Ludwig v. Ford Motor Co.

• Decision Date: 09 July 1987
• Docket Number: No. 30A01-8607-CV-00175,30A01-8607-CV-00175
• Citation: 510 N.E.2d 691
• Parties: 5 UCC Rep.Serv.2d 361 Rodney H. LUDWIG, Plaintiff-Appellant, v. FORD MOTOR COMPANY, General Motors Corporation and Fairway Ford Sales, Inc., Defendants-Appellees.
• Court: Indiana Appellate Court

Page 691

510 N.E.2d 691

5 UCC Rep.Serv.2d 361

Rodney H. LUDWIG, Plaintiff-Appellant, v. FORD MOTOR COMPANY, General Motors Corporation and Fairway Ford Sales, Inc., Defendants-Appellees.

No. 30A01-8607-CV-00175.

Court of Appeals of Indiana First District.

July 9, 1987.

Rehearing Denied Aug. 25, 1987.

Edward B. Hopper, II, James S. Kowalik, Hopper & Opperman, Indianapolis, Michael J. Tosick, Free Brand Tosick & Allen, Greenfield, for plaintiff-appellant.

W.C. Blanton, Ice Miller Donadio & Ryan, Indianapolis, for defendant-appellee Ford Motor Co.

Michael Rosiello, Stanley C. Fickle, Paula Taylor Whitfield, Barnes & Thornburg, Indianapolis, for defendant-appellee General Motors Corp.

RATLIFF, Chief Judge.

STATEMENT OF THE CASE

Rodney H. Ludwig appeals the granting of summary judgment in favor of Ford Motor Company and General Motors Corporation. We affirm.

FACTS

Rodney H. Ludwig is president and principal shareholder of R.H. Ludwig Co., an over-the-road trucking company. In the spring of 1979, Ludwig met with Philip Weisman, president of Fairway Ford, Inc. (Fairway Ford), a Ford dealership that includes tractor-trailers among the vehicles it sells, about purchasing some trucks. Weisman apparently told Ludwig that the five trucks he was considering purchasing were Fairway Ford demonstration models with 200,000 mile warranties, instead of telling Ludwig the trucks had been used previously in Weisman's business. The trucks ranged in mileage from 5,000 to 29,000 with an average mileage of approximately 15,000 miles per truck. Ludwig purchased five Ford CLT 9000 trucks, with General Motors Corp. (GM) engines, from Fairway Ford, the first two trucks being delivered on May 23, 1979, and the remaining three delivered to Ludwig on May 29, 1979.

From the start, the trucks consumed inordinate amounts of fuel and suffered repeated mechanical breakdowns. According to Ludwig, an engineer, the breakdowns were due to various defects in the GM engines and Ford bodies. Ludwig claims the Ford trucks had frame flexing and alignment problems which caused the GM engines to require extra power and consume excessive amounts of fuel. There also was excessive wear on the tires, all of these problems leading to the eventual breakdown of all five engines which essentially blew up over a seven month period leaving the trucks inoperable. Two of the five engines were repaired by GM but blew up again later.

According to Ludwig, when the engines began blowing up he met with Weisman on several occasions and was assured by Weisman, Ford and GM that the situation would be resolved. Ludwig also discovered that other owners had similar frame and fuel consumption problems. Further repairs on the five trucks were not made by Ford or GM as they were no longer under warranty. Since they were not repaired Ludwig refused to make further payments on the trucks; there were no payments made from January of 1979 to January of 1980. Because the five trucks were inoperative, Ludwig lost all of his trucking business. The trucks were repossessed and Ludwig was forced out of the trucking business.

On August 10, 1983, Ludwig brought suit against Ford, GM, and Fairway Ford for $1,500,000.00 in compensatory damages and $500,000.00 in punitive damages. Ludwig based his complaint on alleged breaches of express and implied warranties and negligent design and construction with respect to the five trucks. Ludwig also alleged fraudulent concealment on the part of Detroit Diesel Allison, a division of GM, regarding the manufacture of the engines.

On March 22 and 23, 1986, the trial court granted Ford's and GM's motions for summary judgment respectively. In its findings of fact and conclusions of law pursuant to Ford's summary judgment motion the trial court found that the relationship between Ford and Fairway Ford with respect to trucks was set forth in a heavy truck sales service agreement. Under the terms of this agreement, Fairway Ford had the right to purchase heavy duty trucks manufactured by Ford and re-sell them to Fairway Ford customers on its own behalf. Thus, Fairway Ford was not Ford's agent for the purpose of selling trucks. Furthermore "To the extent allowed by law, THIS WARRANTY IS IN PLACE OF all other warranties, express or implied, including ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS. Under this warranty, repair or replacement of parts is the only remedy.

no Ford employee participated in the negotiations which led to Ludwig's purchase of the trucks, or otherwise had any dealings with Ludwig relating to the trucks prior to their purchase. The court found that the only warranty made by Ford included the following language:

* * *

"Cummins, Caterpillar, Detroit Diesel Engines, and Allison Transmissions installed in Ford-built trucks are warranted by their respective manufacturers and not by Ford or the Selling Dealer...."

