MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D), this Jul 15 2015, 9:21 am
Memorandum Decision shall not be regarded as
precedent or cited before any court except for the
purpose of establishing the defense of res judicata,
collateral estoppel, or the law of the case.
ATTORNEY FOR APPELLANT
C. Melissa Cunnyngham
Church Church Hittle & Antrim
Tipton, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Jeff Griffin, d/b/a JDA Trailers July 15, 2015
Appellant-Defendant, Court of Appeals Case No.
80A02-1407-SC-495
v. Appeal from the Tipton Circuit
Court
Dennis Martin and Lisa Martin, The Honorable Richard L. Russell,
Judge
Appellees-Plaintiffs. Cause No. 80C01-1402-SC-23
Brown, Judge.
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[1] Jeff Griffin, d/b/a JDA Trailers, appeals from the judgment of the small claims
court against him and in favor of Dennis and Lisa Martin in the amount of
$1,896.62 for the costs of repairs to a vehicle Griffin sold the Martins plus
attorney fees. Griffin raises two issues, which we consolidate and restate as
whether the small claims court erred in ordering him to pay the costs incurred
by the Martins to repair the vehicle he had sold them “as-is” and with no
warranty. We reverse.
Facts and Procedural History
[2] On September 5, 2013, the Martins purchased a 2001 Chevy Silverado from
Griffin at his used car dealership in Windfall, Indiana. Dennis Martin signed a
Used Vehicle Order indicating the car’s sales price was $10,000, and the
handwritten words “as-is” were written in the area for “Remarks” on the
document. Appellant’s Appendix at 18. Dennis also signed a “Buyer’s Guide,”
and the box next to the words “AS IS-NO WARRANTY” was marked. Id. at
20. Under the box, the document provided: “YOU WILL PAY ALL COSTS
FOR ANY REPAIRS. The dealer assumes no responsibility for any repairs
regardless of any oral statements about the vehicle.” Id.
[3] While driving the vehicle home, the Martins were able to stop the vehicle only
by using the brakes on the trailer being pulled by the vehicle. The vehicle was
inspected by two independent mechanics who found the pads and rotors were
severely grooved with pieces of metal missing, and the hubs were worn on the
front of the vehicle. The Martins incurred expenses of $1,196.62 to make
repairs.
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[4] On February 5, 2014, the Martins filed a Notice of Claim requesting damages
in the amount of $1,081.12 plus attorney fees of $700 and court costs, and they
alleged that the vehicle they purchased from Griffin “was not road worthy in
that it had defective/non-existent brakes.” Id. at 10. The court held a hearing
on April 25, 2014, at which the parties presented testimony and evidence. The
Martins presented evidence of an invoice and receipt from Paul-Richard GM
Center, two receipts from NAPA Auto Parts, invoices from Car Recyclers and
Jim’s Garage, and a summary of services and costs of vehicle repair and
diagnosis by Thomas Nelson.
[5] The Martins testified that Griffin sold them a vehicle that was dangerous for
them to drive and that at some point after the time of sale they were able to stop
the vehicle only by using the brakes on the camper being pulled by the vehicle
at the time. They stated that they drove the vehicle to the Paul-Richard GM
Center dealership for inspection on September 6, 2013, and that the
“[s]uggested repairs . . . included re-hooking up the ABS, replacing front hubs,
and advising that fuel ‘modles’ were bad.” Id. at 26. The Martins indicated
they did not have the repairs completed at the dealership but paid for the cost of
the inspection. They presented further testimony that they then drove the
vehicle to Nelson for inspection and repair on September 7, 2013. Nelson
testified that “the vehicle was not roadworthy,” and his written summary stated
that the vehicle’s bearings were bad in both front hubs which triggered the ABS
sensor inside the vehicle, the right hub/bearing was worn to the point of near-
separation, new front brake pads had been installed at some point without
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replacing severely grooved rotors, the rotors had chunks of metal missing from
the rotor surfaces, all four shocks were severely rusted and worn out, and that
the fuel level sensor unit was not working properly. Id. The Martins submitted
evidence that they paid Nelson for the repairs, Napa Auto for parts, and Car
Recyclers and Jim’s Garage for parts and repair in November 2013.
[6] Griffin introduced the Used Vehicle Order and Buyer’s Guide and testified that
he obtained the Silverado from Dellen Chrysler in Greenfield on July 26, 2013.
