Opinion
No. 97 C 3689
March 6, 2000
MEMORANDUM AND ORDER
On November 11, 1995, plaintiff, Paul Priebe (Priebe), visited defendant, The Autobarn Limited (Autobarn), seeking a car of "lesser value to park on the city streets of Chicago." With assistance from Autobarn salesman Mark Reed (Reed) and business manager Ron Coleman (Coleman), Priebe settled on a 1988 Acura Legend, took it for a test drive (Priebe dep. at 10), and reviewed and signed the sales contract, including the section entitled "Disclaimer of Warrants" ( id at 12-13 Ex.1) and another document asserting that the car was being sold "AS IS — NO WARRANTY" (Priebe dep. at 14 Ex.2). Priebe also observed that the odometer read 79,645 and signed an odometer disclosure statement containing that reading (Priebe dep. at 15-16 Ex.3). According to Priebe, Reed informed him that the Acura had been run through a "64-point check." Autobarn states that it has no such procedure, but that the automobile had been given a "mechanical inspection." Priebe testified that he understood that the car was being sold to him "as is — in the as is condition with no specific warranties attached from the dealership" ( id. at 13-14).
At the time he purchased the Acura, Priebe was employed as a portfolio manager in the consumer lending division of Citibank and his duties included reviewing contracts (Priebe dep. at 7-8).
Coleman also sold Priebe an "Easy Care" service contract after a discussion regarding "the items within the agreement" and "what was covered and what was not" (id. at 22). The service contract was offered by defendant Automobile Protection Corporation (APCO), which markets and sells service contracts through a system of authorized dealerships, such as Autobarn. Priebe was aware that he was not entering into a service agreement with Autobarn ( id. at 23), He signed the Easy Care "vehicle service contract/application," which included the affirmation that he had read the terms and conditions of the contract and understood and accepted all of the provisions therein, The application includes a provision clarifying that preexisting "mechanical breakdown and failure" is not covered and "failure" is deemed to have occurred when the manufacturer's established tolerances are exceeded. Priebe testified that Coleman discussed with him "what items would be covered under such agreement and the terms of such agreement" ( id. at 22). He acknowledged that Coleman also reviewed repairs that would not be covered under the contract ( id.).
In December 1995, Priebe hit a freeway median while driving the Acura at approximately 55 miles per hour. Although the vehicle was not "drivable" ( id. at 28), Priebe drove the vehicle on its rims to a safer location ( id. at 29). He subsequently had the vehicle towed to Gerber Auto Rebuilders where, after dismantling the car, a mechanic found evidence of earlier repairs to the vehicle's structure. No prior accident had been disclosed to Priebe at the time of sale. Gerber repaired the new damage as well as what it deemed to be faulty workmanship on the earlier repairs. Priebe's insurer covered all of Gerber's work on the vehicle.
Priebe continued to drive the Acura before and after filing this lawsuit on April 16, 1997. His complaint alleges breach of the Easy Care contract and violations of the Magnuson-Moss Act (count I against APCO and Autobarn), breach of implied warranty under ILCS 5/2-314 and violations of the Magnuson-Moss Act (count II against APCO and Autobarn), revocation of acceptance (count III against Autobarn), violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (count IV against Autobarn and count VI against APCO), common law fraud (count V against Autobarn and count VII against APCO), and violation of the federal odometer statute (count VIII against Autobarn).
On May 7, 1998, we denied Autobarn's motion to dismiss counts IV and V, finding that plaintiff had sufficiently pleaded a potential for repetition to maintain his claim under 815 ILCS 505/10a and had pleaded his claims of common law fraud with sufficient particularity to meet the requirements of Rule 9(b). In that same order we granted APCO's motion to dismiss as to counts II, VI, and VII, but denied the motion with respect to count I, the breach of contract claim. On May 12, APCO moved for summary judgment on count I, to which plaintiff responded on July 19, 1999, by voluntarily dismissing the claim. We entered final judgment for APCO on November 11, 1999.
Autobarn now moves for summary judgment on all remaining claims. Because we find that there are no genuine issues of material fact and defendant is entitled to judgment as a matter of law, that motion is granted.
STANDARD
Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment a matter of law." Fed.R.Civ.P. 56(c); Bd. of Trustees of Univ. of Illinois v. Insurance Corp. of Ireland. Ltd., 969 F.2d 329, 332 (7th Cir. 1992). The movant must point to the portions of these papers demonstrating the lack of any genuine issue of material fact, and if the movant succeeds, the non-movant must go beyond the pleadings and find parts of affidavits, depositions, answers to interrogatories, or admissions on file demonstrating that a genuine issue does in fact remain for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). All reasonable factual inferences will be made in favor of the non-movant. Adickes v. S.H. Kress Co., 398 U.S. 144, 157 (1970). Summary judgment should be granted if it is clear that the plaintiff could not carry his burden of persuasion at trial on one or more elements of his claim. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986).
