RESPONDENT'S MOTION TO DISMISSED DENIED; APPEAL DENIED: October 17, 1994 GSBCA 12874 JAMES E. GLYNN, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. James E. Glynn, pro se, Beverly, MA. David G. Gherlein, Office of Regional Counsel, General Services Administration, Boston, MA, counsel for Respondent. GOODMAN, Board Judge. This appeal, filed on June 14, 1994, arises from a General Services Administration (GSA) auction of property. Appellant, James Glynn, purchased a 1988 Dodge Diplomat passenger vehicle at the auction. Appellant seeks the cost of repairing defective power steering discovered after he had purchased the vehicle. GSA moves to dismiss the appeal for failure to state a claim upon which relief can be granted. Appellant elected to proceed pursuant to the small claims procedure. Rule 13.[foot #] 1 Accordingly, on September 9, 1994, the Board convened a conference and took oral evidence from appellant and heard argument from respondent's counsel in lieu of a hearing. During the conference, the Board requested submission of additional documentary evidence from respondent and comment thereon from appellant. The parties agreed to submit the appeal for a decision on the record. Rule 11. We deny respondent's motion to dismiss and also deny the appeal for the reasons stated herein. ----------- FOOTNOTE BEGINS --------- [foot #] 1 58 Fed. Reg. 69,246, 69,258 (Dec. 30, 1993) (to be codified at 48 CFR 6101.13). ----------- FOOTNOTE ENDS ----------- Findings of Fact 1. The GSA conducted an auction on May 7, 1994, at the U.S. Army Corps of Engineers Civil Works, New England Division, 424 Trapelo Road, Waltham, MA. Appeal File, Exhibit 1. 2. Respondent was to make the auctioned property available for inspection on the morning of May 7, 1994, between 8:00 and 10:00 a.m. Appeal File, Exhibit 1 1[5~j; 3. Among the property offered for auction was item number 139, described in the auction announcement as follows: 1988 DODGE DIPLOMAT 4 DR SEDAN AT PS PB AC[[foot #] 2] AM-FM COLOR L BLUE . . . MILEAGE 125,040 (BUCAR-88-3139) REPAIRS REQUIRED Appeal File, Exhibit 1 at 7. 4. The auction announcement notified prospective bidders that: PROPERTY IS IN USED CONDITION EXCEPT AS OTHERWISE INDICATED AND MAY BE INOPERABLE, PARTS MAY BE MISSING AND REPAIRS MAY BE REQUIRED. ALSO DEFECTS OTHER THAN THOSE NOTED MAY EXISTED [sic]. DEFICIENCIES WHEN NOTED HAVE BEEN INDICATED ON THE ITEM CARD, HOWEVER THE ABSENCE OF ANY NOTED DEFICIENCY DOES NOT MEAN THAT THE ITEM MAY NOT HAVE DEFICIENCIES. BIDDERS ARE REMINDED AND CAUTIONED TO INSPECT BEFORE BIDDING. Appeal File, Exhibit 1 at 2. 5. The following clause also appeared in the auction announcement: DESCRIPTION THE GOVERNMENT WARRANTS TO THE ORIGINAL PURCHASER THAT THE PROPERTY LISTED IN THE INVITATION FOR BIDS WILL CONFORM TO IT'S [sic] DESCRIPTION. IF A MISDESCRIPTION IS DETERMINE [sic] BEFORE REMOVAL OF THE PROPERTY, THE GOVERNMENT WILL KEEP THE PROPERTY AND REFUND ANY MONEY PAID. IF A MISDESCRIPTION IS DETERMINED AFTER REMOVAL, THE GOVERNMENT WILL REFUND ANY MONEY PAID IF THE PURCHASER TAKES PROPERTY AT HIS OR HER EXPENSE TO A LOCATION SPECIFIED BY THE CONTRACTING OFFICER. NO REFUND WILL BE MADE UNLESS THE PURCHASER SUBMITS A WRITTEN NOTICE TO THE CONTRACTING OFFICER WITH AN ITEMIZED ESTIMATE OF REPAIRS WITHIN 15 CALENDAR DAYS OF THE DATE OF REMOVAL THAT THE PROPERTY IS MISDESCRIBED ----------- FOOTNOTE BEGINS --------- [foot #] 2 Automatic transmission, power steering, power brakes, air conditioning. ----------- FOOTNOTE ENDS ----------- AND MAINTAINS THE PROPERTY IS [sic] THE SAME CONDITION AS WHEN REMOVED. . . . THIS WARRANTY IS IN PLACE OF ALL OTHER GUARANTEES AND WARRANTIES, EXPRESS OR IMPLIED. THE GOVERNMENT DOES NOT WARRANT THE MERCHANTABILITY OF THE PROPERTY OR ITS FITNESS FOR ANY USE OR PURPOSE. THE AMOUNT RECOVERED UNDER THIS PROVISION IS LIMITED TO THE PURCHASE PRICE OF THE MISDESCRIBED PROPERTY. THE PURCHASER IS NOT ENTITLED TO ANY PAYMENT FOR LOSE [sic] OF PROFIT OR ANY OTHER MONEY DAMAGES, SPECIAL, DIRECT, INDIRECT, OR CONSEQUENTIAL. Appeal File, Exhibit 1 at 2. 