs took possession in November of 1974." Conclusion of law No. 5. He found that "extensive water leaks occurred in the mobile home" and "as a result of the extensive water leakage problems ...," plaintiffs suffered damages. Findings of fact Nos. 6, 18. He found that the mobile home, when reassembled at Westport, "was in the exact same status and condition as when it was manufactured by the defendant." Finding of fact No. 4.

The findings also detail the defects which Lidstrand and his mover discovered prior to reassembly:

That plaintiff and (his mover) examined interior parts of said mobile home and found that insulation was missing in places in the walls, the vapor barrier was incomplete in places, the siding was improperly overlapped in a fashion which allowed driving rain and water to flow freely through to the interior portions of the walls, the roof was sagging in one place and many of the laps in the front of the mobile home lacked caulking of any kind.

Finding of fact No. 9. The trial judge concluded that "the water leakage and other problems were a result of defects in the manufacture of said mobile home, which defects existed at the time said mobile home was manufactured by defendant ..." Conclusion of law No. 3. No error is assigned to the factual elements of these findings and conclusions.

Upon appeal of nonjury trials, "respondents are entitled to the benefit of all evidence and reasonable inference therefrom in support of the findings of fact entered by the trial court." Hallin v. Bode, 58 Wash.2d 280, 281, 362 P.2d 242 (1961), quoting In re Estate of Dand, 41 Wash.2d 158, 247 P.2d 1016 (1952); see 5 Am.Jur.2d Appeal and Error § 840 (1962). From the findings of fact entered, it may be reasonably inferred that the defects which became apparent after the 1-year period were related to and caused by the same defects which existed at the time the mobile home was manufactured. We conclude that Silvercrest breached its warranty and that the Lidstrands were intended beneficiaries of that warranty.

Silvercrest promised to honor its warranty by replacing or repairing any defective parts. Assuming, without deciding, that Silvercrest intended this to be an exclusionary clause which limited the remedy for breach of warranty, the Lidstrands have remedies otherwise available under the Uniform Commercial Code (U.C.C.) if a limited remedy "fail(s) of its essential purpose." RCW 62A.2-719(2). Unreasonable delays in repairing or inability to adequately repair a product where the manufacturer has promised such repairs causes a limited remedy " 'to fail of its essential purpose.' " Ehlers v. Chrysler Motor Corp., 88 S.D. 612, 619, 226 N.W.2d 157, 161 (1975). " 'An unsuccessful effort to remedy the defect renders the seller liable on his warranty; ...' " Schroeder v. Fageol Motors, Inc., supra 12 Wash.App. at 165, 528 P.2d 992, quoting 77 C.J.S. Sales § 340 (1952). Accord, Melby v. Hawkins Pontiac, Inc., 13 Wash.App. 745, 537 P.2d 807 (1975). The Lidstrands are entitled to the remedies otherwise...