KEITH GAYLE DAVIS V FOREST RIVER INCAnnotate this Case
STATE OF MICHIGAN
COURT OF APPEALS
KEITH GAYLE DAVIS,
February 21, 2008
Ingham Circuit Court
LC No. 04-000064-CP
FOREST RIVER, INC.,
Advance Sheets Version
KITSMILLER RV, INC.,
Before: Owens, P.J., and Bandstra and Davis, JJ.
Defendant Forest River, Inc., appeals as of right an order granting revocation of
acceptance under the Magnuson-Moss Warranty--Federal Trade Commission Improvement Act
(the MMWA), 15 USC 2301 et seq., to plaintiff of a recreational vehicle (RV) manufactured by
Forest River and sold by Kitsmiller RV, Inc.1 We affirm, albeit with one clarification.
As we discuss later in this opinion, the remedy of "revocation of acceptance" is actually a
Uniform Commercial Code (UCC), MCL 440.1101 et seq., remedy, available by statute under
MCL 440.2608, but not available to plaintiff in this case because plaintiff and defendant were
not in privity of contract. See Henderson v Chrysler Corp, 191 Mich App 337; 477 NW2d 505
(1991). However, it is clear from the pleadings, discussions, and arguments that plaintiff really
pursued, and the trial court really granted, the equitable remedy, available at common law, of
"rescission," which is available irrespective of privity. Our affirmance is based on the "wellsettled" principle that "the gravamen of an action is determined by reading the complaint as a
Kitsmiller RV accepted a case evaluation and was dismissed with prejudice as a defendant.
Forest River will be referred to as the singular "defendant" in this opinion.
whole, and by looking beyond mere procedural labels to determine the exact nature of the
claim." Adams v Adams (On Reconsideration), 276 Mich App 704, 710-711; 742 NW2d 399
(2007). Therefore, we affirm the substance of the trial court's order, but not the nomenclature
The facts of this case are not seriously disputed. Plaintiff and his wife are avid campers.
In 2002, they decided to upgrade from a relatively small Winnebago RV to a 34-foot Windzone
RV manufactured by Forest River and sold by Kitsmiller RV. They were motivated in part by an
injury that precluded plaintiff from easily entering and leaving the Winnebago, and partly a
desire for a larger and more-luxurious vehicle that could be used for more extensive traveling.
Although they had owned RVs before, and plaintiff had learned how to operate vehicles of that
size while serving in the military, they had never owned a new RV before. After taking
possession of the RV, plaintiff experienced numerous problems with it, some of which he
concluded were safety issues. He cut short a total of three intended trips, and the RV spent
several months being repaired by Forest River on two occasions. Plaintiff ultimately concluded
that Forest River should take the RV back and repay his purchase price. Plaintiff has properly
maintained the RV in the meantime. The only real disputes concerned the number and the
severity of the problems plaintiff experienced and some testimony that all new RVs are expected
to have initial problems that can be worked out.
Plaintiff's complaint alleged eight counts: breach of express warranty; breach of implied
warranty of merchantability; revocation of acceptance under MCL 440.2608; breach of written
warranty under the MMWA; breach of implied warranty under the MMWA; violation of the
Michigan Consumer Protection Act, MCL 445.901 et seq.; breach of contract; and rescission of
contract. The parties stipulated the dismissal of the claim for revocation of acceptance under
state law; however, a significant part of plaintiff's claim was the assertion that he was
nevertheless able to seek revocation of acceptance or rescission as a common-law remedy
through the MMWA. The trial court granted summary disposition to defendant on the breach-ofcontract claim, and a jury found in defendant's favor on the Michigan Consumer Protection Act
claim; plaintiff has not cross-appealed with regard to those matters. The jury found that plaintiff
had "proven that he is entitled to revoke his acceptance of the motor home," on the basis of
which the trial court entered judgment against defendant, from which defendant now appeals.2
The first question posed is what remedies or causes of action are provided for under the
MMWA. "The applicability of a legal doctrine is a question of law. This Court reviews
questions of law de novo." James v Alberts, 464 Mich 12, 14; 626 NW2d 158 (2001). Because
there is no decision on point regarding the MMWA from the United States Supreme Court, this
Court is required to make its own independent assessment of the MMWA; although federal court
decisions may be persuasive, they are not controlling, even if there is no conflict between them.
