Thomas et al v. Cummins Engine Company, Inc.

Filing 70

ORDER granting in part and denying in part 34 Defendant's Motion for Summary Judgment. The Motion is GRANTED as to Plaintiffs' claim for consequential damages as detailed in this Order. The Motion is DENIED in all other respects. By Judge William J. Martinez on 2/18/2015.(alowe)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 13-cv-2587-WJM-KMT
DANNY W. THOMAS, and
JACK THOMAS,
Plaintiffs,
v.
CUMMINS ENGINE COMPANY, INC., a foreign corporation d/b/a CUMMINS, INC.,
Defendant.

ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

Plaintiffs Danny and Jack Thomas bring this action against Defendant Cummins
Engine Company, Inc. arising out of their purchase of a recreational vehicle. (ECF No.
1.) On July 9, 2014, Defendant filed its Motion for Summary Judgment (“Motion”),
which is now before the Court. (ECF No. 34.) Plaintiffs have filed their Response, and
Defendant filed a Reply. (ECF Nos. 45 & 53.) For the reasons set forth below, the
Motion is granted in part and denied in part.
I. BACKGROUND
Plaintiffs purchased a motor coach from Newmar Corporation in the fall of 2007
(“the RV”). (ECF No. 34 at 3.) Defendant manufactured the RV’s engine, and provided
Plaintiffs a five-year warranty for “any failures of the engine which result, under normal
use and service, from a defect in material or factory workmanship.” (Id.) In January
2013, Defendant extended the original five-year warranty for an additional two years.

(ECF No. 45 at 6-7.)
From 2008 through the summer of 2013, the RV’s engine repeatedly overheated,
required replacement parts, or shut down during Plaintiffs’ use of the RV. (ECF No. 458.) Defendant’s authorized repair facility, Cummins Rocky Mountain (“CRM”),
unsuccessfully attempted to repair the RV each time an issue with the engine arose.
(Id.) All of the repairs performed by CRM were covered by the engine warranty
provided by Defendant. (Id.) CRM conducted its final repair attempt in January 2013,
and Plaintiffs believed the engine was fixed at that time. (Id.) However, the RV
subsequently broke down; Plaintiffs did not seek further repairs, and instead filed this
action for breach of warranty on September 20, 2013. (ECF Nos. 3 & 45-8.) Plaintiffs
seek consequential damages in the amount of $453,785.40, which includes the
purchase price of the RV, all interest that will accrue on the loan used for the purchase
of the RV, and add-ons to the RV. 1 (ECF No. 34 at 5.)
II. LEGAL STANDARD
Summary judgment is appropriate only if there is no genuine issue of material
fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Henderson v. Inter-Chem
Coal Co., Inc., 41 F.3d 567, 569 (10th Cir. 1994). W hether there is a genuine dispute
regarding a material fact depends upon whether the evidence presents a sufficient
disagreement as to require submission to a jury or, conversely, is so one-sided that one

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Defendant asserts that the “add-ons” include “a special king size bed, solar panels,
internet hookup, vacuum cleaner and an olive wood eagle head glued to the wall of the [RV].”
(ECF No. 34 at 2.)

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party must prevail as a matter of law. Anderson v. Liberty Lobby, 477 U.S. 242, 248-49
(1986); Carey v. U.S. Postal Serv., 812 F.2d 621, 623 (10th Cir. 1987).
A fact is “material” if it pertains to an element of a claim or defense, and a factual
dispute is “genuine” if the evidence is so contradictory that if the matter went to trial, a
reasonable party could return a verdict for either party. Anderson, 477 U.S. at 248.
The Court must examine the facts in the light most favorable to the nonmoving party,
and resolve factual ambiguities against the moving party. Houston v. Nat'l Gen. Ins.
Co., 817 F.2d 83, 85 (10th Cir. 1987). The summary judgment standard thus favors a
right to trial. See id.
III. ANALYSIS
The parties agree that this action involves the sale of goods and is therefore
governed by Article 2 of the Uniform Commercial Code (“UCC”). (ECF Nos. 34 at 6 &
45 at 8.) In the instant Motion, Defendant raises two arguments: (1) Plaintiffs’ breach of
warranty claim is barred by the applicable statute of limitations contained in Colorado
Revised Statute § 4-2-725; and (2) even if Plaintiffs’ claim is not time barred, Plaintiffs
are precluded as a matter of law from recovering the damages they seek. (ECF No. 34
at 6-8.) The Court discusses each issue below.
A.

