                                                                                          ACCEPTED
                                                                                     04-13-00757-CV
                                                                          FOURTH COURT OF APPEALS
                                                                               SAN ANTONIO, TEXAS
                                                                                1/30/2015 6:24:35 PM
                                                                                       KEITH HOTTLE
                                                                                              CLERK



                            CAUSE NO. 04-13-00757-CV
                          IN THE COURT OF APPEALS FOR                 FILED IN
                                                               4th COURT OF APPEALS
                              THE FOURTH DISTRICT               SAN ANTONIO, TEXAS
                               SAN ANTONIO, TEXAS              1/30/2015 6:24:35 PM
                                                                 KEITH E. HOTTLE
                                                                       Clerk

                                Michael Tatsch,
                                   Appellant,
                                        v.
                             Chrysler Group LLC and
                  Infinity County Mutual Insurance Company,
                                   Appellees.


                              On Appeal from the
                  th
              216 Judicial District Court of Gillespie County, Texas
                         Trial Court Cause No. 12977


          APPELLEE CHRYSLER GROUP LLC’S MOTION FOR REHEARING


Matthew R. Beatty
State Bar No. 24001169
mbeatty@bbsfirm.com
David A. Polsinelli
State Bar No. 24088238
dpolsinelli@bbsfirm.com
                                          COUNSEL FOR APPELLEE
                                          CHRYSLER GROUP LLC
BEATTY BANGLE STRAMA P.C.
400 West 15th Street, Suite 1450
Austin, TX 78701
(512) 879-5050
(512) 879-5040 (FAX)
                                              TABLE OF CONTENTS

TABLE OF CONTENTS ..............................................................................................ii

INDEX OF AUTHORITIES ......................................................................................... iii

ARGUMENT............................................................................................................ 1

A. Introduction ..................................................................................................... 1

B. The Language in the Warranty Booklet Demonstrates that the Cummins
   Warranty is not Unlimited……………………………………………………………………………… 3

PRAYER .................................................................................................................. 9

CERTIFICATE OF COMPLIANCE ............................................................................. 10

CERTIFICATE OF SERVICE...................................................................................... 11




                                                            ii
                             INDEX OF AUTHORITIES

Cases

  1. Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132 (Tex. 1994).

  2. Frost Nat’l Bank v. L&F Distribs., 165 S.W.3d 310 (Tex. 2005).

  3. Med. City Dallas, Ltd. v. Carlisle Corp., 251 S.W.3d 55 (Tex. 2008).

  4. Tatsch v. Chrysler Group, LLC, 2014 Tex. App. LEXIS 12910 (Tex.App.—San

        Antonio, December 3, 2014).




                                        iii
                                       ARGUMENT

       A.     Introduction

       In its partial reversal of the trial court’s decision, the Court mistakenly

interpreted Chrysler’s Cummins Diesel Engine Limited Warranty (“Cummins

Warranty”) in a manner that would arguably impose coveage beyond anything

even argued by Appellant. Since the interpretation was not argued by the Appellant

in his briefs, this Motion presents the first opportunity for Chrysler to bring the

matter to the Court’s attention.

       In its decision, the Court accurately recognized that Chrysler’s Basic Limited

Warranty obligates Chrysler to pay for the cost of parts and labor necessary to

repair “defects” that existed when the vehicle left the manufacturing plant.1 And,

that coverage lasts for 3 years or 36,000 miles, whichever comes first. The Court

also accurately noted that the Cummins Warranty begins when the Basic Limited

Warranty ends, at 36,000 miles, and that the Appellant “sought repairs under the




1       The Court appears to acknowledge that if Appellant’s vehicle had failed during the 3-
year/36,000 mile term of the Basic Limited Warranty, he would in fact be required to put forth
evidence showing that his vehicle had a defect that existed when it left the manufacturing
plant. Tatsch v. Chrysler Group, LLC, No. 04-13-00757-CV, 2014 Tex. App. LEXIS 12910, at *8
(Tex.App.—San Antonio, December 3, 2014)(“However, Tatch did not seek repairs for his truck
under the Basic Limited Warranty...Rather, Tatsch sought repairs under the engine
warranty…[which] makes no mention of the limiting defect language cited to by Chrysler.”).


