Beattie v. Skyline Corporation

Filing 259

MEMORANDUM OPINION AND ORDER denying as moot Bob's Home Services, LLC's 102 MOTION for Summary Judgment; granting Skyline Corporation's 169 MOTION for Summary Judgment; denying Plaintiff's 182 MOTION for Summary Judgment; gr anting in part Vanderbilt Mortgage and Finance, Inc.'s 190 MOTION for Summary Judgment and CMH Homes, Inc.'s 192 MOTION for Summary Judgment; granting in part and denying as moot in part Bob's Home Services, LLC's 177 SUPPLEMENTAL MOTION for Summary Judgment or MOTION to Compel Arbitration. Signed by Judge Robert C. Chambers on 12/19/2014. (cc: attys; any unrepresented parties) (mkw)

IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF WEST VIRGINIA
HUNTINGTON DIVISION

JONATHAN BEATTIE and
HEATHER BEATTIE,
Plaintiffs,
v.

CIVIL ACTION NO. 3:12-2528

SKYLINE CORPORATION, a foreign corporation,
CMH HOMES, INC., d/b/a LUV HOMES #760 and
VANDERBILT MORTGAGE AND FINANCE, INC.,
Defendants,
v.
BOB’S HOME SERVICES, LLC,
Third-Party Defendant.

MEMORANDUM OPINION AND ORDER
Pending before the Court are the following motions: Bob’s Home Services, LLC’s Motion
for Summary Judgment (ECF Nos. 102), Skyline Corporation’s Motion for Summary Judgment
(ECF No. 169), Plaintiffs’ Motion for Summary Judgment (ECF No. 182), Vanderbilt Mortgage
and Finance, Inc.’s Motion for Summary Judgment (ECF No. 190), CMH Homes, Inc.’s Motion
for Summary Judgment (ECF No. 192), and Bob’s Home Services, LLC’s Supplemental Motion
for Summary Judgment or Motion to Compel Arbitration (ECF No. 177).
I.

Statement of Facts

On November 12, 2007, Plaintiffs Jonathan and Heather Beattie entered into a sales
contract with CMH Homes, Inc. (dealer of mobile homes, d/b/a/ Luv Homes, hereinafter “CMH”)

for the purchase of a mobile home manufactured by Skyline Corporation (“Skyline”). ECF No. 1,
Ex. 1. CMH was responsible for installation of the home through a contractor that it would select.
The purchase was financed through lender Vanderbilt Mortgage and Finance, Inc. (“VMF”).
ECF No. 191. The home was installed in December, 2011. ECF No. 193.
Shortly after moving into the home the Beatties began noticing problems. Between 2008
and 2011, CMH “performed warranty services to correct drywall cracks that ran along the
marriage line down the length of the home.” ECF No. 190, Ex. 3. Skyline also made multiple
repairs in 2009 and 2010. ECF No. 170. Plaintiffs allege that in 2011, a CMH employee
inspected the attic area of the home and “discovered that the home was never properly bolted
together along the marriage line.” ECF No. 183. Plaintiffs further allege that CMH added bolts
at that time but did not fully document the defects it found or repairs that it made. ECF No. 183.
In February, 2010, Plaintiffs filed for bankruptcy under Chapter 7. ECF No. 190, Ex. 4.
The Beatties did not list a potential lawsuit as an asset of the bankruptcy estate. ECF No. 190, Ex.
6. Jonathan Beattie reaffirmed the debt for the manufactured home with VMF. ECF No. 190,
Ex. 5. In 2010, Plaintiffs were granted a discharge and their bankruptcy case was closed. ECF
No. 219.
In August, 2011, Plaintiffs filed a complaint with the West Virginia Manufactured Housing
Construction and Safety Standards Board. An officer from the Board inspected the home on
September 14, 2011 and found a number of defects. ECF No. 169, Ex. 6. Skyline allegedly
offered to make the required repairs but the plaintiffs refused. ECF No. 170. On February 22,
2012, Jonathan Beattie sent a demand letter to Skyline, CMH, and VMF informing them that the
Beatties wished to revoke acceptance of the home and sought money damages. ECF No. 169, Ex.
18. Plaintiffs also sent a letter to their bankruptcy trustee informing him that they wished to

