Mercedes-Benz of North America, Inc. v. Garten

• Decision Date: 01 September 1992
• Docket Number: MERCEDES-BENZ,No. 475,475
• Citation: 94 Md.App. 547,618 A.2d 233
• Parties: , 21 UCC Rep.Serv.2d 937 OF NORTH AMERICA, INC., et al. v. Herbert S. GARTEN. ,
• Court: Court of Special Appeals of Maryland

Page 547

94 Md.App. 547

618 A.2d 233, 21 UCC Rep.Serv.2d 937

MERCEDES-BENZ OF NORTH AMERICA, INC., et al. v. Herbert S. GARTEN.

No. 475, Sept. Term, 1992.

Court of Special Appeals of Maryland.

Jan. 11, 1993.

Paul Walter (William C. Sammons, Joan F. Brault, Melissa C. Giove and Tydings & Rosenberg, on the brief), Baltimore, for appellant Mercedes-Benz.

Lynne B. Malone (Deborah J. Clarke and Anderson, Coe & King, on the brief), Baltimore, for appellant Valley Motors, Inc.

Howard J. Schulman, Baltimore, for appellee.

Argued before ALPERT, FISCHER and HARRELL, JJ.

HARRELL, Judge.

Appellee, Herbert S. Garten, filed suit against Mercedes-Benz of North America, Inc. (MBNA) and Valley Motors, Inc., appellants, alleging: (1) breach of express warranty; (2) breach of implied warranty; (3) violation of the Unfair or Deceptive Trade Practices provisions of the Consumer Protection Act (CPA), Md.Com.Law II Code Ann. § 13-301 et seq. (1990 & Supp.1992); and, (4) violation of the Automotive Warranty Enforcement Act, Md.Com.Law II Code Ann. § 14-1501 et seq., in connection with his purchase of a new 1990 Mercedes-Benz, Model 300E. A two day bench trial in the Circuit Court for Baltimore County (Murphy, J.) was held in August 1991. At the close of evidence, the trial court, in an oral opinion, ruled in Mr. Garten's favor on all four counts. After a hearing on 20 September 1991, the trial court also granted Mr. Garten's petition for attorney's fees. Judgment was entered on 24 September 1991. This appeal followed.

Facts

In April 1990, Mr. Garten sought to purchase a new 1990 Mercedes-Benz, Model 300E from Valley Motors. He spoke to a Valley Motors salesman, Mr. Robert Bell, with whom he had dealt previously, about trading in his present car, a 1986 Mercedes-Benz, Model 300E. ¹ Mr. Bell told Mr. Garten that he would have to bring his 1986 Mercedes-Benz in to Valley Motors in order to determine its trade-in value. Mr. Garten testified that during this conversation Mr. Bell represented to him that, except for some cosmetic changes, the 1990 300E was "identical" to the 1986 300E.

On 9 April 1990, Mr. Garten brought his 1986 300E into Valley Motors to be appraised. Mr. Garten testified that during this visit to Valley Motors he asked Mr. Bell to describe the exact differences between the 1986 and 1990 models, and again Mr. Bell replied that they were only cosmetic. After the appraisal was completed Mr. Garten left Valley Motors. Shortly thereafter, Mr. Bell called Mr. Garten on his car phone and they agreed on a purchase price of approximately $42,500 ² with a $17,500 trade-in allowance for the 1986 300E. Mr. Garten took delivery of the 1990 300E on 10 April 1990.

The following morning, upon starting the 1990 300E for the first time that day, Mr. Garten found that the car had difficulty shifting from second to third gear for a short period of time until the car warmed up. Mr. Garten telephoned Mr. Bell to complain about the new car and what he considered to be a possible transmission problem. Mr Garten agreed to wait until the 1000 mile servicing to see if the problem worked itself out.

On 3 May 1990, Mr. Garten brought the 1990 300E to Valley Motors for the 1000 mile checkup and presented a memorandum describing the problems he was having with the car, focusing on the automobile's delayed upshift from second to third gear. The report from the service department personnel stated that they were unable to duplicate the problems about which Mr. Garten complained and that the transmission upshift delay, which Mr. Garten considered to be a problem, was its normal operation.

In the ensuing few days Mr. Garten spoke to several people from MBNA and Valley Motors, the end result being that there was no remedy to the delayed upshift, which was caused by an emissions control device and was, in fact, the way the 1990 300E was designed to operate. ³ Mr. Garten was not satisfied with this response and on 9 May 1990 he returned the 1990 300E to Valley Motors. On the same day, Mr. Garten delivered two letters ⁴ to Valley Motors stating that the 1990 300E was defective and that he was revoking his acceptance and rescinding the sale. Mr. Garten left the keys to the 1990 300E, requested the return of his 1986 300E, and asked Valley Motors how they could re-transfer titles to the two cars. Finally, Mr. Garten informed Valley Motors that he would be renting a car until this matter was resolved. The 1990 300E had approximately 1800 miles on it the day Mr. Garten left it with Valley Motors.

