Thomas v. Ruddell Lease-Sales, Inc.

Decision Date25 March 1986
Docket NumberINC,No. 7539-3-II,LEASE-SALE,7539-3-II
Citation716 P.2d 911,43 Wn.App. 208
Parties, 1 UCC Rep.Serv.2d 394 Barry THOMAS, Respondent, v. RUDDELL, Appellant.
CourtWashington Court of Appeals

Robert L. McAdams, Seattle, for appellant.

Kenneth D. Williams, Johnson & Williams, Port Angeles, for respondent.

REED, Acting Chief Judge.

Ruddell Lease-Sales, Inc. (Lease-Sales), appeals a judgment for Barry Thomas rescinding a contract for the sale of a sports car. We affirm and remand for a recomputation of prejudgment interest.

On May 8, 1979 Thomas bought a used 1976 Corvette Stingray from Lease-Sales, a used-car dealer in Port Angeles. During his first conversation with Lease-Sales, Thomas asked whether a wavy patch of paint meant that the car had been wrecked and repaired. The salesman, Len Wilson, who did not know, told Thomas that to the best of his knowledge the car had not been wrecked. Thomas testified that he was dissatisfied with the high price of nearly $10,000, but elected to purchase after Howard Ruddell told him that the price was higher than bluebook because the car was in top condition. Ruddell, too, did not know whether the car had been in a collision, but acknowledged at trial that he might have said the Corvette was in top condition.

The purchase order that Thomas read and signed contained a blanket disclaimer of warranties. As Thomas was reading the agreement, the salesman pointed out the following statement and requested that Thomas initial it: "I understand you don't provide any warranties whatsoever, and the auto is sold as is and with all defects...." Wilson explained that this provision would protect Lease-Sales from complaints of engine problems from buyers who would punishingly drive a high-performance sports car like the Corvette. No other specifics were discussed. Thomas then initialed the disclaimer.

Thomas paid off the contract May 10, 1979. Within a week, Thomas noticed that the car vibrated severely in front, constantly drifted to the right, and would both "lope" at low speeds and "shimmy" at fast speeds. He complained to Lease-Sales, but the dealer was either unwilling or unable to correct these problems. Thomas continued to drive the car for 2 to 3 months between home and work. The car seemed to wear through its tires rapidly, and for this reason Thomas felt unsafe and garaged the car.

In February 1980 Thomas again began using the Corvette, which immediately broke down. A mechanic found that the fuel pump had ruptured because it was rubbing against the motor mount, a problem that he thought unusual in a car of fairly recent vintage. In making the necessary repairs, the mechanic found that the motor could not be reinstalled without mechanically prying the mount into alignment with the frame. He also observed that the frame had been welded conspicuously. He concluded that the frame had been bent and then repaired and that Thomas would continue to have engine problems and vibration because parts were misaligned.

Thomas immediately told Ruddell by telephone that he had been promised a car in top condition and that he wanted his money back. Ruddell then had the car examined by a body repair specialist, who assured Thomas that the problems of wandering and excessive tire wear were attributable solely to a bent crosspiece, a problem to which he believed General Motors cars were susceptible and that could easily occur without a collision.

Ruddell offered to have the frame examined at a specialty frame shop, and on or about May 10, 1980, sent his salesman to Thomas's business in Forks with a loan car in order to bring the Corvette back to Port Angeles. However, Thomas refused to release the car for repairs unless the salesman signed a statement acknowledging that any repairs were the responsibility of Lease-Sales, that Thomas was rejecting his contract, that Thomas did not accept the Corvette as what he had been promised, and that Thomas was not waiving any legal rights against Lease-Sales. Ruddell refused to give the salesman permission to sign this statement, and the Corvette was left with Thomas.

Between February 1980 and February 1981 Thomas continued to try to use the car 1 but it was again garaged after February 1981. On June 30, 1981, Thomas brought this action for rescission of the contract, seeking refund of the purchase price, recoupment of his repair costs, an award of damages, attorney's fees, and a trebling of damages under the Consumer Protection Act. In preparation for trial, Thomas had a specialty frame shop examine the car. He was told that the frame had been cut open and repaired, affecting tire wear and general safety.

