FOURTH DIVISION FILED: February 28,2007
No. 1-05-3213
DARRELL E. SHOOP, ) Appeal from the Circuit Court ) of Cook County, Illinois Plaintiff-Appellant, ) ) v. ) No. 03 M1 154118 ) DAIMLERCHRYSLER CORPORATION, ) ) Defendant-Appellee. ) ) Honorable Vanessa A. Hopkins, (Dempsey Dodge, Defendant.) ) Judge Presiding
JUSTICE MURPHY delivered the opinion of the court:
Plaintiff, Darrell E. Shoop, filed suit against defendant DaimlerChrysler Corporation for
breach of express and implied warranties under the Magnuson-Moss Warranty–Federal Trade
Commission Act (Magnuson-Moss Act) (15 U.S.C. §§2308, 2310(d) (2000)) when his vehicle
required numerous repairs. When plaintiff received more than the fair market value for his car on
trade-in, defendant filed a motion for summary judgment, arguing that plaintiff did not suffer a
present injury. The trial court granted defendant’s motion. Because we find that a genuine issue
of material fact existed as to plaintiff’s damages at the time of acceptance, we reverse the decision
of the trial court. 1-05-3213
I. BACKGROUND
On April 4, 2002, plaintiff purchased a 2002 Dodge Dakota truck for $28,000, excluding
bank and finance charges. As part of the purchase, defendant, which manufactured the Dakota,
issued a 3-year or 36,000-mile standard limited warranty. Plaintiff alleged that he also entered
into a service contract with the dealer, Dempsey Dodge, at the time of the sale. Dempsey Dodge
was dismissed from the case after it settled with plaintiff.
Plaintiff began experiencing problems with the truck soon after he took possession.
Defects in the engine, suspension, steering, transmission, and other components caused plaintiff to
take the truck to a Chrysler dealership 12 times within 18 months for repairs. The Dakota was
subject to repair at least five times for the same defect, and that defect remained uncorrected.
Plaintiff, contending that defendant was unable to cure the defects after a reasonable number of
attempts, allegedly revoked his acceptance of the truck in writing, but defendant refused the
revocation. Plaintiff then filed a complaint against defendant alleging breach of written and
implied warranties pursuant to the Magnuson-Moss Act (15 U.S.C. §§2308, 2310(d) (2000)).
Plaintiff alleged that as a result of the persistent defects, he traded in his Dakota and
purchased a new vehicle on May 6, 2005. He had driven the truck for three years and logged
more than 39,000 miles. Plaintiff received $16,500 for the trade-in value of the truck. The
NADA guidebook provided that a comparable vehicle in “average” condition would have an
average trade-in value of $14,425 and an average retail value of $17,225. Defendant filed a
motion for summary judgment alleging that plaintiff did not suffer a present injury or damages
because he sold the truck for a price in excess of its fair market value at the time of the trade-in.
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In response, plaintiff submitted affidavits of two witnesses. Based on a visual inspection, a
road test, and reviews of the Dakota’s service history and technical service bulletins related to the
Dakota, Thomas Walters opined that the truck’s value was diminished by 35 % at the time of
purchase. Walters used the valuation guide of the Kelly Blue Book and his professional
experience in estimating the Dakota’s diminished value. Walters believed that the Dakota had
manufacturing defects at the time of sale. Based on a review of the repair records, plaintiff’s
second witness, Joseph Pennacchio, opined that the value of the truck at the time of purchase was
$22,300.
The trial court granted defendant’s motion for summary judgment. No hearing transcripts
are included in the record, and the court did not issue a memorandum opinion. This appeal
followed.
II. ANALYSIS
A. Damages
Summary judgment is appropriate when the pleadings, depositions, and other evidence
reveal that there is no genuine issue of material fact and that the moving party is entitled to
judgment as a matter of law. 735 ILCS 5/2-1005 (West 2004). Summary judgment is a drastic
means of resolving litigation and should only be allowed when the right of the moving party is
clear and free from doubt. Bier v. Leanna Lakeside Property Ass’n, 305 Ill. App. 3d 45, 50
(1999). Our review of a grant of summary judgment is de novo. Woods v. Pence, 303 Ill. App.
