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PROUSI v. CRUISERS DIV. OF KCS INT'L

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA


August 28, 1997

ANDREW S. PROUSI, PLAINTIFF,
v.
CRUISERS DIVISION OF KCS INTERNATIONAL, INC. and CRUSADER MARINE ENGINES, DEFENDANT

The opinion of the court was delivered by: POLLAK

OPINION

 August 28, 1997

 Pollak, J.

 In this case, plaintiff Andrew S. Prousi (hereinafter "Prousi") has brought warranty claims against defendants Cruisers, a Division of KCS International, Inc. ("Cruisers") and Crusader Marine Engines ("Crusader") in connection with plaintiff's purchase of a yacht manufactured by defendant Cruisers. Cruisers has moved for summary judgment. *fn1" Plaintiff has invoked diversity jurisdiction; however, as will be clear from the discussion below, plaintiff's claims under the federal Magnuson-Moss Warranty Act would support federal question jurisdiction in any event.

 I. Background

 In passing on a motion for summary judgment, the court must review the evidence in the light most favorable to the non-moving party, in this case Prousi. *fn2" So viewing the record, it appears that on April 11, 1995, Prousi purchased a yacht from Greenwich Boat Works in New Jersey, an authorized dealer of Cruisers boats. The boat was manufactured by Cruisers in all respects other than that of the engine, which was manufactured and warranted separately by defendant Crusader. The vessel was launched in Greenwich in May 1995; thereafter Prousi hired Tim Silvio to pilot the boat to Delaware and eventually to Maryland. Prousi testified in his deposition that the vessel stalled several times in the course of its journey and that he reported this to Greenwich Boat Works.

 In July 1995, Prousi notified Kenneth Hayes, an agent of Cruisers, of several minor problems he was having with his boat. Prousi had these problems repaired by local mechanics. After Prousi notified Cruisers of these problems, Cruisers sent parts at no charge and notified Greenwich Boat Works that Cruisers would reimburse Prousi for his other expenses if Greenwich Boat Works, whom Cruisers believed was responsible, did not. See Plaintiff's Motion for Summary Judgment against Defendant Cruisers, Exhibit B.

 In October, Prousi contracted with Annapolis Motor Yachts ("AMY") to move the boat to Annapolis. AMY found that the starboard engine was not functioning properly and had local mechanic Tom Vogel inspect the engine. Vogel reported that the valves in the starboard engine were rusted and sticking as a result of water having intruded into the engine. After further inspection, Vogel opined that the water probably came in through the exhaust system, which was installed by and presumably warranted by Cruisers. On October 13, 1995, Prousi notified Cruisers by fax of the problem with the engine. Cruisers responded that the engine was warranted by Crusader and referred Prousi thereto for warranty service. On the 16th Prousi sent a letter to Crusader with the same request for warranty work. Crusader apparently authorized Vogel to continue his inspection of the engine. On October 26, 1995, Prousi directed Vogel to cease work on the engine.

 On October 18, 1995, Prousi filed this lawsuit alleging three counts of warranty violations: Count I under the Magnuson-Moss Warranty Improvement Act, 15 U.S.C. § 2310, Count II under the express and implied warranty provisions of Pennsylvania's Uniform Commercial Code ("UCC"), 13 Pa. Cons. Stat. Ann. §§ 2313, 2314, and count III under Pennsylvania's Unfair Trade Practices and Consumer protection Law ("UTPCPL"), 73 Pa. Stat. Ann. § 201-2(4)(xiv)(West 1997). The gist of Prousi's complaint is that a defect in either the installation of or peripheral attachments to the engine (warranted by Cruisers) caused water to intrude into the engine, eventually making it inoperable. Prousi complains that Cruisers refused to honor its warranty by seeing that the damage was repaired or the engine replaced.

 II. Discussion

 Summary judgment will be granted if there is no genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). In the motion before the court, Cruisers argues that Prousi did not deliver the vessel to an authorized dealer as required by the warranty and did not permit warranty work to be effected on the engine. Prousi urges that many facts are in dispute. Of these, the material fact that Prousi disputes is defendant's contention that Prousi or his counsel prevented Cruisers from repairing the problem. Cruisers' arguments and Prousi's responses will be discussed in turn.

