Ormsby v. Nexus RVS, LLC

• Docket Number: CAUSE NO. 3:19-CV-626 DRL
• Decision Date: 16 March 2023
• Citation: 662 F.Supp.3d 917
• Parties: Aileen ORMSBY et al., Plaintiffs, v. NEXUS RVS, LLC et al., Defendants.
• Court: U.S. District Court — Northern District of Indiana

662 F.Supp.3d 917

Aileen ORMSBY et al., Plaintiffs, v. NEXUS RVS, LLC et al., Defendants.

CAUSE NO. 3:19-CV-626 DRL

United States District Court, N.D. Indiana, South Bend Division

Signed March 16, 2023

Elizabeth Ahern Wells, Scarlett M. Steuart, Ronald L. Burdge, Burdge Law Office Co., LPA, Dayton, OH, for Plaintiffs.

Brent E. Inabnit, Christopher S. Riley, Nicholas Joseph Derda, Sopko Nussbaum Inabnit & Kaczmarek, South Bend, IN, for DefendantsNexus RVs, LLC, David Lint.

OPINION AND ORDER

Damon R. Leichty, Judge

George and Aileen Ormsby wanted to purchase a recreational vehicle from Nexus RVs, LLC in 2017.They toured an Indiana-based Nexus factory, looked at a used recreational vehicle, and spoke with a Nexus sales manager about purchasing the unit.Nexus sent them to a Rowley White LLC dealership in Arizona to consummate a sale.

Meanwhile, the Ormsbys convinced their son to purchase the recreational vehicle through his company, Two J's Enterprises LLC.They did this to save taxes.The final bill of sale from the dealer identified Two J's as the buyer—and identified neither Nexus nor the Ormsbys as parties to the deal.The Ormsbys advanced their son's company the funds to purchase the unit.Later, after issues with the vehicle, the Ormsbys asked Nexus to revoke the contract.Nexus declined, and this suit followed.

Today Nexus and its sales manager request summary judgment on all claims brought by the Ormsbys and Two J's—implied warranty, express warranty, contract, common law fraud, and violation of the Arizona Consumer Fraud Act (ACFA), as well as a UCC-based revocation remedy.The court grants the motion.

BACKGROUND

George and Aileen Ormsby, in the market to purchase a recreational vehicle, toured a Nexus factory in Elkhart, Indiana on October 6, 2017.Nexus East Coast Sales Manager David Lint gave the tour.The Ormsbys said they wanted a smoother-riding recreational vehicle because of Ms. Ormsby's health.The Ormsbys test drove a Nexus Bentley.Mr. Lint informed the Ormsbys that a pre-owned Nexus Bentley (Class A) was under work in a separate warehouse and took them there to see it.

Mr. Lint informed the Ormsbys that the prior owner possessed the unit for four months, that it was returned because the prior owner wanted something bigger, that it was being reconfigured because the prior owner had put a desk in, that Nexus could change certain things for the Ormsbys at no cost because it was already dismantled, and that Nexus would perform a predelivery inspection.For modifications, Mr. Lint said Nexus would replace the current mattress with a king-sized mattress, change the upholstery color, restore all the original equipment, and replace the desk with the original sofa.¹Mr. Lint recorded these changes on a change order form.

The Ormsbys and Nexus discussed a purchase price of $175,000.The Ormsbys "gave [Mr. Lint] a credit card, and [Mr. Lint] put $3,000 down as a down payment so that no one else would come in and buy the RV.We knew it was ours now," Ms. Ormsby testified.Mr. Ormsby similarly said, "We wanted to hold that unit so no one else would buy it.And as long as all the preconditions we discussed with [Mr. Lint] were satisfied, we would consider buying that unit."Nexus testified that the $3,000 would have been refunded if no purchase were made, but that request never came.The Ormsbys and Nexus never drew up a purchase agreement.No express written warranty was discussed for this used unit.

The Ormsbys did not want to travel back to Indiana to pick up the unit when it was complete due to bad weather.Nexus was no longer licensed to sell directly to consumers, as the company had moved to a dealer network, so the two sides pursued other options to facilitate a deal.Nexus lacked a dealer where the Ormsbys lived.The parties thus tried to have the unit delivered to one dealership, but this plan fell through.Instead, the parties decided to use a separate dealership—Rowley White RV, LLC in Phoenix, Arizona.

Rowley White had already entered into a dealership agreement with Nexus.Though the agreement was not so limiting, Rowley White says the dealership never agreed to sell Class A motorhomes.Nexus nonetheless called the dealer and asked it to "facilitate a deal for [Nexus] that [it] had made prior to [it] going wholesale when [it was] consumer direct."The dealer assumed this was a "consignment deal," but Rowley White never signed a consignment agreement with Nexus for this transaction.Rowley White told Nexus that it did not work on Class A motorhomes and could not perform a predelivery inspection, so Nexus agreed to arrange the inspection.Nexus promised to pay Rowley White $5,000 for processing the transaction, though Nexus never made the payment.

