Jeff Griffin, d/b/a JDA Trailers v. Dennis Martin and Lisa Martin (mem. dec.)

• Court: Indiana Court of Appeals
• Decided: July 15, 2015
• Docket: 80A02-1407-SC-495
• Status: Published

Opinion

MEMORANDUM DECISION Pursuant to Ind. Appellate Rule 65(D), this Jul 15 2015, 9:21 am Memorandum Decision shall not be regarded as precedent or cited before any court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law of the case.

ATTORNEY FOR APPELLANT C. Melissa Cunnyngham Church Church Hittle & Antrim Tipton, Indiana

IN THE COURT OF APPEALS OF INDIANA

Jeff Griffin, d/b/a JDA Trailers July 15, 2015

Appellant-Defendant, Court of Appeals Case No. 80A02-1407-SC-495 v. Appeal from the Tipton Circuit Court

Dennis Martin and Lisa Martin, The Honorable Richard L. Russell, Judge Appellees-Plaintiffs. Cause No. 80C01-1402-SC-23

Brown, Judge.

Court of Appeals of Indiana | Memorandum Decision 80A02-1407-SC-495 | July 15, 2015 Page 1 of 10 [1] Jeff Griffin, d/b/a JDA Trailers, appeals from the judgment of the small claims

court against him and in favor of Dennis and Lisa Martin in the amount of

$1,896.62 for the costs of repairs to a vehicle Griffin sold the Martins plus

attorney fees. Griffin raises two issues, which we consolidate and restate as

whether the small claims court erred in ordering him to pay the costs incurred

by the Martins to repair the vehicle he had sold them “as-is” and with no

warranty. We reverse.

Facts and Procedural History

[2] On September 5, 2013, the Martins purchased a 2001 Chevy Silverado from

Griffin at his used car dealership in Windfall, Indiana. Dennis Martin signed a

Used Vehicle Order indicating the car’s sales price was $10,000, and the

handwritten words “as-is” were written in the area for “Remarks” on the

document. Appellant’s Appendix at 18. Dennis also signed a “Buyer’s Guide,”

and the box next to the words “AS IS-NO WARRANTY” was marked. Id. at

20. Under the box, the document provided: “YOU WILL PAY ALL COSTS

FOR ANY REPAIRS. The dealer assumes no responsibility for any repairs

regardless of any oral statements about the vehicle.” Id.

[3] While driving the vehicle home, the Martins were able to stop the vehicle only

by using the brakes on the trailer being pulled by the vehicle. The vehicle was

inspected by two independent mechanics who found the pads and rotors were

severely grooved with pieces of metal missing, and the hubs were worn on the

front of the vehicle. The Martins incurred expenses of $1,196.62 to make

repairs. Court of Appeals of Indiana | Memorandum Decision 80A02-1407-SC-495 | July 15, 2015 Page 2 of 10 [4] On February 5, 2014, the Martins filed a Notice of Claim requesting damages

in the amount of $1,081.12 plus attorney fees of $700 and court costs, and they

alleged that the vehicle they purchased from Griffin “was not road worthy in

that it had defective/non-existent brakes.” Id. at 10. The court held a hearing

on April 25, 2014, at which the parties presented testimony and evidence. The

Martins presented evidence of an invoice and receipt from Paul-Richard GM

Center, two receipts from NAPA Auto Parts, invoices from Car Recyclers and

Jim’s Garage, and a summary of services and costs of vehicle repair and

diagnosis by Thomas Nelson.