Statute of Limitations
Plaintiffs’ Complaint asserts breach of warranty as the single cause of action

against Defendant. (ECF No. 3.) A breach of warranty action must be commenced
within three years after the cause of action accrues. Colo. Rev. Stat. § 13-80-101. A
“cause of action accrues when the breach occurs,” and a “breach of warranty occurs

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when tender of delivery is made.” Colo. Rev. Stat. § 4-2-725. Defendant argues that,
because Plaintiffs purchased the RV in September 2007, the action must have been
filed by September 2010 to be considered timely. (ECF No. 34 at 6.) Plaintiffs
commenced this action in January 2013. (ECF No. 1.)
In response, Plaintiffs argue that the common law “repair doctrine” tolled the
statute of limitations in this matter. (ECF No. 45 at 10.) The repair doctrine provides:
[T]he limitations period on breach of contract and breach of warranty
claims is tolled from the time a seller undertakes efforts
to repair the defective goods until the time it abandons those efforts
where: (1) the seller either expressly or impliedly promises or represents
that such repairs will remedy such defect; and (2) the buyer reasonably
relies upon such promise or representation and, as a result, does not
institute legal action against the seller.
Curragh Queensland Min. Ltd. v. Dresser Indus., Inc., 55 P.3d 235, 239 (Colo. App.
2002).
Defendant contends that the repair doctrine does not apply in this case because
the limitations period had already expired before Defendant undertook any efforts to
repair the engine. (ECF No. 53 at 13.) Defendant notes that CRM or other repair
facilities attempted to repair the engine from 2008 through 2013, and that the repair
was not escalated to Jeremy Taylor, an employee of Defendant, until September 2012.
(Id. at 13-15.) Thus, Defendant argues that it only became involved in attempting to
repair the engine in September 2012, after the statute of limitations had expired. (Id. at
15.)
The Court finds that the repairs attempted by CRM and the other repair facilities
from 2008 through 2013 can be imputed to Defendant using general agency principles.
As a general rule, “[a]n agent can make his principal responsible for his actions if he is
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acting pursuant to either actual or apparent authority, regardless of whether the
principal has knowledge of the agent’s conduct.” Willey v. Mayer, 876 P.2d 1260, 1264
(Colo. 1994). Actual express authority “exists whenever the principal directly states that
its agent has the authority to perform a particular act on the principal’s behalf.” Id.
Here, Defendant provided its agents, including CRM, express authority to act
under its warranty and carry out repairs of its engines. The engine warranty provided
by Defendant states:
Before the expiration of the applicable warranty, Owner must notify a
Cummins distributor, authorized dealer or other repair location approved
by Cummins of any Warrantable Failure and make the engine available
for repair by such facility. . . . Owner must also deliver the engine to the
repair facility.
(ECF No. 34-2 at 2.) The record indicates that CRM was an approved facility that
Defendant authorized to perform repairs on its behalf. (Compare ECF No. 45 at 4-7,
with ECF No. 53 at 4-9.) CRM operated, and was paid, under Defendant’s warranty for
repairs to the RV from 2008 through 2013. (Id.) CRM therefore had actual express
authority to act as Defendant’s agent in all matters related to the repair of the RV’s
engine. Accordingly, the Court finds that Defendant is responsible for CRM’s actions
and representations in attempting to repair the RV’s engine from 2008 onward. Thus,
the Court finds that Defendant was involved with repairs of the RV during the limitations
period.
Defendant next argues that it never made any representations to Plaintiffs that
the repairs would remedy the engine. (ECF No. 53 at 14.) However, Plaintiff Danny

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Thomas testified that Smitty, a CRM representative, stated at one point in 2010, 2 “we’ll
throw parts on the [RV] until we get the problem fixed.” (ECF No. 34-1 at 13.) This
statement, coupled with CRM’s repeated repair attempts over a period of years, not
only indicates that CRM was willing to continue repairs on the RV, but that such repairs
would ultimately be successful. Therefore, a reasonable jury could find that Defendant
expressly or impliedly promised to fix the engine, and that Plaintiffs have satisfied the
first prong of the repair doctrine for purposes of summary judgment.
Finally, Defendant argues that Plaintiffs did not reasonably rely on any
representations of Defendant or its agents, as required by the repair doctrine’s second
prong. (ECF No. 53 at 16-17.) However, Plaintiffs continued to seek repairs of the RV
over a period of years, which CRM willingly undertook. CRM eventually escalated the
engine issue to Defendant, involved other repair facilities, and Defendant extended the
original five-year warranty for two more years. (ECF No. 45-8 at 2.) Plaintiffs’ claim
that, “[i]t was our understanding that CRM repaired the [RV]” following CRM’s final effort
in January 2013, further indicates their actual reliance on Defendant’s representations.
(ECF No. 45-8 at 2.) Thus, a reasonable jury could find that Plaintiffs reasonably relied
on Defendant’s representations that the engine would be fixed, and that Plaintiffs have
satisfied the second prong of the repair doctrine for purposes of summary judgment.

