New York Lemon Car Owners Win – Matter of DaimlerChrysler Corporation v Spitzer

Posted by Sergei Lemberg, Esq. on January 20th, 2008

Recently New York consumers scored a big victory when New York’s highest court found that consumers do not need to prove that the defect in their lemon car exists at the time of the arbitration or trial.

In 1983, the Legislature enacted the New Car Lemon Law to provide New York consumers greater protection than that afforded by automobile manufacturers’ express limited warranties or the Federal Magnuson-Moss Warranty Act. The statute obligates manufacturers to repair, without charge, any new motor vehicle which fails to conform to all express warranties during the first 18,000 miles of operation or for two years immediately following delivery of the vehicle, whichever comes first. If, within this time frame, a manufacturer is unable to correct a defect that “substantially impairs” the value of the vehicle “after a reasonable number of attempts,” the manufacturer – at the consumer’s option – must either replace the vehicle or accept the return of the vehicle in exchange for a refund of the purchase price.

Under the statute, a presumption that the consumer has met the “reasonable number of attempts” requirement arises in two circumstances: if the same defect has been subject to repair “four or more times” but “continues to exist” – commonly termed the “repair presumption”; or if the vehicle has been out of service for a total of 30 or more days – referred to as the “days-out-of-service presumption”.The triggering of either presumption does not ensure that a consumer will recover. A manufacturer may attempt to rebut the presumption and is afforded an affirmative defense when it can show either that the defect “does not substantially impair” the vehicle’s value or the condition resulted from “abuse, neglect or unauthorized modifications or alterations of the motor vehicle.”

As originally enacted, the New Car Lemon Law required consumers to commence a legal action to obtain relief from manufacturers. In 1986, the Legislature amended the statute to give consumers the option of resolving disputes by arbitration and directed the Attorney General to establish and supervise the arbitration hearing process. In addition to promulgating regulations that govern the relevant procedures (see 13 NYCRR part 300), the Attorney General created a written consumer’s guide to Lemon Law procedures and standard forms for use in arbitration.

Beginning in 1987, the consumer’s guide and forms stated that a consumer would be eligible for a refund or replacement vehicle only when the purchaser could demonstrate that a defect still existed as of the date of arbitration. But in 2002, in response to Matter of Bay Ridge Toyota v Lyons (272 AD2d 397 [2d Dept 2000]) the Attorney General reconsidered his interpretation of General Business Law § 198-a (d), and concluded that the presence of a defect at the time of arbitration or trial was not a prerequisite for recovery.

In accordance with this view, the Attorney General amended the consumer guide and forms, effective in 2003, to explain that a consumer may be entitled to relief if, within the first 18,000 miles or two years, the vehicle was subject to four or more unsuccessful repair attempts or out of service for 30 days, notwithstanding that the condition was subsequently repaired.

DaimlerChrysler Corporation and General Motors Corporation objected to the Attorney General’s new interpretation of the statute. The court ruled against the the manufacturers’ argument that that a plain reading of the repair presumption in the New York Lemon Law requires a consumer to establish that the defect continues to exist at the time of trial or arbitration. The Court found that because the New Car Lemon Law is remedial in nature, it should be liberally construed in favor of consumers.

The Court concluded:

We do not read the repair presumption as requiring a consumer to establish that the vehicle defect continued to exist until the trial or hearing date. Rather, the plain language of the provision obligates a consumer to demonstrate that the vehicle was subject to repair at least four times and that the same defective condition remained unresolved after the fourth attempt. Therefore, once a consumer has met the four-repair threshold, the presumption arises regardless of whether the manufacturer later remedies the problem. After four attempts, it is presumed that the manufacturer has been given a reasonable number of opportunities to fix the vehicle. The determination of whether a reasonable number of attempts took place for a consumer to recover does not turn on whether the car was ultimately repaired. If the Legislature intended to condition recovery on such a requirement, it easily could have said so.

