Free Order - District Court of Arizona - Arizona

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA

RONALD WEBER, Plaintiff, vs. FLEETWOOD MOTOR HOMES OF INDIANA, INC., Defendant.

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CIV 03-2606 PHX JWS ORDER AND OPINION [Re: Motion at Docket 120]

I. MOTION PRESENTED In his third amended complaint, Ronald Weber claims Fleetwood Motor Homes of Indiana, Inc., breached written and implied warranties and violated 15 U.S.C. § 2302 and 16 C.F.R. §§ 700.5, 701.3, and 702.3. Fleetwood filed a summary judgment motion on those claims at docket 99. The court granted the motion with respect to Weber's claims under 15 U.S.C. § 2302 and 16 C.F.R. §§ 700.5, 701.3, and 702.3. The court denied Fleetwood's motion with respect to Weber's warranty claims because Fleetwood failed to brief the issue of what law applied to those claims. However, that denial was with leave to renew, and at docket 120, Fleetwood has renewed its summary judgment motion on Weber's warranty claims. At docket 122, Weber

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opposes Fleetwood's renewed motion. The parties have incorporated the briefing associated with the motion at docket 99. In addition, Fleetwood has requested oral argument. That request is denied because the parties' briefs thoroughly address the issues necessary to resolving the motion at docket 120, and oral argument would not further assist the court. II. BACKGROUND Weber is a motor home enthusiast. He has owned five motor homes, the latest of which is the subject of this dispute. That motor home is a 2002 American Dream manufactured by Fleetwood. Weber purchased it in February of 2002 from Beaudry RV in Mesa, Arizona, under a contract to which only he and Beaudry RV were parties. He accepted delivery of the American Dream in New Mexico and, afterwards, began to have problems with it. Fleetwood undertook repairing the motor home, but its repairs were not to Weber's satisfaction. He filed suit against Fleetwood in this court on December 30, 2003. Weber has invoked this court's jurisdiction under the Magnuson-Moss Warranty Act ("MMWA" or "Act"), 15 U.S.C. §§ 2301-2312. The Act's genesis was "an increasing number of consumer complaints regarding the inadequacy of warranties on consumer goods."1 In response to those complaints, the Act sought "to improve the adequacy of information available to consumers, prevent deception, and improve competition in the marketing of consumer products."2 It did that by requiring "any warrantor warranting a

Davis v. S. Energy Homes, Inc., 305 F.3d 1268, 1272 (11th Cir. 2002) (citing H.R.Rep. No. 93-1107 (1974), reprinted in 1974 U.S.C.C.A.N. 7702, 7705-11)).
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15 U.S.C. § 2302(a).

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consumer product ... by means of a written warranty [to] fully and conspicuously disclose in simple and readily understood language the terms and conditions of such warranty."3 To that end, the Act set certain standards and also directed the Federal Trade Commission ("FTC") to establish rules for the contents of written warranties.4 Among the Act's standards are definitions for written and implied warranties. A written warranty is: any written affirmation of fact or written promise made in connection with the sale of a consumer product by a supplier to a buyer which relates to the nature of the material or workmanship and affirms or promises that such material or workmanship is defect free or will meet a specified level of performance over a specified period of time.5 An implied warranty is "an implied warranty arising under State law ... in connection with the sale by a supplier of a consumer product."6 The MMWA classifies written warranties as either "full" or "limited."7 A written warranty is full if it meets the minimum standards for warranties described in Section 2304 of the Act. That section requires a warrantor to: remedy [a] consumer product within a reasonable time and without charge, in the case of a defect, malfunction, or failure to conform with [a] written warranty ... [and] if the product (or a component part thereof) contains a defect or malfunction after a reasonable number of attempts by the warrantor to remedy defects or malfunctions in [it], [then the] warrantor must permit the consumer
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Id. § 2302(a). Id. Id. § 2301(6)(A). Id. § 2301(7). Id. § 2303(a)(1)-(2).

