Lemon Law Update
In recent cases, the Wisconsin Supreme Court stressed the remedial nature
of the lemon law. In one, the court said the lemon law does not require
consumers to be unaware of a nonconformity before accepting delivery.
In the other, consumers may not be required to sign
a general release before payment, because the lemon law does not limit
rights or remedies available under other laws. This column updates the
author's article, "Updating Wisconsin's
Lemon Law," in the October 1999 Wisconsin Lawyer
By
Stephen J. Nicks,
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U.W. 1970, is an assistant attorney general in the Government Operations
and Administrative Law Unit at the Wisconsin Department of Justice.
He formerly directed the Office of Consumer Protection and has written
previous lemon law articles published in the Wisconsin Lawyer. His
views expressed in this article are his own and not of the Department
of Justice or the Attorney General. |
In Dieter v. Chrysler Corp.,1
the Wisconsin Supreme Court, with Justice Sykes writing a consumer friendly
opinion, reversed the court of appeals and stressed the remedial nature
of the lemon law "with a view towards the social problem which the Legislature
was addressing when enacting the law."2
The court of appeals decision in Dieter3
held that only hidden defects discovered after the delivery of a new vehicle
were covered by the lemon law.4
Defects that a consumer knew about - in this case paint scratches from dealer-installed,
manufacturer-approved accessories - were not covered.
Since the lemon law comes into play only where there is manufacturer
warranty coverage,5 the supreme
court first had to determine if the paint scratches, which occurred before
delivery during the dealer installation of manufacturer-approved accessories,6
were covered by the Chrysler warranty. The court found Chrysler's warranty
unambiguously covered "genuine MOPAR (Chrysler Corporation) accessories
approved by Chrysler for dealer installation."7
Chrysler argued that since the damage occurred before the warranty start
date - the delivery date - there was no coverage. The court, however,
found no limitation pertaining to the date the defect or damage was created,
finding instead that the warranty "simply covers repair costs that are
incurred during the warranty period for qualifying defects and damage."8
What about the fact that the consumers were aware of the paint scratches
before delivery? This was significant to the court of appeals, which grafted
a "hidden defect" or "lack of knowledge" element onto the lemon law. Relying
heavily on the remedial nature of the lemon law, the supreme court favored
the opposite result, which put the consumers in the position they were
in when they signed the sales contract - they thought they were getting
a scratch-free truck. Strictly reading the "plain language" of the lemon
law, the court found "nothing" requires that the consumer be unaware of
the nonconformity before accepting delivery in order for coverage.9
Further, since lemon law protection cannot be waived, the court of appeals
conclusion that the law does not apply to known defects acted as a waiver
by notice rule, contravening Wis. Stat. section 218.015(6).10
Dieter represents a powerful reaffirmation of the supreme court's
liberal construction of the lemon law first articulated in Hughes
v. Chrysler Motors Corp. in 1996.11
There Are No Excuses
Chariton v. Saturn Corporation12
is as interesting for what it did not do, as for what it did. Chariton
is another of the "breakdown of negotiations" genre of lemon law cases.
Previously, the supreme court in Hughes,13
and the court of appeals in Church
v. Chrysler Corp.,14
held that when it comes to the 30-day refund period in Wis. Stat. section
218.015(2)(c),
30 days means 30 days - the period is not extended, tolled, or reset if
sticking points in the negotiations arise. Church recognized that
the rigidity of the 30-day requirement sometimes placed the manufacturer
in a "difficult position with attendant risk,"15
but reasoned that the lemon law intent of creating a more equal bargaining
situation between consumers and manufacturers mandated this sometimes
harsh policy.
In Chariton, Saturn conceded liability very early, but two problems
occurred in arriving at the correct refund amount: the consumers' attorney
was alleged to be dilatory in providing Saturn the information it needed
to exactly calculate the refund, and then Saturn insisted on a general
release before payment. Regarding the general release, the court held
that this request contravened Wis. Stat. section 218.015(5),
which expressly states that the lemon law does not limit rights or remedies
available under any other law. Saturn's proposed release "would have barred
any suit against anyone about anything"16
having to do with the car. This type of release puts a consumer into the
position that, to obtain lemon law relief, he or she would have to forfeit
any other cause of action. Gosse v. Navistar International Transp.
