Opinion ID: 616668
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Heading: Warranty Claims Survive Summary Judgment

Text: The Andersons' state law claims for breach of express and implied warranties are related to their claims under the MMWA. The MMWA is a remedial statute designed to protect consumers against deceptive warranty practices. Skelton v. Gen. Motors Corp., 660 F.2d 311, 313 (7th Cir.1981). It provides a federal private cause of action for a warrantor's failure to comply with the terms of a written warranty, implied warranty or service contract. Voelker v. Porsche Cars N. Am., Inc., 353 F.3d 516, 522 (7th Cir.2003) (quoting 15 U.S.C. § 2310(d)(1)). The MMWA distinguishes between two kinds of written warranties: full warranties and limited warranties. See 15 U.S.C. § 2303(a). Written warranties must be clearly and conspicuously designated as one or the other. Id. Sections 2303(a) and 2304(a) of the MMWA impose minimum federal standards for full warranties and provide remedies for their breach. The remedies are either a full refund of the purchase price or a replacement of the product if the warrantor cannot remedy the defects or malfunctions after a reasonable number of attempts to do so. [3] See § 2304(a). Limited warranties and implied warranties are not subject to the same standards as full warranties. See Boelens v. Redman Homes, Inc., 748 F.2d 1058, 1062 (5th Cir.1984); see also §§ 2303, 2304. But the MMWA allows consumers to enforce [limited] written and implied warranties in federal court, [as provided in section 2310(d)(1),] borrowing state law causes of action. Schimmer v. Jaguar Cars, Inc., 384 F.3d 402, 405 (7th Cir.2004); see also § 2310(d)(1). To bring an action under section 2310(d)(1), the consumer must give the warrantor a reasonable opportunity to cure its failure to comply with an obligation under any written or implied warranty. § 2310(e) (No action ... may be brought under subsection (d) ... under any written or implied warranty or service contract ... unless the [warrantor] ... is afforded a reasonable opportunity to cure such failure to comply.). Successful consumers may also recover attorneys' fees. See § 2310(d)(2). As this discussion suggests, for all practical purposes, the MMWA operates as a gloss on the Andersons' state law breach of warranty claims. [4] The MMWA allows the Andersons to bring federal claims premised on state law violations, but also requires them to give Gulf Stream a reasonable opportunity to cure. The MMWA does not, however, prevent the Andersons from bringing their state law claims along with their federal claims. The Andersons sued Gulf Stream under Indiana's version of the Uniform Commercial Code. See IC XX-X-X-XXX (IC 26-1-2 shall be known and may be cited as Uniform Commercial Code-Sales.). Their first claim, for breach of Gulf Stream's Limited Warranty, was brought under section 26-1-2-714(1), which provides that when the buyer has accepted goods and given notification (IC XX-X-X-XXX(3)), he may recover ... for any nonconformity of tender. The district court entered summary judgment in favor of Gulf Stream on this claim because, although the court concluded that the Andersons gave Gulf Stream adequate notice, the court found that the Andersons did not give Gulf Stream a reasonable opportunity to cure. The Andersons contend that the court erroneously conflated their MMWA and Indiana law claims because Indiana law, unlike the MMWA, does not require a buyer asserting a breach of express warranty claim to give the seller a reasonable opportunity to cure. They also contend that, in any event, they did give Gulf Stream a reasonable opportunity to cure. Gulf Stream disagrees with the Andersons' characterization of Indiana law, and further contends that the Andersons' notice was inadequate. See United States v. Am. Ry. Express Co., 265 U.S. 425, 435, 44 S.Ct. 560, 68 L.Ed. 1087 (1925) ([T]he appellee may, without taking a cross-appeal, urge in support of a decree any matter appearing in the record, although his argument may involve an attack upon the reasoning of the lower court or an insistence upon matter overlooked or ignored by it.). We address the question of notice first. Section 26-1-2-607(3) requires a buyer to give the seller notice before bringing suit for breach of warranty. See IC XX-X-X-XXX(3) (Where a tender has been accepted: the buyer must, within a reasonable time after he discovers or should have discovered any breach, notify the seller of breach or be barred from any remedy.). In Indiana, unlike in some other jurisdictions with similar provisions, [5] the requirement of notice under section 26-1-2-607(3)(a) is satisfied if the seller has actual knowledge that the goods are nonconforming. See Agrarian Grain Co., Inc. v. Meeker, 526 N.E.2d 1189, 1193 (Ind. Ct.App.1988) ([T]he notice required by IC XX-X-X-XXX(3)(a) is satisfied by the [seller's] actual knowledge there are some problems with the goods.) (citing McClure Oil Corp. v. Murray Equip., Inc., 515 N.E.2d 546, 554 (Ind.Ct.App.1987) (Under IC 2-607(3)(a), the notice is sufficient if it simply informs the seller that there are some problems with the goods.)); see also B & B Paint Corp. v. Shrock Mfg., Inc., 568 N.E.2d 1017, 1019 (Ind.Ct.App.1991) (notice requirement satisfied when buyer told seller that purchased paint had caused fire). There is ample evidence in the record to support the district court's conclusion that Gulf Stream had actual notice of the