Razor v. Hyundai Motor America

• Decision Date: 02 February 2006
• Docket Number: No. 98813.,98813.
• Citation: 854 N.E.2d 607,222 Ill.2d 75
• Parties: Shante RAZOR, Appellee, v. HYUNDAI MOTOR AMERICA, Appellant.
• Court: Illinois Supreme Court

854 N.E.2d 607

222 Ill.2d 75

Shante RAZOR, Appellee, v. HYUNDAI MOTOR AMERICA, Appellant.

No. 98813.

Supreme Court of Illinois.

February 2, 2006.

Modified on Denial of Rehearing June 29, 2006.

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Hugh C. Griffin, Hugh S. Balsam, of Lord, Bissell & Brook, L.L.P., and Denean K. Sturino, Fagelhaber, L.L.C., Chicago, for appellant.

Scott M. Cohen, of Krohn & Moss, Ltd., Chicago, for appellee.

Bradley B. Falkof and Charla L. Hausler, of Barnes & Thornburg, L.L.P., Chicago, for amicus curiae Mercedes-Benz, U.S.A., L.L.C.

Justice FREEMAN delivered the judgment of the court, with opinion:

This appeal involves the federal Magnuson-Moss Warranty—Federal Trade Commission Improvement Act (Act) (15 U.S.C. § 2301 et seq. (2000)) and the Illinois Uniform Commercial Code (UCC) (810 ILCS 5/1-101 et seq. (West 2000)). The only issues raised concern the propriety of the damages awarded to the plaintiff. The primary question is whether the circuit court acted properly in refusing to enforce a contractual clause prohibiting the award of consequential damages. There is also a sufficiency of the evidence challenge to the court's award of warranty damages. We affirm in part, reverse in part, and remand.

BACKGROUND

Plaintiff Shante Razor purchased a new Hyundai Sonata from Gartner Buick, Inc. (Gartner), on August 4, 2001. At the time she purchased the car, plaintiff also bought an optional remote starter and alarm system from an "options" booklet shown to her by the Gartner salesman. Gartner subcontracted the installation of this starter to Professional Sound Installers (ProSound). ProSound did not install it on the date plaintiff purchased her vehicle, but a few weeks later, on August 30, 2001.

The Sonata was the first new car plaintiff had ever purchased. It came with a five-year, 60,000-mile warranty, a copy of which was introduced into evidence. In pertinent part, the warranty provided as follows:

"WHAT IS COVERED

Repair or replacement of any component originally manufactured or installed by Hyundai Motor Company or Hyundai Motor America (HMA) that is found to be defective in material or workmanship under normal use and maintenance, except any item specifically referred to in the section `What is Not Covered.'

* * *

WHAT IS NOT COVERED

* Damage or failure resulting from:

— Negligence of proper maintenance as required in the Owner's Manual.

— Misuse, abuse, accident, theft, water/flooding or fire.

* * *

— Any device and/or accessories not supplied by Hyundai.

* * *

* INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT LIMITATION, LOSS OF TIME, INCONVENIENCE, LOSS OF USE OF THE VEHICLE, OR COMMERCIAL LOSS.

* The duration of any implied warranties, including those for MERCHANTABILITY and FITNESS FOR A PARTICULAR PURPOSE, are limited to the duration of this limited warranty.

Some states do not allow limitations on how long an implied warranty lasts, or the exclusion or limitation of incidental and consequential damages, so the limitations or exclusions set forth regarding this limited warranty may not apply to you. You may also have other rights which vary from state to state."

In late September 2001, plaintiff began experiencing difficulties with the vehicle. On September 26, plaintiff had the vehicle towed to Gartner for service because it failed to start when she turned the key. She experienced the same problem and again had the vehicle towed to Gartner for service on October 6, October 16, and October 25. On the latter occasion, Gartner kept the vehicle for more than two weeks, providing plaintiff with a rental car to use during the time the vehicle was out of her possession. Nevertheless, the problem happened again on November 21, the day before Thanksgiving, when plaintiff had taken the day off from work to go shopping for the holiday. After a technician came to her home and was himself unable to start the car, the vehicle was yet again towed to Gartner for attempted repairs.

Sometimes after being towed to Gartner the vehicle started normally, other times it did not. Gartner technicians attempted various different repairs on the different occasions that the car appeared before them, including replacing the starter, replacing the "ECU power relay," replacing the remote starter with an updated system, and replacing the "trans range switch" and "starter relay." Additionally, after the October 25 no-start, when the vehicle was kept for more than two weeks, ProSound removed the remote starter it had originally installed on plaintiff's vehicle and replaced it with an updated model. Plaintiff was not charged for any of the attempted repairs.

