author: H. FRANKLIN WATERS, Chief Judge.

text:
    Earl HUGHES and Tracy Hughes, Plaintiffs, v. SEGAL ENTERPRISES, INC. d/b/a Segal Manufactured Home Sales, An Arkansas Corporation; Buccaneer Homes Corp. d/b/a Buccaneer Mobile Homes, An Alabama Corporation; Weyerhaeuser Company, A Washington Corporation; Georgia Pacific Corporation, A Georgia Corporation, and John Doe III, Defendants.
    Civ. No. 84-6045.
    United States District Court, W.D. Arkansas, Hot Springs Division.
    Jan. 27, 1986.

      John S. Evangelisti, of LaFond & Evan-gelista Denver, Colo., and William W. Green, Hot Springs, Ark., for plaintiffs.
    Wayne A. Gruber, Little Rock, Ark., for Segal Enterprises, Inc., d/b/a Segal Manufactured Home Sales.
    Mel Sayes, Tom Forest Lovett, P.A., Little Rock, Ark., for Buccaneer Homes Corp. d/b/a Buccaneer Mobile Homes.
    Robert K. Walsh, Friday, Eldredge & Clark, Little Rock, Ark., for Georgia Pacific Corp.
    Philip M. Clay, Wood, Smith & Schnipper, Hot Springs, Ark., for Weyerhaeuser Co.
   MEMORANDUM OPINION

H. FRANKLIN WATERS, Chief Judge.

Introduction

Plaintiffs, Earl Hughes and Tracy Hughes, citizens of the state of Arkansas, initiated this action on March 23, 1984, against defendants Segal, an Arkansas corporation, Buccaneer, an Alabama corporation, and John Does I, II and III, alleging that Earl Hughes purchased from Segal a new mobile home which was manufactured by Buccaneer. Plaintiffs alleged that John Does I, II and III supplied processed wood products to Buccaneer for use in the manufacturing of mobile homes. These processed wood products allegedly contain urea-formaldehyde resin and release formaldehyde gas. Plaintiffs contend that they were harmed by exposure to the formaldehyde fumes and that their mobile home was damaged when Buccaneer fumigated it with ammonia in an effort to remedy the defect.

Plaintiffs alleged various grounds for relief including (1) knowing failure to warn; (2) breach of warranties; (3) strict product liability; and (4) breach of warranty under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq.

Plaintiffs claimed damages for pain and suffering, medical expenses, lost wages and earning capacity, lost credit and reputation, and loss of consortium, as well as punitive damages.

After Segal and Buccaneer answered, plaintiffs filed an amended complaint adding a claim for relief under the Consumer Product Safety Act, 15 U.S.C. §§ 2072, 2073 (CPSA). Neither Segal nor Buccaneer objected to the amendment.

With regard to the fourth claim for relief, under the Magnuson-Moss Act, it is alleged that plaintiffs are consumers as defined in the Act, that defendants are manufacturers, suppliers and warrantors pursuant to the language of the Act, that the mobile home is a “consumer product” as defined in the Act, and that the express warranty involved is a “written warranty” under the Act.

In plaintiffs’ sixth claim for relief it is alleged that the defendants were required by the CPSA to report instances in which a product failed to comply with a safety rule or has a defect which would create a substantial hazard, but knowingly failed to do so with regard to the wood products containing formaldehyde. Plaintiffs also alleged that defendants failed to comply with section 2064(a) and (b) of the CPSA and that plaintiffs are entitled to recovery under section 2072 of the CPSA.

The remaining claims are the claims based upon state law or cognizable only in state court set forth above.

Segal and Buccaneer then moved to dismiss the fourth and sixth claims for relief. Buccaneer argued that the complaint does not allege a breach of any of the substantive provisions of the Magnuson-Moss Act, but merely alleges a breach of warranties which is not actionable. Buccaneer further alleged that the wood products involved are not “consumer products” under the CPSA, and that any action under the CPSA must be brought where the defendant “resides,” must be preceded by notice to the Commission and the Attorney General, and is available only for injunctive relief.

Segal argued that an action for personal injury based upon a breach of warranty is not cognizable under the Magnuson-Moss Act, and that there must be a violation of a substantive provision of the Act resulting in “economic loss” of fifty thousand dollars or more, exclusive of interest and costs, and punitive damages, in order for the Act to be implicated.

With regard to the CPSA, Segal asserted that the wood products are not “consumer products” as defined by the CPSA, and therefore the CPSA is unavailable to the plaintiffs.

In March, 1985, Buccaneer filed “cross”claims against Georgia Pacific Corporation and Weyerhaeuser Company for contribution and/or indemnity, and requested that they be substituted for John Does I and II as defendants. On April 10, 1985, Judge Harris ordered Georgia Pacific and Weyer-haeuser to be substituted as defendants in place of John Doe I and John Doe II.

Georgia Pacific and Weyerhaeuser Company both moved to dismiss the “cross”claims, Weyerhaeuser arguing that it is not a co-party and that a cross-claim is therefore inappropriate, and Georgia Pacific arguing that the court lacks subject matter jurisdiction of plaintiffs’ claim against Buccaneer and therefore the court lacks jurisdiction over the cross-claim. Weyerhaeu-ser’s motion was denied on September 5, 1985.

Plaintiffs again moved to amend their complaint on September 27, 1985, so as to add Georgia Pacific and Weyerhaeuser as party defendants in place of John Does I and II and clarifying their Magnuson-Moss Act and CPSA claims. All defendants objected to the proposed amendment. Buccaneer contends that the amendment does not cure defects pertaining to the Magnuson-Moss Act claim and that the statute of limitations precludes plaintiffs’ amended complaint.

Segal reiterated its argument that the Magnuson-Moss Act is inapplicable and that the court therefore lacks subject matter jurisdiction of plaintiffs’ claims because plaintiffs and Segal are citizens of Arkansas and therefore complete diversity under 28 U.S.C. § 1332 is lacking. On December 3, 1985, the court was notified that Segal and the plaintiffs had settled the issues as between them, and Segal has now been dismissed from this action.

Georgia Pacific contends that plaintiffs assert no federal claims against it, that pendent jurisdiction over the state claims is inappropriate, and that the claims are barred by the statute of limitations.

Weyerhaeuser joined the other defendants in opposing the amendment and moved for summary judgment on the asserted grounds that the action is barred by the statute of limitations.

All of the parties have responded, replied, and “re-responded” to the various motions until the court’s file is almost unmanageable; nonetheless, the court will attempt to wade through the ever-increasing paper in order to resolve the various claims and contentions of the parties.

Because Buccaneer, Georgia Pacific and Weyerhaeuser all contend that plaintiffs’ claims against them are barred by the statute of limitations, the court will first discuss that issue.

Statute of Limitations

It is not disputed that plaintiffs have contended that Buccaneer fumigated the mobile home with ammonia on April 24, 1982, and that the fumigation caused damage to the home. Assuming that the statute of limitations began running on that date and that a three-year limitations period applies, as Buccaneer, Georgia Pacific and Weyerhaeuser contend, the statute of limitations would have expired on April 24, 1985. Because the cross-claims for contribution and indemnity arising from the same facts as alleged in the complaint were served upon Weyerhaeuser and Georgia Pacific in March, 1985, and because Weyer-haeuser and Georgia Pacific were made party defendants and substituted for John Does I and II by order dated April 10,1985, the court believes that the statute of limitations is no barrier.

