Mydlach v. DaimlerChrysler Corporation ( 2007 )

Docket No. 102588.
IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
LUCY MYDLACH, Appellee, v. DAIMLERCHRYSLER
CORPORATION, Appellant.
Opinion filed September 20, 2007.
JUSTICE FITZGERALD delivered the judgment of the court,
with opinion.
Chief Justice Thomas and Justices Freeman, Kilbride, Garman,
Karmeier, and Burke concurred in the judgment and opinion.
OPINION
Plaintiff, Lucy Mydlach, filed a three-count complaint in the circuit
court of Cook County against defendant, DaimlerChrysler
Corporation, alleging claims under the Magnuson-Moss
Warranty–Federal Trade Commission Improvement Act (Magnuson-
Moss Act or Act) (15 U.S.C. §2301 et seq. (1994)). The circuit court
granted defendant’s motion for summary judgment, holding that the
claims were time-barred under the four-year statute of limitations
contained in section 2–725 of the Uniform Commercial Code–Sales
(UCC) (810 ILCS 5/2–725 (West 2006)). The appellate court
affirmed in part and reversed in part. 364 Ill. App. 3d 135. For the
reasons discussed below, we affirm in part and reverse in part the
judgment of the appellate court and remand the matter to the circuit
court for further proceedings.
BACKGROUND
On June 20, 1998, plaintiff purchased a used 1996 Dodge Neon,
manufactured by defendant, from McGrath Buick-Nissan (McGrath)
in Elgin, Illinois. The vehicle was originally put into service on June
24, 1996, with a three-year/36,000-mile limited warranty. The
warranty provided, in relevant part, as follows:
“The ‘Basic Warranty’ begins on your vehicle’s
Warranty Start Date which is the earlier of (1) the date you
take delivery of your new vehicle, OR (2) the date the vehicle
was first put into service ***.
The ‘Basic Warranty’ covers the cost of all parts and
labor needed to repair any item on your vehicle (except as
noted below) that’s defective in material, workmanship, or
factory preparation. You pay nothing for these repairs.
The ‘Basic Warranty’ covers every Chrysler supplied
part of your vehicle, EXCEPT its tires and cellular telephone.
***
***
These warranty repairs or adjustments (parts and labor)
will be made by your dealer at no charge using new or
remanufactured parts.
***
The ‘Basic Warranty’ lasts for 36 months from the
vehicle’s Warranty Start Date OR for 36,000 miles on the
odometer, whichever occurs first.” (Emphasis in original.)
At the time of plaintiff’s purchase in 1998, the car’s mileage was
26,296. Thus, the warranty had approximately one year or 10,000
miles remaining.
Beginning July 7, 1998, plaintiff brought the car to McGrath and
another authorized dealership several times for a variety of problems,
including a recurring fluid leak. Plaintiff claimed that the dealerships’
repair attempts were unsuccessful and, as a result, she could not use
the vehicle as intended. Plaintiff ultimately filed suit against defendant
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on May 16, 2001, seeking legal and equitable relief, as well as
attorney fees and costs, under the Magnuson-Moss Act. Plaintiff
alleged breach of written warranty (count I), breach of the implied
warranty of merchantability (count II), and revocation of acceptance
(count III).
The case initially proceeded to arbitration, where a decision was
entered in favor of defendant. Plaintiff rejected the arbitrators’
decision and the case was returned to the trial court. After further
discovery, defendant filed a motion for summary judgment. Defendant
argued that counts I and II of plaintiff’s complaint were subject to the
four-year statute of limitations found in section 2–725 of the UCC
(810 ILCS 5/2–725 (West 2006)) and that, as provided by section
2–725(2), the statute of limitations commenced upon “tender of
delivery” of the vehicle to its original purchaser in June 1996. Thus,
according to defendant, plaintiff’s suit, filed in May 2001, was outside
the four-year limitations period. With respect to count III, defendant
argued that plaintiff was not entitled to seek revocation of acceptance
because no privity existed between plaintiff and defendant, and
because plaintiff could not prove the underlying breach of implied
warranty claim.
Plaintiff responded that her claims were not time-barred because
the “tender of delivery” referenced in the UCC was the tender of
delivery to her, and not to the original purchaser. Plaintiff also argued
that a lack of privity is not a bar to a claim for revocation of
acceptance against a manufacturer who is also a warrantor.
Relying on Nowalski v. Ford Motor Co., 335 Ill. App. 3d 625
(2002), the trial court agreed with defendant that plaintiff’s claims
were time-barred and granted defendant’s motion for summary
judgment on all three counts. The trial court denied plaintiff’s motion
for reconsideration, and plaintiff appealed.
The appellate court reversed the trial court’s grant of summary
judgment on counts I and III, and affirmed the grant of summary
judgment on count II. As to the limitations issue, the appellate court
followed Cosman v. Ford Motor Co., 285 Ill. App. 3d 250 (1996),
rather than Nowalski, and held that:
“plaintiff’s right to bring a breach of written warranty action
based on the promise to repair accrued when defendant
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allegedly failed to successfully repair her car after a reasonable
number of attempts and that the four-year statute of
limitations did not begin to run until that time.” 364 Ill. App.
3d at 146.
The appellate court also held that plaintiff could properly pursue
revocation of acceptance as an equitable remedy under the Magnuson-
Moss Act if her breach of warranty claim was successful. 364 Ill. App.
3d at 158.
We allowed defendant’s petition for leave to appeal. See 210 Ill.
2d R. 315. Because plaintiff does not seek cross-relief as to count II
of her complaint, the only counts before this court are counts I and
III.
ANALYSIS
I
The purpose of a summary judgment proceeding is not to try an
issue of fact, but rather to determine whether one exists. Ferguson v.
