Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—SDOhio: Disputed Issues Precluded Rejection of Claims Against Boat Manufacturer , (Apr 25, 2013)

By Jody Coultas, J.D.

Boat manufacturer Regal Marine Industries, Inc. was denied summary judgment on an Ohio Consumer Sales Practices Act (CSPA) claim filed by a boat purchaser because there were numerous disputed issues of material fact, according to the federal district court in Cincinnati (Risner v. Regal Marine Industries, Inc., April 24, 2013, Litkovitz, K.).

The purchaser was dissatisfied with his 2008 Regal boat because he believed the retailer quoted an inflated Manufacturers Suggested Retail Price (MSRP) for the boat, and he received a smaller discount on the purchase price of the boat than he believed he would get. The purchaser and the retailer executed a Settlement Agreement whereby the retailer placed an order on behalf of the purchaser with Regal for a model year 2010 Regal boat. The boat was delivered to the retailer, but there were a number of defects and repairs needed. There was also an issue with the delivery of the Manufacturer's Statement of Origin (MSO).

Because of the defects and delays, the failure of the retailer to pay taxes, and because the MSO arrived nearly four months after he was first supposed to receive the boat, the purchaser refused to pay for or accept the boat and filed the lawsuit. Specifically, the purchaser alleged that Regal misrepresented the quality of its boats, its commitment to customer satisfaction, and the retailer’s status as a reputable dealer.

In its motion for summary judgment, Regal argued that the transfer of the 2010 boat was not governed by the CSPA because the transaction occurred pursuant to the settlement agreement between the purchaser and retailer. Regal was not a party to the agreement, and the purchaser allegedly waived all claims with respect to the subject of the agreement. Also, Regal argued that it had no duty to the purchaser, omitted no facts, and did not make any misrepresentations.

The CSPA prohibits a supplier from committing unfair or deceptive act or practice in connection with a consumer transaction. A plaintiff must establish that a material misrepresentation, deceptive act or omission impacted his decision to purchase the item at issue.

Whether the transaction that took place between Regal and the purchaser was covered by the CSPA was a disputed question of law that precluded summary judgment, according to the court. A consumer transaction is a sale, lease, assignment, award by chance, or other transfer of an item of goods, a service, a franchise, or an intangible, to an individual for purposes that are primarily personal, family, or household, or solicitation to supply any of these things. The parties disputed whether the claims were based on a breach of the settlement agreement. Construing the evidence in favor of the purchaser, the court found that the claims were based on Regal inducing the purchaser to enter into the agreement and inducing him to purchase the 2010 boat. The transfer of the 2010 boat under these circumstances was covered by the CSPA, according to the court.

There were disputed issues of fact as to whether Regal made materially false statements within the meaning of the CSPA that induced the purchaser to enter into the agreement and purchase the 2010 boat, according to the court. Regal contended the statements at issue were mere puffery. While some of the statements may have been mere puffery, such as statements that Regal builds quality boats and customer service is top priority, the other statements could support a CSPA claim.

The court could not determine as a matter of law that all communications between the parties prior to the date of the agreement were barred by the parol evidence rule. A party cannot introduce extrinsic evidence that contradicts the parties' final written contract in order to prove a CSPA violation absent evidence of fraud, mistake, or other invalidating cause. Regal was not a party to the agreement, and evidence as to alleged misrepresentations Regal made that purportedly caused plaintiff to enter into the agreement with the retailer and purchase the 2010 boat did not contradict the terms of the agreement.

The purchaser sought rescission of the purchaser and sale of the 2010 boat as a remedy rather than damages. Whether a party may rescind a transaction hinges on a number of issues, including whether the party attempted to timely and unequivocally revoke the transaction and whether there was substantial depreciation of the goods. The purchaser presented sufficient evidence of an attempt to timely revoke the transaction. Regal was unable to show that rescission was impossible because substantial depreciation in the value of the boat occurred between the time of sale and the time plaintiff sought to revoke the transaction.

The case is No. 1:11-cv-00191.

Attorneys: Michael Patrick McNamee (McNamee & McNamee PLL) for Steve Risner. Joseph Anthony Gerling (Lane Alton & Horst) for Regal Marine Industries, Inc.

Companies: Regal Marine Industries, Inc.

Cases: StateUnfairTradePractices OhioNews