An amendment changing a party relates back when the claim asserted in the amended pleading arises out of the conduct, transaction, or occurrence set forth in the original pleading, and within the limitations period the opposing party has received such notice of the action that he will not be prejudiced and knew or should have known that but for a mistake concerning the identity, the action would have been brought against him. Rule 15(c), Fed.R. Civ.P. A primary factor is whether the defendants received adequate notice of the claims against it. Crowder v. Gordons Transports, Inc., 387 F.2d 413 (8th Cir.1967); see also Campbell v. Bergeron, 486 F.Supp. 1246 (M.D.La.1980).

Weyerhauser and Georgia Pacific were not merely served with process within the limitations period, they were substituted as party defendants by Judge Harris’ April 10, 1985, order. Thus, the court believes that the urged amendment of the complaint would relate back to a point in time prior to the expiration of the limitations period.

The Magnuson-Moss Warranty Act Claims

The second amended complaint, insofar as it purports to allege a cause of action under the Magnuson-Moss Act, states that the defendants are “suppliers” and “war-rantors” as defined by the Act, that the mobile home is a “consumer product” under the Act, and that the written warranty is a “written warranty” as covered by the Act. See sections 2301(1), (4), (5), (6). It is contended that defendants breached express and implied warranties of merchantability and habitability, actionable under section 2310(d)(1), and that the written warranty provided by Buccaneer violated section 2303(a) by not being clearly labeled a “limited” warranty and was defective under section 2304(a)(2) because it limits the duration of implied warranties. Plaintiffs allege that all defendants failed to repair, replace or refund as required by section 2304(a)(4). By making the limitations of duration and liability unclear and inconspicuous, it is argued that defendants violated sections 2302, 2304(a)(2) and 2308.

First, it is well settled that the Act does not require that a seller give a warranty on a consumer product, but if a warranty is given, it must comply with the Act. Boelens v. Redman Homes, Inc., 748 F.2d 1058 (5th Cir.1984). The court assumes for purposes of this discussion that a mobile home is a “consumer product” under the Act. Federal Trade Comm’n Advisory Opin. 42 Fed.Reg. 37440, 37441 (1977); F.T.C. Adv.Opin., 40 Fed.Reg. 25721, 25722 (1975).

The provisions of the Act that create a private cause of action allow a consumer to sue a warrantor for (1) a violation of the substantive provisions of the Act, or (2) breach of a written or implied warranty. The Act provides, inter alia:

(d)(1) Subject to subsection (a)(3) and (e) of this section, a consumer who is damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under this chapter, or under a written warranty, implied warranty, or service contract, may bring suit for damages and other legal and equitable relief—

(A) in any court of competent jurisdiction in any State or the District of Columbia; or
(B) in an appropriate district court of the United States, subject to paragraph (3) of this subsection.

(3) No claim shall be cognizable in a suit brought under paragraph (1)(B) of this subsection—

(A) if the amount in controversy of any individual claim is less than the sum or value of $25;
(B) if the amount in controversy is less than the sum or value of $50,000 (exclusive of interests and costs) computed on the basis of all claims to be determined in this suit; or
(C) if the action is brought as a class action, and the number of named plaintiffs is less than one hundred.
(e) No action (other than a class action or an action respecting a warranty to which subsection (a)(3) of this section applies) may be brought under subsection (d) of this section for failure to comply with any obligation under any written or implied warranty or service contract ... unless the person obligated under the warranty or service contract is afforded a reasonable opportunity to cure such failure to comply....

Section 2310.

Section 2311(b)(2) explicitly precludes the recovery of personal injury damages arising out of a breach of an implied warranty. To date, all of the reported decisions that have faced the issue have held that the Act does not create a federal cause of action for state law personal injury claims for breach of warranty. See Boelens v. Redman Homes, Inc., supra; Bush v. American Motors Sales Corp., 575 F.Supp. 1581 (D.Colo.1984); Gorman v. Saf-T-Mate, Inc., 513 F.Supp. 1028 (N.D.Ind.1981).

Personal injury claims, to be actionable under the Act, must involve a violation of a substantive provision of the Act. Section 2311(b)(2) provides: “Nothing in this chapter (other than sections 2308 and 2304(a)(2) and (4) of this title) shall (A) affect the liability of, or impose liability on, any person for personal injury....” It is generally agreed that the reference to section 2304(a)(4) was a draftsmanship error and that section 2304(a)(3) was intended. Boelens, supra; Saf-T-Mate, supra. Thus, where personal injury is involved, a plaintiff must allege a violation of sections 2304(a)(2), (3), or 2308. Section 2304(a)(2) prohibits full warrantors from limiting the duration of implied warranty coverage; section 2304(a)(3) requires that limitations on liability for consequential damages be conspicuously displayed on the warranty; section 2308 forbids disclaimers of implied warranties. If sections 2308 or 2304(a)(2) or (3) are involved, an action for personal injury may be maintained, because section 2311(b)(2) removes such a suit from the reach of that section. As the court in Boelens noted, such a suit, however, is an action under section 2310(d)(1) for failure “to comply with any obligation under this chapter,” because sections 2308 and 2304 create substantive obligations. It would not be a suit “under a written warranty (or) implied warranty” within the meaning of section 2310(d)(1).

The case is different with respect to economic loss. Many eases make clear that damages for economic loss are recoverable under the Act. In re General Motors Corp. Engine Interchange Litigation, 594 F.2d 1106 (7th Cir.1979); Boelens, supra.

In determining whether the amount in controversy requirement is met it is helpful to segregate damages into different categories for jurisdictional purposes. Section 2310(d)(3)(B) provides that no claim is cognizable under the Act unless the amount in controversy is at least $50,-000. In satisfying this requirement, economic losses may be considered, as well as personal injury damages arising from a breach of sections 2304(a)(2), (3) or 2308. Punitive damages are recoverable under the Act for breach of warranty only if such may be recovered in a breach of warranty action under state law. Boelens, supra; Saval v. B L Ltd., 710 F.2d 1027 (4th Cir.1983).

Plaintiffs seek nearly one million dollars in damages for mental pain, physical pain, future medical expenses, lost wages and earning capacity, lost credit and reputation, and loss of consortium, as well as punitive damages and attorney’s fees. Although not mentioned in the amended complaint, plaintiffs purport to be seeking $15,000 in economic loss for the loss in value of the mobile home and replacement housing. Plaintiffs state that they seek $45,000 in punitive damages based upon the economic loss. (See Plaintiffs’ Response to Motion to Dismiss Fourth and Sixth Claims for Relief, p. 2). Thus, before the economic loss can satisfy the jurisdictional prerequisite, the punitive damages must be included.

It is a well-settled and long-standing rule in Arkansas that punitive damages are ordinarily not recoverable in a breach of contract action. Snow v. Grace, 25 Ark. 570 (1869); McClellan v. Brown, 276 Ark. 28, 632 S.W.2d 406 (1982). There is an exception where the evidence demonstrates that there is willful or malicious conduct in relation to the contract. Delta Rice Mill, Inc. v. General Foods Corp., 583 F.Supp. 564 (E.D.Ark.1984). In Delta Rice the court held that deliberate ordering of unneeded rice, holding the rice for weeks before rejecting it and using but not paying for the rice while knowing of the plaintiff’s financial difficulties did not rise to the level of willfulness, wantonness, malice or conscious indifference, and therefore a punitive damage award was set aside. It is also held that allegations of fraud, without more, do not justify the imposition of punitive damages. Curtis v. Partain, Judge, 272 Ark. 400, 614 S.W.2d 671 (1981).

