Waddell v. L.V.R v. Inc.
58 U.C.C. Rep. Serv. 2d (West) 655, 122 Nev. 15, 125 P.3d 1160 (2006)
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Rule of Law:
Under the Uniform Commercial Code, a buyer may revoke acceptance of goods if a nonconformity substantially impairs the value of the goods to the buyer. The determination of substantial impairment involves a two-part test considering both the subjective needs of the buyer and objective evidence that the nonconformity hindered those specific needs.
Facts:
- Arthur and Roswitha Waddell spoke with a sales manager at L.V.R.V. Inc. (Wheeler's) about purchasing a 'diesel pusher' motor coach for long-term travel.
- The Waddells agreed to purchase a 1996 Coachmen Santara motor home (the RV) and took delivery on September 1, 1997.
- The Waddells intended to sell their house and use the RV to travel around the country for two to three years.
- On the first trip shortly after purchase, the RV's engine overheated to the point that the Waddells had to pull over and wait for it to cool down.
- Between September 1997 and March 1999, the Waddells continually returned the RV to Wheeler's for repairs due to numerous persistent problems, most notably chronic engine overheating.
- During the first eighteen months of ownership, the RV spent a total of seven months in Wheeler's service department for attempted repairs.
- Despite Wheeler's repeated attempts, the engine's chronic overheating problem was never successfully repaired, making the RV unreliable for the Waddells' intended travel plans.
Procedural Posture:
- Arthur and Roswitha Waddell filed a complaint against L.V.R.V. Inc. (Wheeler's) in Nevada district court (trial court) seeking to revoke acceptance of an RV.
- Wheeler's filed a third-party complaint against Coachmen Recreational Vehicle Company, Inc. (Coachmen) for indemnification.
- Following a three-day bench trial, the district court entered judgment in favor of the Waddells, permitting revocation of acceptance, and in favor of Coachmen, denying indemnification.
- The district court ordered Wheeler's to return the Waddells' out-of-pocket expenses and awarded the Waddells attorney fees.
- The district court denied Wheeler's motion for its own attorney fees, and denied the Waddells' motions for certain costs and post-judgment interest on the attorney fees award.
- Wheeler's appealed the judgment to the Supreme Court of Nevada, and the Waddells filed a cross-appeal regarding the denial of costs and interest.
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Issue:
Does a buyer rightfully revoke acceptance of a good under NRS 104.2608 when persistent, unresolved defects, such as chronic engine overheating, undermine the buyer's confidence in the good's reliability and prevent its intended use?
Opinions:
Majority - Gibbons, J.
Yes, a buyer rightfully revokes acceptance when persistent defects substantially impair the value of the goods for the buyer's specific purpose. To determine if a nonconformity substantially impairs value to the buyer under NRS 104.2608, the court adopted a two-part test. The first prong is subjective: what were the buyer's particular needs and circumstances? Here, the Waddells purchased the RV for long-term, cross-country travel. The second prong is objective: does the evidence show the nonconformity in fact impaired the value for those needs? The chronic, unsafe engine overheating objectively prevented the Waddells from using the RV as intended and shook their faith in its reliability. Furthermore, the revocation was timely because the reasonable time for revocation is tolled while the seller makes good-faith attempts to cure the defects. A buyer is not required to allow a seller to attempt repairs indefinitely before revoking acceptance.
Analysis:
This case is significant as a matter of first impression in Nevada for interpreting the 'substantial impairment' standard for revocation of acceptance under UCC § 2-608. By formally adopting the subjective/objective two-part test, the court provides a clear analytical framework for future cases, prioritizing the buyer's specific needs rather than those of a hypothetical 'reasonable' buyer. This decision strengthens consumer protection by clarifying that a seller’s repeated but unsuccessful repair attempts toll the time for revocation and cannot be used to indefinitely postpone a buyer’s right to revoke. It establishes that a loss of confidence in a product's reliability, caused by persistent defects, can constitute substantial impairment.
