Opinion ID: 2281968
Heading Depth: 1
Heading Rank: 5

Heading: Renaissance's Claim for Breach of Express Warranty

Text: Renaissance argues that it is entitled to relief for breach of an express warranty that the T1055 would be free from defects in material and workmanship under normal use for one year or 1,000 hours after purchase. An express warranty is created by any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain ... that the goods shall conform to the affirmation or promise. § 400.2-313.1(a). Here, the affirmation of fact that created the express warranty was included in the written limited warranty given by Vermeer to Crush, the original purchaser. To bring a breach of warranty claim, therefore, Renaissance must show that Vermeer's limited warranty extended to a subsequent purchaser or transferee of the T1055, one who was neither a party to the original sales contract nor a signatory of the written warranty. The elements for a breach of express warranty claim are: (1) the defendant sold goods to the plaintiff; (2) the seller made a statement of fact about the kind or quality of those goods; (3) the statement of fact was a material factor inducing the buyer to purchase the goods; (4) the goods did not conform to that statement of fact; (5) the nonconformity injured the buyer; and (6) the buyer notified the seller of the nonconformity in a timely fashion. Stefl v. Medtronic, Inc., 916 S.W.2d 879, 882-83 (Mo.App.1996); §§ 400.2-313.1(a) and 400.313.2. In Vermeer's motion for summary judgment, the company attempted to establish a right to judgment as a matter of law by showing that Renaissance could not produce enough evidence for the jury to find it suffered a cognizable injuryby showing, specifically, that Renaissance was not injured because there was no evidence it ever owned the T1055 and its warranty. [11] To defeat summary judgment in favor of Vermeer, therefore, Renaissance must provide sufficient evidence for a jury to find the existence of Renaissance's injury. To prove injury for this claim, Renaissance must show that (1) Crushthe original purchaser of the T1055transferred the machine to Renaissance, (2) Crush assigned the written limited warranty to Renaissance, and (3) Renaissance suffered harm through Vermeer's alleged breach. (1) Transfer of the T1055 to Renaissance The first issue is whether the evidence supports Crush's transfer of the terrain leveler to Renaissance. Missouri law requires minimal evidence to establish ownership, with the exception of certificate-of-title property and real property. Hallmark v. Stillings, 648 S.W.2d 230, 234 (Mo.App.1983). Written documentation is not required for an LLC transfer of non-titled property. See id. In fact, any competent evidence may be introduced to establish the fact of ownership of personal property. State v. Curry, 473 S.W.2d 747, 749 (Mo.1971). Here, there is no dispute that the T1055 is not certificate-of-title property. When determining ownership for personal property with no formal title, oral evidence from a witness with knowledge concerning ownership of such chattels is competent ... evidence of the fact of ownership. Hallmark, 648 S.W.2d at 234. Whether the disputed personal property is a piece of heavy mining equipment or a cow is immaterial, so long as it is non-titled personalty. Several pieces of evidence support ownership of the T1055 by Renaissance. First, Uhlmann testified that the T1055 was transferred from Crush to Renaissance in December 2002 and that Renaissance owned the machine following that transfer. Because evidence shows that Uhlmann obtained a super-majority interest [12] in Crush prior to the transfer and was sole member of Renaissance, his testimony constitutes competent evidence of the fact of ownership. Second, William Venable, former vice president and chief financial officer of Crush, testified that although he could not recall a specific document transferring the equipment to Renaissance, there's a listan inventory list of every asset that we could find that was purchased ... at an auction or outright by the company [Crush] that was conveyed into Renaissance Leasing, including the T1055. Venable also testified that Crush put theaggregated the assets that werewhat I thought were secured by promissory notes to the company, and the title was conveyed to Renaissance Leasing as another arm to aggregate all the assets. Third, the master lease agreement between Renaissance and Crush supports Renaissance's ownership of the T1055 and Crush's lack of ownershipfollowing the transfer to Renaissance. The lease, signed by Venable, lists the Vermeer machine in the schedule of equipment owned by Renaissance and leased to Crush. Uhlmann testified that the purpose of the lease was to