Tourmaster's alleged defects. Over a period of five months from September 2008 to January 2009, Apple forwarded over sixty pages of warranty claims to Gulf Stream describing the Tourmaster's problems. Gulf Stream received those warranty claims and kept them in its files. The Andersons also sent Gulf Stream a letter in January advising Gulf Stream of the problems they were having with the Tourmaster. In response, Gulf Stream sent a representative to Royal Gorge to inspect the Tourmaster, and the representative and Mr. Anderson discussed the Tourmaster's problems. Gulf Stream therefore undoubtedly realized that the Tourmaster had multiple defectsincluding the air and water leaks, malfunctioning step cover, and bowed and noisy floors of which the Andersons complain. See Agrarian, 526 N.E.2d at 1193 (trial court's finding that seller knew of goods' defects and of buyer's dissatisfaction with goods was sufficient to fulfill the notice requirement of IC XX-X-X-XXX(3)(a)). The district court nevertheless rejected the Andersons' claim for breach of express warranty because it concluded that the Andersons did not give Gulf Stream a reasonable opportunity to cure. The parties dispute whether Indiana law requires buyers to give sellers a reasonable opportunity to cure before filing suit. There is authority for the proposition that the purpose of the notice requirement is, in significant part, to give the seller an opportunity to cure. See Courtesy Enters., Inc. v. Richards Labs., 457 N.E.2d 572, 577 (Ind.App.Ct.1983) (explaining that the most important policy consideration underlying the notice requirement under IC XX-X-X-XXX(3)(a) is to enable the seller to settle the issue through negotiation or other non-litigious means). However, the only Indiana court to have squarely addressed this issue has concluded that the buyer only has to give the seller a reasonable opportunity to cure if the terms of the warranty impose that requirement. Aamco Transmission v. Air Sys., Inc., 459 N.E.2d 1215, 1217 (Ind.Ct. App.1984) (Although our research reveals cases in which the opportunity to remedy defects was a condition precedent to the [buyer's right] ... to declare a breach of warranty, [in those cases] the opportunity to remedy defects was [required by the terms of the warranty]. Here [there is no such term and therefore an opportunity to cure was not a condition precedent to the buyer's suit for breach of warranty].). In deciding questions of state law, decisions of the state appellate courts control, unless there are persuasive indications that the state supreme court would decide the issue differently. See Thomas v. H & R Block E. Enters., 630 F.3d 659, 663 (7th Cir. 2011). Gulf Stream does not contend that Aamco is not good law or that we should not follow it. In the alternative, Gulf Stream locates the opportunity to cure requirement in the warranty itself, which states: Gulf Stream reserves the right to cure all warranty claims. But Gulf Stream did not make this argument or mention the provision of the Limited Warranty reserving the right to cure in its motion for summary judgment before the district court, and as a result has waived this contention. See Kunz v. DeFelice, 538 F.3d 667, 681 (7th Cir.2008) (failure to adequately present an issue to the district court waives the issue on appeal). Regardless, viewed in the light most favorable to the Andersons, the record supports their claim that Gulf Stream was given a reasonable opportunity to cure. The Andersons took the Tourmaster back to Royal Gorge for repairs many times from September 2008 to January 2009. Numerous warranty claims were sent to Gulf Stream over that time period describing the problems with the Tourmaster. Then, on January 23, 2009, the Andersons' attorney sent Gulf Stream a letter listing the various problems (29 issues) with the Tourmaster and complaining about the 360 horsepower engine. Five days later, Gulf Stream sent its representative to Royal Gorge to talk to Mr. Anderson and to offer to take the Tourmaster to Gulf Stream's plant in Indiana for repairs. The district court construed Mr. Anderson's initial refusal to allow the Tourmaster to be taken to Indiana as a complete rejection of Gulf Stream's offer to make repairs. That was error. The district court disregarded Mr. Anderson's additional testimony that the representative agreed that he would work with Mike Apple at Royal Gorge to get the floor joists repaired at Royal Gorge, and agreed to ship new windows, a new motor, [and to] fix up all the problems. Mr. Anderson also testified that a few weeks later several windows arrived from Gulf Stream, but then it all stopped. It was not until March 27, 2009, that Gulf Stream sent a letter to the Andersons offering to extend its warranty and to take the Tourmaster back to its factory in Indiana for repairs. At that point, nearly two months had passed since Gulf Stream had offered but failed to send parts to Royal Gorge. Gulf Stream could have cured by honoring its commitment to work with Apple to repair the Tourmaster. It did not. Gulf Stream now complains that the Andersons sued only ten days after receiving Gulf Stream's March 27 letter. But a buyer does not have to wait indefinitely for the seller to cure. The Andersons gave Gulf Stream plenty of time to fix the problems with the Tourmaster. The district court erred in rejecting both the Andersons' state law breach of express warranty claim and the Andersons' MMWA claim for failure to give