March 30, 2010 – In Goudy v. Yamaha Motor Corp. and Winnebagoland Kawasaki (2009AP617 Mar. 24, 2010), the Wisconsin Court of Appeals found that the representations a motor vehicle dealer made about a highly-modified motorcycle may violate the Wisconsin Deceptive Trade Practices Act (Wis. Stat. § 100.18(1)).
Goudy entered into a purchase contract with Winnebagoland Kawasaki a/k/a Team Winnebagoland (Winnebagoland) for two Yamaha motorcycles. The contract for the new 04 Yamaha XVS11S motorcycle indicated it was covered by Yamaha’s new motor vehicle warranty.
The motorcycle at issue had been modified by Winnebagoland to include approximately 42 nonstock (i.e. non-Yamaha) accessory parts and twelve Yamaha-issued parts. The motorcycle was purchased with a Yamaha Extended Service Plan. Shortly after purchase, Goudy began experiencing problems with the motorcycle, and those problems persisted over the next year.
Lemon law and other claims
Goudy completed a Motor Vehicle Lemon Law notice, which was provided to Yamaha Motor Corporation. Yamaha responded by notifying Goudy he had purchased a “highly modified unit” and that the warranty was not valid. Goudy then commenced this action against Yamaha, and followed that with a demand for relief to Winnebagoland under the Lemon Law.
Yamaha moved for summary judgment, arguing that the failures Goudy experienced were either the result of nonstock components, none of which were covered by Yamaha’s warranties, or the result of normal wear and tear, also not covered under warranty.
Winnebagoland also moved for summary judgment, arguing that it was not a “manufacturer” as defined under the Lemon Law, it issued no warranties for the motorcycle and it made no misrepresentations in selling the motorcycle.
Goudy opposed the motions on the grounds that both Winnebagoland, having “assembled” the motorcycle, and Yamaha, are subject to the Lemon Law and that Winnebagoland violated the Deceptive Trade Practices Act when it failed to disclose that Yamaha’s warranty would not cover the extensive modifications it made to the motorcycle.
The trial court granted both Yamaha’s and Winnebagoland’s motions for summary judgment, noting that while Yamaha warranted the motorcycle and issued the extended warranty, the warranty only covered original equipment and stock parts. It also found that Winnebagoland is not a manufacturer and issued no warranties, and its failure to disclosure that the accessories were added to the motorcycle is not an assertion, representation or statement of fact with intent to induce the sale actionable under Wis. Stat. 100.18, and therefore did not engage in deceptive trade practices.
Issues on Appeal
Wisconsin’s Lemon Law provides a remedy to the purchaser of a new vehicle, if within one year of purchase date, he or she experiences problems with the vehicle that are (1) covered by the vehicle’s warranty and (2a) severe enough to keep the vehicle out of service for a total of 30 days, or (2b) the manufacturer or its representative is unsuccessful in repairing after four attempts. See Goudy ¶ 13.
The clutch was the only part that failed that was a Yamaha original part, and its replacement was covered under warranty. The repair didn’t keep the vehicle out of service for over 30 days, nor was it the subject of four separate repair attempts. As a result, Goudy’s Lemon Law claims against Yamaha failed and the appeals court upheld the trial court’s judgment on this issue.
Goudy also argued that Winnebagoland “assembled” the motorcycle when it installed approximately 42 accessories. Winnebagoland argued that it is a motor vehicle dealer and cannot be considered a manufacturer under the Lemon Law. The court determined that the definition of manufacturer in the statute specifically excluded motor vehicle dealers, and therefore Winnebagoland could not be subject to the Lemon Law as a manufacturer. The court of appeals affirmed the trial court on this issue.
Deceptive trade practices
Under Wisconsin’s Deceptive Trade Practices Act (Wis. Stat. § 100.18), sellers are prohibited from making deceptive, false or misleading representations or statements of fact to prospective buyers. There are three elements to a claim under this statute: (1) the defendant made a representation to the public with the intent to induce an obligation; (2) the representation was “untrue, deceptive or misleading;” and (3) the representation materially induced (caused) a pecuniary loss to the plaintiff. See Id. ¶ 23.
Goudy contends that Winnebagoland’s failure to disclose the modifications to the motorcycle and the fact that these modifications might preclude application of Yamaha’s warranty are a violation of the statute.
The court initially rejected Goudy’s argument because § 100.18 does not encompass a duty to disclose. However, Goudy also raised Winnebagoland’s affirmative representation that the vehicle was covered by the manufacturer’s warranty, and on that basis, the court agreed with Goudy that there are material issues of fact. See Id.
Goudy stated that the representation Winnebagoland made on the Purchase Contract that the Yamaha motorcycle he was purchasing was covered by a New Vehicle Manufacturer Warranty was false, and that Winnebagoland knew at the time of sale that the Yamaha warranty wouldn’t cover the extensive modifications it made to the motorcycle. According to the court of appeals, this raises a genuine issue of material fact as to whether Winnebagoland’s affirmative representations on the purchase contract were “untrue” or “misleading” under Wis. Stat. § 100.18.
As a result, the court of appeals reversed the trial court’s dismissal of Goudy’s § 100.18 claim and remanded for further proceedings on that issue.