Vol. 75, No. 3, March 2002

Accessories Under the Lemon Law

by Stephen J. Nicks

ention accessories to a district attorney, and parties to a crime come to mind. Mention accessories to my college-age daughters, and fashion comes to mind. But mention accessories in the context of Wisconsin's Lemon Law, then rear spoilers, rust-proofing, and even tow truck mechanisms are the items at issue.

For varying reasons, the inclusion of accessories is significant to the sale of many new motor vehicles. Some people just love to dress up their cars or trucks with accessories such as hood bras, door edge guards, vent shades, bumper guards, and so on. Some dealers just love to add on a pile of accessories, and then price them generously to make it appear that the buyer is getting a bigger discount or a higher trade allowance.

Three reported Lemon Law cases have dealt with motor vehicle "accessories," including, most recently, Kiss v. General Motors Corp.1 Interestingly, the Lemon Law² contains no reference to "accessories" and therefore no definition. As used in these cases, however, an accessory is a dealer furnished item that is included in the purchase contract and installed before the vehicle is delivered to the consumer. The Lemon Law mentions "components" but leaves that term undefined.³ This article shows how the case law has evolved to deal with dealer installed accessories and posits how "components" should be distinguished and treated.

Accessories

Malone v. Nissan Motor Corp.,⁴ Dieter v. Chrysler Corp.,⁵ and Kiss v. General Motors Corp.⁶ all focused on how the Lemon Law should be applied to various motor vehicle accessory situations. The accessories in these cases ranged from a rear spoiler on a car (Malone), to fender shields and rust-proofing (Dieter), to a tow unit installed on a tow truck (Kiss). In Malone and Kiss, the accessories were not manufacturer approved or warranted; in Dieter, the accessories were manufacturer approved and warranted.

Reading these three cases together, there is a clear coverage matrix for accessories:

1) Dealer installed, nonmanufacturer approved items. a) Defects in the accessory. For nonmanufacturer approved accessories, if the accessory itself - a rear spoiler or tow unit - is defective the buyer is not entitled to Lemon Law relief. The buyer may only look to the accessory's manufacturer/warrantor for relief under traditional UCC or Magnuson/Moss Warranty Repair Act theories.⁷

b) Defects in the vehicle. If the vehicle to which the nonmanufacturer approved accessory is attached is a lemon (with no defect in the accessory), the consumer is entitled to Lemon Law relief covering not only the vehicle but also the accessory. The consumer can choose a refund or replacement of the vehicle.⁸ If a refund is chosen, the vehicle manufacturer must include the cost of the accessories in the refund amount, and if a replacement is chosen, the manufacturer must install new after-market accessories. This is the case even though the accessories were dealer installed and not approved by the manufacturer.

Kiss involved this latter situation. Kiss had purchased a GMC Sierra 3500 HD tow truck cab and chassis to which the dealer attached a "Vulcan" tow unit, which General Motors did not manufacture or warrant. There were defects in the vehicle and Kiss was awarded a comparable new motor vehicle⁹ by the General Motors certified dispute settlement mechanism (BBB-Autoline). General Motors took this ruling to mean that it could furnish a new cab and chassis and transfer the now used after-market towing unit to the new vehicle. The Kiss court rejected this solution, finding that the policy articulated by the supreme court in Hughes v. Chrysler Motors Corp.¹⁰of placing consumers in the same position as they thought they were at the point of sale mandated that General Motors also supply a new tow unit, even though it did not manufacture or warrant the tow unit in the first place.¹¹

2) Dealer installed, manufacturer approved items. a) Defect in the accessory.If problems with manufacturer approved accessories are sufficient to trigger the Lemon Law - four attempted repairs or 30 days total out of service - a consumer is entitled to choose replacement or refund covering the whole vehicle.¹²

b) Defect in the vehicle. If the qualifying defect is to the vehicle itself, the Lemon Law mandates refund or replacement of the vehicle and the accessories.¹³

Components

The Malone, Dieter, and Kiss decisions all focused on the treatment of "accessories." The sleeping giant yet to be dealt with at the appellate level is how to treat "components" under the Lemon Law.

What is a "component" and how is it distinguished from an "accessory?" The only time "component" is mentioned in the Lemon Law is in the definition of nonconformity in Wis. Stat. section 218.0171(1)(f). While component is not itself defined, it is apparent from the context of the statute that a component is an integral part of a motor vehicle installed by the manufacturer. The simplest way to focus the component analysis is to use the engine as an example. Many vehicle manufacturers do not manufacture their own engines. Instead, they install those made by others. Their makers (Caterpillar or Detroit Diesel, for example) then separately warrant these engines directly to the buyer, and the vehicle manufacturer specifically excepts the engine from its warranty covering the rest of the vehicle.

What happens in terms of Lemon Law relief if such an engine is defective? Case law has settled half of the equation: the engine manufacturer is not liable for Lemon Law remedies, because it is not a "manufacturer" as defined by the Lemon Law. In Harger v. Caterpillar,¹⁴ the court of appeals held that a manufacturer of component parts of a motor vehicle that ships the completed part to the vehicle manufacturer is not liable under the Lemon Law. This decision arose from peculiar facts. The plaintiff had purchased a Peterbilt truck with a Caterpillar engine. The engine was alleged to be defective and the plaintiff sought Lemon Law relief against Peterbilt. The plaintiff then voluntarily dismissed the action, and two years later began a new action against both Peterbilt and Caterpillar. Peterbilt was dismissed on res judicata grounds, and only the Lemon Law claim against Caterpillar was actively litigated, which resulted in the half a loaf analysis by the court of appeals. Harger did not reach whether the vehicle manufacturer was liable.

