C. KAY SHANNON and READMOND PRINTING, INC. v. DON HALL CHEVROLET-OLDSMOBILE, INC.
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RENDERED:
SEPTEMBER 8, 2000; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1999-CA-001241-MR
C. KAY SHANNON and
READMOND PRINTING, INC.
APPELLANTS
APPEAL FROM BOYD CIRCUIT COURT
HONORABLE KELLEY ASBURY, JUDGE
ACTION NO. 98-CI-00627
v.
DON HALL CHEVROLET-OLDSMOBILE, INC.
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
BUCKINGHAM, EMBERTON, and SCHRODER, Judges.
SCHRODER, JUDGE:
This is an appeal by C. Kay Shannon from an
order of the Boyd Circuit Court granting summary judgment to the
appellee, Don Hall Chevrolet-Oldsmobile, Inc., (Don Hall).
On August 30, 1997, Shannon purchased a 1995 Chevrolet
Tahoe from Don Hall.
In exchange for the Tahoe, Shannon traded
in her 1994 GMC Yukon and paid an additional $6,500.00.
The
Buyer’s Order provides that Don Hall allowed Shannon $17,400.00
on the Yukon, resulting in a total purchase price of $23,900.00
for the Tahoe.
During the closing of the sales transaction, Shannon
executed a “Vehicle Verification Certificate.”
In executing the
certificate, Shannon warranted that her Yukon had never been
designated as a salvage vehicle, a rebuilt vehicle, or a waterdamaged vehicle.
The certificate provided that upon breach of
this warranty, Shannon agreed to “pay the difference in value
resulting from the breach” or that Don Hall could “elect to
rescind the acceptance” of the vehicle.
Subsequent to the sales transaction, Shannon provided
the title for the Yukon to Don Hall.
On September 13, 1997, Don
Hall sold the Yukon to Cheryl Johnson.
At some point after the
sale to Johnson, it was discovered that the Yukon was a rebuilt
vehicle, and that this status was branded on the vehicle’s title.
Don Hall thereafter repurchased the Yukon from Johnson and, in so
doing, incurred a sales tax of $530.00.
Thereafter Don Hall sought to rescind its acceptance of
the Yukon.
Shannon resisted, and on June 24, 1998, Don Hall
filed suit in Boyd Circuit Court against Shannon for breach of
warranty, alleging that Shannon misrepresented the actual state
of the Yukon and either intentionally or negligently deceived Don
Hall from ascertaining the actual value of the vehicle.
On July 8, 1998, Shannon filed her Answer to the
complaint denying any intentional and/or negligent
misrepresentation, and pleading the affirmative defenses of
contributory negligence, estoppel, waiver, the doctrine of
laches, and failure to mitigate damages.
On February 9, 1999,
Don Hall filed a motion for summary judgment.
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On May 5, 1999,
the trial court granted Don Hall’s motion for summary judgment.
The judgment awarded Don Hall damages of $17,930.00 plus
interest.
This appeal followed.
In order to qualify for summary judgment, the movant
must “show that there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter
of law."
CR 56.03.
On appeal, the standard of review of a
summary judgment is whether the trial court correctly found that
there was no genuine issue as to any material fact and that the
moving party was entitled to judgment as a matter of law.
“The
record must be viewed in a light most favorable to the party
opposing the motion for summary judgment and all doubts are to be
resolved in his favor."
Steelvest, Inc. v. Scansteel Service
Center, Inc., Ky., 807 S.W.2d 476, 480 (1991).
Summary judgment
should only be used when, as matter of law, it appears that it
would be impossible for the respondent to produce evidence at
trial warranting a judgment in his favor and against the movant."
Id. at 483 (citing Paintsville Hospital Co. v. Rose, Ky., 683
S.W.2d 255 (1985)).
The “Vehicle Verification Certificate” executed by
Shannon in conjunction with her trade-in of her Yukon stated in
relevant part as follows:
As a material part of the transaction, the
undersigned warrants and represents as to the
subject vehicle, intending by such warranties
and representations that the dealership rely
upon same in establishing a trade-in or
purchase value that:
1. The vehicle has never been designated as
a “Salvage Vehicle” or “Rebuilt Vehicle”,
“Water Damaged” or any such designation of
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similar nature by any state regulatory
agency.
. . . .
If any of the warranties or representations
above are incorrect, the undersigned agrees
to pay the difference in value resulting from
the breach to the dealership forthwith, or
the dealership may elect to rescind the
acceptance or purchase of the vehicle at the
option of the dealership.
First, Shannon contends that Don Hall was not entitled
to revoke its acceptance of the Yukon and rescind the purchase
agreement because of various provisions of the Uniform Commercial
Code (UCC).
See KRS Chapter 355.
We disagree.
The Vehicle
Verification Certificate contains Shannon’s explicit warranty
that the Yukon was not a rebuilt vehicle.
was a rebuilt vehicle.
The Yukon, in fact,
The certificate further provided that
upon Shannon’s breach of the warranty “the dealership may elect
to rescind the acceptance or purchase of the vehicle at the
option of the dealership.”
KRS 355.1-102(3) permits the parties
to vary the effect of provisions of the UCC.