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to elect either a refund for, or replacement without charge of, [the] product or part.8 In addition, Section 2304 prohibits warrantors from "impos[ing] any limitation on the duration of any implied warranty on the product ... [or] exclud[ing] or limit[ing] consequential damages for breach of any written or implied warranty ..., unless [the] exclusion or limitation conspicuously appears on the face of the warranty."9 If a written warranty does not meet Section 2304's standards, it is a limited warranty.10 The MMWA defines some, but not all, of the terms included within or associated with its definitions of written, implied, full, and limited warranties. It defines consumer product, supplier, and warrantor. Those definitions need not be discussed here because the parties do not dispute that Weber's motor home is a consumer product and Fleetwood is a supplier and a warrantor. The Act does not define buyer as it is used in the definition of a written warranty, but the parties do not argue about whether Weber is a buyer and, the court is content to assume he is one. One of the MMWA's other requirements regards how written warranties are "designated," a word the Act uses frequently but does not define. Section 2303 provides that "[a]ny warrantor warranting a consumer product by means of a written warranty shall clearly and conspicuously designate such warranty [as a] `full (statement of duration) warranty' [if it meets Section 2304's standards, and if it] does not meet

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Id. § 2304(a)(1),(4). Id. § 2304(a)(2)-(3). Id. § 2303(a)(2).

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[those standards], then it shall be conspicuously designated a `limited warranty.'"11 Regardless of whether a warranty actually meets Section 2304's standards, "[i]f a supplier designates [it] as a `full (statement of duration)' warranty, then [it] shall, for purposes of any action under [the MMWA], be deemed to incorporate at least the minimum requirements [for full warranties under Section 2304]."12 To ensure its standards are enforced, the MMWA established a private cause of action for consumers "damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under ... a written warranty [or] implied warranty."13 This is the cause of action that Weber has asserted against Fleetwood. He claims that Fleetwood has breached both written and implied warranties. As for his written warranty claim, Weber and Fleetwood do not even agree about what kind of written warranty is at issue in this case. The warranty included in the papers that were delivered with Weber's American Dream was a limited warranty, but Weber argues that Fleetwood should be held to the terms of a full warranty, as defined by the MMWA, based on representations made about the warranty before he bought his motor home. Those representations were a statement by a Beaudry RV salesperson that the American Dream was "warranted"14 and an item in the manufacturer's suggested retail price ("MSRP") sticker on the American Dream

11

Id. § 2303(a)(1)-(2). Id. § 2304(e). Id. § 2310(d)(1). Doc. 108, Weber's controverting statement of facts, ex. A, p. 2, ¶ 5.

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indicating that a "FULL OWNERCARE WARRANTY" came with the motor home.15 Depending on how the written warranty is classified, there could be a significant difference in the remedies available to Weber. As noted above, under a full warranty, a warrantor must give a refund for a product, or replace it without charge, if its defects persist after a reasonable number of attempts to fix them. Those remedies are not explicitly promised by the limited warranty delivered with Weber's American Dream. It promises only that Fleetwood will "repair or replace any parts necessary to correct defects in material or workmanship or will take other appropriate action as may be required."16 Neither party has interpreted "other appropriate action" to mean a refund or replacement, and the court expresses no opinion on that interpretation now. In addition to his written warranty claim, Weber has also asserted claims for breach of the implied warranties of merchantability, fitness for a particular purpose, and habitability. The court has subject matter jurisdiction pursuant to the MMWA because the amount in controversy exceeds $50,000.17 III. STANDARD OF REVIEW Federal Rule of Civil Procedure 56(c) provides that summary judgment should be granted when there is no genuine dispute about material facts and when the moving party is entitled to judgment as a matter of law. The moving party has the burden to

15

Id., ex. A-2 (emphasis in original). Id., ex. B, p. 1.

16

15 U.S.C. § 2310(d)(3)(B). Similarly, jurisdiction is not eliminated by the matters mentioned in 15 U.S.C. 2310(d)(3)(A) or (C), neither of which apply to the facts here.

