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Teaching Consumer Credit Law in an Evolving Australian Economy

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RECENT DEVELOPMENTS<br />

Nobility Homes did not expressly state whether a consumer who<br />

know<strong>in</strong>gly purchased used goods could br<strong>in</strong>g suit aga<strong>in</strong>st the<br />

m<strong>an</strong>ufacturer for breach of the implied warr<strong>an</strong>ty, but did not<br />

exclude that possibility.<br />

The court <strong>in</strong> the <strong>in</strong>st<strong>an</strong>t case extends Nobility Homes, <strong>an</strong>d<br />

holds a subsequent buyer who knew the goods were used could<br />

sue the m<strong>an</strong>ufacturer of the goods for a breach of the implied<br />

warr<strong>an</strong>ty, provided the breach occurred when the goods left the<br />

m<strong>an</strong>ufacturer’s possession as part of the first sale of the goods.<br />

UCC REQUIRES NOTICE OF BREACH OF WARRANTY<br />

FAILURE TO NOTIFY SELLER OF BREACH OF<br />

WARRANTY BARS RECOVERY OF ONLY WARRANTY<br />

CLAIMS<br />

Hull v. South Coast Catamar<strong>an</strong>s, L.P., 365 S.W.3d 35 (Tex.<br />

App.—Houston [1st Dist.] 2011).<br />

FACTS: Pla<strong>in</strong>tiff Edgar Hull, Jr. purchased a new boat from<br />

Defend<strong>an</strong>t South Coast Catamar<strong>an</strong>s, L.P., a boat dealer.<br />

About five months later, Aks<strong>an</strong>o Catamar<strong>an</strong>s, LLC, the boat<br />

m<strong>an</strong>ufacturer, delivered the boat to a third party facility. Hull<br />

hired a truck driver to tr<strong>an</strong>sport the boat to him, <strong>an</strong>d the driver<br />

notified Hull that the boat had cracks, small holes, <strong>an</strong>d dents<br />

<strong>in</strong> its fiberglass. Hull notified Aks<strong>an</strong>o about the boat, <strong>an</strong>d was<br />

told to have the boat <strong>in</strong>spected. The technici<strong>an</strong> estimated that<br />

it would cost $3,000 to $5,000 to determ<strong>in</strong>e the extent of the<br />

fiberglass problem. Hull notified Aks<strong>an</strong>o that he would not<br />

accept the boat based on its condition. Aks<strong>an</strong>o <strong>in</strong>formed Hull<br />

that it would fix <strong>an</strong>y problem with the boat if it was determ<strong>in</strong>ed<br />

to have been caused by them. The surveyor hired to <strong>in</strong>spect the<br />

boat concluded that the boat’s poor structural <strong>in</strong>tegrity precluded<br />

its safe use. Hull dem<strong>an</strong>ded a full refund <strong>an</strong>d other costs he had<br />

<strong>in</strong>curred <strong>in</strong> relation to the boat. Hull refused to accept repair<br />

of the boat or a replacement. Hull made phone calls to South<br />

Coast, but with no <strong>an</strong>swers. Aks<strong>an</strong>o refused to exam<strong>in</strong>e the boat<br />

but offered to help Hull resell it.<br />

Hull sued Aks<strong>an</strong>o <strong>an</strong>d South Coast for violations of<br />

the Texas Deceptive Trade Practices Act, fraud, negligent<br />

misrepresentation, breach of contract, negligence, <strong>an</strong>d breach of<br />

warr<strong>an</strong>ty. The jury returned a un<strong>an</strong>imous verdict <strong>in</strong> favor of Hull<br />

on all of his claims, but before entry of judgment, Aks<strong>an</strong>o <strong>an</strong>d<br />

South Coast moved for a new trial. The district judge ordered a<br />

new trial for violation of the court’s discovery <strong>an</strong>d docket control<br />

order <strong>an</strong>d a juror error. Subsequently, Aks<strong>an</strong>o <strong>an</strong>d South Coast<br />

filed a traditional motion for summary judgment. The district<br />

judge gr<strong>an</strong>ted the motions <strong>an</strong>d entered f<strong>in</strong>al judgment. Hull<br />

appealed.<br />

HOLDING: Reversed.<br />

REASONING: Hull argued that the trial court erred <strong>in</strong> gr<strong>an</strong>t<strong>in</strong>g<br />

summary judgment to Aks<strong>an</strong>o <strong>an</strong>d South Coast regard<strong>in</strong>g Hull’s<br />

breach of warr<strong>an</strong>ty claim related to the defective condition of<br />

the boat. Aks<strong>an</strong>o <strong>an</strong>d South Coast claimed that Hull did not<br />

provide them with <strong>an</strong> opportunity to cure the boat’s defects<br />

because Hull asked for a refund <strong>an</strong>d stated that he would not<br />

accept repair or replacement of the boat. The court disagreed.<br />

It noted the general rule that a buyer must notify the seller of a<br />

breach of warr<strong>an</strong>ty with<strong>in</strong> a reasonable time after he discovers<br />

or should have discovered <strong>an</strong>y breach <strong>in</strong> order to ma<strong>in</strong>ta<strong>in</strong> <strong>an</strong><br />

action for breach of warr<strong>an</strong>ty. See Tex. Bus. & Com. Code Ann.<br />