protect the T1055 from creditors and to capitalize the loan made to Crush. Uhlmann, as a majority member of Crush and sole member of Renaissance, and Venable, as vice president and CFO of Crush, are each a witness with knowledge concerning ownership of such chattels. See Hallmark, 648 S.W.2d at 234. This testimony constitutes competent evidence of the fact of ownership. It is sufficient evidence to allow a jury to find that the terrain leveler was transferred to Renaissance. (2) Assignment of the Limited Warranty to Renaissance If evidence supports Crush's transfer of the T1055 to Renaissance, the second issue is whether Crush assigned the manufacturer's limited warranty on the T1055 to Renaissance at the time of transfer. Although Missouri case law has not specifically addressed the assignment of express warranties under these circumstances, the majority view is that an express warranty of fixed duration in a sale of personal property runs with the property on re-sale unless the warranty clearly limits coverage to the first purchaser. See, e.g., Dravo Equipment Co. v. German, 73 Or.App. 165, 698 P.2d 63 (1985) (holding that ultimate buyers of a tractor could enforce an express warranty guaranteeing the tractor engine for 1,500 hours even though they were not in privity with original seller and the agreement was silent as to transferability of the warranty); Lidstrand v. Silvercrest Industries, 28 Wash. App. 359, 623 P.2d 710 (1981) (holding that, where a mobile home's one-year express warranty did not state it was limited to the original owner, the person who bought the defective mobile home from the original owner was not barred by privity from suing the remote manufacturer for breach of express warranty); see also 1 B. Clark & C. Smith, The Law of Product Warranties § 10:12 (2d ed., 2002) (If a seller of goods wants to limit the express warranty to the first purchaser as a matter of contract, so be it. By contrast, if the warranty does not contain such a limit, it should be enforced in favor of a second buyer who takes within the time period stated therein.). [13] In this case, Vermeer's written warranty states that the warranty period is for one full year or 1,000 operating hours, whichever occurs first. It is undisputed that the warranty would have been in effect at the time it purportedly was transferred to Renaissance in December 2002, three months after the purchase. Moreover, no express terms in the written warranty either restrict its coverage to the original retail purchaser or prohibit its assignment to a subsequent purchaser. In a sale of goods under the UCC, all of the buyer's rights are assignable: Unless otherwise agreed all rights of either buyer or seller can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on him by his contract, or impair materially his chance of obtaining return performance. § 400.2-210.2. Assuming that Vermeer's duty and burden within that time period to repair or replace the T1055 in case of a defect in material or workmanshipwould not be materially changed or increased by assignment of the limited warranty to a new party using the machine for the same purpose, such an assignment is permissible. [14] While no document in the record clearly purports to assign the limited warranty on the T1055 from Crush to Renaissance, the lack of a formal assignment is not an absolute bar. An express warranty that is not limited to the first purchaser may extend to later purchasers even in the absence of a formal assignment. Collins Co., Ltd. v. Carboline Co., 864 F.2d 560 (7th Cir. [Ill.] 1989) (holding, in response to the Illinois Supreme Court decision in Collins Co., Ltd. v. Carboline Co., 125 Ill.2d 498, 127 Ill.Dec. 5, 532 N.E.2d 834 (1988), that an express warranty on a roofing system extends to a subsequent purchaser of the building). Moreover, Missouri case law holds that no particular form of words is necessary to accomplish an assignment, so long as there appears from the circumstances an intention on the one side to assign and on the other side to receive. Keisker v. Farmer, 90 S.W.3d 71, 74 (Mo. banc 2002). The evidence supports Crush's intention to assign the warranty and Renaissance's intention to receive it. The purported transfer of the T1055 took place soon after Crush's purchase. Crush and Uhlmann had spoken with Vermeer about the machine's possible defects. The warranty covered its repair or replacement in case of defects. A reasonable inference is that both assignor and assignee intended a potentially defective piece of equipment to remain covered by the warranty after its transfer to a new owner. Moreover, Renaissance continued to behave as though the T1055 were covered by the warranty after the purported transfer by seeking