Williams v. Hyatt Chrysler-Plymouth, Inc. , 48 N.C. App. 308 ( 1980 )

269 S.E.2d 184 (1980) 48 N.C. App. 308

Tommy WILLIAMS
v.
HYATT CHRYSLER-PLYMOUTH, INC., and Chrysler Corporation.

No. 8010DC6.

Court of Appeals of North Carolina.

August 19, 1980.

Akins, Mann & Pike, P.A. by J. Jerome Hartzell, Raleigh, for plaintiff-appellant.

Corbett & Corbett by Albert A. Corbett, Jr., Smithfield, for defendant-appellee Hyatt Chrysler-Plymouth, Inc.

Teague, Campbell, Conely & Dennis by George W. Dennis, III, Raleigh, for defendant-appellee Chrysler Corporation.

PARKER, Judge.

The trial court concluded as a matter of law that Chrysler could not be held liable to plaintiff on the grounds that there was no privity of contract between plaintiff and defendant manufacturer. In Kinlaw v. Long Mfg., 298 N.C. 494, 259 S.E.2d 552 (1979), our Supreme Court held that the absence of contractual privity no longer bars a direct claim by an ultimate purchaser against the manufacturer for breach of the manufacturer's express warranty which is directed to the purchaser. Here, despite plaintiff's allegations of breach of implied warranties, the action was nevertheless also one based on the express warranty given by Chrysler that it would repair defective parts. The ruling in Kinlaw, therefore, controls, and the absence of privity does not bar plaintiff's recovery against the automobile manufacturer. The trial court erred in concluding to the contrary.

In its judgment the trial court found as a fact that plaintiff had failed to establish any damage, other than consequential damage, resulting from the breach of warranty. Plaintiff assigns error to the exclusion of the following testimony which he contends would have permitted him to prove those damages. On direct examination of plaintiff, the following occurred:

Q. "Mr. Williams, do you have an opinion satisfactory to yourself as to the value of the 1976 Dodge Ramcharger as of the date you purchased it and with the vibration problem to which you previously testified?"

A. "Yes, I do."

Q. "What is that opinion?"

(Objection by defendant Hyatt Chrysler Plymouth, Inc. and by defendant Chyrsler, Corporation. Objection sustained. If permitted to answer the witness would have testified: "Approximately $2,500.")

The admissibility of this testimony depends upon whether it was relevant to the issues in the case and, if so, whether plaintiff was qualified to express such an opinion. We hold that the evidence was relevant and that the witness was qualified.

This action was brought upon the theory that defendant Chrysler Corporation had breached its express limited warrant that any Chrysler dealer would fix, free of charge for parts and labor, any part of the vehicle which proved defective in normal use and that the circumstances of the case were such that defendants' efforts to limit plaintiff's remedies were ineffectual because such remedies had failed of their essential purpose. The relative rights and obligations of the parties to this suit are governed by the provisions of Article 2 of the Uniform Commercial Code, codified as G.S. Ch. 25. G.S. 25-2-316 expressly permits the seller to disclaim or modify any warranty obligation. G.S. 25-2-719 permits the parties to a sales contract to modify or limit the remedy available in the event of breach of an obligation under the warranty. The latter section provides as follows:

G.S. 25-2-719. Contractual modification or limitation of remedy.—

(1) Subject to the provisions of subsections (2) and (3) of this section . . .

(a) the agreement may provide for remedies in addition to or in substitution for those provided in this article and may limit or alter the measure of damages recoverable under this article, as by limiting the buyer's remedies. . . to repair and replacement of nonconforming goods or parts; and

(b) resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy.

(2) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this chapter.

(3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not.

Although G.S. 25-2-316 and G.S. 25-2-719 are closely related, the former is directed to the creation of a limited duty under a warranty, see Official Comment 2 to G.S. 25-2-316, whereas the latter is directed to the limitation of the remedy available in the event of a breach of that duty. See generally, White and Summers, Uniform Commercial Code, § 12-9, pp. 377-378 (1972). In the present case Chrysler Corporation effectively limited its warranty obligation pursuant to G.S. 25-2-316 by agreeing as follows:

FOR THE FIRST 12 MONTHS OF USE OR 12,000 MILES, WHICHEVER OCCURS FIRST, ANY CHRYSLER, PLYMOUTH OR DODGE DEALER WILL FIX WITHOUT CHARGE FOR PARTS OR LABOR, ANY PART OF THIS VEHICLE WE SUPPLY (EXCEPT TIRES) WHICH PROVES DEFECTIVE IN NORMAL USE.

* * * * * *

This is the only warranty made by Chrysler Corporation applicable to this vehicle.

Chrysler also limited the damages available to the buyer pursuant to G.S. 25-2-719 by specifying that:

CHRYSLER CANNOT ASSUME RESPONSIBILITY FOR . . . 4) EXCEPT WHERE PROHIBITED BY LAW, CONSEQUENTIAL DAMAGES SUCH AS: LOSS OF USE OF THE VEHICLE, LOSS OF TIME, INCONVENIENCE EXPENSE FOR GASOLINE-TELEPHONE, TRAVEL, OR LODGING-LOSS OR DAMAGE TO PERSONAL PROPERTY, OR LOSS OF REVENUE.