Tim Phifer, an employee of Griffin, testified that he drove the vehicle to
Windfall, where it was placed in the back of the lot, and that a few weeks later
Dennis Martin expressed an interest in the vehicle and a camper. He testified
that Griffin stated to Dennis that the vehicle had not been serviced since its
acquisition, that Dennis test-drove the vehicle and asked about the ABS light
which was on, that Griffin stated it could be due to the fact the vehicle may
need a new front wheel bearing, that Dennis responded by saying that he would
take care of whatever was causing the ABS light to be on, and that Dennis did
not mention anything further about how the vehicle drove. Phifer further
testified that the parties came to an agreement on price with the understanding
that the sale would include no warranty, the vehicle was then placed on the
back lot, and Griffin performed no further service or inspection. Phifer stated
that the Martins returned on September 5, 2013, executed the sales agreement
and Buyer’s Guide, paid the agreed-upon price, and drove the truck off the lot
while towing the camper. On cross-examination, Phifer testified that, between
the time the Martins took possession of the vehicle on September 5, 2013, and
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the time it was inspected by their mechanic on September 6, 2013, the vehicle
had been driven 201 miles by the Martins. He also testified that Griffin
encourages buyers to have a vehicle inspected prior to a sale. The Martins’
counsel stated that they agreed they bought the vehicle with no warranty but
that they were bringing their claim under “civil tort law.” Id. at 29. The court
took the matter under advisement.
[7] On June 20, 2014, the court entered an order finding that the Martins had
purchased the 2001 Chevy Silverado from Griffin on September 5, 2013; that
Griffin “sold the vehicle ‘as is’ with no warranty”; that while driving home the
Martins “discovered the vehicle was not road worthy and were only able to stop
the vehicle by using the brakes on the trailer being pulled by the vehicle”; and
that the vehicle was subsequently inspected by two separate and independent
mechanics who both found the pads and rotors were severely grooved with
pieces of metal missing and the hubs were found to be so worn on the front of
the vehicle the right hub bearing was at the point of separation. Id. at 7. The
court also found that the Martins incurred costs of $1,196.62 “to make the
vehicle road worthy” and $700 in attorney fees. Id. The court’s ultimate
finding was that Griffin “committed a tort against the [Martins] by selling a
vehicle that was not road worthy and placed them in danger, as well as any
other individuals on the road” and that, “because of [Griffin’s] tort, [he] is liable
to the [Martins] for their reasonable expenses in repairing the vehicle as well as
their reasonable attorney fees.” Id. at 8. The court entered judgment in favor of
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the Martins and against Griffin in the amount of $1,196.62 for costs and $700
for attorney fees.
Discussion
[8] The issue is whether the court erred in finding Griffin liable for the Martins’
costs of repair of the vehicle he sold them “as-is” and with no warranty. The
Martins did not file an appellee’s brief. When an appellee fails to submit a
brief, we do not undertake the burden of developing his arguments, and we
apply a less stringent standard of review, that is, we may reverse if the appellant
establishes prima facie error. Zoller v. Zoller, 858 N.E.2d 124, 126 (Ind. Ct. App.
2006). This rule was established so that we might be relieved of the burden of
controverting the arguments advanced in favor of reversal where that burden
properly rests with the appellee. Wright v. Wright, 782 N.E.2d 363, 366 (Ind. Ct.
App. 2002). Questions of law are still reviewed de novo, however. McClure v.
Cooper, 893 N.E.2d 337, 339 (Ind. Ct. App. 2008).
[9] Judgments in small claims actions are subject to review as prescribed by
relevant Indiana rules and statutes. Ind. Small Claims Rule 11(A); Eagle
Aircraft, Inc. v. Trojnar, 983 N.E.2d 648, 657 (Ind. Ct. App. 2013). In the
appellate review of claims tried by the bench without a jury, the reviewing court
shall not set aside the judgment unless clearly erroneous, and due regard shall
be given to the opportunity of the trial court to judge the credibility of the
witnesses. Ind. Trial Rule 52(A); Eagle Aircraft, 983 N.E.2d at 657. In
determining whether a judgment is clearly erroneous, the appellate tribunal
does not reweigh the evidence or determine the credibility of witnesses but
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considers only the evidence that supports the judgment and the reasonable
inferences to be drawn from that evidence. Eagle Aircraft, 983 N.E.2d at 657. A
judgment in favor of a party having the burden of proof will be affirmed if the
evidence was such that from it a reasonable trier of fact could conclude that the
elements of the party’s claim were established by a preponderance of evidence.
Id. This deferential standard of review is particularly important in small claims
actions, where trials are informal, with the sole objective of dispensing speedy
justice between the parties according to the rules of substantive law. Id. We
presume that the trial court correctly applied the law and we give due regard to
the court’s opportunity to judge the credibility of the witnesses. Id. However,
“this deferential standard does not apply to the substantive rules of law, which
are reviewed de novo just as they are in appeals from a court of general
jurisdiction.” Trinity Homes, LLC v. Fang, 848 N.E.2d 1065, 1068 (Ind. 2006).
“Similarly, where a small claims case turns solely on documentary evidence, we
review de novo, just as we review summary judgment rulings and other ‘paper
records.’” Id.
[10] Griffin asserts that the court erred in failing to apply the economic loss rule and
in finding Griffin liable to the Martins in tort for the costs to repair their vehicle.