In the amended complaint it is alleged that the defendants knew or should have known that the mobile home and wood products were dangerous and unsafe for human habitation, yet that they were warranted to be safe by Buccaneer, who failed to warn the plaintiffs of the hazardous nature of the mobile home as constructed. Although the court seriously doubts that plaintiffs can prove a case for punitive damages, the allegations that Buccaneer knowingly supplied a dangerous product but falsely warranted it to be safe, failed to warn the plaintiffs, and refused to remedy the defects, appear to constitute a claim based upon willful conduct and conscious indifference to the rights and safety of the plaintiffs. Thus, the court believes that plaintiffs have alleged sufficient conduct to warrant the imposition of punitive damages arising from the alleged breach of warranty. However, because the court has diversity jurisdiction over all remaining defendants, this is of minimal importance.

With regard to the claims against Buccaneer, the foregoing discussion pertaining to economic loss also applies. Further, plaintiffs have alleged personal injuries arising from violations of the substantive provisions of the Act, §§ 2304(a)(2), (3) or 2308. Plaintiffs allege that the warranty extended was a “full” warranty and was defective under section 2304(a)(2) because it limits the duration of an implied warranty, was defective under section 2308 because the limitation imposed was unclear, and was defective under section 2304(a)(3) by inconspicuously limiting consequential damages. Buccaneer responds that its only error was the failure to designate the warranty as a “limited” warranty and that, if the warranty is a “limited” warranty, none of the alleged defects are violations of sections 2304(a)(2), (3) or 2308. The failure to designate the warranty as a “limited” warranty is a violation of section 2303(a). However, a violation of section 2303 is not a substantive violation of the Act and will not support a claim for personal injury damages.

In the court’s view, Buccaneer is subject to plaintiffs’ Magnuson-Moss Act claim for two reasons: (1) A violation of section 2303(a) will support a claim for economic loss which plaintiff has alleged, supra, and (2) the failure to designate the warranty as a “limited” warranty may render it a “full” warranty. Section 2303(a) and 16 C.F.R. § 700.6(a) both require that “full warranty” and “limited warranty” be the exclusive designations permitted.

A “full warranty” requires the warrantor to remedy defects in a product within a reasonable time without charge, prevents a warrantor from limiting the duration of implied warranties, and requires the war-rantor to conspicuously place any exclusion or limitation of consequential damages arising from a breach of any written or implied warranty on the face of the warranty. Section 2304(a)(1), (2), (3). If a warranty is a limited warranty, the warrantor is allowed to limit the duration of implied warranties to the duration of a written warranty of reasonable duration if conscionable, set forth in clear language, and prominently displayed on the face of the warranty. Section 2308.

The designation is of great importance in determining whether the warranty is limited or full, otherwise warrantors could simply provide limited warranty protection in a misdesignated warranty, and then argue that the warranty is “limited” and although section 2303 is thereby violated, section 2303 does not provide a cause of action for personal injury damages. To adopt this interpretation would encourage warrantors to mislabel their warranties. One purpose of section 2303 was that:

[0]ver time these adjectives (“full” and “limited”) will achieve a fixed meaning in this context in the minds of consumers and they will thus be able to make more intelligent decisions.

White and Summers, U.C.C. (2d ed.) § 9-13 at 371.

By mislabeling warranties, warrantors deliberately confuse the consumer and negate the basis for intelligent decisions.

The fact that the warranty at issue states that it is a limited warranty in the body of the text does not make it so for purposes of section 2303, because Section 2305 allows the selling of a consumer product which has both full and limited warranties if such warranties are clearly and conspicuously differentiated. Therefore, a consumer could reasonably believe that both full and limited warranties are extended, if the warranty is neither labeled “full” nor “limited,” and the word “limited” appears only in the body of the text.

Further, because warranties must be designated as either “full” or “limited,” a designation which contains neither must be interpreted in a manner most favorable to the consumer. The rule of contra proferentum requires that when a required term of a contract is omitted, that term most favorable to the innocent party be supplied by the court, unless the omission renders the contract void. Any reasonable doubt as to the meaning of any provision must be construed in favor of the plaintiff. Schulte v. Benton Savings and Loan Ass’n, 279 Ark. 275, 651 S.W.2d 71 (1983). Unless the warranty was clearly understood by the plaintiffs to be a limited warranty, that interpretation of the document most favorable to the plaintiffs must apply. Confusion in the mind of the consumer caused by a warrantor’s knowing violation of section 2303 cannot operate to the benefit of the warrantor to the detriment of the consumer who played no part in the drafting of the document. Any other interpretation would effectively “gut” the purpose of section 2303. Thus, Buccaneer’s mislabeling of the warranty is not a mere violation of section 2303, it is also a potential violation of sections 2304(a)(2), (3) and 2308.

The court concludes that plaintiffs have stated a valid claim against defendant Buccaneer under the Magnuson-Moss Act.

The Consumer Product Safety Act Claims

With regard to plaintiffs’ claims under the CPSA, 15 U.S.C. § 2052 et seq., it is alleged that the defendants were required to report any instances in which a product fails to comply with a safety rule or has a defect which would create a substantial hazard to the Commission. It is alleged that the formaldehyde products involved in this action had a defect which created a substantial hazard and. that defendants failed to report that fact. Plaintiff alleges entitlement to relief under sections 2072, 2064(a) and (b).

Defendant Buccaneer argues that a mobile home is not a “consumer product” as defined in section 2052(a)(1)(B), and therefore the CPS A is inapplicable. Buccaneer additionally asserts that actions against it under section 2072 must be brought in the district where it “resides,” and because it is an Alabama corporation, the action must be brought in Alabama.

The articles at issue are particle boards and shelving materials installed by Buccaneer in the mobile home. In Consumer Product Safety Commission v. Anaconda Co., 593 F.2d 1314 (D.C.Cir.1979), the court stated that the test is whether the article is a distinct article of commerce customarily bought separately by the consumer, even if it is also bought by industry. CPSC Advisory Opinion No. 30 (Aug. 31, 1973) states that although the design and construction of mobile homes are outside of the scope of the Act, all appliances or appurtenances of household environments are covered by the Act. It is the structure of mobile homes that is excluded; however, components, equipment and appliances sold with or used in or around a mobile home are covered. CPSC Advisory Opinion No. 112 (May 17, 1974). Thus, the court concludes that the products at issue are covered by the Act.

Suits for damages are authorized by sections 2072 and 2073. Section 2072 provides a private cause of action to “any person who shall sustain injury by reason of any knowing (including willful) violation of a consumer product safety rule, or any other rule or order issued by the Commis-sion_” Section 2073 allows “any interested person ...” to “bring an action ... to enforce a consumer product safety rule or an order under (§ 2064), and to obtain appropriate injunctive relief....” Actions under section 2073 must be preceded by 30 days’ notice to the party, the Attorney General and the Commission.

Plaintiffs allege a violation of section 2064 which requires manufacturers, distributors and retailers of consumer products who obtain information which reasonably supports the conclusion that such product fails to comply with an applicable consumer product safety rule or contains a defect which could create a substantial product hazard to inform the Commission of the failure to comply or of the defect.

The problem is that section 2072 does not authorize suits based upon allegations that a product contains a substantial product hazard. It allows suits based upon knowing violations of safety rules or any rule or order of the Commission.

