Lisa Hoffman, The National Law Journal November 7, 2014
Ruling that a manufactured home is not a consumer product, a divided federal appeals panel reversed a Tennessee district court ruling that the improper installation of a triple-wide was actionable under the Magnuson-Moss Warranty Act.
The three-judge panel of the U.S. Court of Appeals for the Sixth Circuit reached to the 1974 Senate hearings on the establishment of the act to answer what two of the judges deemed the fundamental question: Is a house a consumer product? Asked that question by another senator during the hearing, Sen. Frank Moss, a Utah Democrat and co-sponsor of the legislation, replied: “[A] house would not fall within the definition of consumer product, since a house is not ‘tangible personal property.’ ”
For Sixth Circuit judges Gilbert Merritt and Danny Boggs, that largely decided that the federal breach-of-warranty claim lodged by the owners of the Tennessee home must be dismissed.
Dan and Karen Bennett had bought their home from CMH Homes Inc. after their previous house burned down in 2004. Their new 2,800-square foot, $160,000 home was delivered in three pieces, to be permanently installed by CMH in 2005. Soon, the couple complained that the structure wasn’t level. Despite the warranty attached to the sale, CMH never made good on its promise to fix the installation, the couple alleged, and sued in U.S. District Court for the Middle District of Tennessee.
The district court found in the Bennetts’ favor, ruling that CMH violated both the federal warranty act and Tennessee law by breaching both the contract and its warranties, and awarded about $39,000 to the couple. They appealed the amount, and CMH cross-appealed.
The appeals panel looked to dictionary definitions in use at the time of the enactment of the Magnuson-Moss act to parse the meaning of “consumer goods,” and found them described as products that are expendable and meant to be periodically replaced. A manufactured home permanently affixed in place, as was the Bennetts’, did not qualify, the panel said.
But Sixth Circuit Judge Jane Stranch dissented. She argued that, in fact, the term “manufactured home” was coined by the mobile home manufacturers to counter the stigma that had attached to their product and that the adjectives are interchangeable.
She also argued that both the Federal Trade Commission, which administers the Magnuson-Moss act, and the U.S. Department of Housing and Urban Development explicitly have deemed mobile homes to be consumer products, and thus subject to the warranties statute.
The appeals panel remanded the case for the district court to consider the couple’s state law claims.