Wilke v. Woodhouse Ford, Inc.
774 N.W.2d 370 (2009)
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Rule of Law:
A commercial dealer of used vehicles has a common-law tort duty to conduct a reasonable inspection for patent safety defects prior to sale. This duty of care is separate from contractual warranties and cannot be disclaimed by selling the vehicle "as is."
Facts:
- On September 18, 2004, Elizabeth and Mark Wilke purchased a used 2002 Ford Econoline van from Woodhouse Ford, Inc.
- The purchase agreement included a conspicuous clause stating the van was sold "AS IS" and expressly disclaimed all warranties, including the implied warranty of merchantability.
- Woodhouse Ford did not inspect the van before the sale.
- That same day, the Wilkes parked the van on a sloped driveway. Mark Wilke put the van in park and removed the key from the ignition but did not apply the emergency brake.
- The Wilkes' 3-year-old daughter climbed into the driver's seat and allegedly put her hand on the gearshift.
- After a "clunk" sound, the van rolled backward, injuring Elizabeth Wilke.
- A post-accident investigation and a deputy sheriff's report indicated the van had a defective shift lever that allowed it to be shifted out of park without the brake pedal being depressed and possibly without the key in the ignition.
- After the accident, Woodhouse performed two repairs on the van, replacing worn bushings and adjusting the shifter cable, after which the defect was corrected.
Procedural Posture:
- Elizabeth and Mark Wilke filed a petition against Woodhouse Ford, Inc. in a Nebraska district court (trial court), alleging negligence and breach of implied warranty of merchantability.
- Woodhouse Ford filed a motion for summary judgment on both claims.
- The district court granted summary judgment in favor of Woodhouse Ford.
- The Wilkes, as appellants, appealed the district court's judgment to the state's appellate courts.
- The Nebraska Supreme Court moved the case from the intermediate appellate court to its own docket to hear the appeal.
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Issue:
Does a commercial dealer of used vehicles have a duty to conduct a reasonable inspection for patent safety defects prior to sale, even when the vehicle is sold "as is" with a valid disclaimer of all implied warranties?
Opinions:
Majority - Justice McCormack
Yes, a commercial dealer of used vehicles has a duty to conduct a reasonable inspection for patent safety defects prior to sale, even when the vehicle is sold "as is." The court affirmed the dismissal of the warranty claim but reversed the dismissal of the negligence claim. While the "as is" clause effectively and lawfully disclaimed the implied warranty of merchantability under the Uniform Commercial Code (U.C.C. § 2-316), such a contractual disclaimer does not absolve a seller of their separate tort duty to exercise reasonable care. Tort liability is based not on contractual promises but on a duty imposed by law to prevent foreseeable harm to others. The court established a new duty for used car dealers in Nebraska by applying a risk-utility test, finding that the magnitude of risk to the public is great, the dealer is in the best position to discover defects, and the potential harm is foreseeable. This duty is limited to discovering patent defects through a reasonable inspection and does not require disassembly to find latent defects. Because genuine issues of material fact exist as to whether a reasonable inspection would have revealed the gearshift defect and whether that failure was the proximate cause of the injury, summary judgment on the negligence claim was improper.
Analysis:
This case establishes a significant new precedent in Nebraska by imposing a common-law duty of care upon commercial dealers of used vehicles. It clarifies the boundary between contract law (UCC warranties) and tort law (negligence), holding that an "as is" disclaimer, while effective in contract, cannot waive a seller's fundamental duty to protect buyers and the public from foreseeable harm caused by discoverable safety defects. This decision aligns Nebraska with the majority of jurisdictions that recognize such a duty, providing a new avenue for recovery for individuals injured by defective used cars. The ruling will likely compel used car dealers in the state to implement standardized inspection procedures for all vehicles prior to sale, regardless of warranty disclaimers.