This requirement is met, however, it was not brought to the attention of the court. The rule is 16 C.F.R. § 1115 which, although not a “consumer product safety rule,” is a “rule” as used in section 2072. This conclusion was adopted in Butcher v. Robertshaw Controls Co., 550 F.Supp. 692 (D.Md.1981). Thus, section 2072 is available to the plaintiffs as a basis for suit. Plaintiffs have not pled that the notice required by section 2073 was given. Just as notice of a breach of warranty is an essential allegation under state law, L.A. Green Seed Co. of Arkansas v. Williams, 246 Ark. 463, 438 S.W.2d 717 (1969), the court believes that the notice required by section 2073 is an essential element of a claim arising under that section and must be pled and proved. Because this defect is not “cured” by the amended complaint, the claims arising under section 2073 will be dismissed.

Buccaneer’s contention that it is subject to suit under section 2072 only in Alabama is unavailing. Section 2072 states that suit may be brought “in the district in which the defendant resides or is found or has an agent....” The court believes that Buccaneer is “found” in any state in which it would be subject to the personal jurisdiction of the courts of that state. Buccaneer has waived any defense of lack of personal jurisdiction by not raising the same, Rule 12(g), and the court believes that Buccaneer can be “found” in Arkansas. Therefore, the court concludes that plaintiffs have stated a claim against Buccaneer under the CPSA.

Plaintiffs, via the proposed second amended complaint, seek to assert claims against Weyerhaeuser and Georgia Pacific arising under the CPSA. Because, as indicated above, the statute of limitations is no bar to such action, the amendment should be allowed if it states a cognizable claim against these defendants and if they will not be prejudiced thereby.

Georgia Pacific and Weyerhaeuser will not be prejudiced because they were brought into the action by cross-claim long ago and their defenses to the cross-claims will be substantially similar to the defenses necessarily involved in plaintiffs’ claims.

Further, because Georgia Pacific and Weyerhaeuser are manufacturers, distributors, or retailers of the processed wood products, who allegedly knew of the asserted substantial products hazard, both are subject to suit under section 2072 of the CPSA, no objection to personal jurisdiction having been made.

The court concludes that the second amendment to the complaint, asserting CPSA claims under section 2072 against Georgia Pacific and Weyerhaeuser should be allowed. However, because it is not alleged that either Georgia Pacific or Weyerhaeuser “actually made” a written warranty, within the meaning of section 2310(f), plaintiffs will not be allowed to assert claims against Georgia Pacific and Weyerhaeuser arising under the Magnuson-Moss Act.

The foregoing discussion indicates that plaintiffs may properly assert Magnuson-Moss Act claims against defendant Buccaneer, and may assert claims against all remaining defendants under section 2072 of the Consumer Product Safety Act. Diversity jurisdiction is present over all defendants because Segal has been dismissed from the action.

Although Georgia Pacific argues that diversity jurisdiction is unavailable because diversity is to be determined as of the time of filing the complaint, it is well-settled that the lack of diversity jurisdiction is no bar where a plaintiff has an independent basis for jurisdiction over the defendants. Wright, Miller & Cooper, Federal Practice and Procedure § 3605 at 400.

Therefore, plaintiffs may assert their state claims and claims normally cognizable only in state court against the remaining defendants. There is no jurisdictional bar to any of the claims allowed by the court.

A separate order in accordance with the foregoing will be concurrently entered.


source: Caselaw Access Project

author: WISEMAN, Chief Judge.

license: Public Domain

text:
    Frank MITCHELL v. The WHITE MOTOR CREDIT CORPORATION and Nortran, Inc., d/b/a El Dorado Trucks.
    No. 3-83-0036.
    United States District Court, M.D. Tennessee, Nashville Division.
    Jan. 27, 1986.

      Don R. Ash and Richard L. Cummings, Murfreesboro, Tenn., Burger, Fly & McFarlin, for plaintiff.
    Gary M. Brown, Trabue, Sturdivant & Dewitt, Nashville, Tenn., Gerald G. Patterson, for defendant.
    Michael R. Landers, El Dorado, Ariz., for defendants Nortran dba El Dorado Trucks.
   MEMORANDUM

WISEMAN, Chief Judge.

This case arises under 15 U.S.C. § 1989, and involves claims arising from the sale of a used truck by White Motor Credit Corporation (“White Motor”) to Frank Mitchell. Defendants White Motor Credit Corporation and Nortran, Inc., d/b/a El Dorado Trucks (“Nortran”) move for summary judgment on the plaintiff’s claims against them, asserting (1) that the odometer disclosure requirements contained in section 408 of the Motor Vehicle Information and Cost Savings Act, 15 U.S.C. § 1988, and section 3 of the Arkansas Odometer Regulation Act, Ark.Stat.Ann. § 75-2403, are applicable to the transfer of this truck and (2) that plaintiff may not recover against White Motor or Nortran under a theory of breach of warranty or fraudulent misrepresentation. For the reasons set out below, the Court grants defendants’ motion for summary judgment on the issues of federal and Arkansas odometer disclosure claims, and denies their motion on the issues of breach of warranty and fraudulent misrepresentation.

I. Factual Background

In 1982, plaintiff Mitchell received a notice from defendant White Motor which listed several used vehicles for sale, including the truck which is the subject of this litigation. This notice gave the truck’s model and serial number, and described the condition of the truck as “excellent.” The truck was being kept in El Dorado, Arkansas, on the lot of defendant Nortran, an independent dealership. After conversations with White Motor’s regional finance manager, plaintiff decided to buy the truck, and traveled to Arkansas to inspect it. At this time, the truck’s odometer showed 105,981 miles. Plaintiff alleges that, in the course of making the sale, the defendants made representations as to the truck’s mileage, condition, and appearance. Within a few months after the purchase, plaintiff allegedly experienced serious problems with the truck. While the truck was being repaired, a mechanic discovered that the odometer had been reset or replaced, and that the truck apparently had significantly more mileage than the odometer reflected. Some dispute exists as to whether White Motor or Nortran knew of any such tampering. Plaintiff asked to rescind the purchase agreement, and defendant White Motor agreed, but the parties were unable to reach an agreement as to the terms of recision. Plaintiff failed to make any payments on the truck other than the initial down payment; consequently, White Motor repossessed the truck.

II. Jurisdiction

The Court first must determine whether it may exercise jurisdiction over this action. Plaintiff claims that the action arises under this Court’s diversity jurisdiction and federal question jurisdiction. The complaint alleges that plaintiff is a resident of Tennessee, that White Motor is a Nebraska corporation having its principal place of business in a state other than Nebraska, and that Nortran is a “truck dealer in ... Arkansas.” It cannot be determined from those allegations whether there is complete diversity of citizenship between the plaintiff and each of the defendants. See, e.g., Health Group Management Co. v. Walker County Medical Center, Inc., 595 F.Supp. 381, 382 (M.D.Tenn.1984); Estep & Associates, Inc. v. Leonard Hill & Sons, 543 F.Supp. 124, 125-26 (M.D.Tenn.1982). Congress, however, has granted federal district courts jurisdiction over actions arising under Sub-chapter IV of the Motor Vehicle Information and Cost Savings Act. Accordingly, this Court exercises its federal question jurisdiction over the suit.

Defendants challenge the in personam jurisdiction of this Court only on the issue concerning the Arkansas odometer disclosure requirements; however, their jurisdictional argument is applicable to the entire case, and the Court shall consider it as such. Defendants argue that § 20-2-201(a) of the Tennessee Code Annotated, a state long-arm statute, precludes this Court from adjudicating the claim because, although both defendants are foreign corporations arguably doing business in Tennessee, the claim arises wholly outside Tennessee and has no connection with the state. See Turner v. Nationwide Auto Transporters, Inc., 507 F.Supp. 396 (E.D.Tenn.1980) (citing Gillis v. Clark Equipment Co., 579 S.W.2d 869 (Tenn.Ct.App.1978) (recognizing T.C.A. § 20-2-201 as a jurisdictional statute and applying it in determining in personam jurisdiction in a diversity action)); see also Williams v. Williams, 621 S.W.2d 567, 569 (Tenn.Ct.App.1981) (stating that T.C.A. § 20-20-201 imposes a jurisdictional limitation upon suits against foreign corporations). Based upon the reasons stated herein, the Court finds that this statute is merely a procedural limitation on acquiring jurisdiction over foreign corporations doing business in Tennessee, and not a jurisdictional limitation.