At trial, Lease-Sales's expert witness, Irwin Rohrich, a Seattle auto dealer specializing in Corvettes, testified that bluebook prices for Corvettes were unreliable; that the car actually had been worth more than Thomas had paid for it in 1979, when he had paid a price above bluebook. However, Rohrich conceded on cross examination that about 25 percent of his customers would not buy a Corvette if they knew that it had been wrecked. The mechanic who had examined the frame for Thomas testified that he would not buy a Corvette that had been repaired after a collision. He also testified that the defects in the Corvette would not have been apparent to a purchaser, because the fiberglass exterior is remolded onto the chassis when extensive collision repair is performed.

The court granted Thomas rescission of the contract on September 30, 1983. The judgment was based on alternative grounds: (1) the parties had made a mutual mistake of fact about the subject matter of the contract; and (2) the prior collision affected the operability of the vehicle for Thomas's purposes, was a substantial and material nonconformance of the goods, and substantially impaired the value of the vehicle to Thomas. The court further found that the disclaimer had not been negotiated and was ineffective. The court ordered refund of the purchase price, plus interest of 10 percent per annum from the date of the sale, plus the cost of repairs and tire replacement. The court denied the Consumer Protection Act claims.

Our review is limited to determining whether the trial court's findings are supported by substantial evidence, and, if so, whether the findings in turn support the conclusions of law. Goodman v. Darden, Doman & Stafford Assocs., 100 Wash.2d 476, 483, 670 P.2d 648 (1983). We need determine only whether the evidence most favorable to the prevailing party supports the challenged findings, even if the evidence is in conflict. North Pac. Plywood, Inc. v. Access Road Builders, Inc., 29 Wash.App. 228, 232, 628 P.2d 482, review denied, 96 Wash.2d 1002 (1981). Findings of fact supported by substantial evidence will not be reversed on appeal. Funderburk v. Bechtel Power Corp., 103 Wash.2d 796, 799, 698 P.2d 556 (1985).

First, we find no merit in the finding that a mutual mistake furnished grounds for rescission of contract. A party seeking to rescind must show by clear, cogent and convincing evidence that the mistake was independently made by both parties, that is, by relying on independent sources or a common source of information. Simonson v. Fendell, 101 Wash.2d 88, 91-92, 675 P.2d 1218 (1984). There is no mutual mistake when, as here, one party relies on the other for mistaken information. Simonson, 101 Wash.2d at 91-92, 675 P.2d 1218; Pepper v. Evanson, 70 Wash.2d 309, 313-14, 422 P.2d 817 (1967).

Nevertheless, we find that Thomas fully carried his burden of proving his entitlement under the Uniform Commercial Code to revoke his acceptance of the Corvette and cancel his contract with Lease-Sales. Revocation of acceptance is justified only if: the goods accepted have a nonconformity that substantially impairs their value to the buyer, and, if the buyer accepted without knowledge of the nonconformity, the acceptance was reasonably induced either by the difficulty of discovery of the nonconformity before acceptance or by the seller's assurances. RCW 62A.2-608(1). The burden is on the buyer to establish any breach of contract or warranty with respect to the goods accepted, RCW 62A.2-607(4). If the buyer justifiably revokes acceptance, he may cancel the contract and recover the price paid. RCW 62A.2-711(1).

Thomas asserts that the Corvette failed to satisfy the warranty of merchantability that is implied in all goods sold by a merchant dealing in goods of that kind. RCW 62A.2-314(1). However, Thomas's proof of the nonconformity of the Corvette to that warranty must fail unless it can be shown that the disclaimer that he signed was ineffective.

A disclaimer or waiver is ineffective unless (1) it is explicitly negotiated between the buyer and the seller, and (2) it sets forth with particularity the qualities and characteristics that are not being warranted. Berg v. Stromme, 79 Wash.2d 184,...

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