Castro v. Ernie S Auto

2012 MT 305N

• Court: Montana Supreme Court
• Decided: December 24, 2012
• Docket: 12-0227
• Status: Published

Opinion

December 24 2012

DA 12-0227

IN THE SUPREME COURT OF THE STATE OF MONTANA

2012 MT 305N

LOLA CASTRO,

Plaintiff and Appellant,

v.

ERNIE’S AUTO,

Defendant and Appellee.

APPEAL FROM: District Court of the Thirteenth Judicial District, In and For the County of Yellowstone, Cause No. DV-11-1689 Honorable G. Todd Baugh, Presiding Judge

COUNSEL OF RECORD:

For Appellant:

Joe Hardgrave, Montana Legal Services Association, Billings, Montana

For Appellee:

Calvin J. Stacey, Bryan M. Kautz, Stacey & Funyak, Billings, Montana

Submitted on Briefs: November 29, 2012

Decided: December 24, 2012

Filed:

__________________________________________ Clerk Justice Patricia O. Cotter delivered the Opinion of the Court.

¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court 1996 Internal

Operating Rules, as amended in 2006, the following decision shall not be cited as

precedent. It shall be filed as a public document with the Clerk of the Supreme Court and

its case title, Supreme Court cause number and disposition shall be included in this

Court’s quarterly list of noncitable cases published in the Pacific Reporter and Montana

Reports.

¶2 In March 2011, Lola Castro purchased a used car for $1,500 from Ernie’s Auto in

Billings, Montana. She did not test drive the car before purchasing it. She signed

multiple purchase documents indicating the car was being “Sold As Is,” without any

expressed or implied warranty. After Castro departed from Ernie’s lot, the vehicle broke

down approximately 2.5 miles away. Castro ultimately returned the vehicle and

demanded her money back. Ernie’s refused. Castro sued and the Justice Court of

Yellowstone County entered a directed verdict in favor of Ernie’s. The Thirteenth

Judicial District Court affirmed this ruling on appeal. Castro appeals. We affirm.

ISSUES

¶3 A restatement of the issues is:

¶4 Did the Justice Court err by granting Ernie’s Auto’s motion for a directed verdict?

¶5 Did the Justice Court err by not addressing Castro’s claim that Ernie’s Auto had an

obligation to reimburse the purchase price?

¶6 Did the District Court err in affirming the decision of the Justice Court?

FACTUAL AND PROCEDURAL BACKGROUND

2 ¶7 On or around March 4, 2011, Lola Castro, a Lodge Grass resident, called Ernie’s

Auto in Billings to inquire about a used 1995 Cadillac DeVille advertised for sale in a

local newspaper. The price was listed at $1,995 but Ernie’s agreed to sell it to Castro for

$1,500. On Friday, March 4, Castro and her husband drove to Billings to purchase the

car. Upon arrival at Ernie’s lot at around 5:30 p.m., Castro signed multiple purchase

documents each of which indicated in bold print that the car was being sold “AS IS”

without any expressed or implied guarantees or warranties. Neither Castro nor her

husband test drove the car before purchase.

¶8 At around 6:00 p.m., Castro and her husband left Ernie’s. Castro’s husband drove

the Cadillac and Castro drove the family’s other car. Approximately 2.5 miles from

Ernie’s, the Cadillac began steaming and losing fluids from the radiator. They pulled into

a Town Pump service station and left the vehicle there without seeking service. Castro

testified that her husband called Ernie’s at that time and multiple times over the following

few days but there is no record of those discussions. Castro left the Cadillac parked at the

Town Pump until the following Wednesday. On that day, she and her husband returned

to the Town Pump, purchased and installed a battery in the Cadillac, and drove it back to

Ernie’s. They parked it on the street near Ernie’s lot, returned the keys to Ernie’s and

demanded refund of their purchase money. Ernie’s refused to refund Castro’s money.

¶9 On April 1, 2011, Castro filed a Complaint in Yellowstone County Justice Court.

She alleged Ernie’s had breached an express warranty, violated the Montana Consumer

Protection Act, and was negligent. She also alleged that she had the right to revoke her

3 acceptance. She prayed for a refund of her $1,500 purchase money, as well as $3,000 in

damages under § 30-14-133, MCA, and reasonable attorney fees.

¶10 The Justice Court held a bench trial on October 24, 2011, and at the close of

Castro’s testimony, granted Ernie’s motion for a directed verdict. Castro appealed to the

District Court in December 2011. On March 22, 2012, the District Court affirmed the

directed verdict and dismissed Castro’s appeal. She now appeals to this Court.

