Priebe v. Autobarn

• Decision Date: 14 February 2001
• Docket Number: No. 00-2497,00-2497
• Citation: 240 F.3d 584
• Parties: (7th Cir. 2001) Paul Priebe, Plaintiff-Appellant, v. Autobarn, Limited, Defendant-Appellee
• Court: U.S. Court of Appeals — Seventh Circuit

Page 584

240 F.3d 584 (7th Cir. 2001)

Paul Priebe, Plaintiff-Appellant, v. Autobarn, Limited, Defendant-Appellee.

No. 00-2497

In the United States Court of Appeals For the Seventh Circuit

Argued December 6, 2000

Decided February 14, 2001

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 97 C 3689--James B. Moran, Judge. [Copyrighted Material Omitted] Before Bauer, Posner, and Williams, Circuit Judges.

Bauer, Circuit Judge.

Paul Priebe ("Priebe) bought a 1988 Acura from The Autobarn, Limited ("Autobarn"). While Autobarn offered no warranty, it told Priebe that the car had been inspected and had not been involved in any prior accidents. Through Autobarn, Priebe bought a service plan administered by Automobile Protection Corporation ("APCO"), an unaffiliated company. Roughly a month later, Priebe crashed the Acura and claimed that it had previous damage which made it dangerous to drive. Priebe sued Autobarn under both state and federal law, centering his claims around statutory and common law violations of warranty and commission of fraud. The district court granted summary judgment in favor of Autobarn as to all claims. We affirm the district court's decision.

I. Background

On November 11, 1995, Priebe traded his 1993 Jeep Wrangler worth $12,595 to Autobarn for a 1988 Acura Legend worth $8,185 plus the excess of the Jeep's value. Priebe wanted a car of lesser value to drive in the city of Chicago. Before purchasing the Acura, Priebe test-drove the vehicle and determined that it drove well.

Priebe reviewed the sales contract before he bought the vehicle. He was generally familiar with contracts because he worked as a portfolio manager in Citibank's consumer lending division reviewing contracts. Priebe read the disclaimer of warranties, the conditions of sale and the Federal Used Car Buyers' Guide, all of which informed Priebe that Autobarn did not offer a warranty on the Acura. Priebe admits that he knew Autobarn sold him the car "as is--in the as is condition with no special warranties attached from the dealership."

The same day Priebe purchased the Acura, he entered into an Easy Care Vehicle Service Contract ("Easy Care Service Contract" or "service contract"). The service contract was offered and administered by APCO, and sold through Autobarn. Priebe knew that Autobarn bore no responsibility under the service contract. He discussed the service contract coverage and signed a statement to that effect. Priebe knew that the Easy Care Service Contract did not cover previous damage to the Acura. Autobarn was to deduct the service contract fee from the amount it owed Priebe on the Jeep, however, due to an oversight, Autobarn neglected to do so.

Roughly one month after he purchased the Acura, Priebe crashed the car. Priebe had the car towed to Gerber Auto Rebuilders ("Gerber") for repairs. Several days into the repairs, Gerber called Priebe claiming to have found damage to the Acura caused by an accident previous to Priebe's. Priebe believed that this damage made the car dangerous to drive. As Priebe admitted in his deposition, he could not prove that Autobarn knew about the prior damage. Gerber repaired all the damage to the car and Priebe's auto insurer Allstate paid the entire bill, minus the $500 deductible.

After the accident, Priebe attempted to revoke the sales contract and cancelled the service contract for which he had not been charged. Priebe continued to drive the Acura. At the time of trial in October 1998, he had driven the Acura in excess of 30,000 miles.

Priebe sued Autobarn claiming that: (1) Autobarn breached the Easy Care Service Contract which also violated the Magnuson-Moss Act; (2) Autobarn breached an implied warranty under 810 ILCS 5/2- 314 which also violated the Magnuson-Moss Act; (3) Priebe validly revoked acceptance; (4) Autobarn violated the Illinois Consumer Fraud and Deceptive Business Practices Act; (5) Autobarn committed common law fraud; and (6) Autobarn violated the federal odometer statute. The district court granted Autobarn's motion for summary judgment as to all counts. Priebe then sought relief under Fed. R. Civ. P. 59(e), which the court refused to grant. Priebe now appeals all claims except the federal odometer cause of action, arguing that the district court granted summary judgment in error because genuine issues of material fact exist as to the remaining five claims.

