NEW YORK LEMON LAW ARBITRATION CASE
Keywords, New York lemon law, arbitration, New York lemon law lawyer, arbitration decision, repair and presumption under lemon law, New York state lemon law decision.
In re Application of DaimlerChrysler Corporation, 6 Misc.3d 228, 782 N.Y.S.2d
610 (N.Y.Sup. 09/14/2004)
[1] Supreme Court, Albany County
[2] 4381-04
[3] 6 Misc.3d 228, 782 N.Y.S.2d 610, 2004.NY.0007999< http://www.versuslaw.com>
[4] September 14, 2004
[5] IN THE MATTER OF THE APPLICATION OF DAIMLERCHRYSLER CORPORATION, GENERAL
MOTORS CORPORATION AND SATURN CORPORATION, PETITIONERS, FOR A JUDGMENT PURSUANT
TO ARTICLE 78 OF THE CIVIL PRACTICE LAW AND RULES.
v.
ELIOT SPITZER, ATTORNEY GENERAL OF THE STATE OF NEW YORK AND THE NEW YORK STATE
DISPUTE RESOLUTION ASSOCIATION, RESPONDENTS.
[6] The Rose Law Firm, Pllc (Keith B. Rose, Esq.) Attorneys for Petitioners 501
New Karner Road Albany, New York 12205
[7] Hon. Eliot Spitzer, Attorney General (Matthew J. Barbaro, Aag) Attorneys for
Respondent Eliot Spitzer Nys Department of Law - The Capitol Albany, New York
12224
[8] Tobin And Dempf, Llp (Michael L. Costello, Esq.) Attorneys for Respondent
Nysdra 33 Elk Street Albany, New York 12207
[9] The opinion of the court was delivered by: Joseph R. Cannizzaro, J.
[10] This opinion is uncorrected and subject to revision before publication in
the printed Official Reports.
[11] INTRODUCTION:
[12] This CPLR article 78 proceeding concerns New York General Business Law ("GBL")
§198-a, known as the "New Car Lemon Law." Petitioners, which are manufacturers
of new motor vehicles sold in New York State, commenced this proceeding to
enjoin respondents from using materials, including award forms promulgated for
New Car Lemon Law arbitrations, which proscribe an allegedly incorrect legal
standard. Respondent Eliot Spitzer, the Attorney General of New York State, who
is responsible for the supervision and operation of the statewide New Car Lemon
Law arbitration program, and respondent the New York State Dispute Resolution
Association ("NYSDRA"), which is the independent arbitration firm that conducts
the arbitrations, oppose the petition and seek a dismissal of the proceeding on
grounds that petitioners are not entitled to the relief they seek. The Attorney
General had also asserted as an affirmative defense that the proceeding was
barred by the applicable four month statute of limitations set forth in CPLR
217. However, the Attorney General withdrew this defense during the oral
argument conducted by the Court on August 25, 2004, in order to allow the issues
in this proceeding to be determined.
[13] HISTORY/BACKGROUND:
[14] Under the New Car Lemon Law, a consumer who purchases a new motor vehicle
that is seriously defective is entitled to either bring an action against the
manufacturer of the vehicle within four years of the date of original delivery
of the motor vehicle to the consumer or to arbitrate his or her dispute in
accordance with the arbitration program established pursuant to regulations
promulgated by the New York State Attorney General. See GBL §198-a (j) and (k);
13 NYCRR Ch. VIII, Part 300. More particularly, the New Car Lemon Law states
first that:
[15] "If a new motor vehicle which is sold and registered in this state does not
conform to all express warranties during the first eighteen thousand miles of
operation or during the period of two years following the date of original
delivery of the motor vehicle to such consumer, whichever is the earlier date,
the consumer shall during such period report the nonconformity, defect or
condition to the manufacturer, its agent or its authorized dealer. If the
notification is received by the manufacturer's agent or authorized dealer, the
agent or dealer shall within seven days forward written notice thereof to the
manufacturer by certified mail, return receipt requested, and shall include in
such notice a statement indicating whether or not such repairs have been
undertaken. The manufacturer, its agent or its authorized dealer shall correct
said nonconformity, defect or condition at no charge to the consumer,
notwithstanding the fact that such repairs are made after the expiration of such
period of operation or such two year period." See GBL §198-a (b)(1).
