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Ninth Circuit holds that Ford’s car-warranty language was ambiguous

Take a look at this warranty language from Daniel v. Ford Motor Co., No. 13-16476 (9th Cir. Dec. 2, 2015), in which the appeals court reversed and remanded summary judgment in favor of Ford:

[a] Under your New Vehicle Limited Warranty if:

– your Ford vehicle is properly operated and maintained, and

– was taken to a Ford dealership for a warranted repair during the warranty period,

then authorized Ford Motor Company dealers will, without charge, repair, replace, or adjust all parts on your vehicle that malfunction or fail during normal use during the applicable coverage period due to a manufacturing defect in factory-supplied materials or factory workmanship.

[b] This warranty does not mean that each Ford vehicle is defect free. Defects may be unintentionally introduced into vehicles during the design and manufacturing processes and such defects could result in the need for repairs.

[c] For this reason, Ford provides the New Vehicle Limited Warranty in order to remedy any such defects that result in vehicle part malfunction or failure during the warranty period.

Id., slip op. at 11-12 (emphasis, bracketed paragraph lettering, and extra paragraphing added).

The appeals court held that this language was supposedly ambiguous about whether design defects were covered by the warranty:

… unlike the warranties in the cases cited by Ford, Ford’s express warranty is not simply a “materials and workmanship” warranty, as it references defects that are introduced during the “design” process. Ford’s express warranty is ambiguous. The warranty can reasonably be interpreted [sic] to either:

[1] guarantee against only manufacturing defects (where the second paragraph [broken into [b] and [c] above] is a general explanation and not a guarantee) or

[2] guarantee against both manufacturing and design defects (where the second paragraph [that is, [b] and [c] above] expands the guarantee to design defects).

The ambiguity, which is without question within a contract of adhesion, must be resolved against the draftsman. The warranty must be construed to guarantee against both manufacturing and design defects.

Given the ambiguous terms of Ford’s express warranty, the district court’s order granting summary judgment as to the breach of express warranty claims of Plaintiffs Daniel and Duarte is reversed.

Id. at 13-14 (bracketed numbering added, paragraphing modified).

The court applied but didn’t cite the principle of contra proferentem, which is that other things being equal, an ambiguity in contract language is construed against the drafter responsible for it. But it seems to me that the ancient principle of inclusio unius est exclusio alterius (to include one thing is to exclude others) should have peremptorily defeated the plaintiffs’ argument: By mentioning the possibility of design defects in [b], but listing only manufacturing defects in the repair-replace-or-adjust paragraph of [a], the drafter necessarily excluded coverage of design defects.

Drafting lesson: This is an example of how sometimes a few extra words can help to guard against off-the-rails interpretations of seemingly-plain language, conjured and promoted by motivated trial counsel. With 20-20 hindsight, one might revise the paragraph [a] above by adding “(but not due to a design defect)” after the term “due to  a manufacturing defect”; it’s easy to see, though, how commercial considerations might have shot down that idea.

EDIT (after comment by “Guest” below): Another possibility would have been, in [c], to replace “any such defects” with “certain defects.”

It’ll be interesting to see what lies ahead in this case.

{ 2 comments… add one }
  • Guest 2015-12-07, 08:34

    To me this is poor drafting by Ford. It’s the last sentence in paragraph [b] that reasonably creates ambiguity: “For this reason, Ford provides the New Vehicle Limited Warranty in order to remedy any such defects that result in vehicle part malfunction or failure during the warranty period.” After expressly mentioning design defects, that sentence in the warranty policy links the New Vehicle Limited Warranty to “any such defects.” For should have left out [EDIT BY DCT:] paragraph [c]–or even both paragraphs [b] and [c]–from the warranty.

  • D. C. Toedt 2015-12-07, 09:21

    I see your point, “Guest,” but I still think the 9th Circuit’s reasoning is at best a considerable stretch.

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