Schurtz v. BMW of N. Am.

814 P.2d 1108 (Utah Sup.Ct. 1991)

 

RULE:

Utah Code Ann. § 70A-2-719 states the contractual limitations or modifications that may be made in the remedies provided for in the earlier sections of part 7. Subpart (1) of § 2-719 states that, consistent with subparts (2) and (3) of that section, the parties may limit the remedies provided in chapter two of the agreement between the buyer and seller to, for example, repair and replacement of non-conforming goods or parts. Subpart 2-719(2) then provides that a limitation of remedies may become ineffective: Where circumstances cause an exclusive remedy or limited remedy to fail of its essential purpose, then remedy may be had as provided in the act. Where a limited remedy fails of its essential purpose, the buyer may pursue all remedies provided in that part of the Uniform Commercial Code, including the recovery of incidental and consequential damages under Utah Code Ann. § 2-715.

FACTS:

Plaintiff car buyer brought suit against defendant seller in the district court, alleging breach of express and implied warranties under the Magnuson-Moss Warranty Act, specifically 15 U.S.C.S. §§ 2310(d)(1) and 2301(6), and Utah Code Ann. §§ 70A-2-715 and -719 (1990). The district court granted defendant partial summary judgment, disallowing plaintiff's claim for incidental and consequential damages, and plaintiff appealed. The state supreme court vacated the grant of summary judgment to defendant and remanded for further proceedings on the warranty question. The court directed the trial court to readdress the attorney fees question after deciding the warranty issues.

ISSUE:

Was the limited warranty's provision excluding incidental and consequential damages and limiting the remedy for breach to repair or replacement invalid under section 2-719(2) of the Utah U.C.C?

ANSWER:

Yes.

CONCLUSION:

The trial court erred in ruling on the motion for partial summary judgment that, as a matter of law, plaintiff car buyer was not entitled to incidental and consequential damages. Although the trial court correctly held that subparts (2) and (3) of section 2-719 were to be read independently, it erred by not then determining whether the facts of this case warrant a finding that the limitation of incidental and consequential damages is unconscionable under subpart 2-719(3). And if it had so found, it should have made findings of fact to support the result.

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