Since the Court exercises federal question jurisdiction over this case, the Court must determine what standard to apply in determining whether it also has in personam jurisdiction over the case. This standard differs somewhat from a diversity action. The jurisdictional reach of a federal district court in a diversity case is determined by the law of the state where the court is located. See, e.g., Pickens v. Hess, 573 F.2d 380, 385 (6th Cir.1978); Southern Machine Co. v. Mohasco Industries, Inc., 401 F.2d 374, 376 n. 2 (6th Cir.1968); Milan Express, Inc. v. Missie, Inc., 575 F.Supp. 931, 933 (W.D.Tenn.1983); Chattanooga Corp. v. Klingler, 528 F.Supp. 372, 375 (E.D.Tenn.1981), reversed on other grounds, 704 F.2d 903 (6th Cir.1983); Gullett v. Qantas Airways Ltd., 417 F.Supp. 490, 492 (M.D.Tenn.1975). In a federal question case, the district court’s power to exercise in personam jurisdiction is limited to that provided by the Federal Rules of Civil Procedure, and because it was necessary to utilize state long-arm provisions to obtain service of process on the two foreign corporate defendants in this case, in personam jurisdiction is also limited by two Tennessee long-arm statutes, T.C.A. §§ 20-2-201 & 202 (1980). Chattanooga Corp., 528 F.Supp. at 375; see Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 416-19 (9th Cir.1977); Navarro v. Sedco, Inc., 449 F.Supp. 1355, 1357 n. 1 (S.D.Tex.1978), overruled on other grounds, Prejean v. Sonatrack, Inc., 652 F.2d 1260, 1267 (5th Cir.1981). Thus, Tennessee long-arm statutes are applicable in this action even though a federal question is involved.

Federal courts have faced the question before of whether T.C.A. § 20-2-201 is the exclusive means of acquiring jurisdiction over foreign corporations doing business in Tennessee. Almost uniformly, they have held that T.C.A. § 20-2-201 is only a procedural alternative to Tennessee Rule of Civil Procedure 4.04(4). See, e.g., Milan Express, 575 F.Supp. at 934 n. 1; Gullett, 417 F.Supp. at 497-98; Gallaher v. Chemical Leaman Tank Lines, Inc., 367 F.Supp. 1063 (E.D.Tenn.1973); see also W.D. Lawson & Co. v. Penn Central Co., 456 F.2d 419 (6th Cir.1972) (the court held that T.C.A. § 20-220 (recodified at § 20-2-201) was merely a procedural limitation and that a foreign corporation could be sued in Tennessee for a cause of action arising elsewhere on the basis of T.C.A. § 20-218; Judge Wilson in Gallaher followed the Lawson result, stating that although T.C.A. § 20-218 was repealed shortly after the decision in Lawson, the legislative intent behind repeal was to remove laws inconsistent with the recently-enacted Tennessee Rules of Civil Procedure). But see Turner v. Nationwide Auto Transporters, Inc., 507 F.Supp. 396 (E.D.Tenn.1980); Gillis v. Clark Equipment Co., 579 S.W.2d 869 (Tenn.Ct.App.1978). These courts reason that application of T.C.A. § 20-2-201 as a jurisdictional limit on the exercise of personal jurisdiction over a foreign corporation is inconsistent with the clear intent of the legislature in enacting § 20-2-214(a)(6) to expand the personal jurisdiction of the Tennessee courts to the limits of the Due Process Clause. See generally W.G. Bush & Co. v. Sioux City & New Orleans Barge Lines, Inc., 474 F.Supp. 537, 541-43 (M.D.Tenn.1977) (description of the history and purpose of T.C.A. § 20-235(f) (now T.C.A. § 20-2-214(a)(6)). The Court is persuaded by this reasoning, and holds that T.C.A. § 20-2-201 is not the exclusive means of acquiring jurisdiction or serving process upon foreign corporations doing business in Tennessee.

It is well-established that a court in a federal question case may exercise jurisdiction in its discretion over state law claims, under the doctrine of pendent jurisdiction, where a substantial federal claim is presented, and the federal and state claims “derive from a common nucleus of operative fact.” United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218, 228 (1966). See, e.g., Melamed v. Lake County National Bank, 727 F.2d 1399, 1403-04 (6th Cir.1984). This Court has pendent jurisdiction over this case because the federal and state claims derive from a single transaction, and the grant of jurisdiction to this Court in Section 409 of the federal statute, 15 U.S.C. § 1989, indicates Congress’ finding that a substantial federal claim is involved.

In summary, the Court concludes that it has in personam jurisdiction over this action and that pendent jurisdiction exists over the breach of warranty and fraudulent misrepresentation claims governed by Tennessee law and the Arkansas odometer disclosure claim.

III. Federal and State Odometer Disclosure Claims A. Federal Odometer Claims

In 1972, Congress passed the Motor Vehicle Information and Cost Savings Act. Included in the Act was Subchapter IV, which was intended to prohibit tampering with odometers on motor vehicles and protect purchasers who rely on the odometer reading as an index of the value and condition of a motor vehicle. In furtherance of the consumer protection objective, Congress required the Secretary of the United States Department of Transportation to promulgate rules requiring the transferor of a motor vehicle to disclose to the transferee either the cumulative mileage registered on the odometer or the fact that the mileage shown on the odometer is known to be incorrect. Shortly after this dictate, the National Highway Traffic Safety Administration (“NHTSA”) of the Department of Transportation issued these rules pursuant to the guidelines established by section 408 of the Act, 15 U.S.C. § 1988. Plaintiff claims that the defendants violated the federal odometer disclosure statute by failing to disclose the actual mileage of the truck. The defendants argue that the Act’s disclosure requirements are not applicable to them in this case, citing a regulation exempting certain classes of transferors from the disclosure requirements of section 408 of the Act, 15 U.S.C. § 1988. For the reasons stated herein, the Court upholds the regulatory-exemption at issue in this case, and grants defendants’ motion for summary judgment on this issue.

The Court begins its analysis, as in every case involving construction of a federal statute, with the language of the statute itself. Greyhound Corp. v. Mt. Hood Stages, Inc., 437 U.S. 322, 330, 98 S.Ct. 2370, 2375, 57 L.Ed.2d 239, 247 (1978). Section 408 of the Act, 15 U.S.C. § 1988, requires the Secretary of Transportation to “prescribe rules requiring any transferor to give the following written disclosure to the transferee in connection with the transfer of a motor vehicle ...” Pursuant to this directive, the NHTSA promulgated rules for the disclosure of odometer information and specified the form to be filled out by transferors of motor vehicles. In addition, the NHTSA exempted transferors in four instances from the disclosure requirements.

