Reference no: EM131473878

Question: Thomas v. Micro Center, 875 N.E.2d 108 (Ohio App. 2007)

Plaintiff-appellant C. Douglas Thomas appeals from a summary judgment rendered in favor of defendantappellee Micro Center, Inc. on his claims for breach of warranties relating to a defective laptop computer he purchased from Micro Center. We affirm in part and reverse in part. I Appellant purchased a Toshiba computer from Micro Center on January 2, 2004. The Micro Center purchase receipt stated that "NOTEBOOK/LAPTOP COMPUTERS MAY BE RETURNED OR EXCHANGED WITHIN 7 DAYS OF PURCHASE." Toshiba provided a one-year, limited warranty against defects in materials and workmanship, and further warranted that the computer would conform to the factory specifications in effect at the time the computer had been manufactured. Appellant also purchased a three-year, "TechSaver Protection Plan." The plan specifically stated that "coverage begins on the date of purchase of the covered equipment and is inclusive of the manufacturer's warranty.

During the manufacturer's warranty period, any parts and labor covered by that warranty are the sole responsibility of the manufacturer." The plan stated that it was an agreement between Butler Financial Solutions, LLC and the purchaser. The computer began to malfunction just three weeks after purchase. Appellant spoke with Toshiba's customer service, and then brought the computer back to Micro Center. Appellant stated that the problem had "something to do with the programming." Micro Center accepted the computer back and reinstalled the operating system to get the computer working. The computer worked correctly for only one month after that. Sometime in March or April 2004, the computer began malfunctioning. Appellant said that he called Toshiba customer service about eight times at that point. He could not recall the exact nature of the problems he experienced, but said that Toshiba "carried me through and it started working again." These fixes lasted for only two or three weeks, though.

Toshiba told appellant that he had a broken "recovery disk." It sent him a new disk and the computer began working again. In July 2004, the computer again stopped working. Toshiba diagnosed the problem as a "hard drive problem" and replaced the hard drive. Appellant received the computer back in August 2004, but it would not "boot." Toshiba told appellant to take the computer to a local repair facility. That facility again replaced the hard drive along with some other components, but these repairs did not fix the problems. It told appellant that it could not repair his computer. Appellant again contacted Toshiba and said that he wanted a replacement computer. Toshiba told appellant to contact Micro Center because it was "not their policy to replace computers." Micro Center told appellant that it had no obligation to replace the computer because the computer was still under warranty with Toshiba. Appellant contacted Toshiba's legal department by mail to demand a replacement computer, but his letter went unanswered. Appellant filed a complaint against both Toshiba and Micro Center that asserted three claims:

(1) breach of contract based on the express warranty issued by Toshiba and the TechSaver Protection Plan extended warranty purchased through Micro Center,

(2) breach of implied warranties of merchantability and fitness, and

(3) violation of the Magnuson-Moss Warranty Act.

Micro Center filed a motion for summary judgment on all three claims, arguing that it did not issue any warranties to appellant, that appellant's claims related to a time period in which Toshiba has warranted the computer, and that the Magnuson-Moss Act was inapplicable to commercial transactions. The court granted summary judgment without opinion. II Appellant first argues that Micro Center is liable to him [under UCC § 2-314] because it imposes implied warranties of merchantability and fitness for a particular purpose. He maintains that, regardless of what Toshiba may have disclaimed, these implied warranties applied to Micro Center. [UCC § 2-314] states in pertinent part:

(A) Unless excluded or modified as provided in [UCC § 2-316], a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. The implied warranty of fitness for a particular purpose is set forth in [UCC § 2-315], which states: Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, there is unless excluded or modified under [UCC § 2-316] an implied warranty that the goods shall be fit for such purpose. [UCC § 2-316] governs the exclusion of implied warranties. That section states:

(B) Subject to division

(C) of this section, to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous.

Language to exclude all implied warranties of fitness is sufficient if it states for example, that ‘There are no warranties which extend beyond the description on the face hereof.' Micro Center is a "merchant" as defined by [UCC § 2-104(1)]. The record contains no evidence to show that Micro Center excluded its warranties under [UCC § 2-316]. The sales receipt shows that Micro Center limited the return or exchange of laptop computers to seven days after purchase, but this did not constitute a valid exclusion of warranties. To be effective, the exclusion of a warranty must mention merchantability and, in the case of fitness for a particular purpose, must be conspicuous. The receipt offered into evidence contained none of these requirements. *** Toshiba's exclusion of implied warranties does not apply to Micro Center. In Barazzotto v. Intelligent Sys., Inc. (1987), 40 Ohio App.3d 117, 119-120, 532 N.E.2d 148, the [court stated]: When the manufacturer sells the goods to a dealer who resells the goods to the ultimate purchaser, the latter cannot sue the manufacturer if the manufacturer ha[s] made a disclaimer of warranties that satisfies UCC § 2-316. The fact that the manufacturer is thus protected from liability does not protect the dealer who resells without making this [sic] own disclaimer of warranties. That is, the manufacturer's disclaimer of warranties does not run with the goods so as to protect any subsequent seller of them. To the contrary, each subsequent seller must make his own independent disclaimer in order to be protected from warranty liability.

Micro Center presented no evidence to show that it excluded any warranties when it sold the computer to appellant. We therefore find that the court erred by granting summary judgment to Micro Center on appellant's claims for breach of implied warranties of merchantability and fitness for a particular purpose. III Appellant based his second claim under the Magnuson-Moss Warranty Act. The Act requires manufacturers and sellers of consumer products who provide written warranties to consumers to give detailed information about their warranty coverage. In addition, it affects both the rights of consumers and the obligations of warrantors under written warranties. It is important to understand that the Act applies only to written warranties. [The Act] states in part: Full and conspicuous disclosure of terms and conditions; additional requirements for contents. In order to improve the adequacy of information available to consumers, prevent deception, and improve competition in the marketing of consumer products, any warrantor warranting a consumer product to a consumer by means of a written warranty shall, to the extent required by rules of the Commission, fully and conspicuously disclose in simple and readily understood language the terms and conditions of such warranty.

There is no evidence that Micro Center offered any warranties on the Toshiba computer. The only evidence of a written warranty consists of the Toshiba warranty and the TechSaver extended warranty. Micro Center did state its return policy on the receipt that it printed at the time of the transaction. That policy, however, is not required by law and does not constitute a written warranty for purposes of the Act. The receipt did not contain any written information relating to the performance or workmanship of the computer. The return policy is nothing more than a courtesy to its customers and not a warranty. It follows that with no written warranty issued by Micro Center, appellant could not, as a matter of law, prevail on any Magnuson-Moss warranty claim directed against Micro Center. The court did not err by granting summary judgment to Micro Center on appellant's Magnuson-Moss warranty claim.  IV This cause is affirmed in part, reversed in part and remanded to the lower court for further proceedings consistent with this opinion.

QUESTIONS FOR DISCUSSION FOR CASE 10.2

1. This case illustrates the complexities that the distribution chain can cause for consumers. Which party or parties issued a warranty to this consumer? What warranties were issued?

2. How does a seller effectively disclaim warranties? What type of language is required?

3. Why does it matter whether Micro Center is a "merchant"?

4. Why does the court find that Micro Center is not liable under the Magnuson-Moss Act? Procedurally, what will happen next in this case?