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STATE OF MICHIGAN
COURT OF APPEALS


KERI R. BARRETT and RYAN L. GARDNER, Plaintiffs/Counter-DefendantsAppellees, v LASCO FORD, INC., Defendant/Cross-Defendant-
Appellant,
and LONG BEACH ACCEPTANCE CORP., Defendant/Counter-Plaintiff/Cross Plaintiff-Appellee.


UNPUBLISHED March 1, 2007

No. 264122 Genesee Circuit Court LC No. 03-077617-CP

KERI R. BARRETT and RYAN L. GARDNER, Plaintiffs/Counter-Defendants Appellees/Cross-Appellants, v LASCO FORD, INC., Defendant/Cross-Defendant Appellant/Cross-Appellee, and LONG BEACH ACCEPTANCE CORP., Defendant/Counter-Plaintiff/Cross Plaintiff-Cross-Appellee.
No. 264929 Genesee Circuit Court LC No. 03-077617-CP

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Before: Donofrio, P.J., and Bandstra and Zahra, JJ. PER CURIAM. In Docket No. 264122, defendant/cross-defendant-appellant, Lasco Ford, Inc. ("Lasco"), appeals as of right a March 28, 2005 order denying its motion for summary disposition and granting summary disposition in favor of plaintiffs/counter-defendants-appellees, Keri R. Barrett and Ryan L. Gardner, in this breach of warranty action. In Docket No. 264929, Lasco appeals, and plaintiffs cross-appeal, an August 24, 2005 order entering judgment in favor of plaintiffs and awarding plaintiffs attorney fees and costs. In both appeals, we affirm in part, reverse in part and remand this matter to the trial court for further proceedings. BASIC FACTS AND PROCEEDINGS BELOW The pertinent facts are as follows. Plaintiffs purchased a used 1999 Ford pickup truck from Lasco on May 23, 2003. Lasco sold the truck to plaintiffs with an express three month/3,000 mile limited bumper to bumper warranty, pursuant to which Lasco was to "pay 25% of the labor and 25% of the parts for covered systems that fail during the warranty period." As a condition of their financing, plaintiffs also purchased an extended service contract from Ultimate Warranty Corporation, which is referred to as a "Platinum Plus" warranty. A few days after plaintiffs purchased the truck, it began to emit black smoke, it was not accelerating on the highway and it was "backfiring." Plaintiffs became concerned about the truck's operability and reliability. They took the truck to Lasco, who advised them that the exhaust manifold intake bolts were broken, that the truck needed new right and left exhaust manifolds, an EGR tube, and exhaust gaskets, studs and nuts, and that these repairs would cost plaintiffs more than $1,100. Lasco refused to repair the truck at no cost to plaintiffs, but according to Matt Lasco, offered to "cover 25 percent of parts and 25 percent of labor" pursuant to the limited warranty. On June 25, 2003, plaintiffs' attorney sent Lasco a letter revoking acceptance of the truck. Plaintiffs did not pursue coverage under the Platinum Plus warranty, believing Lasco to be fully responsible for the repairs, although Barrett conceded at her deposition that Lasco's limited "bumper to bumper" warranty covered 25 percent of labor costs and 25 percent of the costs for parts. Lasco's salesperson contacted plaintiffs to advise them that Lasco would repair the exhaust bolts at no cost to them. However, plaintiffs refused Lasco's offer. Thereafter, plaintiffs commenced the instant action. Following motions for summary disposition, the trial court entered judgment in favor of plaintiffs and Lasco appealed. ANALYSIS Lasco and plaintiffs each challenge the trial court's order regarding the parties' respective motions for summary disposition. This Court reviews the grant or denial of summary disposition de novo to determine if the moving party is entitled to judgment as a matter of law. Maiden v

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Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999). Where, as here, it is clear that the trial court looked beyond the pleadings, this Court will treat the motion as having been granted pursuant to MCR 2.116(C)(10). Kefgen v Davidson, 241 Mich App 611, 616; 617 NW2d 351 (2000). "A motion under MCR 2.116(C)(10) tests the factual sufficiency of the complaint." Maiden, supra at 120. This Court must consider the affidavits, depositions, admissions, and other documentary evidence submitted by the parties in the light most favorable to the nonmoving party. Id. If the proffered evidence fails to create a genuine issue of material fact, the moving party is entitled to judgment as a matter of law. Id. "If it appears to the court that the opposing party, rather than the moving party, is entitled to judgment, the court may render judgment in favor of the opposing party." MCR 2.116(I)(2). I. Lasco first asserts that the trial court erred in by granting summary disposition in plaintiffs' favor on their "revocation of acceptance claim." We agree. MCL 440.2608 provides that: (1) The buyer may revoke his acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to him if he has accepted it (a) on the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or (b) without discovery of such nonconformity if his acceptance was reasonably induced either by the difficulty of the discovery before acceptance or by the seller's assurances. "For the purposes of revocation under MCL 440.2608, nonconformity is a failure of the goods sold to conform to legitimate expectations arising from the contract." Davis v LaFontaine Motors, Inc, 271 Mich App 68, 82; 719 NW2d 890 (2006). Plainly, a buyer is not entitled to relief unless the nonconformity of the goods substantially impairs the value of those goods to the buyer. See MCL 440.2608(1). A buyer must revoke acceptance of a nonconforming good within a reasonable amount of time after the discovery of the nonconformity. MCL 440.2608(2). The trial court determined that plaintiffs established the requisite subjective "substantial impairment" under MCR 440.2608, to warrant judgment in their favor as a matter of law on their revocation of acceptance claim. Specifically, the trial court reasoned that Lasco failed to fulfill its duty to repair the truck. However, we find that there is a genuine issue of material fact regarding whether plaintiffs satisfy MCL 440.2608(1)(a). It is unclear based on the record before this Court whether the amounts quoted by Lasco for the repairs reflect total charges for the repairs or 75 percent (i.e., Lasco would pay 25 percent) of the charges for those repairs. It is also unclear whether the repairs set forth in the repair order were intended to address all of the mechanical difficulties with the truck. Contrary to the trial court's findings, Lasco did not have a duty under the limited warranty to repair the vehicle for free. Accordingly, there is a genuine issue of material fact with regard to whether it was reasonable for plaintiffs to assume that Lasco