[16] The New Car Lemon Law states further in relevant part that:
[17] "If, within the period specified in subdivision (b) of this section, the
manufacturer or its agents or authorized dealers are unable to repair or correct
any defect or condition which substantially impairs the value of the motor
vehicle to the consumer after a reasonable number of attempts, the manufacturer,
at the option of the consumer, shall replace the motor vehicle with a comparable
motor vehicle, or accept return of the vehicle from the consumer and refund to
the consumer the full purchase price or, if applicable, the lease price and any
trade-in allowance plus fees and charges..." See GBL §198-a (c)(1) (emphasis
added).
[18] Lastly, as relevant here, the New Car Lemon Law states that:
[19] "It shall be presumed that a reasonable number of attempts have been
undertaken to conform a motor vehicle to the applicable express warranties, if:
[20] (1) the same nonconformity, defect or condition has been subject to repair
four or more times by the manufacturer or its agents or authorized dealers
within the first eighteen thousand miles of operation or during the period of
two years following the date of original delivery of the motor vehicle to a
consumer, whichever is the earlier date, but such nonconformity, defect or
condition continues to exist; or
[21] (2) the vehicle is out of service by reason of repair of one or more
non-conformities, defects or conditions for a cumulative total of thirty or more
calendar days during either period, whichever is the earlier date." See GBL
§198-a (d)(1) and (2) (emphasis added).
[22] This proceeding concerns the presumption set forth in GBL §198-a (d)(1)
(hereinafter sometimes referred to as the repair presumption). At issue in
particular is the interpretation of GBL §198-a (d)(1), and more specifically,
the language "has been subject to repair four or more times" and "but such
nonconformity, defect or condition continues to exist." From 1987, when the New
Car Lemon Law arbitration program began, until December 31, 2002, the Attorney
General states that he interpreted GBL §198-a (d)(1) as requiring that a
consumer had to allege and establish that the defect or condition complained of
continued to exist at the time of the arbitration hearing. However, the Attorney
General contends that this interpretation is simply wrong and that the
arbitration program has been operating for the last 16 years using an incorrect
repair presumption standard.
[23] More specifically, the Attorney General contends that he was prompted to
review existing policies with respect to the presumptions set forth in both the
Used and New Car Lemon Laws because of a decision rendered by the Appellate
Division, Second Department in Bay Ridge v. Lyons, 272 A.D.2d 397 (2nd Dep't
2000). In Bay Ridge, the Appellate Division affirmed the trial court's denial of
the car dealer's request to vacate the consumer's Lemon Law award. The focus of
the matter was the 15 day "out of service" presumption provision contained in
the Used Car Lemon Law that is similar to the 30 day "out of service"
presumption provision contained in the New Car Lemon Law and which does not
contain the language "but such nonconformity, defect or condition continues to
exist." The Appellate Division stated that the consumer was entitled to the
award because the vehicle was of service due to repairs or malfunction for 15 or
more days and that this presumption "was not contingent upon whether the car was
presently operable." Bay Ridge v. Lyons, supra.
[24] The Attorney General contends that because of Bay Ridge, he concluded in
November, 2002, that GBL §198-a (d)(1) only requires that the defect or
condition complained of exist, at a minimum, following the fourth repair attempt
and not that the defect had to continue to exist until the time of the hearing
in order for the consumer to be entitled to the presumption. In other words, the
Attorney General contends that four unsuccessful repair attempts is sufficient
to trigger the repair presumption. The Attorney General contends further that
the consumer's entitlement to the presumption does not extinguish simply because
of the fact that the manufacturer was given 1 more repair opportunity or 20 more
repair opportunities and the defect may have been fixed by the time the
arbitration hearing actually occurred. Rather, the Attorney General contends
that under such circumstances, the manufacturer is given the opportunity to
rebut the repair presumption by showing that four repair opportunities was not a
reasonable number of attempts for the defect complained of and that however many
more repair opportunities were given to the manufacturer after the fourth repair
attempt failed which resulted in fixing the defect was a reasonable number of
attempts.
[25] It is undisputed that the Attorney General's new interpretation of GBL
§198-a (d)(1) became effective as of January 1, 2003. It is also undisputed that
the Attorney General had issued a Memorandum to Lemon Law arbitrators on
November 23, 2002, which was last revised on March 25, 2003, that noticed the
change in policy and how it applied to both the Used and New Car Lemon Laws. In
regards to the New Car Lemon Law specifically, arbitrators are currently
instructed that they are not required to find that a defect continues to exist
at the time of the arbitration hearing to find that a consumer is entitled to
relief under the Lemon Law using either the repair presumption or the 30 day out
of service presumption. Rather, arbitrators are advised that a consumer may be
entitled to relief, provided that all other statutory requirements are met, if
within the first 18,000 miles or two years, the consumer's vehicle was out of
service for thirty days, or was subject to four unsuccessful repair attempts,
notwithstanding that the defect was subsequently repaired.
