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Garemore v. Maple Shade Motor Corporation

A-1786-03T2 (N.J. Super. App. Div. 2004) (Unpublished)

WARRANTIES—A contract that does not refer to the quality or workmanship of a product, such as an aftermarket power train warranty, is not governed by the Magnuson-Moss Warranty Act.

A buyer bought a used car from a dealer. The car came with a 3,000 mile, ninety day limited dealer warranty covering all parts and labor for a number of items. The sales contract stated that this was the only dealer warranty that came with the car. The buyer’s signature appeared immediately after this notice. The contract recited that all work had to be done by the dealer. The buyer’s signature also appeared after this provision. The contract also contained an empty block labeled “Service Required.” In this space was written: “Factor Warranty until 2/20/2001 or 50,000 miles, whichever comes first.” Just below this entry was another that read “MSM Extended Warranty.” Two days after the purchase, the buyer bought a Power Train Service Contract (PTS contract) from the dealer. Under this contract, the dealer promised to replace or repair the engine, transmission, and drive axle assembly units at no cost to the buyer provided that the car was brought to the dealer for regularly scheduled maintenance. The PTS contract specifically declared that it was separate from the manufacturer’s warranty and was optional at the buyer’s election.

In December 2002, the buyer brought the car to the dealer for repair. By this time, both the dealer’s limited warranty and the balance of the factory warranty had expired. The dealer found a transmission problem but refused to fix it for free under the terms of the PTS agreement. It claimed that the buyer had failed to adhere to the service schedule as outlined in the buyer’s maintenance menu, a violation of the PTS contract. According to the service schedule and the car’s mileage, the car should have been serviced and inspected nine times by the time the buyer brought the car to the dealer in 2002. However, during the time following the purchase, the buyer had only brought the car to the dealer three times. Instead, the buyer had the car serviced by others on various occasions prior to December 2002. The buyer sued the dealer for treble damages, claiming consumer fraud and a violation of the Magnuson-Moss Warranty Act. The lower court ruled in favor of the dealer.

On appeal, the buyer claimed that the dealer agreed to provide him with an extended warranty, but failed to do so. However, the Appellate Division concluded that a reasonable reading of the sales contract led to the conclusion that the expression “MSM Extended Warranty"referred not to a third warranty, but rather to the PTS contract. The pre-printed language on the sales contract specifically stated that the only dealer warranty was the limited warranty that was issued with, and made a part of, the order form. In addition, when the buyer was demanding that the dealer repair his transmission for free, he argued that the dealer should do so under the PTS contract. He made no mention of some alleged third warranty. For that reason, the Court held that the dealer did not breach the sales contract by failing to supply the buyer with a third warranty.

The buyer then contended that the dealer violated the Magnuson-Moss Warranty Act because, under federal law, the PTS contract was an unlimited written warranty, which the dealer breached when it expected the buyer to pay for the transmission repair. Under this Act, a written warranty is any written affirmation of fact or written promise made in connection with the sale of a consumer product by a supplier to a buyer which relates to the nature of the material or workmanship and affirms or promises that such material or workmanship is defect free. Looking at that definition, the Court held that the PTS contract was not subject to the requirements of the Magnuson-Moss Warranty Act because the PTS contract didn’t refer to the quality or workmanship of the used car. In addition, the buyer paid for the PTS contract separately from the consideration paid for the car. Also, the buyer agreed to bring the car to the dealer for regularly scheduled service over and above the manufacturer’s recommendations. The buyer specifically acknowledged in the contract that he was required to do more than otherwise he would have been when he signed his name just below a sentence on the PTS contract that read, “I understand that the service schedule recommended at [the dealer] require[d] more service than the Manufacturer’s recommended service schedule.” In return, the dealer promised to make any repairs necessary outside those covered by the dealer supplied limited warranty or the remaining balance of the factory warranty. Finally, the PTS contract clearly stated that it was separate and apart from the Manufacturer’s Warranty and that it was an optional agreement. Therefore, since the PTS contract was not a warranty within the meaning of the Magnuson-Moss Warranty Act, and because the buyer failed to follow its terms, the Appellate Division held that the dealer was not obligated to repair the transmission under the contract.


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