Abela v Gen Motors Corp, 469 Mich 603, 606-607; 677 NW2d 325 (2004). Under the
The trial court also granted an alternative judgment in plaintiff's favor, to be effective only if
this Court reversed the grant of revocation. Because of our resolution of the revocation issue, we
need not address the merits of the alternative judgment and express no opinion about them.
circumstances of this case and considering the answers reached by other courts, we are not
persuaded of a present necessity to answer this question. As we will discuss later in this opinion,
the law in Michigan obviates any need to do so to resolve the issues at bar.
Under the MMWA, subject to provisions not relevant here, "a consumer who is damaged
by the failure of a supplier, warrantor, or service contractor to comply with any obligation under
this chapter, or under a written warranty, implied warranty, or service contract, may bring suit
for damages and other legal and equitable relief" in a state or federal court. 15 USC 2310(d)(1).
The MMWA provides for an award of costs and expenses to prevailing parties, but it does not
otherwise indicate what that legal and equitable relief might be. Nothing in the MMWA itself
appears to mandate any sort of privity between any parties. In fact, its definition of a "supplier"
suggests the opposite: The term "supplier" means "any person engaged in the business of making
a consumer product directly or indirectly available to consumers." 15 USC 2301(4) (emphasis
added). Significantly, it states that "implied warranties" arise under state law. 15 USC 2301(7).
Nowhere in the MMWA is there any hint regarding the nature of the "damages and other legal
and equitable relief."
The parties cite cases reaching opposite results with regard to whether the available relief
under the MMWA is limited to whatever is available under state law in the jurisdiction where a
suit is brought. We have not been offered any authority suggesting that a plaintiff under the
MMWA is entitled to any less than would be available under state law, and it appears that the
parties do not dispute that much. The lower federal courts are substantially divided on the issue
whether the MMWA provides remedies in addition to those available under state law. In our
view, whether the MMWA mandates the availability of remedies beyond what the state provides
can only be satisfactorily determined by the United States Supreme Court. However, it seems
settled that the MMWA does make available, at a minimum, remedies that are available under
state law. Because we find plaintiff here is entitled to a remedy under Michigan law, we need
not address this question any further in this case.
We note initially two legal theories that do not afford plaintiff a remedy here. First, as
Henderson discussed, "revocation of acceptance" is a purely statutory remedy under MCL
440.2608 that was "inextricably connected to the contractual relationship between a buyer and a
seller," and "[t]he fact that a manufacturer may be liable under its warranty provisions does not
change the fundamental nature of the revocation remedy as being contractually based."
Henderson, supra at 341-343. The Henderson Court therefore found that revocation of
acceptance, as a contractual remedy, required privity of contract. Id. Second, Michigan's "lemon
law," MCL 257.1401 et seq., explicitly excludes RVs and motor homes. MCL 257.1401(f).
This is significant, in part, because such an exclusion is not necessarily intuitively obvious. But
most importantly, the "lemon law" would give purchasers of automobiles an adequate remedy at
law, Henderson, supra at 342, precluding an equitable remedy such as rescission from being
available against automobile manufacturers. Detroit Trust Co v Old Nat'l Bank of Grand Rapids,
155 Mich 61, 65; 118 NW 729 (1908). We hold that neither the "lemon law" nor the UCC is
relevant to this matter.
The critical issue in this case is whether a purchaser who, like plaintiff in this case, is not
in contractual privity with a manufacturer may obtain the common-law remedy of rescission.
We find that privity has long been categorically eliminated in Michigan as a prerequisite to
purchasers' bringing suit against manufacturers, and the Legislature's adoption of the UCC did
not abolish rescission except where the parties actually do have a contract with each other.
