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As originally enacted, the New Car Lemon Law required consumers to commence a legal action to obtain relief from manufacturers.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.

http://decisions.courts.state.ny.us/ad3/Decisions/2005/98380.pdf