Jeff Griffin, d/b/a JDA Trailers v. Dennis Martin and Lisa Martin (mem. dec.) ( 2015 )


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  • 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.
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