Miller et al v. Four Winds International Corporation

Filing 100

MEMORANDUM DECISION AND ORDER Four Winds' Motion for Spoliation Sanctions (Dkt. 55 ) is GRANTED IN PART AND DENIED IN PART. Four Winds' Motion for Partial Summary Judgment (Dkt. 64 ) is GRANTED IN PART AND DENIED IN PART. Four Winds' Motion to Defer Ruling on Motion for Partial Summary Judgment (Dkt. 85 ) is DENIED AS MOOT. Four Winds' Motion to Certify a Question to the Idaho Supreme Court (Dkt. 86 ) is DENIED.. Signed by Judge Candy W Dale. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by jm)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

PATRICIA MILLER and MARCIA
PARKER,
Plaintiffs,

Case No. 2:10-cv-00254-CWD
MEMORANDUM DECISION AND
ORDER

v.
FOUR WINDS INTERNATIONAL
CORPORATION, a Delaware
corporation; and DOES I through V,
Defendants.

INTRODUCTION
Plaintiffs Patricia Miller and Marcia Parker bring this breach of warranty action
under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq., against Four Winds
International Corporation (“Four Winds”).1 Plaintiffs allege that the motor home they
purchased in 2008, which was manufactured and warranted by Four Winds, suffers from
numerous defects and that Four Winds failed to repair the motor home under the terms of
a limited warranty. Plaintiffs claim that the motor home has no value due to its numerous

1

Plaintiffs also raise a claim for breach of express warranty and assert that
jurisdiction is proper in this case based upon diversity of citizenship, 28 U.S.C. § 1332,
and because the case involves questions of federal law. See 28 U.S.C. § 1331.
MEMORANDUM DECISION AND ORDER - 1

defects and seek a refund of the purchase price.
Four Winds has filed a Motion for Partial Summary Judgment, (Dkt. 64), arguing
that the remedy Plaintiffs seek – a refund of the purchase price of the motor home – is not
available under the Magnuson-Moss Warranty Act or Idaho’s version of the Uniform
Commercial Code. Four Winds also has filed a Motion for Spoliation Sanctions, (Dkt.
55), alleging that Plaintiffs lost relevant evidence after Four Winds repeatedly requested
production of the evidence. On August 23, 2011, the Court conducted a hearing during
which the parties presented oral arguments on the motions. Following the hearing on the
motions, Four Winds filed a Motion to Defer Ruling on Motion for Partial Summary
Judgment (Dkt. 85) and a Motion to Certify a Question to the Idaho Supreme Court. (Dkt.
86.) All the motions have been fully briefed and are ripe for adjudication.
Having fully reviewed the motions, the parties’ memoranda and supplemental
materials filed in support of each party’s position, and for the reasons discussed below,
the Court will make the following rulings. First, the Court finds that Four Winds has
sufficiently demonstrated spoliation and that an adverse inference jury instruction may be
an appropriate sanction in this case. Therefore, Four Winds’ Motion for Spoliation
Sanctions (Dkt. 55) will be granted in part. However, the propriety of such an instruction
will depend upon the evidence offered at trial, and, as such, the Court will defer ruling on
the jury instruction issue until the appropriate time at trial.
Second, Four Winds is correct that Plaintiffs may not seek a refund of the purchase
price of their motor home for the alleged breach of a limited warranty under the
MEMORANDUM DECISION AND ORDER - 2

Magnuson-Moss Warranty Act or under the applicable provisions of the Idaho Code.
Therefore, Four Winds’ Motion for Partial Summary Judgment (Dkt. 64) will be granted
in part. This ruling, however, will not preclude Plaintiffs from attempting to prove
“special circumstances” within the meaning of Idaho Code § 28-2-714, or establishing
damages through a measure other than diminution in value, which is the ordinary measure
of damages for breach of warranty under Idaho law.
Finally, concerning Four Winds’ motion to defer ruling on its motion for summary
judgment and motion to certify a question to the Idaho Supreme Court, the Court finds
that the question at issue in this case, which is essentially evidentiary in nature, is not
appropriate for certification. Therefore, Four Winds’ Motion to Certify a Question to the
Idaho Supreme Court, (Dkt. 86), will be denied and Four Winds’ Motion to Defer Ruling
on Motion for Partial Summary Judgment, (Dkt. 85), will be denied as moot.
BACKGROUND
In June of 2008, Patricia Miller and Marcia Parker purchased a new Presidio
model motor home from a dealer named Blue Dog RV in Post Falls, Idaho. Plaintiffs
purchased the vehicle for $239,628.00. The motor home was manufactured and
assembled by the Mandalay Luxury Division of Four Winds International Corporation.2
When they purchased the motor home, Plaintiffs received a manufacturer’s limited

