Dealer Implied Warranty Applies to Manufacturer When They Have an Agency Relationship, U.S. District Court Rules


As Illinois and Chicago area consumer rights attorneys with a substantial auto dealer fraud and lemon law practice, we were pleased that a federal district court ruled in October that a manufacturer can be sued for a dealer’s alleged implied warranty under the Magnuson-Moss Warranty Act. Semitekol v. Monaco Coach Corporation, No. 06 C 6424 (Oct. 21, 2008), is an RV warranty case pending in the Northern District of Illinois. The plaintiffs, a married couple, purchased a Monaco motor home from an RV dealer. The motor home turned out to have the following alleged problems: electrical problems, a malfunctioning air-conditioner and heating problems. Numerous attempts to fix it were allegedly unsuccessful, and the motor home allegedly spent 180 of the 341 days the couple owned it in repair shops before the couple allegedly revoked acceptance of the motor home.

The couple sued Monaco, among others, alleging that it breached its own written warranty, the federal Magnuson-Moss Warranty Act and the implied warranty of merchantability created by Illinois law. Monaco moved to dismiss the implied warranty allegation, arguing that Illinois law requires direct contact between a buyer and seller to create an implied warranty. In this case, the manufacturer pointed out, the dealer was the actual seller of the Monaco motor home. The plaintiffs responded by arguing that direct contact in this case was established by BMS’s advertising and actual status as an “authorized Beaver Monaco dealership”; the fact that Monaco allegedly referred customers to the dealer to deal with problems and customer service concerns; consumers’ ability to find and contact the dealer through Monaco’s Web site; BMS’s authorization to distribute Monaco publications; and the fact that plaintiffs had the option of picking up their new motor home at either company.

In its analysis, the district court agreed for purposes of a motion to dismiss that the dealer was acting as Monaco’s agent. It dismissed arguments that past caselaw does not support such a finding, pointing out that unlike the current plaintiffs, none of the plaintiffs in the cases the defense cited showed any evidence for an agency relationship. The court did not agree that there actually was an agency relationship, or even that an agency relationship is enough to establish the direct contact necessary to prove an implied warranty under Illinois law. Rather, it pointed out that these are questions of fact that are improper to resolve with a motion to dismiss. Thus, the motion was denied. Dismissal motions by the dealer and two parts manufacturers also failed.

Based in Chicago and in Oak Brook, Ill., Lubin Austermuehle handles auto dealer and motor home dealer fraud and other consumer fraud litigation for clients in Wheaton, Naperville,Waukegan, Joliet, Aurora, Elgin and in other parts of Illinois, the Midwest and throughout the United States. In addition to helping individuals and families, our Chicago class action attorneys have successfully handled numerous consumer rights class actions. If you believe you’re a victim of fraud and misrepresentations by an auto dealer or other business, please contact us as soon as possible to learn about your rights at a free consultation.

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