MDS Enters., Inc. v. Mid-State Truck Serv., Inc.
| Decision Date | 25 February 2021 |
| Docket Number | Appeal No. 2019AP1575 |
| Citation | 958 N.W.2d 164 (Table),396 Wis.2d 703,2021 WI App 20 |
| Parties | MDS ENTERPRISES, INC., Plaintiff-Appellant, v. MID-STATE TRUCK SERVICE, INC., Navistar International Corporation and Navistar, Inc., Defendants-Respondents. |
| Court | Wisconsin Court of Appeals |
¶1 MDS Enterprises, Inc. ("MDS") appeals the circuit court's orders granting summary judgment and dismissing all six of its claims against Mid-State Truck Service, Inc., Navistar, Inc., and Navistar International Corporation (collectively, "Defendants"). We affirm summary judgment in favor of Defendants dismissing all claims, but we reduce the award of costs to Defendants by $1,000.
¶2 The following background is derived from the parties’ pleadings and from the affidavits and exhibits attached to the parties’ summary judgment submissions. The parties do not dispute the pertinent facts for purposes of this appeal. MDS is a Wisconsin corporation in the business of moving furniture. MDS shares common ownership and a principal place of business with another Wisconsin corporation, Horizon Rental, LLC. In three sets of transactions occurring in 2012, 2013, and 2016, Horizon purchased trucks from commercial truck dealer Mid-State Truck Service, Inc., ("Mid-State") and leased them to MDS.1 The trucks bore the brand name International and were manufactured by Navistar, Inc., a subsidiary of Navistar International Corporation (collectively, "Navistar").
¶3 The trucks were part of Navistar's "MaxxForce" line, which contained an "Engine Gas Recirculation" ("EGR") system that Navistar developed in response to a rule promulgated by the Environmental Protection Agency in 2001. Each of the trucks purchased in the 2012, 2013, and 2016 transactions contained MaxxForce engines with an EGR system.
¶4 MDS acquired ten International ProStar trucks from Mid-State in the 2012 transactions and five International Model 4300 trucks from Mid-State in the 2013 transactions. The sales contract for each of the fifteen trucks used a standard "Motor Vehicle Purchase Contract" form issued by the Wisconsin Automobile & Truck Dealers Association. The sales contracts state that MDS is purchasing the trucks from Mid-State "AS IS" and disclaimed all other warranties, including implied warranties of merchantability and fitness for a particular purpose. The sales contracts also indicate that the trucks come with a "New Vehicle Manufacturer Warranty" and that the parties should refer to a separate document for coverage and exclusion terms for that warranty. The separate document for each truck, captioned "limited warranty," warrants that Navistar, "at its option, will repair or replace any part of this vehicle that proves defective in material or workmanship, in normal use and service, with new or ReNEWed® parts."2 The limited warranty also includes a disclaimer stating that no other warranties, express or implied, are provided, and specifically disclaims warranties of merchantability and fitness for a particular purpose.
¶5 After placing the original fifteen trucks into service, MDS experienced what MDS refers to as "numerous breakdowns" involving the EGR system and its related equipment, leading it to have the trucks repaired by Navistar's authorized repair agents pursuant to the limited warranty. Although Navistar and its authorized agents never declined to repair the original fifteen trucks, the trucks continued to experience EGR-related breakdowns even after being serviced.
¶6 MDS and Mid-State later negotiated a deal whereby MDS would trade in ten ProStar trucks it previously purchased through Mid-State for replacement trucks. The parties finalized the trade-in deal in 2016. MDS traded in its ten ProStar trucks for ten replacement ProStar trucks that had previously been owned by another commercial trucking company, Roehl Transport ("Roehl"). The replacement trucks were covered by Navistar custom service contracts ("extended warranties")3 that Roehl had purchased. MDS and Mid-State executed a set of forms that transferred the Navistar extended warranties from Roehl to MDS. The extended warranties contain similar "repair or replace" language to that in the original warranties.
¶7 After the trade was executed and the replacement ProStars were in MDS's possession, the replacement ProStars experienced EGR-related engine problems. As with the original ProStars and Model 4300s, MDS submitted the trucks to Navistar's authorized repair agents for warranty service, and the trucks were serviced. Eventually, continued breakdowns associated with the EGR components led MDS to file suit against Mid-State and Navistar.