II. Discussion

Despite the absence of the federal odometer claim, which, if frivolous, would not have supported federal jurisdiction, Priebe's claims create federal jurisdiction. Priebe's breach of contract and breach of warranty claims meet the Magnuson-Moss Act's requirements for federal jurisdiction. Priebe's other claims qualify for supplemental jurisdiction under 28 U.S.C. sec. 1367. We have the authority to hear this case under 28 U.S.C. sec. 1291. We review the district court's grant of summary judgment de novo and construe all facts in favor of Priebe. See Oto v. Metropolitan Life Ins. Co., 224 F.3d 601, 603 (7th Cir. 2000).

A. Breach of Contract Claim

Priebe argues that Autobarn breached the Easy Care Service Contract because the sales person failed to disclose that the Acura had been in a prior accident and knew that the Easy Care Service Contract would not cover the existing damage. Under Illinois law, "[t]o state a cause of action for breach of contract a plaintiff must show: (1) the existence of a valid and enforceable contract; (2) the performance of the contract by plaintiff; (3) the breach of the contract by defendant; and (4) a resulting injury to plaintiff." Hickox v. Bell, 195 Ill. App. 3d 976, 992, 552 N.E.2d 1133, 1143 (5th Dist. 1990) (citations omitted).

Priebe's argument does not constitute a breach of contract claim. Initially, it is unclear under what theory Priebe believes Autobarn is a party to the Easy Care Service Contract. Pushing this concern aside, we rest our decision on the breach element. Priebe never invoked the Easy Care Service Contract. He never submitted any claim for the Acura to APCO; rather he sent it to Allstate. Priebe cancelled the Easy Care Service Contract and despite evidence that Priebe did not pay for the contract, he received a pro-rated refund. Given these facts, Priebe fails to prove that Autobarn breached the service agreement.

Priebe's Magnuson-Moss Act claim also fails. The portion of the Act under which Priebe sues does not provide an independent basis for liability; it only provides for federal jurisdiction for some state claims, including this breach of contract claim. See 15 U.S.C. sec. 2310(d); see, e.g., Gardynski-Leschuck v. Ford Motor Co., 142 F.3d 955, 956 (7th Cir. 1998). Because Priebe's underlying breach of contract claim fails, his Magnuson-Moss Act claim cannot succeed.

B. Breach of Implied Warranty Claim

Priebe next claims that Autobarn breached the warranty of merchantability implied by Illinois law on the Acura. See 810 ILCS 5/2-314. In response to Autobarn's argument that it validly disclaimed the warranty, Priebe counters that the Act prevented Autobarn from making a valid disclaimer. Due to Priebe's admission that Autobarn sold the car "as is," the disclaimer stands unless it is disallowed by the Act. The Act prohibits a supplier from disclaiming an implied warranty regarding a consumer product when "at the time of sale, or within 90 days thereafter, such supplier enters into a service contract with the consumer which applies to such consumer product." 15 U.S.C. sec. 2308(a). The Act defines a service contract as "a contract in writing to perform . . . services relating to the maintenance or repair (or both) of a consumer product." 15 U.S.C. sec. 2301(8).

As the district court correctly reasoned, the service contract cannot be construed as creating a warranty of merchantability because the service contract bound APCO, not Autobarn, to repair the Acura. Priebe has not articulated how Autobarn is a party to the contract. Therefore, we conclude that the service contract with APCO is not sufficient to prevent Autobarn from disclaiming implied warranties.

Further, the district court is correct that even if the implied warranty of merchantability was in force, Autobarn did not breach it. The Acura was fit to serve the purpose for which Priebe bought it. Although Priebe maintains that he "lost faith" in the Acura and believed it was "dangerous to drive," his actions belie these vague claims. Priebe continued to drive the car; indeed, at the time of trial, Priebe had driven the Acura more than 30,000 miles. Priebe's claim for breach of warranty fails.

C. Revocation of Acceptance

Next, Priebe claims that he validly revoked his acceptance of the Acura. To be entitled to revoke acceptance, the plaintiff must prove that: (1) there was a breach of an implied warranty of merchantibility; (2) the defect in the product substantially impaired the product's value to him; (3) the plaintiff reasonably thought the defect could be cured; and (4) it has not been cured. See Collum v. Fred Tuch Buick, 6 Ill. App. 3d 317, 321, 285 N.E.2d 532, 535 (1st Dist. 1972).

For the reasons stated above, Priebe fails to create a material issue of fact as to whether Autobarn breached a warranty. Priebe protests that breach of a warranty of merchantability is not a necessary element in valid revocation of acceptance, and claims that he may revoke his acceptance if the "nonconformity of the goods substantially impairs their value to the buyer." Blankenship v. Northtown Ford, Inc., 95 Ill. App. 3d 303, 306, 420 N.E.2d 167, 170 (4th Dist. 1981). Priebe, however did not create a material issue of fact as to whether the value of the Acura was substantially impaired. Priebe argues that the Acura was in a pre-purchase crash that made it dangerous...