Mercedes-Benz of North America Inc. v. Norman Gershman's Things to Wear, Inc.

• Citation: 596 A.2d 1358
• Decision Date: 29 January 1991
• Docket Number: MERCEDES-BENZ
• Parties: 1991-2 Trade Cases P 69,522, 16 UCC Rep.Serv.2d 1076 OF NORTH AMERICA INC., and I.G. Burton and Company, Inc., Defendants Below-Appellants and Cross-Appellees, v. NORMAN GERSHMAN'S THINGS TO WEAR, INC., Plaintiff Below-Appellee and Cross-Appellant. . Submitted:
• Court: United States State Supreme Court of Delaware

Page 1358

596 A.2d 1358

1991-2 Trade Cases P 69,522, 16 UCC Rep.Serv.2d 1076

MERCEDES-BENZ OF NORTH AMERICA INC., and I.G. Burton and Company, Inc., Defendants Below-Appellants and Cross-Appellees, v. NORMAN GERSHMAN'S THINGS TO WEAR, INC., Plaintiff

Below-Appellee and Cross-Appellant.

Supreme Court of Delawer.

Submitted: Jan. 29, 1991.

Decided: Aug. 2, 1991.

As Revised: Aug. 6, 1991.

Upon appeal and cross-appeal from Superior Court. Appeal Affirmed. Cross-Appeal Affirmed.

Joseph M. Bernstein, Wilmington, for appellant Mercedes-Benz of North America Inc.

N. Maxson Terry, Jr. of Terry, Jackson, Terry & Wright, Dover, for appellant I.G. Burton and Co., Inc.

Christopher J. Curtin of Sawyer & Akin, P.A., Wilmington, for plaintiff Norman Gershman's Things to Wear, Inc.

Before HORSEY, MOORE and WALSH, JJ.

HORSEY, Justice:

This suit for breach of warranty arises out of a car dealer and distributor's refusal to refund to purchaser the car's original purchase price and purchaser's refusal to accept the dealer and distributor's second "engine replacement" twenty-two months and 22,000 miles later.

In February 1984, plaintiff, "Norman Gershman's Things to Wear, Inc.," through Norman Gershman ("Gershman"), purchased for $58,660 a new 1984 Mercedes-Benz 500 SEC from defendant, I.G. Burton & Co., Inc. ("Burton"), a franchised Mercedes-Benz Delaware dealer. Defendant, Mercedes-Benz of North America, Inc. ("MBNA"), was the importer and distributor of the vehicle. Four months later, after the car had been driven 6,253 miles, Gershman complained to Burton that the car's engine had overheated and was inoperable. The overheating was later attributed to a crack in the engine block. Defendants returned the car thirty days later, after replacing the engine's "short block." Gershman would later testify that he was told, "They are replacing it with a brand new engine," and he did not learn until June 1986 that Burton had in fact only replaced the engine block. The repairs were made under MBNA's warranty at a cost to MBNA of $7,227.28.

Between August and November 1984, Gershman returned the car to Burton four times for servicing for engine problems related to: overheating, temperature gauge malfunction, and engine stalling or "running rough." In May 1986, Gershman left the car with Burton for repair of front end damage from a minor collision. After repair and while the car was being returned by Burton's service personnel to Gershman, the engine again overheated, attributed to a defective thermostat, resulting in extensive damage to the motor. By then, Gershman had driven the car 22,134 miles. MBNA replaced the entire engine assembly at a cost of $12,070; but Gershman then refused to accept redelivery of the car and demanded a full refund of the car's purchase price or a new vehicle. ¹ Burton declined, stating that MBNA's warranty obligation did not go beyond repairing the vehicle at its expense. In November 1986, Gershman commenced this litigation, asserting multiple claims for relief, including breach of express and implied warranties and violation of state and federal law. Defendants moved for summary judgment on all claims and Superior Court granted in part and denied in part defendants' motions. Norman Gershman's Things to Wear, Inc. v. Mercedes-Benz of North America, Inc., Del.Super., 558 A.2d 1066 (1989) ("Gershman I ").

In trial by jury in Superior Court, the court granted in part and denied in part defendants' motions for directed verdict on all claims. The court permitted four of plaintiff's claims to be submitted to the jury: (i) plaintiff's primary claim against both defendants for breach of their warranty to "repair or replace"; (ii) plaintiff's claim for relief under 6 Del.C. § 2-608 for recovery of the car's purchase price for the remedy of "revocation of acceptance"; (iii) plaintiff's claim against both defendants for violation of the Delaware Deceptive Trade Practices Act, 6 Del.C. § 2531, et seq.; and (iv) plaintiff's claim against MBNA for violation of the Delaware Lemon Law, 6 Del.C. § 5001, et seq.

The jury, by special interrogatories, found defendants not in violation of the Delaware Deceptive Trade Practices Act, but MBNA liable for violation of the Delaware Lemon Law. Both defendants were found to have breached their warranty to "repair or replace," the warranty to have "failed of its essential purpose," and plaintiff to have "effectively revoked his acceptance" of the car. On these findings, the court entered a verdict against both defendants for $58,660.