 A. Failure to Perform Condition Precedent

 Cruisers argues that Prousi never presented the boat to an authorized Cruisers dealer for warranty work and consequently failed to perform a condition precedent to Cruisers' warranty obligations. Prousi does not contest Cruisers' factual contention. If meritorious, Cruisers' argument would support summary judgment for defendant irrespective of other contested issues, for even if Prousi did not affirmatively prevent warranty work, his failure to perform a condition precedent would bar recovery.

 The warranty explicitly states that "for warranty service, the boat must be delivered to the selling dealer." However, the issue remains whether Cruisers is entitled to rely on this condition. Cruisers may not rely on the condition if it has waived its right to do so. From the record before the court, viewed as it must be in the light most favorable to the plaintiff, it is apparent that a fact-finder could reasonably conclude that defendant has waived reliance on this condition. Under Pennsylvania law, *fn3" a waiver of legal rights can arise by "a clear unequivocal, and decisive act of the party claimed to have waived its rights, with knowledge of such right and evident purpose to surrender it." Keenan v. Scott Township Auth., 151 Pa. Commw. 226, 616 A.2d 751 (Pa. Commw. Ct. 1992). See also, Evcco Leasing Corp. v. Ace Trucking Co., 828 F.2d 188 (3d Cir. 1987). Waiver may be effected by a party's words or conduct. When waiver is implied from conduct, it applies in those situations that would support equitable estoppel. Penn Mutual Life Ins. v. Bank of New England, 756 F. Supp. 856 (E.D. Pa. 1991); Brown v. City of Pittsburgh, 409 Pa. 357, 186 A.2d 399 (Pa. 1962). See also Walsh v. Ford Motor Co., 588 F. Supp. 1513 (D.D.C. 1982) (recognizing equitable estoppel under the Magnuson-Moss Act to hold that plaintiffs who had not presented their vehicles to dealers as required by the warranty were not barred). Thus for an implied waiver to be operative, the person charged with waiver must have by conduct manifested an intent to relinquish the right and the party claiming the benefit of the waiver must show that he or she was "misled and prejudiced" by the conduct. Brown, 186 A.2d at 401.

 In this case plaintiff has undertaken to establish, or at least has alleged with support and without contradiction by defendant, all of the elements of a waiver of legal rights (albeit without arguing the point). According to the pleadings, documents, and affidavits supplied by both parties, it appears that Cruisers (1) provided Prousi with replacement parts at no charge, and (2) reimbursed or promised to reimburse plaintiff for work performed by people other than authorized Cruisers dealers, despite the fact that the boat was not brought to a dealer. See, e.g., Defendant's Motion for Summary Judgment at 3; Plaintiff's Motion for Summary Judgment Against Defendant Cruisers, Exhibit B. Furthermore, Prousi has alleged that he was never shown the written warranty, an allegation that has not been denied by Cruisers' agent Hayes. See Plaintiff's Opposition to Defendant's Motion, Exhibits C and D. Consequently, Prousi's only guidance in understanding the warranty would be defendant's conduct. Thus plaintiff has made a sufficient showing to support the proposition that defendant's conduct--namely, honoring minor warranty without requiring that Prousi deliver the vessel to the New Jersey dealer--could be found by a fact-finder to have led Prousi reasonably to believe that bringing the boat from Maryland to the dealer in New Jersey was unnecessary. But for this apparent waiver prejudice would result from the conduct because plaintiff did not deliver the vessel to the dealer within the warranty's time limit. *fn4" Accordingly, defendant is not entitled to summary judgment on the basis of plaintiff's failure to perform a condition precedent.

 B. Prematurity of Plaintiff's Suit

 Defendant contends that Prousi's suit on all counts is premature and urges summary judgment on this ground.