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show that material facts are not genuinely disputed.18 To meet this burden, the moving party must point out the lack of evidence supporting the nonmoving party's claim, but need not produce evidence negating that claim.19 Once the moving party meets its burden, the nonmoving party must demonstrate that a genuine issue exists by presenting evidence indicating that certain facts are so disputed that a fact-finder must resolve the dispute at trial.20 The court must not assess the credibility of this evidence, and must draw all justifiable inferences from it in favor of the nonmoving party.21 IV. DISCUSSION A. Fleetwood Is Not Entitled to Summary Judgment on Weber's Claim That It Breached Its Written Warranty The parties debate three issues regarding Weber's claim that Fleetwood breached its written warranty. The first issue is whether Fleetwood should be held to the limited warranty delivered with Weber's American Dream or the terms of a full warranty, as defined by the MMWA. The second issue is whether Weber has offered any evidence that Fleetwood breached its warranty, regardless of what type it is. If Weber has offered evidence that Fleetwood breached its warranty, the third issue is whether he has presented evidence of his damages due to that alleged breach.

18

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Id. at 325. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). Id. at 255.

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1. Weber's Cause of Action Is Limited to Fleetwood's Limited Warranty The MMWA provides a federal cause of action for a failure to comply with "any obligation ... under a written warranty."22 "Under" is not defined in the Act, but when it is used as a preposition whose object is a written instrument, the dictionary defines it to mean "required by."23 To determine what is required by a written instrument, including a warranty, the usual course is to examine its language. The MMWA allows courts to depart from that course, but only in one circumstance. If a warranty whose terms would only qualify it as limited under the MMWA is still "designated" as a full warranty, then a court may read into it the Act's requirements for a full warranty.24 The gist of Weber's argument is that the limited warranty that was delivered with his American Dream was designated a full warranty by Beaudry RV's salesperson and the MSRP sticker affixed to the motor home. This argument depends on the proposition that a warranty may be designated as full through representations made somewhere other than its face or text. Unfortunately, the Act's definition section does not include the word "designate." Consequently, the court must look elsewhere to determine the merits of Weber's proposition. The first place to look is the dictionary. It defines designate to mean "to specify," "to call by a distinctive title, term, or expression" and "to declare to be."25 None of these definitions answers the question where must designations be made in order to be
22

15 U.S.C. § 2310(d)(1) (emphasis added). W EBSTER 'S THIRD NEW INTERNATIONAL DICTIONARY 2487 (1986). 15 U.S.C. § 2304(e). W EBSTER 'S THIRD NEW INTERNATIONAL DICTIONARY 612 (1986).

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effective. Nor is the question answered by the way designate is used in the MMWA. The Act's requirement that "[a]ny warrantor warranting a consumer product by means of a written warranty shall clearly and conspicuously designate such warranty" as either a limited or full warranty26 does not expressly restrict the designation to the warranty's face or text or prohibit it from being made elsewhere. The same is true of its requirement that "[i]f a supplier designates a warranty ... as a `full (statement of duration)' warranty," then the warranty will be deemed full.27 Case law interpreting the MMWA is not helpful, either. Weber cites Hughes v. Segal Enterprises, Inc.28 to support his argument, but that case is not on point because the Hughes court did not consider representations made outside the warranty at issue in that case when deciding whether to construe it as full or limited. Instead, the court confined its inquiry to the face of the warranty.29 If there are any cases in which courts considered the kind of representations that Weber would have this court consider, the parties and the court have not been able to find them. In contrast to the dictionary, the MMWA and case law interpreting the Act, the FTC's interpretations of the Act do shed some light on what designate means. According to the FTC, which Congress tasked with establishing rules for warranty contents, "[t]he designation or designations should appear clearly and conspicuously as