A & A Mechanical,
Inc. v. Thermal Equipment Sales, Inc., Ky. App., 998 S.W.2d 505,
510 (1999).
To the extent that the explicit warranty contract
language varies from any UCC provision, the variation is clearly
expressed by the contract, and we are not persuaded that the UCC
provisions cited by Shannon inhibit Don Hall’s ability to enforce
Shannon’s warranty.
Next, Shannon contends that Don Hall did not exercise
its right to revoke acceptance within a reasonable time.
The
transaction between Don Hall and Shannon occurred on August 30,
1997.
The record does not disclose exactly when Don Hall
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discovered that the Yukon was a rebuilt vehicle and sought to
rescind the contract; however, in conjunction with its motion for
summary judgment, Don Hall filed a letter from Shannon’s trial
counsel addressed to Don Hall’s trial counsel dated November 20,
1997.
The first sentence of that letter states, “As you may or
may not be aware, Don Hall Chevrolet is attempting to rescind the
sales contract it has with my client, Kay Shannon, pertaining to
the sale of a 1995 Chevrolet Tahoe.”
It is evident that Don Hall
sought to rescind the sale no later than twelve weeks from the
date of the original transaction.
The certificate is silent as to the issue of how long
Don Hall was to have, following a breach of warranty, to seek
redress under the warranty.
Shannon contends that the UCC
“reasonable time” provisions of KRS 355.2-608 apply.
Certainly a
“reasonable time” provision is an implicit term to be implied to
Don Hall’s right to rescind and, normally, what constitutes a
reasonable time is one of fact for the jury.
Chaplin v. Bessire
& Company, Ky., 361 S.W.2d 293, 294-295 (1962); Chernick v.
Casares, Ky. App., 759 S.W.2d 832 (1988).
However, we are not
persuaded that a genuine issue of material fact exists as to
whether Don Hall sought to rescind its acceptance of the Yukon
within a reasonable time.
The facts may be so overwhelming as to
render the timeliness question a matter of law.
Chernick at 834.
No later than twelve weeks following the August 30, 1997,
transaction, Don Hall sought to rescind.
Drawing all inferences
in the light most favorable to Shannon, this was manifestly a
reasonable time period for Don Hall to seek to rescind its
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acceptance of the Yukon.
We discern no chance that Shannon would
prevail at trial under the theory that Don Hall did not seek to
rescind within a reasonable time.
Next, citing KRS 355.2-608(2), Shannon contends that
Don Hall did not revoke its acceptance before a substantial
change in the condition of the Yukon occurred.
It is uncontested
that the Yukon was vandalized and damaged while in the possession
of Don Hall.
However, the May 5, 1999, order addressing summary
judgment provided that “Any damage which has occurred [to the
Yukon] during Don Hall’s possession of the vehicle shall be
repaired and/or remedied by Don Hall Chevrolet.”
Moreover, the
trial court’s August 27, 1999, order granting Don Hall’s motion
to auction the Yukon states, “the Court not[es] that [Don Hall]
has complied with the Court’s Order of Judgment entered on May 5,
1999 by repairing the damage to the vehicle[.]”
In summary, the
record discloses that the issues relating to the vandalism damage
have been resolved, and this issue cannot defeat summary
judgment.
Next, citing KRS 355.2-603(1), Shannon contends that
Don Hall did not make a reasonable effort to mitigate damages.
Shannon alleges that Don Hall failed to make a good faith effort
to attempt to sell the Yukon following its discovery of the
breach of warranty.
Under the circumstances of this case, we
disagree that Don Hall was under a duty, at the same time it was
seeking to rescind its acceptance of the Yukon, to attempt to
sell the Yukon.
It was Don Hall’s objective to return the Yukon
to Shannon in conjunction with its recission of its acceptance of
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the Yukon.
Efforts to sell the vehicle to a third party would
have been contrary to this objective.
Moreover, we are not
convinced that the Yukon was a good which “threaten[ed] to
decline in value speedily” such that KRS 355.2-603(1) would
apply.
Next, Shannon contends that the trial court incorrectly
determined breach of warranty damages.
Again relying on the UCC,
Shannon, citing KRS 355.2-714, contends that the proper 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 had if they had been as warranted.
However, this ignores the fact that the Vehicle Verification
Certificate specifically provided that “the dealership may elect
to rescind the acceptance or purchase of the vehicle at the
option of the dealership.”
The summary judgment awarded Don Hall a judgment of
$17,930.00. Shannon was granted a $17,400.00 trade-in allowance
on her Yukon and Don Hall incurred a $530.00 sales tax expense on
the aborted sale of the Yukon to Johnson.
The judgment awarded
to Don Hall is the sum of these two amounts, and appears to be a
proper judgment, in conjunction with Don Hall’s return of the
Yukon to Shannon, to make Don Hall whole.
There are no genuine issues of material fact, and,
under the facts, based upon the express warranty given by Shannon
in the Vehicle Verification Certificate, Don Hall was entitled to
summary judgment.
The judgment of the Boyd Circuit Court is
affirmed.
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ALL CONCUR.
BRIEF FOR APPELLANTS:
BRIEF FOR APPELLEE:
Todd K. Trautwein
Olive Hill, Kentucky
Kimberly S. McCann
Christopher A. Dawson
Ashland, Kentucky
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