Gilbert v. Monaco Coach Corp.
352 F.Supp.2d 1323, 2004 WL 3111021 (2004)
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Rule of Law:
Under the Magnuson-Moss Warranty Act, a consumer asserting a breach of written warranty claim against a manufacturer need not prove the exact cause of a defect, only its existence, and can recover consequential damages if a limited warranty's repair or replacement remedy fails its essential purpose; however, claims for breach of implied warranty and revocation of acceptance typically require privity of contract with the manufacturer under state law.
Facts:
- Plaintiffs Raymond and his wife, residents of Georgia, purchased a 2001 Safari Serengeti Recreational Vehicle (RV) from La Mesa RV Center in Arizona on June 3, 2002.
- The sales contract for the RV was entered into in Arizona, and plaintiffs took possession on June 6, 2002, knowing it had existing problems with the electrical system, DVD, VCR, satellite system, and door colors, but with the understanding the dealer would repair them.
- Plaintiffs received a limited warranty from Safari Motor Coaches (whose obligations Monaco Coach Corporation assumed), covering defects in parts manufactured or supplied by Safari for one year or 12,000 miles.
- Four days after taking possession, plaintiffs returned the RV to the dealer for repairs and subsequently took it to authorized dealers at least seven more times, experiencing ongoing issues with the waste system, exterior body, interior trim, electrical system, doors, and brakes.
- At Safari/Monaco's direction, plaintiffs took the RV to Planet RV in Kennesaw, Georgia, for repairs, where they were told walls needed to be removed to fix a sewage odor problem; plaintiffs paid for these repairs but were not reimbursed by Safari/Monaco.
- Plaintiffs' expert, Mike Wardingley, identified some causes of the problems and confirmed the existence of defects, though not for brakes or suspension, but did not perform a full diagnosis.
- Since October 19, 2002, the RV has remained parked in the plaintiffs' driveway in Georgia, unusable due to persistent electrical problems and sewage odor.
- Plaintiffs contacted Safari/Monaco seeking to revoke their acceptance of the vehicle due to its inability to be properly repaired.
Procedural Posture:
- Plaintiffs filed a lawsuit alleging claims under the Uniform Commercial Code (UCC), state warranty law (specifically Georgia law), and the Magnuson-Moss Warranty Act (MMWA) against defendant Monaco Coach Corporation (as successor to Safari Motor Coaches).
- Defendant Monaco Coach Corporation filed a Motion for Summary Judgment.
- Plaintiffs filed a Motion for Oral Argument on defendant’s motion for summary judgment.
- The U.S. District Court for the Northern District of Georgia considered these motions.
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Issue:
1. Does a consumer, in a breach of written warranty claim under the Magnuson-Moss Warranty Act, need to prove the specific cause of a defect, or only its existence, to survive a motion for summary judgment? 2. Is privity of contract required between a consumer and a manufacturer for claims of breach of implied warranty or revocation of acceptance under Arizona law? 3. Can a disclaimer of consequential and incidental damages in a limited warranty be deemed ineffective if the warranty's repair/replacement remedy fails its essential purpose under Arizona law?
Opinions:
Majority - Carnes, District Judge
1. No, a consumer bringing a breach of written warranty claim under the Magnuson-Moss Warranty Act does not need to prove the specific cause of a defect, only its existence. The court reasoned that requiring consumers to identify the exact, technical cause of a defect would thwart Congress's intent in enacting the MMWA, which was to make warranties more understandable and enforceable for consumers. Given the technological complexity of modern products, warrantors are in a better position to diagnose the sources of problems. Once a consumer alerts the warrantor to a defect, the burden shifts to the warrantor to establish that the defect is not covered by the warranty. The court also noted that the Limited Warranty covered parts "supplied" by Safari, not just those manufactured, broadening its scope. 2. No, privity of contract is required between a consumer and a manufacturer for claims of breach of implied warranty or revocation of acceptance under Arizona law. The court applied Georgia's choice of law rules, lex loci contractus, determining that Arizona law governed the state law claims because the sales contract was negotiated and executed there. Under the MMWA, implied warranties arise under state law. Arizona law, as evidenced by cases like Seekings v. Jimmy GMC of Tucson, Inc. and Flory v. Silvercrest Industries, Inc., requires vertical privity (a direct contractual relationship) for claims of breach of implied warranties of merchantability and fitness. As plaintiffs purchased the RV from a dealer, not directly from Safari/Monaco, they lacked the requisite privity. Similarly, the court found no legal authority in Arizona or Georgia to allow revocation of acceptance against a manufacturer in the absence of privity of contract, as revocation is a remedy meant to return the buyer and seller to their pre-transaction positions. 3. Yes, a disclaimer of consequential and incidental damages in a limited warranty can be deemed ineffective if the warranty's repair/replacement remedy fails its essential purpose under Arizona law. The court cited Arizona Revised Statutes § 47-2719(B), which allows for a remedy to fail its essential purpose. This occurs when a repair or replacement remedy, implicit in the contract, cannot cure the defect because the product is too deficient or the warrantor fails to perform the promised repairs. If the warrantor fails to repair or replace the defective parts, the consumer would not receive the benefit of their bargain, thus rendering the contractual limitation on damages unenforceable. The court found that plaintiffs had proffered evidence of unrepaired defects, and the defendant had not addressed the 'failure of essential purpose' argument.
Analysis:
This case clarifies crucial aspects of consumer warranty litigation, particularly distinguishing between claims requiring privity and those that do not. It significantly eases the burden on consumers bringing breach of written warranty claims under the Magnuson-Moss Warranty Act, shifting the onus to the warrantor to prove non-coverage of a defect once its existence is established. Furthermore, the ruling on the 'failure of essential purpose' provides a vital mechanism for consumers to overcome disclaimers of consequential damages, ensuring they are not left without a remedy when a warrantor fails to honor its repair obligations. However, the strict application of privity for implied warranty claims and revocation of acceptance underscores the importance of identifying the correct defendant (seller versus manufacturer) and the applicable state law when pursuing these specific remedies.
