manufacturer is responsible for defective parts installed by the dealer even if they were unauthorized

95 N.J.A.R.2d (CMA) 32 (N.J. Adm.), 1994 WL 759792

Office of Administrative Law, State of New Jersey

SAPRENA FLORENCE GANTT, Petitioner,

v.

VOLKSWAGEN UNITED STATES, INC., Respondent.

Consumer Affairs

OAL Docket No. CMA 11467-93

Initial Decision: January 4, 1994

Final Agency Decision: January 28, 1994

INITIAL DECISION AND FINAL AGENCY DECISION

Howard Gutman, Esq., for petitioner

Richard J. Cino, Esq., for respondent (Lindabury, McCormick and Estabrook, attorneys)

GOLDBERG, ALJ: STATEMENT OF THE CASE AND PROCEDURAL HISTORY

*1 Petitioner Saprena Florence Gantt seeks a refund under the New Jersey Lemon Law, N.J.S.A. 56:12-29 to -49, from Volkswagen United States, Inc., for a 1992 Jetta purchased at Cherry Hill Imports, Cherry Hill, New Jersey. Petitioner contends that the vehicle has a defect which substantially impairs its use, value and safety. According to petitioner, her car stalls while driving or after starting and it cannot be restarted. Further, despite respondent’s attempts to correct the problem, petitioner alleges the vehicle remains defective.

Petitioner’s Lemon Law dispute resolution application was accepted by the New Jersey Division of Consumer Affairs on November 30, 1993, and the matter was transmitted to the Office of Administrative Law (OAL) on December 3, 1993, for determination as a contested case pursuant to N.J.S.A. 52:14F-1 to -13. The hearing was held at the OAL in Mercerville, New Jersey, on December 16, 1993. After testimony concluded, the hearing record was closed.

UNDISPUTED FACTS

The parties stipulated to the following facts:

  1. Petitioner purchased a 1992 Jetta, vehicle identification number 3VWRA21G6NM040158, from Cherry Hill Imports on May 4, 1992.
  1. Cherry Hill Imports is an authorized Volkswagen dealer.
  2. The purchase price of the vehicle, including registration, title fees and sales tax, was $15,264.43.

Gantt v. Volkswagen United States, Inc., 95 N.J.A.R.2d (CMA) 32 (1994)

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  1. Petitioner’s down payment was $1,837.50.
  2. Petitioner has made eighteen monthly payments of $345.28 each.
  3. The “payoff” to the finance company is now $9,086.29.
  4. The odometer reading was 4,866 miles when the defect was first reported to Cherry Hill Imports.
  5. The allowance for vehicle use is $688.49 (see corrected allowance on page 6).
  6. Petitioner purchased an alarm system which was installed at Cherry Hill Imports before delivery. (The cost of the alarm system was included in the car’s purchase price—see 3 above.)

SERVICE HISTORY

The car was towed to Cherry Hill Imports on October 1, 1992, after the motor “cut off” and would not restart. The service invoice (No. 81326) indicates that a “bad ground” was repaired. Petitioner picked up the car on October 4, 1992. Petitioner returned the car to Cherry Hill Imports on November 9, 1992, when the battery light came on. The service advisor (see service invoice No. 82013) notes a belt shield was installed and the belts were adjusted. Petitioner picked up the car on November 9, 1992. While driving the vehicle on July 15, 1993, petitioner experienced the inability of the car to maintain speed and it “cut off” without warning. After ten to fifteen minutes, petitioner was able to restart the car and she drove it to Moore Motors, a Philadelphia, Pennsylvania, Volkswagen dealer, where the service advisor found “no problem at this time”; he did, however, repair the temperature gauge wiring (see service invoice No. R88110). Petitioner picked the car up on July 15, 1993, and had driven it about forty minutes when the motor “cut off,” and she pushed the car to the side of the road. The car was towed to Moore Motors, where Cherry Hill Imports picked it up and towed it to their facility. The service advisor notes a problem with the electric system, for which he replaced the ignition switch (see service invoice No. 86529). Petitioner picked up the car on July 20, 1993. When petitioner started the car on October 4, 1993, it “shut off.” The car was again towed to Cherry Hill Imports, where the service advisor again replaced the ignition switch and adjusted the engine. Petitioner picked up the car on October 5, 1993.