McKenzie, 202 Ill. 2d 304, 307-08 (2001). Summary judgment is thus
appropriate “if the pleadings, depositions, and admissions on file,
together with the affidavits, if any, show that there is no genuine issue
as to any material fact and that the moving party is entitled to a
judgment as a matter of law.” 735 ILCS 5/2–1005(c) (West 2006).
Because summary judgment is a drastic measure, it should only be
allowed “when the right of the moving party is clear and free from
doubt.” Purtill v. Hess, 111 Ill. 2d 229, 240 (1986). In an appeal from
the grant of summary judgment our review proceeds de novo. Morris
v. Margulis, 197 Ill. 2d 28, 35 (2001). In assessing whether summary
judgment was appropriate here, we must determine when the
limitations period, applicable to a breach of warranty claim under the
Magnuson-Moss Act, commences. On this legal issue our review also
proceeds de novo. See Belleville Toyota, Inc. v. Toyota Motor Sales,
U.S.A., Inc., 199 Ill. 2d 325, 350 (2002).
II
As an initial matter we address defendant’s argument that the
Magnuson-Moss Act does not apply to limited warranties like the one
at issue here.
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The Magnuson-Moss Act, adopted by Congress in 1975, is a
“remedial statute designed to protect consumers from deceptive
warranty practices.” Skelton v. General Motors Corp., 660 F.2d 311,
313 (7th Cir. 1981). The Act does not require a consumer product to
be warranted. See 15 U.S.C. §2302(b)(2) (1994) (prohibiting the
Federal Trade Commission (FTC) from requiring “that a consumer
product or any of its components be warranted”). Where a warranty
is provided, however, the warranty is subject to the Act’s regulatory
scheme (Skelton, 660 F.2d at 314), including rules promulgated by the
FTC (15 U.S.C. §2302(a) (1994); 16 C.F.R. §700.1 et seq. (2006)).
The Act speaks to both implied warranties and written warranties.
An “implied warranty” means “an implied warranty arising under State
law,” as modified by the Act. 15 U.S.C. §2301(7) (1994). As already
noted, plaintiff’s implied warranty claim is not before this court.
The Act defines a “written warranty” as:
“(A) any written affirmation of fact or written promise
made in connection with the sale of a consumer product by a
supplier to a buyer which relates to the nature of the material
or workmanship and affirms or promises that such material or
workmanship is defect free or will meet a specified level of
performance over a specified period of time, or
(B) any undertaking in writing in connection with the sale
by a supplier of a consumer product to refund, repair, replace,
or take other remedial action with respect to such product in
the event that such product fails to meet the specifications set
forth in the undertaking.” 15 U.S.C. §2301(6) (1994).
The parties are in agreement that the warranty at issue here constitutes
a “written warranty” for purposes of the Act. Case law on this subject
is in accord. E.g., Cosman, 285 Ill. App. 3d at 253, 259-60 (“A
warranty under the Magnuson-Moss Act includes promises to repair
products in the future whose inherent reliability is not warranted” and
includes six-year/60,000-mile repair or replacement warranty); Pierce
v. Catalina Yachts, Inc., 2 P.3d 618, 626-27 (Alaska 2000)
(concluding that one-year limited repair warranty “falls within the
definition” of a written warranty under section 2301(6)(B) of the Act);
Nationwide Insurance Co. v. General Motors Corp., 533 Pa. 423,
433, 625 A.2d 1172, 1177 (1993) (noting that 12-month/12,000-mile
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repair warranty “fit[s] within the modern concept of warranty,” citing
section 2301(6)(B) of the Act); see also C. Reitz, Manufacturers’
Warranties of Consumer Goods, 75 Wash. U. L.Q. 357, 363 n.21
(1997) (“The Magnuson-Moss Warranty Act’s key concept, called a
‘written warranty,’ is defined primarily as a promise to repair or
replace goods,” citing section 2301(6)(B) of the Act).
The Magnuson-Moss Act also distinguishes between “full” and
“limited” warranties, and sets forth minimum standards for “full”
warranties. 15 U.S.C. §2304 (1994). If a written warranty meets the
federal minimum standards, “then it shall be conspicuously designated
a ‘full (statement of duration) warranty.’ ” 15 U.S.C. §2303(a)(1)
(1994). If a warranty does not meet the federal minimum standards,
“then it shall be conspicuously designated a ‘limited warranty.’ ” 15
U.S.C. §2303(a)(2) (1994). The parties agree that the warranty at
issue here is a “limited” warranty, as opposed to a “full” warranty. We
note that defendant’s warranty booklet for the 1996 Dodge Neon
repeatedly refers to defendant’s warranties as “Limited Warranties.”
To enforce its provisions, the Magnuson-Moss Act authorizes
suits by the Attorney General and the FTC to enjoin “any warrantor
from making a deceptive warranty” or to enjoin “any person from
failing to comply with any requirement *** or from violating any
prohibition” contained in the Act. 15 U.S.C. §2310(c)(1) (1994).
Significantly, the Act also “provides a statutory private right of
action.” Borowiec v. Gateway 2000, Inc., 209 Ill. 2d 376, 386 (2004);
accord Skelton, 660 F.2d at 315; Davis v. Southern Energy Homes,
Inc., 305 F.3d 1268, 1272 (11th Cir. 2002); Milicevic v. Fletcher
Jones Imports, Ltd., 402 F.3d 912, 917 (9th Cir. 2005).
Section 2310(d)(1) states in relevant part:
“[A] consumer who is damaged by the failure of a
supplier, warrantor, or service contractor to comply with any
obligation under this chapter, or under a written warranty,
implied warranty, or service contract, may bring suit for
damages and other legal and equitable relief–
(A) in any court of competent jurisdiction in any State
or the District of Columbia; or
(B) in an appropriate district court of the United States
***.” 15 U.S.C. §2310(d)(1) (1994).
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The term “consumer” is broadly defined under the Act as
“a buyer (other than for purposes of resale) of any
consumer product, any person to whom such product is
transferred during the duration of an implied or written
warranty (or service contract) applicable to the product, and
any other person who is entitled by the terms of such warranty
(or service contract) or under applicable State law to enforce
against the warrantor (or service contractor) the obligations of
the warranty (or service contract).” 15 U.S.C. §2301(3)
(1994).
