Melissa Khan alleges that on May 27, 2004, she entered into a lease and warranty agreement with Riverbank Motors Corporation, Inc. (the Dealership), for a new, 2004 Volkswagen Toureg (the “Vehicle”), manufactured by the defendant. The Vehicle came with written “factory warranties” for any nonconformities or defects in materials or workmanship. Ms. Kahn alleges that the defendant, Volkswagen of America, Inc., and the Dealership made various other “express warranties” to the plaintiff regarding the quality of the Vehicle. After delivery, the Vehicle experienced various operating problems and malfunctions on myriad occasions during the period from February 2005 to August 2006, including multiple system monitoring lights coming on, engine stalling, problems with shifting, and the Vehicle lurching forward unexpectedly. The plaintiff returned the Vehicle to the Dealership and other Volkswagen dealerships repeatedly for repairs and service of these problems. Despite multiple attempts and a total of 49 days in the repair shop, the problems with the Vehicle were never rectified. She now brings this action under a variety of claims: breach of express warranties, breach of implied warranties, breach of contract, and breach of Connecticut’s “lemon law.”
Her breach of implied warranties pertains to the fact that with all of its defects—which were confirmed—the car was undriveable and thus not merchantable.
Here is the court’s reasoning regarding her claim of Volkswagen’s breach of the implied warranty of merchantability as it applies to the plaintiff, a third-party beneficiary of that implied warranty.
JUDGE DAVID R. TOBIN … In the third count, the plaintiff asserts a claim for breach of implied warranties under the Magnuson-Moss Warranty Act, 15 U.S.C. §2301 et seq., and the Uniform Commercial Code. The defendant has moved to strike the third count on the grounds that plaintiff cannot state a legally sufficient cause of action for breach of implied warranties. The defendant makes two principal arguments in support of its motion to strike: 1) that although it made express warranties, it did not extend implied warranties to the plaintiff; and 2) that the plaintiff may not bring an action for breach of implied warranties sounding in contract against a party with whom it is not in contractual privity.
In response the plaintiff claims that the Magnuson-Moss Warranty Act guarantees that consumers who receive express warranties enjoy implied warranty protection as well, and that Connecticut law no longer enforces a privity requirement for breach of contractual implied warranty actions.
A. Implied Warranties Contrary to the plaintiff’s position, the Magnuson-Moss Warranty Act does not itself create implied warranties. It merely provides a cause of action for breach of an enforceable implied warranty. 15 U.S.C. §2310(d)(1). State law, rather than Magnuson-Moss, governs the creation and enforcement of implied warranties….
In her complaint the plaintiff alleges that “[t]he Vehicle was subject to implied warranties of merchantability, as defined in 15 U.S.C. §2308 and U.C.C. 2-314 and 2-318, running from the Defendants to the Plaintiff.” It appears that the plaintiff’s claim is that the purported implied warranty she seeks to enforce is derived from the underlying sale of the vehicle from the defendant to the Dealership (the lessor in the lease transaction), and that she is entitled to enforce such a warranty as a third-party beneficiary to that transaction. This inference may be drawn from the fact that Article 2 of the Uniform Commercial Code applies to the sale of goods and §2-318 addresses the rights of third-party beneficiaries to enforce a seller’s warranties.
General Statutes §42a-2-314 establishes that a warranty of merchantability from the seller to the buyer is implied in all contracts for the sale of goods. A breach of this warranty occurs, if at all, at “the time of sale … or when [the goods] leave the manufacturer’s control.” [Citations omitted.] Criscuolo v. Mauro Motors, Inc., 58 Conn.App. 537, 546, 754 A.2d 810 (2000). However, the plaintiff was not the buyer in the sale made by the defendant manufacturer, the Dealership was. By its terms, General Statutes §42a-2-314 creates a warranty that is enforceable, if at all, by the Dealership.
The plaintiff also relies on General Statutes §42a-2-318 as a basis for her alleged right to enforce the warranty. Section 42a-2-318, however, only extends the right to enforce the seller’s warranty to “any natural person who is in the family or household of his buyer or who is a guest in his home if it is reasonable to expect that such a person may use, consume, or be affected by the goods and who is injured in person by breach of warranty.” The plain language explicitly limits the extension of the right of enforcement to individuals who are family members or guests in the Dealership’s home and who suffer personal injuries as a result of a breach of the warranty. Therefore, the plaintiff has not pleaded facts which bring her within the application of General Statutes §42a-2-318, nor do the facts alleged give rise to any such inference.
