Ford Mercury Marquis breach of warranty – Ford Motor Company appealed from the final judgment in

this action in which the consumer, the purchaser of a new 1978 Mercury Marquis Brougham, sued Ford's

authorized dealer, Marino Auto Sales, Inc. (Marino Auto) and Ford, as manufacturer, for damages due to

defects in the vehicle. The final judgment (a) granted the consumer rescission of the purchase and damages

of $6,745.59 against Marino Auto Sales (representing the purchase price of $7,847.49 less an allowance for

the consumer's use of the car and the sales tax), (b) awarded damages in favor of Marino Auto against Ford

on a cross-claim in the sum of $2,910.59 (representing $6,745.59 less the resale value of the car), and (c)

awarded counsel fees to the consumer against Ford in the sum of $5,165. The consumer's demands for

interest, punitive damages in excess of $2,000,000 and treble damages were denied.  The consumer took

delivery of the automobile on April 12, 1978. According to the testimony of the consumer and his wife, they

experienced engine hesitation and stalling problems early in their use of the car which continued without

interruption despite repeated attempts by Marino Auto to cure the problem. Ford's zone service manager and

mechanical specialist who assists dealers in satisfying customers, inspected the vehicle on July 13, 1978 and

recommended replacing the exhaust regulator valve. The consumer testified that he was told by Ford’s

mechanical specialist that there was nothing wrong with the car and he would "have to live with this one."  

The consumer also testified that later in July 1978 he returned to Marino Auto intending to ask Mr. Marino to

take the car back if it could not be fixed but that he was prevented from doing so and was forcibly removed

from the premises.  On the trial date in this case, Marino Auto's attorney was unavailable. The trial judge in

his discretion severed the consumer's case against Marino Auto and ordered the case to proceed against Ford

only, as then authorized by the court rules. The appellate court rejected the contention that, lacking expert

proof, the consumer failed to establish that a defective mechanism for which Ford was responsible caused the

engine to hesitate and stall. For, this conclusion could be reached by inferences from the evidence. The

appellate court ruled that the findings that Ford breached its express warranty and that the car was

substantially impaired were supported by sufficient credible evidence and were therefore affirmed on appeal.  

At the conclusion of the trial with Ford, the case was continued to permit the consumer to claim a refund of

the purchase price, less an allowance for the use of the car, on a rescission basis against Marino Auto and to

permit Marino Auto to claim indemnification against Ford. Ford was to be afforded the opportunity to defend

by establishing Marino Auto's fault in failing properly to repair the auto.  On the next trial date Marino Auto

stipulated the sale of the car to the consumer and seemingly conceded at one point that the consumer would

be entitled to a judgment against Marino Auto based on the finding of Ford's breach of warranty on the

proofs offered by the consumer against Ford. The issues to be tried on the cross-claim were held to include

damages to Marino Auto on rescission or revocation of acceptance, namely, the purchase price less the value

of the car to be returned to the dealer, minus an allowance for the limited use of the car. (There was

evidence that the consumer was financially compelled to continue to use the vehicle in its imperfect state.

Upon the seller's breach the buyer has the right to "cover" by acquiring substituted goods but is not barred

from any other remedy if he fails to effect "cover.")  The case proceeded on the cross-claim although Ford

contended that no claim over could arise until the consumer recovered a judgment against Marino Auto. On

the assumption that proof of Ford's breach of an express warranty established the consumer's right to

recover against Marino Auto, the trial judge ordered the trial to proceed on Marino Auto's indemnification

claim. Proof of the consumer's damage claim was also anticipated before a final judgment was to be entered

on the complaint and cross-claim.  Proofs were presented by Ford to show that the car was not defective and

that there could be other causes for engine hesitation or stalling, such as contaminated fuel. Although Ford

contended that Marino Auto was negligent in not checking the fuel system, there was no proof that

contaminated fuel was the actual cause of the problem. Thus, there was no proof that the defect in the

vehicle would have been discovered but for Marino Auto's lack of reasonable care in attempting to repair the

car. Marino Auto could be denied indemnification because it failed to successfully diagnose the cause of the

problem. Ford's expert could find nothing wrong with the car and, on the facts of this case, the trial judge

could properly have rejected Ford's contention that Marino Auto was at fault for not correcting it, regardless

of where the burden of proving Marino Auto's negligence was placed.At the conclusion of this testimony

Marino Auto contended that there was no proof of any wrongdoing by Marino Auto and no basis for

rescission. However, Marino Auto also claimed indemnification from Ford for any damage award granted to

the consumer against Marino Auto. Ford contended that no judgment should be entered against Marino Auto,

that there was no basis for rescission and therefore no need for indemnification. Ford also protested the lack

of sufficient notice of the consumer's complaints about the car's performance.  The appellate court’s

reasoning through the body of law applicable to the warranty claim differed from that of the trial judge.

Nevertheless, the appellate court affirmed the consumer's recovery, concluding that, despite Marino Auto's

attempted disclaimer of all warranties, holding that the consumer could recover from Marino Auto for the

breach of implied warranty of merchantability and upholding the award of counsel fees against Ford pursuant

to the Magnuson-Moss Warranty Act.  For breach of the implied warranty of merchantability, the consumer

was entitled to revoke acceptance against Marino Auto and a judgment for the purchase price less an

allowance for the use of the vehicle was properly entered against Marino Auto. The consumer also could have

recovered damages against Ford for Ford's breach of its written limited warranty. Marino Auto was Ford's

representative for the purpose of making repairs to the consumer's vehicle under the warranty. The limited

warranty expressly required the purchaser to return the vehicle "for warranty service" to the dealer or to any

Ford or Lincoln-Mercury dealer if the purchaser is traveling or has moved a long distance or needs emergency

repairs. Ford contends that it put purchasers on notice that they should advise Ford's district office if they

have problems with their cars that a dealer is unable to fix.  However, the appellate court did not read these

provisions as requiring notice to Ford as a condition of relief against Ford when Ford's dealer has failed after

numerous attempts to correct defects under warranty.  The appellate court found that nothing prevented it

from granting an adequate remedy under state law for that breach of contract, including rescission when

appropriate. Under state law the right to revoke acceptance for defects substantially impairing the value of

the product and to receive a refund of the purchase price  are rights available to a buyer against a seller in

privity. Where the manufacturer gives a warranty to induce the sale it is consistent to allow the same type of

remedy as against that manufacturer. Although the manufacturer intended to limit the remedy to the repair

and replacement of defective parts, the failure of that remedy and the consequent breach of the implied

warranty of merchantability which accompanied the limited warranty by virtue of the Magnuson-Moss

Warranty Act, make a rescission-type remedy appropriate when revocation of acceptance is justified. The

award of counsel fees fulfills the intent of the Magnuson-Moss Warranty Act. Without such an award

consumers frequently would be unable to vindicate warranty rights accorded by law.  In an appropriate case

a consumer could recover the purchase price from a manufacturer for breach of a limited warranty causing a

substantial impairment of the value of the product.  But the appellate court did not have to determine

whether the consumer had the right to such relief in this case. Ordinarily, a purchaser seeking such relief

after unsuccessful repairs should be required to give timely notice to the manufacturer of revocation of

acceptance of defective goods and of his demand for a refund of the purchase price. The consumer's

complaint alleges that such notice and demand were given to Ford in this case, but no finding was made by

the trial judge on the consumer's claim against Ford. Having determined that the consumer was entitled to a

judgment for nominal damages and counsel fees against Ford, and tha judgments against Marino Auto and

for indemnification by Ford were properly entered, it makes no difference in this case whether the consumer

was also entitled to a refund of his purchase price from Ford.