Murphy v. 24th Street Cadillac Corp.

PAUL E. ALPERT, Judge (retired), Specially Assigned. Appellant, Thomas J. Murphy, III, filed suit against appellees, Chesapeake Cadillac Jaguar (“Chesapeake”) and General Motors Corporation (“GM”), in the Circuit Court for Baltimore County alleging violations of express warranties made pursuant to Md.Code (1997 Repl.Vol.) § 2-313 of the Commercial Law Article (“C.L.”), and the implied warranty of merchantability made pursuant to C.L. § 2-314, and sought damages pursuant to C.L. § 14-2004. The circuit court (Cadigan, J.) at a bench trial, ruled in favor of appellees. Mr. Murphy filed a timely appeal. .

ISSUES Appellant raises four issues, which we rephrase: I. Did the circuit court interpret § 14-2004(e)(l) to require a lessee to demonstrate that he allowed a lessor at least four repair attempts in order to establish that he allowed the lessor a “reasonable number” of repair attempts under § 14-2004(d)? ⁴⁵⁷ II. Did the circuit court err by failing to rule that Murphy was entitled to a presumption that he had allowed a “reasonable number” of repair attempts pursuant to § 14-2004(e)(3)?

III

Did the circuit court err by ruling that Murphy failed to allow appellees a “reasonable number” of repair attempts?

IV

Did the circuit court commit reversible error by considering Murphy’s refusal to accept a replacement vehicle from appellees? FACTS 1 On February 26,1996, Mr. Murphy entered into a lease with Chesapeake. Under the lease, Mr. Murphy received, at a monthly rate of $930.74, the use of a brand new Cadillac STS automobile for 24 months. He also received a standardized GM warranty.

A few weeks after he received the vehicle, Mr. Murphy noticed a problem with the car’s sound system. Thus, on March 21, 1996, he took the car back to Chesapeake to have the problem repaired. After Chesapeake repaired and returned the automobile, Mr. Murphy began to notice a second problem: on occasion, the car would hesitate during acceleration. Thus, he returned to Chesapeake on April 16,1996 to have their mechanics check into the hesitation problem.

Chesapeake kept the car overnight, but its mechanics were unable to duplicate the hesitation problem. Nevertheless, Chesapeake contacted GM about the condition. GM responded by notifying Chesapeake that it was aware that the STS model occasionally suffered from a hesitation problem, and that it would — at an unspecified date in the future — send a ⁴⁵⁸ representative to Chesapeake with a “recalibration chip,” which would be used to correct the condition. After receiving this information from GM, Chesapeake relayed it to Mr. Murphy.

It also returned the car to him, and told him to continue driving it until the recalibration chip arrived. Several days after Chesapeake returned the car to Mr. Murphy, it stalled at a traffic light. On April 24, 1996, Mr. Murphy called GM to report this incident and to request that GM repurchase or replace the car. GM took note of Mr. Murphy’s complaint, but took no immediate action on the problem.

Mr. Murphy continued to drive the automobile. On April 28, 1996, the car stalled again, this time while Mr. Murphy was attempting to turn onto a U.S. highway. As a result of the stall, Mr. Murphy’s car was nearly struck by another. Fortunately, it was able to stop just in time.

The next day — April 29, 1996 — Mr. Murphy took the automobile back to Chesapeake for further repairs. Chesapeake worked on the car for several days, and notified GM of the additional stalling problem. Because the recalibration chip had not yet arrived, Chesapeake was forced to try other methods of repair. On May 2, 1996, Chesapeake returned the car to Mr. Murphy.

For a short while after the return of the vehicle, Mr. Murphy noticed an improvement. Nevertheless, the car stalled again in mid May, and yet again in late May. On May 27, 1996, Mr. Murphy called GM again to report these latest incidents and to ask to be released from the lease. Again, GM apparently took no immediate action on this complaint, and in the first week of June, Mr. Murphy stopped driving the car altogether.

On June 11, 1996, Mr. Murphy called Chesapeake and told them that, although he wanted out of the lease, he would give them one last opportunity to fix the problems with the car. Chesapeake responded by telling Mr. Murphy that the reealibration chip had arrived, and that he could bring the car in on ⁴⁵⁹ June 17, 1996 to have the repairs done. Mr. Murphy, in turn, told Chesapeake that he was not willing to wait six days to have the car repaired, and refused that offer. Mr. Murphy then had his attorney inform Chesapeake, via a letter dated June 11,1996, that he wanted the lease terminated and the car taken back.

An unspecified number of days after June 11, 1996, Chesapeake called Mr. Murphy at work to inform him that he could bring the car in that day for repairs. Mr. Murphy refused this offer. Then, on June 27, 1996, GM wrote to Mr. Murphy offering to replace the car in his possession. Again, Mr. Murphy refused this offer and subsequently filed his lawsuit on July 5,1996.

DISCUSSION Before we address the issues raised by appellant, it is important that we make some preliminary points clarifying the nature of his suit against appellees. The complaint contains three separate counts against appellees. One alleges that appellees violated express warranties issued pursuant to C.L. § 2-313 and asks for damages of $43,995.52. The second alleges that appellees violated the warranty of merchantability implied pursuant to C.L. § 2-314 and asks for damages of $43,995.52.