Griffin also argues that exclusions of warranties are permitted under Indiana’s
Uniform Commercial Code (the “UCC”) and that the court’s order effectively
circumvented his rights under the UCC when it awarded Martins the precise
relief in tort that was clearly excluded in their contract.
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[11] Ind. Code § 26-1-2-316 provides in part that, “unless the circumstances indicate
otherwise, all implied warranties are excluded by expressions like ‘as is’, ‘with
all faults’, or other language which in common understanding calls the buyer’s
attention to the exclusion of warranties and makes plain that there is no implied
warranty.” It is well-settled that automobile dealers may use this law to exclude
express warranties and make it plain that there are no implied warranties. Town
and Country Ford, Inc. v. Busch, 709 N.E.2d 1030, 1032 (Ind. Ct. App. 1999);
DeVoe Chevrolet-Cadillac Inc. v. Cartwright, 526 N.E.2d 1237, 1240 (Ind. Ct. App.
1988).
[12] Here, the Used Vehicle Order included the handwritten words “as-is,” and the
Buyer’s Guide included a marked box next to the words “AS IS-NO
WARRANTY” and below that stated “YOU WILL PAY ALL COSTS FOR
ANY REPAIRS. The dealer assumes no responsibility for any repairs
regardless of any oral statements about the vehicle.” Appellant’s Appendix at
18, 20. Accordingly, any implied warranty was excluded in this case. Further,
the record contains no evidence showing Griffin made a representation which
created an express warranty, and absent such evidence the “as-is” limitation
controls. See Cartwright, 526 N.E.2d at 1240.
[13] Turning to whether the Martins were entitled to recover their repair costs by
alleging that a tort occurred, we observe that the economic loss rule precludes
tort liability for purely economic loss. Indianapolis-Marion Cnty. Pub. Library v.
Charlier Clark & Linard, P.C., 929 N.E.2d 722, 727 (Ind. 2010). Economic losses
are disappointed contractual or commercial expectations. Gunkel v. Renovations,
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Inc., 822 N.E.2d 150, 154 (Ind. 2005), reh’g denied. “Damage to the product
itself, including costs of repair or reconstruction, is an ‘economic loss’ even
though it may have a component of physical destruction.” Id. If the plaintiff’s
injury results from a defective product or service, the defendant is liable under a
tort theory only if the defect causes personal injury or damage to property other
than the product or service the plaintiff purchased. Indianapolis-Marion Cnty.
Pub. Library, 929 N.E.2d at 726. A defendant is not liable under a tort theory
for a pure economic loss caused by its negligence, including damage to the
product or service itself. Id. at 726-727. See also Greg Allen Constr. Co. v. Estelle,
798 N.E.2d 171, 175 (Ind. 2003) (stating that “damages recoverable in tort from
negligence in carrying out the contract will be for injury to person or physical
damage to property, and thus ‘economic loss’ will usually not be recoverable”),
reh’g denied; Reed v. Central Soya Co., 621 N.E.2d 1069, 1073-1074 (Ind. 1993)
(stating that, “where the loss is solely economic in nature, as where the only
claim of loss relates to the product’s failure to live up to expectations, and in the
absence of damage to other property or person, then such losses are more
appropriately recovered by contract remedies”), modified on other grounds by 644
N.E.2d 84 (Ind. 1994). While the economic loss rule “operates as a general rule
to preclude recovery in tort for economic loss, it does so for purely economic
loss—pecuniary loss unaccompanied by any property damage or personal
injury (other than damage to the product or service provided by the
defendant)—and even when there is purely economic loss, there are exceptions
to the general rule.” Indianapolis-Marion Cnty. Pub. Library, 929 N.E.2d at 730;
see also id. at 736 (“Indiana courts should recognize that the rule is a general rule
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and be open to appropriate exceptions”). Some of these exceptions include
lawyer malpractice, breach of duty of care owed to a plaintiff by a fiduciary,
breach of duty to settle owed by a liability insurer to the insured, and negligent
misstatement. Id. at 736.
[14] Here, the Martins’ costs of repairing the Silverado constituted economic loss.
The Martins did not allege or present evidence that its loss was not purely
economic, that personal injury or damage to other property occurred, or that
any other recognized exception to the economic loss rule is applicable under the
circumstances. Thus, the economic loss rule is applicable and Griffin is not
liable for the Martins’ repair costs under a tort theory.
[15] For these reasons, we conclude that Griffin has demonstrated prima facie error
in the trial court’s order awarding repair costs to the Martins. We also reverse
the court’s order as to attorney fees.
Conclusion
[16] Based on the foregoing, we conclude that the trial court erred when it awarded
damages and attorney fees to the Martins in contravention of their agreement
that the Silverado they purchased was sold “as is,” and the evidence shows that
they suffered only economic loss precluding recovery under a tort theory. We
reverse the judgment of the small claims court.
[17] Reversed.
Crone, J., and Pyle, J., concur.
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