Mesa v. BMW OF NORTH AMERICA, LLC

• Decision Date: 04 May 2005
• Docket Number: No. 3D04-1643.,3D04-1643.
• Citation: Mesa v. BMW of N. Am. LLC, 904 So.2d 450 (Fla. App. 2005)
• Parties: Ivon MESA, Appellant, v. BMW OF NORTH AMERICA, LLC, Appellee.
• Court: Florida District Court of Appeals

904 So.2d 450

Ivon MESA, Appellant, v. BMW OF NORTH AMERICA, LLC, Appellee.

No. 3D04-1643.

District Court of Appeal of Florida, Third District.

May 4, 2005.

Rehearing Denied June 22, 2005.

Krohn & Moss and Alex D. Weisberg and Theodore F. Greene III, Sunrise, for appellant.

Hinshaw & Culbertson and Bruce W. Bennett and Lori A. Heim, Tampa, for appellee.

Before CORTIÑAS and ROTHENBERG, JJ., and SCHWARTZ, Senior Judge.

CORTIÑAS, Judge.

The plaintiff, Ivon Mesa ("Mesa"), appeals from a final summary judgment in favor of the defendant, BMW of North America, LLC ("BMWNA"). We affirm, in part, and reverse, in part.

On January 29, 2001, Mesa leased a 2001 BMW 330i ("vehicle") from South Motors BMW ("South Motors"), a dealer in Miami, Florida. Prior to Mesa's lease of the vehicle, the vehicle was sold by South Motors to BMW Financial Services, which then leased the vehicle to Mesa. The lease agreement stated that "[t]he Vehicle is subject to the standard manufacturer's warranty." The lease agreement contained a disclaimer of any express or implied warranties for the vehicle. Included in the lease agreement was a provision for the assignment of title and interest in the vehicle from South Motors to the financing company, BMW Financial Services.

The vehicle was covered by the 2001 New Vehicle Limited Warranty ("warranty"), which identified BMWNA as the "Warrantor." The first sentence of the warranty stated:

BMW NA warrants 2001 U.S. specification vehicles distributed by BMW NA or sold through the BMW NA European Delivery Program against defects in materials or workmanship to the first retail purchaser, and each subsequent purchaser.

The warranty period was for 48 months or 50,000 miles, whichever occurred first. In detailing its warranty coverage during the warranty period, the warrantor (BMWNA) represented that any authorized BMW center "will, without charge for parts or labor, either repair or replace the defective part(s) using new or authorized remanufactured parts." BMWNA, as warrantor, acknowledged:

These warranties give you specific legal rights, and you may also have other rights which vary from state to state.

THE DURATION OF ANY IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTY OF MERCHANTABILITY, IS LIMITED TO

THE DURATION OF THE EXPRESS WARRANTIES HEREIN....

Beginning in February 2001, Mesa took the vehicle to South Motors reporting various defects and requesting that they be repaired. Mesa claimed that the vehicle had a defective engine, a defective body, defective electrical work, defective brakes, and other defects. According to Mesa, these defects were never repaired. Consequently, Mesa attempted to revoke acceptance of the vehicle to no avail.

On March 3, 2003, Mesa filed a complaint against BMWNA alleging counts for 1) breach of written warranty pursuant to the federal Magnuson-Moss Warranty Act ("MMWA"), 15 U.S.C. §§ 2301-2312, 2) breach of implied warranty pursuant to the MMWA, and 3) revocation of acceptance pursuant to § 2310(d) of the MMWA. On June 2, 2004, the trial court granted BMWNA's motion for summary judgment concluding that the MMWA does not apply to this lease.

When considering a motion for summary judgment, the trial court must determine that no genuine issue of material fact exists, and the moving party is entitled to summary judgment as a matter of law. Volusia County v. Aberdeen at Ormond Beach, L.P., 760 So.2d 126 (Fla.2000). A trial court's entry of summary judgment based on its interpretation of a statute is reviewed de novo. BellSouth Telecomm., Inc. v. Meeks, 863 So.2d 287 (Fla.2003); Fitzgerald v. S. Broward Hosp. Dist., 840 So.2d 460 (Fla. 4th DCA 2003).

Mesa is a "Consumer" under the MMWA

Under 15 U.S.C. § 2310(d)(1), a consumer may bring suit against a warrantor in any state for failure to comply with its obligations under a written warranty or implied warranty. Mesa alleged that BMWNA failed to comply with its written warranty. In addition, Mesa claimed that BMWNA breached its implied warranty under 15 U.S.C. §§ 2301(7) and 2308. Pursuant to 15 U.S.C. § 2310(d)(1)(A) and 15 U.S.C. § 2311(b)(1), state law governs the appropriate measure of damages for breach of warranty under the Magnuson-Moss Act. MacKenzie v. Chrysler Corp., 607 F.2d 1162, 1166 (5th Cir.1979).