¶8 MDS's amended complaint alleges six counts, three against Navistar and three against Mid-State. MDS's first count alleges breach of express warranty against Navistar with respect to all twenty-five trucks.4 MDS alleges that the authorized repair work done pursuant to the repair-or-replace provisions failed to remedy the problems with the trucks’ EGR systems and related engine problems, causing any and all warranties to fail of their essential purpose. Counts two and three allege that Navistar breached implied warranties of merchantability (count two) and fitness for a particular purpose (count three) due to flaws in the engines in all twenty-five trucks. Counts four through six allege various claims against Mid-State regarding Mid-State's alleged representations that the ten replacement ProStars were "much more reliable" than the original ProStars and that they had "next generation" engines.
¶9 Defendants filed motions for summary judgment requesting dismissal of all counts, which the circuit court granted. The court also awarded costs to Defendants. MDS appeals.
¶10 "We review de novo a circuit court's ruling on summary judgment, and apply the same legal principles." Chapman v. B.C. Ziegler & Co. , 2013 WI App 127, ¶2, 351 Wis. 2d 123, 839 N.W.2d 425. Under that methodology, we examine the moving party's submissions to determine whether they establish a prima facie case for summary judgment. See Tews v. NHI, LLC, 2010 WI 137, ¶41, 330 Wis. 2d 389, 793 N.W.2d 860. If the moving party has made a prima facie showing, we examine the opposing party's affidavits and other proof to determine whether summary judgment is appropriate. See id. Ultimately, summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." WIS. STAT . § 802.08(2).5 "[W]e draw all reasonable inferences from the evidence in the light most favorable to the non-moving party." Pum v. Wisconsin Physicians Serv. Ins. Corp. , 2007 WI App 10, ¶6, 298 Wis. 2d 497, 727 N.W.2d 346. The purpose of summary judgment is "to avoid trials when there is nothing to try." Tews , 330 Wis. 2d 389, ¶42.
¶11 We review an award of costs under the erroneous exercise of discretion standard. See Lane v. Sharp Pkg. Sys., Inc. , 2002 WI 28, ¶66, 251 Wis. 2d 68, 640 N.W.2d 788.
¶12 For the reasons explained below, we conclude that Defendants are entitled to summary judgment dismissing all six of MDS's claims. We also conclude that the circuit court properly awarded video deposition costs to Defendants but erroneously awarded costs to Defendants for pro hac vice fees.
¶13 MDS argues that Defendants are not entitled to summary judgment dismissing count one, which alleges breach of express warranty. MDS contends that the repair-or-replace provision for each of the twenty-five trucks failed of its essential purpose because authorized repair work on the trucks failed to remedy the defective EGR system and related engine problems. For reasons we now explain, we conclude that, based on the undisputed facts, no reasonable factfinder could find that the repair-or-replace provisions failed of their essential purpose, and that as a result, there was no breach of Navistar's express warranty.
¶14 A seller may disclaim or limit express warranties. See WIS. STAT . § 402.316. Where an express warranty fails of its essential purpose, a buyer may pursue the full panoply of remedies under the Uniform Commercial Code (UCC), as adopted in Wisconsin. See WIS. STAT . § 402.719(2). A repair-or-replace provision may fail of it essential purpose "where the cumulative effect of all the nonconformities substantially impairs the value of the goods to the buyer." Murray v. Holiday Rambler, Inc. , 83 Wis. 2d 406, 421, 265 N.W.2d 513 (1978) ; see also Southern Fin. Grp., LLC v. McFarland State Bank , 763 F.3d 735, 741 (7th Cir. 2014) (). Even where parties have agreed to limit the remedies available, those limitations may not deprive a party of "a fair quantum of remedy." Phillips Petroleum Co. v. Bucyrus-Erie Co. , 131 Wis. 2d 21, 40, 388 N.W.2d 584 (1986).
¶15 Here, it is undisputed that for each repair event, Navistar performed the requested repair and MDS accepted the truck and put the truck back into service, as promised by the repair-or-replace provision. It is also undisputed that, as shown below, MDS placed hundreds of thousands of miles on each of these trucks over the several years that it owned them, demonstrating that MDS was not deprived of a fair quantum of remedy.
¶16 As to the latter point, the record shows that the ten ProStar trucks that MDS purchased in 2012 averaged approximately 500,000 miles when MDS traded them in after three and a half years of use. Similarly, the five Model 4300 trucks purchased in 2013 were run for between 226,309 and 308,227 miles during the years MDS owned them. As for the ten replacement trucks, when MDS acquired them, they had between 338,440 to 349,049 miles, and...
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