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Manufactured homes too permanent to be consumer product,
Sixth Circuit says
A split Sixth Circuit Court of Appeals panel has determined
that a pre-made home is not a consumer product within the meaning of the
Magnuson-Moss Warranty Act (MMWA) in a case brought against a manufactured
house installer that allegedly failed to adjust the house to the plaintiffs’
satisfaction. Bennett
v. CMH Homes, Inc., No. 13-5423 (6th Cir., order entered October 30, 2014).
A dissenting judge drew upon the distinction between mobile homes and modular
homes, finding that the MMWA applies to the former but not the latter.
In 2004, the plaintiff couple purchased a “2180-square-foot,
‘triple-wide’ manufactured home” from CMH Homes, which delivered the house in
three pieces the following year and assembled it on their property. The couple
noticed that the house was not level before closing the sale, and CMH promised
to make the repair. After several inspection and repair attempts, the company
was unable to level the house to the couple’s satisfaction. They sued and
prevailed in a bench trial but appealed the nearly $40,000 damages award to the
Sixth Circuit.
At the outset, the majority assessed whether it had
subject-matter jurisdiction, because “[w]hether plaintiffs’ home is a ‘consumer
product’ appears at first to be both a jurisdictional question and a merits
question.” Applying Gentek Bldg. Prods., Inc. v. Sherwin-Williams Co., 491 F.3d
320 (6th Cir. 2007) (when a question of “subject-matter jurisdiction also
implicates an element of the cause of action, then the district court should
‘find that jurisdiction exists and deal with the objection as a direct attack
on the merits of the plaintiff’s claim’”), the court held that it had
jurisdiction.
The court then considered the MMWA’s legislative history,
citing a sponsoring senator’s statement that a “house would not fall within the
definition of consumer product since a house is not ‘tangible personal
property.’” The court also found that the couple’s manufactured house is permanent,
“would be taxed as real property and, at 2180 square feet, has the size and
appearance of a regular house.” It further consulted the dictionary used during
the general era of the law’s enactment and found “consumer” and “consumer
goods” definitions which “describe products that are expendable or meant to be
replaced periodically—not a permanent dwelling.” Dismissing the federal claim,
the court then remanded the case for the district court to determine whether it
would consider the couple’s state law claims under supplemental jurisdiction.
The dissenting jurist contended that a manufactured home
falls within the definition of consumer product under the MMWA, because a
“manufactured home” is now the accepted term for what were once called “mobile
homes” before the negative connotations associated with that term caused a name
change in federal housing laws, Tennessee law and the manufactured-home
industry’s own labels. She distinguished them from a modular home, which is
“largely manufactured somewhere away from the eventual home site and brought to
the local home site for installation,” and stick-built homes, which “are built
using traditional construction techniques, largely on the final home site” and
fall outside the MMWA’s purview.
According to the dissent, the U.S. Federal
Trade Commission (FTC), which administers the MMWA, and the Department of
Housing and Urban Development (HUD) “have concluded that manufactured (or
mobile) homes are consumer products for the purposes of the Act,” but “found no
MMWA coverage for modular homes” in a 1977 advisory opinion. She also asserted
that “the structure of the MMWA definition further supports the FTC’s and HUD’s
interpretation.” The MMWA covers fixtures like furnaces and garbage disposals,
she stated, so whether they are permanently installed “does not resolve the
question of whether that product is a ‘consumer product’ under the MMWA.”
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