Court Opinion

ID: 9663889
Source: CourtListenerOpinion
Date Created: 2023-08-23 23:54:33.964886+00
Date Added: 2024-06-11T18:14:58.789323
License: Public Domain

Jansen, J.
Chrysler Corporation appeals by leave granted a Macomb Circuit Court order affirming judgment for plaintiff in this action for revocation of an automobile sale pursuant to Article 2 of the Uniform Commercial Code, MCL 440.2101 et seq.; MSA 19.2101 et seq. On appeal, *339Chrysler alleges that the district court lacked jurisdiction because an action for revocation of acceptance is equitable in nature and the remedy of revocation of acceptance is not available against the manufacturer. We hold that while the district court had subject-matter jurisdiction, the remedy of revocation of acceptance is not available against a manufacturer that is not in privity of contract with the purchaser.
In January 1982, plaintiff purchased from Colonial Dodge, Inc., a truck manufactured by Chrysler. At the time of the sale, plaintiff received a written warranty for the vehicle from Chrysler. The dealer explicitly disclaimed liability under Chrysler’s warranty. Sometime after plaintiff accepted the truck, it began to have engine-related difficulties. Plaintiff attempted on numerous occasions, but without success, to have the truck repaired. Eventually, plaintiff filed in the Macomb Circuit Court an action for rescission, naming both Chrysler and Colonial as defendants, seeking to revoke acceptance of the vehicle and claiming breach of contract and breach of warranty.
The case was removed to district court after mediation upon a finding that the damages were below the jurisdictional limit for circuit court. The district court denied Chrysler’s motion for dismissal based on lack of subject-matter jurisdiction. The case proceeded to trial, and the jury found in favor of plaintiff and awarded $7,494,46 plus interest and costs against Chrysler and $788 against Colonial. Chrysler’s motion for a judgment notwithstanding the verdict or for a new trial was denied.
First, we affirm the trial court’s finding that the district court had subject-matter jurisdiction. Although plaintiff’s claim was referred to as rescission in the complaint, it is apparent that plaintiff *340was asserting revocation of acceptance of a motor vehicle sales contract pursuant to art 2, § 608 of the ucc, MCL 440.2608; MSA 19.2608, which provides:
(1) The buyer may revoke his acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to him if he has accepted it
(a) on the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or
(b) 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.
(2) Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. It is not effective until the buyer notifies the seller of it.
(3) A buyer who so revokes has the same rights and duties with regard to the goods involved as if he had rejected them.
Chrysler correctly asserts that rescission is an equitable remedy and that the ucc no longer provides for rescission, but rather substitutes revocation of acceptance. See Ramirez v Autosport, 88 NJ 277, 288; 440 A2d 1345 (1982); Peppler v Kasual Kreations, Inc, 416 So 2d 864 (Fla App, 1982). However, as noted by the circuit court, unlike rescission, revocation of acceptance gives a buyer a security interest in the goods in his possession or control for the purchase price. The buyer may resell the goods to recover damages, MCL 440.2711(3); MSA 19.2711(3), or may continue to use the goods in order to mitigate damages. Fargo Machine & Tool Co v Kearney & Trecker Corp, *341428 F Supp 364, 378 (ED Mich, 1977). Revocation of acceptance is a statutory remedy, limited by the terms of the statute and only available if the statutory conditions are satisfied. Thus, unlike rescission, revocation of acceptance is not based on the discretion of the court. While there may be similarities between rescission and revocation of acceptance, we believe revocation of acceptance is more properly classified as an action at law. Accord Koperski v Husker Dodge, Inc, 208 Neb 29, 36-37; 302 NW2d 655 (1981); Sudol v Rudy Papa Motors, 175 NJ Super 238; 417 A2d 1133 (Passaic Co Dist Ct, 1980); General Motors Acceptance Corp v Jankowitz, 216 NJ Super 313; 523 A2d 695 (1987); Merola v Atlas Lincoln Mercury, Inc, 70 AD2d 950; 417 NYS2d 775 (1979).
Second, Chrysler also contends that an action for revocation of acceptance is not available against the manufacturer because there is no privity. We agree.
Revocation of acceptance under UCC 2-608, MCL 440.2608; MSA 19.2608, is typically utilized against an immediate seller. This section allows a buyer to revoke his acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to him. There is nothing to indicate that the Legislature intended the revocation of acceptance of a contract to apply to parties not in privity of contract. Acceptance under the ucc concerns the relationship between a buyer and a seller, MCL 440.2606; MSA 19.2606. Thus, revocation is inextricably connected to the contractual relationship between a buyer and a seller. This rationale includes the concept of contractual privity between the parties. On the basis of this statute’s language and clear implication, we follow the opinions of a majority of other courts that have held that the remedy of revocation of acceptance is *342not available against a manufacturer. Seekings v Jimmy GMC of Tucson, Inc, 130 Ariz 596; 638 P2d 210 (1981); Wright v O’Neal Motors, Inc, 57 NC App 49; 291 SE2d 165 (1982); Noice v Paul’s Marine & Camping Center, Inc, 5 Ohio App 3d 232; 451 NE2d 528 (1982); Ayanru v General Motors Acceptance Corp, 130 Misc 2d 440; 495 NYS2d 1018 (1985); Voytovich v Bangor Punta Operations, Inc, 494 F2d 1208 (CA 6, 1974).
This determination does not mean that a typical purchaser of a motor vehicle is left without a remedy. Recourse against manufacturers of new motor vehicles may be had through other Michigan statutes. MCL 257.1402; MSA 9.2705(2) provides that if a new motor vehicle has any defect or condition that impairs the use or value of the new vehicle, the manufacturer has a duty to repair the defect or condition. MCL 257.1403; MSA 9.2705(3) provides that if a reported defect or condition is not rectified after a reasonable number of repairs, a manufacturer has the option to either replace the new motor vehicle or accept return of the vehicle and refund the full purchase price. The existence of this statute obviates the need to stretch contractual privity in order to permit the use of the ucc remedy of revocation of acceptance against a manufacturer.
We disagree with the position taken in the dissenting opinion, which premises the extension of the availability of the remedy of revocation of acceptance on the existence of a manufacturer’s warranty. We would find that, as a matter of policy, a manufacturer’s warranty and a retail sales contract are not so closely linked in terms of subject matter and time of delivery that they constitute a single unit. Contra Volkswagen of America, Inc v Novak, 418 So 2d 801 (Miss, 1982). The fact that a manufacturer may be liable under *343its warranty provisions does not change the fundamental nature of the revocation remedy as being contractually based. We would not expose a manufacturer to essentially contractual liabilities and remedies on the basis that they provide other protections in the form of warranties. Actions against a manufacturer of a motor vehicle can be based on other specific state statutes. MCL 257.1401 et seq.; MSA 9.2705(1) et seq. Therefore, we would leave plaintiff with his cause of action and remedies under the warranty. The extension of a contractual obligation as set forth in the dissenting opinion could have widespread effect on a number of manufacturers in various fields. On the facts of the present case, we would not create such an extensive potential for liability. Thus, we hold that the privity requirement precludes seeking the ucc remedy of revocation of acceptance against a distant manufacturer.
Because plaintiff voluntarily abandoned at trial his claim to enforce the warranty provision, we reverse and remand to the trial court for entry of a dismissal of the judgment against defendant.
Reversed and remanded. We do not retain jurisdiction.
Mackenzie, J., concurred.