2

The parties dispute the extent to which Four Winds manufactured and assembled
the motor home. Four Winds alleges that it “manufactured, in part, and assembled, in
part, the motorhome.” (Dkt. 66.) Four Winds does not elaborate on what “in part” entails
or whether this fact has any legal significance.
MEMORANDUM DECISION AND ORDER - 3

warranty, which obligated Four Winds to repair or replace defective material or
workmanship at no charge to the owner for a one year period of time. The limited
warranty contains the following provision:
In the event that a substantial defect in material or
workmanship, attributable to Presidio, is found to exist during
the warranty period, Presidio will repair or replace the
defective material or workmanship, at its option, at no charge
to the RV owner, in accordance with the terms, conditions and
limitations of this Limited Warranty.
(Dkt. 67-3.) The warranty expressly does not cover any materials or components of the
motor home that are warranted by another entity, such as the engine, drive train, batteries,
gauges, generator, hydraulic jacks, audio/video equipment, etc. (Id. at 4.) The warranty
also excludes from coverage “[i]tems that are working as designed but that you are
unhappy with because of the design.” (Id.)
Plaintiffs allege in their complaint that they began experiencing serious problems
with the motor home shortly after they purchased it. When Plaintiffs first “leveled” the
vehicle after taking it home from the dealer, “the front windshield cracked from top to
bottom, and a latch on an outside cabinet broke, evidencing structural stress issues.” (Dkt.
1 at 3.) This was the first of many problems Plaintiffs experienced with the motor home.
In July of 2008, Ms. Miller took the motor home on a trip to Oregon during which
she experienced problems with the motor home’s “slide outs.” When she contacted Four
Winds about the issue, she was told that the factory would not be able to repair the motor
home until five or six months of time expired. (Id.) The delay in fixing the motor home

MEMORANDUM DECISION AND ORDER - 4

caused Ms. Miller to miss a family reunion and from visiting her ailing mother, who
passed away on October 1, 2008. Plaintiffs allege that, due to the unreliability of the
motor home, Ms. Miller was forced to travel by airplane to attend her mother’s funeral.
Plaintiffs allege that Four Winds made arrangements to repair the motor home, but
required Plaintiffs to deliver the motor home to a site in Fontana, California. “During the
trip to the repair facility the large slide dislodged with the bottom of the slide sticking out
about a foot . . . prevent[ing] Ms. Miller from driving the RV, and she was stuck in the
middle of Montana without food, heat or even the ability to access her bedroom due to the
malfunctioning slide.” (Dkt. 1 at 3-4.) The dealer sent employees to temporarily fix the
motor home and Ms. Miller eventually arrived in California, where she found the repair
site closed due to the owner being on vacation in Mexico. Ms. Miller alleges she was
forced to make alternative arrangements both for storing the motor home and for housing
herself until the motor home was fixed. At one point, when Ms. Miller attempted to
retract the slide on the motor home so she could drive to the repair facility, one of the
hydraulic lines burst, causing a mist of hydraulic fluid to spray throughout the interior of
the vehicle. (Id. at 4.) Ultimately, the motor home was in California for almost six
months of time until the repairs were completed.
Plaintiffs allege that, in May of 2009, the tile floor of the motor home began to lift,
causing Ms. Miller to cut her foot. Additionally, the bathroom and kitchen walls began to
bow. Then in July of 2009, Ms. Miller took the motor home to the dealer for a final
check before she started a long trip in the vehicle. “The mechanics at the dealership
MEMORANDUM DECISION AND ORDER - 5

checked the slide several times to make sure it was operating correctly [but] [t]he slides
again became stuck, and the mechanics were unable to get them back into place.” (Dkt. 1
at 6.)
Plaintiffs’ complaint identifies several other problems with the motor home.
Plaintiffs state: “[d]espite more than ten trips to repair facilities in the first year of
ownership, these issues have persisted” and “Defendant has ultimately been unable to
adequately repair the motor home in compliance with its written warranty.” (Dkt. 75 at 2.)
Ms. Miller stated in her deposition that the motor home has “zero” value to her, and that
she could not in good faith sell the motor home to someone else due to the extent and
history of the vehicle’s problems. (Dkt. 67-4 at 4.)
Plaintiffs filed this action against Four Winds on May 18, 2010. Plaintiffs identify
two claims for relief. First, Plaintiffs allege breach of express warranty. Second,
Plaintiffs assert a claim under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et
seq. Plaintiffs seek a full refund of the purchase price, with Four Winds to accept return
of the motor home.
DISCUSSION
1. Motion for Spoliation Sanctions
A.

Facts

During her deposition on December 16, 2010, Plaintiff Patricia Miller testified that
she had recordings of voice mail messages left on her cellular telephone by employees or
other representatives of Four Winds. The messages were saved approximately two years
MEMORANDUM DECISION AND ORDER - 6

prior to the deposition. Ms. Miller testified that she still had access to some of the
messages but that: “I haven’t gone through my backlog of voicemails[,] I just save them
because so many names changed.” (Dkt. 57-1, Deposition of P. Miller at 196.) Counsel
for Four Winds admonished Ms. Miller not to delete the voice mails and requested that
Plaintiffs’ counsel make a copy of the voice mails to produce for the Defendant.
When the voicemails were not produced, Four Winds again requested the
recordings by email on January 12, 2011, and served a formal request for production on
Plaintiffs’ counsel on January 26, 2011. Additional requests for production of the voice
mails were made on March 31, April 14, and May 5, 2011.
On April 19, 2011, Plaintiffs’ counsel sent defense counsel an e-mail stating that
he was working on getting the voice mails together and that “[Ms. Miller] told me this
morning that she still has access to them.” (Dkt. 57-6 at 2.) He also proposed a transcript
in lieu of production of the recordings in their original format. (Id.) On May 3, 2011,
Plaintiffs’ counsel notified Four Winds that he was not sure whether the messages were
capable of being recovered, stating: “Ms. Miller is in the process of conferring with her
cellular phone provider to determine if the cell phone messages she referenced as still
available [and] [a]s of today’s date, I do not know if those messages are capable of being
recovered.” (Dkt. 57-7.) Then, on May 20, 2011, Plaintiffs’ counsel informed Four
Winds that the messages were not retrievable. (Dkt. 57-9.)

