Warranty claims against dealership fail - Greater Cincinnati Automobile Dealers Association

Warranty claims against dealership fail

By Shelley B. Fowler

George and Odelia Dolores bought a recreational vehicle from General R.V. Centers, Inc. They claimed that the salesman told them that if they agreed to buy a 2018 Crossfit for $87,000, General R.V. would give them $55,000 in trade-in credit for their Winnebago and Honda truck.

The purchase agreement, however, reflected a purchase price of $100,247. The Doloreses experienced many problems with the RV and sued General R.V. and U.S. Bank, the assignee of their retail installment contract, for violating the Magnuson-Moss Warranty Act, the Michigan Motor Vehicle Sales Finance Act, and the Michigan Motor Vehicle Installment Sales Contract Act and for misrepresentation.

The defendants moved for summary judgment, and the U.S. District Court for the Eastern District of Michigan granted the motion.

The Doloreses claimed that General R.V. breached express and implied warranties under the MMWA. The court noted that the MMWA provides that a supplier may not disclaim or modify any implied warranty if the supplier makes a written warranty to the consumer with respect to a consumer product. In this case, the manufacturer provided a written warranty, but General R.V. expressly sold the RV “as is” and disclaimed implied warranties in several different places on the transaction documents. Therefore, the court found that because General R.V. did not provide a written warranty, it was not precluded by the MMWA from disclaiming implied warranties.

The Doloreses claimed that the defendants misrepresented the RV’s purchase price and its safety and fitness for its intended purpose. The court concluded that the misrepresentation claims were precluded by language in the purchase agreement providing that the agreement constituted the entire agreement, that no other representations had been made, and that the Doloreses did not rely on any representations not contained in the agreement.

The Doloreses claimed that the alleged increase in the RV’s sale price violated the MVSFA. The court concluded, however, that they failed to provide legal authority for their claim that the alleged sale price increase violated Section 492.131(a) of the MVSFA, which prohibits hidden fees, noting case law establishing that the MVSFA does not alter the profit margin a dealership may receive on a vehicle sale and any additions the buyer selects.

Finally, the Doloreses claimed that the defendants violated the MVISCA, which sets forth requirements for written retail installment contracts. The court noted that the MVISCA did not apply because the document stated that it was governed by Ohio law.

The court didn’t stop there, however, determining that even if Michigan law applied, the contract substantially complied with the MVISCA because it disclosed the principal balance, the amount financed, the finance charge, the number of payments, and the amount of payments.

Using language that will be music to the ears of dealership lawyers everywhere, the court noted that although it was sympathetic to the Doloreses’ claims, they were bound by the documents they signed and they conceded they did not read before signing.

Dealer lessons here? One is that any disclaimer is ineffective if the seller offers a written warranty. Another that we’ve covered in several articles is the importance of following the rules concerning the dealership’s ability to disclaim implied warranties (note that not all states permit such disclaimers). For example, the Uniform Commercial Code requires that any such disclaimer use certain words and that it be “conspicuous.” This dealer either followed the disclaimer rules correctly, or the lawyer for the buyers didn’t challenge the dealership on this basis. Make sure that your lawyer agrees that you are doing it right!

Dolores v. General R.V. Center, Inc., 2019 U.S. Dist. LEXIS 105821 (E.D. Mich. June 25, 2019).

*Shelley B. Fowler is a managing editor at CounselorLibrary.com, LLC. She can be reached at 410.865.5406 or by email at rfowler@hudco.com.