Court Opinion

ID: 2817209
Source: CourtListenerOpinion
Date Created: 2015-07-15 14:16:21.770487+00
Date Added: 2024-06-11T12:11:12.798424
License: Public Domain

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D), this                         Jul 15 2015, 9:21 am
Memorandum Decision shall not be regarded as
precedent or cited before any court except for the
purpose of establishing the defense of res judicata,
collateral estoppel, or the law of the case.

ATTORNEY FOR APPELLANT
C. Melissa Cunnyngham
Church Church Hittle & Antrim
Tipton, Indiana

                                             IN THE
    COURT OF APPEALS OF INDIANA

Jeff Griffin, d/b/a JDA Trailers                          July 15, 2015

Appellant-Defendant,                                      Court of Appeals Case No.
                                                          80A02-1407-SC-495
        v.                                                Appeal from the Tipton Circuit
                                                          Court

Dennis Martin and Lisa Martin,                            The Honorable Richard L. Russell,
                                                          Judge
Appellees-Plaintiffs.                                     Cause No. 80C01-1402-SC-23

Brown, Judge.

Court of Appeals of Indiana | Memorandum Decision 80A02-1407-SC-495 | July 15, 2015        Page 1 of 10
[1]   Jeff Griffin, d/b/a JDA Trailers, appeals from the judgment of the small claims

      court against him and in favor of Dennis and Lisa Martin in the amount of

      $1,896.62 for the costs of repairs to a vehicle Griffin sold the Martins plus

      attorney fees. Griffin raises two issues, which we consolidate and restate as

      whether the small claims court erred in ordering him to pay the costs incurred

      by the Martins to repair the vehicle he had sold them “as-is” and with no

      warranty. We reverse.

                                       Facts and Procedural History

[2]   On September 5, 2013, the Martins purchased a 2001 Chevy Silverado from

      Griffin at his used car dealership in Windfall, Indiana. Dennis Martin signed a

      Used Vehicle Order indicating the car’s sales price was $10,000, and the

      handwritten words “as-is” were written in the area for “Remarks” on the

      document. Appellant’s Appendix at 18. Dennis also signed a “Buyer’s Guide,”

      and the box next to the words “AS IS-NO WARRANTY” was marked. Id. at

      20. Under the box, the document provided: “YOU WILL PAY ALL COSTS

      FOR ANY REPAIRS. The dealer assumes no responsibility for any repairs

      regardless of any oral statements about the vehicle.” Id.

[3]   While driving the vehicle home, the Martins were able to stop the vehicle only

      by using the brakes on the trailer being pulled by the vehicle. The vehicle was

      inspected by two independent mechanics who found the pads and rotors were

      severely grooved with pieces of metal missing, and the hubs were worn on the

      front of the vehicle. The Martins incurred expenses of $1,196.62 to make

      repairs.
      Court of Appeals of Indiana | Memorandum Decision 80A02-1407-SC-495 | July 15, 2015   Page 2 of 10
[4]   On February 5, 2014, the Martins filed a Notice of Claim requesting damages

      in the amount of $1,081.12 plus attorney fees of $700 and court costs, and they

      alleged that the vehicle they purchased from Griffin “was not road worthy in

      that it had defective/non-existent brakes.” Id. at 10. The court held a hearing

      on April 25, 2014, at which the parties presented testimony and evidence. The

      Martins presented evidence of an invoice and receipt from Paul-Richard GM

      Center, two receipts from NAPA Auto Parts, invoices from Car Recyclers and

      Jim’s Garage, and a summary of services and costs of vehicle repair and

      diagnosis by Thomas Nelson.

