On appeal from Superior Court, Chancery Division, Middlesex County, whose opinion is reported at 173 N.J. Super.. 501.
Botter, King and McElroy. The opinion of the court was delivered by Botter, P.J.A.D.
[180 NJSuper Page 51] Ford Motor Company (Ford) appeals from the final judgment in this action in which plaintiff, the purchaser of a new 1978
Mercury Marquis Brougham, sued Ford's authorized dealer, Marino Auto Sales, Inc. (Marino Auto) and Ford, as manufacturer, for damages due to defects in the vehicle. Marino Auto cross-claimed against Ford for indemnification. The final judgment (a) granted plaintiff rescission of the purchase and damages of $6,745.59 against Marino Auto Sales (representing the purchase price of $7,847.49 less an allowance for plaintiff's use of the car and the sales tax), (b) awarded damages in favor of Marino Auto against Ford on the cross-claim in the sum of $2,910.59 (representing $6,745.59 less the resale value of the car), and (c) awarded counsel fees to plaintiff against Ford in the sum of $5,165. Plaintiff's demands for interest, punitive damages in excess of $2,000,000 and treble damages were denied. The trial court's published opinion was limited to the issue of counsel fees awarded under the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, 15 U.S.C.A. § 2301 et seq. 173 N.J. Super. 501 (Ch.Div.1980).
Plaintiff took delivery of the automobile on April 12, 1978. According to the testimony of plaintiff and his wife, they experienced engine hesitation and stalling problems early in their use of the car which continued without interruption despite repeated attempts by Marino Auto to cure the problem. Stanley Bednarz, Ford's zone service manager and mechanical specialist who assists dealers in satisfying customers, inspected the vehicle on July 13, 1978 and recommended replacing the exhaust regulator valve. Plaintiff testified that he was told by Bednarz that there was nothing wrong with the car and he would "have to live with this one." Plaintiff also testified that later in July 1978 he returned to Marino Auto intending to ask Mr. Marino to take the car back if it could not be fixed but that he was prevented from doing so and was forcibly removed from the premises.
Before considering the points raised on this appeal we note the unusual procedural aspects of the trial in this case. In a nonjury case such as this, with Marino Auto cross-claiming against Ford for indemnification, the adjudication of any party's
rights normally would be withheld until all the evidence has been introduced by all parties. The evidence in support or in defense of a cross-claim may tend to buttress or refute plaintiff's claims. Particularly in products liability cases, where the dealer has an action over against the manufacturer, "it would seem to make sense procedurally to have the plaintiff's cause of action whenever possible adjudicated in one action against manufacturer and retailer." Newmark v. Gimbel's Inc. , 54 N.J. 585, 600-601 (1969). In nonjury cases a single, uninterrupted trial should be the norm.
Nevertheless, on the trial date in this case, Marino Auto's attorney was unavailable. The trial judge in his discretion severed plaintiff's case against Marino Auto and ordered the case to proceed against Ford only, as authorized by R. 4:38-2. Ford's counsel did not object to this procedure. Ford's witnesses were present at the conclusion of plaintiff's case but, after the trial judge denied Ford's motion for judgment dismissing the claim against Ford, Ford elected to rest its case and renew its motion without introducing any evidence. In these circumstances we will not reverse the trial judge for ordering separate trials of plaintiff's claims against Ford and Marino Auto, and we reject Ford's contention that, "in retrospect," the severance order constituted prejudicial error. R. 1:7-2. Ford cannot now renounce the trial tactics which it intentionally employed. On the trial of Marino Auto's cross-claim against Ford, Ford introduced evidence on which it now relies to refute plaintiff's claim. That evidence, which is before us, is not conclusive and was available to Ford on the first day of trial. It should have been offered then in an effort to overcome plaintiff's proofs that the vehicle suffered from a substantial manufacturing defect.
We reject the contention that, lacking expert proof, plaintiff failed to establish that a defective mechanism for which Ford was responsible caused the engine to hesitate and stall. This conclusion could be reached by inferences from the evidence. See Moraca v. Ford Motor Co. , 66 N.J. 454, 458-459
(1975); Scanlon v. General Motors Corp. , 65 N.J. 582, 592-593 (1974); Durfee v. Rod Baxter Imports, Inc. , 262 N.W. 2d 349 (Minn.Sup.Ct.1977); Arnold v. Ford Motor Co. , 90 N.M. 549, 551, 566 P. 2d 98, 100 (Sup.Ct.1977); Vernon v. Lake Motors , 26 Utah 2d 269, 274, 488 P. 2d 302, 306 (Sup.Ct.1971). The findings that Ford breached its express warranty and that the car was substantially impaired were supported by sufficient credible evidence and must be affirmed on appeal. Rova Farms Resort, Inc. v. Investors Ins. Co. of America , 65 N.J. 474, 483-484 (1974).