About two days after the conversation between Nexus and Rowley White, Nexus delivered the unit to the dealer.Nexus put the cost of the unit on Rowley White's credit line.This was done through the dealership agreement's floorplan financing, which allowed Nexus to place items on Rowley White's credit line without its approval.Though the dealership agreement seems not to specify this, it was Rowley White's understanding that floorplan financing would be used only for new recreational vehicles, not used ones.

Meanwhile, and seemingly without informing Nexus, the Ormsbys decided not to buy the unit themselves and instead discussed a purchase arrangement with their son and owner of Two J's Enterprises LLC.The Ormsbys agreed to advance the purchase money for Two J's to purchase the recreational vehicle.They wired $174,502 to the company on December 14, 2017.Two J's agreed to pay for storage and insurance.The Ormsbys wanted to avoid tax consequences.

Rowley White called the Ormsbys to schedule a walkthrough.On December 26, 2017, Two J's transferred $174,483 to Rowley White.The Ormsbys went to Rowley White to finalize the bill of sale on January 20, 2018.The bill of sale listed Two J's as the purchaser and Rowley White as the seller.The Ormsbys testified that they structured the deal this way for tax purposes—again a sales tax could be avoided if Two J's purchased the recreational vehicle.

With a Rowley White representative watching, Ms. Ormsby crossed out "all used trailers are sold as is" and "sold as is initial" on the purchase bill of sale because a predelivery inspection had not yet been conducted.Another Rowley White representative testified that there are no records that one of its managers authorized this modification.The parties nevertheless proceeded with the bill of sale.Ms. Ormsby signed it for Two J's.Though not a member, director, or employee, she was ostensibly authorized by Two J's to sign the bill of sale for the company (both she and her son so testify, albeit not always consistently).

Rowley White performed a walkthrough, creating a punchlist of repairs.The Ormsbys coordinated the recreational vehicle's delivery with a Wagon Trail dealership in Nevada to avoid a $5,000 Arizona tax that would have applied had they possessed the unit in Arizona.Nexus asked Wagon Trail to perform the predelivery inspection.Wagon Trail performed the inspection; and, about two weeks later, delivered the unit to the Ormsbys.

The Ormsbys received the certificate of title in June 2018.The title listed Two J's as the owner and the Ormsbys as security interest holders/lessors.Ms. Ormsby, finding the name of the unit's prior owner after experiencing issues with it, called him.The prior owner reported that the recreational vehicle "was a junk.That's the only way to say it to you.Everything was falling apart on it."He returned the unit because it "was nothing but junk on six wheels."

The Ormsbys testified that the promises made by Nexus (Mr. Lint) were not kept, including the installation of a king-sized mattress, the changing of the upholstery color, and restoring the recreational vehicle to its original condition.²The Ormsbys say they never received a predelivery inspection form.They say the unit remains riddled with defects.On August 5, 2019, the Ormsbys sent Nexus a notice of revocation.Nexus declined to rescind the transaction.This suit followed.

STANDARD

Summary judgment is warranted when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."Fed. R. Civ. P. 56(a).The non-moving party must present the court with evidence on which a reasonable jury could rely to find in his favor.Weaver v. Speedway, LLC, 28 F.4th 816, 820(7th Cir.2022).The court must construe all facts in the light most favorable to the non-moving party, viewing all reasonable inferences in that party's favor, Bigger v. Facebook, Inc., 947 F.3d 1043, 1051(7th Cir.2020), and avoid "the temptation to decide which party's version of the facts is more likely true,"Payne v. Pauley, 337 F.3d 767, 770(7th Cir.2003);see alsoJoll v. Valparaiso Cmty. Schs., 953 F.3d 923, 924-25(7th Cir.2020).

In performing its review, the court"is not to sift through the evidence, pondering the nuances and inconsistencies, and decide whom to believe."Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 920(7th Cir.1994).Instead, the "court has one task and one task only: to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial."Id.The court must grant a summary judgment motion when no such genuine factual issue—a triable issue—exists under the law.Luster v. Ill. Dep't of Corr., 652 F.3d 726, 731(7th Cir.2011).

DISCUSSION

The court has both federal question and diversity jurisdiction.The MMWA provides a means to assert state law warranty claims in federal court, though the claims remain informed by state law.See15 U.S.C. § 2310(d)(1);Anderson v. Gulf Stream Coach, Inc., 662 F.3d 775, 781(7th Cir.2011);Priebe v. Autobarn, Ltd., 240 F.3d 584, 587(7th Cir.2001).Separately, a court sitting in diversity applies Indiana's choice of law rules.See...