MEMORANDUM DECISION AND ORDER - 7

B.

Legal Standard for Spoliation Sanctions

Federal trial courts have the inherent discretionary authority to make appropriate
evidentiary rulings and to levy sanctions in response to the destruction or spoliation of
relevant evidence. Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir. 1993).3 Sanctions for
spoliation include dismissal of claims, exclusion of evidence, and adverse jury
instructions in which the jury is informed that it may presume that the destroyed evidence,
if produced, would have been adverse to the party that destroyed or failed to preserve it.
See Unigard Security Ins. Co. v. Lakewood, 982 F.2d 363, 368-70 (9th Cir. 1992). A
finding of bad faith is not required before spoliation sanctions may be imposed –
sanctions may be imposed on the basis of simple notice of potential relevance to the
litigation. See Glover, 6 F.3d at 1329.
C.

Analysis

Based upon Plaintiffs’ failure to produce the voice mails, Four Winds has filed a
motion requesting spoliation sanctions. Four Winds requests that the Court impose two
sanctions: (1) the exclusion of any and all evidence and testimony of statements,
representations, or admissions made verbally by any past or present Four Winds
employee or representative; and (2) an instruction to the jury that it may infer from
Plaintiffs’ failure to produce the voice mail recordings that the content of the messages

3

Spoliation is defined as the intentional destruction or alteration of evidence, or
the knowing failure to preserve property for another’s use as evidence in pending or
reasonably foreseeable litigation. Black’s Law Dictionary 1409 (7th ed. 1999).
MEMORANDUM DECISION AND ORDER - 8

was unfavorable to Plaintiffs’ case.4
Plaintiffs do not dispute that the lost voice messages were relevant to their claims.
In their complaint, Plaintiffs allege that Four Winds made various agreements with
Plaintiffs about repairing or replacing the motor home, but then reneged on those
agreements. As Four Winds points out, “[t]he recordings are perhaps the best evidence of
the nature, scope, and content of communications between Plaintiffs and Four Winds,”
and “[t]he voicemail recordings would have shed light on the credibility of her allegations
and the content of Four Winds employee statements including statement of people who
allegedly lied to Plaintiffs.” (Dkt. 56 at 6.)
Plaintiffs do, however, oppose Four Winds’ motion on two grounds. First,
Plaintiffs assert that no sanctions should be imposed because Ms. Miller did not destroy
the voice messages. Second, Plaintiffs argue that, even if the Court finds spoliation, the
Court should give an adverse inference instruction, but not exclude testimony concerning
all previous conversations with Four Winds employees. Both of Plaintiffs’ arguments are
addressed below.
In response to Four Winds’ motion for sanctions, Plaintiffs submitted the Affidavit
of Patricia Miller. (Dkt. 72.) In her affidavit, Ms. Miller reiterates that she saved the

4

Four Winds requests the following instruction: “Plaintiffs failed to produce
recorded voicemail messages left by past or present Four Winds employees or
representative. Those voicemail recordings were under Plaintiffs’ control and reasonably
available to Plaintiffs and not reasonably available to Four Winds. You may infer that the
voicemail recordings were unfavorable to Plaintiffs, who could have produced them and
did not.” (Dkt. 55 at 2.)
MEMORANDUM DECISION AND ORDER - 9

voice messages over two years ago and that, at the time of the deposition, she “believed
that these messages were still saved on [her] cellular phone.” (Id. at 1.) Ms. Miller also
states the following:
I honestly thought that the messages were saved. I assumed
that when I saved the messages one time they would remain
there forever and I could access the messages later. When
questioned by my attorney about the issue, I told my attorney
that I believed I could still access the messages.
In the spring of 2011[,] I had to get a new cell phone because
mine was water damaged. When I got my new phone, I
attempted to access the voicemail messages that I thought I
had saved. I was not able to access the messages at that time.
A Verizon employee informed me that there was no way to
access these voicemail messages because they had been
deleted from my old phone memory due to the water damage
and they were so old that they could not be accessed from my
new phone. I[] understand that it is Verizon’s policy to
automatically delete these messages after a certain period of
time.
(Id. at 3.)
Four Winds takes issue with the statements in Ms. Miller’s affidavit. First, Four
Winds points out that, although the messages purportedly were lost in the Spring of 2011,
when Ms. Miller’s cell phone suffered water damage, the Plaintiffs failed to produce the
messages in either January, or February, or March of 2011 after defense counsel already
had made the requests for production. Second, Four Winds points out that, while
Plaintiffs refer to Verizon Wireless’s message-deletion policy, Plaintiffs do not indicate
how long messages are preserved pursuant to that policy or if Plaintiffs ever found out