The crucial question presented in this case is whether the Act itself permits the NHTSA to exempt any such transferors from the disclosure requirements. The regulation being attacked here, found at 49 C.F.R. § 580.5(a)(1) (1984), exempts the transferors of motor vehicles having a gross vehicle weight rating (“GVWR”) of more than 16,000 pounds from the odometer disclosure requirements set forth in 49 C.F.R. § 580.4 (1984). The vehicle here is one whose GVWR, as defined in 49 C.F.R. § 571.3 (1984), is 45,000 pounds. Clearly, the defendants are members of the class of transferors contemplated by the regulatory exemption. Although the plaintiff has failed to challenge the validity of 49 C.F.R. § 580.5(a)(1) or the authority of the NHTSA to promulgate regulations exempting any transferor from the operation of section 408 of the Act, 15 U.S.C. § 1988, the Court is obliged to consider these issues in determining the outcome of the motion for summary judgment. Therefore, if the Court finds that the exemption in 49 C.F.R. § 580.5(a)(1) is valid, the defendants must be granted summary judgment on the issue of the federal odometer disclosure requirements.

In reviewing an administrative regulation, the Court has a clear duty to grant “more than mere deference or weight” to the interpretation of a statute by the agency charged with its enforcement. Batterton v. Francis, 432 U.S. 416, 426, 97 S.Ct. 2399, 2406, 53 L.Ed.2d 448, 457 (1977). See also Walker v. Adams, 578 F.Supp. 50, 52 (W.D.Ky.1983), aff'd, 741 F.2d 116 (6th Cir.1984). The Court is extremely hesitant to substitute its judgment for that of an administrative agency on a question of statutory interpretation, especially when this question is within the particular agency’s area of specialization. The Court will declare a regulation invalid only if it finds that the Secretary of the appropriate agency “exceeded his [or her] statutory authority or if [the regulation] is “arbitrary, capricious, or otherwise not in accordance with the law.” Batterton, 432 U.S. at 426, 97 S.Ct. at 2406, 53 L.Ed.2d at 457 (quoting 5 U.S.C. § 706(2)(A) (1977)); 5 U.S.C. § 706(2)(c) (1977)). On the other hand, the Court will not abdicate to federal agencies the interpretation of regulations which are promulgated pursuant to an empowering statute. Federal courts, after all, bear the ultimate responsibility for interpreting federal statutes. Any regulation promulgated pursuant to rulemaking authority conferred by statute assumes the force of law only to the extent it is consistent with the statutory scheme it was designed to implement. Insurance Co. of North America v. Gee, 702 F.2d 411, 414 (2d Cir.1983). Accordingly, the Court is obliged to declare invalid any regulation that is inconsistent with the will of Congress as expressed by the governing statute. United States v. Larionoff, 431 U.S. 864, 873, 97 S.Ct. 2150, 2156, 53 L.Ed.2d 48, 56 (1977).

The purpose of the Act’s odometer disclosure requirements expressed by Congress in the legislative history serves as a guide to the Secretary in promulgating regulations which are consistent with the will of Congress. In the preamble to these regulations, the NHTSA explained its reasons for exempting certain classes of transfer-ors from the disclosure requirements. In explaining the exemption for heavier vehicles, the NHTSA stated:

A new section, [49 C.F.R. § ] 580.5, has been added in response to a number of comments that objected to the application of the requirements to categories of vehicles for which the odometer is not used as a guide to value. Buses and large trucks, for example, are routinely driven hundreds of thousands of miles, and their maintenance records, have traditionally been relied on by Buyers as the principal guide to their condition. The NHTSA is in agreement with the position taken by Freightliner [Corp.], White [Motor Corp.], and the National Association of Motor Bus Operators, and has therefore created an exemption for larger vehicles. The exemption applies to vehicles having gross weight ratings of more than 16,000 pounds.

38 Fed.Reg. 2978 (1973). This exemption is consistent with the language of the empowering statute, which directs the Secretary to issue rules applying to transferors. This exemption also is consistent with the statutory scheme contemplated by Congress when it adopted the Act. Congress enacted odometer requirements to “establish a national policy against odometer tampering and prevent consumers from being victimized by such abuses,” finding that “purchasers, when buying motor vehicles, rely heavily on the odometer reading as an index of the condition and value” of the vehicle.

The Court has examined the provisions of the Act, its legislative and regulatory history, and case law development. The Court is satisfied that the regulatory exemption comports with the purpose of the odometer disclosure requirements which is to protect consumers who rely upon odometer readings as a guide to value. The NHTSA has determined that purchasers of heavier vehicles do not rely on odometer readings for these calculations. Because the inclusion of transferors of large commercial vehicles would not further the purpose of the Act as contemplated by Congress, this Court upholds the regulatory exemption, finding it to be neither arbitrary nor capricious. The Court defers to the agency’s judgment and upholds the regulatory exemption. Accordingly, summary judgment on the issue of federal odometer disclosure is granted.

B. Arkansas Odometer Claim

Plaintiffs second claim is based on the odometer disclosure requirements of the Arkansas Odometer Regulation Act, Ark.Stat.Ann. § 75-2403 (1975), which are almost identical to the requirements contained in section 408 of the federal statute, 15 U.S.C. § 1988. The Arkansas statute states that “[t]he registrar of motor vehicles shall adopt, pursuant to the administrative procedure act, rules not inconsistent with this act or Title IV of the Federal Motor Vehicle Information and Cost Savings Act or any rules promulgated thereunder prescribing the manner in which such written disclosure shall be made.” These regulations have in fact been promulgated, although the parties failed to discover them. The state regulations are strikingly similar to the federal odometer regulations, and exempt motor vehicles having a “gross unladen weight” of more than 16,-000 pounds from the state statute’s odometer disclosure requirements. Therefore, applying the Court’s analysis of the federal odometer disclosure statute and regulations promulgated thereto, the Court finds that this vehicle is exempt from the disclosure requirements of the Arkansas statute.

IV. State Claims

A. Breach of Warranty

Defendants assume a series of defensive positions with respect to plaintiff's breach of warranties claims. Defendants first argue that the statements which were made concerning the truck, including the description of the truck’s condition as “excellent” in the sales notice, did not rise to the level of express warranties. Defendants claim that the statements related only to the “good condition” of the truck, and were not relied upon by the plaintiff. Plaintiff argues that the statements were not limited to the “good condition” of the truck, but rather that White Motor and Nortran created express warranties by making representations as to the truck’s mileage, condition and appearance. Plaintiff contends that the representations became a part of the basis of the bargain. See T.C.A. § 47-2-313(l)(a) (1979). The deposition testimony cited by the parties indicates that material issues of fact exist as to whether representations were made concerning the truck’s mileage, condition and appearance, and whether the plaintiff relied on the defendants’ statements in making the purchase. Accordingly, the Court denies the motion for summary judgment on the question of whether express warranties were created.

Defendants next argue that, assuming these statements were express warranties, none were breached since the statements were accurate. Defendants claim no warranties were breached because the plaintiff admitted the vehicle was a “sharp truck” (and therefore, according to defendants, admitted the truck was in “good condition”), and because the mileage information conveyed to plaintiff by White Motor’s regional finance manager “accurately reflected the number of miles displayed on the [truck’s] odometer.” Defendants mischaracterize the focus of the express warranty which the plaintiff claims were created. Plaintiff contends that the defendants created an express warranty as to the truck's actual mileage, not the mileage reflected on the odometer. This contention may be proven at trial. Accordingly, defendants’ motion for summary judgment is denied as to whether or not express warranties were breached.