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pursue these claims. ECF No. 219, Ex. 8. The trustee stated that he was not interested in
pursuing the claims as an asset of the estate. ECF No. 219, Ex. 9. Plaintiffs stopped making
payments to VMF in April, 2012. ECF No. 192, Ex. 8. They still reside in the home. ECF No.
192, Ex. 4.
On June 15, 2012 Plaintiffs filed a complaint against Skyline, CMH, and VMF relating to
the installation and repair of their manufactured home. ECF No. 1. All three defendants filed
motions for summary judgment. On December 5, 2012, CMH and VMF filed a third-party
complaint against MJW Towing, Inc. (“MJW”) alleging that MJW was the contractor hired to
install Plaintiffs’ home. ECF No. 29. CMH and VMF later dismissed the complaint against
MJW and on August 26, 2013 filed a third-party complaint against Bob’s Home Services, LLC
(“Bob’s”) alleging that Bob’s was the contractor responsible for installing Plaintiffs’ home. ECF
No. 66, ECF No. 70.
Bob’s moved for summary judgment on June 10, 2014 contending that “no contract for the
delivery of the Beattie home exists as between CMH and Bob’s.” ECF No. 102. On September
15, 2014 Bob’s filed a supplemental motion for summary judgment and moved, in the alternative,
to compel arbitration. ECF No. 177. Bob’s maintains the position that it was not contracted to
install the home. ECF No. 178. Bob’s also alleges that, if it did install the home, the installation
was performed pursuant to the Independent Contractor Application and Agreement, a master
contract between CMH and Bob’s. ECF No. 178. The agreement contains an arbitration clause
requiring the parties to resolve any conflicts arising under the agreement through a binding
arbitration process. ECF No. 102, Ex. 7. CMH alleges that it entered into an oral contract with
Bob’s to install Plaintiffs’ home and that the master contract does not apply. ECF No. 207.

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II.

Standard of Review

To obtain summary judgment, the moving party must show that there is no genuine issue as
to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R.
Civ. P. 56(a). In considering a motion for summary judgment, the Court will not “weigh the
evidence and determine the truth of the matter.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
249 (1986). Instead, the Court will draw any permissible inference from the underlying facts in
the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587-88 (1986).
Although the Court will view all underlying facts in the light most favorable to the
nonmoving party, the nonmoving party nonetheless must offer some “concrete evidence from
which a reasonable juror could return a verdict in his [or her] favor.” Anderson, 477 U.S. at 256.
Summary judgment is appropriate when the nonmoving party has the burden of proof on an
essential element of his or her case and does not make, after adequate time for discovery, a
showing sufficient to establish that element. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23
(1986). The nonmoving party must satisfy this burden of proof by offering more than a mere
“scintilla of evidence” in support of his or her position. Anderson, 477 U.S. at 252. “‘[W]here
the moving party has the burden—the plaintiff on a claim for relief or the defendant on an
affirmative defense—his showing must be sufficient for the court to hold that no reasonable trier of
fact could find other than for the moving party.’” Proctor v. Prince George’s Hosp. Ctr., 32 F.
Supp. 2d 820, 822 (D. Md. 1998) (quoting Calderone v. United States, 799 F.2d 254, 259 (6th Cir.
1986)).

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III.

Skyline’s Motions for Summary Judgment

Skyline filed a motion for summary judgment on all remaining claims against it. ECF No.
169. Skyline correctly states that “Plaintiffs have alleged non-conformities in the installation,”
not the manufacturing of the home.

ECF No. 169.

Skyline was not responsible for the

installation of the home and is thus not implicated in the majority of Plaintiffs’ claims. The only
claim in which Plaintiffs specifically accuse Skyline of fault is Count Ten, which claims common
law fraud and misrepresentation.
The elements of an action for fraud are:
(1) that the act claimed to be fraudulent was the act of the defendant or induced by him; (2)
that it was material and false; that plaintiff relied upon it and was justified under the
circumstances in relying upon it; and (3) that he was damaged because he relied upon it.
Bowens v. Allied Warehousing Servs., 729 S.E.2d 845, 852 (W. Va. 2012). Here, plaintiffs
contend that Skyline, and employee Bill Robb, knew that the home was improperly installed “but
concealed their knowledge of the defects and/or defective installation from Plaintiffs throughout
the course of numerous repair attempts and related communications.” ECF No. 169, Ex. 17.
Plaintiffs have not produced any evidence showing that Skyline or Mr. Robb knew of the defects
in installation. Mr. Beattie specifically stated that Mr. Robb never went into the attic to inspect
the alleged defects in the marriage line.

ECF No. 169, Ex. 9. Mr. Beattie also testified that he

could not say if Mr. Robb had ever lied to him. ECF No. 169, Ex. 9. Moreover, if Skyline knew
that the defects in the home were caused by improper installation, Skyline would have every
incentive to inform the plaintiffs of this fact and absolve itself of any responsibility for those
defects.