MEMORANDUM DECISION AND ORDER - 10

exactly when or how the messages were lost.
The question that Plaintiffs have not answered, and perhaps the most important
question for purposes of the spoliation analysis, is when were the voice messages no
longer accessible? Plaintiffs have not answered this question. Because Ms. Miller
represented on multiple occasions that she could in fact access the messages, and she has
not provided the Court with any evidence of when the messages were no longer
accessible, the Court finds that spoliation did occur.
As Four Winds has demonstrated that relevant evidence was lost while in
Plaintiffs’ control, the next question is whether the proposed sanctions are appropriate in
this case. Four Winds requests two sanctions: (1) an adverse inference instruction –
allowing the jury to draw the inference that the withheld evidence was unfavorable to the
suppressing party’s case; and (2) the exclusion of testimony by Plaintiffs concerning all
statements made by former and current Four Winds employees. Plaintiffs argue that, even
if the Court finds spoliation, the sanctions requested by Four Winds are too harsh. The
Court agrees.
Factors to be considered when determining the severity of the sanction to impose
against a party for failure to preserve evidence include: (1) willfulness or bad faith of the
party responsible for loss of evidence; (2) degree of prejudice sustained by opposing
party; and (3) what is required to cure prejudice. See Swofford v. Eslinger, 671 F. Supp.
2d 1274, 1280 (M.D. Fla. 2009). Courts generally will not impose a significant sanction
for spoliation, unless there is a showing that the spoliation was willful and the loss of
MEMORANDUM DECISION AND ORDER - 11

evidence prejudiced the opposing party. See Aiello v. Kroger Co., 2010 WL 3522259 (D.
Nev. Sept. 1, 2010); see also Byrnie v. Town of Cromwell, Bd. of Educ., 243 F.3d 93, 108
(2d Cir. 2001). “The loss or destruction of evidence qualifies as willful spoliation if the
party ‘has some notice that the documents were potentially relevant to the litigation’
before they were lost.” Aiello, 2010 WL 3522259 at *3 (quoting Leon v. IDX Systems
Corp., 464 F.3d 951, 959 (9th Cir. 2006)).
The Ninth Circuit has addressed circumstances under which various sanctions for
spoliation (including adverse inference instructions and the exclusion of evidence) are
appropriate. Unigard Sec. Ins. Co. v. Lakewood Eng’r & Mfg. Corp., 982 F.2d 363 (9th
Cir. 1992). In Unigard v. Lakewood, the court of appeals upheld the district court’s
exclusion of evidence and the determination that an adverse inference instruction would
be insufficient to cure the prejudice arising from the spoliation that occurred in that case.
The court of appeals first looked to its ruling in Wong v. Swier, 267 F.2d 749 (9th Cir.
1959). In that case, the evidence of tampering was equivocal, the alleged tampering had
been brought to the jury’s attention, both parties had the chance to inspect the evidence
before the alleged tampering, and significant evidence remained for the jury to consider.
Given the above circumstances, the court in Unigard stated that, “[i]n such a factual
context, a district court’s imposition of anything more than a rebuttable presumption
against a purported despoiler would be an abuse of discretion.” Unigard, 982 F.2d at 369.
The court in Unigard then looked at the facts of its own case, where the destruction of
evidence was not in dispute, the non-spoiling party was not able to inspect the evidence,
MEMORANDUM DECISION AND ORDER - 12

and the loss of the evidence “rendered unreliable virtually all of the evidence that a finder
of fact could potentially consider.” Id. The court held, “[g]iven these factors, it was
within the district court’s discretion to determine that a rebuttable presumption against
Unigard would have been insufficient to cure the prejudice arising in the context of this
case.” Id.
This case is closer to the circumstances present in Wong. The Court recognizes that
Four Winds did not have the opportunity to listen to the messages before they were lost.
Like the facts in Wong, however, because it is unclear in this case when the voice
messages were no longer accessible, the evidence of spoliation is equivocal. Four Winds
argues that “an adverse inference would not fully cure the harm of Plaintiffs’ spoliation
because it would leave Plaintiffs free to tell their own story, unchecked by the evidence
they failed to preserve.” (Dkt. 73 at 6.) The Court disagrees. Four Winds’ contention that
Plaintiffs’ story will be unchecked without the exclusion of testimony concerning any and
all conversations between Ms. Miller and employees of Four Winds is overstated. For
example, Four Winds can cross examine Ms. Miller as to conversations with Four Winds
employees that occurred before and after the voice messages were left on her cellular
phone. Four Winds also can introduce testimony from its employees that spoke with Ms.
Miller concerning their conversations.
Ultimately, the jury will have to decide whose story is more credible and an
instruction informing the jury that it may infer from Plaintiffs’ failure to produce the
voice messages that they were harmful to Plaintiffs’ case may be an appropriate and
MEMORANDUM DECISION AND ORDER - 13

adequate sanction in this case. The Court will decide whether such an instruction will be
given after considering the evidence offered and admitted at the time of trial.
Furthermore, neither party shall mention the lost voice messages nor shall the attorneys
make reference to the same unless first doing so as an offer of proof outside the presence
of the jury.
2.

