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COHEN v. AM GENERAL CORPORATION

March 10, 2003

MARK COHEN AND FIRST CHOICE MEDICAL, PLAINTIFF,
v.
AM GENERAL CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: James Moran, United States District Senior Judge

MEMORANDUM OPINION AND ORDER

Plaintiff's Mark Cohen and First Choice Medical (First Choice) filed a complaint in state court against defendant AM General Corporation (AM) alleging breach of express and implied warranties and revocation of acceptance. Defendant removed the case to the district court and filed a motion for summary judgment, arguing that the Magnuson-Moss Warranty Improvement Act, 15 U.S.C. § 2301 et seq., does not apply to lease transactions and that plaintiff's cannot demonstrate damages as a matter of law. For the following reasons, defendant's motion for summary judgment is denied.

BACKGROUND

On July 6, 1999, plaintiff's arranged to lease a new 1999 American General Hummer (Hummer) from Naperville Hummer Jeep for a total lease price of $84,000. In order to facilitate this transaction Mister Leasing Corporation (Mister Leasing) purchased the Hummer. Plaintiff's had the option to purchase the vehicle at the conclusion of the lease period. Al Jordan, the vice-president of Mister Leasing, maintains that the purchase of the Hummer was for the purpose of leasing it to plaintiff's and that without such a plan Mister Leasing would not have purchased the vehicle. Mister Leasing transferred its rights in American General's factory warranty to the plaintiffs.

Plaintiffs allegedly experienced numerous problems with the Hummer. Pursuant to the warranty, plaintiffs tendered the vehicle to authorized dealers of Hummers, who serviced the vehicle at no cost to plaintiffs. Plaintiffs filed their complaint in the Circuit Court of Cook County on June 5, 2002, alleging breach of the warranty and revoking acceptance of the vehicle. On July 11, 2002, plaintiffs chose to trade in the vehicle, receiving $49,000 for the Hummer.

Defendants filed a motion for summary judgment, arguing that plaintiffs are not entitled to enforce the terms of the warranty pursuant to the Magnuson-Moss Act and that they cannot prove any damages because they were able to trade in the vehicle for its fair market value.

DISCUSSION

We grant a motion for summary judgment only if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). We draw all reasonable inferences and view all admissible evidence in the light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). Only if there is insufficient evidence to support a jury verdict do we grant a motion for summary judgment. Id. at 248. Magnuson-Moss Act

The Magnuson-Moss Act authorizes civil suits by a consumer to enforce the terms of an implied or express warranty. 15 U.S.C. § 2310(d)(1). "Consumer" is defined as

a buyer (other than for purposes of resale) of any consumer product, any person to whom such product is transferred during the duration of an implied or written warranty (or service contract) applicable to the product, and any other person who is entitled by the terms of such warranty (or service contract) or under applicable State law to enforce against the warrantor (or service contractor) the obligations of the warranty (or service contract).

15 U.S.C. § 2301(3).

As part of the lease transaction Mister Leasing transferred all rights in the warranty to plaintiffs. Even as lessees rather than purchasers of the Hummer, plaintiffs became entitled to enforce the warranty against the warrantor. See Diamond v. Porsche Cars North America, Inc., 2002 WL 31155064, *3 (N.D. Ill. 2002) (holding that automobile lessees were entitled to assert rights to the warranty because the lessor transferred all rights to the plaintiff). Written Warranty

This does not end the inquiry, however. The Magnuson-Moss Act allows enforcement only of an implied or written warranty as defined by the Act. A written warranty is defined as

(A) any written affirmation of fact or written promise made in connection with the sale of a consumer product by a supplier to a buyer which relates to the nature of the material or workmanship and affirms or promises that such material or workmanship is defect free or will meet ...

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