Haight v. Dales Used Cars, Inc.

Citations: 87 P.3d 962; 139 Idaho 853; 51 U.C.C. Rep. Serv. 2d (West) 1017; 2003 Ida. App. LEXIS 110Docket: 28024

Court: Idaho Court of Appeals; October 24, 2003; Idaho; State Appellate Court

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G.W. Haight appealed a district court judgment that denied his request to revoke acceptance of a used Jeep Grand Cherokee purchased from Dale's Used Cars, Inc. After a bench trial, the court found that although the Jeep did not conform to an implied warranty of merchantability, the nonconformity did not substantially impair its value. Haight had purchased the vehicle in January 1998, believing it was covered by an unexpired manufacturer’s warranty, and provided a list of repairs that Dale's agreed to cover. However, it was later discovered that the Jeep had prior collision damage that neither party was aware of at the time of sale. Haight sought to revoke acceptance and demanded a refund, but Dale's rejected this. The court affirmed that Haight's revocation was unjustified and ruled in favor of Dale's, also awarding attorney fees to them. The appellate court noted the relevant legal standard under Idaho's Uniform Commercial Code about revocation of acceptance, concluding that the Jeep conformed to the contractual obligations, thereby supporting the district court's decision.

Nonconformity pertains to whether goods or conduct meet contractual obligations. The central issue is whether Dale effectively excluded implied warranties of merchantability and fitness concerning the vehicle's body condition, asserting the Jeep was sold "as is" with all existing faults. The sale agreement consisted of a retail order, a buyer's guide, and an installment sale contract, all of which were presented as evidence. The district court initially found no express warranty regarding the Jeep's body condition and concluded that the warranty of fitness was excluded based on Dale's marking of "as is—no warranty" on the buyer's guide. However, the court determined that the implied warranty of merchantability was not excluded, as the necessary conspicuous language was absent.

On appeal, the ruling was overturned regarding the implied warranty of merchantability. While it is required that a warranty exclusion reference "merchantability" conspicuously to exclude it under I.C. 28-2-316(2), an exclusion can also be established under I.C. 28-2-316(3)(a) without that mention. In this case, the retail order explicitly stated the Jeep was sold "as is, with all defects, and without any warranty," and the buyer's guide indicated the absence of warranty. The court found the disclaimer's bold lettering and proximity to the signature made it conspicuous, fulfilling the requirements under I.C. 28-2-316(2) for excluding the implied warranty of merchantability. Therefore, regardless of the district court's findings, both implied warranties were excluded, confirming Dale's obligation was to provide the Jeep as it was, including any defects present at the time of sale.

Haight did not assert that the condition of the Jeep changed between delivery and sale, leading to the conclusion that the Jeep conformed to the contract terms, preventing Haight from revoking acceptance. On appeal, Haight contends that under the Magnuson-Moss Warranty Act, Dale's cannot disclaim implied warranties since a written manufacturer's warranty was offered. However, Haight failed to present evidence that Dale's provided a separate written warranty as required by the Act. Dale's acknowledgment of the manufacturer's warranty did not render them a party to it, as established in relevant case law. Consequently, Haight could not prove that Dale's disclaimer of implied warranties violated federal law.

Haight also argues that undisclosed prior collision damage entitles him to revoke acceptance, but the cited authority does not support this claim, focusing instead on undisclosed damage in cases where warranties were not effectively disclaimed. The current situation is distinct as both parties were unaware of the Jeep's damage, and Dale's had effectively disclaimed implied warranties.

Regarding substantial impairment, the district court found that even if the Jeep did not conform to the sale contract, its value to Haight was not substantially impaired. Haight argued that the court erred by using repair costs to assess impairment. The court must follow a two-step analysis to determine substantial impairment: first, identifying the purpose for which the buyer purchased the goods, and second, assessing whether the nonconformity substantially impaired the buyer's intended use. The district court noted conflicting testimonies regarding Haight's intended use of the vehicle and disagreed with Haight's assertion that subjective belief in a defect suffices for revocation.

Dale's denied engaging in discussions regarding the vehicle's purchase, while Haight asserted that safety and towing needs motivated his decision. The district court found that the Jeep's repair costs, approximately ten percent of its purchase price, did not significantly impair its value to Haight. On appeal, Haight did not convincingly argue that the district court's findings regarding the Jeep's value impairment were erroneous. 

Regarding attorney fees, Haight contended that the district court improperly awarded fees to Dale's and the Zooks, claiming they were not prevailing parties under Idaho Code Section 12-120. However, the record does not confirm any award of fees, and it is the appellant's duty to provide sufficient documentation to support claims on appeal. Since Haight's request to cancel the sale and retrieve the purchase price was denied, Dale's and the Zooks were deemed the prevailing parties, thus entitled to attorney fees under the statute. The court reaffirmed that the prevailing party is entitled to fees both at trial and on appeal, leading to an award of fees and costs to Dale's and the Zooks.

In conclusion, Haight failed to establish grounds for revoking his acceptance of the Jeep, and the district court's judgment favoring Dale's and the Zooks was upheld. Additionally, attorney fees and costs were granted to the respondents on appeal. Haight's other claims regarding the denial of summary judgment and exclusion of evidence were not addressed due to insufficient argument and lack of authority to support them.