The abolition of the privity requirement was accomplished half a century ago in Spence v
Three Rivers Builders & Masonry Supply, Inc, 353 Mich 120, 126-127; 90 NW2d 873 (1958).
The case involved concrete building blocks that turned out to be defective after they had been
used to construct buildings; the problem was that the plaintiff purchased the blocks from an
intermediary who was not reachable at the time of the action, not from the manufacturer itself.
Id. at 122-125. Justice Voelker, writing for the Court, observed that the "general rule" in
Michigan had, until that time, been that a person who had not directly contracted with a
manufacturer—and was therefore "'not in privity'"—could not recover from the manufacturer for
defective products under theories of either negligence or implied warranty.
concern" of the Court was whether, in that day and age, to uphold the trial court's "holding that
the plaintiff is barred from her action by lack of privity of contract with defendant . . . ." Id. at
125. In other words, whether the lack of privity "insulat[ed the defendant] from all liability to
plaintiff." Id. at 123.
Justice Voelker observed that at that time, the cases on point were inconsistent and
symptomatic of "try[ing] vainly to wed the outmoded thinking and legal cliches of the past to the
pressing realities of modern life." Id. at 129. Thus, "[a]ggrieved plaintiffs have scarcely known
whether to sue in deceit or fraud or for negligence or breach of warranty—or indeed whether it
was worthwhile to sue at all." Id. "Either lack of privity should always be a defense in these
cases, or it never should be. The basically contractual notion of privity in this context has largely
to do with the right of a party to bring his action against the person he seeks to hold, regardless
of injury suffered." Id. at 129 (emphasis in original). Justice Voelker further noted that the
"doctrine of nonliability crept into our law from a casual dictum in an English case decided in
1842 (which, to add to the delightful irony, did not even involve a manufacturer)," which
American courts seized upon and expanded "into a 'general rule' to relieve manufacturers of all
liability," even after "the English in due course sensibly scuttled their earlier dependence on this
old dictum . . . ." Id. at 132.
Our Supreme Court concluded that, following the lead of Carter v Yardley & Co Ltd, 319
Mass 92; 64 NE2d 693 (1946), the "general rule" requiring a purchaser to be in contractual
privity to bring suit against a manufacturer was unjust, unsound, out of touch with modern-day
realities, and in need of abandonment. Spence, supra at 134-135.
Three years later, our Supreme Court revisited the issue and it made even clearer the
absurdity of applying the outdated privity requirement in modern society and the importance of a
policy that recognized the current economic realities. Manzoni v Detroit Coca-Cola Bottling Co,
363 Mich 235; 109 NW2d 918 (1961). The Court observed that warranty actions were "of
ancient lineage" and historically required privity of contract. Id. at 238.
requirement was an anachronism left over from "when many of our precedents began to take
form" in a day when "[s]ales were little more than neighborhood trades" and products were
"made under the very eyes of the person who ultimately used it." Id. at 238-239. Therefore, the
privity requirement was an adaptation to conditions largely free of intermediaries, vastly simpler
than the modern world and realistically inapplicable to it. Id. at 239-241.
In contrast, the Manzoni Court noted that modern sales were nothing like the sales of the
day in which the privity requirement was adopted. Quoting extensively from the supreme court
of New Jersey, Manzoni explained that in an economy where manufacturers were no longer
generally in privity with their products' users, "'where the commodities sold are such that if
defectively manufactured they will be dangerous to life or limb, then society's interests can only
be protected by eliminating the requirement of privity between the maker and his dealers and the
reasonably expected ultimate consumer.'" Id. at 240, quoting Henningsen v Bloomfield Motors,
Inc, 32 NJ 358, 379; 161 A2d 69 (1960). The Court therefore concluded that the privity
requirement, as a prerequisite to bringing a warranty claim, was an anachronism and
inapplicable to the modern commercial world; rather than engage in "the use of fictions," many
jurisdictions had therefore simply abandoned the privity requirement outright. Manzoni, supra at
241. The Court reiterated that Michigan permitted recovery under theories of negligence or
breach of implied warranty. Id.