STANDARD OF REVIEW

¶11 We review the grant or denial of a motion for a directed verdict de novo. In re

S.F., 2010 MT 244, ¶ 8, 358 Mont. 185, 244 P.3d 316.

DISCUSSION

¶12 Did the Justice Court err by granting Ernie’s Auto’s motion for a directed verdict?

¶13 Castro was the sole witness called in her case-in-chief in Justice Court. At the

close of her testimony, the Justice Court granted Ernie’s motion for directed verdict. We

conduct a de novo review of an order of directed verdict. We determine as a matter of

law whether the non-moving party—in this case, Castro—could prevail upon any view of

the evidence including any legitimate inferences that could be drawn from the evidence.

Cameron v. Mercer, 1998 MT 134, ¶ 8, 289 Mont. 172, 960 P.2d 302. See also DiMarzio

v. Crazy Mt. Constr., Inc., 2010 MT 231, ¶ 34, 358 Mont. 119, 243 P.3d 718.

¶14 Castro asserts that neither the Justice Court nor the District Court issued detailed

findings of fact and conclusions of law addressing each of her claims against Ernie’s. We

note, however, that the Justice Court created a transcribed record of the bench trial and

4 explained the rationale for its ruling on Ernie’s motion for a directed verdict. We

therefore have a transcript of the trial to aid us in our review.

¶15 On appeal before this Court, Castro argues that the Justice Court erred by granting

a directed verdict without addressing her individual claims against Ernie’s. She argues

that under the Montana Uniform Commercial Code, § 30-2-608, MCA, she is entitled to

revoke her acceptance of the vehicle provided she does so in a “reasonable time” after

she discovers, or should have discovered, the “nonconformity” of the purchased product.

She also argues that the District Court erred in affirming the Justice Court decision.

¶16 Section 30-2-608, MCA, “Revocation of acceptance in whole or in part” states in

relevant part:

(1) The buyer may revoke acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to the buyer if the buyer 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 the buyer’s 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.

¶17 Castro failed in Justice Court, and failed on appeal to the District Court, to satisfy

the threshold requirement of § 30-2-608(1), MCA. Section 30-2-608(1), MCA, would

allow Castro to revoke her acceptance upon proof that the purchased vehicle was

nonconforming and that the nonconformity substantially impaired the value. Castro had

the burden of providing credible evidence that the vehicle was nonconforming but failed

5 to do so. While she recounted the problems they had with the vehicle—the engine light

came on, the car leaked fluids, and smoke or steam was emitted—she failed to establish

that these problems constituted nonconformities in a 16-year-old car purchased “as is.”

Moreover, Castro herself testified that replacement of the battery rendered the car

operable. Castro did not have the car checked by a mechanic for proof of nonconformity

or to determine the actual condition of the vehicle. As noted by the District Court, a

purchaser of a used 1995 vehicle in 2011 “should . . . expect that some repairs will be

necessary such as belts, hoses, battery, seals, tire balancing and alignment, etc. These

sorts of things do not render a motor vehicle unsafe.”

¶18 Without prima facie evidence of nonconformity, the Justice Court had no basis for

proceeding to the remaining requisites of the statute, which in any event were not

established by way of Castro’s limited testimony. There was simply no evidence to

support a ruling in favor of Castro on her “revocation of acceptance” claim.

¶19 Castro also asserted claims for negligence, breach of express warranty and

violation of the Montana Consumer Protection Act. However, no evidence was offered

to support these claims. Castro established no express warranties, no negligence on the

part of Ernie’s, and no Consumer Protection Act violation. Aside from Castro’s

testimony, the record contains the purchase documents signed by Castro that repeatedly

informed her that she was purchasing the car “as is” without any warranties or

guarantees. Notably, one of the purchasing documents even listed numerous “major

defects” that may occur in used cars, including visible leakage and improper functioning

of the battery. Because Castro failed to meet her burden of proof on any claim raised in

6 the Complaint, the Justice Court did not err in granting Ernie’s motion for a directed

verdict.

¶20 Did the Justice Court err by not addressing Castro’s claim that Ernie’s Auto had an obligation to reimburse the purchase price?

¶21 Prior to filing her Complaint and after returning the vehicle, Castro asked Ernie’s

to refund her purchase money. She also prayed for that relief in her Complaint.