Vehicle manufacturer liability for components was tangentially discussed in Kiss, but its resolution remains. In Kiss, the court of appeals rejected General Motors' sweeping contention that a vehicle manufacturer cannot be held responsible for parts it did not manufacture or warrant, saying that the contention was too broad and failed to consider the underlying Lemon Law policy concerns.¹⁵ Even though Kiss involved a dealer-added accessory and not a component like an engine installed by a vehicle manufacturer, this language foreshadows the proper result for components.

The analysis of a component is necessarily different from that of an accessory because of the statutory reference to components and the legislative history of that reference. The heart of the Lemon Law is its definition and use of "nonconformity" as the trigger for relief. Section 218.0171(1)(f) of the Wisconsin Statutes defines "nonconformity" as a "defect which ... is covered by an express warranty applicable to the motor vehicle or to a component of the motor vehicle." (Emphasis added.) As originally passed in 1983, the Lemon Law defined nonconformity only in the context of a defect covered by an express warranty applicable to the motor vehicle.¹⁶ In 1985, this definition was expanded to its present form by also including defects covered by an express warranty applicable to "a component of the motor vehicle."¹⁷

The explicit addition of components to the definition of nonconformity came as Assembly Amendment 7 to 1985 Assembly Bill 434. Rep. Vernon W. Holschbach, A.B. 434's sponsor and the main proponent of the original Lemon Law, shed considerable light on both the intent of the amendment and the vehicle manufacturer's responsibility under the Lemon Law, in a memorandum he authored on Oct. 29, 1985, addressed to the Senate Judiciary and Consumer Affairs Committee. The first paragraph of the memorandum states the bill's purpose: "I have introduced this bill because my monitoring of the new law since its passage in the 198385 session indicates that some sections of the law should be strengthened."

The last bullet point in the Holschbach memorandum captures its intent:

"• Even though large trucks may be assembled from parts from numerous suppliers, I have always felt that liabilities for faulty components can be worked out between the manufacturers of the truck and the component supplier. What's more, I think it is all the more important in cases like these, for the consumer to have an identifiable responsible manufacturer that he or she can seek relief from." (Emphasis added.)

When the Wisconsin Legislature expanded the scope of nonconformity with the 1985 amendment, significantly, it let the vehicle manufacturer's responsibility under Wis. Stat. section 218.0171(2)(b) remain the same. "[T]he manufacturer," under Wis. Stat. section 218.0171(2)(b) "shall carry out the requirement under subd. 2. or 3." (replacement or refund) "[i]f after a reasonable attempt to repair the nonconformity is not repaired." If the legislature wished to limit the vehicle manufacturer's responsibility for nonconformities under Wis. Stat. section 218.0171(2)(b) to just those covered by the vehicle manufacturer's own express warranty when it expanded the scope of section 218.0171(1)(f) to include component warranties, it could have done so quite simply. It did not. To the contrary, the legislative intent was to give "the consumer ... an identifiable responsible manufacturer that he or she can seek relief from." If the engine manufacturer has no Lemon Law responsibility, responsibility must necessarily lie with the vehicle manufacturer. This conclusion was reinforced when the legislature made changes to the definition of manufacturer in 1999 Wis. Act 31 and did not include component parts manufacturers as liable under the Lemon Law.¹⁸

This legislative history also is perfectly consistent with the public policy concerns in Harger, in which the court balanced effecting consumer relief (the usual liberal construction of the Lemon Law) with fairness to component manufacturers. Harger found it "made no sense" to saddle component manufacturers with the entire Lemon Law financial risk when the engine cost was less than 20 percent of the total vehicle value.¹⁹

Conclusion

Vehicle manufacturers should be held liable under the Lemon Law for defects in components they assemble into their vehicles. Unlike the concern in Malone about making vehicle manufacturers responsible for shoddy accessories they did not approve,20 components are chosen and installed by the vehicle manufacturer. The express language of the Lemon Law, its legislative history, and the overriding public policy to provide a remedy for vehicle purchasers strongly indicate vehicle manufacturer liability for defective components.

Endnotes

¹ Kiss v. General Motors Corp., 2001 WI App 122, 246 Wis. 2d 364, 630 N.W.2d 742.

² Wis. Stat. § 218.0171.

³ Wis. Stat. § 218.0171(1)(f).

⁴ Malone v. Nissan Motor Corp., 190 Wis. 2d 436, 442, 526 N.W.2d 841 (Ct. App. 1994).

⁵ Dieter v. Chrysler Corp., 2000 WI 45, 234 Wis. 2d 670, 610 N.W.2d 832.

⁶ Kiss, 2001 WI App 122.

⁷ See Malone.

⁸ Wis. Stat. § 218.0171(2)(b)2.a., b.

⁹ "Comparable new vehicle" is the language of Wis. Stat. section 218.0171(2)(b)2.a. The actual decision of the BBBAutoline used "substantially identical." Kiss, 2001 WI App 122, ¶ 19.

¹⁰ Hughes v. Chrysler Motors Corp., 197 Wis. 2d 973, 982, 542 N.W.2d 148 (1996).

¹¹ Kiss, 2001 WI App 122, ¶ 17.

¹² See Dieter.

¹³ See Kiss.

¹⁴ Harger v. Caterpillar Inc., 2000 WI App 241, 239 Wis. 2d 551, 620 N.W.2d 477. See also Wis. Stat. § 218.0171(1)(c).

¹⁵ Kiss, 2001 WI App 122, ¶ 15.

¹⁶ Wis. Stat. § 218.015(1)(f) (1983-84).

¹⁷ Wis. Stat. § 218.015(1)(f) (1985-86).

¹⁸ 1999 Wis. Act 31 (Senate Bill, enacted April 4, 2000).

¹⁹ Harger, 239 Wis. 2d at 557.

²⁰ Malone, 190 Wis. 2d at 442.

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