Spence and Manzoni were decided while the Uniform Sales Act was in effect in
Michigan; the Uniform Sales Act was adopted in 1913, 1913 PA 100, and was replaced (along
with other old uniform acts) with the Uniform Commercial Code in 1964. Critically, the
Uniform Sales Act—and particularly § 69, 1948 CL 440.69—addressed the remedy of
rescission, and it was merely "declaratory of the common law." Rubin v Crowley, Milner & Co,
214 Mich 365, 369; 183 NW 51 (1921); Kirby v Gibson Refrigerator Co, 274 Mich 395, 399;
264 NW 840 (1936); Cova v Harley Davidson Motor Co, 26 Mich App 602, 610-611; 182
NW2d 800 (1970). Moreover, our Supreme Court has explicitly stated that it has repudiated the
privity-of-contract requirement for pursuing a warranty claim under the Uniform Sales Act.
Prentis v Yale Mfg Co, 421 Mich 670, 682 n 9; 365 NW2d 176 (1984). It is clear that privity-ofcontract was long ago eliminated in Michigan as a prerequisite to bringing a suit, under the
common law, seeking rescission on the theory of breach of implied warranty.3
Even after the UCC became effective in Michigan, our Supreme Court again recounted
the history of the privity requirement in Hill v Harbor Steel & Supply Corp, 374 Mich 194; 132
NW2d 54 (1965). The Court observed that there had been "a time . . . when lack of privity of
contract between plaintiff and defendant was a defense to a suit for breach of warranty," but that
an exception had previously developed for foods, and that exception was made the rule in
Spence. Id. at 201. The Hill Court provided two significant clarifications. First, that the Spence
decision had erroneously implied that there was no distinction between a negligence action and
an action alleging breach of implied warranty, when in fact the two actions were significantly
different, the most important difference being that a plaintiff need not show a lack of due care to
prevail under a warranty theory. Id. at 202-204. Second, although the Manzoni decision had
The dissent quotes a quote in Lash v Allstate Ins Co, 210 Mich App 98, 102; 532 NW2d 869
(1995), in support of the conclusion that rescission is definitionally unavailable here. We note
that the quotation from Lash traces its lineage back to Wall v Zynda, 283 Mich 260, 264; 278
NW 66 (1938), a case that predates Spence by two decades. More importantly, Wall was not a
consumer-goods case at all; rather, it was concerned with whether an action specifically seeking
rescission of a land contract constituted an action founded upon a covenant in that contract.
involved a food product, the opinion itself had been general and intended to apply to all cases
involving defective products. Id. at 204. Thus, even after the UCC was adopted, it was clear
that at common law, in suits between purchasers and manufacturers, contractual privity remained
discredited and abandoned as an anachronistic requirement that had no place in the modern
Shortly after Hill, our Supreme Court reiterated that in a case involving an innocent
bystander with no privity of any sort pursuing a breach-of-warranty claim against a
manufacturer, "[t]he fact is that Michigan, for abundantly worthy reasons, has eliminated lack of
privity as a defense to actions as at bar. . . ." Piercefield v Remington Arms Co, Inc, 375 Mich
85, 99; 133 NW2d 129 (1965).4 Almost a decade later, our Supreme Court was asked to
determine whether a third-party purchaser of property could recover from a title abstractor on the
basis of a faulty abstract of title despite a lack of contractual privity between them. Williams v
Polgar, 391 Mich 6, 9; 215 NW2d 149 (1974). Among other issues in the case, our Supreme
Court again explained that it had "in categorical terms relieved Michigan jurisprudence of the
restrictions of 'privity.'" Id. at 9-10, 15-18 (citing Spence, supra).