6. Appellant did not read the above language in the auction announcement, which he characterized as "fine print." Memorandum of Conference (Sept. 9, 1994) 3. 7. Appellant was present during the inspection period and inquired from others present at the auction whether keys were available. He alleges that he was told that the Government does not make the keys available. He did not make a request to the GSA officials present that the keys be made available. It was the understanding of the GSA's counsel that it was the GSA's policy not to make the keys available, as the vehicles had been towed to the auction site and might not be able to start. Memorandum of Conference (Sept. 9, 1994) 1. 8. As part of his duties, an employee of the GSA conducted the auction as auctioneer/contracting officer. The proceedings were recorded on audio tape. Appeal File, Exhibit 6 at 1. 9. At the beginning of the portion of the auction during which vehicles were offered for sale, the contracting officer stated: "All of these vehicles were towed in here. I am told that they were running at some point in time, but they have been sitting dead-lined for over a month." Appeal File, Exhibit 6 at 1. When the Dodge Diplomat was offered for sale, the contracting officer stated: "Item number 139, 1988 Dodge Diplomat, 125,000 miles on it, repairs required." Id. 10. Appellant was the high bidder and paid $1,500 for the Dodge Diplomat. Appeal File, Exhibits 2, 6 at 2. After appellant purchased the vehicle, he started it without assistance. Memorandum of Conference (Sept. 9, 1994) 1. 11. Appellant thereafter sent a demand letter to the contracting officer dated May 21, 1994, which stated: On May 7, 1994 you sold me a 1988 Dodge Diplomat Sedan. I didn't know the power steering unit was leaking fluid until I noticed the fluid on the pavement under the car. I am enclosing an estimate to have the problem repaired. The steering box has be replaced and is a major repair: Rebuilt Steering Box $235.00 Estimated Labor $220.00 Paid for the Estimate $ 27.50 $482.50 The vehicle is dangerous to drive in this condition, and was sold to me knowingly and willfully by the GSA, that the fluid was leaking from the power steering unit. Under the implied warranty of merchantsability [sic] I respectfully request you pay for this repair that must be done ASAP so I can use the car. Appeal File, Exhibit 3. 12. By final decision dated May 31, 1994, the contracting officer denied appellant's claim. In his letter to appellant, the contracting officer stated: This letter is in response to your 'Demand Letter' of May 21, 1994. In the Invitation for Bid (IFB) that you received when registering for the Auction, item #139 was listed as 'REPAIRS REQUIRED'. You were provided with an inspectional period and you where urged to inspect the vehicle before bidding. When the item was 'Cried', I as the Auctioneer also stated that the vehicle needed repairs. As in any Auction the responsibility of inspection is the bidders [sic], and the bidder should incorporated [sic] any potential repair costs into his bid. Nonetheless, it is my final determination that the vehicle was not misdescribed and that no adjustments should be made to this contract. Appeal File, Exhibit 4. 13. Appellant timely filed a notice of appeal on June 14, 1994. Appeal File, Exhibit 5. On June 15, 1994, the Board docketed appellant's notice of appeal as GSBCA 12874. Id., Exhibit 7. By letter dated June 24, 1994, appellant elected to proceed pursuant to the Board's small claims procedure, and by letter dated July 27, 1994, appellant designated his notice of appeal as his complaint. 