*2 Petitioner’s October 11, 1993 “last-chance” repair opportunity letter was received by Volkswagen United States on October 16, 1993. After petitioner’s fiance expressed an unwillingness to return the car to Cherry Hill Imports, Slawski, Volkswagen district service manager, made arrangements for Moore Motors to tow the car to its facility and make the necessary repairs. The car was towed to Moore Motors on October 22, 1993, and it was picked up by petitioner on October 26, 1993. The service advisor disabled the alarm wiring from the ignition and replaced the ignition/starter switch (see service invoice No. R90514). On October 26, 1993, the car’s odometer read 15,045. Between October 4, 1992, and October 26, 1993, petitioner’s car was out of service approximately 22 days.

FACTUAL DISCUSSION

Petitioner testified that the Moore Motors service manager told her on October 26, 1993, that the problem was corrected because the alarm system was disconnected. This statement was disproven when on November 1, 1993, the car motor hesitated at a traffic light, then cut off. Petitioner stated that she has no confidence in the car’s reliability, adding that she only uses it for emergencies. On cross-examination, petitioner acknowledged that the increase in the purchase price of the car from $13,750 to $14,149 represented the cost of the alarm system, which was installed at Cherry Hill Imports by an outside company on October 4, 1993. The outside company was authorized to install the alarm system by Cherry Hill Imports.

Gantt v. Volkswagen United States, Inc., 95 N.J.A.R.2d (CMA) 32 (1994)

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Petitioner’s testimony was credible. In fact, Slawski, Volkswagen’s district service manager, acknowledged that the car motor “cuts off.” Pedro, the Moore Motors shop foreman, told Slawski that the alarm system was causing the motor to lose ground and subsequently “shut off.” He advised petitioner that the problem could be corrected; the alarm system was removed and the car rewired. Slawski admitted the problem had been misdiagnosed by both Cherry Hill Imports and Moore Motors. Slawski maintained the problem of “no start and cut off” was not a manufacturing-related defect, but was caused by the “aftermarket” alarm system. Because the malfunction was caused by the alarm system, respondent asserts petitioner is not covered by the Volkswagen warranty (see R-10) and, therefore, she does not qualify for Lemon Law relief. I disagree. Petitioner has established that her car frequently will not start and it sometimes cuts off while driving. Respondent acknowledged that this defect substantially impairs the use, value and safety of the vehicle.

Based upon the foregoing, I FIND as fact:

  1. Petitioner’s vehicle has a defect which impairs its use, value and safety.
  2. Respondent’s authorized dealers had more than three opportunities to correct the defect.
  3. Respondent was provided a “last-chance” repair opportunity to correct the defect.
  4. Petitioner’s vehicle has lost power after the “last-chance” repair opportunity.