Whether testimony by plaintiff as to the fair market value of the 1976 Dodge Ramcharger was relevant to the issue of damages depends upon the exact extent to which Chrysler did limit the available remedies. In this respect, the distinction between G.S. 25-2-316 and G.S. 25-2-719 is significant. Subsection (b) of the latter provision, which states that "resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive" (emphasis added), creates a presumption that, in the absence of a clear expression to the contrary, remedies are cumulative rather than exclusive. See, Official Comment 2 to G.S. 25-2-719. The Limited Warranty in the present case implies that repair or replacement of defective parts is a remedy available to the buyer. There is, however, no language in the warranty expressly stating that such a remedy is exclusive. In view of the statutory presumption that remedies are cumulative rather than exclusive, all remedies provided in the Code are available to the buyer in the present case, with the exception of recovery of consequential damages, which the warranty specifically limits. See, Ford Motor Company v. Reid, 250 Ark. 176, 465 S.W.2d 80 (1971); cf., McCarty v. E.J. Korvette, Inc., 28 Md.App. 421, 347 A.2d 253 (1975).

The general measure of damages for breach of warranty allowed under G.S. 25-2-714 is "the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount." The buyer bears the burden of proving that difference in value. Stutts v. Green Ford, Inc., 47 N.C.App. 503, 267 S.E.2d 919 (1980); HPS, Inc. v. All Wood Turning Corp., 21 N.C.App. 321, 204 S.E.2d 188 (1974). The record in the present case discloses that plaintiff knew within one day after the date of purchase that the vibration problem in his automobile had not been remedied. To the extent that plaintiff had that knowledge and yet took no affirmative action to reject the vehicle, see G.S. 25-2-602, but continued to use it, he accepted the goods at that time. G.S. 25-2-606. Thus, we conclude that testimony as to the value of the 1976 Dodge Ramcharger at the time plaintiff purchased it with the vibration problem on 26 August 1976 was relevant to the issue of the amount of damages to which plaintiff was entitled in the event breach of warranty was found.

We note that plaintiff here pleaded both the express warranty given by Chrysler as well as implied warranties allegedly arising by operation of law. Because Chrysler failed effectively to limit the remedy available to the buyer for breach of warranty other than to exclude consequential damages, it was not necessary to plaintiff's recovery of damages under G.S. 25-2-714 that he prove that any such limitation of remedies had failed of its essential purpose within the meaning of G.S. 25-2-719(2). Even if there had been a limitation which failed of its essential purpose, that failure would not have altered either the scope of Chrysler's express warranty or its disclaimer of all implied warranties. The remedy alone in such case would fail, but the terms of the express warranty would remain intact.

Concerning plaintiff's competency to testify to his opinion as to the value of the vehicle at the time of acceptance, the general rule is that a non-expert witness who has knowledge of value gained from experience, information, and observation may give his opinion of the value of personal property. 1 Stansbury's North Carolina Evidence § 128 (Brandis Rev. 1973). Here, prior to being asked his opinion of the value of the vehicle with the vibration problem at the time of the purchase, plaintiff had testified at length concerning the nature of the vibration problem. He further testified that during the twenty-six months he owned the Ramcharger before the problem was fixed, he drove the car approximately 40,000 miles. This testimony furnished an ample foundation upon which his opinion as to value could be based, and the trial court erred in excluding that opinion. It was competent evidence of the fair market value of the vehicle in its condition at the time of acceptance, and the weight to be accorded it was for the trier of fact to determine. On the basis of the erroneous exclusion of that relevant evidence, plaintiff is entitled to a new trial.

Because it cannot be known what the evidence will show at the new trial, we express no opinion as to the merits of plaintiff's claim of breach of warranty against either defendant dealer or defendant Chrysler. For the guidance of the trial court in the event a breach is found, however, we discuss more fully the measure of damages to which plaintiff would be entitled. Because the limited warranty effectively bars plaintiff from recovering consequential damages, his sole remedy is the recovery of the difference between the value of the vehicle as accepted and the value of the vehicle had it been as warranted. G.S. 25-2-714(2). It is undisputed, however, that the vibration problem of which plaintiff complained was eventually eliminated by Chrysler Corporation representatives, albeit not until twenty-six months had elapsed from the date of purchase, long after plaintiff had "accepted" the vehicle. To the extent that the successful elimination of the vibration increased the value of the vehicle, defendants should be entitled to offset the damages computed under the formulation in G.S. 25-2-714(2) by an amount representing that increase in value, an amount which defendants should bear the burden of proving. See, Stutts v. Green Ford, Inc., supra. Even if all defects in the vehicle have been cured, that increase in value would not restore the vehicle to its value as warranted on the date of purchase, since depreciation must be taken into account. Thus, the amount of offset to damages is most fairly computed by determining, first, what the hypothetical depreciated value of the vehicle would have been as of the date the repairs were completed had the vehicle been as warranted and, second, what the depreciated value of the vehicle was in its defective condition as of that same date (not taking into account the repairs made). The difference between those figures should reflect the amount of offset to damages which the warrantor could claim.^[1]

For the errors noted, the judgment appealed from is vacated, and the cause is remanded for a

New Trial.

HEDRICK and VAUGHN, JJ., concur.

NOTES

[1] By way of illustration, it may be assumed that X represents the fair market value of the vehicle had it been as warranted and Y represents the actual fair market value of the vehicle at the time of acceptance. If breach of warranty has occurred, the purchaser is entitled under G.S. 25-2-714(2) to recover damages in the amount of $(X-Y). Assuming that after breach has occurred, the warrantor corrects the defects on Date A, he is entitled to offset $(X-Y) by the difference between X, reduced by the amount the vehicle would have normally depreciated as of Date A had the vehicle been as warranted, and Y, reduced by the amount the vehicle depreciated in its defective condition as of Date A. The formula may be expressed thusly: Total damages recoverable by purchaser: $(X-Y)-(depreciated X-depreciated Y).