State By and Through Div. of Consumer Protection v. GAF Corp.

• Decision Date: 18 August 1988
• Docket Number: No. 19836,19836
• Citation: 760 P.2d 310
• Parties: STATE of Utah, By and Through the DIVISION OF CONSUMER PROTECTION, Jean A. Williams, Director, Plaintiff and Appellant, v. GAF CORPORATION, a Delaware corporation, Defendant and Appellee.
• Court: Utah Supreme Court

Page 310

760 P.2d 310

STATE of Utah, By and Through the DIVISION OF CONSUMER PROTECTION, Jean A. Williams, Director, Plaintiff and Appellant, v. GAF CORPORATION, a Delaware corporation, Defendant and Appellee.

No. 19836.

Supreme Court of Utah.

Aug. 18, 1988.

David L. Wilkinson, Neal T. Gooch, Salt Lake City, for plaintiff and appellant.

J. Rand Hirschi, Salt Lake City, for defendant and appellee.

STEWART, Justice:

The State Division of Consumer Protection (the "Division") appeals from a summary judgment against it in a civil action brought by the Division against GAF Corporation ("GAF"). The Division's complaint alleges that GAF committed a deceptive act or practice against a Utah consumer in violation of the Utah Consumer Sales Practices Act, Utah Code Ann. §§ 13-11-1 to -23 (Supp.1983). The trial court ruled that (1) the Division could not sue for damages to a consumer based on a complaint filed by the consumer with the Division, (2) a builder who sold the GAF product to the consumer and who allegedly made express warranties about GAF products was not an authorized agent of GAF, and (3) GAF's liability is limited by the terms of its own written warranty.

We take the following statement of facts primarily from Dr. Dewey MacKay's deposition. In June, 1974, Dr. MacKay contacted Pendleton Builders to discuss the installation of a new roof for his home. During the negotiations, Pendleton Builders showed MacKay an asphalt shingle made by GAF called the Slate Blend Timberline shingle ("Timberline"). MacKay was also shown GAF promotional materials about asphalt shingles, including pictures of a house newly roofed with GAF shingles.

Either Pendleton Builders or its subcontractor told MacKay that the Timberline was GAF's top-of-the-line, self-sealing shingle, which carried a twenty-five-year guarantee and was made of the highest quality asphalt. MacKay also testified that the GAF advertising materials he saw contained representations that the Timberline shingle roof was "a 25-year roof." He thought that meant that GAF would remedy any defects in the shingles that appeared within twenty-five years. Based on these representations, MacKay purchased Timberline shingles and had them installed on his home by a subcontractor of Pendleton Builders.

In May or June, 1981, MacKay noticed that the shingles had not sealed properly and had begun to curl. MacKay contacted a GAF representative who went to MacKay's home and took samples of the shingles for testing. The tests showed that the shingles were defective at the time of installation.

MacKay testified that he was not informed by GAF until after the shingles were tested that GAF's liability was limited by its written "Asphalt Shingle Warranty," which limits GAF's liability to "$25.00 per square subject to 4% annual reduction of liability each successive year at the life of the bond." In this case that liability would total $720. The warranty also states that the Timberline shingle is a "25-year bond" shingle. MacKay does not remember receiving a copy of the written warranty prior to the installation or to discovering the defective condition of the shingles. The estimated cost to repair the roof was $8,000.

After discovering that GAF's written warranty purported to limit its liability, MacKay complained to the Division. The Division investigated the complaint and, on September 23, 1983, filed a lawsuit alleging that GAF had participated in a deceptive act or practice forbidden by the Utah Consumer Sales Practices Act (the "Act").

I.

We first consider whether the Division complied with the terms of the governing statute in filing this lawsuit. In its complaint, the Division asserted that it was "charged with the enforcement and administration of the [Consumer Sales Practices] Act pursuant to ... Utah Code Ann. § 13-11-7 and Utah Code Ann. § 13-11-17 (Supp.1983)." GAF argues, and the trial court held, that under § 13-11-17(1)(c), as amended in 1983, the Division is authorized to recover damages only for those consumers who file complaints with the Division after the Division has already instituted an action against a defendant. As shown below, that construction of the statute would essentially eviscerate the Act and defeat the evident legislative objective of providing an effective remedy to consumers who have purchased defective products and who often have no practical private remedy because of the small amounts of money lost and the cost of pursuing legal proceedings. Indeed, the statutory scheme contemplates that the Division will act at the behest of consumers. The Act specifically provides, "the enforcing authority shall ... receive and act on complaints." Utah Code Ann. § 13-11-7(1)(d) (Supp.1988).

