Osburn v. Bendix Home Systems, Inc.

• Decision Date: 03 June 1980
• Docket Number: Nos. 50470,50478,s. 50470
• Citation: 613 P.2d 445,1980 OK 86
• Parties: 29 UCC Rep.Serv. 119, 1980 OK 86 Vernon L. OSBURN and Phyllis Osburn, husband and wife, Appellees, v. BENDIX HOME SYSTEMS, INC., and American Mobile Homes of Okla., Inc., Appellants, (two cases).
• Court: Oklahoma Supreme Court

Page 445

613 P.2d 445

29 UCC Rep.Serv. 119, 1980 OK 86

Vernon L. OSBURN and Phyllis Osburn, husband and wife, Appellees, v. BENDIX HOME SYSTEMS, INC., and American Mobile Homes of Okla., Inc., Appellants, (two cases).

Nos. 50470, 50478.

Supreme Court of Oklahoma.

June 3, 1980.

Rehearing Denied July 21, 1980.

Appeal from District Court, Lincoln County; Donald E. Powers, Judge.

Buyer of new mobile home brought breach-of-warranty suit against manufacturer and dealer. Upon jury verdict for buyer, manufacturer and dealer bring separate appeals. Causes consolidated. Dealer's appeal dismissed for want of due diligence in its prosecution and judgment.

AFFIRMED.

Erwin & Butts by Larry K. Lenora, Chandler, for appellant Bendix Home Systems, Inc.

Farmer, Woolsey, Tips & Gibson by Theodore P. Gibson, Tulsa, for appellant American Mobile Homes of Okla., Inc.

Richard James by R. Patrick Gilmore, Stroud, for appellees.

OPALA, Justice:

Issues presented by this appeal are: (1) Was the evidence with respect to the existence of defects sufficient to sustain a legal claim for breach of warranty? (2) Did the limitation-of-remedy clause in manufacturer's warranty "fail of its essential purpose" so as to make expanded UCC remedies available to the buyer under 12A O.S.1971 § 2-719(2)? (3) Did the trial court err in not directing the jury to apportion damages between manufacturer and dealer? and (4) Can additional counsel fees be awarded on appeal to the prevailing party in a breach-of-express-warranty case?

We hold that: (1) The evidence sufficiently established the existence of a defect in the purchased mobile home (consisting of water leakage and numerous other deficiencies) to submit for consideration of the jury the issue of a manufacturer's breach of express warranty that the home was free of "substantial defects in material and workmanship". (2) Because neither the manufacturer nor its dealer timely fulfilled its obligation under the warranty's limitation-of-remedy clause (to repair or replace defective parts), the buyer failed to receive a product free of "substantial defects in material and workmanship". The limitation clause hence "failed of its essential purpose" and expanded avenues of redress became available to the buyer under the UCC provisions. (3) In the procedural posture in which the buyer's single claim was presented and the defense to it advanced by the two defendants, there was no error in the trial court's failure to instruct the jury on, and submit verdict forms for, apportionment of damages between the manufacturer and the dealer. (4) Counsel fees may be awarded on appeal to the prevailing party in a breach-of-express-warranty case.

Plaintiffs (buyer) purchased in August of 1973 a new "double-wide" mobile home from defendants Bendix Home Systems, Inc. (manufacturer) and American Mobile Homes of Oklahoma, Inc. (dealer). The buyer chose a model similar to that shown him on the dealer's lot. It was shipped direct by the manufacturer who expressly warranted that it was free of substantial defects in workmanship and materials. The warranty (a) limited buyer's remedy to the cost of repair and replacement of defective parts and (b) disclaimed any other express or implied warranties. The manufacturer delivered the home to buyer's designated location. The dealer's crew placed it on the ground and then performed the necessary installation work. At his initial inspection buyer found numerous deficiencies in parts and materials. These were promptly reported to the dealer. Within a month after occupancy began, substantial water leakage made itself manifest during a rainstorm. Both the manufacturer and dealer were immediately notified of this condition. They were also reminded of the other defects yet to be remedied. The water leakage problem was not corrected until a year later. By that time the interior had been subjected to heavy water damage.