A “supplier” means “any person engaged in the business of making a
consumer product directly or indirectly available to consumers.” 15
U.S.C. §2301(4) (1994). A “warrantor” means “any supplier or other
person who gives or offers to give a written warranty or who is or
may be obligated under an implied warranty.” 15 U.S.C. §2301(5)
(1994). No dispute exists that plaintiff is a “consumer” within the
meaning of the Act or that defendant is a “warrantor” under the Act.
A consumer who prevails in any action brought under section
2310(d)(1) may be allowed by the court to recover costs and
expenses, including attorney fees. 15 U.S.C. §2310(d)(2) (1994).
Plaintiff’s complaint was filed under section 2310(d)(1) of the Act.
Defendant’s argument that the Magnuson-Moss Act does not
apply to limited warranties is not entirely clear. As noted above,
defendant does not dispute that its warranty constitutes a limited
warranty, as defined by the Act. Additionally, defendant does not
argue that plaintiff is precluded from bringing a breach of warranty
claim under the Act. Indeed, defendant’s motion for summary
judgment “ ‘assumes that a cause of action has been stated.’ ”
Delgatto v. Brandon Associates, Ltd., 131 Ill. 2d 183, 190 (1989),
quoting Janes v. First Federal Savings & Loan Ass’n of Berwyn, 57
Ill. 2d 398, 406 (1974). Moreover, as set forth above, the remedies
provision of section 2310 of the Act brings within its reach the failure
of a warrantor to comply with any obligation “under a written
warranty.” 15 U.S.C. §2310(d)(1) (1994). Section 2310 does not
distinguish between a full warranty and a limited warranty.
Defendant makes the related argument that the Magnuson-Moss
Act is merely a conduit to apply state law remedies. This is the same
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argument defendant raised in Cogley v. DaimlerChrysler Corp., 368
Ill. App. 3d 91, 98 (2006), where the appellate court considered the
same statute-of-limitations issue that is before us today. The appellate
court rejected defendant’s argument, stating:
“According to defendants, in cases arising under limited
warranties, the Magnuson-Moss Act serves only as a ‘conduit’
for claims arising under state law. Even if this statement is
true, we fail to see how it has any bearing on the question of
when the statute of limitations begins to run. As seen, all of
the relevant Illinois decisions are in agreement that the
Magnuson-Moss Act borrows the UCC’s statute of
limitations. This would appear to be true whether state law or
federal law governs the substance of the claim. In other words,
for statute of limitations purposes, it should make no
difference whether the Magnuson-Moss Act provides the
substantive law or merely serves as a conduit for a state law
claim.” (Emphasis added.) Cogley, 368 Ill. App. 3d at 98.
We agree with the appellate court. Whether state law will ultimately
determine if a breach of limited warranty occurred here is irrelevant to
the limitations issue this case presents. Accordingly, we need not
consider defendant’s “conduit” argument further and, instead, focus
on the limitations issue.
III
Although the Magnuson-Moss Act provides a private right of
action for breach of a written warranty, the Act does not contain a
limitations provision for such an action. Where a federal statute fails
to specify a limitations period for suits under it, “courts apply the most
closely analogous statute of limitations under state law.” DelCostello
v. International Brotherhood of Teamsters, 462 U.S. 151, 158, 76 L.
Ed. 2d 476, 485, 103 S. Ct. 2281, 2287 (1983); accord Wilson v.
Garcia, 471 U.S. 261, 268, 85 L. Ed. 2d 254, 261, 105 S. Ct. 1938,
1942 (1985); Teamsters & Employers Welfare Trust v. Gorman
Brothers Ready Mix, 283 F.3d 877, 880 (7th Cir. 2002). In suits
brought under the Magnuson-Moss Act, our appellate court, as well
as courts in other jurisdictions, generally consider the UCC to be the
most closely analogous statute and have borrowed the limitations
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provision contained therein. See, e.g., Nowalski, 335 Ill. App. 3d at
628 (collecting Illinois cases); Hillery v. Georgie Boy Manufacturing,
Inc., 341 F. Supp. 2d 1112, 1114 (D. Ariz. 2004); Poli v.
DaimlerChrysler Corp., 349 N.J. Super. 169, 181, 793 A.2d 104, 111
(2002); Murungi v. Mercedes Benz Credit Corp., 192 F. Supp. 2d 71,
79 (W.D.N.Y. 2001); Keller v. Volkswagen, 1999 PA Super. 153, ¶5.
We agree with the foregoing authorities and will look to the
limitations provision contained in the UCC to determine the timeliness
of plaintiff’s complaint. Specifically, we will look to article 2 of the
UCC, which applies to “transactions in goods.” 810 ILCS 5/2–102
(West 2006).
Section 2–725 of the UCC, titled “Statute of limitations in
contracts for sale,” generally provides a four-year limitations period:
“(1) An action for breach of any contract for sale must be
commenced within 4 years after the cause of action has
accrued. By the original agreement the parties may reduce the
period of limitation to not less than one year but may not
extend it.
(2) A cause of action accrues when the breach occurs,
regardless of the aggrieved party’s lack of knowledge of the
breach. A breach of warranty occurs when tender of delivery
is made, except that where a warranty explicitly extends to
future performance of the goods and discovery of the breach
must await the time of such performance the cause of action
accrues when the breach is or should have been discovered.”
