Sorchaga v. Ride Auto, LLC

Ride Auto, LLC (defendant) purchased a pickup truck from a salvage yard knowing that the truck’s engine needed to be replaced. Esmeralda Sorchaga (plaintiff) test drove the truck and noticed that the truck’s check-engine light was on. A Ride Auto employee told Sorchaga that the engine had a minor problem that could easily be fixed, and that Ride Auto would make the needed repairs. The employee also told Sorchaga that the truck would be covered by a third-party warranty. Sorchaga relied on the employee’s statements and purchased the truck. The contract between Ride Auto and Sorchaga included an as-is disclaimer, disclaiming all express and implied warranties. Sorchaga experienced problems with the truck immediately. When she returned the truck to Ride Auto for the promised repairs, Ride Auto refused to service the truck. Sorchaga took the truck to a mechanic and was told that the engine needed to be replaced at a cost of $20,000 and that the third-party warranty she was told about did not exist. Sorchaga filed a lawsuit in Minnesota state court against Ride Auto, alleging that Ride Auto committed fraud and breached the implied warranty of merchantability when it sold her the truck. Ride Auto moved for summary judgment, arguing that the implied warranty of merchantability had been disclaimed by the contract. The district court denied Ride Auto’s motion and ruled in favor of Sorchaga. The district court found that Ride Auto and its employee committed fraud by lying to Sorchaga about the truck’s condition and the third-party warranty to induce her to buy the truck. The district court cited Minnesota state law, which provided that parties to a transaction could disclaim the warranty of merchantability implied in all contracts for the sale of goods through an as-is disclaimer unless the circumstances of the transaction required otherwise. The district court reasoned that if a transaction involved fraud, the circumstances indicated that the implied warranty of merchantability should not be disclaimed. The court of appeals affirmed the district court. Ride Auto appealed.