§ 2.607(c)(1) (West 2009). The court expla<strong>in</strong>ed that notification<br />

is <strong>in</strong>tended to give the seller <strong>an</strong> opportunity to cure <strong>an</strong>y defects<br />

<strong>in</strong> the product. Additionally, the court recognized that the notice<br />

does not need to be formal; a general expression of dissatisfaction<br />

may be sufficient to meet the notice requirement under section<br />

2.607. U.S. Tire-Tech, Inc. v. Boer<strong>an</strong>, B.V., 110 S.W.3d 194, 200<br />

(Tex. App. — Houston [1st Dist.] 2003). The court expla<strong>in</strong>ed<br />

that ord<strong>in</strong>arily the question of notice is a question of fact to be<br />

determ<strong>in</strong>ed by the trier of fact – thus <strong>in</strong>appropriate for summary<br />

judgment unless “no room<br />

for ord<strong>in</strong>ary m<strong>in</strong>ds to differ<br />

exists.”<br />

The court, after review<strong>in</strong>g<br />

the record, determ<strong>in</strong>ed<br />

that Aks<strong>an</strong>o <strong>an</strong>d South<br />

Coast received appropriate<br />

notice under section 2.607(c)<br />

(1) when Hull notified them<br />

Notification is<br />

<strong>in</strong>tended to give the<br />

seller <strong>an</strong> opportunity<br />

to cure <strong>an</strong>y defects<br />

<strong>in</strong> the product.<br />

of problems with the fiberglass. Also, because the record showed<br />

that Aks<strong>an</strong>o refused to exam<strong>in</strong>e the boat, disputed the damage<br />

reports sent by Hull, <strong>an</strong>d made no attempt to repair the boat or<br />

to pay for repairs or replacement, the court found there were issues<br />

of material fact as to whether Aks<strong>an</strong>o <strong>an</strong>d South Coast were<br />

given <strong>an</strong> opportunity to cure, <strong>an</strong>d thus summary judgment was<br />

improperly gr<strong>an</strong>ted to the breach of warr<strong>an</strong>ty claims.<br />

F<strong>in</strong>ally, the court addressed the applicability of section<br />

2.607(c)’s notice requirement on Hull’s DTPA non-breach of<br />

warr<strong>an</strong>ty claims. Cit<strong>in</strong>g Mobil M<strong>in</strong>. & M<strong>in</strong>erals Co. v. Texas Auto<br />

Pool, Inc., 01-09-00093-CV, 1992 WL 211503 (Tex. App. —<br />

Houston [1 st Dist.] 1992), the court found that section 2.607(c)<br />

does not bar DTPA non-breach of warr<strong>an</strong>ty claims even if the<br />

notice requirement had not been met. The court concluded that<br />

the trial court erred <strong>in</strong> gr<strong>an</strong>t<strong>in</strong>g the summary judgment motion<br />

<strong>in</strong> favor of Aks<strong>an</strong>o <strong>an</strong>d South Coast.<br />

DTPA LAUNDRY LIST REQUIRES PROOF OF RELI-<br />

ANCE<br />

DTPA RESCISSION AWARD NOT AVAILABLE WITH-<br />

OUT PROOF OF ACTUAL DAMAGES<br />

DTPA RESCISSION REQUIRES CONSUMER RETURN<br />

VALUE RECEIVED<br />

Cruz v. Andrews Restoration, Inc., 364 S.W.3d 817 (Tex. 2012).<br />

FACTS: Erw<strong>in</strong> Cruz <strong>in</strong>sured his home property with Chubb<br />

Lloyd’s Insur<strong>an</strong>ce Comp<strong>an</strong>y of Texas. After a big storm, Cruz<br />

discovered several roof leaks that caused signific<strong>an</strong>t water<br />

damage throughout the house <strong>an</strong>d called to file a claim with<br />

Chubb. Andrews Restoration, do<strong>in</strong>g bus<strong>in</strong>ess as Protech, was<br />

called to the home to evaluate the damage of the storm. Chubb<br />

authorized Protech to perform mold remediation services <strong>an</strong>d<br />

verbally agreed to pay for them. Cruz formally dem<strong>an</strong>ded<br />

policy limits, but Chubb suggested hir<strong>in</strong>g a contractor to<br />

evaluate <strong>an</strong>d estimate the reconstruction cost of the projected<br />

damages result<strong>in</strong>g from remediation activities. After a foray <strong>in</strong>to<br />

Journal of <strong>Consumer</strong> & Commercial <strong>Law</strong> 43

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