Breniser et al v. Western Recreational Vehicles, Inc.

Filing 52

Findings of Fact and Conclusions of Law. Judgment is awarded to plaintiff. See full 9-page Opinion. Signed on March 17, 2009 by Magistrate Judge Dennis J. Hubel. (hubel2, )

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Justin M. Baxter BAXTER & BAXTER LLP 8835 S.W. Canyon Lane, Suite 130 Portland, Oregon 97225 Attorney for Plaintiffs HUBEL, Magistrate Judge: Plaintiffs Jerry Breniser and Gale Thurber bring this action against defendant Western Recreational Vehicles, Inc., regarding an allegedly defective fifth-wheel trailer plaintiffs purchased in August 2005. Plaintiffs bring a single breach of warranty claim IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON JERRY BRENISER and GALE THURBER, ) ) ) Plaintiffs, ) ) v. ) ) WESTERN RECREATIONAL VEHICLES,) INC., a foreign corporation, ) ) Defendant. ) )

No.

CV-07-1418-HU

FINDINGS OF FACT & CONCLUSIONS OF LAW

under the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301 - 2312 (MMWA). Both parties have consented to entry of final judgment by a 1 - FINDINGS OF FACT & CONCLUSIONS OF LAW

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Magistrate Judge in accordance with Federal Rule of Civil Procedure 73 and 28 U.S.C. § 636(c). The case was tried to the Court on March 17, 2009. appeared through their counsel. Plaintiffs

Defendant, which was initially

represented by counsel in this case, did not make an appearance because it presently has no counsel and thus, it may not appear in this Court. Local Rule 83.9(b) ("Unless otherwise specifically

provided by law or Court order, a corporation may appear or act only through an attorney."). These are my Findings of Fact and Conclusions of Law. Civ. P. 52(a). FINDINGS OF FACT On or about August 26, 2005, plaintiffs purchased a 2006 Alpenlite Portofino fifth-wheel trailer from Highway Trailer Sales in Salem, Oregon. Pltfs' Exh. 1. The Alpenlite was manufactured Fed. R.

by Western Recreational Vehicles, Inc., a Washington corporation (WRV). Plaintiffs planned to live in the trailer full-time while

traveling for Breniser's work as an aircraft mechanic. At the time of the sale, a representative of Highway Trailer Sales advised plaintiffs that the trailer was covered by WRV's warranty, and that plaintiffs could bring the fifth-wheel to Highway Trailer Sales for any and all repairs. (warranty). WRV warranted that the fifth-wheel would be free of See Pltfs' Exh. 2

substantial defects in material and workmanship attributable to WRV, for one year from the date of purchase. Id. A substantial

defect is defined as the failure of a part or system to perform substantially within the design or manufacturing specifications for 2 - FINDINGS OF FACT & CONCLUSIONS OF LAW

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that part or system, and which substantially limits the usage of the good. Id. The warranty also expressly provides for a pro-rata

five-year limited warranty covering the "structural integrity" of the unit, meaning fixed, or stationary components including the front, side, and back walls, ceiling, and undercarriage. Id.

Not long after the August 2006 purchase, plaintiffs began discovering numerous defects and damage to the fifth-wheel. defects included refrigerator, a leaking roof and slider seals, a The

leaking vents,

faulty

shower,

faulty

moulding,

faulty

defective microwave, defective furnace, defective electronics, damaged or defective slider, de-lamination at trailer-side fifthwheel support, and defective wheels. See Pltfs' Exh. 3 (service

records from Highway Trailer Sales in October 2005, November 2005, January 2006, reflecting numerous problems). In addition, as a

result of one or more of the defects, the fifth-wheel has sustained water damage, mold, and damage to wiring and circuitry. Exh. 9 (photographs showing mold on walls and carpet). Initially, plaintiffs brought the fifth-wheel to Highway Pltfs'

Trailer Sales for service under the WRV warranty.