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Mr. Thomas testified that Plaintiffs purchased the RV sometime in September or
October 2007. (ECF No. 34-1 at 2.) Plaintiffs assert that Smitty’s representation that he would
repair the RV was made anywhere from “August 25, 2010 through October 7, 2010.” (ECF No.
45 at 3.) Therefore, Smitty’s representation could conceivably have been made within the
three-year statute of limitations period that began in the fall of 2007. Because Defendant put
forth no evidence suggesting that this representation was made outside of the original threeyear limitations period, the Court resolves this factual ambiguity in favor of Plaintiffs. Houston,
817 F.2d at 85.

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The Court therefore finds that Plaintiffs have presented evidence from which a
reasonable jury could find that the repair doctrine tolled the statute of limitations in this
case until January 2013, when Defendant made its final repairs to the RV. Because
this action was filed within three years of that date, the Court denies summary judgment
on Defendant’s claim that the statute of limitations bars this action.
B.

Plaintiffs’ Damages
Plaintiffs seek consequential damages amounting to the purchase price of the

RV, all interest that will accrue on the loan used for the purchase of the RV, and the
cost of add-ons to the RV. (ECF No. 34 at 5.) In a breach of warranty action under the
UCC, “[t]he measure of damages . . . is the difference at the time and place of
acceptance between the value of the goods accepted and the value they would have
had if they had been as warranted,” plus consequential damages. Colo. Rev. Stat. §
4-2-714(2)-(3). The RV’s engine was the only product manufactured and sold by
Defendant. (ECF No. 34 at 9.) Defendant therefore asserts that Plaintiffs are limited
to the difference between the value of the engine as accepted, and the value it would
have had as warranted. (Id.) Although Defendant concedes that consequential
damages are also recoverable in a breach of warranty case, it disputes that the
damages Plaintiffs seek in this case constitute consequential damages. (ECF No. 53 at
9-10.)
Under general contract principles, “[d]irect damages refer to those which the
party lost from the contract itself—in other words, the benefit of the bargain—while
consequential damages refer to economic harm beyond the immediate scope of the
contract.” Penncro Assoc., Inc. v. Sprint Spectrum, L.P., 499 F.3d 1151, 1156 (10th
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Cir. 2007). The UCC defines consequential damages to include “any loss resulting
from general or particular requirements and needs of which the seller at the time of
contracting had reason to know and which could not reasonably be prevented by cover
or otherwise; and . . . [i]njury to person or property proximately resulting from any
breach of warranty.” Colo. Rev. Stat. § 4-2-715. Examples of consequential damages
are lost profits, the cost of unsuccessful attempts to repair the goods at issue, and
damage to person or property. White, Summers, & Hillman, Uniform Commercial Code
§ 11:10 (6th ed.).
The Court agrees with Defendant that the damages Plaintiffs claim in this case
are not consequential. As stated above, Plaintiffs seek: (1) the entire purchase price of
the RV, (2) the interest paid on the RV through the end of the note, and (3) various
add-ons to the RV. (ECF No. 34 at 5.) Plaintiffs present no argument or evidence
indicating that any of these damages were proximately caused by Defendant’s breach
of warranty.3 Nothing in the record suggests that the defective engine caused Plaintiffs
to buy the RV at the purchase price or at its rate of interest, or to purchase any of the
add-ons to the RV. Rather, Plaintiffs would have incurred these costs regardless of
whether Defendant ever breached its warranty. The Court therefore grants summary
judgment on Defendant’s claim that Plaintiffs’ damages do not constitute consequential
damages under the UCC.

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Plaintiffs rely on Cooley v. Big Horn Harvestore Sys., Inc., 813 P.2d 736 (Colo. 1991)
to support their position that the damages are consequential. (ECF No. 45 at 14.) However,
that case speaks only to the general availability of consequential damages in a breach of
warranty action, not that the damages listed above are in fact consequential in nature. Cooley,
813 P.2d at 745-48.

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IV. CONCLUSION
For the reasons set forth above, the Court ORDERS as follows:
1.

Defendant’s Motion for Summary Judgment (ECF No. 34) is GRANTED IN PART
and DENIED IN PART;

2.

The Motion is GRANTED as to Plaintiffs’ claim for consequential damages as
detailed in this Order; and

3.

The Motion is DENIED in all other respects.
Dated this 18th day of February, 2015.
BY THE COURT:

William J. Martínez
United States District Judge

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