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A buyer is allowed to establish breach of warranty of title if a substantial shadow is cast over a title, even if the buyer's title ultimately is proven to be legally valid.
Because of a series of problems plaintiff George Saber was experiencing with a recently purchased used car, he decided to research the car's history. He discovered the title application did not match the car. He then contacted the state police who subsequently impounded the car, thinking it was stolen. A subsequent investigation revealed it was not stolen. Rather, it was destroyed in a fire and subsequently rebuilt using parts from various other cars. None of those facts were disclosed to plaintiff when he purchased the car, and it was not clear whether defendant, Dan Angelone Chevrolet, Inc., was aware of them when it sold the car to the plaintiff. Plaintiff filed a lawsuit against the defendant seeking damages for negligence and breach of contract. The plaintiff's amended complaint added counts for deceptive trade practices, misrepresentation, revocation of acceptance, and violations of the Magnuson Moss Warranty Act, 15 U.S.C. §§ 2301-2312, but did not expressly allege breach of warranty of title. To support his claim for negligence, however, plaintiff alleged in his complaint that he was not given good title to the car. The defendant moved for judgment as a matter of law, arguing that there could be no breach of the warranty of title because the car was not stolen. The trial justice, however, denied defendant's motion, stating that the warranty of title may be breached by law enforcement impoundment. The trial justice determined that the car was impounded and because of that impoundment, defendant breached the warranty of title owed to plaintiff. The trial justice, however, charged the jury with the task of determining whether plaintiff provided defendant with sufficient notice of the breach as required under G.L. 1956 § 6A-2-607. The jury returned a verdict in plaintiff’s favor. The defendant later renewed its motion for judgment as a matter of law and moved for a new trial. Both motions were denied. The defendant timely appealed, arguing that the trial court erred in finding that the car was indeed impounded. Assuming that the car was impounded, the defendant argued that the trial court erred in finding that the impoundment constituted a breach of warranty of title.
Under the circumstances, did the defendant breach the warranty of title?
The appellate court agreed the buyer's failure to oppose the impoundment should have had no impact on the trial court's finding. The dealer did not contest the fact that the buyer was dispossessed of the car by the state police. The claim made against the buyer's car, the state police's impoundment, was not too far attenuated. The "distinctive characteristics" associated with the car and its title would lower its value in the eyes of a reasonably prudent purchaser. By imposing liability for breach of warranty of title in this scenario, the trial court allayed buyers' fears of encountering a similar situation. Thus, the trial court's ruling that the dealer breached the warranty of title was upheld.