LEGAL DISCUSSION AND CONCLUSIONS

*3 Under the provisions of the Lemon Law, N.J.S.A. 56:12-29 to -49, if a consumer reports a nonconformity in a motor vehicle to the manufacturer or dealer during the first 18,000 miles of operation or during the first two years following the date of the original delivery to the consumer, whichever is earlier, the manufacturer or dealer must within a reasonable time make all repairs necessary to correct the nonconformity. N.J.S.A. 56:12-31. “Nonconformity” means a defect or condition which substantially impairs the use, value, or safety of a motor vehicle. N.J.S.A. 56:12-30. If the manufacturer or dealer is unable to repair or correct the nonconformity within a reasonable time, the consumer must be given a refund or replacement of the defective vehicle. N.J.S.A. 56:12-32(a). Further, a dealer or manufacturer is presumed to be unable to repair the nonconformity within a reasonable time if substantially the same nonconformity has been subject to repair three or more times by the manufacturer or its dealer and the nonconformity continues to exist, or the vehicle has been out of service by reason of repair for one or more nonconformities for a cumulative total of twenty days and a nonconformity continues to exist. N.J.S.A. 56:12-33(a). However, this presumption shall only apply if the manufacturer has received written notice by certified mail, return receipt requested, of a potential claim under the statute, and has had one opportunity to repair or correct the nonconformity within ten calendar days following receipt of the notification. N.J.S.A. 56:12-33(b). Such notification by the consumer must take place any time after the motor vehicle has had substantially the same nonconformity subject to repair two or more times or has been out of service by reason of repair for a cumulative total of twenty or more calendar days. Ibid. In the instant matter, the facts establish that petitioner has complied with all the Lemon Law requirements. Further, respondent manufacturer or its dealers have been unable to correct the nonconformity which substantially impairs the use, value and safety of the vehicle after more than three attempts plus the unsuccessful “last-chance” repair opportunity. Respondent’s holding that it should be held blameless because installation of an alarm system at Cherry Hill Imports invalidates the warranty (see R-10) and petitioner should seek relief from Cherry Hill Imports is REJECTED. An affirmative defense would exist for respondent if the qualifying nonconformity resulted from the unauthorized modification of the motor vehicle by anyone other than the manufacturer (Volkswagen United States, Inc.) or its dealer (Cherry Hill Imports). N.J.S.A. 56:12-40. Here, the vehicle was modified by Cherry Hill Imports, an authorized Volkswagen dealer.

Gantt v. Volkswagen United States, Inc., 95 N.J.A.R.2d (CMA) 32 (1994)

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Based upon the facts and pursuant to the Lemon Law, I CONCLUDE that respondent and its dealers are unable to correct the nonconformity and petitioner is entitled to a refund.

CALCULATION OF THE REFUND

Petitioner’s Costs Vehicle Purchase Price

Down payment $1,837.50 $15,264.43

Monthly Payments Lemon Law Fee 50.00

$345.28 x 18 6,215.04 Total $15,314.43

Lemon Law filing fee 50.00 Respondent’s Vehicle Use Credit

$8,102.54 4,866 x 15,314.43

100,000 = 745.20

Respondent’s Vehicle

Use Credit – 745.20

Total Refund $7,357.34

*4 Therefore, I ORDER Volkswagen United States, Inc., to reimburse petitioner $7,357.34.

I further ORDER Volkswagen United States, Inc., to pay the lien holder the $9,086.29 balance of petitioner’s loan. I finally ORDER that the parties effect the transfer of the vehicle title no later than ten days after the final decision. I hereby FILE my initial decision with the DIRECTOR OF THE DIVISION OF CONSUMER AFFAIRS for consideration. This recommended decision may be adopted, modified or rejected by the DIRECTOR OF THE DIVISION OF CONSUMER AFFAIRS, who by law is authorized to make a final decision in this matter. If the Director of the Division of Consumer Affairs does not adopt, modify or reject this decision within fifteen (15) days, this recommended decision shall become a final decision in accordance with N.J.S.A. 56:12-37(b).

Any party may file written exceptions with the DIRECTOR OF THE DIVISION OF CONSUMER AFFAIRS, P.O. Box 45027, Newark, New Jersey 07101, marked “Attention: Exceptions.” Exceptions must be received by the Division of Consumer Affairs no later than eight (8) days from the date on which this recommended decision was mailed to the parties. Exceptions shall not exceed three (3) pages in length. A copy of any exceptions must be sent to the judge and to the other parties.

FINAL AGENCY DECISION

BYRNE, Director: The initial decision in the above matter was received by the Division of Consumer Affairs on January 14, 1994. I have reviewed the record in this matter and hereby adopt the findings of fact and conclusions of law by Judge Bernard Goldberg as my final decision.

95 N.J.A.R.2d (CMA) 32 (N.J. Adm.), 1994 WL 75979