In December 2001, plaintiff filed suit against defendant, Hyundai Motor America (Hyundai). Plaintiff made claims against Hyundai pursuant to the Magnuson-Moss Warranty Act (15 U.S.C. § 2301 et seq. (2000)) for breach of written warranty and breach of implied warranty of merchantability. Plaintiff also alleged that Hyundai had violated the Illinois New Vehicle Buyer Protection Act (815 ILCS 380/1 et seq. (West 2000)).

The case initially went to arbitration. The arbitration panel found in plaintiff's favor, and entered an award of $6,500, plus attorney fees and costs. Hyundai rejected this award and demanded trial.

The case went to trial in February 2003. Plaintiff was the sole witness for her case, and most of the above undisputed facts are drawn from her testimony. In addition, plaintiff testified that she never saw the actual warranty until after she had purchased the car, because the warranty was contained in the owner's manual, which she saw for the first time in the glove box of her vehicle when she drove it off the lot. Plaintiff's purchase contract, a copy of which was introduced into evidence, does not appear to contain or refer to the vehicle warranty. When asked on cross-examination if she had seen the warranty on a placard at Gartner, plaintiff testified that she had not. Plaintiff testified that she had performed all required maintenance on her car, had never been in an accident or been the victim of vandalism, and that no one other than Gartner had ever performed any repairs on the vehicle.

During plaintiff's direct examination, defense counsel objected when plaintiff's counsel inquired regarding her purchase of prior automobiles. During a lengthy sidebar, counsel explained that he was attempting to lay a foundation in order to ask her how much the car's value to her had decreased because of the problems she had with it. The court ruled that plaintiff could not answer such a question. The court indicated that plaintiff could testify "as to what her feelings were, what her frame of mind was and the impact of the slow [sic] start situation on her personal feelings. * * * But as to `the value of the vehicle would have been such and such because of the no start conditions,' I don't see how you're going to go that far with it." Plaintiff was permitted to testify that the purchase price of her Sonata was $16,522, and that she would eventually have paid a total of $21,249 for the car, including finance charges.

Plaintiff testified that the vehicle did not provide her the type of transportation she expected. She testified, "[I]t's a brand new car. I expected it to be perfect, flawless or minimal problems, certainly not the ones that I encountered here." She testified that she would not purchase the same vehicle today, because it was "proven unreliable," and she would not today pay the price she had originally paid for the vehicle, because "given the problems that this vehicle—that I have had with this vehicle or the problems the vehicle has had, that's like a used car. I would not pay that for a new car with used problems as it were." Plaintiff also testified that the problems she had with the car had caused her considerable inconvenience, including missing days of work. However, on cross-examination, plaintiff admitted she was still driving the car at the time of trial—May 2003—and had not experienced any difficulties with it since December 2001.

Plaintiff offered her exhibits into evidence and rested. Hyundai moved for a directed verdict, which the court denied in its entirety. During argument on the motion, the court initially ruled that Hyundai's disclaimer of incidental and consequential damages was not unconscionable, but shortly thereafter the court reversed itself and ruled that the disclaimer was unconscionable and would not be enforced. When defense counsel inquired of the court as to the basis for its ruling that the disclaimer was unconscionable, the court responded:

"THE COURT: The number of attempts that the plaintiff attempted for repairs. The fact that the plaintiff needed, used or intended to use the vehicle for transportation to and from work. The fact that the plaintiff was unable to use the vehicle for the time period in question for it's [sic] intended use."

After the court denied Hyundai's motion for a directed verdict, the defense called its sole witness, Randy Wood. Wood is treasurer and part owner of ProSound, the company which installed plaintiff's alarm and remote starter system. He testified that ProSound had inspected the system installed on plaintiff's vehicle on more than one occasion, and no problem was ever found. Although ProSound did replace plaintiff's system with the newest model, this was for customer satisfaction purposes only, because ProSound never found anything wrong with plaintiff's system. He did admit on redirect examination that plaintiff's vehicle "may have" had a weak signal coming through its "tack [sic] wire," and if that condition existed it could cause problems for the ProSound system. Wood also testified that the system could itself prevent the car from starting, if one attempted to start it with the key after locking the car with the remote control.

After the defense rested, Hyundai renewed its motion for a directed verdict, including specifically...