26

15 U.S.C. § 2303(a)(1)-(2). Id. § 2304(e). 627 F. Supp. 1231 (W.D. Ark. 1986). Id. at 1239.

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a caption, or prominent title, clearly separated from the text of the warranty."30 That interpretation implies that designations must be made on the face of the warranty and does not contemplate that they will be made elsewhere. Given the relative clarity of the FTC's interpretation, its plausibility, and the lack of any authority contradicting it, this court will follow it. Under that interpretation, a court may construe a warranty as full only when it is designated as such on its face. Because the warranty delivered with Weber's American Dream was designated on its face as limited and not full, this court will not read it as full. 2. There Is a Genuine Issue About Whether Fleetwood Breached Its Limited Warranty To decide if there is a genuine issue about whether Fleetwood breached its limited warranty, the first thing to do is determine its obligations under that warranty. The most obvious source of those obligations is the warranty itself. It promises that the motor home "is warranted under normal use to be free from manufacturing defects in material or workmanship" and that if those defects exist, Fleetwood "will repair or replace any parts necessary to correct [them] or will take other appropriate action as may be required."31 If there is evidence that Fleetwood did not meet its obligations, then there is a genuine issue for trial. Fleetwood argues that "the undisputed evidence demonstrates that [it] has repaired or replaced the allegedly defective parts and the [American Dream]

30

16 C.F.R. § 700.6(a) (emphasis added). Doc. 138, Weber's controverting statement of facts, ex. B, p. 1.

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is working properly today."32 However, its own statement of facts seems to create a genuine dispute. There, Fleetwood cites passages from Weber's deposition testimony in which he testifies about the problems that still exist with his motor home and characterizes them as defects.33 Fleetwood attempts to negate Weber's testimony by arguing that his "lay opinion as to present defects ... is not sufficient to survive a motion for summary judgment."34 According to Fleetwood, Weber "has offered absolutely no evidence as to why he is qualified to opine regarding whether [his] motor home ... contains a defective component."35 Fleetwood contends that the question whether Weber's motor home suffers from defects requires expert testimony and that Weber is not an expert.36 The court disagrees with the idea that Weber is required to offer expert testimony to defeat Fleetwood's summary judgment motion. All he must do is offer evidence from which a reasonable jury could justifiably infer that his motor home suffered defects attributable to Fleetwood's material or workmanship and that Fleetwood did not repair them. Weber's testimony fits that bill. A reasonable jury could infer from his testimony about the present problems with his American Dream the fact that those problems are due to defects in Fleetwood's material or workmanship that

32

Doc 99, p. 6.

Doc. 100, Fleetwood's statement of facts, p. 5, ¶ 15 (citing transcript of Weber's deposition attached to the statement of facts).
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Doc. 111, p. 4. Id. Id.

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Fleetwood has not repaired. An expert's testimony may be more persuasive than Weber's, but that is for the jury to decide. Besides the issue about whether Fleetwood repaired all the alleged defects, there may be other issues regarding Fleetwood's alleged breach of its limited warranty. Weber argues that Fleetwood was required to repair any defects in a "reasonable" number of attempts and amount of time, and although that requirement is not written in the limited warranty, the law might imply it. Another issue is whether Fleetwood took "other appropriate action" in addition to repairing or replacing defective parts, as its limited warranty promised it would do if that "may be required." Neither party raises those issues, however, and so the court will not address them now. Still, the court reminds the parties that they should figure out what the limited warranty required before they try to prove that Fleetwood did or did not breach it. 3. There Is a Genuine Issue About Damages Fleetwood argues that Weber has not offered any evidence that he has suffered damages from its alleged breach of its limited warranty. As noted above, there is a genuine issue about whether Fleetwood breached its warranty because there is a genuine issue about whether the American Dream still suffers from defects due to Fleetwood's material or workmanship. And from the fact defects still exist, a reasonable jury could further infer that Weber has suffered damages from those defects. This is because continued defects would either cause his American Dream to be worth less than it otherwise would be, cost money to repair, or both.

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The parties also disagree about Weber's entitlement to incidental and consequential damages. Fleetwood's limited warranty excludes those damages,37 and Fleetwood argues that Weber is thus not entitled to them unless its warranty "failed of its essential purpose."38 Fleetwood insists there is no evidence of that because it "repaired all the allegedly defective items covered under its warranty."39 But as discussed above, there is evidence that it did not make all the repairs required under its warranty. That creates an issue about whether its warranty's essential purpose was realized and precludes summary judgment on Weber's claim for incidental and consequential damages. B. Fleetwood Is Entitled to Summary Judgment on Weber's Implied Warranty Claims Weber's implied warranty claims raise three issues. The first issue is whether state or federal law applies. The second issue is if state law applies, which state's law applies. The third issue is whether implied warranties arose from Weber's purchase of his American Dream under the applicable law. 1. State Law Determines Whether Implied Warranties Arose from Weber's Purchase of His American Dream Although the MMWA creates a federal cause of action for breach of implied warranties, according to several circuit courts outside the Ninth Circuit, state law

37

Doc. 138, Weber's controverting statement of facts, ex. B, p. 2. Doc. 99, p. 7. Id., p. 8.