[5]   The Martins testified that Griffin sold them a vehicle that was dangerous for

      them to drive and that at some point after the time of sale they were able to stop

      the vehicle only by using the brakes on the camper being pulled by the vehicle

      at the time. They stated that they drove the vehicle to the Paul-Richard GM

      Center dealership for inspection on September 6, 2013, and that the

      “[s]uggested repairs . . . included re-hooking up the ABS, replacing front hubs,

      and advising that fuel ‘modles’ were bad.” Id. at 26. The Martins indicated

      they did not have the repairs completed at the dealership but paid for the cost of

      the inspection. They presented further testimony that they then drove the

      vehicle to Nelson for inspection and repair on September 7, 2013. Nelson

      testified that “the vehicle was not roadworthy,” and his written summary stated

      that the vehicle’s bearings were bad in both front hubs which triggered the ABS

      sensor inside the vehicle, the right hub/bearing was worn to the point of near-

      separation, new front brake pads had been installed at some point without

      Court of Appeals of Indiana | Memorandum Decision 80A02-1407-SC-495 | July 15, 2015   Page 3 of 10
      replacing severely grooved rotors, the rotors had chunks of metal missing from

      the rotor surfaces, all four shocks were severely rusted and worn out, and that

      the fuel level sensor unit was not working properly. Id. The Martins submitted

      evidence that they paid Nelson for the repairs, Napa Auto for parts, and Car

      Recyclers and Jim’s Garage for parts and repair in November 2013.

[6]   Griffin introduced the Used Vehicle Order and Buyer’s Guide and testified that

      he obtained the Silverado from Dellen Chrysler in Greenfield on July 26, 2013.

      Tim Phifer, an employee of Griffin, testified that he drove the vehicle to

      Windfall, where it was placed in the back of the lot, and that a few weeks later

      Dennis Martin expressed an interest in the vehicle and a camper. He testified

      that Griffin stated to Dennis that the vehicle had not been serviced since its

      acquisition, that Dennis test-drove the vehicle and asked about the ABS light

      which was on, that Griffin stated it could be due to the fact the vehicle may

      need a new front wheel bearing, that Dennis responded by saying that he would

      take care of whatever was causing the ABS light to be on, and that Dennis did

      not mention anything further about how the vehicle drove. Phifer further

      testified that the parties came to an agreement on price with the understanding

      that the sale would include no warranty, the vehicle was then placed on the

      back lot, and Griffin performed no further service or inspection. Phifer stated

      that the Martins returned on September 5, 2013, executed the sales agreement

      and Buyer’s Guide, paid the agreed-upon price, and drove the truck off the lot

      while towing the camper. On cross-examination, Phifer testified that, between

      the time the Martins took possession of the vehicle on September 5, 2013, and

      Court of Appeals of Indiana | Memorandum Decision 80A02-1407-SC-495 | July 15, 2015   Page 4 of 10
      the time it was inspected by their mechanic on September 6, 2013, the vehicle

      had been driven 201 miles by the Martins. He also testified that Griffin

      encourages buyers to have a vehicle inspected prior to a sale. The Martins’

      counsel stated that they agreed they bought the vehicle with no warranty but

      that they were bringing their claim under “civil tort law.” Id. at 29. The court

      took the matter under advisement.

[7]   On June 20, 2014, the court entered an order finding that the Martins had

      purchased the 2001 Chevy Silverado from Griffin on September 5, 2013; that

      Griffin “sold the vehicle ‘as is’ with no warranty”; that while driving home the

      Martins “discovered the vehicle was not road worthy and were only able to stop

      the vehicle by using the brakes on the trailer being pulled by the vehicle”; and

      that the vehicle was subsequently inspected by two separate and independent

      mechanics who both found the pads and rotors were severely grooved with

      pieces of metal missing and the hubs were found to be so worn on the front of

      the vehicle the right hub bearing was at the point of separation. Id. at 7. The

      court also found that the Martins incurred costs of $1,196.62 “to make the

      vehicle road worthy” and $700 in attorney fees. Id. The court’s ultimate

      finding was that Griffin “committed a tort against the [Martins] by selling a

      vehicle that was not road worthy and placed them in danger, as well as any

      other individuals on the road” and that, “because of [Griffin’s] tort, [he] is liable

      to the [Martins] for their reasonable expenses in repairing the vehicle as well as

      their reasonable attorney fees.” Id. at 8. The court entered judgment in favor of

      Court of Appeals of Indiana | Memorandum Decision 80A02-1407-SC-495 | July 15, 2015   Page 5 of 10
      the Martins and against Griffin in the amount of $1,196.62 for costs and $700

      for attorney fees.