The parties and the trial court gave considerable attention to Henderson, and in particular
Henderson's holding that the remedy of revocation of acceptance under the UCC was only
available to purchasers against parties with whom they were in privity of contract. We hold that
Henderson is not relevant to this case except to the extent that it reaffirms the fact that the
statutory UCC remedy of revocation of acceptance is distinct from the common-law equitable
remedy of rescission. Henderson, supra at 339-341; see also Gauthier v Mayo, 77 Mich App
513, 515; 258 NW2d 748 (1977). This is, of course, entirely proper: the UCC "keeps intact
those areas of the common law not superseded by specific provisions of the UCC." Huron Tool
& Engineering Co v Precision Consulting Services, Inc, 209 Mich App 365, 374; 532 NW2d 541
(1995); MCL 440.1102(2)(a) and 440.1103.
In Henderson, the plaintiff attempted to pursue a breach-of-contract action against a party
with whom he did not have a contract. The Henderson Court discussed rescission only to
explain that rescission was an equitable remedy distinct from the contractual remedy now
provided for in the UCC. Henderson, supra at 340. The Henderson Court stated that warranty
liability was an independent matter, and in that case it was irrelevant because the plaintiff had
abandoned his warranty claims. Id. at 342-343. Henderson did not obviate the longstanding
"principles of law and equity" in Michigan that the remedy of rescission is available for breach
of implied warranty.5 Indeed, the holding in Henderson was consistent with the reasoning
The remainder of the discussion concerned the possibility, which our Supreme Court declined
to address at the time, that such a warranty case might be barred on the alternative basis that
there was too great a causal distance between the injury and the defect. Id.
Additionally, Henderson relied on an out-of-state case for the proposition that the UCC now
provided for "revocation of acceptance" as a new remedy, distinct and different from
"rescission"; in that case, the District Court of Appeal of Florida explicitly cautioned "that this
does not alter a plaintiff's right to bring suit under a common law theory of rescission by
behind our Supreme Court's explanation of the purpose behind the economic-loss doctrine: just
as it would be inappropriate to recover on a tort theory for a breach of contract, it would be
inappropriate to recover on a breach-of-warranty theory for a breach of a contract. The legal
theory in a given case must be appropriate to the kind of wrong allegedly suffered.
In contrast to Henderson, plaintiff here actually pleaded alternative claims of "revocation
of acceptance" under the UCC and "rescission" in his complaint. However, it is clear that
plaintiff's claims were based on defendant's alleged breach of implied warranty, not on a breach
of contract. Moreover, the parties did not clearly differentiate "rescission" from "revocation,"
but they appeared to consider the primary remedy plaintiff pursued throughout this case to be
equitable. As discussed earlier in this opinion, our concern is with the substance of a claim,
irrespective of the labels applied by the parties. Adams, supra at 710-711. The substance of the
claim that plaintiff pleaded and pursued here was a breach-of-warranty theory seeking the
venerable equitable remedy of rescission. The UCC provides a remedy that applies in contract
cases; nothing in the UCC revoked the remedy of rescission, nor did it in any way suggest that
the important policy set forth by Justice Voelker is no longer applicable to the way sales are
We find additional support in the way in which this Court has treated the "economic-loss
doctrine." Our Supreme Court described the doctrine as follows:
The economic loss doctrine, simply stated, provides that "'[w]here a
purchaser's expectations in a sale are frustrated because the product he bought is
not working properly, his remedy is said to be in contract alone, for he has
suffered only "economic" losses.'" This doctrine hinges on a distinction drawn
between transactions involving the sale of goods for commercial purposes where
economic expectations are protected by commercial and contract law, and those
involving the sale of defective products to individual consumers who are injured
in a manner which has traditionally been remedied by resort to the law of torts.
[Neibarger v Universal Coops, Inc, 439 Mich 512, 520-521; 486 NW2d 612
(1992) (citations omitted).]
