BEFORE ROY NOBLE LEE, HAWKINS AND SULLIVAN
HAWKINS, JUSTICE, FOR THE COURT:
Fedders Corporation appeals from a judgment in favor of Ross and Mary Elizabeth Boatright in the circuit court of Lafayette County for $3,000 actual and $20,000 punitive damages, and attorney fees of $5,000 plus $310.74 in trial expenses.
We find no error in the award of actual damages, and also the allowance of attorney fees was proper under the Magnuson-Moss Act, 15 U.S.C.A. 2303 et seq., and affirm the judgment as to these.
This is not a case for punitive damages, however, and the judgment is reversed and rendered as to this item.
In 1977 Tommy Skelton constructed a new residence for the Boatrights. On July 11 the Oxford Heating & Cooling Company (OH&CC), a local air conditioning business, installed a Fedders brand heat pump. The Fedders Corporation's principal offices are located in New Jersey.
The complete system for this heat pump consisted of the outdoor condensing unit, the indoor evaporator (blower with coil on inside), and interconnecting tubing and thermostat.
Larry E. Tatum owned and operated OH&CC during the period following the Boatrights occupancy of their home, and this business was the local dealer for Fedders air conditioners.
Thermal Equipment & Sales Corporation (TESCO), a Memphis jobber, was the area distributor for Fedders air conditioners and parts.
Fedders issued a limited warranty with this heat pump carrying the following express obligations:
(1) In event of failure to function the first year due to defect in material or workmanship of any part of the product, Fedders would furnish a new or rebuilt part, with the owner obligated to pay all delivery, installation and labor cots.
(2) In event of failure to function from second through fifth year of purchase date due to defect in material or workmanship of compressor, Fedders would furnish a new or rebuilt compressor, with the owner obligated to pay all delivery, installation or labor costs.
The limited warranty excluded liability caused by improper installation or unreasonable use of the unit, including failure to provide reasonable and necessary maintenance, or to follow written installation and use instructions of the manual.
In bold face type the limited warranty stated it provided the sole and exclusive remedies, no other express warranties were made. Likewise, all implied warranties were limited to one year from date of purchase, and incidental expenses and consequential damages were excluded. *fn1
The Boatrights testified the unit began giving them trouble in the summer of 1977. The main trouble with the heat pump occurred, however, in the winter, especially in the severely cold periods, when the outdoor condensing unit would" freeze up. "
This case went to trial June 15, 1983. Tatum testified his first record of repairing the unit was November 22, 1977, when he found the outdoor condenser coil frozen with ice. He said it was normal to freeze to a certain extent, but a defrost cycle should then be triggered thawing it out, and enabling the machine to start heating. On December 5, 1977, he found the same problem, and three small leaks. He thought the problem was the indoor coil or the" reversing valve, "but neither he nor his employees could locate the precise cause of the problem. They never found the compressor overheated. Tatum contacted TESCO who told him the trouble was in the defrost switch, but he said another switch did not correct the problem. After working on the unit, it would operate for a while only to have the same problem recur.
Tatum had seventeen repair tickets covering the period
from July 18, 1978, through April 20, 1980, of his firm's work on the unit, the lowest charge being $23.63 and the highest $59.06 on March 28, 1979, when the defrost timer switch was replaced. The Boatrights were never charged for any of the work done by Tatum's firm. Some time in the latter half of 1981 Tatum telephoned the Consumer Affairs Department of Fedders and reported the problem with the unit.
This model of Fedders heat pumps was having problems nationwide with the defrost cycle switches. The Federal Trade Commission (FTC) made an investigation, following which Fedders entered into a consent order with the Commission on June 14, 1979, whereby Fedders agreed to make available to all customers without charge defrost system service to replace the defrost cycle switches, and to install them without charge. In addition Fedders was required to give an extended full warranty for the replacement through May 1, 1980.
The order required Fedders to mail within ten days after it became final a written notice to each current owner of Fedders the obligations of Fedders thereunder, and to enclose with it a postage pre-paid card for the owner to mail to Fedders. The card was to notify Fedders of the owner's election to have a new switch installed.
The order also provided that failure of an owner to return the card, unless the package was returned to Fedders as undeliverable, should be considered an election by the owner not to have a new switch installed.
