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Jordan v. Four Winds International

March 31, 2010

JACK JORDAN AND LYN JORDAN, PLAINTIFFS,
v.
FOUR WINDS INTERNATIONAL, INC., FOUR WINDS INTERNATIONAL CORPORATION AND MEYERS RV CENTERS, LLC. AND ED SHULTS CHEVROLET, INC., DEFENDANTS.



The opinion of the court was delivered by: McLAUGHLIN, Sean J., District J.

MEMORANDUM OPINION

This civil action arises out of an incident occurring on June 15, 2006 in which a catastrophic fire destroyed a recreational vehicle ("RV") owned by Plaintiffs, Jack and Lyn Jordan, as well as all of the RV's contents. Plaintiffs claim that the fire resulted from a defect in the vehicle. Their amended complaint asserted claims premised on strict liability, negligence, and breach of warranty against Four Winds International, Inc. and Four Winds International Corporation (collectively referred to as "Four Winds"), which manufactured the RV, and Defendant Meyers RV Centers, LLC ("Meyers"), which sold the RV to Plaintiffs. This Court's jurisdiction is premised upon 28 U.S.C. § 1332, as there is complete diversity of citizenship among the parties and the amount in controversy (exclusive of interest and costs) exceeds $75,000.

Pending before the Court are motions for summary judgment filed on behalf of Defendants Four Winds and Meyers relative to the Plaintiffs' sole remaining claim for breach of warranties. For the reasons set forth below, these motions will be granted.

I. STANDARD OF REVIEW

Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment should be entered "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). In adjudicating a Rule 56 motion, we must review the evidence in the light most favorable to Plaintiffs, the non-moving party, and draw all reasonable inferences in their favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); O'Connor v. City of Philadelphia, 233 Fed. Appx. 161, 164, 2007 WL 1379960 at **3 (3d Cir. May 11, 2007).

II. BACKGROUND

On May 22, 2004, Plaintiffs signed an agreement with Meyers to purchase a 2004 Four Winds International Infinity Motor Home (the "RV"). This Vehicle Cash Purchase Agreement (the "Agreement") outlines numerous terms of the RV purchase and indicates that the total amount of the purchase price was $101,313.00. (Ex. B to Mot. for Summ. Judg. [43-2] at p. 6.) Included on the reverse side of the Agreement are nine separate paragraphs setting forth "ADDITIONAL TERMS OF AGREEMENT." Paragraph 5 is entitled "Disclaimer of Warranties," and states:

I UNDERSTAND THAT YOU EXPRESSLY DISCLAIM ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND THAT YOU NEITHER ASSUME NOR AUTHORIZE ANY OTHER PERSON TO ASSUME FOR YOU ANY LIABILITY IN CONNECTION WITH THE SALE OF THE VEHICLE, except as otherwise provided in writing by YOU in an attachment to this Agreement or in a document delivered to ME when the vehicle is delivered.

(See Def.'s Mot. for Summ. Judg. Ex. B [43-2] at p. 7.) Paragraph 9 reads: "New York Law Applies. You and I agree that this Agreement is governed by New York State Law." (Id.)

Various forms and documents relating to the sale -- including the owner's registration card, a check used to pay the balance of the purchase price, and a "New York Law 198-a" form -- indicate that the transaction was completed on June 12, 2004. (Ex. A to Pls.' Mem. in Opp. to Def.'s Mot. for Summ. Judg. [48-1] at 71-73.) Plaintiffs also took delivery of the RV on that date.

The vehicle in question was covered by a "New Recreational Vehicle Limited Warranty" issued by Four Winds, which limited the coverage of any and all warranties associated with the RV to two years from the date of delivery or 24,000 miles. (See Ex. A to Def.'s Mot. for Summ. Judg. [43-1] at p. 3.) The limited warranty further restricted the limitations period associated with those warranties to a period of one year following expiration of the warranty coverage. (Id. at p. 5.) Thus, given that the Plaintiffs took possession of the RV on June 12, 2004, the limited warranties by their terms lapsed no later than June 12, 2006 and any warranty claims arising during that time had to be enforced no later than June 12, 2007.

On June 15, 2006 -- just three days after their warranty coverage lapsed under the terms of the New Recreational Vehicle Limited Warranty, a defect in the Plaintiffs' RV caused a catastrophic fire. Although Plaintiffs were not injured, the RV and all of its contents (including Plaintiffs' warranty information) was destroyed. Plaintiffs submitted a claim with their insurer and this subrogation lawsuit followed on May 1, 2008.

