Tammi v. Porsche Cars North America

• Citation: 2009 WI 83,768 N.W.2d 783
• Decision Date: 17 July 2009
• Docket Number: No. 2008AP1913-CQ.,2008AP1913-CQ.
• Parties: Bruce A. TAMMI, Plaintiff-Appellee, v. PORSCHE CARS NORTH AMERICA, INC., Defendant-Appellant.
• Court: United States State Supreme Court of Wisconsin

768 N.W.2d 783

2009 WI 83

Bruce A. TAMMI, Plaintiff-Appellee, v. PORSCHE CARS NORTH AMERICA, INC., Defendant-Appellant.

No. 2008AP1913-CQ.

Supreme Court of Wisconsin.

Argued February 4, 2009.

Decided July 17, 2009.

For the defendant-appellant there were briefs by Jeffrey S. Fertl and Hinshaw & Culbertson LLP, Milwaukee, and oral argument by Jeffrey S. Fertl.

For the plaintiff-appellee there was a brief by Bruce A. Tammi, and oral argument by Bruce A. Tammi.

An amicus curiae brief was filed by Frank J. Daily, Mitchell S. Moser, and Quarles & Brady LLP, Milwaukee, on behalf of Product Liability Advisory Council, Inc.

¶ 1 DAVID T. PROSSER, J

This case is before the court on certification from the United States Court of Appeals for the Seventh Circuit pursuant to Wis. Stat. § 821.01 (2007-08)¹ and Circuit Rule 52 (Circuit Rules of the U.S. Court of Appeals for the Seventh Circuit). The four certified questions relate to damages permitted in a suit under Wis. Stat. § 218.0171, Wisconsin's Lemon Law,² in a specific factual situation. The questions restated by the Seventh Circuit are as follows:

1. When a consumer defined in Wisconsin Statute Section 218.0171(1)(b)4[.] brings an action pursuant to subsection (7), if that consumer, after making his Lemon Law demand, then exercises an option to purchase and buys the vehicle as provided in the lease, is the consumer then entitled to recover the amount of the purchase price?

2. If the consumer defined in Wisconsin Statute Section 218.0171(1)(b)4[.] is entitled to recover the vehicle purchase price when he exercises the purchase option provided in the lease, does the purchase amount qualify as pecuniary loss subject to the doubling provision in subsection (7)?

3. If the answers to questions 1 and 2 are in the affirmative, is the consumer permitted to keep the purchased vehicle in addition to the receipt of the damage award or must the vehicle be returned to the manufacturer?

4. Is a damage award under subsection (7) subject to a reduction for reasonable use of the vehicle?

Tammi v. Porsche Cars N. Am., Inc., 536 F.3d 702, 713-14 (7th Cir.2008).

¶ 2 We answer the first certified question as follows: No. When a consumer who is leasing a motor vehicle brings an action against the manufacturer of the vehicle pursuant to subsection (7) of Wis. Stat. § 218.0171, and then exercises his option to purchase the vehicle under the terms of the lease, the consumer is not entitled to damages for the price of his voluntary purchase because his purchase was not "caused" by any violation of the statute by the manufacturer. See Wis. Stat. § 218.0171(7).

¶ 3 Because our answer to the first certified question is "no," it is unnecessary for us to reach the second and third certified questions, as they depend upon a "yes" answer to the first question. A discussion of certified questions two and three would devolve into an impermissible discussion of a hypothetical situation, because this case does not implicate a consumer who is entitled to recover his vehicle purchase price. As the resolution of those issues "depends on hypothetical or future facts, [they are] not ripe for adjudication and will not be addressed by this court." State v. Armstead, 220 Wis.2d 626, 631, 583 N.W.2d 444 (Ct.App.1998); see also City of Janesville v. County of Rock, 107 Wis.2d 187, 199, 319 N.W.2d 891 (Ct.App.1982) ("Courts will not render merely advisory opinions.").

¶ 4 We answer the fourth certified question as follows: The plain language of the statute makes clear that a consumer's refund under Wis. Stat. § 218.0171(2)(b)2.b. or 3.a. is subject to a reasonable allowance for use. Because we read subsection (7) in conjunction with the rest of the statute, we conclude that the amount of "pecuniary loss" under Wis. Stat. § 218.0171(7) must incorporate a reasonable allowance for use before the pecuniary loss is doubled.

I. FACTS AND PROCEDURAL HISTORY³

¶ 5 On May 30, 2003, Bruce A. Tammi (Tammi) entered into a 36-month lease with Zimbrick Inc. Hyundai & European of Madison (Zimbrick) for a 2003 Porsche 911 Turbo Coupe.⁴ Tammi was an avid car enthusiast and member of the Porsche Club of America. He "leased the vehicle for use in competitive car club events as well as for his work commute" to his law firm in Milwaukee. Tammi, 536 F.3d at 704.

¶ 6 Tammi's payment obligations under the 36-month lease amounted to $69,327.10. This total included an initial payment of $1,999.85, 35 monthly payments of $1,912.35 ($66,932.25), and a termination fee of $395.00.