A later consent judgment was entered in 1981. The Boatrights testified they never received the notice. However, the notice sent by Fedders to the Boatrights pursuant to the second order was returned to the company, because it was not delivered, and it was mailed to Ralph M. Dean, an Oxford attorney who was then representing the Boatrights in their difficulties with Fedders. Pursuant to the order Fedders mailed 40,000 notices nationwide to customers.
Both Mr. and Mrs. Boatright testified about the problems they had with the heat pump, corroborating Tatum. Because of the inadequate heating the Boatrights purchased and installed a wood stove costing $800, and two kerosene heaters costing $179 each. They also testified their electric bills increased because of this, but no amount was shown.
In March, 1980, the Boatrights read an article in the local newspaper about Fedders heat pumps being defective. This article caused them to consult Dean, who they employed. Defense objection to the published article's introduction into evidence was sustained.
We summarize the exchange of correspondence between Dean and Fedders from April 25, 1980, through November 18, 1981.
1. April 25, Dean demands entire replacement cost of unit plus out-of-pocket expenses, including $800 lost for heater and $40 to $50 a month for added heating bills.
2. May 21 Joel Gold, Manager-Consumer Affairs with Fedders, wrote Mr. Boatright that after evaluating the installation" a decision has been made to grant your request for a refund of the purchase price of your split system heat pump. "This letter further states the refund covered the cost of equipment only, the retail price of which was $1,451.21. This letter requested Boatright to sign an enclosed release and return with the metal tags to the heat pump units.
3. June 4 Dean wrote Gold enclosing estimated cost of a replacement unit in amount of $2,227.37 and demanded this payment plus additional electrical bills in the amount of $480.
4. July 21 Dean received no replay to his letter, and again wrote Gold demanding payment reminding him of the complaint with the FTC.
5. July 22 Gold wrote Dean that under the terms of the full warranty, the consumer had the right to request a full refund for a free replacement, and Boatright had elected the refund (an error, Boatright had made no such election). The letter requested Boatright to sign the release and return with the metal tags.
6. July 31 Dean wrote Gold insisting on full
7. August 22 Gold wrote Dean their obligation was only to refund original, not current costs.
8. September 12 Dean to Gold, informing him Boatright was interested in investigating the possibility of a replacement unit rather than a cash refund. He wanted information of Fedders' policy regarding replacement units, cost of installation and warranty. He also wanted to know who would service the unit.
9. September 30 Gold to Dean. In lieu of refund Fedders would be willing to install a new outdoor unit at no cost. However, warranty would be from date of original purchase.
10. October 13 Dean to Gold. His client wanted the entire unit replaced, not just the outside unit.
11. November 17 Gold to Dean. Under" full warranty "the customer was entitled to refund of full purchase price of the entire unit. If customer wanted replacement, only the outside unit would be replaced; but if the service man upon inspection found the coil of the indoor blower should be replaced, Fedders would do this also.
12. November 21 Dean to Gold. His client wanted a replacement of the unit rather than cash refund, and also to replace the indoor unit if needed. If Gold would sent the necessary papers, he would have his client sign them. Requested prompt attention from Fedders.
13. December 29 Dean to Paul Kolv, Vice President. Stated he represented Boatright and had first written Fedders on April 25, and had since been negotiating with Gold. Because of total failure of unit, Fedders should either replace the unit with full warranty or refund at replacement cost. Also Mr. Boatright had suffered out-of-pocket expenses. Dean also stated he had been in contact with FTC, and he did not believe Fedders had dealt in a fair and reasonable
14. January 20 Peter Palumbo, Manager-Consumer Affairs, to Dean. He stated their records indicated Mr. Boatright requested a refund of purchase price on April 25, 1980 (an erroneous statement), and that request had been granted on November 17. Fedders agreed to refund full purchase price or replace the unit at Fedders expense.
15. February 20 Dean to Palumbo. Stated he was confused by Palumbo's letter, and complained of" foot dragging "by Fedders, and asked for a replacement unit in a few days.
16. May 14 Palumbo to Dean. A search of files failed to produce a release. A release was enclosed for Boatright to sign, and when returned would arrange for immediate installation of the replacement unit.
17. May 18 Dean to Palumbo. Complained release sent was for a cash refund of $1,451.21, and nothing said about a replacement unit. If not forthcoming suit would be filed.
18. June 22 Dean to Palumbo. The release was being sent, but with specific understanding Boatright ...