Mydlach v. DaimlerChrysler Corp.
875 N.E.2d 1047, 314 Ill. Dec. 760, 226 Ill. 2d 307 (2007)
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Rule of Law:
The four-year statute of limitations for a Magnuson-Moss Act claim alleging breach of a repair or replacement warranty accrues when the warrantor fails or refuses to make the promised repairs, not upon tender of delivery of the goods, because such a warranty is not an "express warranty" under the UCC's tender-of-delivery rule. Additionally, the remedy of revocation of acceptance is generally not available against a non-selling manufacturer.
Facts:
- On June 24, 1996, a 1996 Dodge Neon manufactured by DaimlerChrysler Corporation was originally put into service with a three-year/36,000-mile limited warranty.
- On June 20, 1998, Lucy Mydlach purchased the used 1996 Dodge Neon from McGrath Buick-Nissan in Elgin, Illinois.
- At the time of purchase in 1998, the vehicle had 26,296 miles, leaving approximately one year or 10,000 miles remaining on the warranty.
- Beginning July 7, 1998, Lucy Mydlach brought the car to McGrath and another authorized dealership several times for a variety of problems, including a recurring fluid leak.
- Lucy Mydlach claimed that the dealerships' repair attempts were unsuccessful, and as a result, she could not use the vehicle as intended.
Procedural Posture:
- Lucy Mydlach filed a three-count complaint against DaimlerChrysler Corporation in the circuit court of Cook County (trial court).
- The case initially proceeded to arbitration, where a decision was entered in favor of DaimlerChrysler Corporation.
- Lucy Mydlach rejected the arbitrators’ decision, and the case was returned to the trial court.
- DaimlerChrysler Corporation filed a motion for summary judgment, arguing the claims were time-barred under the UCC and that revocation of acceptance was unavailable against a manufacturer without privity.
- The trial court agreed with DaimlerChrysler Corporation, relying on Nowalski v. Ford Motor Co., and granted summary judgment on all three counts.
- The trial court denied Lucy Mydlach’s motion for reconsideration.
- Lucy Mydlach appealed the trial court's decision to the Illinois Appellate Court.
- The appellate court reversed the trial court’s grant of summary judgment on counts I (breach of written warranty) and III (revocation of acceptance), and affirmed the grant of summary judgment on count II (implied warranty of merchantability), following Cosman v. Ford Motor Co..
- DaimlerChrysler Corporation filed a petition for leave to appeal to the Illinois Supreme Court, which was allowed.
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Issue:
1. Does the four-year statute of limitations for a breach of a repair or replacement warranty under the Magnuson-Moss Act accrue at the time of tender of delivery of the goods, or when the warrantor fails or refuses to make repairs? 2. Is the remedy of revocation of acceptance available against a non-selling manufacturer under the Magnuson-Moss Act?
Opinions:
Majority - Justice Fitzgerald
1. No, the four-year statute of limitations for a breach of a repair or replacement warranty under the Magnuson-Moss Act accrues when the warrantor fails or refuses to make the promised repairs, not upon tender of delivery of the goods. The Magnuson-Moss Act (15 U.S.C. §2301 et seq.) does not contain its own statute of limitations, so Illinois courts borrow the four-year limitations period from Section 2—725 of the Uniform Commercial Code (UCC) (810 ILCS 5/2—725). While UCC Section 2—725(2) states that a "breach of warranty occurs when tender of delivery is made," this rule applies to express warranties (UCC §2—313) which relate to the quality or description of goods at the time of sale. A repair or replacement warranty, however, is not a warranty of the goods' inherent quality at tender, but rather a promise by the manufacturer to perform repairs or replacements should a defect arise during the warranty period. Such a promise cannot be breached until the manufacturer fails or refuses to perform the promised repair. To apply the "tender of delivery" rule to repair warranties would render longer-term warranties unenforceable if the breach (failure to repair) occurs more than four years after initial delivery, which is contrary to the consumer protection purpose of the Magnuson-Moss Act. 2. No, the remedy of revocation of acceptance is not available against a non-selling manufacturer under the Magnuson-Moss Act. Although the Magnuson-Moss Act provides for "legal and equitable relief" (15 U.S.C. §2310(d)(1)), and revocation of acceptance is an equitable remedy, it is conceptually inapplicable to a non-selling manufacturer. UCC Section 2—608, which governs revocation of acceptance, contemplates a buyer-seller relationship where the contract of sale can be cancelled, title and possession restored to the seller, and the purchase price returned to the buyer. A remote manufacturer, not being a party to the sales transaction, has no role in restoring the status quo ante of that contract. While a manufacturer's written warranty can establish limited privity for some implied warranty claims under Szajna v. General Motors Corp., this does not extend to allow revocation against a non-seller. Lucy Mydlach is not without a remedy, as she can still seek money damages and attorney fees for the alleged breach of written warranty.
Analysis:
This case significantly clarifies the application of the UCC's statute of limitations to Magnuson-Moss Act claims, ensuring that repair and replacement warranties, often extending beyond four years, remain enforceable for their full term. By distinguishing repair promises from traditional express warranties, the court protects consumers from misleading warranty marketing. Furthermore, the decision provides clear guidance that the equitable remedy of revocation of acceptance, designed to unwind a sales contract, is generally limited to the direct seller and cannot be pursued against a remote manufacturer, thereby delineating the scope of relief available under federal warranty law against different parties in the distribution chain.