Defendant’s Motion for Partial Summary Judgment
Defendant Four Winds moves for partial summary judgment on two grounds.

First, Four Winds asserts that the remedy Plaintiffs seek – refund of the purchase price of
the motor home – is not an available remedy under the Magnuson-Moss Warranty Act or
Idaho’s version of the Uniform Commercial Code (“Idaho UCC”). Second, Four Winds
argues that Plaintiffs’ remedies are limited to those provided for in the warranty, which
expressly limits the remedies Plaintiffs may seek to repair or replace defective materials
or workmanship. For their part, it is clear from Plaintiffs’ filings that they contend the
warranty failed its essential purpose, which allows Plaintiffs to seek remedies outside of
those provided for in the warranty under the Idaho UCC. Plaintiffs also argue that the
“special circumstances” exception to the general measure of damages for breach of
warranty applies in this case, and that they may prove and recover damages – up to the
amount of the purchase price of the motor home – in any manner reasonable under § 282-714(2) of the Idaho UCC. In response, Four Winds argues that, even assuming the
limited warranty failed its essential purpose, Plaintiffs are nonetheless limited to repair
and replacement because they have failed to produce any evidence supporting an award
MEMORANDUM DECISION AND ORDER - 14

of monetary damages. Put a slightly different way, Four Winds argues that Plaintiffs may
not avoid the general measure of damages for breach of warranty under the Idaho UCC,
which is diminution in value, by simply asserting that the motor home is worthless and
failing to offer any evidence that attempts to quantify the value of the motor home.
A.

Legal Standard for Summary Judgment

Summary judgment is appropriate when, viewing the facts in the light most
favorable to the nonmoving party, 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(c). The
moving party bears the initial burden of stating the basis for its motion and identifying
those portions of the record demonstrating the absence of genuine issues of material fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). “If the party moving for summary
judgment meets its initial burden of identifying for the court those portions of the material
on file that it believes demonstrates the absence of any genuine issues of material fact,”
the burden of production shifts and “the non moving party must set forth, by affidavit or
as otherwise provided in Rule 56, ‘specific facts showing that there is a genuine issue for
trial.’” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir.
1987) (quoting Fed. R. Civ. P. 56(e)).
The absence of disputed material facts does not automatically entitle the moving
party to summary judgment; Rule 56(c) requires the moving party to establish, in addition
to the absence of a dispute over any material fact, that it is entitled to judgment as a
matter of law. Fed. R. Civ. P. 56(c); see also, Custer v. Pan Am. Life Ins. Co., 12 F.3d
MEMORANDUM DECISION AND ORDER - 15

410, 416 (4th Cir. 1993). This requires the movant to set forth the legal theory upon
which its motion is based and to satisfy the court that undisputed facts clearly lead to the
conclusion that it is entitled to judgment on that legal theory.
B.

Whether Plaintiffs May Seek a Refund

In their second claim for relief under the Magnuson-Moss Warranty Act
(“Warranty Act”), Plaintiffs state that, “[t]o the extent the remedy is available, Plaintiffs
elect a full refund of their purchase price, with the Defendants to accept the return of the
Presidio.” (Dkt. 1 at 7.) Four Winds contends that this remedy is not available.
(i) Remedies under the Magnuson-Moss Warranty Act
Four Winds correctly points out that the Warranty Act does contain a “refund-orreplace provision.” Section 2304(a) of the Warranty Act provides:
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 such product,
such warrantor must permit the consumer to elect either a
refund for, or replacement without charge of, such product or
part.
15 U.S.C. § 2304(a). It is well-settled, however, that this provision applies only to “Full
Warranties,” and the courts having addressed the question have held that a purchaser who
receives only a limited warranty cannot recover remedies under 15 U.S.C. § 2304. See
e.g., Gusse v. Damon Corp., 470 F. Supp. 2d 1110, 1116 (C.D. Cal. 2007) (“the federal
remedies described in 15 U.S.C. § 2304(a) only apply to full warranties.”) It is
undisputed in this case that the applicable warranty is a limited warranty. Indeed,

MEMORANDUM DECISION AND ORDER - 16

Plaintiffs do not dispute that the refund provision contained in § 2304 is not applicable in
this case.
Plaintiffs assert that they are bringing their claim under Section 2310 of the
Warranty Act, which provides that “a consumer who is damaged by the failure of a
supplier, warrantor, or service contractor to comply with any obligation under this
chapter, or under a written warranty, implied warranty, or service contract, may bring suit
for damages and other legal and equitable relief.” 15 U.S.C. § 2310(d)(1). Plaintiffs also
assert that, under the Warranty Act, damages are determined by reference to state law.
This appears correct. As the Fifth Circuit has stated:
The Magnuson-Moss Warranty Act is virtually silent as to the
amount and type of damages which may be awarded for
breach of an express limited warranty. However, the statute
provides that nothing in the Act “shall invalidate or restrict
any right or remedy of any consumer under State law . . . .” 15
U.S.C. § 2311(b)(1). Furthermore, the legislative history
clearly implies that a resort to state law is proper in
determining the applicable measure of damages under the Act.
MacKenzie v. Chrysler Corp., 607 F.2d 1162, 1166 (5th Cir. 1979). Thus, the operative
question is whether Plaintiffs can seek a refund under Idaho state law.
Before moving on to the remedies available under Idaho state law, it should be
noted that Plaintiffs cite a Ninth Circuit case for the proposition that a consumer may seek
a refund under the Warranty Act even though the warranty at issue is limited. In Milicevic
v. Fletcher Jones Imports, Ltd., 402 F.3d 912 (9th Cir. 2005), a consumer purchased a
Mercedes S-500 with a limited warranty obligating the manufacturer to correct defects in