Moreover, plaintiff has not pled any alternative theory pursuant to which she may enforce any implied warranty derived from the sale of the vehicle to the Dealership…. Accordingly, the court finds that plaintiff has failed to show that an implied warranty of merchantability was created between the plaintiff and the defendant, or that the plaintiff is entitled to enforce the warranty between the defendant and the Dealership as a beneficiary of that contract.
B. Privity Even if the court were to find that the plaintiff had the right to enforce an implied warranty of merchantability against the defendant, the court would be constrained to agree with the defendant’s second claim that such an action is barred by the lack of privity between the plaintiff and the defendant. The court agrees with the defendant that Connecticut law has maintained a privity requirement that prevents parties who are not in contractual privity with the warrantor from enforcing any implied warranty. See Rosenthal v. Ford Motor Co, Inc., 462 F.Supp.2d 296, 309 (D.Conn. 2006) (noting differences between common-law tortious implied warranty claim and contractual implied warranty claim include the abolition of a privity requirement in the former); Koellmer v. Chrysler Motors Corporation, 6 Conn.Cir. 478, 485, 276 A.2d 807, cert. denied, 160 Conn. 590, 274 A.2d 884 (1971). Similarly, a contractual or buyer-seller relationship between the parties is required to maintain a claim under Article 2 of the UCC which governs the sale of goods. Sylvan R. Shemitz Designs, Inc. v. Newark Corp., Superior Court, judicial district of New Haven, Docket No. 055001029 (May 24, 2006, Blue, J.) (41 Conn. L. Rptr. 440, 2006 Conn. Super. LEXIS 1554).
Connecticut’s general rule requiring privity is subject to certain limited exceptions. For example, after reviewing developments in Connecticut law, District Judge Clarie held that the privity requirement is not etched in stone and the doctrine is only applied to situations in which alternative remedies that do not require privity are available. Utica Mutual Ins. Co. v. Denwat Corp., 778 F. Supp. 592, 595-96 (D.Conn. 1991). Courts applying Connecticut law have also recognized that it may be possible to satisfy the privity requirement by pleading facts which establish an agency relationship between a vehicle manufacturer and the Dealership. Koellmer v. Chrysler Motors Corporation., supra, 6 Conn.Cir. 485-86. “The existence of an agency relationship is one of fact.” Wesley v. Schaller Subaru, Inc., 277 Conn. 526, 543, 893 A.2d 389 (2006). In Koellmer, however, a directed verdict in favor of the manufacturer was upheld due to the plaintiff’s failure to prove an agency relationship where the manufacturer made express written warranties but all direct dealings surrounding the completion of the transaction were between the plaintiff and the dealer.
Other jurisdictions have liberally reduced the role of the privity requirement in breach of implied warranty actions sounding in contract. For example, some courts have found that the extension of the express warranty makes the manufacturer “a party to the retail contract and removes the privity objection as to both express and implied warranties” on the reasoning that the consumer, having received the express warranty, should be entitled to rely on the manufacturer for implied warranties absent a disclaimer…. Despite the trend in other jurisdictions to dispense with the privity requirement in contractual breach of implied warranty actions, Connecticut maintains the requirement except under limited circumstances which are not present in this case. There is no allegation in the complaint of an agency relationship between the Dealership and manufacturer nor is it alleged that the plaintiff has no alternative means to obtain a remedy. The no alternative remedies exception also appears particularly inapplicable in light of the plaintiff’s claim of breach of express warranty set forth in the second count of her complaint.
C. Conclusion The court finds that the plaintiff is precluded from maintaining the claim for breach of implied warranty set forth in her third count, on both grounds raised by the defendant. Accordingly, the motion to strike the third count is granted.
Defendant’s motion is granted to dismiss the third count.
CRITICAL THINKING:
The court emphasizes the privity-of-contract requirement to enforce an implied warranty from the car manufacturer to a subsequent purchaser (through a dealership). However, the court is clear that had certain facts been alleged, the privity requirement may have been relaxed, allowing the plaintiff to maintain her claim. What could those facts be?
ETHICAL DECISION MAKING:
Do you find an ethical lapse in the court’s arguments in this case regarding privity of contract? Isn’t it clearly the intent of the UCC to have the implied warranties extend to foreseeable users? Why is the court so adamant in refusing to recognize this concept?