3d 573, 576 (1999).
The Magnuson-Moss Act provides a consumer with a private cause of action against a
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manufacturer or retailer that fails to comply with the Act or the terms of a written warranty or any
implied warranty arising therefrom. 15 U.S.C. §2310(d)(1) (2000). When the Act does not
conflict with state law governing the sale of consumer products, state law applies. Bartow v.
Ford Motor Co., 342 Ill. App. 3d 480, 484 (2003), citing Sorce v. Naperville Jeep Eagle, Inc.,
309 Ill. App. 3d 313, 323 (1999). Section 2-714(2) of the Uniform Commercial Code (UCC)
provides that the measure of damages for breach of warranty when the buyer has accepted goods
and given notice is the difference at the time and place of acceptance between the value of the
goods accepted and the value they would have if they had been as warranted, unless special
circumstances show proximate damages of a different amount. 810 ILCS 5/2-714(2) (West
2004); Razor v. Hyundai Motor America, 222 Ill. 2d 75, 106 (2006).
In addition, damages are an essential element of a breach of warranty claim. Kim v.
Mercedes-Benz U.S.A., Inc., 353 Ill. App. 3d 444, 460 (2004). The diminished value of a product
is a compensable injury in a breach of warranty claim. Dewan v. Ford Motor Co., 363 Ill. App.
3d 365, 369 (2005). While it is not necessary that damages for breach of warranty be calculated
with mathematical precision, basic contract theory requires that damages be proved with
reasonable certainty. Burrus v. Itek Corp., 46 Ill. App. 3d 350, 357 (1977). Damages based on
conjecture or speculation are precluded. Bockman Printing & Services, Inc. v. Baldwin-Gregg,
Inc., 213 Ill. App. 3d 516, 527 (1991). Plaintiff claims that the difference between the value of
the automobile as warranted and its value in its defective condition on the date of the sale must be
determined in hindsight. See Durant v. Palmetto Chevrolet, Inc., 241 S.C. 508, 129 S.E.2d 323
(1963). Furthermore, according to plaintiff, uncertainty as to the amount of damages when there
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is no doubt as to the fact of damage will not preclude recovery. Story Parchment Co. v. Paterson
Parchment Paper Co., 282 U.S. 555, 75 L. Ed. 544, 51 S. Ct. 248 (1931).
Plaintiff argues that he established damages under section 2-714(2) because two witnesses
attested that the value of his car was diminished at the time it was purchased. Defendant responds
that plaintiff failed to establish “present damages” because he traded in the Dakota for the fair
market value.
This issue appears simple because in response to defendant’s motion for summary
judgment, plaintiff provided evidence of his damages at the time of acceptance, the point in time
when damages are measured for breach of warranty under the UCC. 810 ILCS 5/2-714(2) (West
2004); Razor, 222 Ill. 2d at 106. However, we will discuss the issue more extensively because the
general requirement that a plaintiff have actual, present damages and the rule in section 2-714(2)
that damages are measured on the date of acceptance converge in this case.
Defendant relies on Valenti v. Mitsubishi Motor Sales of America, Inc., 332 Ill. App. 3d
969 (2002), for its contention that plaintiff could not establish “present damages” when he
received fair market value when he traded in the Dakota. In Valenti, the plaintiff revoked
acceptance after she experienced numerous problems with a new car that she purchased. The
defendant denied her revocation, and she filed a complaint alleging breach of express warranty
and the implied warranty of merchantability under the Magnuson-Moss Act. More than two years
after she revoked acceptance, the plaintiff sold the allegedly defective car for its fair market value,
as a sales manager at the dealership where the plaintiff received the trade-in credit attested. To
establish damages, the Valenti plaintiff relied solely on the allegations of her complaint. The court
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held that the plaintiff “cannot meet this burden where the undisputed facts show that plaintiff sold
the car at its fair market value, despite the alleged defect of which she now complains.” Valenti,
332 Ill. App. 3d at 973.
Valenti is distinguishable from the facts in the instant case. To establish damages, the
Valenti plaintiff only relied on the allegations of her complaint, which, combined with the rest of
the record, established that the “plaintiff purchased a new car for an agreed-upon price, drove it
17,290 miles and traded it in more than 2 1/2 years later for fair market value.” Valenti, 332 Ill.