Next, defendants argue that, assuming that the written sales notice which described the truck’s condition as “excellent” was an express warranty, the notice “merged” into the contract of sale which disclaimed all warranties. The doctrine of merger generally states in contractual matters that the last agreement as to the same subject matter, which is signed by all the parties but contains terms inconsistent with the former oral or written contract, will supersede the former agreement if supported by sufficient consideration. See American Fruit Growers v. Hawkinson, 21 Tenn.App. 127, 133, 106 S.W.2d 564, 568 (1937); see, e.g., Bringhurst v. Tual, 598 S.W.2d 620, 622 (Tenn.Ct.App.1980). In this case, the express warranties which allegedly were created prior to the signing of the sales contract were never part of an earlier agreement which could be merged into a later agreement. The defendants also argue that all warranties, express and implied, were disclaimed in a form provision of the sales contract. Form disclaimers of express warranties clearly are disfavored in Tennessee, while form disclaimers of implied warranties often are sufficient to accomplish their intended purpose. The comments to the Tennessee statute governing the creation of express warranties state:

“Express” warranties rest on “dickered” aspects of the individual bargain, and go so clearly to the essence of that bargain that words of disclaimer in a form are repugnant to the basic dickered terms. “Implied” warranties rest so clearly on a common factual situation or set of conditions that no particular language or action is necessary to evidence them and they will arise in such a situation unless unmistakably negated.

T.C.A. § 47-2-313 comment 1 (1979). Courts will refuse to give effect to unbar-gained for language of a disclaimer which is inconsistent with the language of an express warranty. T.C.A. § 47-2-316(1) & comment 1 (1979). On the other hand, courts will give effect to disclaimers of implied warranties of merchantability and fitness if the disclaimers are conspicuous, if they mention “merchantability,” and if they are in writing with reference to the fitness warranty. T.C.A. § 47-2-316(2) (1979). See Ford Motor Co. v. Moulton, 511 S.W.2d 690, 692 (Tenn.), cert. denied, 419 U.S. 870, 95 S.Ct. 129, 42 L.Ed.2d 109 (1974). In this case, the form disclaimer of any implied warranties is sufficient to accomplish its purpose. Accordingly, the Court finds that no material question of fact exists as to the application of implied warranties, and grants defendants’ motion for summary judgment to this extent. The language of the disclaimer of express warranties, however, is inconsistent with the language of the alleged express warranties and therefore may be insufficient. Therefore, the Court finds that since a material question of fact exists as to whether express warranties were created, a material issue of fact also exists as to whether the contractual disclaimer was sufficient and denies defendants’ motion for summary judgment on this issue.

Finally, defendants argue that the plaintiff’s election of remedies bars his claim for breach of warranties. Defendants’ account of the facts is that the plaintiff offered to rescind the sale contract when he discovered that the truck had more mileage than the odometer indicated. Defendants explain that Whité Motor accepted the plaintiff's offer, and returned his down payment and the maximum travel allowance provided for in the sales notice. Pursuant to the plaintiff’s offer of rescission, and because he made no further payments, defendants contend they repossessed the truck and began looking for a new buyer. Defendants state that the plaintiff subsequently refused to accept the return of the down payment and travel expenses, and brought this action based on the contract of sale. Plaintiff’s version of the facts is that his offer to rescind the sales contract was based upon the conditions that he be reimbursed for his lost time and costs as well as have his down payment returned.

Defendants argue that by not honoring the terms of the sales contract, the plaintiff elected his remedy, and is entitled to rescission and a return of his down payment. It is well-settled that, according to the doctrine of election of remedies, a party who clearly has chosen to pursue one of two inconsistent and irreconcilable remedies cannot later resort to the other. See, e.g., Barger v. Webb, 216 Tenn. 275, 280-81, 391 S.W.2d 664, 666-67 (1965); Purcell Enterprises, Inc. v. State, 631 S.W.2d 401, 408 (Tenn.Ct.App.1981); Hutchison v. Pyburn, 567 S.W.2d 762, 764-65 (Tenn.Ct.App.1977). The theories of rescission and damages for breach of contract clearly are inconsistent remedies. See Petty v. Darin, 675 S.W.2d 714, 716 (Tenn.1984). Therefore, plaintiff’s action for damages for breach of contract will be foreclosed if a rescission actually took place. Rescission involves the avoidance of a transaction and usually involves the refund of the purchase price or otherwise placing the parties in the position they occupied before the transaction took place. The purchaser who has been the victim of fraud or mistake, however, may recover, in addition to the purchase price, other damages which he or she incurred in good faith by reason of the fraud or mistake, such as the cost of improvements. Mills v. Brown, 568 S.W.2d 100, 102-03 (Tenn.1978). See Isaacs v. Bokor, 566 S.W.2d 532, 538-39 (Tenn.1978). As stated in the following discussion on the issue of fraudulent misrepresentation, the plaintiff may have been the victim of fraud. Therefore, since a rescission may not have occurred, a material question of fact clearly presents itself as to whether plaintiff’s “lost time” and “costs” are reasonable damages incurred in good faith. Accordingly, defendants’ motion for summary judgment on the issue of election of remedies is denied.

B: Fraudulent Misrepresentation

It is well-settled that in order to maintain a successful cause of action for fraudulent misrepresentation, there must be proof of false representation of an existing or post material fact, which must have been made knowingly, without belief in its truth, or recklessly, without belief in its truth, or recklessly. Some person must have relied on the false representation and suffered some damage as a result of the reliance. Graham v. First American National Bank, 594 S.W.2d 723, 725-26 (Tenn.Ct.App.1979). For a summary of the Tennessee law on fraud, see Edwards v. Travelers Insurance, 563 F.2d 105, 110-15 (6th Cir.1977). Plaintiff argues that, although discovery has not been completed, a false representation may have been made knowingly by White Motor Credit Corporation and Nortran as to the truck’s mileage because records indicate that some repair work was done by White Motor Corporation. Plaintiff contends that a possibility exists that agents of White Motor Credit Corporation and Nortran had knowledge of the truck’s actual mileage which might have been discovered during repair operations by employees of White Motor Corporation. Defendants argue that the representations made by employees of White Motor Credit Corporation and Nortran as to the truck’s mileage were true to the extent of their knowledge. Defendants also contend that the affidavit of the plaintiff’s counsel which cites the two repair bills is based on inadmissible hearsay since plaintiff’s counsel has no personal knowledge as to these facts. Defendants also claim that the two repair bills fail to show that they had any knowledge as to the truck’s correct mileage because White Motor Corporation, a separate corporate entity, performed the repair work. Defendants claim that, at most, a mutual mistake of fact existed at the time of the sale, and therefore, no fraud occurred.

Fraud rarely is a matter appropriate for summary disposition. It hinges on a subjective determination of the parties’ knowledge. Defendants may or may not have had any knowledge of the falsity of their representations as to the truck’s mileage. The Court cannot conclude that there is no material issue of fact on this point. Moreover, the plaintiff should be given the opportunity to conduct discovery on this issue to attempt to discover if the defendants committed fraud. Accordingly, defendants’ motion on the issue of fraudulent misrepresentation is denied.

Summary

For the reasons set forth herein, defendants’ motion for summary judgment is GRANTED on the issues of federal and Arkansas odometer disclosure claims, and DENIED on the issues of breach of warranty and fraudulent misrepresentation.

      . Although defective allegations of jurisdiction may be amended, 28 U.S.C. § 1653, the Court chooses to resolve this motion without pausing for the defect to be cured. The Court’s exercise of federal question jurisdiction and application of that jurisdiction to this action negates any threat of prejudice to the plaintiff.

      . See 15 U.S.C. § 1989(b) (1982).

      .The parties have not briefed thoroughly whether both defendants are "doing business” in Tennessee or whether "minimum contacts” have been established. Construing the pleadings in the light most favorable to the party opposing summary judgment, for purposes of resolving defendants’ motion, the Court shall assume that minimum contacts exist.