Our Supreme Court concluded that the economic-loss doctrine applied in Michigan, and, as a
consequence, "where a plaintiff seeks to recover for economic loss caused by a defective product
purchased for commercial purposes, the exclusive remedy is provided by the UCC, including its
statute of limitations." Id. at 527-528 (emphasis added). The economic-loss doctrine therefore
was originally applicable only between sophisticated commercial parties of nominally equal
knowledge and bargaining power; in other words, businesses. The purpose of the doctrine was
to prevent a plaintiff from recovering in tort for a harm that was fundamentally contractual,
unless the plaintiff had suffered an injury that was not solely economic. Id. at 527-529.
pleading the traditional grounds for equitable relief." Peppler v Kasual Kreations, Inc, 416 So
2d 864, 865 n 1 (1982). Although an out-of-state case would not ordinarily be binding, we note
it here simply because reliance thereon in Henderson further shows that it did not find rescission
abolished in Michigan except with regard to the narrow field of breach-of-contract claims.
However, this Court extended the economic-loss doctrine to unsophisticated, individual
purchasers, but only "where: (1) the parties or others closely related to them had the opportunity
to negotiate the terms of the sale of the good or product causing the injury, and (2) their
economic expectations can be satisfied by contractual remedies." Quest Diagnostics, Inc v MCI
WorldCom, Inc, 254 Mich App 372, 380; 656 NW2d 858 (2002). In the absence of an actual
transaction of some sort involving both parties, there was no way they could have bargained for
terms with respect to each other, and therefore no way a contractual remedy could be available.
Id. at 380-381. Most importantly, where this Court has applied the economic-loss doctrine in the
absence of contractual privity, it did so because it found contractual privity irrelevant to the
availability of a remedy for a breach of warranty. Sullivan Industries, Inc v Double Seal Glass
Co, Inc, 192 Mich App 333, 342-343; 480 NW2d 623 (1991), quoting and adopting Chief Judge
Danhof's dissenting opinion in Auto Owners Ins Co v Chrysler Corp, 129 Mich App 38, 43-44;
341 NW2d 223 (1983). Chief Judge Danhof had stated that "in a breach of warranty action it is
unnecessary to establish vertical privity of contract between the manufacturer and purchaser . . .
even where the loss is solely economic." Id. at 44 (Danhof, C.J., dissenting), citing Piercefield
The significance of the above discussion is that the UCC and the economic-loss doctrine
apply to situations where the parties have some kind of contractual relationship with each other.
No such contractual relationship existed here. The UCC and the economic-loss doctrine
therefore simply do not apply.
Michigan law has, for half a century, unambiguously afforded the remedy of rescission to
purchasers against remote, out-of-privity manufacturers on a theory of breach of implied
warranty.6 The Legislature's adoption of the UCC restricted the availability of that remedy only
where the parties are, in fact, in contractual privity. In this case, plaintiff proceeded under
theories of revocation of acceptance and rescission. For the reasons stated, he was clearly
entitled to the verdict of rescission awarded by the trier of fact.
This theory is incompatible with much of our dissenting colleague's concerns about possibly
unlimited liability. Under an implied-warranty theory, a plaintiff—whether an immediate
purchaser or a purchaser many intermediate owners removed—must in any event prove that
there had been a defect in the product when it left the manufacturer's control, especially where
that product requires regular maintenance, is expected to undergo wear, or where "the product
has provided defect-free serviceability for a reasonable period of time." Kupkowski v Avis Ford,
Inc, 395 Mich 155, 166; 235 NW2d 324 (1975). Furthermore, at an obvious minimum, the time
constraints are provided by applicable statutes of limitations.
We affirm the trial court's primary grant of judgment in plaintiff's favor under the
MMWA because rescission is an available remedy in this case under Michigan law. We clarify
that, given the substance of plaintiff's action, the judgment was clearly based on the remedy of
rescission for a breach of implied warranty, even if it was not characterized as such. In light of
our decision, we decline to consider the merits and arguments concerning alternative judgments.
Owens, P.J., concurred.
/s/ Alton T. Davis
/s/ Donald S. Owens