[5] The Martins testified that Griffin sold them a vehicle that was dangerous for

them to drive and that at some point after the time of sale they were able to stop

the vehicle only by using the brakes on the camper being pulled by the vehicle

at the time. They stated that they drove the vehicle to the Paul-Richard GM

Center dealership for inspection on September 6, 2013, and that the

“[s]uggested repairs . . . included re-hooking up the ABS, replacing front hubs,

and advising that fuel ‘modles’ were bad.” Id. at 26. The Martins indicated

they did not have the repairs completed at the dealership but paid for the cost of

the inspection. They presented further testimony that they then drove the

vehicle to Nelson for inspection and repair on September 7, 2013. Nelson

testified that “the vehicle was not roadworthy,” and his written summary stated

that the vehicle’s bearings were bad in both front hubs which triggered the ABS

sensor inside the vehicle, the right hub/bearing was worn to the point of near-

separation, new front brake pads had been installed at some point without

Court of Appeals of Indiana | Memorandum Decision 80A02-1407-SC-495 | July 15, 2015 Page 3 of 10 replacing severely grooved rotors, the rotors had chunks of metal missing from

the rotor surfaces, all four shocks were severely rusted and worn out, and that

the fuel level sensor unit was not working properly. Id. The Martins submitted

evidence that they paid Nelson for the repairs, Napa Auto for parts, and Car

Recyclers and Jim’s Garage for parts and repair in November 2013.

[6] Griffin introduced the Used Vehicle Order and Buyer’s Guide and testified that

he obtained the Silverado from Dellen Chrysler in Greenfield on July 26, 2013.

Tim Phifer, an employee of Griffin, testified that he drove the vehicle to

Windfall, where it was placed in the back of the lot, and that a few weeks later

Dennis Martin expressed an interest in the vehicle and a camper. He testified

that Griffin stated to Dennis that the vehicle had not been serviced since its

acquisition, that Dennis test-drove the vehicle and asked about the ABS light

which was on, that Griffin stated it could be due to the fact the vehicle may

need a new front wheel bearing, that Dennis responded by saying that he would

take care of whatever was causing the ABS light to be on, and that Dennis did

not mention anything further about how the vehicle drove. Phifer further

testified that the parties came to an agreement on price with the understanding

that the sale would include no warranty, the vehicle was then placed on the

back lot, and Griffin performed no further service or inspection. Phifer stated

that the Martins returned on September 5, 2013, executed the sales agreement

and Buyer’s Guide, paid the agreed-upon price, and drove the truck off the lot

while towing the camper. On cross-examination, Phifer testified that, between

the time the Martins took possession of the vehicle on September 5, 2013, and

Court of Appeals of Indiana | Memorandum Decision 80A02-1407-SC-495 | July 15, 2015 Page 4 of 10 the time it was inspected by their mechanic on September 6, 2013, the vehicle

had been driven 201 miles by the Martins. He also testified that Griffin

encourages buyers to have a vehicle inspected prior to a sale. The Martins’

counsel stated that they agreed they bought the vehicle with no warranty but

that they were bringing their claim under “civil tort law.” Id. at 29. The court

took the matter under advisement.

[7] On June 20, 2014, the court entered an order finding that the Martins had

purchased the 2001 Chevy Silverado from Griffin on September 5, 2013; that

Griffin “sold the vehicle ‘as is’ with no warranty”; that while driving home the

Martins “discovered the vehicle was not road worthy and were only able to stop

the vehicle by using the brakes on the trailer being pulled by the vehicle”; and

that the vehicle was subsequently inspected by two separate and independent

mechanics who both found the pads and rotors were severely grooved with

pieces of metal missing and the hubs were found to be so worn on the front of

the vehicle the right hub bearing was at the point of separation. Id. at 7. The

court also found that the Martins incurred costs of $1,196.62 “to make the

vehicle road worthy” and $700 in attorney fees. Id. The court’s ultimate

finding was that Griffin “committed a tort against the [Martins] by selling a

vehicle that was not road worthy and placed them in danger, as well as any

other individuals on the road” and that, “because of [Griffin’s] tort, [he] is liable

to the [Martins] for their reasonable expenses in repairing the vehicle as well as

their reasonable attorney fees.” Id. at 8. The court entered judgment in favor of

Court of Appeals of Indiana | Memorandum Decision 80A02-1407-SC-495 | July 15, 2015 Page 5 of 10 the Martins and against Griffin in the amount of $1,196.62 for costs and $700

for attorney fees.

