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Elia v. Hertrich Family of Auto. Dealerships, 2013 WL 6606054 (Del. Super. Ct. Dec. 13, 2013); aff’d. Del. October 23, 2014.

Delaware Superior Court determines that it lacks Subject Matter Jurisdiction where the parties entered into a valid and enforceable agreement to arbitrate; Supreme Court affirms.

In this lawsuit, it was alleged that Plaintiff visited Defendant’s business for the express purpose of purchasing a four-wheel drive vehicle. Plaintiff alleged that Defendant presented and sold the Plaintiff a vehicle that was two-wheel drive, but represented it as four-wheel drive vehicle. Plaintiff later determined that the vehicle was actually two-wheel drive. In the process of purchasing the vehicle from Defendant, Plaintiff executed a Retail Installment Sales Contract. The Retail Installment Sales Contract included a provision for all disputes to be resolved through binding arbitration.

Plaintiff filed this lawsuit in the Superior Court alleging, among other things, violations of the Magnuson Moss Warranty Act and Delaware Consumer Fraud statutes. In response, Defendant filed a motion to dismiss the Plaintiff's complaint arguing that the arbitration provision of the Retail Installment Sales Contract prevented the Superior Court from exercising subject matter jurisdiction over the lawsuit. The Defendant also argued that the Magnuson Moss Warranty Act was inapplicable as the type of vehicle (two-wheel vs. four-wheel) did not amount to a “defect” that would be covered by the vehicle’s warranty. Furthermore, Plaintiff was not alleging that the Defendant failed and/or refused to make necessary repairs pursuant to the vehicle’s warranty.

The Superior Court agreed that the Magnuson Moss Warranty Act did not apply because Plaintiff was not claiming a defect in the vehicle but rather the misidentification of the vehicle. The Superior Court stated that the misidentification was not a defect because it was still fit for its particular purpose, i.e. transportation. The Superior Court further held that where the parties had entered into a valid and enforceable agreement to arbitrate disputes, it lacked subject matter jurisdiction over Plaintiff’s complaint. Therefore, the Superior Court granted Defendant’s motion to dismiss.


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