Plaintiffs’ claims against Skyline thus cannot survive summary judgment.

Accordingly, Skyline’s Motion for Summary Judgment (ECF No. 169) is GRANTED.

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IV.

CMH, VMF, and Plaintiffs’ Motions for Summary Judgment

The plaintiffs, CMH, and VMF have each filed a motion for summary judgment. These
motions substantially overlap and will thus be discussed together in this section, which is
organized by the counts in the complaint.
A. Count One: Cancellation of Contract by Rejection
A buyer can only reject goods if she does not accept them. After acceptance, revocation,
but not rejection, may be available. See Shreve v. Casto Trailer Sales, Inc., 149 S.E.2d 238,
242-43 (W. Va. 1966). Generally, acceptance occurs when a buyer takes some action, such as
moving into a home and making payments, which indicates ownership. See id. Here, Plaintiffs
have lived in the manufactured home for several years and made payments on it until 2012. They
have therefore accepted the home and cannot now attempt to reject it. CMH and VMF’s motions
for summary judgment are GRANTED as to this count.
B. Count Two: Cancellation of Contract by Revocation of Acceptance
West Virginia Code Section 46-2-725 states: “An action for breach of any contract for sale
must be commenced within four years after the cause of action has accrued . . . A cause of action
accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the
breach.” W. Va. Code § 46-2-725 (1963). Defendants contend that this statute of repose bars
Plaintiffs’ claim for revocation and thus they are entitled to judgment as a matter of law. There is
a split of authority on the applicability of this statute of repose to revocation claims. Several
courts have concluded that the statute of repose applies to rejection and revocation claims because
such claims are based on the seller’s alleged breach of contract. See McCoy v. Southern Energy
Homes, Inc., No. 1:09–1271, 2012 WL 1409533, at *9 (S.D. W. Va. Apr. 23, 2012); Snyder v.
Boston Whaler, Inc., 892 F. Supp. 955, 959 (W.D. Mich. 1994). Others have reasoned that the

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statute of repose is not applicable because breach and revocation are governed by different
sections of the UCC and because the remedies for each “are different remedies that require
different proofs.” Jaramillo v. Gonzales, 50 P.3d 554, 558 (N.M. Ct. App. 2002). Revocation
cancels the contract, whereas a claim for breach leaves the contract unchanged. Id.; see also
Shreve, 149 S.E.2d at 242.
The Court finds the latter reasoning persuasive. Revocation and breach of warranty
claims are alternative remedies. Furthermore, the UCC’s revocation provision, unlike the breach
provisions, “sets forth its own time limitation for seeking revocation.” Jaramillo, 50 P.3d at 559.
West Virginia Code Section 46-2-608 states: “Revocation of acceptance must occur within a
reasonable time after the buyer discovers or should have discovered the ground for it.” W. Va.
Code § 46-2-608 (1963). This test measures the proper timing for revocation from the time of
discovery, whereas the statue of repose expressly prohibits consideration of the Plaintiffs’
“knowledge of the breach.” See W. Va. Code § 46-2-725.
Although the Supreme Court of Appeals of West Virginia has not directly addressed the
issue, the court’s reasoning in City Nat’l Bank of v. Charleston v. Wells, 384 S.E.2d 374 (W. Va.
1989), supports the conclusion that the statue of repose is inapplicable. In that case, the court
addressed whether the plaintiff timely revoked acceptance of a defective truck fourteen months
after discovering the defect. City Nat’l, 384 S.E.2d at 381. Although the opinion does not
address the statute of repose, the court held that “where delay in revoking acceptance is
attributable to efforts or promises to correct the defect or nonconformity in the goods, revocation
even after a relatively lengthy period of time may still be timely within the statute.” Id. The
court then went on to cite a long list of cases where revocation has been permitted after significant
delay. Id. The court concluded that whether revocation is timely is a matter to be determined by

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the jury. Id. The issue of timeliness is thus a question for the jury to analyze under Section
46-2-608. Plaintiffs’ claim for revocation is not barred by the four year statute of repose.1
As the claim is not time-barred, the Court must next address whether Plaintiffs have raised
a genuine issue of material fact for trial. A buyer may revoke acceptance of a good “whose
nonconformity substantially impairs its value to him” if the buyer had a “reasonable assumption
that its nonconformity would be cured and it has not been seasonably cured” or “without discovery
of such nonconformity if his acceptance was reasonably induced either by the difficulty of
discovery before acceptance or by the seller's assurances.” W. Va. Code, § 46-2-608 (1963).
Here, Plaintiffs claim that they initially did not discover the defects in the home because (1) they
were difficult to discover and (2) once they discovered that the home was nonconforming, they
reasonably relied on the defendants’ assurances that the home would be promptly repaired. When
repairs failed, the plaintiffs notified the defendants that they wished to revoke acceptance and
stopped making payments. Plaintiffs have presented sufficient evidence in support of these
allegations to raise genuine issues of fact for trial. Accordingly, CMH and VMF’s motions for

