Peterson v. Volkswagen of America, Inc.

• Court: Wisconsin Supreme Court
• Citation: Peterson v. Volkswagen of America, Inc., 2005 WI 61, 697 N.W.2d 61, 281 Wis.2d 39 (Wis. 2005)
• Decision Date: 27 May 2005
• Docket Number: No. 2003AP955.,2003AP955.
• Parties: Jaime R. PETERSON, Plaintiff-Appellant, v. VOLKSWAGEN OF AMERICA, INC., Defendant-Respondent-Petitioner.

281 Wis.2d 39

2005 WI 61

697 N.W.2d 61

Jaime R. PETERSON, Plaintiff-Appellant, v. VOLKSWAGEN OF AMERICA, INC., Defendant-Respondent-Petitioner.

No. 2003AP955.

Supreme Court of Wisconsin.

Oral argument January 6, 2005.

Decided May 27, 2005.

For the defendant-respondent-petitioner there were briefs by Bruce D. Huibregtse, Laura Skilton Verhoff, Drew J. Cochrane and Stafford Rosenbaum, LLP, Madison, and oral argument by Drew J. Cochrane.

For the plaintiff-appellant there was a brief by Gregory H. Moss and Krohn & Moss, Ltd., Chicago, IL, and oral argument by Scott Cohen.

¶ 1. JON P. WILCOX, J.

This is a review of a published court of appeals decision, Peterson v. Volkswagen of America, Inc., 2004 WI App 76, 272 Wis. 2d 676, 679 N.W.2d 840, reversing an order of the Waukesha County Circuit Court, Lee S. Dreyfus, Judge. The circuit court granted Volkswagen's motion to dismiss Jamie R. Peterson's (Peterson) three-count complaint, which sought various forms of relief under the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301-2312 (2000) [hereinafter "the MMWA" or "the Act"].¹

I. ISSUE

¶ 2. The question presented is whether Peterson, as a lessee, meets the definition of "consumer" under the MMWA, such that she can maintain a cause of action under the Act for breach of written warranty against the manufacturer and warrantor of an allegedly defective vehicle. We hold that Peterson has alleged sufficient facts to qualify as a category two consumer under the Act because the facts alleged in her complaint indicate that Volkswagen's warranty satisfies the definition of "written warranty" and because Peterson has alleged that the vehicle in question was transferred to her during the duration of Volkswagen's warranty. Volkswagen's warranty constitutes a "written warranty" under the MMWA because Peterson has alleged that it was issued by Volkswagen in connection with the sale of the vehicle by an authorized dealer to a lending institution in order to facilitate the lease, the warranty was part of the basis of the bargain between the dealership and the lending institution, and the lending institution purchased the vehicle for purposes other than resale.

¶ 3. Furthermore, we conclude that Peterson has pled sufficient facts to qualify as a category three consumer because the facts alleged in her complaint indicate that Volkswagen's warranty satisfies the definition of "written warranty" and because Peterson has alleged that she was entitled by the terms of Volkswagen's warranty to enforce said warranty against Volkswagen. Therefore, we affirm the decision of the court of appeals.

II. FACTUAL BACKGROUND AND PROCEDURAL POSTURE

¶ 4. On September 18, 2002, Peterson filed a three-count complaint against Volkswagen, alleging breach of written warranty, breach of implied warranty, and revocation of acceptance under the MMWA. The pertinent facts as alleged in her complaint are as follows. ¶ 5. On March 27, 1999, Peterson leased a new 1999 Volkswagen Beetle, manufactured by the defendant, from North Shore Bank (the Bank). "Prior to or contemporaneous to Plaintiff's lease of the Beetle," Ernie Von Schledorn Pontiac Buick Volkswagen (EVS), an authorized Volkswagen dealer, sold the Beetle to the Bank. The Bank "purchased the Beetle for purposes other than resale." The Bank "purchased the Beetle to lease to the Plaintiffs [sic]." As part of the consideration for the sale of the Beetle, Volkswagen issued the Bank a written warranty "which included a two (2) year or twenty-four thousand (24,000) mile bumper to bumper coverage" in addition to other warranties. At the time of the sale, the Beetle had been driven 100 miles and was covered by Volkswagen's written warranty.

¶ 6. On March 27, 1999,² the Bank assigned it rights in the defendant's written warranty to Peterson and "[t]he transfer of [the] written warranty occurred during the duration of said warranty." The Bank would not have purchased the vehicle without the issuance of the warranty and Peterson would not have leased the vehicle without the transfer of the warranty.

¶ 7. Shortly after taking possession of the vehicle, Peterson began experiencing several problems with the vehicle that "substantially impair[ed] the use, value and/or safety of the Beetle." Such defects violated the defendant's written warranty and implied warranty of merchantability. Peterson furnished the vehicle to authorized Volkswagen dealers for repairs on several occasions. The defendant "allowed [Peterson] to enforce its written warranty" and said repairs "were covered by [Volkswagen's] written warranty."