810 ILCS 5/2–725 (West 2006).
Preliminarily, we note that the future-performance exception to
the four-year limitations period, set forth in subsection (2) above, is
not at issue in this case. As will be discussed in greater detail below,
a repair or replacement warranty like the one issued by defendant here
“has nothing to do with the inherent quality of the goods or their
future performance.” Cosman, 285 Ill. App. 3d at 261. See also C.
Reitz, Manufacturers’ Warranties of Consumer Goods, 75 Wash. U.
L.Q. 357, 364 n.24 (1997) (“Promises to repair or replace refer to
future performance of sellers, not to future performance of goods”);
L. Lawrence, Lawrence’s Anderson on the Uniform Commercial
Code §2–625:129, at 332 (3d ed. 2001) (discussing difference
between a warranty of future performance and a covenant to repair or
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replace). Accordingly, we turn our attention to the balance of the
statute and the parties’ arguments relative thereto.
Defendant argues that section 2–725 should be applied as written.
Thus, because the statute provides that a “breach of warranty occurs
when tender of delivery is made,” and tender of delivery of the Dodge
Neon was first made in June 1996, plaintiff’s suit, filed in May 2001,
was untimely. See Nowalski, 335 Ill. App. 3d at 632 (holding that
cause of action for breach of three-year/36,000-mile limited warranty
accrued when the vehicle was delivered and not when defendant failed
to successfully repair the vehicle). Plaintiff argues that a repair
warranty cannot be breached until the manufacturer fails to repair the
vehicle after a reasonable opportunity to do so, and that the appellate
court did not err in finding her complaint was timely filed. See
Cosman, 285 Ill. App. 3d at 260 (holding that breach of six-
year/60,000-mile limited powertrain warranty “cannot occur until
Ford refuses or fails to repair the powertrain if and when it breaks”);
Belfour v. Schaumberg Auto, 306 Ill. App. 3d 234, 241 (1999)
(following Cosman and holding that breach of three-year/50,000-mile
repair warranty “cannot occur until Audi refuses or fails to repair the
defect”); Cogley, 368 Ill. App. 3d at 96-97 (following Cosman and
holding that suit for breach of three-year/36,000-mile repair warranty
filed within four years of repair attempt was timely).1
We begin our analysis by turning to the language of article 2 of the
UCC. Section 2–725(2) plainly states that “[a] breach of warranty
occurs when tender of delivery is made.” 810 ILCS 5/2–725(2) (West
2006). The Nowalski opinion, on which defendant relies, concluded
that once article 2 of the UCC is chosen as the analogous state statute
from which to borrow the statute of limitations, the analysis begins
and ends with the “tender of delivery” language quoted above.
Nowalski, 335 Ill. App. 3d at 632. We disagree.
1
The same divergence of opinion on the limitations issue that is
exemplified by Nowalski and Cosman exists among our sister states. See
generally L. Garvin, Uncertainty and Error in the Law of Sales: The Article
Two Statute of Limitations, 83 B.U.L. Rev. 345, 377-81 (2003) (discussing
the split among state courts in their approach to repair or replacement
promises).
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Although courts generally consider article 2 of the UCC to be the
statute most closely analogous to the Magnuson-Moss Act, the two
enactments are not identical. For example, article 2 addresses
warranties that are created by the “seller.” See 810 ILCS 5/2–312,
2–313, 2–314, 2–315 (West 2006). The Magnuson-Moss Act,
however, addresses warranties from a “supplier” or “warrantor” who
may or may not be the immediate seller. See 15 U.S.C. §§2301(4),
(5), (6) (1994). In addition, the term “warranty,” as used in the two
enactments, is not the same. As discussed above, the Act speaks of
implied warranties and written warranties, the latter of which may be
either full or limited. 15 U.S.C. §§2301(6), (7), 2303 (1994). In
contrast, the UCC speaks of express warranties (which may be oral or
written), implied warranties, and warranty of title. 810 ILCS 5/2–312,
2–313, 2–314, 2–315 (West 2006).
Although the parties agree that defendant’s warranty is a “written
warranty” under the Magnuson-Moss Act, they disagree as to whether
the warranty is an “express warranty” under the UCC. Defendant
argues that the repair warranty qualifies as an express warranty and
that plaintiff’s claim is therefore governed by the tender-of-delivery
rule in section 2–725(2). Plaintiff argues that it does not qualify as an
express warranty and that her claim is not subject to the tender-of-
delivery rule.
Section 2–313 of the UCC explains how express warranties are
created.
“Express warranties by the seller are created as follows:
(a) Any affirmation of fact or promise made by the
seller to the buyer which relates to the goods and becomes
part of the basis of the bargain creates an express warranty
that the goods shall conform to the affirmation or promise.
(b) Any description of the goods which is made part of
the basis of the bargain creates an express warranty that
the goods shall conform to the description.
(c) Any sample or model which is made part of the
basis of the bargain creates an express warranty that the
whole of the goods shall conform to the sample or model.”
810 ILCS 5/2–313(1) (West 2006).
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The UCC makes plain that an express warranty is related to the
quality or description of the goods. See Moorman Manufacturing Co.
v. National Tank Co., 91 Ill. 2d 69, 78 (1982) (observing that UCC
warranty rules “determine the quality of the product the manufacturer
promises and thereby determine the quality he must deliver”); Alloway
v. General Marine Industries, L.P., 149 N.J. 620, 630, 695 A.2d 264,
269 (1997) (stating that “the U.C.C. provides for express warranties
regarding the quality of goods”); Allis-Chalmers Credit Corp. v.
Herbolt, 17 Ohio App. 3d 230, 233, 479 N.E.2d 293, 297 (1984)
(identifying UCC express warranties as one of the “warranties of
quality”); 1 W. Hawkland, Uniform Commercial Code Series
§2–313.4, at 546 (2002) (“express warranties relate exclusively to
quality, description and title of the goods and have nothing to do with
the other terms of the contract”).
