Payne v. Berry’s Auto, Inc.

Payne v. Berry’s Auto, Inc., 2013 MT 102 (April 16, 2013) (5-0) (Rice, J.)

Issue: (1) Whether Berry’s disclaimed implied warranties of a used vehicle when the transaction included purchase of a service contract, and (2) whether the district court erred in affirming the justice court’s denial of Payne’s implied warranty claim.

Short Answer: (1) No, and (2) no.


Facts: Linda Payne bought a used 1997 Ford Explorer from Berry’s in September 2007. She paid an additional $1,870 for an extended service contract. She signed several documents, including the Buyer’s Guide, a double-sided form to be affixed to the window of a used vehicle. The box next to “AS IS — NO WARRANTY” was checked, as was the box next to “SERVICE CONTRACT,” which stated, “If you buy a service contract within 90 days of the time of sale, state law ‘implied warranties’ may give you additional rights.” Similar language stating that the vehicle was being sold “as is” was in the retail installment contract and the retail purchase agreement. The service contract was offered through a separate company, Wynn’s, although sold by the Berry’s salesman. The service contract price was included in the amount Payne financed, but paid to Wynn’s.

Three weeks after buying the vehicle, Payne brought it to Berry’s for minor repairs. After picking it up, and while driving on the interstate, the engine died. Payne contacted Berry’s, which initially gave her a loaner vehicle but told her it would not be responsible for repairs and she should contact Wynn’s. Wynn’s initially declined to cover the costs of the repair, although Payne testified at trial that negotiations were ongoing.

Payne filed suit against Berry’s in justice court, seeking damages for Berry’s failure to honor implied warranties and for committing an unfair trade practice. Payne argued that she bought the service contract from Berry’s not Wynn’s, and that under the Magnuson-Moss Warranty Act, Berry’s cannot disclaim the implied warranties. After a bench trial, the justice court issued entered judgment for Berry’s, finding that the service contract was with Wynn’s, and holding that implied warranties do not apply unless the service contract is with the vehicle seller.

Procedural Posture & Holding: Payne appealed to the district court, which affirmed. Payne appeals, and Berry’s did not file an appellee’s brief or otherwise participate. The Court therefore takes the appellant’s positions as correct if they are supported by the record, and affirms on the basis of state, rather than federal, law.