14. In his complaint, appellant stated: I was not given the proper opportunity to inspect the vehicle. There were no keys available to start the motor at the time of inspection. The vehicle had not been running for weeks. The motor has to be running for the power steering unit to leak fluid. The auctioneer stated at the start of the auction that all of these vehicles have been running at one time or another in the past month or so. The contracting officer states in his letter of May 31, [19]94 "The bidder should incorporate any potential cost of repair into his bid." It was impossible for me to know the fluid was leaking because the motor has to be going to run the unit. This is a major repair and the mechanics maintaining the car for General Services Administration should have known this condition existed, and so noted, because it was not something visable [sic] at the inspection of the vehicle. . . . . The vehicle was misdescribed at the auction and the adjustment of $482.00 should be made to this contract. Appeal File, Exhibit 5. 15. On August 23, 1994, respondent filed a motion to dismiss the appeal for failure to state a claim upon which relief can be granted. Appellant filed a response to the motion on September 2, 1994. 16. During a conference with the Board on September 9, 1994, both parties stated their intent not to proceed in discovery, and the Board inquired as to several factual issues. Respondent's counsel stated that he had been informed by the contracting officer that there was no indication in the government standard form 126 from the owning agency, the Federal Bureau of Investigation (FBI), which accompanied the vehicle when it was delivered to the GSA, that the vehicle needed repair to the power steering mechanism. The designation "repairs required" was the result of the age of the vehicle and the fact that it had been towed to the auction site, as stated by the contracting officer in his declaration supporting the motion to dismiss. Memorandum of Conference (Sept. 9, 1994) 2. 17. The Board requested respondent to provide to the Board and to appellant a copy of standard form 126 which accompanied the vehicle so the Board could ascertain whether there was any indication of prior knowledge that the vehicle needed repair to the power steering column. On September 9, 1994, respondent forwarded to the Board and appellant a copy of standard form 126, dated April 19, 1994, from the FBI to the GSA, which listed the vehicle. There was no indication on standard form 126 that any repairs needed to be made to the vehicle. Discussion Respondent's Motion to Dismiss Respondent's motion to dismiss is premised upon appellant's statement in his original claim letter of May 21, 1994, to the contracting officer that the GSA was liable to appellant for the cost of repairs to the power steering under the "implied warranty of merchantsability [sic]." Finding 11. Since the auction announcement contained only a warranty that the property would conform to its description, and specifically stated that "THE G O V E R N M E N T D O E S N O T W A R R A N T T H E MERCHANTABILITY[[foot #] 3] OF THE PROPERTY OR ITS FITNESS FOR ANY USE OR PURPOSE," respondent moves to dismiss the appeal for failure to state a claim for which relief can be granted. Finding 5. We deny respondent's motion to dismiss. While appellant alleges breach of the warranty of merchantability in his claim letter to the contracting officer, the contracting officer recognized the claim as one of misdescription, and issued his decision on that basis. Finding 12. Additionally, appellant alleges misdescription in his complaint. Finding 14. Allegation of Misdescription Appellant's claim is based on his allegation that the GSA knew that the vehicle's power steering required repair. The claim is for a breach of the description warranty, i.e., the car was misdescribed. The auction notice clearly notified potential purchasers that: PROPERTY IS IN USED CONDITION EXCEPT AS OTHERWISE INDICATED AND MAY BE INOPERABLE, PARTS MAY BE MISSING AND REPAIRS MAY BE REQUIRED. ALSO DEFECTS OTHER THAN THOSE NOTED MAY EXISTED [sic]. DEFICIENCIES WHEN NOTED HAVE BEEN INDICATED ON THE ITEM CARD, HOWEVER THE ABSENCE OF ANY NOTED DEFICIENCY DOES NOT MEAN THAT THE ITEM MAY NOT HAVE DEFICIENCIES. BIDDERS ARE REMINDED AND CAUTIONED TO INSPECT BEFORE BIDDING. Finding 4. The only warranty made by respondent to potential purchasers was that