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Mercedes-Benz Credit Corp. v. Lotito

February 28, 2000

MERCEDES-BENZ CREDIT CORPORATION, PLAINTIFF-RESPONDENT/CROSS-APPELLANT,
v.
CHRISTOPHER LOTITO, DEFENDANT/THIRD PARTY PLAINTIFF-APPELLANT/CROSS-RESPONDENT,
v.
RAY CATENA MOTOR CAR CORPORATION, AND MERCEDES-BENZ NORTH AMERICA, INC., THIRD-PARTY DEFENDANTS-RESPONDENTS/CROSS-APPELLANTS, AND MERCEDES-BENZ, A.G., THIRD-PARTY DEFENDANT.



Before Judges Petrella, Braithwaite and Coburn.

The opinion of the court was delivered by: Coburn, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 24, 2000

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

Plaintiff, Mercedes-Benz Credit Corporation ("MBCC") filed this action in the Law Division, alleging that defendant Christopher Lotito was in default of payments due on a four-year lease for a new automobile. Lotito filed a counterclaim and a third-party complaint against defendants Ray Catena Motor Car Corp. ("Catena") and Mercedes-Benz North America, Inc. ("MBNA"), for breach of express and implied warranties under the Uniform Commercial Code and for violation of the Lemon Law, N.J.S.A. 56:12-29 to -49.

MBCC obtained an order for summary judgment against Lotito for $34,443.13, representing the net amount due under the lease, and Lotito's counterclaim was dismissed with prejudice. The judge designated the order as a final judgment. Lotito appealed, and we reversed, holding that enforcement of the lease obligations must await determination of the breach of warranty issues and the Lemon Law claim. Mercedes-Benz Credit Corp. v. Lotito, 306 N.J. Super. 25, 35 (App. Div. 1997). We noted that although Lotito did not contest the accuracy of MBCC's claim, he was entitled to an opportunity to prove the claims set forth in his counterclaim and third-party complaint. Id. at 36. Therefore, we reversed the designation of the order granting summary judgment as a final judgment, deemed it to be one of partial summary judgment, and remanded for trial of Lotito's affirmative claims. Id. at 37. On the eve of trial, without having filed a notice of motion, Lotito asked for permission to amend his complaint to add a cause of action under the Consumer Fraud Act, N.J.S.A. 56:8-1 to -48. The request was denied as untimely.

The breach of warranty claims were tried to a jury. In answer to written interrogatories, the jury returned inconsistent, special verdicts about which all parties complain; however, the judge interpreted the verdicts as warranting entry of a judgment relieving Lotito of any obligation under the lease (thereby vacating the $34,443.13 partial summary judgment award to MBCC) and awarding him an $8,000 recovery against MBCC for breach of implied warranty. The jury was also requested to return advisory verdicts on certain aspects of Lotito's Lemon Law claim. We refer to the advisory verdicts only because the parties have argued as if those verdicts could be considered as a basis for judgment. But that is not so generally, and it is certainly not so in the circumstances of this case.

R. 4:35-2 governs the use of advisory juries. It provides that "[t]he court on motion or its own initiative may try with an advisory jury any issue not triable of right by a jury, or it may, with the consent of all parties appearing at the trial, order a trial of any such issue with a jury whose verdict has the same effect as if trial by jury had been a matter of right."

Our rule accords with the generally accepted principle that absent extraordinary circumstances, elevation of an advisory verdict to a binding verdict violates procedural due process. Almog v. Israel Travel Advisory Serv., Inc., 298 N.J. Super. 145, 159-60 (App. Div. 1997), appeal dismissed, 152 N.J. 361 (1998). Due process is implicated mainly because "it is recognized that advisory juries ordinarily consider fewer than all the issues and that even where they consider all the issues, trial strategy is, to a significant extent, dependent upon who the ultimate fact finder will be." Id. at 159. Almog is an example of the kind of extraordinary circumstances that warrant acceptance of an advisory verdict as a binding verdict. There, the parties tried the entire case to the jury, which was fully charged. It was only after the jury had the case that the court decided on motion that it would treat the verdict on a certain claim as advisory. Since the "jury never functioned as or was constituted or denominated as an advisory jury," we held "there is no prejudice . . . in accepting the jury's fact-finding as the final verdict." Id. at 160.