In other words, an express warranty, for purposes of the UCC,
obligates the seller to deliver goods that conform to the affirmation,
promise, description, sample or model. If a seller delivers conforming
goods, the warranty is satisfied. If the seller delivers nonconforming
goods, the warranty is breached at that time. Even if the buyer is
unaware that the goods, as delivered, do not conform to the seller’s
affirmation, promise, description, sample or model, the warranty has
been breached. Under this scenario, the statutory pronouncement that
“[a] breach of warranty occurs when tender of delivery is made” (810
ILCS 5/2–725(2) (West 2006)) makes perfect sense, and the four-year
limitations period commences at that time. See M. Klinger, The
Concept of Warranty Duration: A Tangled Web, 89 Dick. L. Rev.
935, 939 (1985) (“Section 2–725(2) presumes that all warranties,
expressed or implied, relate only to the condition of the goods at the
time of sale” and “[a]s a result, the period of limitations begins to run
at that time”); L. Garvin, Uncertainty and Error in the Law of Sales:
The Article Two Statute of Limitations, 83 B.U.L. Rev. 345, 379
(2003) (“Article Two defines a range of express and implied
warranties” which “[a]ll go to the quality of the goods at tender”).
The warranty in the present case, however, is not related to the
quality or description of the goods at tender. It does not warrant that
the vehicle will conform to some affirmation, promise, description,
sample or model. Rather, the warranty promises only that the
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manufacturer will repair or replace defective parts during the warranty
period. As defendant made clear in its brief before this court:
“DaimlerChrysler’s limited warranty was not a promise that
the vehicle would be defect free and in the event of a breach
of warranty, Plaintiff would be limited to repair or replacement
of the vehicle. Rather, DaimlerChrysler’s limited warranty
promised to cover the cost to repair or replace defective parts
in the automobile for the time period covering 36 months or
36 thousand miles.”
Although defendant’s warranty qualifies as a “written warranty” under
the Act, it is not an “express warranty” under the UCC, and is thus
not the type of warranty that can be breached on “tender of delivery”
(810 ILCS 5/2–725(2) (West 2006)). See Cogley, 368 Ill. App. 3d at
96; Cosman, 285 Ill. App. 3d at 258-60; C. Dewitt, Note, Action
Accrual Date for Written Warranties to Repair: Date of Delivery or
Date of Failure to Repair, 17 U. Mich. J.L. Reform 713, 722 n.35
(1984) (promise to repair “relates not to the goods and their quality,
but to the manufacturer and its obligation to the purchaser,” and thus
“a repair ‘warranty’ falls beyond the scope of *** the on-delivery
rule”); C. Reitz, Manufacturers’ Warranties of Consumer Goods, 75
Wash. U. L.Q. 357, 364 n.24 (1997) (tender-of-delivery date for
commencement of four-year UCC limitations provision is “completely
inappropriate to promises to repair or replace goods that are later
determined to be defective”). Accordingly, we reject defendant’s
argument that the four-year limitations period for breach of the repair
warranty commenced upon delivery of the Dodge Neon in 1996, and
we overrule the Nowalski opinion on which defendant relies.
Our conclusion that the repair warranty is not a UCC express
warranty, and thus not subject to the tender-of-delivery rule set forth
in the second sentence of section 2–725(2), does not render section
2–725(2) irrelevant for purposes of determining when the limitations
period began on plaintiff’s claim under the Magnuson-Moss Act. The
first sentence of section 2–725(2) remains applicable. The first
sentence states: “[a] cause of action accrues when the breach occurs,
regardless of the aggrieved party’s lack of knowledge of the breach.”
(Emphasis added.) 810 ILCS 5/2–725(2) (West 2006). Although the
UCC does not expressly state when the breach of a repair promise
occurs, we may refer to the law that exists outside of the UCC. See
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810 ILCS 5/1–103 (West 2006) (“Unless displaced by the particular
provisions of this Act, the principles of law and equity *** shall
supplement its provisions”); L. Lawrence, Lawrence’s Anderson on
the Uniform Commercial Code §2–725:99, at 301 (3d ed. 2001)
(because the UCC provides no assistance as to when a nonwarranty
breach of contract “occurs” for purposes of computing the limitations
period, “it is necessary to resort to the general non-Code law of
contracts,” which “has not been displaced by the Code and therefore
continues in force”).
Generally, “[w]hen performance of a duty under a contract is due
any non-performance is a breach.” Restatement (Second) of Contracts
§235, at 211 (1979). Performance under a vehicle manufacturer’s
promise to repair or replace defective parts is due not at tender of
delivery, but only when, and if, a covered defect arises and repairs are
required. In that event, if the promised repairs are refused or
unsuccessful, the repair warranty is breached and the cause of action
accrues, triggering the four-year limitations period. See Cosman, 285
Ill. App. 3d at 260 (holding that breach of six-year/60,000-mile limited
powertrain warranty “cannot occur until Ford refuses or fails to repair
the powertrain if and when it breaks”); Belfour, 306 Ill. App. 3d at
241 (holding that breach of three-year/50,000-mile repair warranty
“cannot occur until Audi refuses or fails to repair the defect”); Cogley,
368 Ill. App. 3d at 96-97 (holding that suit for breach of three-
year/36,000-mile repair warranty filed within four years of repair
attempt was timely). See also Monticello v. Winnebago Industries,
Inc., 369 F. Supp. 2d 1350, 1356-57 (N.D. Ga. 2005) (under Georgia
law, a written warranty that provides for repair or replacement of
parts is breached when the purchaser returns the product to the dealer
for repair and repair is refused or unsuccessful); Poli, 349 N.J. Super.
at 180, 793 A.2d at 110-11 (under New Jersey law, cause of action
for breach of seven-year/70,000-mile powertrain warranty would not
have accrued when the car was delivered, but rather when persistent
problems appeared or when DaimlerChrysler was unable to repair the
defect); Long Island Lighting Co. v. IMO Industries Inc., 6 F.3d 876,
889-90 (2d Cir. 1993) (under New York law, cause of action for
breach of a repair promise accrued when the generator malfunctioned
and the seller refused to make the necessary repairs).
