Article

Skinning Cats

February 2010, Auto Dealer Today - WebXclusive

by Thomas B. Hudson, Esq. - Also by this author

Try, Try Again Until You Succeed


The old adage says there’s more than one way to skin a cat. The following plaintiffs sought to have the court hold the dealer liable for their injuries. First, they claimed that the dealership couldn’t disclaim the implied warranties of sale with respect to a safety defect. When the court didn’t agree with that argument, the plaintiffs claimed that the dealer had been negligent in not inspecting the car. Here’s how the fight went.

Elizabeth and Mark Wilke bought a used van from Woodhouse Ford, Inc. The Wilkes did not test drive the van, and Woodhouse did not inspect the vehicle before it sold the vehicle to the Wilkes.

The sales documents stated that the sale was “as is” and disclaimed all implied warranties. Many states’ versions of the Uniform Commercial Code permit dealers to “disclaim” implied warranties, provided they do so in a specified manner.

The Wilkes drove the van home, parked it in their driveway, and carried the keys into their house. Their daughter climbed into the driver seat and shifted the automatic gearshift out of park. The van rolled backwards, knocked Elizabeth (who had evidently come back outside) to the ground, and ran over her leg.

The police report stated that the shift lever could be shifted out of park without depressing the brake pedal. After the accident, the Wilkes had Woodhouse repair the van twice.

Woodhouse’s mechanic testified that there was play in the gearshift, but that a person could not shift the van out of park without the key in the ignition. Woodhouse repaired the shifter cable. Mark testified that after the repair, he could no longer move the gearshift out of place without the key in the ignition and the brake pedal depressed.

The Wilkes sued Woodhouse for breach of implied warranty of merchantability and for negligence. Woodhouse moved for summary judgment (legal speak for a judgment by the court without all that messy trial stuff), and the trial court granted its motion. The Wilkes appealed.
 
The Nebraska Supreme Court affirmed the trial court’s decision on the breach of warranty claim, and reversed and remanded on the negligence claim.

The Wilkes argued that Woodhouse could not disclaim an implied warranty of merchantability with respect to a safety defect because that would violate public policy. The high court disagreed, finding that the Uniform Commercial Code does not make any exception for warranties relating to safety of the product.

Not happy that the cat retained its skin, the Wilkes then argued that Woodhouse was negligent because it failed to reasonably inspect the van for safety defects before the sale. Woodhouse claimed that it had no duty to inspect the van before the sale.

The Wilkes second argument got a better reception. The high court found that dealers have a limited duty to inspect used vehicles for patent safety defects because there is a significant risk of injury if an unknowing buyer drives off the dealer’s lot in a vehicle with a patent (legal speak for obvious) defect, such as faulty brakes or steering.

The appellate court further determined that a dealer cannot avoid or disclaim this limited duty by making a valid disclaimer of warranties under the UCC. The high court concluded that whether Woodhouse breached this limited duty was a question of fact for the lower court to revisit, noting that there was conflicting testimony as to whether the gearshift malfunctioned.

If courts in other states follow this Nebraska court’s reasoning, you can kiss “as is” goodbye, at least as far as obvious safety defects are concerned.

Vol. 7, Issue 1

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