Record at 522. The court found that Ford promised only that it would repair or replace certain parts of trucks found to be defective in factory material or workmanship and did not warrant the absence of defects. Thus, the court concluded that Ford's warranty does not relate to future performance. The court further found that Ludwig had not alleged personal injury or property damage as proximately caused by any alleged defects.

In its conclusions of law regarding Ford's motion for summary judgment the court determined that the four year statute of limitations, Indiana Code section 26-1-2-725, barred all of Ludwig's claims of breach of express and implied warranties against Ford because the action was commenced more than four years after the trucks were delivered to Ludwig. Neither, the court concluded, did Ford's warranty fall within the future performance exception found in I.C. Sec. 26-1-2-725(2). The court found that Ludwig's claim of breach of an implied warranty failed to state a claim because no privity of contract existed between Ludwig and Ford with respect to Ludwig's purchase of the trucks. In addition, Ford effectively disclaimed all implied warranties. Ludwig's claim for breach of an implied warranty of fitness for a particular purpose was also found to fail to state a claim as a matter of law because the trucks were used for their ordinary purpose. Finally, the court concluded that Ludwig's claim of negligent design and construction failed to state a claim in that such claims are not legally cognizable in Indiana. Therefore, the trial court granted Ford's motion for summary judgment.

The court made additional findings of fact regarding GM's motion for summary judgment. GM warranted only the engines contained in the trucks, the warranty stating:

"Detroit Diesel Allison (Detroit Diesel Allison, Division of General

Motors Corporation) warrants to the owner that it will repair any

defective or malfunctioning parts of each new Series 71 and 92 Detroit

Diesel engine (referred to as Engine) used to power a motor vehicle

operated on highway . . . in accordance with the following schedule:

                               WARRANTY LIMITATIONS AND ADJUSTMENTS SCHEDULE
                -------------------------------------------------------------------------------
                   Warranty Limitations                          Adjustment Charge to
                   (Whichever Occurs First)                       Be Paid by Owner
                    ----------------------                        ----------------
                    Item           Months           Miles         Parts          Labor
                    ----           ------           -----         -----          -----
                  Engine          Up to 24       Up to 200,000  No Charge      No Charge
                  Optional
                  Equipment       Up to 24       Up to 50,000   No Charge      No Charge
                  The warranty periods shall begin on the date the engine is delivered to
                  the first retail purchaser or, if the engine is first placed in service as
                  a demonstrator prior to sale at retail, on the date the engine is first
                  placed in service
                

. . . .

THIS WARRANTY IS THE ONLY WARRANTY APPLICABLE TO DETROIT DIESEL ENGINES

AND ENGINE OPTIONAL EQUIPMENT AND IS EXPRESSLY IN LIEU OF ANY OTHER

WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF

MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. DETROIT DIESEL

ALLISON DOES NOT AUTHORIZE ANY PERSON TO CREATE FOR IT ANY OTHER

OBLIGATION OR LIABILITY IN CONNECTION WITH THESE ENGINES OR OPTIONAL

EQUIPMENT. DETROIT DIESEL ALLISON SHALL NOT BE LIABLE FOR CONSEQUENTIAL

DAMAGES RESULTING FROM BREACH OF WARRANTY."

Further, no GM employee participated in negotiations for the purchase. Finally, Ludwig did not claim any personal injury or property damage due to the defects in the GM engine. Since Ludwig sought to recover for alleged breaches of express and implied warranties concerning the sale of goods, the court found the action subject to the Uniform Commercial Code. Thus, the court concluded that the four year statute of repose, I.C. Sec. 26-1-2-725, applied and barred Ludwig's claim for breaches of express and implied warranties against GM, and further that the warranty did not fall within the future performance exception,

I.C. Sec. 26-1-2-725(2), of the statute. The court determined that GM promised only that it would repair any defective or malfunctioning parts on the engine within the warranty period and did not promise an absence of defects. Thus, the court opined, the warranty was one of remedy and not future performance. The court determined that Ludwig's claim of alleged fraudulent concealment was flawed as there was no evidence GM made affirmative acts of concealment and no fiduciary or confidential relationship between GM and Ludwig giving rise to a duty to disclose information. Further, Ludwig's claim of breach of implied warranties was insufficient as a matter of law because there was no privity of contract between Ludwig and GM and GM's warranty had correctly and effectively disclaimed all implied warranties pursuant to I.C. Sec. 26-1-2-316. In addition, Ludwig's claim of negligence failed as a matter of...