Peterson v. Volkswagen of America, Inc.

• Decision Date: 31 March 2004
• Docket Number: No. 03-0955.,03-0955.
• Parties: Jaime R. Peterson, Plaintiff-Appellant, v. Volkswagen of America, Inc., Defendant-Respondent.
• Court: Wisconsin Court of Appeals

272 Wis.2d 676

2004 WI App 76

679 N.W.2d 840

Jaime R. Peterson, Plaintiff-Appellant, v. Volkswagen of America, Inc., Defendant-Respondent.¹

No. 03-0955.

Court of Appeals of Wisconsin.

Submitted on briefs November 18, 2003.

Decided March 31, 2004.

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Gregory H. Moss, Scott M. Cohen, and Matthew J. McClenahan of Krohn & Moss, Ltd., of Chicago, Illinois.

On behalf of the defendant-respondent, the cause was submitted on the brief of Bruce D. Huibregtse and Drew J. Cochrane of Stafford Rosenbaum LLP of Madison.

Before Brown, Nettesheim and Snyder, JJ.

¶1. BROWN, J.

Jaime R. Peterson appeals from an order dismissing her claim for breach of warranty brought pursuant to the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301-12 (2004). Peterson contends that the circuit court erred in concluding that because she leased, rather than purchased, the vehicle under warranty, she fails to satisfy the Magnuson-Moss Act's definition of a "consumer" and is therefore not entitled to the Act's protections. We hold that where the sale is made in an effort to facilitate a lease, the issuance of the warranty accompanies this sale, and the lessor explicitly transfers its rights in the warranty to the lessee — as was allegedly the case here — the lessee is entitled to the protections of the Act. Accordingly, we reverse and remand the case for further proceedings consistent with this opinion.

¶2. This case comes to us as an appeal from a grant of a motion to dismiss. A motion to dismiss a complaint for failure to state a claim tests the legal sufficiency of the complaint. Wausau Tile, Inc. v. County Concrete Corp., 226 Wis. 2d 235, 245, 593 N.W.2d 445 (1999). The facts set forth in the complaint must be taken as true and the complaint dismissed only if it appears certain that no relief can be granted under any set of facts the plaintiffs might prove in support of their allegations. Northridge Co. v. W.R. Grace & Co., 162 Wis. 2d 918, 923, 471 N.W.2d 179 (1991). The reviewing court must construe the facts set forth in the complaint and all reasonable inferences that may be drawn from those facts in favor of stating a claim. Id. at 923-24. Whether a complaint states a claim for relief is a question of law which this court reviews de novo. Wausau Tile, Inc., 226 Wis. 2d at 245.

¶3. This dispute concerns the lease of an automobile, a 1999 Volkswagen Beetle, manufactured by Volkswagen of America, Inc. The complaint states that North Shore Bank purchased the Beetle from Ernie Von Schledorn Pontiac Buick Volkswagen, an authorized Volkswagen dealer, in order to facilitate the lease of the Beetle to Peterson. In consideration for the sale of the Beetle, Volkswagen issued and supplied to North Shore Bank its written warranty, which included two-year or twenty-four-thousand mile bumper-to-bumper coverage, as well as other warranties outlined in the Vehicle Limited Warranty booklet. On or about March 27, 1999, Peterson leased and took possession of the Beetle from North Shore Bank. On or about that same date, North Shore Bank assigned its rights in the Volkswagen warranty to Peterson.² The complaint further alleges that the transfer of Volkswagen's warranty "occurred during the duration of said warranty."

¶4. Pursuant to Volkswagen's warranty, Peterson tendered the Beetle to Volkswagen's authorized dealerships for repair on numerous occasions. Specifically, Peterson tendered the Beetle for repair due to defects in its engine as evidenced by intermittent illumination of the check engine light, intermittent illumination of the check oil light, the vehicle not running, and problems with the keyless entry system and windows. Volkswagen, through its authorized dealerships, attempted to repair the Beetle on at least four occasions. Volkswagen, however, was unable to remedy the defects in the car.

¶5. In August 2002, Peterson revoked her acceptance of the vehicle in writing. Volkswagen refused Peterson's attempt to revoke acceptance of the Beetle. Thereafter, Peterson filed a three-count complaint against Volkswagen, alleging that (1) Volkswagen breached its written warranty pursuant to the Magnuson-Moss Act; (2) Volkswagen breached its implied warranty of merchantability pursuant to the Magnuson-Moss Act; (3) Peterson revoked her acceptance of the Beetle pursuant to the Magnuson-Moss Act.