Gulf Stream a reasonable opportunity to cure. We now turn to the Andersons' breach of implied warranty of merchantability claim. To resolve that issue, we must first address a point about the MMWA that it is relevant to the analysis. In addition to allowing consumers to bring federal claims premised on written warranties, the MMWA allows consumers to bring claims for violations of implied warranties, which the MMWA defines as a warranty under state law. See 15 U.S.C. §§ 2310(d), 2301(7). The MMWA prohibits suppliers from disclaiming or modifying any implied warranty to a consumer, except that the duration of an implied warranty may be limited for a reasonable period of time and such limitation must be conscionable and set forth in clear and unmistakable language and prominently displayed on the face of the warranty. § 2308(a), (b); see also Boelens, 748 F.2d at 1062. Gulf Stream's Limited Warranty purports to disclaim state law implied warranties, but the district court concluded that the disclaimer was ineffective because of the proscription in the MMWA. Gulf Stream does not challenge that ruling and we do not disturb it. Nevertheless, the district court entered summary judgment in favor of Gulf Stream because it concluded that the MMWA permitted Gulf Stream to limit the Andersons' remedies for breach of implied warranty. Without discussing any specific provision of the Limited Warranty, the court stated that Gulf Stream had limited the Andersons' remedies in the express warranty to require the Andersons to give Gulf Stream a reasonable opportunity to cure, which the court concluded the Andersons did not do. In determining that Gulf Stream could limit the remedies available for breach of implied warranty, the court relied upon Hahn v. Ford Motor Co., Inc., 434 N.E.2d 943, 952-53 (Ind.Ct.App.1982). In that case, the court held that disclaimers, which are prohibited by the MMWA, are different from limitations of remedies, which are not. See id. We need not decide whether Hahn correctly construed the MMWA to permit a seller to limit remedies available to the buyer. In discussing remedies, the court in Hahn was referring to the form of relief available to the plaintiff (for example, consequential as opposed to incidental damages). See id. Requiring the Andersons to give Gulf Stream an opportunity to cure is not the kind of limitation of remedies contemplated by Hahn. And even if Gulf Stream could be said to have limited the Andersons' remedies to require them to give Gulf Stream a reasonable opportunity to cure, as explained earlier, there is enough evidence in the record from which a reasonable jury could conclude that the Andersons satisfied that requirement. Two other points with respect to the Andersons' claim for breach of the implied warranty of merchantability must be addressed. First, the district court found that the Andersons inspected the Tourmaster before accepting it. As a result, the court concluded that the Andersons could maintain a claim only for latent (but not for patent) defects. See Richards v. Goerg Boat & Motors, Inc., 179 Ind.App. 102, 384 N.E.2d 1084, 1093 (1979) (abrogated in part on different grounds) (In so far as [the buyer] made an examination which would have disclosed the defects he later alleged ... no implied warranty of merchantability or fitness ... would be sustainable as to those defects.... However, ... such a result would not pertain to latent defects....). The Andersons have no quarrel with the rule, but contest which defects were patent and which were latent. This is a question of fact to be decided by the jury on remand. Second, Gulf Stream contends on appeal that the Andersons' claim for breach of the implied warranty of merchantability fails with respect to the 360 horsepower engine because the Andersons do not contend that the engine is defective. Gulf Stream waived this argument by not raising it with the district court. See Kunz, 538 F.3d at 681. We note, however, that the implied warranty of merchantability is a warranty that goods shall be merchantable. IC § 26-1-2-314. This at least means that the goods are fit for the ordinary purposes for which such goods are used. Id.; Woodruff v. Clark Cnty. Farm Bureau Coop. Ass'n, 153 Ind.App. 31, 286 N.E.2d 188, 194 (1972). It also means that the goods conform to promises or affirmations of fact made on the container or label, if any. IC § 26-1-2-314. Since the district court did not decide the question, we will not consider whether the smaller engine can form the basis of a claim for breach of the implied warranty of merchantability either because it rendered the Tourmaster unfit for its ordinary uses or because the Tourmaster did not conform to any promises made by Gulf Stream. In sum, we conclude that the Andersons are entitled to proceed on their claim for breach of the implied warranty of merchantability. Cf. Jones v. Abriani, 169 Ind.App. 556, 350 N.E.2d 635, 645 (1976) (concluding that seller of mobile home breached the implied warranty of merchantability because the mobile home in question was clearly below average, of poor quality, and was not fit for its ordinary purpose, i.e., to serve as a modern, comfortable home where one can entertain guests without being embarrassed about bald carpets, crooked doors, and a leaky roof). Since their state law implied warranty claims survives, and Gulf Stream was given a reasonable opportunity to cure, the Andersons are also entitled to proceed on their MMWA claim.