                                              -1-
[Cummins Warranty].” Tatsch, 2014 Tex. App. LEXIS 12910, at *8. However, the

Court erred when it stated that the Cummins Warranty does not have “limiting

defect language” like the Basic Limited Warranty. Id. The error was a result of the

Court’s failure to read the warranty as a whole. Had it done so, it would have

recognized that the Cummins Warranty is an extension of the Basic Limited

Warranty for a specific list of parts. It would have also noted that the Cummins

Warranty is indeed limited, not only by the “defects” language of the Basic Limited

Warranty, by extension, but by language that says “[y]our warranties don’t cover

the costs of repairing damage caused by poor or improper maintenance. Nor do

they cover damage caused by the use of contaminated fuels, or by the use of fuels,

oils, lubricants, cleaners or fluids other than those recommended in your Owner’s

Manual.” (CR 335) (emphasis added).

      The error is significant because it arguably obligates Chrysler to pay for

repairs to listed components for any and every reason. If the Court’s opinion is left

unaltered, the Cummins Warranty would provide coverage regardless of the

problem or its cause, so long as the vehicle is presented to a dealership after the

Basic Limited Warranty expired and the Cummins Warranty is still active. Under the

Court’s interpretation, a vehicle that was failing due to sand in the fuel tank would

not be covered at 35,990 miles because of the “defect limiting language” in the

                                        -2-
Basic Limited Warranty. Yet, if the owner could manage to put an additional 11

miles on the odometer, it would be suddenly be covered by the Cummins Warranty.

      Chrysler never intended to assume such unlimited warranty obligations. And

the Appellant has never asserted that it did so.

      B.     The Language in the Warranty Booklet Demonstrates that the
             Cummins Warranty is Not Unlimited.

      An express warranty is the product of a negotiated exchange and is therefore

contractual in nature. Med. City Dallas, Ltd. v. Carlisle Corp., 251 S.W.3d 55, 60

(Tex. 2008). Accordingly, “[w]hen we ascertain the parties’ intentions in a warranty,

we look to well-established rules for interpretation and construction of contracts.”

Id. at 61. In ascertaining the parties’ intentions, a court “must consider the entire

writing and attempt to harmonize and give effect to all the provisions of the

contract by analyzing the provisions with reference to the whole agreement.” Frost

Nat’l Bank v. L&F Distribs., 165 S.W.3d 310, 312 (Tex. 2005) (emphasis added).

Furthermore, courts must “construe contracts from a utilitarian standpoint bearing

in mind the particular business activity sought to be served and will avoid when

possible and proper a construction which is unreasonable, inequitable, and

oppressive.” Id. (internal quotations omitted).




                                        -3-
      By mistakenly reading Chrysler’s Cummins Warranty in isolation, the Court

has reached a result that is unreasonable, inequitable, and oppressive to Chrysler.

Moreover, the Court’s interpretation is not what the parties intended. In support

of its holding that the Appellant has presented some evidence that Chrysler

breached its express warranty, the Court cites to Section 2.2(B) of the Warranty

Information Booklet for Appellant’s vehicle (“Warranty Booklet”). That Section,

entitled “What’s Covered,” provides:

      In vehicles equipped with a Cummins Diesel Engine, ONLY the
      following engine parts and components are covered by the Cummins
      Diesel Engine Limited Warranty:
                 cylinder block and all internal parts
                 cylinder head assemblies
                 core plugs
                 EGR system (includes any valves and coolers) – 6.7L
                 fuel injection pump & injectors
                 gaskets and seals for listed components
                 intake and exhaust manifold
                 oil pan
                 oil pump
                 timing gear drive belts and/or chains and cover
                 turbocharger housing and internal parts
                 valve covers
                 water pump and housing

(CR 331). The Court concludes that because the parts alleged to have failed on

Appellant’s vehicle were included in this Section, there is sufficient evidence that

Chrysler breached its express warranty. Tatsch, 2014 Tex. App. LEXIS 12910, at *6.