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determines whether implied warranties arise from a particular sale.40 Weber argues that the Ninth Circuit held otherwise in Milicevic v. Fletcher Jones Imports, Ltd.,41 but that is not so. The question presented in Milicevic was not about implied warranties. Instead, it was about whether the MMWA created a "federal private cause of action for a warrantor's failure to comply with the terms of a written warranty."42 The Milicevic court answered that question in the affirmative. In so holding, it discussed one of the circuit court cases mentioned above, but only to clarify that the other circuit court's holding was not contrary to its own. At no point did the Milicevic court comment on whether the MMWA incorporated state law on implied warranties. In the absence of Ninth Circuit activity on point, and because the other circuit courts' decisions addressing the question are persuasive, this court will follow those decisions and apply state law to determine whether implied warranties arose from Weber's purchase of his American Dream. 2. Arizona Law Applies There remains the question about which state's law to apply. The record shows that three states have contacts with this case. Arizona is where Weber purchased his American Dream; New Mexico is where he accepted delivery of it; and Indiana is where Fleetwood is incorporated. It would not matter that three states have contacts with this

Voelker v. Porsche Cars N. Am., Inc., 353 F.3d 516, 525 (7th Cir. 2003);Abraham v. Volkswagen of Am., Inc., 795 F.2d 238, 247-49 (2d Cir. 1986); Walsh v. Ford Motor Co., 807 F.2d 1000, 1014 (D.C. Cir. 1986)).
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402 F.3d 912 (9th Cir. 2005) (emphasis added). Id. at 917.

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case if their relevant laws were the same, but they are not. Arizona requires contractual privity between a buyer and a manufacturer before implied warranties will arise from the buyer's purchase of the manufacturer's goods;43 New Mexico and Indiana do not.44 In deciding which state's law to apply, this court must look to either "specific statutory guidance" or federal common law because a federal question is the basis of its jurisdiction.45 This court has not found any cases that address whether the MMWA provides a choice-of-law rule. The most likely source of such a rule in the Act is its definition of an implied warranty: "an implied warranty arising under State law ... in connection with the sale by a supplier of a consumer product." This definition specifies that state law determines whether a warranty arises from a sale, but it does not say which state's law. Because the MMWA gives no guidance, the court must turn to federal common law. Federal courts rely on the choice-of-law rules in the Restatement (Second) of Conflict of Laws.46 Between them, the parties have suggested that the court follow Restatement Sections 187, 188, and 191. Those sections are not useful, however, because they assume that parties to a dispute have a contract between them and that

Plagens v. Nat'l RV Holdings, Inc., 328 F. Supp. 2d 1068, 1073 (D. Ariz. 2004) (citing Flory v. Silvercrest Indus. Inc., 633 P.2d 383, 387-89 (Ariz. 1981); Rocky Mountain Fire & Cas. Co. v. Biddulph Oldsmobile, 640 P.2d 851, 856 (Ariz. 1982); Seekings v. Jimmy GMC of Tucson, Inc., 638 P.2d 210, 215 (Ariz. 1981)). Perfetti v. McGhan Med., 662 P.2d 646, 654 (N.M. Ct. App. 1983) (New Mexico); Hyundai Motor Am., Inc. v. Goodin, 822 N.E.2d 947, 948 (Ind. 2005) (Indiana).
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43

Harris v. Polskie Linie Lotnicze, 820 F.2d 1000, 1002-03 (9th Cir. 1987).

Id. at 1003 (citing Comm. Ins. Co. v. Pacific-Peru Constr. Corp., 558 F.2d 948, 952 (9th Cir. 1977)).

