## Facts

- Hugh Schurtz bought a new 1982 BMW 320i from BMW of Murray in February 1982.
- The written limited warranty restricted BMW’s obligation to repair or replace defective parts within three years or 38,000 miles, at BMW’s discretion.
- The warranty disclaimed other express warranties and excluded incidental and consequential damages for breach of any express or implied warranty.
- Schurtz alleged the vehicle had numerous defects soon after purchase and that BMW was unable or unwilling to make the car conform to the warranty.
- Schurtz sued for breach of express and implied warranties (including claims under the Magnuson–Moss Warranty Act and Utah’s U.C.C.), misrepresentation, and violations of the Utah Consumer Sales Practices Act.
- Schurtz sought incidental and consequential damages on the warranty claims and attorney’s fees under Magnuson–Moss.

## Issues

1. Under Utah Code Ann. § 70A-2-719, does failure of a limited repair-or-replace remedy’s essential purpose automatically invalidate a separate contractual exclusion of incidental and consequential damages, or must the exclusion be separately tested for unconscionability?
2. Did the trial court err in awarding less than the attorney’s fees requested under the Magnuson–Moss Warranty Act?

## Decision

- The Utah Supreme Court held that § 70A-2-719(2) (failure of essential purpose) and § 70A-2-719(3) (consequential-damages limitations) operate independently.
- A limited remedy’s failure of essential purpose does not, by itself, invalidate a consequential-damages exclusion.
- The enforceability of the exclusion requires a separate unconscionability analysis under § 70A-2-719(3), read with general unconscionability principles.
- The court vacated the partial summary judgment that barred incidental and consequential damages and remanded for the required unconscionability determination.
- The court also vacated the attorney’s fee award and remanded for reconsideration under proper standards and adequate findings.

## Legal Principles

- A finding that an exclusive or limited remedy failed of its essential purpose restores access to Article 2 remedies, but it does not automatically negate a contractual exclusion of consequential damages.
- Contractual exclusions or limitations of consequential damages are enforceable unless proven unconscionable under § 70A-2-719(3).
- Unconscionability of a damages exclusion is fact-dependent and may consider bargaining power, meaningful choice, transaction setting, and whether combined limitations leave the buyer without a fair or adequate remedy.
- In consumer warranty disputes, failure of the limited remedy may support (but does not compel) a conclusion that a consequential-damages exclusion is unconscionable.
- Attorney’s fees under Magnuson–Moss must be supported by appropriate criteria and explanation tied to the work performed and results obtained.

## Conclusion

The court required separate analysis of a consequential-damages exclusion for unconscionability even when a repair-or-replace warranty remedy may have failed, and it remanded both the damages-limitation question and the reduced Magnuson–Moss fee award for reconsideration under correct legal standards.


Schurtz v. BMW of N. Am., Inc., 814 P.2d 1108 (Utah 1991)