≡ Menu

Alleged-lemon RV bought by buyer’s LLC, so all warranties were excluded

The buyer of a recreational vehicle was given an expensive lesson in the im­por­t­ance of reading the sales contract:

In his telling, plaintiff Nicholas Knopick bought a $415,000 jalopy, but to be more precise, a limited liability company he controls bought the $415,000 jalopy. This factual shift determines the outcome of this case. Knopick has sued the manufacturer under the vehicle’s express limited warranty. That warranty does not cover the vehicle because the warranty excludes from coverage all vehicles purchased by business entities—like limited liability companies. The district court granted summary judgment to the manufacturer. We affirm.

Knopick v. Jayco, Inc., No. 17-2285, slip op. at 1-2 (7th Cir. July 11, 2018).

The RV allegedly was a real lemon, according to the unsuccessful plaintiff:

Almost immediately after purchasing the vehicle in July, Knopick discovered he had purchased a $415,000 lemon. According to Knopick, the RV leaked, smelled of sewage, had paint issues, and contained poorly installed fea­tures, including bedspreads screwed into furniture and staples protruding from the carpet.

After taking possession of the vehicle in Iowa, Knopick drove it to Jayco’s factory in Indiana for repairs. The following month, he picked up the RV in Indiana intending to drive it to his home in Texas. Concerned about con­tin­ued problems with the RV, Knopick dropped it off at a repair facility in Mis­souri, where a Jayco driver picked it up and drove it back to Indiana for fur­ther repairs. In December, Jayco had a driver deliver the coach to Knopick in Arkansas.

Knopick remained unsatisfied with the condition and requested a full refund later that month, which Jayco apparently refused.

Id., slip op. at 3 (extra paragraphing added).

It brings to mind a variation on a saying from the nuclear Navy:  RTFC — Read The [Fine] Contract.

But why did the buyer take title in his LLC? The court wondered that too:

The obvious question arises: why would a consumer structure such a large purchase in a way that strips him of the protection of the manufacturer’s stan­dard warranty? And what to make of Knopick using a Montana LLC des­pite his having no ties to the state discernible in the record? The un­sur­pri­sing answer is taxes. At oral argument, Knopick’s lawyer asserted: “Knop­ick purchased the recreational vehicle through the LLC solely for the purpose of sales tax advantage,” and the business entity serves “no other purpose whatsoever.”

Id., slip op. at 10.

(The court also rejected the plaintiff’s argument that the defendant had waived the limited warranty’s exclusion; that will be discussed in a separate post.)

{ 0 comments… add one }

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.