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This is the approach advocated by some commentators. For
example, in his discussion of the appropriate treatment of a
manufacturer’s express warranty to repair or replace defective parts,
Professor Lawrence states:
“The sounder approach is to recognize that the failure to
repair or replace is merely a breach of contract and not a
breach of warranty, and therefore no cause of action arises
until the seller has refused to repair or replace the goods. This
is because until the seller has failed or refused to make the
repairs or provide a replacement, the buyer, not being entitled
to such a remedy, has no right to commence an action for
damages. As a result, the action is timely if brought within
four years of the seller’s failure or refusal.” L. Lawrence,
Lawrence’s Anderson on the Uniform Commercial Code
§2–725:101, at 303 (3d ed. 2001).
Accord L. Garvin, Uncertainty and Error in the Law of Sales: The
Article Two Statute of Limitations, 83 B.U.L. Rev. 345, 381 (2003).
The correctness of this approach is manifest when we consider
consumer claims for breach of repair warranties that run for periods
longer than the three years/36,000 miles at issue here. For example,
consider the case of a consumer who purchases a vehicle carrying a
five-year/50,000 mile repair warranty. If the four-year limitations
period commences at “tender of delivery,” the limitations period for
a breach of the repair promise occurring in year five will expire before
the breach even occurs, thus rendering the repair warranty
unenforceable during its final year. Statutes of limitations, however,
are intended “to prevent stale claims, not to preclude claims before
they are ripe for adjudication.” Guzman v. C.R. Epperson
Construction, Inc., 196 Ill. 2d 391, 400 (2001). Even a four-year
warranty could be rendered unenforceable if breach of the repair
promise occurred near the end of the warranty period. In that case, the
buyer would have only the briefest of periods in which to file suit. See
Nationwide Insurance Co., 533 Pa. at 434, 625 A.2d at 1178.
Defendant argues that concerns about the enforceability of longer-
term repair warranties are inapplicable to the facts of this case and
without merit. We disagree. Although the repair warranty at issue here
ran for three years, our holding in this case will apply equally to
longer-term warranties. Such warranties are common in the
automobile industry. Adoption of defendant’s position would be an
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invitation to manufacturers and sellers of automobiles, as well as other
goods, to engage in misleading marketing. That is, a manufacturer or
seller could use the marketing advantage of a longer repair warranty,
yet escape the accompanying obligations of that warranty by pleading
the statute of limitations in defense. C. Williams, The Statute of
Limitations, Prospective Warranties, and Problems of Interpretation
in Article Two of the UCC, 52 Geo. Wash. L. Rev. 67, 105 (1983).
Such a result is contrary to the very purpose of the Magnuson-Moss
Act: “to improve the adequacy of information available to consumers”
and “prevent deception.” 15 U.S.C. §2302(a) (1994).
Defendant also argues that unless the tender-of-delivery rule in
section 2–725 is given effect, the limitations period for breach of
limited warranty actions will be “limitless” and “uncertain.” This
argument is without merit. Because the promise to repair or replace
defective parts is only good during the warranty period, the latest a
breach of warranty can occur is at the very end of that period.
Accordingly, the statute of limitations will expire, at the latest, four
years after the warranty period has run. If breach of a repair warranty
occurs earlier in the warranty period, the limitations period for that
breach will expire sooner, but in no event will the warrantor’s
exposure extend beyond the warranty period, plus four years. Thus,
contrary to defendant’s argument, commencing the four-year
limitations period from the date the warrantor fails or refuses to repair
the vehicle does not result in a limitless limitations period.
We recognize, of course, that a fact question may arise as to the
date on which a repair warranty was breached which, in turn, would
create some uncertainty as to when the four-year limitations period
should commence. Fact questions of this nature, however, frequently
arise in cases where the statute of limitations has been pled in defense.
Resolution of this type of uncertainty is a classic function of the trier
of fact. See, e.g., County of Du Page v. Graham, Anderson, Probst
& White, Inc., 109 Ill. 2d 143, 153-54 (1985) (remanding the matter
to the circuit court for a factual determination as to when the statute
of limitations began to run against the county on its claims for
defective design and construction of the county’s administration
building); Knox College v. Celotex Corp., 88 Ill. 2d 407, 417 (1981)
(holding that trier of fact must determine when the plaintiff had
sufficient information as to the roof defect to start the running of the
limitations period); Witherell v. Weimer, 85 Ill. 2d 146, 156 (1981)
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(“In many, if not most, cases the time at which an injured party knows
or reasonably should have known both of his injury and that it was
wrongfully caused will be a disputed question to be resolved by the
finder of fact”). We therefore reject defendant’s argument that
commencing the limitations period when the warrantor fails or refuses
to repair the defect–rather than at tender of delivery–will create
unacceptable uncertainty in the limitations period.
Turning to the facts of this case, the record indicates that plaintiff
brought her vehicle to McGrath and another authorized dealer on
several occasions beginning in July 1998. At that point, assuming the
alleged defects were covered defects, defendant was obligated
(through its authorized dealer) to make good on its repair promise.
Plaintiff’s lawsuit, filed in May 2001, is therefore timely. Accordingly,
we affirm that portion of the judgment of the appellate court which
reversed the grant of summary judgment in favor of defendant as to
count I of the complaint.
