Defense Verdict For Yamaha In Golf Car Fleet Defect Case

April 2011

On March 16, 2011, an eight person federal court jury returned a unanimous verdict in favor of Yamaha Golf-Car Company and against Swan Lake Holdings LLC on a product performance case involving a fleet of Yamaha G22 golf cars. It was the first golf car fleet case Yamaha has tried. Jeff Mortier of Frost Brown Todd was lead trial counsel for Yamaha.

The lawsuit arose out of Swan Lake’s purchase of 110 golf cars in March 2006. Swan Lake, a golf resort in Plymouth, Indiana, decided to upgrade its fleet of golf cars with 110 new Yamaha cars. The resort bought these cars and installed a GPS system on each one. Swan Lake claimed the batteries on the Yamaha cars subsequently began to fail. The batteries, Swan Lake suspected claimed, could not hold a charge. By the end of the first full golf season, more than half of the cars were experiencing premature battery failure.

Swan Lake brought these issues to Yamaha’s attention, and in February 2007 Yamaha agreed to replace the original batteries in all 110 of the cars with larger capacity batteries. The larger capacity batteries worked for most of the remainder of 2007, but by the end of the year Swan Lake claimed they began to experience similar problems. In early 2008, Swan Lake replaced the batteries in 22 of the cars. More than a year went by before Swan Lake decided to send Yamaha a letter, dated March 17, 2009, stating that it was revoking its acceptance of the 110 cars despite having used the cars for more than three golf seasons. Swan Lake filed a breach of warranty suit against Yamaha in Indiana state court, which was then removed to Indiana’s Northern District Court.

In its Complaint, Swan Lake alleged that shortly after purchase, the golf cars experienced battery failure. Specifically, the resort claimed that the electrical charging system on the golf cars was defectively designed. Swan Lake sought damages under theories of breach of express warranty and breach of implied warranty of fitness for a particular purpose. Plaintiff also argued that it was entitled to revoke acceptance of its entire fleet of Yamaha vehicles.

Yamaha contested all of these claims and the case proceeded to jury trial.

Prior to trial, Yamaha obtained judgment in its favor under Rule 56 on plaintiff’s revocation and consequential damages claims. After additional briefing by the parties, the court concluded that Swan Lake’s revocation claim failed for two reasons. First, Swan Lake did not timely attempt to revoke its acceptance of the cars. Citing a similar case, in which the Seventh Circuit held that seven months was too long a delay to constitute timely revocation, the court found that Swan Lake’s delay of over a year barred its revocation claim. Second, Swan Lake’s continued use of the golf cars after announcing its revocation was grounds for summary judgment in favor of Yamaha. The court noted that a party attempting to revoke acceptance may not, absent exceptional circumstances, continue to use the good, causing its value to depreciate. That party must maintain the condition and integrity of the goods so the parties can be returned to their positions prior to sale. Thus, the court granted Yamaha summary judgment on plaintiff’s revocation claim. At the conclusion of plaintiff’s evidence at trial, Yamaha also obtained judgment as a matter of law under Rule 50 on plaintiff’s breach of implied warranty claim for fitness for a particular purpose.

At trial, Yamaha defended its golf cars and asserted that any issues Swan Lake was experiencing were solely attributed to the addition of a ProLink GPS system, which was not original equipment and was excluded under Yamaha’s written warranty. Yamaha argued that when a product failure is not the result of the manufacturer’s workmanship or installation, the manufacturer cannot be liable for a breach of warranty. Yamaha obtained an admission from plaintiff’s expert that although he had issues with the design of the charging system, he had no evidence of a defect in materials or workmanship. Yamaha’s limited warranty that accompanied the golf cars covered "defects in material and workmanship" and excluded coverage for any product failure due to "installation of parts or accessories that are not original equipment" or "modifications or alterations that affect the car’s condition, operation, performance…." By this language, argued Yamaha, the installation of the GPS units was excluded under the terms of Yamaha’s Limited Warranty.

The jury agreed, and unanimously concluded after one hour of deliberation that Yamaha Golf-Car Company did not breach its express warranty and the fleet was not defective. The court entered a judgment consistent with that verdict.