                                                   Discussion

[8]   The issue is whether the court erred in finding Griffin liable for the Martins’

      costs of repair of the vehicle he sold them “as-is” and with no warranty. The

      Martins did not file an appellee’s brief. When an appellee fails to submit a

      brief, we do not undertake the burden of developing his arguments, and we

      apply a less stringent standard of review, that is, we may reverse if the appellant

      establishes prima facie error. Zoller v. Zoller, 858 N.E.2d 124, 126 (Ind. Ct. App.

      2006). This rule was established so that we might be relieved of the burden of

      controverting the arguments advanced in favor of reversal where that burden

      properly rests with the appellee. Wright v. Wright, 782 N.E.2d 363, 366 (Ind. Ct.

      App. 2002). Questions of law are still reviewed de novo, however. McClure v.

      Cooper, 893 N.E.2d 337, 339 (Ind. Ct. App. 2008).

[9]   Judgments in small claims actions are subject to review as prescribed by

      relevant Indiana rules and statutes. Ind. Small Claims Rule 11(A); Eagle

      Aircraft, Inc. v. Trojnar, 983 N.E.2d 648, 657 (Ind. Ct. App. 2013). In the

      appellate review of claims tried by the bench without a jury, the reviewing court

      shall not set aside the judgment unless clearly erroneous, and due regard shall

      be given to the opportunity of the trial court to judge the credibility of the

      witnesses. Ind. Trial Rule 52(A); Eagle Aircraft, 983 N.E.2d at 657. In

      determining whether a judgment is clearly erroneous, the appellate tribunal

      does not reweigh the evidence or determine the credibility of witnesses but
      Court of Appeals of Indiana | Memorandum Decision 80A02-1407-SC-495 | July 15, 2015   Page 6 of 10
       considers only the evidence that supports the judgment and the reasonable

       inferences to be drawn from that evidence. Eagle Aircraft, 983 N.E.2d at 657. A

       judgment in favor of a party having the burden of proof will be affirmed if the

       evidence was such that from it a reasonable trier of fact could conclude that the

       elements of the party’s claim were established by a preponderance of evidence.

       Id. This deferential standard of review is particularly important in small claims

       actions, where trials are informal, with the sole objective of dispensing speedy

       justice between the parties according to the rules of substantive law. Id. We

       presume that the trial court correctly applied the law and we give due regard to

       the court’s opportunity to judge the credibility of the witnesses. Id. However,

       “this deferential standard does not apply to the substantive rules of law, which

       are reviewed de novo just as they are in appeals from a court of general

       jurisdiction.” Trinity Homes, LLC v. Fang, 848 N.E.2d 1065, 1068 (Ind. 2006).

       “Similarly, where a small claims case turns solely on documentary evidence, we

       review de novo, just as we review summary judgment rulings and other ‘paper

       records.’” Id.

[10]   Griffin asserts that the court erred in failing to apply the economic loss rule and

       in finding Griffin liable to the Martins in tort for the costs to repair their vehicle.

       Griffin also argues that exclusions of warranties are permitted under Indiana’s

       Uniform Commercial Code (the “UCC”) and that the court’s order effectively

       circumvented his rights under the UCC when it awarded Martins the precise

       relief in tort that was clearly excluded in their contract.

       Court of Appeals of Indiana | Memorandum Decision 80A02-1407-SC-495 | July 15, 2015   Page 7 of 10
[11]   Ind. Code § 26-1-2-316 provides in part that, “unless the circumstances indicate

       otherwise, all implied warranties are excluded by expressions like ‘as is’, ‘with

       all faults’, or other language which in common understanding calls the buyer’s

       attention to the exclusion of warranties and makes plain that there is no implied

       warranty.” It is well-settled that automobile dealers may use this law to exclude

       express warranties and make it plain that there are no implied warranties. Town

       and Country Ford, Inc. v. Busch, 709 N.E.2d 1030, 1032 (Ind. Ct. App. 1999);

       DeVoe Chevrolet-Cadillac Inc. v. Cartwright, 526 N.E.2d 1237, 1240 (Ind. Ct. App.

       1988).