¶ 7 Tammi had significant experience purchasing expensive cars, and he frequently purchased vehicles via lease contracts containing options to purchase. In this case, he negotiated a sophisticated lease under which he could purchase the Porsche at the end of the lease or at any time during the lease. The negotiated purchase price at the end of the lease was $64,344.10, plus taxes and fees. If Tammi decided to exercise his option to purchase prior to the expiration of 36 months, the $64,344.10 purchase price would be increased pro rata based upon the previously negotiated residual value of the vehicle, namely $63,994.10.

¶ 8 Approximately eight months after Tammi took possession of the Porsche, he began to encounter mechanical problems with the vehicle. See id. Tammi's Porsche was equipped with a rear spoiler that was "designed to deploy automatically when the vehicle exceeded 75 m.p.h." Id. When the vehicle traveled below 40 m.p.h., the spoiler was designed to retract. See id. Tammi's problem was that, when the spoiler deployed, it often failed to retract. Id. at 704-05. This occurred about one-third of the time that Tammi drove the vehicle. See id. at 704, 707. Moreover, when the spoiler failed to retract, "it prompted an audible chime to ring intermittently, a red warning light to illuminate, and a red warning message image to display in the center instrument cluster." Id. at 704. These warning signals were annoying, distracting, and frequently forced Tammi to pull over or leave the highway to turn off his vehicle in an effort to reset the spoiler and defective alarms. See id. at 704-05. In addition, the vehicle's radio would sometimes blare loudly upon start-up before eventually returning to normal volume after a few minutes. See id.

¶ 9 Between March and August 2004, Tammi took his vehicle to a certified Porsche service provider for repairs at least eight times.⁵ See id. at 705. He always brought the vehicle to certified Porsche service providers so that he would not violate any provisions of his lease. Id.; see also Wis. Stat. § 218.0171(2)(a). These many attempts to correct the problems were not successful. Tammi, 536 F.3d at 705.

¶ 10 On September 7, 2004, Tammi submitted the requisite notice under Wisconsin's Lemon Law to Porsche. Tammi submitted his notice using a Lemon Law notice form provided by the Wisconsin Department of Transportation. In his notice, Tammi informed Porsche that the "vehicle had been made available for repair at least [four] times for the same defect during its first year of warranty, and [he] demanded a refund calculated in accordance with the Lemon Law, plus collateral costs." Id. (internal quotations omitted). Tammi also offered to return the vehicle. In a letter dated October 6, 2004, Porsche rejected Tammi's Lemon Law claim, stating "its understanding that [the] vehicle had been repaired." Id.

¶ 11 On October 14, 2004, following Porsche's denial of his claim, Tammi filed a Lemon Law complaint in Waukesha County Circuit Court, seeking double damages for his lease payments in accordance with Wis. Stat. § 218.0171(7). See id. Citing diversity jurisdiction, Porsche removed the case to the United States District Court for the Eastern District of Wisconsin. See id. A month or so later, on December 6, 2004, Tammi filed a motion for summary judgment. The district court denied Tammi's motion, finding that there were issues of material fact that remained unresolved specifically, whether the vehicle had a substantial impairment that would constitute a nonconformity under Wis. Stat. § 218.0171(1)(f).

¶ 12 Tammi filed Federal Rule 26⁶ disclosures on January 14, 2005, alleging damages for the amount of his lease, his tire rack and floor mat purchases, and his insurance expenditures. His initial damages disclosure did not include the purchase price of the vehicle. Following Tammi's disclosures, the district court ordered that discovery be completed by September 1, 2005.

¶ 13 In December 2005, while the case was pending, Tammi exercised his option to purchase the Porsche vehicle for $75,621.88. Tammi, 536 F.3d at 705. Because Tammi's purchase occurred after his initial lease payment of $1,999.85, plus 29 subsequent monthly lease payments of $1,912.35, his payments under the lease totaled $57,458.00.⁷ Despite his ongoing claim that the vehicle was a lemon, Tammi testified that he had fixed the spoiler malfunction on his own, see id. at 705 n. 1, and decided to purchase the vehicle because he felt it was worth more than the lease buyout amount.

¶ 14 On April 12, 2006, the district court held a scheduling conference during which it referred the case to mediation and set a final pretrial conference for August 3, 2006. Tammi subsequently revised his Rule 26 disclosures to include a claim of damages for the purchase price of the vehicle. In response, Porsche filed several motions in limine asking the court to limit Tammi's damages to his lease payments. The district court denied these motions.

¶ 15 Ultimately, Tammi sought the following in damages:

[R]ecovery of his lease payments ($57,458.00), the amount he paid for the purchase of the car under the [buyout] option of the lease ($75,621.88), insurance ($2,457.85), winter tires ($2,044.11) and floor mats and an auto manual ($788.71), for a total of $138,370.55. [He also wanted] to retain ownership of the car.

Id. at 705-06. Porsche countered that Tammi's lease payments...