We must first determine whether or not the MMWA applies to leases. Under the MMWA, a consumer may sue for damages and other equitable relief if the consumer "is damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under this chapter, or under a written warranty, implied warranty, or service contract." 15 U.S.C. § 2310(d)(1) (2001). The MMWA's definition of "consumer" is broken down into three categories:

(1) "a buyer (other than for purposes of resale) of any consumer product,"

(2) "any person to whom such product is transferred during the duration of an implied or written warranty (or service contract) applicable to the product," or

(3) "any other person who is entitled by the terms of such warranty (or service contract) or under applicable State law to enforce against the warrantor (or service contractor) the obligations of the warranty (or service contract)."

15 U.S.C. § 2301(3) (2001). A plaintiff need only fall into one of the three categories in order to qualify as a "consumer" entitled to bring a claim under the MMWA. Voelker v. Porsche Cars N. Am., Inc., 353 F.3d 516 (7th Cir.2003); Parrot v. DaimlerChrysler Corp., 210 Ariz. 143, 108 P.3d 922 (2005); Mangold v. Nissan N. Am., Inc., 347 Ill.App.3d 1008, 284 Ill.Dec. 129, 809 N.E.2d 251 (2004).

BMWNA contends that the decision in Sellers v. Frank Griffin AMC Jeep, Inc., 526 So.2d 147 (Fla. 1st DCA 1988), is controlling on the issue of whether or not the MMWA applies to leases. The trial court agreed and granted summary judgment for BMWNA based on Sellers.

In Sellers, the plaintiff leased a new Jeep Grand Cherokee from a Jeep dealer. Several days later, the motor exploded and the engine had to be repaired, after which the plaintiff experienced continuous problems with the vehicle. The plaintiff attempted to revoke acceptance of the vehicle and sued the dealer and finance company for refusing to take the vehicle back. The Sellers court found that a lessee cannot have a "written warranty" under any of the three categories of "consumer" under the MMWA because that would require a "sale" under the Uniform Commercial Code ("UCC"), and the UCC requires "the passing of title from a seller to a buyer" for a "sale." Sellers, 526 So.2d at 155.

In analyzing whether a lease transaction may be treated as a "sale," the Sellers court considered various factors under the UCC including:

(1) Whether the total amount of rental payments is sufficient to amortize the value, with interest, of the object being rented;

(2) whether the term of the lease covers the useful life of the object, so that the object has no residual value at the end of the lease;

(3) whether there is an option to purchase the object at the end of the lease for a nominal price, or an option to continue the lease on rental terms favorable to the lessee;

(4) whether the lessee is responsible for such incidents of ownership as insurance coverage, repairs, and replacement of parts;

(5) whether the lessee bears the risk of damage to or loss of the object;

(6) the nature of the lessor's business, i.e., whether the lessor normally sells rather than leases the object in question, and whether the lessor normally acts as a financing agency;

(7) whether the lessee paid a sales tax on the transaction and is required to pay all other taxes incident to the ownership of the equipment;

(8) whether the lessee is required to pay all license fees for the operation of the equipment;

(9) whether the agreement permits the lessor to accelerate the payment of rent on default by the lessee and grants remedies similar to those of a mortgagee; and

(10) whether the lessee is required to pay a substantial security deposit in order to obtain the equipment.

Sellers, 526 So.2d at 151. The court ultimately found that the lease transaction between the plaintiff and the Jeep dealer did not meet the UCC criteria for a "sale" and, thus, was not covered under the MMWA.¹ Sellers, 526 So.2d at 155-156.

In attempting to analyze whether the MMWA applies to certain automobile lease transactions, some courts have looked to definitions and terms in the UCC. See e.g., Sellers, 526 So.2d 147; DiCintio v. DaimlerChrysler Corp., 97 N.Y.2d 463, 742 N.Y.S.2d 182, 768 N.E.2d 1121 (2002). However, other courts have held that it is unnecessary to look to the UCC to define the MMWA's terms because the statute is clear on its face. See Cohen v. AM Gen. Corp., 264 F.Supp.2d 616, 620 (N.D.Ill. 2003) (holding that the plain language of the Act "does not require [the court] to look at the bundle of rights acquired by the purchaser and the lessee" to determine if the lessee is a "consumer"); Mangold, 809 N.E.2d at 253 (deciding that nothing in the MMWA implies that "transfer" means that title must pass). We note that this court is not bound by any precedent on the issue of whether or not a lease transaction may be covered under the MMWA.

Contrary to the First District's analysis in Sellers, we find it is unnecessary to look at the UCC to define the MMWA's terms because the statute is clear on its face. See Mangold, 809 N.E.2d at 253-255. With regard to warranties on consumer products, the MMWA modifies the applicability and operation of the UCC and, to the extent applicable, supersedes inconsistent provisions of the UCC. Murphy v. Mallard Coach Co., 179 A.D.2d 187, 582 N.Y.S.2d 528, 531 (1992).

As noted above, the MMWA allows a "consumer" to sue a supplier, warrantor, or manufacturer who fails to comply with any obligation under the MMWA, a written warranty, an implied warranty, or a service contract. 15 U.S.C. § 2310(d) (2001). "Supplier" is defined as "any person engaged in the business of...