Corp.17 illustrates
the practical effect this can have. Gosse held that nonlemon law
claims related to a faulty vehicle - such as a personal injury claim -
must be asserted in a separate nonlemon law claim. The consumer's reluctance
to sign the proposed release in Chariton was therefore justified,
and did not "suspend time in this case."18
The Chariton court reiterated its holding in Church stating:
"regardless of the status of negotiations, the Lemon Law requires that
the manufacturer provide a refund within thirty days or the Lemon Law
has been violated."19
In a tag line worthy of Arnold Schwartzenneger in a Terminator flick,
the court concluded: "There are no excuses."20
However, the Chariton court also held that a manufacturer may insist
that all persons named as owners on the title sign off on the title.
In its order for oral argument, the Chariton court requested
additional briefing and argument on whether there is an "implied duty
of good faith and fair dealing within the lemon law" and on whether a
"claim of unfair dealing against the vehicle owner and/or the owner's
attorney obviates the necessity of complying with the thirty day rule."
The court also requested, and received, an amicus brief from the Wisconsin
Department of Justice.
Underlying this additional briefing was Saturn's contention that the consumers'
attorney, when time was of the essence, failed to promptly return Saturn's
phone calls during the negotiation process and then used regular mail
instead of fax to respond to requests for information Saturn needed to
calculate a correct refund. These actions allegedly impeded Saturn getting
the refund completed within the 30-day window.
After briefing and oral argument, the Chariton court declined
to address whether the consumer has a duty to communicate promptly with
the manufacturer, since Saturn had all the information it needed by the
22nd day. Therefore, "[t]his was not a case where the manufacturer was
lost at sea due to the consumer's alleged evasiveness."21
Where this good faith issue will go in the future
is anyone's guess. The manufacturers' concern about the process being
abused by dilatory tactics will have to be weighed against the lemon law's
original intent to equalize the parties' bargaining positions and the
case law that has articulated a bright-line refund test to encourage swift
resolution.
To
Read More About It ...
Professional Ethics Committee opinions may be found online at www.wisbar.org/ethop/.
In addition, Professional Ethics Committee opinions are available
in Wisconsin Ethics Opinions, published by State Bar of Wisconsin
CLE Books. Wisconsin Ethics Opinions includes the complete text
of all formal, informal, and memorandum opinions issued by the Professional
Ethics Committee since 1954, including opinions that have been withdrawn.
The book also includes the full text of the Rules of Professional
Conduct for Attorneys (SCR 20). For more information or to order
Wisconsin Ethics Opinions, call (800) 728-7788 or visit WisBar at
www.wisbar.org/cle/books/.
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Endnotes
Endnotes
1 Dieter
v. Chrysler Corp., 2000
WI 45, 234 Wis. 2d 670, 610 N.W.2d 832 (2000).
2 Id., 234 Wis. 2d 670, 19, citing Hughes
v. Chrysler Motors Corp., 197 Wis. 2d 973, 982, 542 N.W.2d 148
(1996).
3 Dieter
v. Chrysler Corp., 229
Wis. 2d 481, 600 N.W.2d 201 (Ct. App. 1999).
4 Wis. Stat. § 218.015.
5 Wis. Stat. § 218.015(2)(a).
6 There is a distinction between dealer-installed
aftermarket accessories approved by the manufacturers as here, which are
covered by lemon law, and dealer-installed nonmanufacturer-approved accessories
that are not covered. See Malone v. Nissan Motor Corp. in U.S.A., 190
Wis. 2d 436, 442, 526 N.W.2d 841 (Ct. App. 1994).
7 Dieter,
234 Wis. 2d 670, 16.
8 Id., 17.
9 Id., 21.
10 Id., 22.
11 Hughes,
197 Wis. 2d 973.
12 Chariton
v. Saturn Corp., 2000 WI App 148, ___ Wis. 2d ___, 615 N.W.2d
209 (Ct. App. 2000).
13 Hughes,
197 Wis. 2d 973.
14 Church
v. Chrysler Corp., 221 Wis. 2d 460, 585 N.W.2d 685 (Ct. App. 1998).
15 Id. at 469.
16 Chariton,
2000 WI App 148, 5.
17 Gosse
v. Navistar International Transp. Corp., 2000 WI App 8, 14, 232
Wis. 2d 163, 605 N.W.2d 896 (Ct. App. 1999), rev. denied Feb. 22, 2000.
18 Chariton,
2000 WI App 148, 5.
19 Id.
20 Id.
21 Id., 3, n.3.
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