MEMORANDUM DECISION AND ORDER - 17

material or workmanship. Like the case before the Court, in Milicevic the purchaser
experienced several on-going problems with the car that were not repaired. When the
purchaser demanded a refund and the dealer refused, the purchaser brought an action in
Nevada state court against the manufacturer and the dealer for breach of warranty and
relief under the Nevada state lemon law and under the Magnuson-Moss Warranty Act.
The defendants removed the case to federal court and, after a bench trial, the U.S. District
Court for the District of Nevada awarded the plaintiff the purchase price of the vehicle.
The Ninth Circuit affirmed.
Plaintiffs argue that Milicevic “establishes that the Plaintiffs may sue directly
under the Act, and seek damages which may include the purchase price of the vehicle.”
(Dkt. 75 at 5.) Plaintiffs overstate the holding in Milicevic. The key to that case rests in
the fact that the plaintiff sought relief not only under the federal Warranty Act, but also
under the applicable Nevada lemon law, which “states that if an automobile manufacturer,
its agent or its authorized dealer is not able to conform a vehicle to its warranty after a
reasonable number of attempts to repair the vehicle have been made, . . . it must replace
the vehicle or give the purchaser a refund of the purchase price.” 402 F.3d at 916 (citing
Nev. Rev. Stat. § 597.630).
Here, Plaintiffs have not sought relief under any comparable Idaho statute or
lemon law that specifically would allow the recovery of the purchase price of the motor
home.

MEMORANDUM DECISION AND ORDER - 18

(ii) Remedies under Idaho state law
Four Winds argues that Plaintiffs cannot recover the purchase price of the motor
home under Idaho law for two reasons. First, Four Winds asserts that Plaintiffs may not
avail themselves of the provision in the Idaho UCC that allows for revocation of
nonconforming goods and recovery of a refund because, according to the Idaho Supreme
Court, revocation is only available against the seller of goods. See Griffith v. Latham
Motors, Inc., 913 P.2d 572, 577 (Idaho 1996). Plaintiffs do not contest this proposition.
Second, Four Winds argues that the remedy for breach of warranty under the Idaho UCC
does not include a refund remedy. Again, Plaintiffs do not contest this assertion. Plaintiffs
argue, however, that “special circumstances” exist in this case within the meaning of the
Idaho UCC, and, as such, they may prove damages – including an amount equal to the
purchase price – in any reasonable manner.
The Idaho UCC recognizes two scenarios where a buyer may recover the purchase
price of nonconforming goods. Under Idaho Code § 28-2-711(1), a buyer may reject
unaccepted goods or revoke acceptance of goods accepted and obtain a refund of the
purchase price. However, as pointed out above, a buyer may only reject or revoke goods
against the seller, not the manufacturer.
Under Section 28-2-719 of the Idaho Code, a warrantor may “limit or alter the
measure of damages recoverable.” I.C. § 28-2-719(1)(a). Here, the warranty limits
Plaintiffs’ remedies to repair or replacement of any defective material or workmanship.
Four Winds argues that, under the Idaho UCC, Plaintiffs are limited to those remedies.
MEMORANDUM DECISION AND ORDER - 19

The Idaho UCC, however, provides an exception to the above rule “[w]here
circumstances cause an exclusive or limited remedy to fail of its essential purpose.” I.C. §
28-2-719(2). Plaintiffs do not specifically invoke this exception, but it is clear from their
complaint and their response to Four Winds’ motion for partial summary judgment that
they contend that the warranty has failed its essential purpose: the purpose of the warranty
clearly was to keep the parts manufactured by Four Winds in working condition, and
Plaintiffs allege that Four Winds failed to repair several malfunctioning parts on several
occasions. At the very least, there are disputed material facts as to whether the warranty
failed its essential purpose, i.e., whether Four Winds sufficiently repaired the motor home
each time it malfunctioned.
Because the Court has determined that disputed facts exist as to whether the
warranty failed its essential purpose, which, if proven, would allow Plaintiffs to seek
remedies outside of those provided for in the limited warranty, the next question is what
remedies are available for breach of warranty under Idaho law. The Idaho UCC
specifically addresses a buyer’s remedy for breach of warranty:
The measure of damages for breach of warranty 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, unless special
circumstances show proximate damages of a different
amount.
I.C. § 28-2-714(2) (emphasis added).