Id. (service

records show warranty work performed by Highway Trailer Sales). At some point, Highway Trailer Sales was unable to remedy or repair all of the defects and plaintiffs contacted WRV directly. WRV told Breniser that he could continue to bring the trailer to Highway Trailer Sales for warranty work, or could bring it directly to WRV's service center in Yakima, Washington. p. 8 (December 29, 2005 email from See Pltfs' Exh. 4 at Customer Service

WRV

Representative Gary Ford indicating plaintiffs could schedule a thorough inspection of the fifth-wheel at WRV's Factory Service 3 - FINDINGS OF FACT & CONCLUSIONS OF LAW

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Center in Yakima, Washington). In early February 2006, plaintiffs brought the fifth-wheel to WRV's service center in Yakima. Pltfs' Exh. 4 at p. 11.

Nonetheless, on March 1, 2006, plaintiffs emailed WRV to express continued dissatisfaction with the fifth-wheel and to ask for a rescission of the transaction, with a total refund to plaintiffs. Id. at p. 18. The parties continued discussions about the ongoing problems, including leaks and mold. their E.g., attorney, Id. at p. 21. In 2007, WRV

plaintiffs,

through

again

requested

that

repurchase the fifth-wheel and refund plaintiffs' out-of-pocket losses. WRV refused to rescind the sale and refund plaintiffs' The defects have continued, and plaintiffs

out-of-pocket losses.

continue to experience leaking and mold growth in the fifth-wheel. Plaintiffs have lived in the fifth-wheel since they bought it, and continue to do so as of the time of trial. On December 15, 2006, WRV sold its assets to Delaware

corporation Western Recreational Vehicles, Inc. (WRV-Delaware). Pltfs' Exh. 10. Some liabilities were assumed under the Asset Id.

Purchase Agreement between the two companies. CONCLUSIONS OF LAW

Plaintiffs' claim arises under the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301-2312 (MMWA); (Dec. 12, 2008 Op. at pp. 5-7). The warranty issued by the manufacturer of the fifth-wheel trailer, WRV, was a limited warranty under the MMWA; (Dec. 12, 2008 Op. at pp. 7-9). The binding arbitration provision in the limited warranty is unenforceable and thus, plaintiffs' failure to follow the dispute 4 - FINDINGS OF FACT & CONCLUSIONS OF LAW

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resolution provision in the warranty does not bar their claim; (Dec. 12, 2008 Op. at pp. 9-11). Defendant in this case, WRV-Delaware, assumed the liability of this warranty under its Asset Purchase Agreement with WRV; (Dec. 12, 2008 Op. at pp. 15; Jan. 14, 2009 Op. at pp. 2-4). Under the MMWA, state law provides the remedy for breach of a limited warranty; (Dec. 12, 2008 Op. at pp. 15; Jan. 14, 2009 Op. at pp. 4-7). The appropriate state law remedy in this case is found at Oregon Revised Statute § (O.R.S.) 72.8100, which allows a consumer to sue the manufacture for breach of warranty when the manufacturer maintains, or causes to be maintained, in the state sufficient service and repair facilities to carry out the terms of the warranty. The evidence shows that plaintiffs were instructed to

take the fifth-wheel to Highway Trailer Sales for warranty-related repairs, and that plaintiffs did so, making Highway Trailer Sales an authorized agent of the manufacturer WRV for purposes of O.R.S. 72.8100. Clark v. Ford Motor Co., 46 Or. App. 521, 529, 612 P.2d

316, 320 (1980) ("the dealer was the [manufacturer's] agent at least for purposes of warranty work."). The statute provides that if the manufacturer is unable to service or repair the good in compliance with the applicable warranty, the manufacturer shall either replace the good or

reimburse the buyer in an amount equal to the purchase price paid by the buyer, less a reasonable charge for the beneficial use by the buyer, and damage, if any, to the good. O.R.S. 72.8100(4).

Plaintiffs timely notified the dealer and the manufacturer of the defects that were covered under the warranty. 5 - FINDINGS OF FACT & CONCLUSIONS OF LAW WRV has failed

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to service or repair the fifth-wheel in compliance with the limited warranty. The defects in the fifth-wheel are substantial defects

as defined in the warranty, and occurred within one year of the purchase date. It is defendant's burden of proof to establish a "reasonable charge for beneficial use" by plaintiffs. Clark, 46 Or. App. at

530, 612 P.2d at 320 ("If Ford is to set off the beneficial use value of the vehicle to plaintiff, the burden is on it to show what that value is."). Although defendant, when represented by counsel, raised

several affirmative defenses in its Answer, it failed to re-assert any affirmative defenses in the pretrial order, precluding its ability to rely on any such affirmative defenses at trial. DP