Trial resulted in a general verdict against both the manufacturer and the dealer for $5,200 the undisputed difference ¹ at the time and place of acceptance between the home's actual value and the value it would have had if it had been as warranted. An attorney's fee of $1,040 was taxed as costs against the defeated litigants. Manufacturer and dealer brought here separate appeals from the same judgment. These were consolidated for disposition. Dealer's appeal, though timely lodged, must be dismissed for want of due diligence in its prosecution. ²

I

The buyer's claim is founded on Article 2 of the Uniform Commercial Code. ³ A mobile home falls clearly within the definition of "goods" found in § 2-105. The sale of a mobile home is hence a transaction governed by the legal norms provided in that article. ⁴ The seller expressly warranted that the home was free of "substantial defects in workmanship and materials" and confined buyer's remedies for the enforcement of his rights. For breach of the express warranty buyer's remedy was restricted to the value of repair or replacement of defective parts. ⁵

Manufacturer asserts, inter alia, the trial court erred in overruling its demurrer to buyer's evidence. This assignment must be deemed waived because the manufacturer proceeded at trial to elicit evidence in its defense. ⁶ Our review must hence be confined to that assignment which calls upon us to determine error in overruling manufacturer's motion for directed verdict made at the close of the evidence. In short, our task is to assay the sufficiency of the evidence as a totality to sustain the verdict.

Manufacturer asserts that the record is devoid of evidence with respect to any defect in material or workmanship. That proof, we are urged, is essential as a basis for imposition of breach-of-warranty liability. The argument advanced is that, as in actions based on the theory of products liability, so in a breach-of-warranty case, the claimant must establish the presence of a specific defect. The contention so advanced is without merit. Identification of an existing defect is not essential to recovery upon express warranty. It is sufficient if, as here, the evidence shows, either directly or by permissible inference, that the goods were defective in their performance or function or that they otherwise failed to conform to the warranty. ⁷

The proof here amply shows that, in addition to the substantial water leakage, numerous other defects and deficiencies existed. These consisted of (a) leaking water faucets, (b) buckled wall paneling, (c) missing interior trim, (d) insecurely fastened kitchen cabinets, (e) torn carpet and (f) a roof that made rumbling noises. All of these defects came to be discovered by the buyer shortly after he had moved into the home and all were promptly reported to the dealer pursuant to the warranty requirements. The manufacturer instructed the buyer to hire someone locally to make the repairs and to send any bills to them. One bill was paid in full and only a portion of a second bill was paid.

Although the evidence does not identify the factor precipitating the leakage which caused interior water damage to the walls, floorboards, draperies and carpets, there was sufficient proof from which the jury could infer that the problem was attributable to faulty manufacture or assembly. Dealer and manufacturer made only minimal effort to correct the substantially flawed product. The home had been heavily damaged before necessary repairs made a year later finally brought about the long-needed rectification.

Viewing the record, as we must, in the light most favorable to the buyer, ⁸ and assuming all proof in conflict stands resolved by the verdict in buyer's favor, we conclude that the evidence without identifying a specific defect in manufacture or assembly is sufficient to support the verdict of liability for breach of express warranty.

II

The warranty here in suit restricts the buyer's right of recovery for its breach to "repair or replacement of defective parts". ⁹ The limitation so imposed is not, on its face, unconscionable. ¹⁰ In fact, § 2-719(1)(a) expressly sanctions its employment. ¹¹ Limiting the buyer to the remedy of repair or replacement does not appear unfair because the warranty clause amply assures him of receiving the goods which either do or will conform to the contract. The purpose of the clause, as applied to this case, was hence to provide the buyer with a mobile home substantially free of defects. Implicit in the warranty-imposed obligation to repair or replace is the duty of providing conformable goods within a reasonable time after a defect in the original delivery is discovered. ¹² Where the seller is afforded a reasonable opportunity to correct the defect and fails timely to respond or is repeatedly unsuccessful in the efforts to meet the warranty-imposed obligation, the limitation of remedy is deemed to have failed of its essential purpose eo instante and without the necessity of a prior judicial declaration. ¹³ The buyer is then free to invoke any of the broader remedies available under the Code. ¹⁴

Neither the seller nor the manufacturer was successful in the effort of rectifying the faulty conditions before the home was severely damaged by water leakage. When the home was not made to conform to the warranty within a reasonable time, the buyer then left without the substantial value of his bargain was relieved by the Code of the warranty-imposed limitation and hence able to seek broader recovery.

Manufacturer next complains that the trial court gave improper instructions upon the measure of damages for the breach in suit. The charge given called upon the jury to apply the difference at the time and place of acceptance between the actual value of the goods accepted and the value they would have had if they had been as warranted. ¹⁵ This measure is, of course, proper when the evidence shows, as it did here, that the warranty-imposed limited-recovery clause "failed of its essential purpose." ¹⁶ We need not decide here...