Discussion

[8] The issue is whether the court erred in finding Griffin liable for the Martins’

costs of repair of the vehicle he sold them “as-is” and with no warranty. The

Martins did not file an appellee’s brief. When an appellee fails to submit a

brief, we do not undertake the burden of developing his arguments, and we

apply a less stringent standard of review, that is, we may reverse if the appellant

establishes prima facie error. Zoller v. Zoller, 858 N.E.2d 124, 126 (Ind. Ct. App.

2006). This rule was established so that we might be relieved of the burden of

controverting the arguments advanced in favor of reversal where that burden

properly rests with the appellee. Wright v. Wright, 782 N.E.2d 363, 366 (Ind. Ct.

App. 2002). Questions of law are still reviewed de novo, however. McClure v.

Cooper, 893 N.E.2d 337, 339 (Ind. Ct. App. 2008).

[9] Judgments in small claims actions are subject to review as prescribed by

relevant Indiana rules and statutes. Ind. Small Claims Rule 11(A); Eagle

Aircraft, Inc. v. Trojnar, 983 N.E.2d 648, 657 (Ind. Ct. App. 2013). In the

appellate review of claims tried by the bench without a jury, the reviewing court

shall not set aside the judgment unless clearly erroneous, and due regard shall

be given to the opportunity of the trial court to judge the credibility of the

witnesses. Ind. Trial Rule 52(A); Eagle Aircraft, 983 N.E.2d at 657. In

determining whether a judgment is clearly erroneous, the appellate tribunal

does not reweigh the evidence or determine the credibility of witnesses but Court of Appeals of Indiana | Memorandum Decision 80A02-1407-SC-495 | July 15, 2015 Page 6 of 10 considers only the evidence that supports the judgment and the reasonable

inferences to be drawn from that evidence. Eagle Aircraft, 983 N.E.2d at 657. A

judgment in favor of a party having the burden of proof will be affirmed if the

evidence was such that from it a reasonable trier of fact could conclude that the

elements of the party’s claim were established by a preponderance of evidence.

Id. This deferential standard of review is particularly important in small claims

actions, where trials are informal, with the sole objective of dispensing speedy

justice between the parties according to the rules of substantive law. Id. We

presume that the trial court correctly applied the law and we give due regard to

the court’s opportunity to judge the credibility of the witnesses. Id. However,

“this deferential standard does not apply to the substantive rules of law, which

are reviewed de novo just as they are in appeals from a court of general

jurisdiction.” Trinity Homes, LLC v. Fang, 848 N.E.2d 1065, 1068 (Ind. 2006).

“Similarly, where a small claims case turns solely on documentary evidence, we

review de novo, just as we review summary judgment rulings and other ‘paper

records.’” Id.

[10] Griffin asserts that the court erred in failing to apply the economic loss rule and

in finding Griffin liable to the Martins in tort for the costs to repair their vehicle.

Griffin also argues that exclusions of warranties are permitted under Indiana’s

Uniform Commercial Code (the “UCC”) and that the court’s order effectively

circumvented his rights under the UCC when it awarded Martins the precise

relief in tort that was clearly excluded in their contract.

Court of Appeals of Indiana | Memorandum Decision 80A02-1407-SC-495 | July 15, 2015 Page 7 of 10 [11] Ind. Code § 26-1-2-316 provides in part that, “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.” It is well-settled that automobile dealers may use this law to exclude

express warranties and make it plain that there are no implied warranties. Town

and Country Ford, Inc. v. Busch, 709 N.E.2d 1030, 1032 (Ind. Ct. App. 1999);

DeVoe Chevrolet-Cadillac Inc. v. Cartwright, 526 N.E.2d 1237, 1240 (Ind. Ct. App.

1988).