IV
Defendant next argues that plaintiff cannot seek revocation of
acceptance (count III of the complaint) if the underlying breach of
warranty claim is time-barred. Because we have already held that
plaintiff’s breach of warranty claim was timely filed, we necessarily
reject defendant’s argument. Defendant further argues, however, that
plaintiff is not entitled to revocation of acceptance because no privity
of contract exists between the parties, and the relief sought by
revocation–the unwinding of the sales contract–is nonsensical against
a manufacturer who is not a party to the sales transaction. Plaintiff
responds that revocation is an equitable form of relief available under
section 2310(d) of the Magnuson-Moss Act and that the existence of
a manufacturer’s written warranty creates sufficient privity to seek
revocation against the manufacturer.
Section 2310(d) of the Act states that “a consumer who is
damaged by the failure of a supplier, warrantor, or service contractor
to comply with any obligation under *** a written warranty *** may
bring suit for damages and other legal and equitable relief.” (Emphasis
added.) 15 U.S.C. §2310(d)(1) (1994). Revocation of acceptance is
a form of equitable relief. See Mrugala v. Fairfield Ford, Inc., 325 Ill.
App. 3d 484, 492 (2001). Whether this form of relief should be
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available against a nonselling manufacturer is an issue on which Illinois
state courts have not spoken. Courts in our sister states are divided.
Compare, e.g., Hardy v. Winnebago Industries, Inc., 120 Md. App.
261, 270-71, 706 A.2d 1086, 1091 (1998), and Conte v. Dwan
Lincoln-Mercury, Inc., 172 Conn. 112, 125, 374 A.2d 144, 150
(1976) (where the Maryland and Connecticut courts held that the
remedy of revocation is only available against a seller of goods), with
Ventura v. Ford Motor Corp. 180 N.J. Super. 45, 65-66, 433 A.2d
801, 812 (1981), and Volkswagen of America, Inc. v. Novak, 418 So.
2d 801, 804 (Miss. 1982) (where the New Jersey and Mississippi
courts allowed revocation of acceptance against the remote
manufacturer).
We note that federal courts sitting in Illinois that have considered
this issue have also reached contrary results. Compare Larry J.
Soldinger Associates, Ltd. v. Aston Martin Lagonda of North
America, Inc., No. 97 C 7792 (N.D. Ill. September 13, 1999) (holding
that the plaintiff could pursue revocation against the defendant
manufacturer based on breach of the written warranty), with Kutzler
v. Thor Industries, Inc., No. 03 C 2389 (N.D. Ill. July 14, 2003)
(rejecting Soldinger and holding that revocation of acceptance is
unavailable against a manufacturer who is not a party to the sales
contract). The appellate court in the present case followed the
Soldinger line of cases. 364 Ill. App. 3d at 158. After carefully
considering the matter, we find Kutzler to be more persuasive, and
thus reverse the appellate court’s judgment as to count III of the
complaint.
In Kutzler, the plaintiff asserted a claim for revocation of
acceptance under section 2310(d) of the Magnuson-Moss Act based
on an alleged breach of a written limited warranty by Thor Industries,
the manufacturer of a motor home which the plaintiff had purchased
from Bernard Chevrolet. In holding that the plaintiff could not seek
revocation of acceptance against the non-selling manufacturer, the
Kutzler court first consulted Illinois law, turning to section 2–608 of
the UCC. Section 2–608, which has not been amended since Kutzler
was decided, provides as follows:
“Revocation of Acceptance in Whole or in Part. (1) The
buyer may revoke his acceptance of a lot or commercial unit
whose non-conformity substantially impairs its value to him if
he has accepted it
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(a) on the reasonable assumption that its non-
conformity would be cured and it has not been seasonably
cured; or
(b) without discovery of such non-conformity if his
acceptance was reasonably induced either by the difficulty
of discovery before acceptance or by the seller’s
assurances.
(2) Revocation of acceptance must occur within a
reasonable time after the buyer discovers or should have
discovered the ground for it and before any substantial change
in condition of the goods which is not caused by their own
defects. It is not effective until the buyer notifies the seller of
it.
(3) A buyer who so revokes has the same rights and duties
with regard to the goods involved as if he had rejected them.”
820 ILCS 5/2–608 (West 2006).
The Kutzler court observed that “[t]he language of Section 2–608
on its face contemplates that the remedy of revocation would be
available against the seller, and not against a non-seller who
manufactured the goods.” The Kutzler court also noted, however, that
no Illinois state court had yet ruled on whether the remedy of
revocation should be so limited, and that courts in other jurisdictions
were not in agreement. Ultimately, Kutzler found instructive the
analysis in Gasque v. Mooers Motor Car Co., Inc., 227 Va. 154, 162,
313 S.E.2d 384, 390 (1984), where the Virginia Supreme Court
explained:
“The remedy of revocation of acceptance *** lies only against
a seller of goods, not against a remote manufacturer. This is
so because the remedy, where successful, cancels a contract of
sale, restores both title to and possession of the goods to the
seller, restores the purchase price to the buyer, and as fairly as
possible, returns the contracting parties to the status quo ante.
The remote manufacturer, having no part in the sale
transaction, has no role to play in such a restoration of former
positions.”
The Virginia Supreme Court thus held that the remedy of revocation
of acceptance “is conceptually inapplicable to any persons other than
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the parties to the contract sought to be rescinded.” Gasque, 227 Va.
at 163, 313 S.E.2d at 390.
Kutzler concluded that the Gasque opinion comports with the
language of section 2–608 of the UCC and with the underlying
purpose of the remedy of revocation. Thus, the court dismissed the
plaintiff’s revocation claim against the non-selling manufacturer. See
also Smith v. Monaco Coach Corp., 334 F. Supp. 2d 1065, 1070
(N.D. Ill. 2004) (following Kutzler and holding that the plaintiff could
not pursue revocation of acceptance against the manufacturer).