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would repair the truck at no cost to them, as well as to whether Lasco offered to perform its obligations under the warranty. Thus, the trial court erred in granting summary disposition in plaintiffs' favor regarding this claim. MCR 2.116(C)(10). II. Lasco next argues that the trial court erred in granting summary in plaintiffs' favor with regard to plaintiffs' claim that Lasco violated the Motor Vehicle Service Repair Act ("MVSRA"), MCL 257.1301 et seq, by refusing to repair the vehicle at no cost. We agree. The MVSRA prohibits persons subject to it from engaging or attempting to engage "in a method, act or practice which is unfair or deceptive", MCL 257.1307, and it imposes liability on any facility that violates the act or who "engages in an unfair or deceptive method, act, or practice." MCL 257.1336. Thus, to establish a claim under the MVSRA, plaintiffs must establish that Lasco engaged in some unfair or deceptive act with respect to the repair, or refusal to repair, the truck. The trial court concluded that plaintiffs established that Lasco "failed to properly repair the vehicle in a professional workman-like manner, that it failed to perform promised repairs within a reasonable period of time and refused to repair the vehicle after the defects and poor workmanship were brought to [its] attention." The trial court also noted that plaintiffs notified Lasco of their revocation of acceptance of the vehicle before Lasco offered to repair the truck free of charge and that Lasco's offer to repair the vehicle "was for one specific repair, not the total repairs required." As discussed, it is unclear from the record whether Lasco offered to make the repairs it was obligated to make under the limited warranty that came with the truck. Similarly, the trial court's ruling that plaintiffs had effectuated revocation by the time Lasco offered to completely repair the truck at no cost to plaintiffs and that Lasco's offer to repair the vehicle "was for one specific repair, not the total repairs required" erroneously presumes that Lasco was required to repair the vehicle without cost to plaintiffs. The trial court also erred in ruling that plaintiffs established that more repairs were required than those offered to be performed by Lasco. There is no evidence in the record conclusively demonstrating this fact. Accordingly, there are genuine issues of material fact with regard to whether Lasco is liable under MCL 257.1336. Consequently, the trial court erred by granting summary disposition in plaintiffs' favor regarding plaintiffs' claims under the MVSRA. III. Lasco also argues that the trial court erred by granting summary disposition in plaintiffs' favor regarding the "implied warranty" claim set forth in Count II of plaintiffs' complaint. In so ruling, the trial court observed that MCL 440.2316(2) permits conspicuous disclaimers of implied warranties, but concluded that Lasco failed to effectuate conspicuous disclaimers. The trial court explained:

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There was no indication given to the seller that this was an "as is" purchase or that the implied warranty is waived upon [p]laintiff[s] taking possession of the vehicle. It is vivid from the buyer's guide that the seller gave no indication to the buyer that it was renouncing its obligations under state law for implied warranties. Instead, the seller emphasized that the buyer may have more rights under state law because of implied warranties. Lasco is prohibited from now disclaiming or modifying any implied warranty. Lasco's failure to honor the implied warranties violated the state warranty law as stated in the Uniform Commercial Code. Lasco does not challenge the trial court's determination that it breached the implied warranty of merchantability. Rather, Lasco argues that the trial court erred because Lasco properly disclaimed any and all implied warranties as a matter of law. We disagree. Every contract for the sale of goods carries an implied warranty of merchantability unless such warranty is excluded or modified. MCL 440.2314(1). Such a contract may also carry an implied warranty of fitness for a particular purpose under MCL 440.2315, which may also be excluded or modified. MCL 440.2316 provides, in part: (2) Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous. Language to exclude all implied warranties of fitness is sufficient if it states, for example, that "There are no warranties which extend beyond the description on the face hereof." (3) Notwithstanding subsection (2): (a) 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 . . .. Further, MCL 440.1201(10) provides: A term or clause is conspicuous when it is so written that a reasonable person against whom it is to operate ought to have noticed it. A printed heading in capitals (as: non-negotiable bill of lading) is conspicuous. Language in the body of a form is "conspicuous" if it is in larger or other contrasting type or color. But in a telegram any stated term is "conspicuous". Whether a term or clause is "conspicuous" or not is for decision by the court. Lasco contends that its disclaimers of implied warranties contained in the sales contract and the bill of sale for the truck were sufficiently conspicuous under MCL 440.2316(2) to disclaim any and all implied warranties as a matter of law.

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The sales contract expressly states in

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