However, when the Justice Court directed a verdict on the record in favor of Ernie’s, she

failed to raise the refund issue. Castro raised the matter on appeal to the District Court

and raises it again on appeal to this Court. Castro asserts that §§ 30-2-703(d), -706, and

-708, MCA, support her argument that Ernie’s would be unjustly enriched if it was

allowed to keep both the vehicle and her purchase price.

¶22 The statutes Castro cites for her contention that Ernie’s should refund her purchase

price unfortunately do not support her argument. These statues address, respectively, the

Seller’s remedies in general, Seller’s resale, and Seller’s damages for non-acceptance or

repudiation. Collectively, these statutes set forth the remedies available to a seller when a

buyer wrongfully rejects goods or revokes acceptance. The statutes provide no grounds

for affording any relief to a buyer like Castro. Castro has thus failed to support her

argument with any applicable legal authority. However, this does not end our inquiry.

¶23 While it is not the role of this Court to locate authorities or formulate arguments

for a party in support of positions taken on appeal, we are empowered, as a court sitting

in equity, “to determine all questions involved in the case and to do complete justice,

including the power to fashion equitable results.” Kauffman-Harmon v. Kauffman, 2001

7 MT 238, ¶ 11, 307 Mont. 45, 36 P.3d 408 (citation omitted). Because we have held that

Castro failed to prove that she revoked her acceptance, we have impliedly held that the

contract must be upheld. This being so, Castro is the rightful owner of the car and is

entitled to its return. Should Ernie’s be unable to return the car to Castro, then it should

reimburse her for the purchase price or compensate her in equivalent value. Ernie’s

should not be permitted to both retain the purchase price and the car. Such would not be

fair, equitable, or just.

CONCLUSION

¶24 For the foregoing reasons, we affirm the District Court’s order granting Ernie’s

Auto’s motion for a directed verdict, but remand for further proceedings in accordance

with ¶ 23 of this Opinion.

/S/ PATRICIA COTTER

We concur:

/S/ JAMES C. NELSON /S/ JIM RICE

Justice Beth Baker, concurring.

¶25 I concur with the Court’s analysis and conclusions in all respects, but disagree

with its decision to issue the decision as a non-citable opinion under Section I, Paragraph

3(c) of the Court’s Internal Operating Rules. Such opinions are reserved for cases that

present no issues of first impression and establish no new precedent or would not

8 otherwise be of future guidance. This appears to be the first time the Court has

considered revocation of acceptance under § 30-2-608(1), MCA, and the application of

an “as-is” disclaimer. Although the case presents its own unique facts and proof

problems, I believe the opinion could be useful to the citizens of Montana, the bench and

the bar when faced with similar cases.

/S/ BETH BAKER

Chief Justice Mike McGrath, dissenting.

¶26 I dissent. In my view Castro presented enough evidence to survive a directed

verdict on her claim that she revoked acceptance as permitted by § 30-2-608, MCA. The

Court holds that Castro failed to establish that the problems with the car constituted

nonconformities in a sixteen-year-old vehicle purchased “as is.” However, this is not a

warranty case, but rather a case involving the revocation of a prior acceptance pursuant to

the sales provisions of the Uniform Commercial Code. Section 30-2-608, MCA,

provides in pertinent part:

(1) The buyer may revoke acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to the buyer if the buyer has accepted it: . . .

9 (b) without discovery of such nonconformity if the buyer's acceptance was reasonably induced . . . by . . . the seller's assurances.

(Emphasis added.) The plain language of the statute controls because it is clear and

unambiguous. Micone v. Dept. of Pub. HHS, 2011 MT 178, ¶ 12, 361 Mont. 258, 258

P.3d 403.

¶27 Castro accepted the car without test driving it. However, as the District Court

found, a salesperson assured Castro that it was in good working order. Castro testified

that she discovered the nonconformity when the car became inoperable less than three

miles after leaving Ernie’s Auto. She returned the car and the keys to Ernie’s Auto

within the week and informed them that she was revoking her acceptance. Section 30-2-

608, MCA, provides Castro the right to revoke her acceptance within a reasonable time

once she discovered its value to her was impaired. Further, Castro’s testimony was

clearly sufficient to meet her burden of proof to avoid a directed verdict.

¶28 However, I agree with the Court that once the contract is enforced, the car

belonged to Castro. If Ernie’s Auto is unable to return the car for any reason, then it

should refund Castro her purchase price.

/S/ MIKE McGRATH

Justice Michael E Wheat and Justice Brian Morris join the foregoing dissenting Opinion of Chief Justice Mike McGrath.

/S/ MICHAEL E WHEAT /S/ BRIAN MORRIS