ANALYSIS
Count I charges Autobarn with breach of the Easy Care service contract on the theory that no Autobarn representative informed Priebe that preexisting damage was not covered by the contract. Priebe's own testimony that he reviewed the contract and discussed the details of coverage with Coleman defeats this claim. Priebe's position with Citibank gives him a familiarity with contract terminology and the disclaimer with respect to preexisting failures is stated quite plainly on the face of the agreement.
Autobarn argues that Priebe's breach of contract claim also fails based on a lack of consideration. The sales contract on the Acura indicates that Priebe was owed a refund of $3,421. That amount represents a sale price of $8,250 for the Acura ($8185 + $25 county tax + $40 documentary service and filing fee) + $924 for the Easy Care contract — $12,595 (the trade-in value of Priebe's `93 Jeep Wrangler). Inexplicably, however, Priebe received a refund check in the amount of $4,326, an overpayment of $905. He testified that he was not sure why he received a check for a greater amount, but that he believed the amount "was the difference that the service contract amount equals" (Priebe dep. at 20-21). Priebe cashed the check without asking any questions. There is no indication that either Autobarn or APCO sought a return of the overpayment, which does not precisely match the cost of the Easy Care contract, though it is very close. We need not resolve the implications of the overpayment, however, because Priebe has alleged no cognizable breach of the service contract by Autobarn or by Autobarn employees as agents of APCO. Priebe never sought or was denied repair service under the contract, he incurred no costs with respect to Gerber's repair of the preexisting damage, the terms of the contract and its exclusions are plain on its face, Priebe testified that he and Coleman reviewed the specified exclusions, and it was Priebe who ultimately sought to cancel the service contract and received a prorated return from APCO in early 1996 ( id. at 44-46).
Plaintiff claims in his brief, at 2, that Autobarn is liable under 15 U.S.C. § 2310(d) because it represented to Priebe that the car had been given a 64-point inspection which, he alleges, would have found any prior accident damage. That argument also fails, not only because § 2310(d) provides no independent basis for liability (it provides federal jurisdiction over certain claims and specifies available damages and costs), but also because there is no evidence that Autobarn did not carry out the promised inspection — whatever its nomenclature — or that such an inspection would have found the repairs to the vehicle's infrastructure. Plaintiff's evidence, in the form of a letter and affidavit from Gerber, acknowledges that the preexisting repairs were only discovered after the vehicle was dismantled over the course of three days. Generously construed, we think Priebe is really arguing fraudulent inducement here, which we will later consider with his common law fraud allegations in count V.
Priebe's complaint also cites to 15 U.S.C. § 2306, which requires that the terms and conditions of service contracts shall be fully, clearly and conspicuously disclosed in simple and readily understood language. The APCO Easy Care Contract/application contained in the record fully, clearly and conspicuously discloses the fact that repairs to preexisting damage will not be covered. The exclusions are contained within a box titled in block letters "E. WHAT IS NOT COVERED." Section E.1 provides that "Mechanical Breakdown or Failure . . . that occurs prior to this CONTRACT'S effective date or after this CONTRACT'S expiration" is not covered, and a "Definitions" section explains the scope of the phrase "Mechanical Breakdown or Failure."
Count II of the complaint alleges breach of the implied warranty of merchantability on the Acura. Plaintiff's brief in opposition to Autobarn's motion for summary judgment appears to argue that count II is directed instead at the service contract, and consequently covers the same territory as our discussion of count I. If Priebe intended to challenge any implied warranty of merchantability associated with the Acura itself, that claim is defeated by Priebe's own testimony that he knew the car was being sold "as is" without any such warranty. Priebe does cite to 15 U.S.C. § 2308, which prohibits a supplier from disclaiming any implied warranty to a consumer if "at the time of sale, or within 90 days thereafter, such supplier enters into a service contract with the consumer which applies to such consumer product." However, it is uncontroverted that the service contract was not with Autobarn, it was with APCO and it contained clear, specific exclusions regarding previous damage. We are presented with no authority to suggest that a consumer's decision to buy an independent service contract prevents a dealer from expressly disclaiming any warranty on its product. Lastly, Priebe fails to show that the vehicle was unfit for its intended purpose. There is no dispute that Priebe drove the vehicle before and after his December collision. Indeed, at the time of his deposition, Priebe had added another 29,447 miles since the accident and reported that the car drove "OK" (Priebe dep. at 44). Priebe does not allege that the accident was caused by faulty repairs to prior damage.
Plaintiff's brief also quarrels with Autobarn's characterization of the events leading up to the December 1995 accident (apparently Autobarn failed to mention that Priebe drank several soft drinks along with his beers). That certainly is immaterial to any cognizable claim buried here within Priebe's convoluted and unsupported legal theories.