                                        -4-
There are a few problems with this conclusion. First and foremost, the Court fails

to recognize that the Cummins Warranty is an extension of the Basic Limited

Warranty.

       This is shown by looking no further than the very first page of the Warranty

Booklet, which lists the vehicle’s “Warranty Coverage at a Glance.” (CR 327). On

this list, the Basic Limited Warranty is listed by itself at the very top, with the

vehicle’s Cummins Warranty listed below it and labeled as “Special Extended

Warranty Coverage.” (CR 327) (emphasis added). In other words, the Cummins

Warranty is an extension of the Basic Limited Warranty, and therefore founded

upon the same terms. This is further supported by the fact that the Cummins

Warranty does not begin until the exact moment the Basic Limited Warranty

expires.2 As such, the Cummins Warranty is not one that applies simultaneously

with or independent from the Basic Limited Warranty, but is instead a less inclusive

version of the Basic Limited Warranty. Stated another way, all of the Basic Limited




2       The Basic Limited Warranty ends at the earlier of three years from when the vehicle was
purchased or when the vehicle has been driven 36,000 odometer miles. (CR 329). Once the
Basic Limited Warranty has expired, the Cummins Warranty begins and remains in effect until
either the vehicle has been driven for a total of five years or 100,000 odometer miles,
whichever occurs first. (CR 331-32).


                                             -5-
Warranty’s terms also apply to the Cummins Warranty, with one key exception: the

parts that are covered.

      Further consistent with this interpretation is the fact that the Cummins

Warranty makes no mention of what Chrysler’s obligations are with respect to

these covered parts. Because breach of warranty claims are contractual in nature,

the only obligations the Court can impose on Chrysler are those that it agreed to,

as evidenced by language in the Warranty Booklet. See Med. City Dallas, 251

S.W.3d at 60 (“An express warranty is the result of a negotiated exchange, and is a

creature of contract.”) (internal quotations and citations omitted). Yet, without

pointing to any language in the Warranty Booklet specifying exactly what Chrysler’s

obligations were, the Court nonetheless found that Chrysler breached its expressed

warranty obligations.

      Similarly, if we were to rely exclusively on Section 2.2(B), there would be no

requirement that the covered parts even stop functioning. That is, under the

Court’s reasoning, Appellant could simply bring his vehicle to a dealership during

the Cummins Warranty period and have any or all of the covered parts replaced at

no charge—regardless of whether they were functioning properly or not—because

that Section does not stipulate what condition the parts would need to be in for

Chrysler’s “obligations” to trigger.

                                        -6-
      The absence of any specific terms or obligations in the Cummins Warranty,

other than covered parts, clearly demonstrates that it is an extension of the Basic

Limited Warranty. The Basic Limited Warranty not only lists the parts it covers

(everything except tires and headphones), but it also specifies the condition they

must be in (defective in material, workmanship or factory preparation at the time

they left the manufacturing plant) before triggering Chrysler’s obligations (to repair

or adjust the defects at no cost to the customer, using new or manufactured parts).

(CR 328).

      When considering that the Cummins Warranty begins at a later date than

the Basic Limited Warranty—after the vehicle has endured significantly more usage

and exposure to misuse or other external factors—it would seem pretty illogical for

an experienced automobile manufacturer like Chrysler to agree to expand its

warranty obligations to an unconditional level, but that is exactly what the Court’s

opinion suggests. Under the Court’s holding, the same exact parts covered under

the Basic Limited Warranty with specific conditions for their coverage would

suddenly become covered unconditionally, creating a huge windfall for customers,

like the Appellant, whose parts fail at just the right time. Such an unreasonable

interpretation is not what the parties intended. Instead, the only reasonable way

                                         -7-
to interpret these two warranties in conjunction is that Chrysler did not agree to

such an irrational expansion of its obligations when the Basic Limited Warranty

expired, but rather agreed to the same terms of the Basic Limited Warranty, except

that the only parts subject to those terms were the ones specifically listed in the

Cummins Warranty.