the vehicle would conform to its description, and the only remedy under the contract for a misdescription is to notify the Government and return the car for a refund of the purchase ----------- FOOTNOTE BEGINS --------- [foot #] 3 Generally, a warranty of merchantability assures that the product offered for sale is fit for the ordinary purpose for which such product is used. ----------- FOOTNOTE ENDS ----------- price within fifteen days. All other warranties were clearly disclaimed. Finding 5. Under the terms of the contract, the buyer does not have the option to repair the car and seek the cost of repairs. Irving Kaplan, GSBCA 8244, 86-3 BCA 19,196; accord Audycki, GSBCA 9309, 88-3 BCA 21,112; John Gottsche, GSBCA 8374, 87-3 BCA 20,076. To recover on a claim of misdescription, appellant must prove that the Government knew of the complained-of defect and failed to disclose it. Louis Paolino, GSBCA 11005, 92-1 BCA 24,500 (1991); Audycki. In the instant case, the car was not misdescribed. The written property description indicated "repairs required," based upon the age of the vehicle and the fact that the car had been towed to the auction site and "dead-lined for a month." Finding 16. The property description also noted that the car had power steering, but buyers were cautioned by the auction announcement that the vehicle "MAY BE INOPERABLE, PARTS MAY BE MISSING AND REPAIRS MAY BE REQUIRED" and, therefore, that such components may not be in working order. Findings 4, 5. The standard form 126 from the owning agency to the GSA did not indicate that any repairs to the vehicle were necessary, Finding 17, and there is no evidence that the Government knew of and failed to disclose defects in the power steering. Appellant alleges that the contracting officer knew of the defect in the power steering, as appellant alleges that the contracting officer stated at the auction that "all of these vehicles have been running at one time or another in the past month or so." Finding 14. This allegation is not supported by the audio tape of the auction. The auctioneer stated that "[a]ll of these vehicles were towed in here. I am told that they were running at some point in time, but they have been sitting dead-lined for over a month." Finding 9. Thus, there is no evidence that the vehicle had been started after it had been transferred from the FBI to the GSA for sale. In a sale of this sort, where both buyer and seller are ignorant of a car's condition, the risk that unknown defects exist is on the buyer. Audycki, 88-3 BCA 21,112; James P. Smith, GSBCA 8216, 86-3 BCA 20,076. Appellant complains that he had no opportunity before purchase to inspect the vehicle with its engine running, yet admits he did not ask to have the vehicle started. Finding 7. While respondent has averred that it was the GSA's policy not to allow the cars to be started, id., appellant chose to bid on the vehicle in any event. Appellant did not read that portion of the auction announcement which notified potential bidders that the vehicles may be inoperable, that other deficiencies might exist that were not noted, and that all warranties except the description warranty were disclaimed. Finding 6. As in many similar cases arising from GSA auctions, appellant's real complaint is with the nature of the sale he attended, rather than with the conduct of the Government. The sale terms and conditions, which appellant admits he did not read, contained no warranty of condition, and the vehicle was sold "as is." The only promise with respect to condition was that if defects were known they would be disclosed. See, e.g., James P. Smith, 86-3 BCA 20,076. There is no evidence that respondent was aware of the alleged defect in the power steering of the vehicle at the time of sale. Accordingly, there was no breach of the description warranty, and appellant assumed the risk of defects unknown to both him and respondent. Decision Respondent's motion to dismiss is DENIED. The appeal is DENIED. _____________________ ALLAN H. GOODMAN Board Judge