      . The parties make no distinction between federal question jurisdiction and diversity jurisdiction in this action, or the fact that a court’s personal jurisdiction may vary depending on the subject matter jurisdiction which is present. Nor do they cite any of the federal cases interpreting this particular Tennessee long-arm statute, T.C.A. § 20-2-201(a) (1980).

      . The Tennessee legislature provided no legislative history whatsoever to aid courts in their interpretation of T.C.A. § 20-2-201. The only mention of it is that the Tennessee Senate passed the House bill. See Senate J. Tenn. 770-71 (1887); House J. Tenn. 790 (1887).

      . Service in compliance with Tenn.R.Civ.P. 4.04(4) may be made:
      Upon a domestic corporation, or a foreign corporation doing business in this state, by delivering a copy of the summons and of the complaint to an officer or managing agent thereof, or to the chief agent in the country wherein the action is brought, or by delivering the copies to any other agent authorized by appointment or by law to receive service on behalf of the corporation.
      Tenn.R.Civ.P. 4.04(4) (1981). See Gallaher, 367 F.Supp. at 1065.

      .It is well-established that T.C.A. § 20-2-214, the general long-arm statute, confers jurisdiction to the full extent allowable under the Due Process Clause. Pickens, 573 F.2d at 385; Chattanooga Corp., 528 F.Supp. at 375; Nicholstone Book Bindery, Inc. v. Chelsea House Publishers, 621 S.W.2d 560, 562 (Tenn.1981), cert. denied, 455 U.S. 994, 102 S.Ct. 1623, 71 L.Ed.2d 856 (1982).

      . 15 U.S.C. §§ 1901-2012 (1982).

      . 15 U.S.C. §§ 1981-1991 (1982).

      . See 15 U.S.C. § 1981 (1982). The Act defines "motor vehicle” broadly as "any vehicle driven or drawn by mechanical power manufactured privately for use on the public streets, roads, and highways, except any vehicle operating exclusively on a rail or rails.” 15 U.S.C. § 1901(15) (1982).

      . Section 408(a) of the Act, 15 U.S.C. § 1988(a), states as follows:
      Promulgation of rules
      (a) Not later than 90 days after October 20, 1972, the Secretary shall prescribe rules requiring any transferor to give the following written disclosure to the transferee in connection with the transfer of ownership of a motor vehicle:
      (1) Disclosure of the cumulative mileage registered on the odometer.
      (2) Disclosure that the actual mileage is unknown, if the odometer reading is known to the transferor to be different from the number of miles the vehicle has actually traveled.
      Such rules, shall prescribe the manner in which information shall be disclosed under this section and in which such information shall be retained.

      . See 38 Fed.Reg. 2979 (1973) (codified at 49 C.F.R. § 580 (1984)).

      . In order to establish a violation of the Act and justify the imposition of civil liability, a transferee must prove not only that a transferor failed to disclose in writing any of the information required by regulation, see 49 C.F.R. § 580.4(a) & (c) (1984), but also that the trans-feror violated the Act with an intent to deceive the transferee. See, e.g., Witkowski v. Mack Trucks, Inc., 712 F.2d 1352, 1353-54 (11th Cir.1983).

      . See 49 C.F.R. § 580.5(a)(1) (1984).

      . In reaching this conclusion, the Court rejects the position taken by two sister courts on this exact issue, which neither the plaintiff nor defendants cite in their briefs. See Lair v. Lewis Service Center, 428 F.Supp. 778, 781 (D.Neb.1977); Davis v. Dils Motor Co., 566 F.Supp. 1360, 1362 (S.D.W.Va.1983) (quoting Lair). These courts ruled that by exempting certain classes of motor vehicles from odometer disclosure requirements, the NHTSA has, in effect, amended the statutory definition of "motor vehicle.” See supra note 9. The courts cite for their authority the fact that the Act contains two more narrowly drawn definitions — "passenger motor vehicle,” defined at 15 U.S.C. § 1901(1); and “multipurpose motor vehicle,” defined at 15 U.S.C. § 1901(2) — which are used in the sub-chapters of the Act dealing with bumper standards and consumer information study. These two courts reason that if Congress had intended to allow exemption to the odometer disclosure requirements, that august body would have used one of these terms or some other term less broad than the all-inclusive term “motor vehicle” employed in section 408 of the Act, 15 U.S.C. § 1988. Therefore, these courts held 49 C.F.R. § 580.5(a)(1) void, finding it "in direct variance with an unambiguous statutory provision." Lair, 428 F.Supp. at 781 (quoting United States v. Maxwell, 278 F.2d 206, 210 (8th Cir.1960)).
      This Court, however, rejects the reasoning of the Lair court, finding instead that 49 C.F.R. § 580.5(a)(1) exempts certain classes of trans-ferors, not classes of motor vehicles themselves in full compliance with the language and purposes of the Act.

        .See Affidavit of Neil H. Cochran, August 30, 1984 (submitted with Defendants’ Motion for Summary Judgment). Although 49 C.F.R. § 480.5 refers to 49 C.F.R. § 570.3 for the definition of the phrase “gross vehicle weight rating,” the phrase actually is defined in 49 C.F.R. § 571.3 as "the value specified by the manufacturer as the loaded weight of a single vehicle." It is obvious to the Court that the Secretary has failed to keep the regulations internally consistent as revisions have been made; therefore, the reference to 49 C.F.R. § 570.3 shall be disregarded. The defendants have submitted an affidavit that the manufacturer’s specification for this vehicle is 45,000 pounds. The plaintiff argues, however, that he purchased only the cab of the truck from the defendant White Motor rather than the entire vehicle, and that the GVWR for the cab as specified by the manufacturer is 13,500 pounds. The Court finds that the plaintiffs method of weighing the vehicle does not conform to the regulatory definition.

      . Citing United States v. Larionoff, the Court of Appeals for the Sixth Circuit in Meade Township v. Andrus, 695 F.2d 1006 (6th Cir.1983). articulated a "clear language” standard that a court must hold a regulation invalid if it is inconsistent with the “clear language” of the governing statute.

      . S.Rep. No. 413, 92nd Cong., 2d Sess. —, reprinted in 1972 U.S.Code Cong. & Ad.News, 3960, 3962.

      . 15 U.S.C. § 1981 (1982).

      . See S.Rep. No. 413, 92nd Cong., 2d Sess., reprinted in 1972 U.S.Code Cong. & Ad.News, 3960, 3962.

      . Motor Vehicle Regulation 1984-2: Odometer Disclosure Requirements, — Ark.Admin.Reg. - (Docket No. 006.0584-007 effective date July 11, 1984). The Arkansas regulations incorporate the state statutory definition of "motor vehicle:”
      “Motor vehicle" means any self-propelled vehicle not operated exclusively upon railroad tracks, except snowmobiles and other devices designed and used primarily for the transportation of persons over natural terrain, snow, or ice propelled by wheels, skis, tracks, runners, or whatever other means.

        Id. at 1(a); Ark.Stat.Ann. § 75-2401(2) (1975). This definition is very similar to the federal definition of “motor vehicle.” See supra note 10.

      .No opinion has yet construed this regulation.

      . Defendants’ Reply Brief at 5.

      . The sales contract contains the following form disclaimer:
      Limitation of Warranty: Seller makes no warranties as to the property, express, implied, or implied by law except the manufacturer’s standard vehicle warranty, which is incorporated herein by reference, and seller specifically disclaims any implied warranty of merchantability or fitness for a particular purpose and any liability for consequential damages.