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The first part of the above provision sets forth the general measure of damages for
breach of warranty – the difference between the value of the goods as accepted and the
value the goods would have had if it had been delivered as warranted, also referred to as
diminution in value. According to the Idaho Supreme Court, this is “[t]he usual, although
not exclusive, method of ascertaining damages for breach of warranty.” Jensen v. Seigel
Mobile Homes Group, 668 P.2d 65, 72 (Idaho 1983). The second part of the provision,
italicized above, provides an exception to the general rule; “If there are ‘special
circumstances’ which indicate a different measure of damages is reasonable, that different
measure may be used.” Id. The Idaho Supreme Court has also made clear that, under the
Idaho UCC, “[d]amages for breach of warranty may be determined ‘in any manner which
is reasonable.’” Jensen, 668 P.2d at 72 (quoting I.C. § 28-2-714(1)).
Plaintiffs rely on the exception to the general rule, and argue that, because “special
circumstances” exist in this case, they should be allowed to prove damages outside of the
normal diminution in value formula. Four Winds asserts that Plaintiffs have not produced
any evidence relating to the general measure of damages for breach of warranty – the
difference between the value of the motor home as accepted and the value it would have
had if delivered as warranted. Four Winds argues that Plaintiffs should not be able to
avoid the general measure of damages, and seek what, in essence, would be a refund, by
simply asserting that the motor home has no value.
In response, Plaintiffs argue that, under the Idaho UCC, and the Idaho Supreme
Court precedent interpreting the statute, they need not prove damages through diminution
MEMORANDUM DECISION AND ORDER - 21

in value if special circumstances exist. Specifically, Plaintiffs rely on Jensen v. Seigel
Mobile Homes Group, in which the Idaho Supreme Court stated that the inability to prove
the amount of loss in value caused by breaches of warranty constitutes a special
circumstance, “which may enable [plaintiffs] to recover on an alternative measure of
damages.” 668 P.2d at 73.
Four Winds notes that Plaintiffs’ Rule 26 disclosures, which were to contain a
computation of any category of damages claimed, state that the “nature of the damages
include [sic] the cost of effectively repairing the many defects, if possible, or the
replacement of the coach if adequate repairs are not possible,” (Dkt. 67-5), but provide no
actual computation. Four Winds asserts that the failure to produce competent testimony
about the motor home’s value should preclude any effort to obtain damages under the
Idaho Code.
Plaintiffs direct the Court to the numerous statements by Ms. Miller that the motor
home has no value, several examples of incidental and consequential damages due to the
alleged breach, and the statement of John Asplund, the owner of Blue Dog RV, that he
would not purchase the motor home back from the Plaintiffs due to the motor home’s
personal history. Plaintiffs also cite an Ohio Court of Appeals case, in which the court of
appeals upheld a “special circumstances” verdict where the plaintiffs offered evidence of
the sale price of the care, their opinion on the value of the car with its defects, the twelve
repair attempts made by the warrantor that failed to fix the car’s problems, and the fact
that the plaintiffs were left without a vehicle on several occasions. Cox v Kia Motors Am.
MEMORANDUM DECISION AND ORDER - 22

Inc., 2011 Ohio App. LEXIS 1142 (March 18, 2011).
Finally, Plaintiffs argue that the Idaho UCC does not apply to this case because the
warranty is a service contract rather than a contract relating to the sale of goods, and that
Plaintiffs may therefore avail themselves of any common law contract remedies available
under Idaho law. In response, Four Winds directs the Court to a non-Idaho federal case
holding that breach of warranty claims against a manufacturer are governed by statute,
not common law. See Terrill v. Electrolux Home Prods., Inc., 753 F. Supp. 2d 1272, 1281
(S.D. Ga. 2010). The Court will not linger on this point as the warranty in this case
concerned the repair and replacement of defective goods and the Idaho UCC clearly
applies. “[T]he Uniform Commercial Code is the primary source of commercial law rules
in areas that it governs, . . . [and] while principles of common law and equity may
supplement provisions of the Uniform Commercial Code, they may not be used to
supplant its provisions . . . unless a specific provision of the Uniform Commercial Code
provides otherwise.” I.C. § 28-1-103 cmt. n.2.
Based upon the discussion above, the Court finds that Plaintiffs cannot utilize the
refund provision under the Magnuson-Moss Warranty Act. Likewise, there does not
appear to be a refund provision under Idaho law that Plaintiffs can invoke. Therefore, the
Court will grant Four Winds’ motion for partial summary judgment as to the refund
claim, and finds that, while Plaintiffs may not invoke the refund provision in the
Warranty Act or under the provisions of Idaho UCC providing for that remedy, the
Plaintiffs may nevertheless present evidence that special circumstances exist in this case.
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The Court is not in the position, at this stage in the litigation, to rule that Plaintiffs cannot
prove special circumstances as a matter of law. If Plaintiffs sufficiently demonstrate
special circumstances at trial, as defined by the Idaho Supreme Court, they then may
attempt to demonstrate damages through any reasonable means.
C.

Plaintiffs’ Design Defect Claim

Four Winds seeks summary judgment on Plaintiffs’ claims for damages due to
design defects because the limited warranty expressly excludes claims relating to items
that are “working as designed but that you are unhappy with because of the design.” This
appears to be a non-issue. Plaintiffs make clear in their response that they are not
claiming design defects as that term is commonly used in legal parlance. Plaintiffs state
“[t]here is an issue of fact as to whether the motor home is ‘working as designed.’” (Dkt.
75 at 18.) “Plaintiffs allege that the motor home is not working as it was designed.” (Id. at
19.) As Plaintiffs point out, “[i]t is illogical to think that the Defendant designed the
Presidio to have built-in defects such as buckling tile, slide outs that do not stay in place,
and improper leveling.” (Id.) Therefore, as it appears that Plaintiffs are not making a
claim for design defect, Four Winds’ motion for partial summary judgment on that issue
will be denied.
3.