Plaintiffs filed their first Amended Complaint on June 11, 2008, asserting four causes of action against the Defendants. Count I alleged a claim of strict liability against Four Winds and Meyers. Count II alleged negligence against Meyers and another entity known as "Ed Shults Chevrolet, Inc.."*fn1 Count III alleged negligence against Four Winds. Count IV alleged breach of warranty against Four Winds and Meyers. Defendants filed motions to dismiss these claims pursuant to Fed. R. Civ. P. 12(b)(6).

This Court subsequently granted the Defendants' motions to dismiss relative to Counts I through III of the Amended Complaint on the grounds that any tort claims seeking recovery for damages to the product itself were barred by the economic loss doctrine. The Court denied the Defendants' motions to dismiss insofar as they related to Count IV and instead permitted discovery on issues pertinent to the breach of warranty theory.

Defendants Four Winds and Meyers have now moved for summary judgment on the Plaintiffs' remaining breach of warranty claims. Meyers RV contends that there can be no liability on its part because it issued no express warranty and in fact expressly disclaimed any and all warranties, express or implied, on the vehicle. Four Winds contends that the incident which gives rise to the Plaintiffs' warranty claim occurred only after the express and implied warranties on the vehicle had expired. In addition, Four Winds argues that the limited warranty on the RV required that any suit for breach of warranty be brought within one year of the expiration of the warranty coverage which, in this case, meant no later than June 12, 2007. Because this lawsuit was not filed until May 1, 2008, Four Winds contends that Plaintiffs' claim is time-barred.

Plaintiffs have filed a memorandum in opposition to the pending summary judgment motions, arguing that the waivers and/or limitations of the Defendants' warranties are invalid and therefore of no effect, either because they lack the requisite conspicuousness or because they are unconscionable. The issues have been fully briefed and are now ripe for disposition.

III. DISCUSSION

A. Choice of Laws

The first question which we must address is the applicable source of law governing the present dispute. Defendants contend that Pennsylvania law applies, while Plaintiffs maintain that New York law controls. Because our analysis concerning the claim against Meyers differs somewhat from our analysis of the claim against Four Winds, we consider each choice-of-law issue separately.

1. The Claim Against Meyers

In a diversity action such as this, a federal court "must apply the choice of law rules of the forum state to determine what law will govern the substantive issues of a case." Warriner v. Stanton, 475 F.3d 497, 499-500 (3d Cir.2007) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). "Because choice of law analysis is issue-specific, different states' laws may apply to different issues in a single case, a principle known as 'depecage.'" Berg Chilling Systems, Inc. v. Hull Corp., 435 F.3d 455, 462 (3d Cir. 2006) (citing Compagnie des Bauxites v. Argonaut-Midwest Ins. Co., 880 F.2d 685, 691 (3d Cir.1989)).

Under Pennsylvania choice of law principles, "the first question to be answered in addressing a potential conflict of laws dispute is whether the parties explicitly or implicitly have chosen the relevant law." Atlantic Pier Assocs., LLC v. Boardakan Rest. Partners, 647 F. Supp. 2d 474, 486 n. 13 (E.D. Pa. 2009) (quoting Assicurazioni Generali, S.P.A. v. Clover, 195 F.3d 161, 164 (3d Cir. 1999)). As a general matter, if the parties have agreed to the applicable law, that agreed upon law should be given effect. Id. (citing Assicurazioni Generali, S.P.A., supra, at 164).

In this case, the Agreement between Plaintiffs and Meyers contained an express provision stating: "New York Law Applies. You and I agree that this Agreement is governed by New York State Law." (Ex. B to Mot. for Summ. Judg. [43-2] at p. 7.) Based on this provision, Plaintiffs argue that New York law controls the present dispute.

Meyers, on the other hand, argues that this provision has no applicability because it is being sued not for breach of contract but, rather, for breach of implied warranty.

Although Meyers is not being sued for direct breach of the Purchase Agreement, Meyers has invoked the Agreement's "Disclaimer of Warranties" clause as a defense to Plaintiffs' breach of implied warranties claim and, therefore, the Agreement is not irrelevant to the parties' dispute. In fact, Meyers' responsibilities depend directly on whether the Disclaimer of Warranties" clause is legally valid and enforceable. Ostensibly, at least, New York law governs that issue.

Pennsylvania has adopted § 187 of the Restatement (Second) of Conflict of Laws (1971), entitled "Law Of The State Chosen By The Parties." See Pennsylvania Dept. of Banking v. NCAS of Delaware, LLC, 948 A.3d 752, 758 (Pa. 2008); Miller v. Allstate Ins. Co., 763 A.2d 401, 403 (Pa. Super. 2000). That provision states, in relevant part, as follows:

(1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue.

(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either

(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or

(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of ยง 188, would be the state of the ...


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