App. 3d at 973. Here, plaintiff countered defendant’s motion for summary judgment with the
affidavits of two witnesses, who averred as to the reduced value of the Dakota at the time of
acceptance. In addition, the Valenti plaintiff did not argue that the vehicle was defective at the
time of acceptance, while plaintiff’s witnesses here attested that the Dakota was not substantially
free of defects at the time plaintiff took possession.
Defendant also cites a number of cases interpreting the damages required under the
Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS
505/10a(a) (West 2004)) in support of its argument. See Avery v. State Farm Mutual Automobile
Insurance Co., 216 Ill. 2d 100 (2005); Hayman v. Autohaus on Edens, Inc., 315 Ill. App. 3d
1075, 1078 (2000); Verb v. Motorola, Inc., 284 Ill. App. 3d 460 (1996); White v.
DaimlerChrysler Corp., 368 Ill. App. 3d 278 (2006). These cases, while relevant to the general
issue of present damages, do not deal with section 2-714, a statute that specifically provides that
damages are measured on the date of acceptance. In Avery, for example, our supreme court held
that the plaintiff failed to show “actual damage” under section 10a(a) of the Consumer Fraud Act
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when he sold the truck in question for the same value that he would have received if only original
equipment manufacturer parts had been used in the repair. Avery, 216 Ill. 2d at 196. Similarly, in
Hayman, the court found the plaintiff’s Consumer Fraud Act case was moot when the defendant
sent him a refund before the case was filed, and in White, 368 Ill. App. 3d at 287, the plaintiff
failed to allege proximate damages under the Consumer Fraud Act.
Although the issue in Bartow, 342 Ill. App. 3d 480, was whether the plaintiff had standing
to pursue a claim under the Magnuson-Moss Act after selling the vehicle in question, its
discussion of damages is also persuasive. In Bartow, the plaintiff, who had brought a case for
damages pursuant to the Magnuson-Moss Act, traded in her vehicle before she filed her
complaint. The defendant moved to dismiss the case on the basis that the plaintiff no longer had
standing to bring her case under the Magnuson-Moss Act. Bartow held that the UCC and the
common law of sales demonstrate that the resale by the buyer does not preclude recovery for
breach of warranty. Bartow, 342 Ill. App. 3d at 490. We noted, citing 67A Am. Jur. 2d Sales
§1242 (2000), that the application of the ordinary rule of damages for breach of warranty was not
changed or modified by the fact that the purchaser had resold the article at a profit. Bartow, 342
Ill. App. 3d at 491.
The plain language of section 2-714(2) provides that “[t]he measure of damages for
breach of warranty is the difference at the time and place of acceptance between the value of the
goods accepted and the value they would have if they had been as warranted.” 810 ILCS 5/2-
714(2) (West 2004). Furthermore, Anderson on the Uniform Commercial Code provides as
follows:
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“The buyer’s damages for breach of warranty are not lessened because the
buyer has resold the goods at an enhanced price. Had the goods been as warranted,
they might have been resold at a still higher price. It is, therefore, immaterial that the
goods were actually worth the price for which they were resold. Whether the price
received on a resale is evidence of the value of the goods at the time of the breach is
another question. Certainly such evidence is not conclusive.” R. Anderson,
Anderson on the Uniform Commercial Code § 2-714:59, at 424 (3d ed. 1997).
Therefore, we find that where plaintiff produced evidence of the Dakota’s diminished value at the
time of sale, a genuine issue of material fact existed as to his damages.
While the remedies provided by the UCC are to be “liberally administered with the goal of
placing the aggrieved party in as good a circumstance as if the other party had fully performed”
(Toyomenka (America), Inc. v. Combined Metals Corp., 139 Ill. App. 3d 654, 660 (1985)), an
award should not put a plaintiff in a better position than he would have been in if the contract had
been fully performed. First National Bank of Elgin v. Dusold, 180 Ill. App. 3d 714, 719 (1989).