 First, Defendant argues that Prousi did not give Cruisers the opportunity to cure that the Magnuson-Moss Act requires before action may be brought under the statute. 15 U.S.C. § 2310(e). The filing of the action, occurring as it did less than one week after plaintiff's written notification to defendant of the problem, on first glance certainly seems premature. *fn5" However, Prousi's contention that Cruisers refused to honor warranty service renders summary judgment on this basis inappropriate. Prousi alleges that Cruisers ceased or refused to honor warranty requests upon learning from the dealer, Greenwich Boat Works, that Prousi still reportedly owed the dealer money. Prousi's allegation is supported by the deposition of Hayes, defendant's agent. See Plaintiff's Opposition to Defendant's Motion, Exhibit K. This allegation, which amounts to one of anticipatory repudiation, can be considered to mature plaintiff's claim.

 Although the Magnuson-Moss Act does not provide for anticipatory repudiation, the Act does call for the application of state warranty law in the absence of a regulating rule. Walsh v. Ford Motor Co., 257 U.S. App. D.C. 85, 807 F.2d 1000 (D.C. Cir. 1986). In its UCC, Pennsylvania provides that when a party repudiates concerning a performance not yet due, which repudiation would substantially impair the value of the contract, the aggrieved party "may resort to any remedy for breach." 13 Pa. Cons. Stat. § 2610(2). Thus by operation of the state UCC, Prousi has alleged sufficient facts to show, for the purposes of this motion, that his warranty claims have matured.

 Plaintiff's state-law UTPCPL claims require a reasonable time for defendant to comply. The UTPCPL's warranty provisions are limited by the terms of the warranty itself: 73 Pa. Stat. Ann. § 201-2(4)(xiv) provides that the UTPCPL provides a remedy for "failing to comply with the terms of any written guarantee or warranty." The warranty provides that Cruisers will repair or replace defective parts or workmanship "within a reasonable time after notification." Again, Prousi's allegation of anticipatory repudiation satisfies, for the purpose of this motion, the reasonable time requirement.

 Warranty claims under the UCC, however, accrue at the time of discovery of the defect and are thus not barred in any event. See 13 Pa. Cons. Stat. Ann. § 2725(b) (when warranty extends to future performance of the goods, cause of action for breach of warranty accrues when the breach is or should have been discovered). Accordingly, plaintiff's UCC claims have accrued and would not be barred by a failure to provide an opportunity to cure, and summary judgment will not be granted on this ground.

 C. Prevention of Warranty Work

 Relatedly, Cruisers maintains that Prousi prevented any warranty work from being performed, an issue that Prousi disputes. Although Prousi acknowledges that he instructed Vogel to cease work on the engine, nothing in the record flatly contradicts his contention that he did not prevent Cruisers from repairing the engine. Defendant places much emphasis on an October 17, 1995 letter from Plaintiff's counsel to Crusader. Defendant's Motion for Summary Judgment, Exhibit D, at 8. Defendant seeks to construe this letter as forbidding warranty work by Cruisers. However, the letter will not bear the meaning defendant would assign it. The letter merely informs Crusader that Prousi is represented and instructs Crusader not to communicate directly with Prousi other than as "necessary to effectuate current repairs." Moreover, the letter is addressed to co-defendant Crusader and not to Cruisers. In sum there is nothing in the record that conclusively undermines Prousi's denial that he refused to allow warranty work and thereby vitiated his warranty claims. *fn6" This issue constitutes a genuine issue of material fact and, as to it, defendant's motion for summary judgment will be denied.

 D. Implied Warranty Claims

 Count II of Prousi's complaint includes claims for implied warranties under the UCC. As to these portions of count II, summary judgment is appropriate. The warranty at issue specifically and conspicuously--in capital letters on the front page--excludes warranties of fitness and merchantability. This exclusion thus satisfies the UCC requirement of specific, conspicuous language to exclude the warranty of merchantability and a conspicuous writing to exclude that of fitness. See 13 Pa Cons. Stat. Ann. § 2316(b) (West 1997). Hence there is no disputed issue of material fact on this issue and summary judgment will be granted on these claims.

 An order will issue accordingly.

 ORDER

 Upon consideration of defendant Cruiser's motion for summary judgment and plaintiff's response thereto, it is hereby ORDERED that defendant's motion for summary judgment is DENIED as to Count I, the express warranty claims of Count II, and Count III of plaintiff's complaint. It is further ORDERED that defendant's motion for summary judgment is GRANTED as to the implied warranty claims of Count II.

 August 28, 1997

 Louis H. Pollak


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