At the conclusion of plaintiff's case against Ford the trial judge announced his findings and conclusions that Ford had breached its warranty, that the car was substantially impaired because of persistent and continual stalling and hesitation, but that plaintiff had not proven damages against Ford. He held that the only remedy to which plaintiff was entitled was rescission or revocation of acceptance against Marino Auto, see N.J.S.A. 12A:2-608; Herbstman v. Eastman Kodak Co. , 68 N.J. 1, 9-10 (1975), except that plaintiff would also have a claim for attorney's fees against Ford under the Magnuson-Moss Warranty Act, supra , 15 U.S.C.A. § 2310(d)(2). Various reasons were given for affording plaintiff the right to rescind the purchase and receive a refund of the purchase price from Marino Auto. At one point in his oral decision the trial judge alternatively relied upon the theory of strict liability in tort and breach of an implied warranty of merchantability and fitness. In his written opinion he stated that this result "pierced through the dealership system, granting rescission against the selling dealer Marino, based upon defects in breach of the manufacturer Ford's express warranty." 173 N.J. Super. at 504. He also said: "The only remedy under the Magnuson-Moss Warranty Act for Ford's violation of the act was rescission against the selling dealer Marino"; and he viewed Marino Auto as Ford's "authorized agent to remedy defects. . . ." Id. Punitive damages against Ford were denied because of the absence of "deliberate, willful, malicious fraud or wanton and gross negligence or unconscionable commercial practice. . . ." Thus, the case was continued to
permit plaintiff to claim a refund of the purchase price, less an allowance for the use of the car, on a rescission basis against Marino Auto, and to permit Marino Auto to claim indemnification against Ford. Ford was to be afforded the opportunity to defend by establishing Marino Auto's fault in failing properly to repair the auto.
On the next trial date Marino Auto stipulated the sale of the car to plaintiff and seemingly conceded at one point that plaintiff would be entitled to a judgment against Marino Auto based on the finding of Ford's breach of warranty on the proofs offered by plaintiff against Ford. The issues to be tried on the cross-claim were held to include damages to Marino Auto on rescission or revocation of acceptance, namely, the purchase price less the value of the car to be returned to the dealer, minus an allowance for the limited use of the car. (There was evidence that plaintiff was financially compelled to continue to use the vehicle in its imperfect state. Upon the seller's breach the buyer has the right to "cover" by acquiring substituted goods but is not barred from any other remedy if he fails to effect "cover." N.J.S.A. 12A:2-711 and 712. See also, N.J.S.A. 12A:2-711(3), which gives the buyer a security interest in and the right to retain or resell goods after revocation of acceptance.*fn1) The case proceeded on the cross-claim although Ford contended that no claim over could arise until plaintiff recovered a judgment against Marino Auto. On the assumption that proof of Ford's breach of an express warranty established plaintiff's right to recover against Marino Auto, 173 N.J. Super. at 503-504, the trial judge ordered the trial to proceed on Marino Auto's indemnification claim. Proof of plaintiff's damage claim was also anticipated before a final judgment was to be entered on the complaint and cross-claim.
Proofs were presented by Ford to show that the car was not defective and that there could be other causes for
engine hesitation or stalling, such as contaminated fuel. Although Ford contends that Marino Auto was negligent in not checking the fuel system, there was no proof that contaminated fuel was the actual cause of the problem. Thus, there was no proof that the defect in the vehicle would have been discovered but for Marino Auto's lack of reasonable care in attempting to repair the car. Marino Auto cannot be denied indemnification because it failed to successfully diagnose the cause of the problem. Ford's expert could find nothing wrong with the car and, on the facts of this case, the trial judge could properly have rejected Ford's contention that Marino Auto was at fault for not correcting it, regardless of where the burden of proving Marino Auto's negligence was placed.
At the conclusion of this testimony Marino Auto contended that there was no proof of any wrongdoing by Marino Auto and no basis for rescission. However, Marino Auto also claimed indemnification from Ford for any damage award granted to plaintiff against Marino Auto. Ford contended that no judgment should be entered against Marino Auto, that there was no basis for rescission and therefore no need for indemnification. Ford also protested the lack of sufficient notice of plaintiff's complaints about the car's performance.
We have considered the merits of this appeal on the assumption that, although Marino Auto has not appealed the judgment against it, Ford can contend that no judgment should have been entered against Marino Auto. Ford has an interest in the judgment against Marino Auto since it was the basis for Ford's indemnification obligation. In fact, the trial judge did consider Ford's arguments against Marino Auto's liability to plaintiff.
Our reasoning through the body of law applicable to this commonplace contractual skein, which binds consumers, car dealers and manufacturers together, differs from that of the trial judge. But we affirm plaintiff's recovery. We conclude that, despite Marino Auto's attempted disclaimer of ...