¶6. Volkswagen filed a motion to dismiss Peterson's complaint pursuant to Wis. Stat. § 802.06 (2001-02)³, arguing that because Peterson is an automobile lessee, she failed to satisfy the definition of the term "consumer" in the Magnuson-Moss Act. The circuit court agreed and granted Volkswagen's motion to dismiss, concluding that the Magnuson-Moss Act applies only when "a warranty, whether written or implied, [is] in connection with the sale of a vehicle." This appeal follows.

¶7. The sole issue we address on appeal is whether Peterson has standing to pursue her claim under the Magnuson-Moss Act. The Act allows a "consumer" to bring a suit where he or she claims to be "damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under this [Act] or under a written warranty, implied warranty, or service contract." 15 U.S.C. § 2310(d)(1). The interpretation of a statute is a question of law that we review de novo. Morris v. Juneau County, 219 Wis. 2d 543, 550, 579 N.W.2d 690 (1998).

¶8. For purposes of the Act, a "supplier" is "any person engaged in the business of making a consumer product directly or indirectly available to consumers." 15 U.S.C. § 2301(4). In addition, a "warrantor" is defined to mean "any supplier or other person who gives or offers to give a written warranty or who is or may be obligated under an implied warranty." 15 U.S.C. § 2301(5). Here, Peterson has alleged that Volkswagen is in the business of manufacturing, selling and distributing motor vehicles and related equipment and services as well as marketing, supplying and selling written warranties to the public through a system of authorized dealerships, including Ernie Von Schledorn. Therefore, Peterson has alleged that Volkswagen is both a "supplier" and a "warrantor."

¶9. We now turn to the question of whether Peterson qualifies as a "consumer" under the Act. The Act defines three categories of "consumer"⁴: a category one consumer is "a buyer (other than for purposes of resale) of any consumer product"; a category two consumer is "any person to whom such product is transferred during the duration of an implied or written warranty (or service contract)"; and, a category three consumer is "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). Accordingly, there are three classes of individuals that may qualify as a "consumer": (1) buyers; (2) transferees; and (3) persons entitled to enforce the warranty. Szubski v. Mercedes-Benz, U.S.A., L.L.C., 796 N.E.2d 81, 85 (Ohio Com. Pl. 2003). Here, Peterson alleged in her complaint that she leased and took possession of the Beetle during the time in which a written two-year or twenty-four-thousand mile "bumper to bumper" warranty issued by Volkswagen was in effect. We agree with Peterson that a plain reading of the Act reveals that this is sufficient to establish that the automobile was transferred to her during the effective period of the warranty. See id. at 85 (holding that a lessee qualified as a transferee where the plaintiffs "alleged that they leased the automobile during the time period in which a written four-year or fifty-thousand mile `bumper to bumper' warranty issued by the manufacturer was in effect"); see also Black's Law Dictionary 1504 (7th ed. 1999) (defining "transfer" as "to change over the possession or control of"). This, however, does not end the inquiry. The Act allows enforcement only of an implied or written warranty as defined by the Act. Cohen v. AM Gen. Corp., 264 F. Supp. 2d 616, 619 (N.D. Ill 2003).

¶10. A written warranty is defined as:

(A) any written affirmation of fact or written promise made in connection with the sale of a consumer product by a supplier to a buyer which relates to the nature of the material or workmanship and affirms or promises that such material or workmanship is defect free or will meet a specified level of performance over a specified period of time, or

(B) any undertaking in writing in connection with the sale by a supplier of a consumer product to refund, repair, replace, or take other remedial action with respect to such product in the event that such product fails to meet the specifications set forth in the undertaking, which written affirmation, promise, or undertaking becomes part of the basis of the bargain between a supplier and a buyer for purposes other than resale of such product.

15 U.S.C. § 2301(6) (emphasis added). Thus, to qualify as an enforceable written warranty for purposes of the Act, a writing must have either been made as part of a sale or made "in connection with a sale by a supplier," and "be a part of the basis of the bargain between a supplier and a buyer for purposes other than resale." See id.

¶11. Peterson contends that Volkswagen's warranty was given "in connection with a sale" of the car and the sale was "for purposes other than resale." She points out that in her complaint she alleges that a sale occurred between North Shore Bank and the Ernie Von Schledorn dealership and this sale was for the nonresale purpose of facilitating and financing the lease of the car. Volkswagen responds that, under the Act, a sale to a consumer with a passage of title is required in order for there to be a "written warranty." Volkswagen suggests that because the Act does not define "buyer" or "sale," we must look to the Uniform Commercial Code to define those...