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General Motors Acceptance Corp. v. Jankowitz

Decided: April 1, 1987.


On appeal from Superior Court of New Jersey, Law Division, Middlesex County.

King and Deighan. The opinion of the court was delivered by Deighan, J.A.D.


[216 NJSuper Page 318] On this appeal we are required to determine whether, under the facts of this case, the purchaser of a new automobile may revoke acceptance for defects in the electrical system when the

seller, after several unsuccessful attempts to cure the defects, was, according to the buyer, unable to do so. If the acceptance was properly revoked, the measure and sufficiency of proof of damages thereof must be determined. Also involved is the question of whether there was an effective waiver of implied warranties under the Uniform Commercial Code, Sales, N.J.S.A. 12A:2-101 et seq., and the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, (Magnuson-Moss Act) 15 U.S.C.A. ยง 2301 et seq.

Defendant-third-party plaintiff Stanley Jankowitz appeals from a judgment of involuntary dismissal entered at the close of all of the evidence, R. 4:37-2(b) and R. 4:40-1, in a trial by jury. A judgment was entered against defendant in the total amount of $4,410.83 which included repossession costs, registration and reselling charges in the amount of $362.50, $750 attorneys fees and $969.04 prejudgment interest. In addition, his counterclaim against plaintiff General Motors Acceptance Corporation (GMAC) and third-party complaint against Potamkin Cadillac Corporation (Potamkin) were dismissed. We reverse.

GMAC instituted an action against Jankowitz for a default in monthly payments under a retail installment contract for the purchase of a 1982 Cadillac from Potamkin. He counterclaimed against GMAC and filed third-party complaints against General Motors Corporation (GM) as manufacturer and Potamkin as the dealer for rescission, compensatory and punitive damages, breach of contract, misrepresentation, negligence, breach of warranty and fraud. He contended that the Cadillac had a defective electrical system which, despite repeated attempts to repair by Potamkin, continued to malfunction. Defendant maintained that he revoked the acceptance of the automobile and tendered it back to Potamkin and GM.

Prior to trial the complaint was dismissed for failure to answer interrogatories propounded by GMAC and GM. Subsequently, Jankowitz's application to reinstate the third-party

complaint as to Potamkin was granted. However, since no application was made to reinstate the third-party complaint against GM, and no appeal has been taken from that dismissal, GM is not a party to this appeal. At the conclusion of all the evidence Jankowitz consented to a dismissal of the claim for punitive damages as to GMAC. Applications by both GMAC and Potamkin for dismissal of claims for negligence, fraud and misrepresentation were also granted. The only remaining issues, which were subsequently decided by the trial judge, were the extent of warranties made, application of the Magnuson-Moss Act, and whether Jankowitz was entitled to relief under the Uniform Commercial Code.

The following facts were developed at trial. Jankowitz purchased a new 1982 Cadillac from Potamkin in New York on April 16, 1982. He received a credit of $1,852.18 for the equity on the trade-in of his 1981 Cadillac and entered into a retail installment contract for the balance of the purchase price in the sum of $14,027.67, payable in 36 monthly installments of $471.77. Potamkin assigned its rights under the contract to GMAC.

About one week after he purchased the car, the cruise control failed to operate properly and the warning light on the dashboard flashed "stop engine." On April 23, 1982, he returned the car to Potamkin for service. On May 18, 1982, after redelivery of the car, Jankowitz again experienced problems when the "stop engine" light again flashed on as did the "generator" warning light. He returned the car to Potamkin. The work order to the service department on this occasion directed that the electrical system be checked and repaired and that the generator be overhauled.

On May 20, 1982, the day after Jankowitz picked up the car, the "stop engine" and "generator" light again flashed on and, for the third time, he returned the car to Potamkin. The service manager also told him that there was a problem with the electrical system which was indicated by a "code 16" from

the computer on the dashboard. The service manager explained to Jankowitz that "code 16" indicates a problem with the electrical system. The work order indicated that there was excessive generator output and that the generator needed to be overhauled.

After receiving the car Jankowitz experienced the same problem on May 24, while he was crossing the George Washington Bridge. At that time the lights went out, then came back on, the "stop engine" light and generator light went on and the vehicle "cut out". Once more the car was returned to Potamkin. The work order for this service repair indicated, among other things, that on a road test, the car "cut out." The work order again indicated "code 16" and also stated that the ECM (electronic control module) was replaced. Jankowitz testified that the car had stalled on two previous occasions. On one occasion the car "cut out" while he was driving to Rockland County, New York.

