## Facts

- Esmeralda Sorchaga purchased a used diesel pickup truck from Ride Auto, LLC under a written agreement containing prominent “AS IS” language and disclaimers of express and implied warranties, including merchantability.
- Ride Auto had bought the truck from a salvage yard knowing it needed engine repairs and performed limited work sufficient to make it look appealing and drive short distances.
- During a short test drive, Sorchaga observed an illuminated check-engine light and smoke from the tailpipe.
- A Ride Auto salesperson stated the check-engine light was caused by a minor oxygen-sensor issue that was easily fixed and would not affect longevity, and that she could return in a few days for Ride Auto to fix it.
- The salesperson also represented the smoke was normal for a diesel engine while warming up, and Ride Auto represented the truck was covered by a third-party warranty that did not exist.
- Soon after purchase, the truck developed serious mechanical problems and became inoperable; Ride Auto refused to perform the promised repairs.
- An independent mechanic advised that the engine required replacement costing about $20,000 and confirmed there was no third-party warranty.
- Sorchaga sued for common-law fraud and breach of the implied warranty of merchantability under Minnesota’s U.C.C. Article 2.

## Issues

1. Whether a seller’s fraudulent statements about a vehicle’s condition and fitness make “as is” and warranty-disclaimer language ineffective under Minn. Stat. § 336.2-316(3)(a).
2. Whether a buyer who rescinds because of fraud may also recover damages for fraud and breach of implied warranty under Minn. Stat. § 336.2-721, and how courts avoid impermissible double recovery.

## Decision

- The Minnesota Supreme Court affirmed the court of appeals and the district court.
- The court held that fraudulent statements about the vehicle’s fitness and condition were “circumstances” indicating that the “as is” disclaimer did not exclude implied warranties under Minn. Stat. § 336.2-316(3)(a).
- The court held that Minn. Stat. § 336.2-721 permits cumulative remedies for fraud and Article 2 remedies, and that rescission or return of goods does not bar a damages claim.
- The court concluded the district court’s award did not constitute a double recovery because it was structured to prevent Sorchaga from receiving more than one satisfaction for the same harm.

## Legal Principles

- Under Minn. Stat. § 336.2-316(3)(a), “as is” language excludes implied warranties unless circumstances indicate otherwise; seller fraud regarding condition or fitness is such a circumstance and can render the disclaimer ineffective.
- U.C.C. fraud remedies (Minn. Stat. § 336.2-721) include all Article 2 remedies for breach, and rescission, rejection, or return of goods is not inconsistent with seeking damages or other relief.
- A plaintiff may pursue recovery under both fraud and breach-of-warranty theories arising from the same transaction, but courts must prevent duplicative compensation for the same injury.

## Conclusion

The court held that a used-car seller cannot rely on “as is” disclaimers to defeat implied-warranty liability when the sale was induced by fraudulent misrepresentations, and that Minnesota’s U.C.C. allows rescission and damages for both fraud and breach of warranty so long as the remedy does not duplicate the buyer’s losses.


Sorchaga v. Ride Auto, LLC, 909 N.W.2d 550 (Minn. 2018)