The Michigan Court of Appeals held today that consumers who buy mobile homes have the right to sue if sellers fail to comply with the law, and that sellers can not circumvent the law by artificially shortening the statute of limitations. The unanimous decision by the three-judge panel hearing the case could have broad repercussions for Michigan consumers.
According to court filings, Plaintiffs Robert and Amanda Johnson purchased a mobile home from Defendant QFD, Inc. in 2006. Months later, Plaintiffs discovered that the water heater—which was installed behind a wall—was not designed for use in mobile homes, and rendered the premises unsafe for human habitation. They also discovered that QFD was not licensed to sell mobile homes at the location where it had been sold, and that QFD had not registered the title with the Michigan Secretary of State as the law requires.
The Johnsons filed suit in Genesee County Circuit Court, alleging breach of contract and violations of the Michigan Mobile Home Commission Act, and naming QFD, Inc. as one of several defendants. The defendants filed a motion to dismiss the case, arguing that the contract between the parties shortened the statute of limitations for breach of contract to one year. Judge Judith Fullerton agreed, dismissing all counts.
On appeal, attorney Steven Shelton argued on behalf of the Johnsons, pointing out to the Court that the Michigan Mobile Home Commission Act has its own three-year statute of limitations. A lawsuit brought under that act is not the same as a lawsuit brought for “breach of contract”, he said, noting that “the statute specifically prohibits a contractual shortening of the statute of limitations for such a cause of action.” QFD, Inc.’s counsel countered that the Uniform Commercial Code (“UCC”) allows parties to shorten the statute of limitations for a breach of contract, and that any violations committed by QFD were too minor to give the Johnsons the right to sue.
The Michigan Court of Appeals reversed the decision of the trial court. In agreeing with the Johnsons, the Court rejected both of QFD’s arguments. In a published opinion, the Court found that the language of the statute “does not limit the availability of a private action for rescission and damages to instances in which a mobile home dealer has committed a significant or substantial violation of the MHCA or the regulations promulgated thereunder.” In fact, said the Court, “any violation of the MHCA or the regulations promulgated thereunder is sufficient to give rise to a claim” on the part of the buyers.
The Court also rebuffed attempts to limit the liability of mobile home sellers by contractually shortening the statute of limitations for lawsuits. After reviewing the applicable statutes and caselaw, the Court concluded “that the MHCA’s three-year period of limitations controls plaintiffs’ statutory claim for rescission and damages under MCL 125.2331, and prevails over the more general UCC provisions governing the limitation of actions.” Furthermore, the Court held, “any contractual provision purporting to bind a person ‘to waive compliance with [the MHCA] or a rule promulgated or order issued under [the MHCA] is void.’”
Shelton called the ruling a rare win for consumers in Michigan. “Unfortunately, we have had a series of rulings in the last few years that have all but gutted consumer protections in this state,” he said. “It’s become a veritable paradise for companies that want to engage in predatory practices, knowing that consumers won’t be able to fight back. Today’s decision puts a stop to at least some of those practices.”
Buyers of mobile homes are particularly vulnerable, he said, because they are usually among the least able to stand up for their rights. “People don’t typically move into mobile homes because they want to,” he said. “They move into mobile homes because they don’t have very many other options. And once they’re in, they’re stuck because if they leave, they have to either sell the mobile home to someone else, or continue to pay lot rent even though they don’t live there anymore. And, of course, the park owner has to approve the new buyers, and many times they refuse to do so, with the idea that the mobile home owner will be so desperate to get rid of this albatross that he’ll literally just give it to the park owner. So now the park owner has a $15,000 mobile home that he got for free and can sell it to someone else and start the whole process over again.”
“I had a case once in which the park owner knew that most of the residents were on Social Security, and knew that Social Security checks are issued based on the recipient’s birth date, so he intentionally set the due date for rent based on the tenant’s birthdate and timed it to be two days before the checks were issued. Then he charged an outrageous late fee when people couldn’t pay on time,” Shelton said. “He actually admitted to me that this was his strategy. Of course, landlords can’t charge late fees in Michigan in the first place, but that didn’t matter. He figured that none of his tenants knew that, and even if they did, there was nothing they could do about it. What I hope is that today’s decision will send a message to park owners that if they engage in predatory practices, consumers can and will fight back.”
The case is Johnson v. QFD, Inc., No. 294732 (Apr 21, 2011).
Steven Shelton is an attorney in private practice in Fenton, Michigan. Initial consultations are always free. To schedule an appointment, contact attorney Steven Shelton on-line or by telephone at 810-750-1420.