After the car was serviced, on June 7th Jankowitz experienced the same problem. On this occasion, Potamkin sent a flat bed truck to return the vehicle to its repair shop. The work order for that date indicates that Potamkin was unable to read any information on the ECM so they replaced it as well as the alternator and made some other repairs.

Jankowitz had similar problems on June 17 and June 22. On June 23 he informed the salesman who sold the car to him as well as the sales manager of Potamkin, GMAC and General Motors Cadillac Division in Detroit that he no longer wanted the car and told them to take it back. He left the car, which he said had 2,700 miles on the odometer, in front of his home in Fort Lee, New Jersey. On the same date he purchased a new Mercedes and testified that he never used the Cadillac again.

Jankowitz made two payments on his car in May and June but defaulted on the third payment due in July 1982. On January 6, 1983, GMAC instituted this action against Jankowitz. On April 13, 1983, a consent order was entered directing

Jankowitz to deposit into an escrow account $4,291.93 representing the amount past due on the account, and directing that he pay the $471.77 monthly payments commencing April 16, 1983. Apparently Jankowitz failed to make the required deposit or payments. Accordingly, on May 27, 1983, a writ of replevin was issued for the Cadillac, directing Jankowitz to surrender possession of it to GMAC and permitting GMAC to repossess and sell the car in a commercially reasonable manner. At trial, Charles Knast, special collections manager for GMAC, testified that the car was not repossessed until July, 1983. While there is no testimony concerning the reason for the delay for over a year in repossessing and selling the vehicle, it is indicated during that period of time there were some negotiations between Jankowitz or his attorney and GMAC for a return of the vehicle which apparently fell through.

Charles Knast testified that the Cadillac was picked up at an address in Oradell, New Jersey in July, 1983. It was taken to Bronx, New York where GMAC stores its repossessed automobiles. At the time the car was picked up the odometer read 3,213 miles. Knast testified that on June 17, 198 2, the last date that the Cadillac was taken by Jankowitz to be serviced by Potamkin, the work order for service noted the mileage on the odometer was 2,164 miles. The car was sold at auction to a wholesale dealer on July 12, 1983 for $12,950. Knast further testified that GMAC did not make any repairs to prepare the car for sale and that it had been driven from where it had been picked up to the place of storage without any difficulty. He also stated that GMAC never received any complaints about the condition of the car from the party who purchased it at auction.

On this appeal Jankowitz contends that (1) there was sufficient credible evidence from which reasonable inferences could have been drawn to support his affirmative claims and defenses under the Uniform Commercial Code (UCC), and (2) the disclaimer of warranties in the Retail Installment Contract does not constitute a valid disclaimer of implied warranties.

GMAC responds and contends that there were no facts to establish that there was a substantial impairment to the value of the car and that the implied warranties were effectively disclaimed under both the UCC and Magnuson-Moss Act but that, in any event, the Magnuson-Moss Act does not apply to GMAC. Potamkin argues that there were insufficient facts to support a recovery for any loss under either the UCC or Magnuson-Moss Act and that there was a failure "to show that the disclaimer of implied warranties set forth in the retail installment contract did not apply to Potamkin."


The retail installment contract contained the following language on its reverse side:

Warranties You [Potamkin?] Disclaim. I [Jankowitz?] understand that there are no implied warranties of merchantability, fitness for a particular purpose, or other warranties, express or implied, covering the vehicle unless:

1. it is of a type normally used for personal use, and

2. was manufactured after July 3, 1975, and

3. you [Potamkin?] extend your written warranty or service contract within 90 days from the date of this contract.

Warranty You [Potamkin] May Provide. If you [Potamkin] offer a written warranty or service contract within 90 days from the date of this contract, any implied warranty which applies to the vehicle lasts only as long as the warranty or service contract.

The 1982 Cadillac new car warranty information by GM contains a limited warranty which states:

Cadillac Motor Car Division General Motors Corporation warrants each new 1982 car.

DEFECTS This exclusive warranty covers any repairs and needed adjustments to correct defects in materials or workmanship.

REPAIRS Your Cadillac dealer will make the repairs or adjustment using new or ...

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