¶ 8. The defects in the vehicle remained uncorrected despite the numerous attempts at repair. The defects substantially impaired the value of the vehicle, and Peterson justifiably lost confidence in the vehicle after allowing Volkswagen a reasonable number of attempts to cure the defects. Peterson thereafter attempted to revoke her acceptance of the vehicle in writing, and Volkswagen refused her demand for revocation.

¶ 9. Peterson attached an unsigned copy of the lease as an exhibit to her complaint, which stated at the top of the document: "WITH ASSIGNMENT TO NORTH SHORE BANK, FSB." Peterson did not attach a copy of the warranty to her complaint, and the warranty is not part of the record.

¶ 10. Volkswagen filed its answer on December 9, 2002, which denied many of the allegations in the complaint and affirmatively alleged that Peterson leased the vehicle in question from EVS, not the Bank. Volkswagen also asserted various affirmative defenses. It maintained that Peterson failed to state a claim upon which relief could be granted and that the MMWA did not apply to Peterson because she is a lessee. On the same date, Volkswagen filed a notice of motion and motion to dismiss under Wis. Stat. § 802.06 (2001-02),³ asserting that Peterson failed to state a claim upon which relief could be granted because she is a lessee and the MMWA does not apply to lessees.⁴ ¶ 11. In her brief in opposition to dismissal, Peterson attached as an exhibit an affidavit from one Richard Wibe, a lease manager at EVS who had "overseen over a thousand lease transaction[s] for the lease of cars at my dealer."⁵ The affidavit describes in detail Peterson's dealing with EVS and the relationship between EVS and the Bank.⁶

¶ 12. A hearing was held on the motion to dismiss on February 10, 2003. The circuit court ruled:

I'm satisfied that regardless of how you define it that the plaintiff in this case does not constitute a consumer under the Magnuson-Moss Warranty Act. Now, I would note and I'm satisfied that that's a legislative issue to ultimately be addressed.

....

However, I'm also satisfied that at least based upon [Volkswagen's] analysis, and I'm satisfied it's a correct one, it still has to apply to a buyer that on the basis that the — a warranty, whether written or implied, must be in connection with the sale of a vehicle.

Now, in this case the person who's attempting to enforce it was not the purchaser. That's an issue that we cannot get around. Clearly, they are the lessee. The purchaser is North Shore Savings.

On February 26, 2003, the circuit court entered an order for final judgment and judgment dismissing Peterson's complaint.

¶ 13. The court of appeals reversed, concluding that Peterson was entitled to enforce Volkswagen's written warranty⁷ as a category two consumer under the MMWA. Peterson, 272 Wis. 2d 676, ¶ 17.

We agree with the courts that have held that where the sale of a vehicle is merely 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 — the lessee is protected by the Magnuson-Moss Act. . . . The statutorily defined term "written warranty" does not dictate that the sale be made to an ultimate consumer with a passage of title to the party. The language of the Act demands only that we find a warranty exchange between a buyer and a supplier in connection with a sale made for purposes other than resale. . . . To the extent that a lessee fits the definition of "consumer" by receiving an automobile in transfer, it would be unreasonable, if not illogical, to conclude that a lessee does not enjoy the same right to enforce a warranty as a purchaser enjoys.

Id., ¶ 15. The court of appeals also stated that it was significant that Peterson alleged that Volkswagen's warranty was in effect at the time of the transfer and that the terms of the warranty were part of the bargain between EVS and the Bank. Id., ¶ 17. The court did not address whether Peterson also qualified as a category three consumer. Id.

III. STANDARD OF REVIEW

¶ 14. Wisconsin Stat. § 802.06(2)(a)6. allows a party to move to dismiss a complaint on the ground that the complaint fails to state a claim upon which relief can be granted. Such a motion "tests the legal sufficiency of the complaint." Watts v. Watts, 137 Wis. 2d 506, 512, 405 N.W.2d 305 (1987). "Whether a complaint states a claim upon which relief may be granted is a question of law and this court need not defer to the circuit court's determination." Id.

¶ 15. When reviewing a motion to dismiss, we assume the facts set forth in the complaint are true and consider only the facts set forth therein. Larson v. City of Tomah, 193 Wis. 2d 225, 227, 532 N.W.2d 726 (1995). However, "[w]hen a document is attached to the complaint and made part thereof, it must be considered a part of the pleading, and may be resorted to in determining the sufficiency of the pleadings." Friends of Kenwood v. Green, 2000 WI App 217, ¶ 11, 239 Wis. 2d 78, 619 N.W.2d 271.⁸ Any document so attached prevails over inconsistent averments in the complaint. Id. ¶ 16. We will not grant a motion to dismiss "unless it appears certain that no relief can be granted under any set of facts that a plaintiff can prove in support of his or her allegations." Watts, 137 Wis. 2d at 512. As such, courts are to liberally construe a...