Business Law 13th Edition by Frank Cross, Kenneth Clarkson, Roger LeRoy Miller

Exercise 9

Shoop v. DaimlerChrysler Corp. Appellate Court of Illinois,
First District, 371 Ill.App.3d 1058, 864 N.E.2d 785, 309 Ill.Dec. 544 (2007).
COMPA NY PROFILE?In 1920, Walter Chrysler, the head of manufacturing operations for General Motors Corporation(GMC), was dissatisfied with its management and quit. He took over Maxwell Motor Company and renamed it Chrysler Corporation. For most of its history, Chrysler ranked third in vehicle sales among the "Big 3" U.S. automakers-GMC, Ford Motor Company, and Chrysler. In 1998, the German company Daimler-Benz AG, maker of Mercedes-Benz vehicles, bought Chrysler and created DaimlerChrysler AG. The new entity proved less successful than its investors had hoped, and in 2007, Chrysler was sold to Cerberus Capital Management, which renamed it Chrysler, LLC (www.chrysler.com). Its vehicles are made and sold under the Chrysler, Dodge, Jeep, and Mopar brands.
BACKGROUND AND FA CTS?In April 2002, Darrell Shoop bought a 2002 Dodge Dakota truck for $28,000 from Dempsey Dodge in Chicago, Illinois. DaimlerChrysler Corporation had manufactured the Dakota. Problems with the truck arose almost immediately. Defects in the engine, suspension, steering, transmission, and other components required repairs twelve times within the first eighteen months, including at least five times for the same defect, which remained uncorrected. In May 2005, after having driven the Dakota 39,000 miles, Shoop accepted $16,500 for the trade-in value of the truck as part of a purchase of a new vehicle. At the time, a comparable vehicle in average condition would have had an average trade-in value of $14,425 and an average retail value of $17,225. Shoop filed a suit in an Illinois state court against DaimlerChrysler, alleging, among other things, a breach of the implied warranty of merchantability. DaimlerChrysler countered, in part, that Shoop's sale of the Dakota was evidence of its merchantability. The court issued a summary judgment in DaimlerChrysler's favor. Shoop appealed to a state intermediate appellate court.
IN THE LANGUAGE OF THE COURT
Justice MURPHY delivered the opinion of the court.
* * * * Under Section 2-314(c)(2) of the UCC, a product breaches the implied warranty of merchantability if it is not fit for the ordinary purposes for which such goods are used. With regard to automobiles, fitness for the ordinary purpose of driving implies that the vehicle should be in a safe condition and substantially free from defects. Breach of an implied warranty of merchantability may also occur where the warrantor has unsuccessfully attempted to repair or replace defective parts. Whether an implied warranty has been breached is a question of fact. [Emphasis added.]
Defendant contends that the Dakota was fit for the ordinary purpose of driving because plaintiff drove it daily for more than three years after purchase and traded it in for its fair market value. * * * A prima facie case [legally sufficient case] that a product was defective and that the defect existed when it left the manufacturer's control is made by proof that in the absence of abnormal use or reasonable secondary causes the product failed to perform in the manner reasonably to be expected in light of its nature and intended function. [In a previous case, the] court found that the only defect of any consequence, a jerking transmission, was remedied, and the plaintiff failed to exclude the buildup of moisture or other materials as a reasonable cause of the problem. Here, however, plaintiff's complaint specifically eliminated any abnormal uses and secondary causes as the source of the defects in the vehicle.
In [a different case], the court rejected the defendant's argument that the implied warranty of merchantability was not breached when the plaintiff drove the vehicle for almost 100,000 miles because the testimony established that the plaintiff had the vehicle serviced no less than six times. In addition, in [another case], the court held that the jury could have concluded that a defective paint job on a new car rendered it unmerchantable as a new car, and in [a fourth case] a question of fact existed as to whether the plaintiff's car was in a safe condition and substantially free of defects when an expert testified that poor gas mileage was consistent with a number of defects
The amended complaint alleged that plaintiff began experiencing problems with the Dakota's engine, suspension and steering, transmission, and other components of the truck soon after he took possession. Plaintiff was required to take the truck to a Chrysler dealership 12 times within 18 months for repairs, and he alleged that defendant was unable to cure the defects after a reasonable number of attempts. When [Shoop's witness Thomas] Walters test drove the Dakota, he experienced a loping or jerking sensation when he braked at very low speeds. Furthermore, at highway speeds, a steering wheel shimmy with additional vibration was also present when he braked. He also noticed an intermittent single pop noise from the front suspension when he turned left into plaintiff's driveway. Therefore, a genuine issue of material fact existed as to whether defendant breached the implied warranty of merchantability.
DECISION AND REMEDY The state intermediate appellate court concluded that "a genuine issue of material fact existed as to whether [DaimlerChrysler] breached the implied warranty of merchantability." The court reversed the lower court's summary judgment and remanded the case for trial.
The Ethical Dimension?Should Shoop's trade-in of the Dakota preclude his recovery in this case? Why or why not?
The Legal Environment Dimension?If Shoop is allowed to recover damages for breach of warranty, what should be the measure of those damages?