Prior to 1983, § 13-11-17(1)(c) read as follows:

(1) The enforcing authority may bring an action:

....

(c) To recover actual damages, or obtain relief under subsection (2)(b) on behalf of consumers who complained to the enforcing authority before he instituted proceedings under this act.

Utah Code Ann. § 13-11-17(1)(c) (Supp.1981). Subparagraph (c) of § 13-11-17(1) was amended in 1983. We set out the amended version in the full context of subsection (1):

(1) The enforcing authority may bring an action:

(a) to obtain a declaratory judgment that an act or practice violates this chapter;

(b) to enjoin, in accordance with the principles of equity, a supplier who has violated, is violating, or is otherwise likely to violate this chapter; and

(c) to recover, for each violation, actual damages, or obtain relief under Subsection (2)(b), on behalf of consumers who complained to the enforcing authority within a reasonable time after it instituted proceedings under this chapter.

Utah Code Ann. § 13-11-17(1) (1986).

It is axiomatic that a statute should be given a reasonable and sensible construction, Curtis v. Harmon Elec. Inc., 575 P.2d 1044, 1046 (Utah 1978), and that the legislature did not intend an absurd or unreasonable result. Millett v. Clark Clinic Corp., 609 P.2d 934, 936 (Utah 1980). Subsection (1) explicitly authorizes the Division to obtain three types of remedies: declaratory judgments, injunctions, and damages "on behalf of consumers." As construed by the trial court, the Division must act on its own initiative in filing a complaint, and once it has done that, it may then, and only then, press the claims of consumers who have been taken advantage of. As a practical matter, the trial court's reading of the statute would subvert the purpose of the Act and result in a nonsensical enforcement scheme, with the result that if a consumer complained to the Division before rather than after it commenced an action, the Division could not recover damages for that consumer. That result would contravene the stated purpose of the Act, which is "to protect consumers from suppliers who commit deceptive and unconscionable sales practices." Utah Code Ann. § 13-11-2(2) (1986).

The 1983 amendment is more reasonably construed as a remedial measure to extend the time limit for complaining to the Division to obtain the benefits of a damage action brought by the Division. Prior to the 1983 amendment, the Division could bring an action for damages only on behalf of those consumers who complained to the Division before the Division instituted an action against a supplier. Once the Division had initiated proceedings, it had to file a new action for subsequent consumer complaints concerning the same product. That limitation was unnecessary and burdensome to the Division and the courts. Thus, the amendment to § 13-11-17(1)(c) merely allowed additional consumers to join a pending action within "a reasonable time" after commencement of proceedings.

II.

The next issue is whether the Division stated a valid claim on which relief can be granted. In its first claim for relief, the Division alleged that GAF "indicated to Dr. MacKay that its Slate Blend Timberline shingle was a top-of-the-line, high quality, self-sealing shingle with a product life of at least 25 years," but that the shingles actually supplied to MacKay, although Timberline shingles, "were of an inferior quality and defective." On that basis, the Division alleged that GAF violated § 13-11-4(2)(b) (Supp.1983), which states:

(2) [T]he following acts or practices of a supplier or the following indications by a supplier are deceptive:

....

(b) That the subject of a consumer transaction is of a particular standard, quality, grade, style, or model, if it is not....

The Division does not allege that GAF knew the shingles were defective when they were sold to MacKay. On the contrary, it is undisputed, at least at this point, that GAF was unaware of the defective condition of the shingles until 1981. That, however, does not defeat the Division's claim for relief.

The Utah Consumer Sales Practices Act was modeled after the Uniform Consumer Sales Practices Act. Section 13-11-4 of the Utah Act was amended in 1985 to require "intent to deceive" on the part of a supplier before a deceptive trade practice can be found. See Utah Code Ann. § 13-11-4 (Supp.1988). However, the earlier version of the Utah Act, applicable in this case, contained no intent requirement. Indeed, the express intention of the drafters of the Uniform Act was not to require intent to deceive. According to the official comment to the Uniform Act, "The acts and practices listed in this subsection are treated as per se deceptive." Uniform Consumer Sales Practices Act § 3(b), 7A U.L.A. 237 (1985). See also Riley v. Enterprise Furniture, 54 Ohio Misc. 1, 375 N.E.2d 821 (1977). The Act allowed consumers to recover for a deceptive practice without showing intent to deceive. Because no intent is required under the version of § 13-11-4 that controls here, the Division's allegation that the shingles sold Dr. MacKay were of the Timberline type and of a particular quality, when they were of an inferior quality, states a valid claim for relief.

The Division's second...