Here, the judge decided without motion to ask the jury for advice on the Lemon Law claim. The parties did not agree that the jury's answers would be binding. Moreover, the judge clearly explained to the jury that "[i]t will be my function to decide the Lemon law questions and not yours." He also explained that he would generally describe the law on this subject only to the extent he believed necessary for them to answer certain factual questions. And, he did not discuss the remedies available under the Lemon Law, other than to assure that if he granted damages, there would be no double recovery. Therefore, under the rule itself and the principles endorsed by Almog, supra, the advisory verdicts were of no legal effect.

After the jury trial ended, the judge decided the Lemon Law claim against Lotito based on his own findings of fact and conclusions of law.

Lotito appealed and the others filed cross-appeals. We affirm the judgment rejecting the Lemon Law claim because it is based on findings of fact that are adequately supported by the evidence and is legally sound; however, because of errors in the charge and inconsistencies in the special verdicts, we reverse and remand for a new trial on the breach of implied warranty claim, reinstating for the time being the partial summary judgment awarded to MBCC.

I.

On June 10, 1993, Lotito leased a new Mercedes-Benz 500SL automobile from Catena, which simultaneously assigned the lease to MBCC. Lotito received a trade-in credit of $13,603.44, paid an additional $2,058.90 (which covered the first month's rent, an acquisition fee, and license and registration fees), and agreed to pay $1,419 per month for four years. By the end of the lease, had no problems arisen, he would have expended approximately $68,000 and would have been entitled to purchase the vehicle for approximately $54,000. The manufacturer's suggested list price was $102,495, and all agree that this was a luxury car. Lotito signed the lease on July 10, 1993.

On July 16, Lotito brought the car back to Catena with complaints about the operation of the convertible top, the alignment of doors, the tendency of the engine to idle fast, inoperability of the telephone, static on the radio, and a "dent chip" on the trunk. Catena addressed some of the problems, but could not confirm any defects with respect to the phone, radio, or idling. Lotito picked up the car twelve days later.

On August 5, Lotito brought the car in and Catena replaced the cable and motor for the antenna. The car was returned after five days.

On October 4, Lotito returned with the car, complaining of roof leaks and, for the second time, of high engine idle, which he described as the engine racing and surging. The roof was repaired but Catena found the engine to be operating normally. This was the date of the regular 1000-mile maintenance service, and the car was in the shop for one day.

On November 12, the car stalled and could not be started. It was towed to Catena where, over a seven-day period, the ignition control unit, the "EZL" box, and the spark plugs were replaced and the engine mounts were repaired.

On April 4, 1994, Lotito brought the car in for the regular maintenance service, complaining that there was "hesitation" during acceleration at highway speeds, the roof was leaking again, and there was a "rotten egg smell." He testified that there was always a problem with this smell in the car, although there is no evidence that he complained about it during the first nine months.

The servicing took one day. A catalytic converter was ordered, apparently for later installation in Lotito's car.

On May 3, Lotito complained again about roof leaks and the rotten egg smell. The leaks were repaired and the new catalytic converter was installed to rectify the rotten egg smell. The car spent two days in the shop.

On June 27, Lotito brought the car in for a regular servicing, and complained of continued roof leaks and engine surging while idling. Catena found no problem with the engine but installed new seals to deal with the leaks. The car was returned to Lotito after three days.

On July 10, the leaky roof problem was repaired satisfactorily.

On August 4, Lotito wrote to the customer service office of MBNA asking for help but not stating that he wanted to return the car. The only problems he identified in the letter were "leaking roof," "continually racing engine," radio static, and a "roll bar that pops up whenever I hit pot holes." MBNA replied, writing that the New York regional field manager would become involved.

On September 20, Lotito returned to Catena, complaining about the rotten egg smell and the engine surging while idling. The idle was considered normal; however, Catena did replace the ignition control unit and the ignition control device to ameliorate the rotten egg smell. The car spent four days in the shop.

On October 14, the car was brought in for a regular servicing during which the radio receiver was replaced. The car was in the shop for five days.

On February 9, 1995, the car lost power and stopped while Lotito was driving on a highway. According to Catena there were problems with the computer. Repairs to the crank shaft and replacement of the spark plugs fixed the ...


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