“When the buyer sues the seller for warranty damages, the general rule specified by the [UCC] for
the measurement of the damages must be modified by deducting the profits made on resale.” R.
Anderson, Anderson on the Uniform Commercial Code § 2-714:223, at 488 (3d ed. 1997).
Therefore, plaintiff will not reap a windfall as a result of our conclusion that a genuine issue of
material fact existed as to his damages even though he received fair market value at trade-in.
Defendant claims, however, that plaintiff’s opinion testimony regarding the value of the
Dakota at the time of acceptance is based on speculation and guess because the witnesses did not
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speak to present damages. We first note that defendant did not move to strike the affidavits of
plaintiff’s witnesses. Defendant, relying on Verb, Anzalone v. Kragness, 356 Ill. App. 3d 365
(2005), and Jankoski v. Preiser Animal Hospital, Ltd., 157 Ill. App. 3d 818 (1987), contends that
plaintiff picked “a diminution in value figure out of thin air.” In Verb, the plaintiffs failed to plead
damages because the complaint was based on the possibility that cellular telephones may be
defective because of their unproven safety. Here, however, plaintiff has not alleged that the
Dakota may have been defective. Rather, he has alleged that the Dakota was defective and that
he had to take it in for repairs 12 times in 18 months. Furthermore, Anzalone and Jankoski are
inapposite, as they involve sentimental or emotional damages resulting the wrongful death of a
family pet instead of the diminished value of a vehicle under section 2-714 of the UCC.
In addition, because the value of the Dakota at the time of acceptance is important to a
damages analysis under section 2-714(2), so, too, are expert opinions attesting to that value.
Even lay witnesses are permitted to testify as to the value of property if they have sufficient
knowledge of the property and its value. Razor, 222 Ill. 2d at 109; Burrus, 46 Ill. App. 3d at 358
(there is no requirement that a witness with experience and knowledge as to the value of printing
presses be qualified as an expert). Furthermore, in Mattuck v. DaimlerChrysler Corp., 366 Ill.
App. 3d 1026, 1034 (2006), we declined to disturb the jury’s damage award when the plaintiff’s
expert testified that he relied on the Kelly Blue Book and opined that the vehicle’s defects
reduced the vehicle’s value by 40 %.
Here, based on a visual inspection, a road test, and reviews of the Dakota’s service history
and technical service bulletins related to the Dakota, Thomas Walters opined that the truck’s
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value was diminished by 35 % at the time of purchase. Walters used the valuation guide of the
Kelly Blue Book and his professional experience in estimating the Dakota’s diminished value.
Walters believed that the Dakota had these manufacturing defects at the time of sale. Plaintiff’s
second witness, Joseph Pennacchio, opined based on a review of the repair records that the value
of the truck at the time of purchase was $22,300. Both of these witnesses were experienced in
the inspection or appraisal of vehicles. Accordingly, the testimony of plaintiff’s opinion witnesses
created a genuine issue of material fact that the value of the Dakota was diminished at the time of
the sale.
In summary, we find that because damages under section 2-714 are the difference at the
time of acceptance between the Dakota as accepted and as warranted, a genuine issue of material
fact existed as to plaintiff’s damages. Because we find the existence of a genuine issue of material
fact, we need not address plaintiff’s alternative “cover” damages under section 2-712.
B. Breach of Implied Warranty of Merchantability
Defendant argues that even if we find a genuine issue of material fact as to plaintiff’s
damages, he cannot recover under the implied warranty of merchantability because the sale of his
Dakota was evidence of its merchantability.
Under section 2-314(c)(2) of the UCC, a product breaches the implied warranty of
merchantability if it is not fit for the ordinary purposes for which such goods are used. 810 ILCS
5/2-314(2)(c) (West 2004). “[W]ith regard to automobiles, ‘[f]itness for the ordinary purpose of
driving implies that the vehicle should be in a safe condition and substantially free from defects.’ ”
Check v. Clifford Chrysler-Plymouth of Buffalo Grove, Inc., 342 Ill. App. 3d 150, 159 (2003),
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quoting Overland Bond & Investment Corp. v. Howard, 9 Ill. App. 3d 348, 354 (1972). Breach
of an implied warranty of merchantability may also occur where the warrantor has unsuccessfully
attempted to repair or replace defective parts. Check, 342 Ill. App. 3d at 150. Whether an
implied warranty has been breached is a question of fact. Check, 342 Ill. App. 3d at 150.