All parties filed motions for judgment notwithstanding the verdict ("judgment n.o.v.") as to all findings. The court granted MBNA's motion with respect to Gershman's claim under the Lemon Law, and otherwise denied defendants' motion. The court also denied plaintiff Gershman's motion for judgment n.o.v.--for failure of plaintiff to have earlier filed a motion for a directed verdict.

Defendants' appeal raises a single issue: whether the trial court erred as a matter of law in refusing to grant defendants' motion for a directed verdict and motion for judgment n.o.v. with respect to plaintiff's claim for relief based on "revocation of acceptance" under 6 Del.C. § 2-608. Plaintiff cross-appeals from Superior Court's ruling setting aside its verdict against MBNA for violation of the Lemon Law and for new trial on the deceptive trade practices counts. Plaintiff also cross-appeals the court's reduction of its attorney's fee award. We find no merit to either the appeal or the cross-appeal.

The question presented by defendants' appeal is whether, under the facts of this case, plaintiff's delay in exercising its remedy of revocation was so excessive as to be found untimely as a matter of law. While conceding that timeliness of revocation is ordinarily a question for the trier of fact, defendants contend that this case is the exception to the rule. Defendants refer to "uncontradicted" evidence that over a period of eighteen months, from November 1984 to May 1986, Gershman drove the car approximately 12,600 miles without reporting any engine overheating problem, and with the car having been serviced by Burton but once. ² Since Gershman could not have been relying on any promise by defendants "to make further repairs" over that period, defendants assert that Gershman's revocation remedy for engine malfunction accrued at the latest by November 1984, when he had "actual knowledge" of the warranty's failure. Defendants assert that plaintiff's 18-month delay, until May 1986, after obtaining knowledge of "grounds" for revocation, rendered the remedy untimely as a matter of law because neither induced by any assurance by defendants nor exercised "within a reasonable time after the buyer discover[ed] or should have discovered the ground for it." 6 Del.C. § 2-608(2). Defendants contend that there is insufficient evidence as a matter of law to sustain a jury finding that plaintiff's delay was "reasonable" under section 2-608(2) as either caused or induced by any actions or promises of defendants to make further repairs of the vehicle.

The predicate for the availability to plaintiff of the remedy of "revocation of acceptance," for purposes of recovery of the car's purchase price, was the jury's finding that MBNA's exclusive "repair or replace warranty failed of its essential purpose." See 6 Del.C. § 2-719(2). A warranty on a motor vehicle fails of its essential purpose when it is not repaired in conformity with the warranty within a reasonable time or within a reasonable number of attempts. Gershman I, 558 A.2d at 1070, 1071; Beal v. General Motors Corp., 354 F.Supp. 423, 425, 426 (D.Del.1973). On this issue, Superior Court in Gershman I, in denying defendants summary judgment, found a dispute of a material fact, 558 A.2d at 1071; and defendants do not appeal the jury's finding that the warranty failed of its essential purpose. Indeed, defendants concede that plaintiff had, as late as November 1984, "valid grounds" for revocation of acceptance, presumably for engine overheating due to a "porous block."

This Court's standard of review of the trial court's denial of defendants' motion for a directed verdict and motion for judgment n.o.v. is well settled. The evidence of record must be viewed in a light most favorable to plaintiff, the non-moving party; and the trial judge must determine whether under any reasonable view of the evidence, the jury could justifiably find in favor of the plaintiff and against the defendants. Moody v. Nationwide Mutual Ins. Co., Del.Supr., 549 A.2d 291, 292-293 (1988). In reviewing the decision of the trial court, this Court applies the same standard that controls the trial court. See 9 C. Wright & A. Miller, Federal Practice and Procedure, § 2536 at 595 (1971). "[T]he findings of the jury, if supported by evidence, shall be conclusive." Del. Const. Art. IV § 11(1)(a); Storey v. Camper, Del.Supr., 401 A.2d 458, 465 (1979). Thus, the factual findings of a jury will not be disturbed if there is "any competent evidence upon which the verdict could reasonably be based." Turner v. Vineyard, Del.Supr., 80 A.2d 177, 179 (1951).

Plaintiff denies that he had actual knowledge before November 1984 of grounds for revocation of acceptance. Plaintiff testified that after the 1984 repairs, he continued to experience problems with the car's engine involving hesitation, stalling and the motor's running "rough." Gershman stated that he telephoned Burton's service manager to report the problems and was told that he would have to "live with the car's behavior of [engine temperature] rising almost to the red zone." Assuming that the car's entire engine assembly had been replaced in June, plaintiff, in effect, accepted Burton's explanations and continued to drive the car. Plaintiff contends that his revocation remedy was thereby tolled by Burton's misrepresentations in June concerning the engine replacement work and by Burton's assurances after November...