Four Winds’ Motion to Certify
Shortly after the hearing on Four Winds’ motions for partial summary judgment

and spoliation sanctions, Four Winds filed a motion to defer ruling on the motion for
summary judgement, (Dkt. 85), and a motion to certify a question to the Idaho Supreme
MEMORANDUM DECISION AND ORDER - 24

Court. (Dkt. 86.) Four Winds requests the Court to certify the following question to the
Idaho Supreme Court:
May a buyer, who sues a remote non privity manufacturer for
breach of express warranty, recover a refund remedy under
the “special circumstances” exception in I.C. 28-2-714(2),
where there is no evidence that the general measure of
damages (that is, the difference in value) either cannot be
proved or would fail to provide an adequate remedy?
(Dkt. 86.) In other words, Four Winds seeks clarification on what constitutes “special
circumstances” within the meaning of the Idaho UCC, and what a buyer must
demonstrate (as an evidentiary matter) to invoke the exception to the general measure of
damages for breach of warranty.
Idaho Appellate Rule 12.3 provides that a United States District Court may certify
a question of law to the Idaho Supreme Court under certain circumstances:
(a) Certification of a Question of Law. The Supreme Court of
the United States, a Court of Appeals of the United States or a
United States District Court may certify in writing to the
Idaho Supreme Court a question of law asking for a
declaratory judgment or decree adjudicating the Idaho law on
such question if such court, on the court’s own motion or
upon the motion of any party, finds in a pending action that:
(1) The question of law certified is a controlling question of
law in the pending action in the United States court as to
which there is no controlling precedent in the decisions of the
Idaho Supreme Court, and
(2) An immediate determination of the Idaho law with regard
to the certified question would materially advance the orderly
resolution of the litigation in the United States court.
Idaho App. R. 12.3. Based upon the above rule, for a question to be eligible for
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certification, the question of law must meet three conditions: first, it must be controlling
in an action pending in an U.S. court; second, the question must be controlling on an
Idaho state law issue that has not been addressed by the Idaho Supreme Court; and third,
resolution of the question must materially advance the orderly resolution of the litigation.
Here, the Court finds that certification would not be appropriate. The Idaho
Supreme Court has held that the inability to prove the amount of loss in value caused by a
breach of warranty constitutes special circumstances within the meaning of the Idaho
UCC. Jensen, 668 P.2d at 73. This is precisely the argument Plaintiffs have made and
continue to make. (See Pl.s’ Resp. to Def.’s Mot. to Cert. a Question, Dkt. 94 at 5 (“none
of the mechanics, engineers or experts, hired by the Plaintiff or Defendants, can
accurately diagnose the cause of the motor home’s malfunctions. A jury could find from
this evidence (or lack thereof) that the parties are unable to give an exact monetary
number for difference in value, and that usual damages cannot be proven.”)).
Because the Idaho Supreme Court has addressed the meaning of “special
circumstances” within the meaning of the Idaho UCC, although not precisely in the
context of the facts of this action, the question sought to be certified does not meet the
conditions of Idaho Appellate Rule 12.3. Therefore, Four Winds’ Motion to Certify a
Question to the Idaho Supreme Court (Dkt. 86) will be denied.

MEMORANDUM DECISION AND ORDER - 26

ORDER
Based on the foregoing, the Court being otherwise fully advised in the premises,
IT IS HEREBY ORDERED that:
1.

Four Winds’ Motion for Spoliation Sanctions (Dkt. 55) is GRANTED IN

PART AND DENIED IN PART. The exclusion of all the evidence requested by
Defendant is not an appropriate sanction in this case. The decision whether the Court will
give an adverse inference instruction to the jury regarding the spoiled voice messages will
be made by the Court at the appropriate time after considering the evidence the parties
intend to offer regarding these voice messages at the time of trial. Neither party shall
mention the voice messages nor shall the attorneys make reference to the same unless first
doing so as an offer of proof outside the presence of the jury.
2.

Four Winds Motion for Partial Summary Judgment (Dkt. 64) is GRANTED

IN PART AND DENIED IN PART. This case is governed by Idaho’s version of the
Uniform Commercial Code. Plaintiffs may not seek a refund remedy under the
Magnuson-Moss Warranty Act or Idaho’s version of the Uniform Commercial Code. This
ruling does not preclude Plaintiffs from attempting to prove “special circumstances”
within the meaning of Idaho Code § 28-2-714.
3.

Four Winds’ Motion to Defer Ruling on Motion for Partial Summary

Judgment (Dkt. 85) is DENIED AS MOOT.
4.

Four Winds’ Motion to Certify a Question to the Idaho Supreme Court

(Dkt. 86) is DENIED.
MEMORANDUM DECISION AND ORDER - 27

DATED: October 25, 2011

Honorable Candy W. Dale
Chief United States Magistrate Judge

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