Aviation v. Smiths Indus. Aerospace & Defense Sys. Ltd., 268 F.3d 829, 842 n.8 the (9th Cir. 2001) and ("a the pretrial parties order generally by its

supersedes

pleadings,

are

bound

contents.") (internal quotation and brackets omitted). Even if the affirmative defenses raised in the Answer are

considered, no evidence or argument was offered at trial in support of any of these defenses. Notably, defendant failed to raise the It also

issue of an offset for beneficial use in its Answer. failed to provide any evidence of the value of

plaintiff's

beneficial use, if any.

Defendant has been on notice since this

Court's December 12, 2008 Opinion on plaintiff's first summary judgment motion, that Oregon consumer statutes supplied the

appropriate remedy for plaintiffs' MMWA claim.

And, defendant has

been on notice since plaintiff's supplemental motion for summary judgment was filed on January 2, 2009, that O.R.S. 72.8100, was the 6 - FINDINGS OF FACT & CONCLUSIONS OF LAW

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particular statute that plaintiffs relied on. The record suggests that plaintiffs' ability to live in the fifth-wheel might have some value, but, because of defendant's failure of proof, there is no evidence of what that value might be. Additionally, the record supports finding that the value is

negligible given the multiple defects, the continued leaking, and the incessant mold growth. The purchase price of the fifth-wheel was $85,333.69. Exh. 1. Pltfs'

Under O.R.S. 72.8100(4), plaintiffs are entitled to I reject plaintiffs' argument that they

judgment in that amount.

are entitled to a judgment of $88,765.53 because, as the record shows, this includes interest paid on the loan they used to finance part of the purchase price. The statute allows plaintiff to

recover the purchase price which is the price paid by the buyer to the seller. There is no support for the purchase price to include

monies attributable to finance charges and interest paid to someone other than the seller. The statute also provides that when the purchase price is refunded, warrantor 72.8100. the free buyer and is to return liens the and defective good to the

clear

of

encumbrances.

O.R.S.

Here, while returning the fifth-wheel to Highway Trailer

Sales is sufficient, Clark, 46 Or. App. at 529, 612 P.2d at 320 ("Because the dealer was designated as [the manufacturer's] agent for warranty work, we conclude that the return of the vehicle to the dealer was a return to [the manufacturer] within the meaning of the statute"), given the burdens already placed on plaintiffs, it is more reasonable to order that plaintiffs make the fifth-wheel available to defendant and require defendant to retrieve it. 7 - FINDINGS OF FACT & CONCLUSIONS OF LAW

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Because of defendant's purported insolvency, the Judgment in this case will require plaintiffs to make the fifth-wheel trailer available to defendant within thirty days of recovering the monies owed by defendant, whether that be by defendant's voluntary

payment, or from defendant involuntary through other means. Plaintiffs seek prejudgment interest in the pretrial order. Because state law provides the remedy for this federal cause of action, I award plaintiffs prejudgment interest at the rate of 9% per annum, beginning with the date of sale of the fifth-wheel, under O.R.S. 82.010, since this result contemplates a rescission of the contract. Although plaintiffs sought attorney's fees in their Complaint, I make no award of attorneys' fees because they failed to assert an attorney's fee claim in the pretrial order. CONCLUSION Judgment is awarded to plaintiff in the amount of $85,333.69. Prejudgment interest is awarded, beginning with the date of sale of August 26, 2005, at a rate of 9% per annum. at that rate is also awarded. Post-judgment interest

Within thirty days of payment by

defendant of the money owed, with interest, plaintiffs shall vacate the fifth-wheel trailer, tell defendant where the fifth-wheel trailer is located, and make it available to defendant wherever it /// /// /// /// /// /// 8 - FINDINGS OF FACT & CONCLUSIONS OF LAW

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is then located.

Defendant then has thirty days to retrieve the If defendant does not do is at plaintiffs'

fifth-wheel trailer from that location. so, disposal of the fifth-wheel

trailer

discretion. IT IS SO ORDERED. Dated this 17th day of March , 2009.

/s/ Dennis James Hubel Dennis James Hubel United States Magistrate Judge

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