1 In addition to the statute of repose, VMF raised several other defenses on this and the other
remaining claims which warrant brief discussion. First, VMF maintains that by signing a
reaffirmation agreement, Jonathan Beattie is now estopped from bringing claims under the original
contract. The Court disagrees. The agreement reaffirmed the Beatties’ debt to VMF but did not
vitiate the terms of the original contract. Second, VMF argues that only the bankruptcy trustee,
and not the plaintiffs, has standing to bring claims on the home. Plaintiffs informed the trustee
that they sought to bring this suit and the trustee responded that he did not wish to pursue the
claims as an asset of the bankruptcy estate. Furthermore, Plaintiffs reaffirmed their debt and
maintain ownership of the home. Plaintiffs thus reserve the right to bring their own claims.
Finally, VMF argues that Plaintiffs are estopped from bringing these claims because they did not
list the claims on their bankruptcy schedules. Here, the plaintiffs were granted a discharge and
their bankruptcy case was closed in 2010. Plaintiffs did not discover the structural defects in the
marriage line until 2011. They therefore did not know at the time of their bankruptcy action that
they had the present claims. Moreover, judicial estoppel is inapplicable in the absence of bad
faith. Williams v. Basic Contracting Serv., Inc., No. 5:09-cv-00049, 2009 WL 3756943, at *2
(S.D. W. Va. Nov. 9, 2009). VMF has presented no evidence of bad faith here. VMF’s
arguments are thus without merit.
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summary judgment are DENIED as to this count.
C. Counts Three, Four, Five, and Six: Breach of Contract and Warranties
Defendants contend that the four-year statue of repose in Section 46-2-725 bars Plaintiffs’
claims for breach of the contract, express warranties, and implied warranties. West Virginia
courts have held that there are no equitable exceptions to this statute of repose. See Basham v.
General Shale, 377 S.E.2d 830, 835 (W. Va. 1988).

Section 46-2-725 does contain one

exception: “where a warranty explicitly extends to future performance of the goods and discovery
of the breach must await the time of such performance the cause of action accrues when the breach
is or should have been discovered.” Generally, such a future guarantee only exists where the
contract makes an explicit and “specific reference to a future time period.” Comm'rs of Fire Dist.
No. 9 v. American La France, 424 A.2d 441, 445 (N.J. Super. Ct. App. Div.1980). No such
explicit guarantee of future performance can be found in the contract here. The four year statute
of repose thus applies.
Plaintiffs contend that the statute of repose as to their claims against VMF is waived under
West Virginia Code Section 46A–2–102. In McCoy v. Southern Energy Homes, Inc., the court
held that “only where a buyer/consumer is asserting claims in defense to a suit against him does the
waiver of statute of limitations come into play” under § 46A–2–102. McCoy v. Southern Energy
Homes, Inc., No. 1:09–1271, 2012 WL 1409533, at *8, n. 9 (S.D. W. Va. Apr. 23, 2012). Here,
Plaintiffs are asserting their own claims, not defenses. Thus the statute of limitations has run as to
the claims against VMF as well as CMH, entitling the defendants to judgment as a matter of law.
CMH and VMF’s motions for summary judgment are GRANTED as to counts three, four, five,
and six. Plaintiffs’ motion for summary judgment is DENIED as to these counts.
D. Count Seven: Unconscionability

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Under West Virginia law, a contract is only unconscionable if both procedural and
substantive unconscionability are present to some degree. State ex rel. Johnson Controls. Inc. v.
Tucker, 729 S.E.2d 808, 817 (W. Va. 2012). Procedural unconscionability refers to inequity
during the bargaining process and substantive unconscionability refers to the unfairness of a
specific contract term. See id.
Here, Plaintiffs do not allege any procedural unfairness during the bargaining process.
Furthermore, the only term that the plaintiffs argue is substantively unconscionable is the price of
the home. Given that the installation problems and subsequent depreciation in value of the home
could not have been known to either party at the time the contract was executed, it seems difficult
to maintain the proposition that the price was unfair when the contract was signed. Finally,
Plaintiffs claim that when CMH allegedly concealed defects in the home and referred installation
problems to Skyline its actions were was unconscionable. Post-contract behavior, however, is not
generally considered unconscionable. Plaintiffs have not produced evidence of either procedural
or substantive unconscionability.