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is not true of Weber and Fleetwood. Moreover, it would not help to construe the defects in the American Dream as "injuries" and apply the most analogous tort sections, 145 and 146. Those sections stress the state where the injury occurred and would not be of much assistance in cases involving motor homes, which often are driven through many states. If defects were injuries, every state in which a defect cropped up would have to be considered. Add to that problem the difficulty of identifying the states in which defects arose, and the rules for torts become an even less sensible source of choice-of-law principles. Rather than utilizing contract or tort rules, the court will turn to Section 6 of the Restatement. In contrast to the specific choice-of-law rules for contracts and torts, Section 6 lists seven interests to consider when choosing the applicable law: (a) the needs of the interstate and international systems, (b) the relevant policies of the forum, (c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue, (d) the protection of justified expectations, (e) the basic policies underlying the particular field of law, (f) certainty, predictability and uniformity of result, and (g) ease in the determination and application of the law to be applied. The section also provides that courts should evaluate those interests only if no relevant statute provides a choice-of-law rule.47 Because there is no relevant statute to follow, the court will analyze the Section 6 interests. Those interests indicate that Arizona's law should apply. Arizona is where Weber purchased his American Dream and if the law of the state of purchase were applied to all MMWA cases, it would benefit both consumers like Weber and sellers like

47

RESTATEMENT (SECOND ) CONFLICT OF LAW S § 6(1) (1971).

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Fleetwood. Consumers could choose to buy products in states with warranty laws favorable to them, such as those that do not require privity before implied warranties will arise. And it would be easier for sellers to gauge their potential liability and adjust their prices accordingly. These two benefits are reflected in interests (a), (d), (e), (f), and (g). This rule also would advance interest (b) in this case because Arizona is both the state of purchase and the forum state. If any interests are not advanced by applying Arizona's law, they are Indiana and New Mexico's interests, which should be considered under (c). Indiana has an interest in this case because it is the state of Fleetwood's incorporation. New Mexico's interest is in the fact that it is where Weber accepted delivery of his American Dream. To the extent that these interests are negatively affected by applying Arizona's law, that negative affect is outweighed by the positive affect on the other interests discussed above. 3. Weber's Purchase of the American Dream Did Not Give Rise to Implied Warranties Under Arizona Law Weber's implied warranty claims fail because no implied warranties arose from his purchase of the American Dream under either Arizona's version of the Uniform Commercial Code or its common law. Implied warranties did not arise under the code because he was not in privity with Fleetwood.48 As for whether implied warranties arose under the common law, Weber has not cited any case law supporting his argument that they did. He points to no decisions indicating that the implied warranties of merchantability and fitness for a particular purpose exist outside the code. And

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Plagens, 328 F. Supp. 2d at 1073 (citations omitted).

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although he cites cases recognizing the implied warranty of habitability in the common law, he has not cited any cases applying it to anything but real property. Given that Weber has cited, and the court has found, no Arizona case law holding that Arizona common law attaches implied warranties to sales of the kind in which Weber was involved, this court concludes that it does not. C. Fleetwood Is Not Entitled to Attorney's Fees Fleetwood cites Arizona Revised Statute § 12-341.01 as the basis for an award of attorney's fees in its favor. That statute would apply if Weber's cause of action were under state law, but it is not. Instead, it is under the MMWA. The Act does have an attorney's fees provision, but it only allows courts to award attorney's fees to prevailing plaintiffs.49 Even assuming that Fleetwood has prevailed in part because of the dismissal of Weber's implied warranty claims, it is still a defendant and thus not entitled to attorney's fees under the MMWA. V. CONCLUSION For the reasons set out above, the motion at docket 120 is GRANTED in part and DENIED in part. It is granted with respect to Weber's claims that Fleetwood breached the implied warranties of merchantability, fitness for a particular purpose and

49

15 U.S.C. § 2310(d)(2).

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habitability. Those claims are DISMISSED. It is denied with respect to Weber's claim that Fleetwood breached its limited warranty. DATED at Anchorage, Alaska, this 29th day of December 2005.

/s/ JOHN W. SEDWICK UNITED STATES DISTRICT JUDGE

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