Defendant, relying on Alvarez v. American Isuzu Motors, 321 Ill. App. 3d 696 (2001),
contends that the Dakota was fit for the ordinary purpose of driving because plaintiff drove it
daily for more than three years after purchase and traded it in for its fair market value. In Alvarez,
the court held that a “ ‘prima facie case that a product was defective and that the defect existed
when it left the manufacturer’s control is made by proof that in the absence of abnormal use or
reasonable secondary causes the product failed “to perform in the manner reasonably to be
expected in light of its nature and intended function.” [Citations.]’ ” Alvarez, 321 Ill. App. 3d at
703, quoting Tweedy v. Wright Ford Sales, Inc., 64 Ill. 2d 570, 574 (1976). The court found that
the only defect of any consequence, a jerking transmission, was remedied, and the plaintiff failed
to exclude the buildup of moisture or other materials as a reasonable cause of the problem.
Alvarez, 321 Ill. App. 3d at 706. Here, however, plaintiff’s complaint specifically eliminated any
abnormal uses and secondary causes as the source of the defects in the vehicle.
In Mattuck, the court rejected the defendant’s argument that the implied warranty of
merchantability was not breached when the plaintiff drove the vehicle for almost 100,000 miles
because the testimony established that the plaintiff had the vehicle serviced no less than six times.
In addition, in Check, the court held that the jury could have concluded that a defective paint job
on a new car rendered it unmerchantable as a new car, and in Pearson v. DaimlerChrysler Corp.,
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349 Ill. App. 3d 688, 699 (2004), a question of fact existed as to whether the plaintiff’s car was in
a safe condition and substantially free of defects when an expert testified that poor gas mileage
was consistent with a number of defects.
The amended complaint alleged that plaintiff began experiencing problems with the
Dakota’s engine, suspension and steering, transmission, and other components of the truck soon
after he took possession. Plaintiff was required to take the truck to a Chrysler dealership 12 times
within 18 months for repairs, and he alleged that defendant was unable to cure the defects after a
reasonable number of attempts. When Walters test drove the Dakota, he experienced a loping or
jerking sensation when he braked at very low speeds. Furthermore, at highway speeds, a steering
wheel shimmy with additional vibration was also present when he braked. He also noticed an
intermittent single pop noise from the front suspension when he turned left into plaintiff’s
driveway. Therefore, a genuine issue of material fact existed as to whether defendant breached
the implied warranty of merchantability.
Furthermore, a lack of privity between plaintiff and defendant does not preclude plaintiff’s
claim. Although the UCC extends a buyer’s potential cause of action for breach of the implied
warranty of merchantability only to an immediate seller, the privity requirement has been
“relaxed” when (1) a manufacturer has extended a written warranty with a product; and (2) a
consumer brought an action against the manufacturer under the Magnuson-Moss Act. Mydlach v.
DaimlerChrysler Corp., 364 Ill. App. 3d 135, 153 (2005). See Rothe v. Maloney Cadillac, Inc.,
119 Ill. 2d 288, 292 (1988); Szajna v. General Motors Corp., 115 Ill. 2d 294, 311 (1986).
Defendant does not dispute that a written warranty was provided to plaintiff when he purchased
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the vehicle, and his action against defendant has been brought pursuant to the Magnuson-Moss
Act. Therefore, defendant was in vertical privity with plaintiff for purposes of plaintiff’s implied
warranty of merchantability claim. Rothe, 119 Ill. 2d at 292; Szajna, 115 Ill. 2d at 311.
III. CONCLUSION
Because a genuine issue of material fact existed as to plaintiff’s damages when he received
fair market value at trade-in but had evidence of the Dakota’s reduced value at the time of
acceptance, the trial court’s grant of summary judgment is reversed.
REVERSED.
CAMPBELL, J., and NEVILLE, J., concur.
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