Accordingly, CMH and VMF’s motions for summary

judgment are GRANTED as to this count.
E. Count Nine: Unfair or Deceptive Acts or Practices
Plaintiffs have alleged multiple violations of the West Virginia Consumer Credit
Protection Act. ECF No. 1, Ex. 1. In support of their claims Plaintiffs have put forth evidence
that CMH was required to use a licensed contractor to install the home and indicated that it would
use MJW, but instead hired Bob’s, a company not licensed in West Virginia. Plaintiffs have also
proffered evidence supporting their claim a CMH employee discovered the marriage line defect
and wrote a report detailing significant problems with the home but then concealed the extent of
those problems in discussions with the Beatties. This evidence is sufficient to raise a genuine

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issue of material fact as to whether CMH and VMF committed unfair or deceptive acts in violation
of the West Virginia Consumer Credit Protection Act. Accordingly, VMF, CMH, and Plaintiffs’
motions for summary judgment are DENIED as to this count.
F. Count Ten: Common Law Fraud and Misrepresentation
Plaintiffs contend that CMH and VMF fraudulently promised to use a licensed contractor,
falsified paperwork to indicate that a licensed contractor was used, and actively concealed
significant installation defects in the home. Plaintiffs have put forth sufficient evidence of these
acts to raise a genuine issue of fact for trial. VMF and CMH’s motions for summary judgment are
therefore DENIED as to this count.
V.

Motion for Summary Judgment on Third-Party Complaint
& Motion to Compel Arbitration

CMH and VMF filed a third-party complaint against Bob’s more than a year after this
litigation commenced. Bob’s responded with a motion for summary judgment indicating that
there was no evidence that CMH contracted Bob’s to install Plaintiffs’ home. ECF No. 102.
Bob’s later supplemented this motion and moved in the alternative to compel arbitration.

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only contract between CMH and Bob’s for which sufficient evidence has been presented is the
Independent Contractor Application and Agreement. ECF No. 178. That agreement contains an
arbitration clause that requires CMH and Bob’s to resolve any conflicts through binding
arbitration. ECF No. 102, Ex. 7.
CMH contends that Bob’s has waived its right to compel arbitration by “by participating in
all aspects of this litigation and by filing its Motion for Summary Judgment seeking adjudication
on the merits.” ECF No. 196. Bob’s has not, however, attempted to first obtain a judgment on
the merits and then arbitrate. Bob’s was brought into this case late and based on its initial
research determined that it had not contracted with CMH to install the home. After further
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research Bob’s determined that it does not know whether it installed the home, but that if it did so,
it did the work under the master agreement. Bob’s timely filed a supplemental motion for
summary judgment and moved in the alternative to compel arbitration. ECF No. 178. CMH also
argues that Bob’s cannot compel arbitration because Bob’s failed to supply “factual or legal
analysis to support a claim that the Agreement is valid and enforceable.” ECF No. 196. The
Court finds that no further analysis is necessary. The Agreement clearly contains an arbitration
clause covering all disputes under the contract that is purported to apply here. CMH created a
dispute by filing a third-party complaint against Bob’s. Accordingly, Bob’s motion to compel
arbitration is granted and Bob’s is terminated as a party in this case. Bob’s Motion for Summary
Judgment and Supplemental Motion for Summary Judgment are DENIED AS MOOT.
Conclusion
For the foregoing reasons, Bob’s Home Services, LLC’s Motion for Summary Judgment
(ECF Nos. 102) is DENIED AS MOOT. Skyline Corporation’s Motion for Summary Judgment
(ECF No. 169) is GRANTED. Plaintiffs’ Motion for Summary Judgment (ECF No. 182) is
DENIED. Vanderbilt Mortgage and Finance, Inc.’s Motion for Summary Judgment (ECF No.
190) and CMH Homes, Inc.’s Motion for Summary Judgment (ECF No. 192) are GRANTED IN
PART. Bob’s Home Services, LLC’s Supplemental Motion for Summary Judgment or Motion
to Compel Arbitration (ECF No. 177) is GRANTED IN PART and DENIED AS MOOT IN
PART. The Court DIRECTS the Clerk to send a copy of this written Opinion and Order to
counsel of record and any unrepresented parties.

ENTER:

December 19, 2014

ROBERT C. CHAMBERS
UNITED STATES DISTRICT JUDGE
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