The Kutzler opinion expressly declined to follow Soldinger. In
Soldinger, the plaintiff sued the vehicle manufacturer, Aston Martin
Lagonda of North America, for breach of warranty and revocation of
acceptance under both the Magnuson-Moss Act and the UCC. The
defendant manufacturer argued that revocation of acceptance, based
on breach of the implied warranty of merchantability, must fail for the
same reason the implied warranty claim failed: a lack of privity. The
federal court rejected the defendant’s argument, stating:
“Section 2310(d)(1) provides that ‘a consumer who is
damaged by the failure of a supplier ... to comply with any
obligation ... under a written warranty, implied warranty, or
service contract, may bring suit for damages and other legal
and equitable relief.’ In other words, Plaintiff’s request for
revocation of acceptance may be based on Aston Martin’s
failure to comply with either a written warranty or an implied
warranty. Clearly, the latter alternative is not available, as the
court is dismissing Count II [the implied warranty count]. But
nothing in Count III [the revocation count] suggests that it
requests relief solely on the basis of the breach of implied
warranty claim, or that it is otherwise limited to Count II. ***
Defendant’s argument that Count III must be dismissed for
lack of contractual privity is unavailing.” Soldinger, No. 97 C
7792.
Soldinger also considered whether revocation of acceptance
against the defendant manufacturer was available under section 2–608
of the UCC. Relying on Lytle v. Roto Lincoln Mercury & Subaru,
Inc., 167 Ill. App. 3d 508 (1988), and Blankenship v. Northtown
Ford, Inc., 95 Ill. App. 3d 303 (1981), the federal court ruled that
revocation of acceptance was available against the defendant
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manufacturer even where the plaintiff had no viable UCC breach of
warranty claims.
We, like the Kutzler court, are not persuaded by Soldinger that
revocation of acceptance should lie against a nonselling manufacturer.
The Soldinger opinion did not consider the nature of the remedy or
the divergence of opinion on this issue, and its rejection of the
defendant’s privity argument is not entirely clear. Moreover, as
Kutzler observed, the two Illinois state cases to which Soldinger
cites–Lytle and Blankenship–did not involve revocation claims against
a nonselling manufacturer. Rather, they involved revocation claims
against the direct sellers.
Nonetheless, Soldinger has been cited with approval by other
federal district courts in Illinois. See Jones v. Fleetwood Motor
Homes, No. 98 C 3061 (N.D. Ill. October 29, 1999); Schimmer v.
Jaguar Cars, Inc., No. 03 C 1884 (N.D. Ill. July 2, 2003), vacated on
other grounds, 384 F.3d 402 (7th Cir. 2004); Hamdan v. Land Rover
North America, Inc., No. 03 C 2051 (N.D. Ill. August 8, 2003). We
remain unpersuaded, however, that simply because the Act allows an
action for equitable relief, revocation must be available for all breaches
of warranty, irrespective of the status of the defendant or the
relationship between the parties. Rather, we agree with Kutzler and
Gasque that revocation of acceptance is “conceptually inapplicable”
to a nonseller. As one commentator observed: “Manufacturers do not
tender goods to consumers; consumers do not accept (or reject)
goods tendered by manufacturers. Vis-a-vis manufacturers there is no
acceptance to revoke.” C. Reitz, Manufacturers’ Warranties of
Consumer Goods, 75 Wash. U. L.Q. 357, 362 n.17 (1997).
Citing Szajna v. General Motors Corp., 115 Ill. 2d 294 (1986),
and Rothe v. Maloney Cadillac, Inc., 119 Ill. 2d 288, 295 (1988),
plaintiff argues that, by virtue of defendant’s written warranty, privity
is established and revocation should be permitted. Under Szajna and
Rothe, a manufacturer’s extension of a Magnuson-Moss written
warranty to the consumer establishes privity which, although limited
in nature, is sufficient to support a claim for breach of an implied
warranty under section 2310(d) of the Act. Szajna, 115 Ill. 2d at 315-
16; Rothe, 119 Ill. 2d at 294-95.2` The limited privity we recognized
2
Tangentially, we note that federal courts are not in agreement with
Szajna’s interpretation of the Magnuson-Moss Act’s implied warranty
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in Szajna does not change the nature of the remedy plaintiff seeks.
Revocation of acceptance contemplates a buyer-seller relationship that
is absent here. We are not inclined to extend our holding in Szajna to
permit revocation against DaimlerChrysler where plaintiff purchased
the subject vehicle–a used Dodge Neon–from a Buick-Nissan
dealership.
We recognize that under the New Vehicle Buyer Protection Act
(815 ILCS 380/1 et seq. (West 2006)), a manufacturer may be
required to accept return of a new vehicle and make a full refund to
the consumer where, after a reasonable number of attempts, the seller
is unable to conform the new vehicle to any of its applicable express
warranties. 815 ILCS 380/3 (West 2006). The fact that our state
legislature has provided this type of remedy to new-vehicle buyers
does not persuade us that this type of relief is necessarily available to
used-car buyers seeking relief under the Magnuson-Moss Act.
Our holding does not leave plaintiff without a remedy for
defendant’s alleged breach of its repair warranty. Plaintiff may still
seek money damages, as well as attorney fees, should she prevail in
the trial court on her breach of written warranty claim.
CONCLUSION
For the reasons discussed above, we affirm the judgment of the
appellate court reversing the trial court’s grant of summary judgment
in favor of defendant as to count I of the complaint, and reverse the
judgment of the appellate court reversing the trial court’s grant of
summary judgment in favor of defendant as to count III of the
complaint. We remand this matter to the trial court for further
proceedings.
Affirmed in part and reversed in part;
cause remanded.
provisions. See Smith, 334 F. Supp. 2d at 1068-69; Mekertichian v.
Mercedes-Benz U.S.A., L.L.C., 347 Ill. App. 3d 828, 833 (2004).
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