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American West Enterprises, Inc. v. CNH, LLC

Supreme Court of Idaho, Twin Falls

December 20, 2013

AMERICAN WEST ENTERPRISES, INC., an Idaho corporation, Plaintiff-Appellant-Cross Respondent,
v.
CNH, LLC, Defendant-Respondent-Cross Appellant.

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Robinson, Anthon & Tribe, Rupert, attorneys for Appellant. Brent Taylor Robinson argued.

Jones, Gledhill, Fuhrman & Gourley, Boise, attorneys for Respondent. Christopher Graham argued.

SCHROEDER, J. pro tem.

I.

Nature of Case

This is an appeal from the district court's grant of summary judgment to Case New Holland, Inc. (" CNH" ) in a suit brought by American West Enterprises (" American West" ) in an effort to recover the cost of a remanufactured tractor engine sold by CNH to a local seller, Pioneer Equipment Company (" Pioneer" ), and purchased by American West. The district court dismissed American West's claim of implied warranty because there was no privity between American West and CNH. The district court also rejected American West's claims that it was an intended third party beneficiary of a contract between CNH and Pioneer and that Pioneer was an agent of CNH. American West appeals. The district court denied CNH's request for attorney fees and costs below. CNH cross-appeals.

II.

Factual and Procedural Background

In August 2007, American West entered into an agreement with Pioneer to replace the engine in a Case IH 3394 tractor which American West originally purchased in 1997. Pioneer was an authorized dealer of CNH. Pioneer ordered a new engine and core from CNH and installed the engine and core on American West's Case IH 3394. In the two years following the installation of the new engine, the tractor was used for only fifteen hours. American West sold the Case tractor to Frank Jensen in the spring of 2009. Jensen used the tractor for four to five hours before the engine stopped working. American West refunded Jensen the purchase price of the tractor and took it to Pioneer to diagnose the problem. Pioneer requested CNH to warrant the tractor engine. CNH refused to warrant the engine because the time limit on any warranty had expired.

On March 18, 2011, American West filed a Complaint naming CNH as defendant, alleging breach of the implied warranties of merchantability and fitness for a particular purpose. American West demanded reimbursement for the cost of parts and labor. CNH answered and subsequently filed a motion for summary judgment, asserting that American West's claims were barred by a lack of privity between the parties. American West sought leave to amend its complaint to include claims as a third party beneficiary of an oral contract between CNH and Pioneer and that Pioneer was CNH's agent.

The district court granted CNH's motion for summary judgment and denied American West's motion to amend the complaint. The district court found that privity of contract was required to recover for economic loss in a breach of an implied warranty case and that there was no privity between American West and CNH. The district court also found that American West was not the intended third party beneficiary of the agreement between Pioneer and CNH and that American West failed to allege any facts indicating that Pioneer was the agent of CNH. The fact that Pioneer was an authorized dealer of CNH was not in and of itself sufficient to establish an agency relationship. The district court entered final judgment in favor of CNH and against American West.

CNH requested attorney fees and costs pursuant to I.C. § 12-120(3). The district court denied CNH's motion for attorney fees on the basis that it was unable to find a commercial transaction between CNH and American West.

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American West appealed, maintaining that the district court erred when it ruled that privity of contract was required and when it denied American West's motion to amend its complaint. CNH filed a cross-appeal, maintaining that the district court erred in ruling that CNH could not recover attorney fees pursuant to I.C. § 12-120(3).

III.

Standard of Review

An appeal from summary judgment is reviewed under the same standard a district court uses when granting a motion for summary judgment. Under Rule 56(c) of the Idaho Rules of Civil Procedure, summary judgment is proper if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. If the evidence reveals no disputed issues of material fact, then summary judgment should be granted. In making this determination, all disputed facts are liberally construed in favor of the non-moving party. Circumstantial evidence can create a genuine issue of material fact. Inferences that can reasonably be made from the record are made in favor of the non-moving party. However, the non-moving party may not rest on a mere scintilla of evidence. If the record raises neither a question of witness credibility nor ...

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