      In addition to its failure to recognize that the Cummins Warranty is an

extension of the Basic Limited Warranty, the Court also disregarded Section 3 of

the Warranty Booklet, entitled “What’s Not Covered.” Specifically, Section 3.3

reads, “Your warranties don’t cover the costs of repairing damage caused by poor

or improper maintenance. Nor do they cover damage caused by the use of

contaminated fuels, or by the use of fuels, oils, lubricants, cleaners or fluids other

than those recommended in your Owner’s Manual.” (CR 335). Based on this Section

alone, the Court should grant rehearing to vacate its opinion, because Appellant

cannot meet the burden on his breach of express warranty claim without offering

proof that his vehicle’s failure was due to something other than the causes listed in

Section 3.3. Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133-34 (Tex. 1994)

(holding that when one provision of a contract defines an obligation generally and

another provision sets limits on that obligation, the more specific provision

controls). The Court’s disregard of Section 3 is very significant, because the precise

                                         -8-
reason why Appellant’s vehicle was denied warranty coverage is because his

vehicle’s failure was due to these non-covered causes.

      Thus, when reading the Warranty Booklet in its entirety, Appellant was not

just required to prove that a covered part failed, as the Court opined, but instead

had to put forth evidence that the part had a defect that existed when his vehicle

left the manufacturing plant. As Section 3.3 of the Warranty Booklet explains, such

a defect does not exist when the part’s failure was caused by contaminated fuel or

improper maintenance. For these reasons and the reasons more fully discussed in

Chrysler’s briefing, Appellant has failed in his attempt to offer proof of a defect. As

such, Chrysler was under no obligation to repair Appellant’s vehicle and his breach

of express warranty claim fails as a matter of law.

                                      PRAYER

      WHEREFORE, PREMISES CONSIDERED, Appellee Chrysler Group LLC asks the

Court to grant this Motion for Rehearing, withdraw its memorandum opinion and

judgment, and affirm the trial court’s decision granting Chrysler’s no-evidence

motion for summary judgment on Appellant’s breach of express warranty claim.

                                                      Respectfully submitted,

                                                      BEATTY BANGLE STRAMA, P.C.
                                                      400 W. 15th Street, Suite 1450
                                                      Austin, Texas 78701

                                         -9-
                                                  (512) 879-5050
                                                  (512) 879-5040 (Fax)


                                           By:    /s/ Matthew R. Beatty
                                                  Matthew R. Beatty
                                                  State Bar No. 24001169
                                                  mbeatty@bbsfirm.com
                                                  David A. Polsinelli
                                                  State Bar No. 24088238
                                                  dpolsinelli@bbsfirm.com


                         CERTIFICATE OF COMPLIANCE

      Pursuant to Texas Rule of Appellate Procedure 9.4(i)(2)(D), I hereby certify
that foregoing document contains 2,013 words, which was calculated using the
word counting of the computer program used to prepare the document.



                                                  /s/ Matthew R. Beatty     ____
                                                  Matthew R. Beatty




                                      - 10 -
                             CERTIFICATE OF SERVICE

      I hereby certify that a true and correct copy of the foregoing has been served
via the Court’s electronic filing system to all counsel listed below on January 30,
2015:

Craig M. Patrick
Patrick Law Firm, P.C.
3333 Lee Parkway, Suite #600
Dallas, TX 75219
(214) 665-9510
(214) 665-9511 (FAX)

Sharla J. Frost / Shawn D. Golden / Michelle Scheiffele
Wilson Elser Moskowitz Edelman & Dicker, LLP
5847 San Felipe, Suite #2300
Houston, TX 77057
(713) 353-2000
(713) 785-7780 (FAX)


                                                   /s/ Matthew R. Beatty     ____
                                                   Matthew R. Beatty




                                       - 11 -
