Two recent Tennessee appellate decisions address the issue of whether revocation of acceptance is an available remedy when a product buyer brings a Magnuson-Moss Warranty Act (MMWA) claim against a product manufacturer or distributor. The remedy of revocation of acceptance, which used to be called rescission, essentially "undoes" the sale and requires the seller to refund the purchase price to the buyer in exchange for taking the product back. In Watts v. Mercedes-Benz USA, LLC, (now reported at 254 S.W.3d 422) the Tennessee Court of Appeals, Eastern Section, held that revocation of acceptance was not available under the MMWA, in a suit brought by a retail purchaser against the subject vehicle's distributor. The court focused on the absence of privity of contract between the parties. Although the MMWA is a Federal statute, courts look to state law to determine the available remedies. The Watts court looked to Tennessee's Uniform Commercial Code, which requires a "buyer-seller" relationship for the buyer to revoke acceptance. A similar result was reached by the Western Section in Davis v. Ford Motor Company, a case in which the purchaser of a used truck unsuccessfully tried to revoke acceptance against the vehicle's manufacturer. These decisions are consistent with a number of out of state decisions and an unpublished U.S. District Court decision authored by Judge Phillips of the Eastern District of Tennessee. In the Watts case, the plaintiff's application for permission to appeal was recently denied so it appears unlikely that the Tennessee Supreme Court will be inclined to accept Davis on an application for appeal.
The Magnuson-Moss Warranty Act does provide for buy-back if the product comes with a "full warranty." The term "full warranty" is defined by the MMWA. However, vehicles (and most other products) typically come with a "limited warranty" and thus, state law would define the available remedies, as was the case in Watts.