[12] Here, the Used Vehicle Order included the handwritten words “as-is,” and the

Buyer’s Guide included a marked box next to the words “AS IS-NO

WARRANTY” and below that stated “YOU WILL PAY ALL COSTS FOR

ANY REPAIRS. The dealer assumes no responsibility for any repairs

regardless of any oral statements about the vehicle.” Appellant’s Appendix at

18, 20. Accordingly, any implied warranty was excluded in this case. Further,

the record contains no evidence showing Griffin made a representation which

created an express warranty, and absent such evidence the “as-is” limitation

controls. See Cartwright, 526 N.E.2d at 1240.

[13] Turning to whether the Martins were entitled to recover their repair costs by

alleging that a tort occurred, we observe that the economic loss rule precludes

tort liability for purely economic loss. Indianapolis-Marion Cnty. Pub. Library v.

Charlier Clark & Linard, P.C., 929 N.E.2d 722, 727 (Ind. 2010). Economic losses

are disappointed contractual or commercial expectations. Gunkel v. Renovations,

Court of Appeals of Indiana | Memorandum Decision 80A02-1407-SC-495 | July 15, 2015 Page 8 of 10 Inc., 822 N.E.2d 150, 154 (Ind. 2005), reh’g denied. “Damage to the product

itself, including costs of repair or reconstruction, is an ‘economic loss’ even

though it may have a component of physical destruction.” Id. If the plaintiff’s

injury results from a defective product or service, the defendant is liable under a

tort theory only if the defect causes personal injury or damage to property other

than the product or service the plaintiff purchased. Indianapolis-Marion Cnty.

Pub. Library, 929 N.E.2d at 726. A defendant is not liable under a tort theory

for a pure economic loss caused by its negligence, including damage to the

product or service itself. Id. at 726-727. See also Greg Allen Constr. Co. v. Estelle,

798 N.E.2d 171, 175 (Ind. 2003) (stating that “damages recoverable in tort from

negligence in carrying out the contract will be for injury to person or physical

damage to property, and thus ‘economic loss’ will usually not be recoverable”),

reh’g denied; Reed v. Central Soya Co., 621 N.E.2d 1069, 1073-1074 (Ind. 1993)

(stating that, “where the loss is solely economic in nature, as where the only

claim of loss relates to the product’s failure to live up to expectations, and in the

absence of damage to other property or person, then such losses are more

appropriately recovered by contract remedies”), modified on other grounds by 644

N.E.2d 84 (Ind. 1994). While the economic loss rule “operates as a general rule

to preclude recovery in tort for economic loss, it does so for purely economic

loss—pecuniary loss unaccompanied by any property damage or personal

injury (other than damage to the product or service provided by the

defendant)—and even when there is purely economic loss, there are exceptions

to the general rule.” Indianapolis-Marion Cnty. Pub. Library, 929 N.E.2d at 730;

see also id. at 736 (“Indiana courts should recognize that the rule is a general rule Court of Appeals of Indiana | Memorandum Decision 80A02-1407-SC-495 | July 15, 2015 Page 9 of 10 and be open to appropriate exceptions”). Some of these exceptions include

lawyer malpractice, breach of duty of care owed to a plaintiff by a fiduciary,

breach of duty to settle owed by a liability insurer to the insured, and negligent

misstatement. Id. at 736.

[14] Here, the Martins’ costs of repairing the Silverado constituted economic loss.

The Martins did not allege or present evidence that its loss was not purely

economic, that personal injury or damage to other property occurred, or that

any other recognized exception to the economic loss rule is applicable under the

circumstances. Thus, the economic loss rule is applicable and Griffin is not

liable for the Martins’ repair costs under a tort theory.

[15] For these reasons, we conclude that Griffin has demonstrated prima facie error

in the trial court’s order awarding repair costs to the Martins. We also reverse

the court’s order as to attorney fees.

Conclusion

[16] Based on the foregoing, we conclude that the trial court erred when it awarded

damages and attorney fees to the Martins in contravention of their agreement

that the Silverado they purchased was sold “as is,” and the evidence shows that

they suffered only economic loss precluding recovery under a tort theory. We

reverse the judgment of the small claims court.

[17] Reversed.

Crone, J., and Pyle, J., concur.

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