Count III alleges a cause of action for revocation of acceptance. A buyer of a defective automobile may on a proper showing recover the purchase price from the seller for breach of the implied warranty of merchantability. Collum v. Fred Tuch Buick, 6 Ill. App.3d 317, 321 (1st Dist. 1972). However, the right to revoke acceptance of an automobile does not arise from every breach of warranty. Id. To revoke acceptance the defect must substantially impair the value of the car to the plaintiff. Each case must be carefully examined on its own merits to determine what is a substantial impairment of value. Id. Here, as the foregoing discussion indicates, there was no breach of an implied warranty of merchantability and consequently there is no cause of action for revocation of acceptance. Plaintiff directs our attention toBlakenship v. Northtown Ford, Inc., 95 Ill. App.3d 303, 420 N.E.2d 167 (4th District 1981), which holds that an action for revocation of acceptance is not limited to goods which are not merchantable, "but rather contains a more subjective standard: rescission may be sought if the non-conformity of the goods substantially impairs their value to the buyer." However, Priebe presents no evidence that he considered the value of the automobile to be substantially impaired, that he suffered any consequence from any reduced value, or that he "lost confidence in the automobile's safety and reliability," as his amended complaint alleges at p. 7, ¶ 5. He bought a nine-year-old used automobile with almost 80,000 miles, he was unaware of any problem until the car was dismantled, the problem was repaired, and the car is now eleven years old with 110,000 miles. The notice issue, which Priebe insists must be sent to the jury, is a non-starter.
Count IV charges that Autobarn employees violated the Illinois Consumer Fraud and Deceptive Practices Act (ICFA), 815 ILCS 505/1 et. seq., by their conduct, misrepresentations, and omissions. Priebe first alleges that defendant failed to disclose the vehicle's actual mileage to Priebe at the time of sale. Given that Priebe's own testimony (dep. at 15-16, 77-78) directly refutes this allegation, counsel's failure to withdraw this claim is remarkable. Any attempt by counsel to suggest that the second odometer statement requested by Priebe when he later sought to cancel the Easy Care contract actually reflects the mileage at the time of purchase may well be sanctionable. Any argument that Autobarn is liable to Priebe for a failure to correct the date on the second statement, as Priebe alleges with respect to count VIII, is simply preposterous. See Priebe dep. at 70.
Second, Priebe reasserts his claim that Autobarn employees failed to disclose that preexisting damage would not be covered under the Easy Care service contract. We have addressed that claim above and find it no more actionable when asserted under ICFA.
Third, Priebe alleges that Autobarn's failure to disclose that the vehicle had been damaged in an accident prior to plaintiff's purchase violates the Act. The elements of the statutory cause of action under the Consumer Fraud Act are: (1) a deceptive act or practice, including concealment or omission of any material fact; (2) defendants' intent that plaintiffs rely on the concealment; and (3) that the concealment occurred in the course of conduct involving trade or commerce. 815 ILCS 505/2;Washington Courte Condominium Association-Four v. Washington-Golf Corp., 267 Ill. App.3d 790, 643 N.E.2d 199, 221 (1st Dist. 1994). ICFA was intended to provide broader protection than does the common law action of fraud. Washington Courte, 643 N.E.2d at 222. Consequently, the good faith of a seller is irrelevant under the Act and a plaintiff can recover for an innocent misrepresentation. Id.; Munjal v. Baird Warner, Inc., 138 Ill. App.3d 172, 183, 485 N.E.2d 855 (2nd Dist. 1985).
However, the Act may not be used to turn nondeceptive and nonfraudulent statements or omissions into actionable omissions. Harkala v. Wildwood Realty., Inc., 200 Ill. App.3d 447, 453, 558 N.E.2d 195, 200 (1st Dist. 1990); Kellerman v. Mar-Rue Realty Builders, Inc., 132 Ill. App.3d 300, 476 N.E.2d 1259 (1st Dist. 1985). Nor was it intended to impose liability upon a broker or reseller for latent or hidden defects. See Munjal, 138 Ill.App.3d at 183; Harkala, 200 Ill.App.3d at 453-454, 558 N.E.2d at 200. Plaintiff has presented no evidence that Reed or any Autobarn employee knew or should have known of the repaired structural damage and, just as the real estate agent was not held liable in Harkala because she was unaware of concealed termite damage, Autobarn may not be held liable here. See Harkala, 200 Ill.App.3d at 454 ("The concealment of the damage was so effective that . . . [defendant] could not have known that there were termites in the wall unless she took the wall down or apart"). Plaintiff's claims of common law fraud under count V must also fail. There is no evidence that a statement was made that was known or believed by the speaker to be untrue, or that there was an intentional breach of a duty to disclose material information. See Lidecker v. Kendall College, 194 Ill. App.3d 309, 314, 550 N.E.2d 1121, 314 (1st Dist. 1990) (finding no liability under ICFA or common law fraud where college did not inform applicants that nursing school was not yet eligible for accreditation); and see Sciarabba v. Chrysler Corp., 173 Ill. App.3d 57, 62, 527 N.E.2d 368, 371 (1st Dist. 1988) (requiring these same elements where plaintiff seeks recission of contract on the basis of fraudulent inducement), appeal denied, 123 Ill.2d 567, 535 N.E.2d 411, 128 Ill. Dec. 900 (Ill. 1988) (table).
CONCLUSION
For the foregoing reasons, defendant Autobarn's motion for summary judgment is granted and plaintiff's amended complaint is dismissed with prejudice.