The 1990 300E sat parked in Valley Motors' lot for approximately seven months until December 1990 when Mr. Garten retrieved the car. He subsequently traded in the 1990 300E for a new 1991 300E that he purchased from another Mercedes-Benz dealer. The total purchase price of the 1991 300E was $43,123.50. Mr. Garten also traded in the 1990 300E for $31,500.

We will include additional facts as necessary in our discussion of the issues presented.

Issues

MBNA and Valley Motors each attack the four counts upon which Mr. Garten was able to recover in the trial court. For the sake of clarity, we will address the issues by count as filed in Mr. Garten's complaint and then turn to the parties' arguments on damages and attorney's fees. Where the appellants' arguments on the counts are similar or the same, we will address their arguments together. Where their arguments and theories differ, we will discuss their positions separately.

MBNA raises the following issues, which we have slightly rephrased:

I. Whether the trial court erred in finding MBNA liable for breach of an express warranty under Md.Com.Law I § 2-313 Code Ann. (1992) and for violation of the Unfair or Deceptive Trade Practices provisions of the CPA, Md.Com.Law II § 13-301 et seq. Code Ann. (1990 & Supp.1992) ⁵;

A. Whether the trial court erred in finding that the Valley Motors salesman who made the statements to Mr. Garten concerning the 1990 300E was MBNA's agent;

B. Whether the trial court erred in finding that the delayed upshift device installed in the 1990 300E constituted a material change from the 1986 300E, thereby making Mr. Bell's representations false;

II. Whether the trial court erred in finding that the 1990 300E was unmerchantable under Md.Com.Law I Code Ann. § 2-314 and substantially impaired under the Automotive Warranty Enforcement Act, Md.Com.Law II Code Ann. 14-501 et seq.;

III. Whether the trial court erred in its calculation of damages;

A. Under Mr. Garten's theories of implied and express warranty and unfair or deceptive trade practices, whether there was sufficient evidence to establish that Mr. Garten sustained any injury as a result of the delayed upshift device;

B. Whether the trial court erred in allowing Mr. Garten to recover damages under the Automotive Warranty Enforcement Act, § 14-501 et seq., because he disposed of the 1990 300E; and

IV. Whether the trial court erred in its award of attorney's fees because Mr. Garten did not identify the number of hours spent on the Unfair or Deceptive Trade Practices and Automotive Warranty Enforcement Act counts, the only counts that allow recovery of attorney's fees.

Valley Motors presents the following issues for our review, which we have slightly recast:

I. Whether the trial court erred in finding a breach of an express warranty;

II. Whether the trial court erred in holding Valley Motors liable under the Unfair and Deceptive Trade Practices provisions;

III. Whether the trial court erred in holding Valley Motors, a car dealer, liable under the Automotive Warranty Enforcement Act;

IV. Whether the trial court erred in finding that the installation of the delayed upshift device substantially impaired the value of the 1990 300E under the Automotive Warranty Enforcement Act;

V. Whether the trial court erred in finding that the 1990 300E was unmerchantable under Md.Com.Law I Code Ann. § 2-314;

VI. Whether the trial court erred in awarding attorney's fees or, in the alternative, whether the amount awarded was erroneous; and

VII. Whether the trial court's award of damages was erroneous.

Standard of Review

On appeal, we review the case on both the law and the evidence. Md.Rule 8-131(c). We will not set aside the trial court's judgment on the evidence unless clearly erroneous. Accordingly, in reviewing the lower court's findings, our function is not to determine whether we might have reached a different conclusion. Rather, it is to decide only whether there was sufficient evidence to support the trial court's findings. In making this decision, we must assume the truth of all the evidence, and of all the favorable inferences fairly deducible therefrom, tending to support the factual conclusions of the lower court. Pahanish v. W. Trails, Inc., 69 Md.App. 342, 353-54, 517 A.2d 1122 (1986).

Discussion

Count I: Breach of Express Warranty Was Mr. Bell MBNA's Agent?

MBNA argues that the trial court erred in finding it liable for breach of an express warranty. Specifically, MBNA claims that the trial court was clearly erroneous in finding that Mr. Bell, who made the representations to Mr. Garten, was an agent of MBNA and, therefore, could bind MBNA by his statements. We agree with MBNA's position and explain.

There are two possible agency relationships that could be found between Mr. Bell and MBNA. The first, actual agency, is a fiduciary relationship "which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act." Proctor v. Holden, 75 Md.App. 1, 20, 540 A.2d 133, cert. denied, 313 Md. 506, 545 A.2d 1343 (1988). This Court, in Schear v. Motel Management Corp. of Am., 61 Md.App. 670, 487 A.2d 1240 (1985), set forth the characteristics of an actual agency relationship:

There are three elements that are integral to an agency relationship: (1) The agent is subject to the principal's right of control; (2) the agent has a...