warranty repairs, and Great Plains continued to perform repairs as stipulated in the warranty. There is sufficient evidence to allow a jury to find that the warranty was assigned to Renaissance. (3) Renaissance's Injury Even if a jury finds that Crush transferred ownership of the machine to Renaissance and also assigned the warranty, Renaissance still must show evidence of injury suffered through Vermeer's alleged breach. Renaissance alleges that it was injured by the failure of the terrain leveler to function properly. The leasing company attempts to show injury by citing Uhlmann's testimony that he lost business when the T1055 was not in operation: I was getting disheartened about the fact that this machine was not working. I was losing money. They weren't replacing it. Every time I was starting to use it, it wasn't doing what it said it would perform. It wasn't even close, kept breaking down repeatedly. It broke down. I had three customers, Emery Sapp, who is the largest construction people in the state, one of the largest people, Clarkson, which is the largest in Kansas City road construction, and a Mid-States Excavating, which is Al Swearingen. Again, with our own property at 250at 40 and 291, we would start, it would break down. An injury to Uhlmann, however, is not the same as an injury to the company he created to protect Crush's assets from creditors; Uhlmann as an individual or as a member of Crush is distinct from Renaissance as a business entity. As stated above, the mere identity of members of two companies does not result in an identity of interest between the two entities. See Blackwell Printing, 440 S.W.2d at 437. Each company is a distinct legal entity with the right to own property, sue and be sued, contract, and acquire and transfer property. See §§ 347.061 and 347.063. Likewise, each entity must independently prove the elements of its claim and independently establish its own damages. Uhlmann's testimony that he himself was losing money is insufficient to show injury to Renaissance. The record contains other evidence of injury to Renaissance, however. The sole business of Renaissance, as a leasing company, is to rent the equipment it owns; accordingly, the primary damages Renaissance could have suffered are a loss in rental income or a decrease in the rental value of the T1055. There was testimony that, from the moment Renaissance allegedly obtained ownership of the T1055, it had continually leased the machine either to Crush, Mo-Kan, or TEAM. The record also includes two lease agreements: one to Crush, dated January 1, 2003, by which Renaissance leased back to Crush the equipment listed in an addendum, all of which purportedly was transferred to Renaissance in December; and a second to TEAM, dated June 3, 2004, by which Renaissance leased certain unspecified items to TEAM. [15] An item identified as Vermeer is listed in the addendum to the first lease, but no model or description is included. A reasonable inference is that Vermeer refers to the T1055. The addendum shows that Crush would owe no monthly rent for months one through six that is, from January to June 2003on approximately fifty vehicles, tools, and pieces of heavy equipment, including presumably the T1055. Starting in July 2003, Crush would owe a monthly rent of $44,143.09 until the thirty-third month. There is evidence that Renaissance lost rental income because Mo-Kanthe renamed Crushdefaulted on its lease payments. First, Uhlmann testified that Mo-Kan was dissolved because it defaulted on its lease payments to Renaissance. Second, a letter notifying Mo-Kan members of a meeting to dissolve the companydated September 2, 2003, about two months after the six-month rent-free period expiredspecifies Mo-Kan's default as one reason for dissolution. Third, the document dissolving Mo-Kan stipulates that the company defaulted under the lease. And fourth, the agreement by which Uhlmann assigned Crush/Mo-Kan's liquidation proceeds to TEAM indicates that Mo-Kan defaulted on its lease payments to Renaissance. A reasonable inference is that Mo-Kan failed to make payments because the T1055 did not function as warranted. [16] The facts underlying the element of injury are, therefore, controverted. On one hand, Renaissance has not shown that it lost business or business opportunities by being unable to rent the T1055. Nor has the company shown that it ever received any rent from Crush or TEAM. On the other hand, the record supports an inference that Renaissance lost rental income due to Mo-Kan's failure to pay rent because of the malfunctioning terrain leveler. Accordingly, Renaissance has provided sufficient evidence of injury. Summary judgment on Renaissance's claim for breach of express warranty was improper.