The third (listed first in the complaint) alleges that appellees violated express warranties issued pursuant to C.L. § 2-313, and the warranty of merchantability implied pursuant to C.L. § 2-314, and seeks damages of $46,753.32 pursuant to C.L. § 14-2004. Notwithstanding that Mr. Murphy asserted three separate claims in his complaint, the trial focused on only one of those — the claim for damages pursuant to C.L. § 14-2004. Further, the issues in this appeal deal solely with Mr. Murphy’s C.L. § 14-2004 claim. Thus, we will deal here only with the C.L. § 14-2004 claim, and not with either of the claims advanced pursuant solely to Title 2 of the Commercial Law Article. 2 ⁴⁶⁰ The primary purpose of C.L. § 14-2004 is to apply the warranty provisions of Title 2 (§§ 2-313' through 2-318) to leases of motor vehicles.

See C.L. § 14-2004(a). If any warranty established pursuant to those Title 2 provisions (i.e. the implied warranty of merchantability, express warranties, an implied warranty of fitness for a particular purpose) are violated, C.L. § 14-2004 requires the lessee to give notice of the defect to the lessor, factory branch, authorized dealer, or manufacturer by certified mail, return receipt requested, and to allow the lessor, factory branch, authorized dealer, or manufacturer an opportunity to fix the defect. See C.L. § 14-2004(c)(1) and (2). Further, the lessor, factory branch, authorized dealer, or manufacturer must fix the problem at no cost to the lessee.

See C.L. § 14-2004(c)(3). If the lessor, factory branch, authorized dealer, or manufacturer cannot fix the defect after a reasonable number of attempts, the lessee has a choice of two alternative remedies: 1) accept a comparable replacement vehicle; or 2) return the defective vehicle and accept, in compensation, all monies paid (by the lessee) to repair the defect, and all other monies paid (also by the lessee) “due” to the defect. See C.L. § 14-2004(d). Section 14-2004(e). sets forth three different factual scenarios which, if established by the lessee, give rise to a rebuttable presump ⁴⁶¹ tion that a reasonable number of attempts at fixing the defect were afforded.

Here, Mr. Murphy claims that the circuit court misinterpreted one part of C.L. § 14-2004(e), improperly failed to apply another part of C.L. § 14-2004(e), erred by failing to find that he allowed appellees a reasonable number of repair attempts, and erred by taking into account his decision not to accept a replacement vehicle. We address each contention in turn. I. Circuit Court’s Interpretation Of C.L. § 14-2004(e) Again, Mr. Murphy phoned Chesapeake on June 11, 1996, ostensibly to give them one last chance to repair his vehicle. Chesapeake informed him that it had received the recalibration chip, and that he could bring the vehicle back in for repairs on June 17.

Mr. Murphy, in turn, felt that six days was too long to wait, and refused Chesapeake’s offer. In its oral opinion, the circuit court made the following statement with respect to that refusal by Mr. Murphy: This Court finds it was unreasonable on the part of Mr. Murphy to not wait that six days to see if Chesapeake could repair this vehicle. Accordingly, the Court finds that Chesapeake was not given a reasonable opportunity to perform the repairs which could have cured this particular problem. The statute requires that the dealer be given a reasonable number of attempts to undertake to conform the motor vehicle to the applicable warranties under 14-2004(3)(e) and the Court finds that it was Mr. Murphy, instead, chose to continue to obligate himself on the lease through March of 1998 rather than take advantage of an offer to repair the car within the six days after his call to Chesapeake.

Mr. Murphy argues that this passage indicates that the circuit court interpreted C.L. § 14-2004(e) to require a lessee to establish one of the factual scenarios contained in that subsection in order to establish that he afforded the lessor a reasonable number of opportunities to repair the vehicle. We disagree. ⁴⁶² Before we address the meaning of the circuit court’s ruling, it is important that we first address a dispute about the effect of C.L. § 14-2004(e). That subsection provides as follows: (e) When presumption that a reasonable number of attempts to conform vehicle to applicable warranties arises.— It shall be presumed that a reasonable number of attempts have been undertaken to conform a motor vehicle to the applicable warranties if: (1) The same nonconformity, defect, or condition has been subject to repair 4 or more times by the manufacturer or factory branch, or its agents or authorized dealers, within the warranty period but such nonconformity, defect, or condition continues to exist; (2) The motor vehicle is out of service by reason of repair of 1 or more nonconformities, defects, or conditions for a cumulative total of 30 or more days during the warranty period; or (3) A nonconformity, defect, or condition resulting in failure of the braking or steering system has been subject to the same repair at least once within the warranty period, and the manufacturer has been notified and given the opportunity to cure the defect, and the repair does not bring the vehicle into compliance with the motor vehicle safety inspection laws of the State. As Mr. Murphy correctly points out, this subsection simply provides that when a lessee has established one of the factual scenarios listed, there is a presumption that the lessee has afforded the lessor a reasonable number of opportunities to repair the vehicle, and