Maryland Independent Auto. Dealers Ass'n, Inc. v. Administrator, Motor Vehicle Administration

• Decision Date: 07 December 1978
• Docket Number: No. 356,356
• Parties: , 25 UCC Rep.Serv. 699 MARYLAND INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION, INC. et al. v. ADMINISTRATOR, MOTOR VEHICLE ADMINISTRATION.
• Court: Court of Special Appeals of Maryland

Page 7

41 Md.App. 7

394 A.2d 820, 25 UCC Rep.Serv. 699

MARYLAND INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION, INC. et al. v. ADMINISTRATOR, MOTOR VEHICLE ADMINISTRATION.

No. 356.

Court of Special Appeals of Maryland.

Dec. 7, 1978.

William L. Putzel and Ronald J. Kearns, Baltimore, with whom were Putzel, Putzel & Danoff, P. A., Baltimore, on brief, for appellants.

Joanna S. LeHane, Asst. Atty. Gen., with whom was Francis Bill Burch, Atty. Gen., on brief, for appellee.

Argued before LOWE, WILNER and MacDANIEL, JJ.

WILNER, Judge.

Commercial Law article, § 2-316 describes various ways in which a seller of goods may limit or negate implied warranties that otherwise might be applicable to the sale. Section 2-316.1, however, which immediately follows § 2-316, states that the provisions of § 2-316 "do not apply to sales of consumer goods, as defined by § 9-109." Section 9-109 defines as "consumer goods" those that are "used or bought for use primarily for personal, family or household purposes." No one contests that automobiles, whether new or used, that are bought primarily for personal, family, or household use are "consumer goods" as so defined. See Houck v. DeBonis, 38 Md.App. 85, 379 A.2d 765 (1977), footnote 2 at 87.

Having excluded sales of consumer goods from the provisions of § 2-316, § 2-316.1 goes on to state in its next succeeding paragraph (hereafter referred to as § 2-316.1(2)):

"Any oral or written language used by a seller of consumer goods and services, which attempts to exclude or modify any implied warranties of merchantability and fitness for a particular purpose or to exclude or modify the consumer's remedies for breach of those warranties, is unenforceable. However, the seller may recover from the manufacturer any damages resulting from breach of the implied warranty of merchantability or fitness for a particular purpose."

The Motor Vehicle Administration (MVA), a unit within the State Department of Transportation, is the agency that licenses, and to a degree, regulates, automobile dealers and salesmen. See Transportation article, title 15, subtitles 3 and 4. With more particular reference to this case, § 15-312 provides that a dealer may not willfully fail to comply with the terms of a warranty or guarantee; § 15-315 authorizes MVA to suspend, revoke, or refuse to renew the license of any dealer who fails to comply with any provision of the Maryland Vehicle Law relating to the sale of vehicles, which would include § 15-312; and § 12-104(b), dealing with the general powers of MVA, authorizes it to adopt rules and regulations to carry out those provisions of the Maryland Vehicle Law "that relate to or are administered and enforced by (MVA)". ¹

Presumably in furtherance of this regulatory and rulemaking authority, and with tacit, but nonetheless apparent, reference to Commercial Law article, § 2-316.1, MVA, on May 16, 1976, adopted Regulation 11.02.03.83, which provides: ²

"A warranty may not contain language which specifically disclaims any implied warranty of merchantability or fitness. Examples of prohibited disclaimers are as follow.

"A. 'This warranty is expressly in lieu of any other warranty, express or implied, including any implied warranty of merchantability or fitness for a particular purpose, and any other obligations or liabilities on the seller's part,' or similar language that could be construed by a consumer to limit his recourse to the terms of express warranties.

"B. 'This vehicle is being sold as is, without any implied or express warranty of merchantability,' or similar language.

"C. 'Sold used with 50-50 warranty. The dealer hereby guarantees this vehicle for ______ days after ________ 19____ with the understanding that necessary repairs made within this period of time will be charged half to the buyer and half to the dealer, of total retail cost of parts and labor used,' or similar language."

The Maryland Independent Automobile Dealers Association, appellant, sued MVA and its administrator initially seeking a declaratory judgment that § 2-316.1 does not apply to the sale of used cars, and that its member dealers therefore have a right to sell used cars on either an express warranty or an "as is" basis. Following the sustaining of a demurrer to this complaint, appellant filed an amended complaint seeking essentially the same relief, but through a challenge to the MVA regulation. The specific relief requested was a judgment declaring that § 2-316.1(2) does not apply to "used motor vehicles", and that the complainants are "thereby not required to comply with the terms thereof", and an injunction restraining MVA and its administrator "from exercising any of the powers respecting the enforcement of the implied warranty provisions of (§ 2-316.1(2)) against the Complainants." This appeal is from the denial of that relief by the Circuit Court for Baltimore County.

Although the parties differ in their statement of the questions presented, it appears that there are but two issues to be decided: (1) does § 2-316.1(2) apply to the sale of used automobiles which otherwise fall within the definition of "consumer goods", and (2) if so, may MVA enforce that section in the manner reflected by its regulation 11.02.03.83?

(1) Statutory Interpretation

There is nothing within § 2-316.1(2) itself that facially would restrict its application to the sale of "new" goods, or conversely, that would exclude from its provisions the sale of "used" goods. Appellant seeks to read that restriction, or exclusion, into the law by interpreting the second sentence in paragraph (2) "However, the seller may . . ." as a condition precedent to the first sentence in that paragraph. In other words, its position seems to be that the restrictions contained in the first sentence apply only if the seller has an actual remedy under the second sentence, and, therefore, language which modifies or excludes an implied warranty is only unenforceable if the seller is able to recover from the manufacturer damages resulting from breach of an implied warranty. From this rather tenuous base, it argues that, with respect at least to used cars that, for one reason or another, are no longer subject to manufacturer's warranties at the time of the resale, the dealer, or seller, cannot avail himself of this condition, and, for that reason, the requirement itself does not apply.

As § 2-316.1(2) is now written, there is no basis whatever for the interpretation suggested by appellant. The two sentences comprising that paragraph express complete, unambiguous, and independent thoughts, neither being conditioned upon the other. The first sentence concerns the relationship between the seller and buyer of consumer goods, and makes absolutely clear, without condition or equivocation, that any attempt by the seller in such a transaction to modify or exclude implied...