[12]   Here, the Used Vehicle Order included the handwritten words “as-is,” and the

       Buyer’s Guide included a marked box next to the words “AS IS-NO

       WARRANTY” and below that stated “YOU WILL PAY ALL COSTS FOR

       ANY REPAIRS. The dealer assumes no responsibility for any repairs

       regardless of any oral statements about the vehicle.” Appellant’s Appendix at

       18, 20. Accordingly, any implied warranty was excluded in this case. Further,

       the record contains no evidence showing Griffin made a representation which

       created an express warranty, and absent such evidence the “as-is” limitation

       controls. See Cartwright, 526 N.E.2d at 1240.

[13]   Turning to whether the Martins were entitled to recover their repair costs by

       alleging that a tort occurred, we observe that the economic loss rule precludes

       tort liability for purely economic loss. Indianapolis-Marion Cnty. Pub. Library v.

       Charlier Clark & Linard, P.C., 929 N.E.2d 722, 727 (Ind. 2010). Economic losses

       are disappointed contractual or commercial expectations. Gunkel v. Renovations,

       Court of Appeals of Indiana | Memorandum Decision 80A02-1407-SC-495 | July 15, 2015   Page 8 of 10
Inc., 822 N.E.2d 150, 154 (Ind. 2005), reh’g denied. “Damage to the product

itself, including costs of repair or reconstruction, is an ‘economic loss’ even

though it may have a component of physical destruction.” Id. If the plaintiff’s

injury results from a defective product or service, the defendant is liable under a

tort theory only if the defect causes personal injury or damage to property other

than the product or service the plaintiff purchased. Indianapolis-Marion Cnty.

Pub. Library, 929 N.E.2d at 726. A defendant is not liable under a tort theory

for a pure economic loss caused by its negligence, including damage to the

product or service itself. Id. at 726-727. See also Greg Allen Constr. Co. v. Estelle,

798 N.E.2d 171, 175 (Ind. 2003) (stating that “damages recoverable in tort from

negligence in carrying out the contract will be for injury to person or physical

damage to property, and thus ‘economic loss’ will usually not be recoverable”),

reh’g denied; Reed v. Central Soya Co., 621 N.E.2d 1069, 1073-1074 (Ind. 1993)

(stating that, “where the loss is solely economic in nature, as where the only

claim of loss relates to the product’s failure to live up to expectations, and in the

absence of damage to other property or person, then such losses are more

appropriately recovered by contract remedies”), modified on other grounds by 644

N.E.2d 84 (Ind. 1994). While the economic loss rule “operates as a general rule

to preclude recovery in tort for economic loss, it does so for purely economic

loss—pecuniary loss unaccompanied by any property damage or personal

injury (other than damage to the product or service provided by the

defendant)—and even when there is purely economic loss, there are exceptions

to the general rule.” Indianapolis-Marion Cnty. Pub. Library, 929 N.E.2d at 730;

see also id. at 736 (“Indiana courts should recognize that the rule is a general rule
Court of Appeals of Indiana | Memorandum Decision 80A02-1407-SC-495 | July 15, 2015   Page 9 of 10
       and be open to appropriate exceptions”). Some of these exceptions include

       lawyer malpractice, breach of duty of care owed to a plaintiff by a fiduciary,

       breach of duty to settle owed by a liability insurer to the insured, and negligent

       misstatement. Id. at 736.

[14]   Here, the Martins’ costs of repairing the Silverado constituted economic loss.

       The Martins did not allege or present evidence that its loss was not purely

       economic, that personal injury or damage to other property occurred, or that

       any other recognized exception to the economic loss rule is applicable under the

       circumstances. Thus, the economic loss rule is applicable and Griffin is not

       liable for the Martins’ repair costs under a tort theory.

[15]   For these reasons, we conclude that Griffin has demonstrated prima facie error

       in the trial court’s order awarding repair costs to the Martins. We also reverse

       the court’s order as to attorney fees.

                                                    Conclusion

[16]   Based on the foregoing, we conclude that the trial court erred when it awarded

       damages and attorney fees to the Martins in contravention of their agreement

       that the Silverado they purchased was sold “as is,” and the evidence shows that

       they suffered only economic loss precluding recovery under a tort theory. We

       reverse the judgment of the small claims court.

[17]   Reversed.

       Crone, J., and Pyle, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 80A02-1407-SC-495 | July 15, 2015   Page 10 of 10