Contrary to the manufacturers’ argument, this interpretation gives meaning to all of the statutory language in the context of the statute as a whole. The requirement that the defect “continues to exist” is simply another way of saying that the fourth repair attempt was unsuccessful. Without that language, a consumer could meet the presumption even if the defect was repaired on the fourth visit. The phrase “or more” clarifies that consumers may opt to bring their vehicles for repair more than four times yet still retain eligibility for Lemon Law relief. The Legislature likely included the phrase “or more” in the days-out-of-service presumption for the same reason.

This interpretation is also consistent with the remedial nature of the New Car Lemon Law. The statutory construction posited by the manufacturers would restrict its salutary objectives by effectively requiring a consumer to leave the new vehicle in an inoperable or malfunctioning state in order to preserve the right to seek Lemon Law relief.

Fast Facts About New York Lemon Law

Posted by Sergei Lemberg, Esq. on January 9th, 2008

If you live in New York and think you have a Lemon, you’ll be heartened to know that:

  • The New York new car Lemon Law (General Business Law Section 198-a) was enacted in 1983
  • In 2003, New York Attorney General Eliot Spitzer modified the Lemon Law to make it more consumer-friendly; instead of having to prove that a new vehicle’s defect existed at the time of the arbitration hearing, consumers had to prove that the vehicle was not repaired after four attempts
  • In 2004, the New York State Supreme Court rejected a challenge brought by car manufacturers’ to the Attorney General’s amendments to the law
  • Between 1987 and 2005, over $208 million was recovered on behalf of new car owners
  • Between 1990 and 2005, over $12 million was recovered on behalf of used car owners

When are new cards covered by New York Lemon Law? “Cars covered by the law include any car that:· was covered by a warranty at original delivery; AND· was purchased, leased or transferred within the earlier of 18,000 miles or two years from the date of original delivery; AND· was either purchased, leased or transferred in New York State or is presently registered in the state; AND· is used primarily for personal purposes.” The law states that the manufacturer or its agent has to have an opportunity to repair defects: “A reasonable chance for a manufacturer or its authorized agent to repair a problem for a new car is considered to be:· four or more attempts to repair and the problem continues to exist; OR

  • the car is out of service by reason of repair of one or more problems for a cumulative total of 30 days or more.”

Your remedies include a repurchase of the vehicle, replacement with a comparable vehicle or a cash settlement of your claim. Source: Office of the Attorney General

Why I Practice Lemon Law

Posted by Sergei Lemberg, Esq. on January 9th, 2008

There is a recent article NY Times entitled The Falling Down of Professions. In a nutshell, the article describes the unfortunate experience of many young lawyers disappointed in the professional choices they make. They work long hours at large law firms, receiving substantial salaries and bonus, and nonetheless remain unhappy about their professional choices. What the article does not do is answer the more difficult question — what are they all so unhappy about? How can it be changed?

I can answer that question, because I’ve been there myself. Before launching my own practice focusing on automotive defects and lemon law, I practiced law at several large firms in Manhattan, Boston and Connecticut. And I hated every minute of it. I hated the meaningless assignments, the daily drudgery, the lack of control over one’s time, the lack of free time, the backstabbing politics….the list is long. I was terrified that I’d made a wrong professional choice, that I had acquired no useful skills, that I was wasting my life in a useless, cruel profession.

Then one day I visited my dentist. I asked him why he liked what he does. His answer was surprising: “I like being my own boss, I like having a staff, treating my own clients, in the way that I like; I like helping people, I like the freedom this profession gives me,” he said, and continued, “whoever wants to work for another dentist?”

It became clear to me then that my experience as a lawyer practicing in a large firm gave me none of the benefits that this man found so essential to his daily routines. So, in my case, I had all the problems associated with the profession — the long hours, the difficult problems etc — but none of its most fundamental benefits. Plus, of course, the practice of law has changed tremendously over the last the last 25 years. Gone are the ideas of apprenticeship, of committing to an enterprise that has a common goal, a history and an interest in growing in the future through training younger associates. The modern law firm is a business. It makes money by billing out at high hourly rate and making a margin on each our of its associates’ time.

And so I decided to change the way I was practicing law and launched my own practice in the Spring of 2006. Focusing on lemon law and auto warranty allows me to run my own practice, help my own clients, many of whom are desperately in need of legal advice, and make a living.

New York Times Article