[26] Petitioners contend that the Attorney General's new interpretation has
resulted in consumers obtaining arbitration awards under GBL §198-a (d)(1), even
though their vehicles may have been repaired at the time of their arbitration
hearings. Petitioners, however, admit that they did not directly challenge the
Attorney General's new interpretation of GBL §198-a (d)(1) in 2002 or 2003.
Instead, petitioners state that they chose to commence CPLR Article 75 special
proceedings to vacate the individual arbitration awards won by consumers on the
basis that the arbitrators misapplied the law and that the old interpretation is
the correct interpretation of GBL §198-a (d)(1). Petitioners state that they
contended in each Article 75 proceeding that the plain language of GBL §198-a
(d)(1) required a finding that the problem remained unrepaired and continued to
exist at the time of the arbitration hearing.
[27] It is undisputed that in four Article 75 proceedings (hereinafter referred
to as the "Test Cases"), the Attorney General's new interpretation of GBL §198-a
(d)(1) was rejected as unsupported. See General Motors Corp. v. Jacobs, Index
No. 5636-03 (Sup. Ct. Albany Co., Hon. Bernard J. Malone, Jr., decided September
26, 2003); Saturn Corp. v. Guidice, Index No. 7146-03 (Sup. Ct., Albany Co.,
Hon. Louis C. Benza, decided March 11, 2004); DaimlerChrysler Corp. v. Catherman,
Index No. 1265-04 (Sup. Ct., Albany Co., Hon. Louis C. Benza, decided June 12,
2004); and DaimlerChrysler Corp. v. Arvonio, Index No. 2500-04 (Sup. Ct., Albany
Co., Hon. Louis C. Benza, decided July 6, 2004). Rather, in looking at the plain
language of GBL §198-a (d)(1), these Courts required a defect to exist at the
time of the hearing if a consumer was to recover using this presumption. In
short, the arbitration awards in the test cases were vacated on grounds that the
arbitrator did not apply the correct legal standard.
[28] The Attorney General, however, points out that it was never a party to the
test cases. In addition, the Attorney General points outs that out of the four
test cases, one consumer defaulted and the petition was unopposed, two other
petitions were opposed only by consumers who were not represented by counsel and
in the fourth matter, the attorneys for the consumer failed altogether to
address the issues raised in this proceeding. As a result, the Attorney General
states that in five other similar pending CPLR Article 75 proceedings brought by
petitioners, he has requested permission to appear as amicus curiae in order to
provide support for his position and demonstrate the appropriateness of his new
interpretation of GBL §198-a (d)(1). The Attorney General contends that because
petitioners are now actually being faced with serious opposition to their
interpretation of GBL §198-a (d)(1) and because they believe they can rely on
the unchallenged holdings of the four test cases, as well as dicta from Kucher
v. DaimlerChrysler Corp, 194 Misc. 2d 688 (Civ. Ct. 2003), a decision from the
New York City Civil Court that in an advisory opinion interpreted GBL §198-a
(d)(1) in the same manner as the test cases, petitioners commenced the instant
Article 78 proceeding to enjoin respondents from operating the arbitration
program in a manner inconsistent with the test cases and Kucher. The Attorney
General contends, however, that upon the issue being fully addressed by the
Court for the first time, it will be clear that his new interpretation of GBL
§198-a (d)(1) is the correct interpretation and that petitioners are not
entitled to the injunctive relief they seek.
[29] Petitioners, on the other hand, contend that the only reason they were
compelled to commence the instant proceeding is because the Attorney General has
refused to follow the test cases and Kucher which they contend have correctly
interpreted GBL §198-a (d)(1), and to operate the arbitration program
accordingly. More particularly, petitioners contend that the Attorney General's
refusal to change the arbitration materials and decision forms and to retrain
the arbitrators to follow the legal standard for the repair presumption set
forth in the test cases and Kucher raises the question of whether the Attorney
General "failed to perform a duty enjoined upon it by law." See CPLR 7803(1).
Petitioners contend that the Attorney General is legally bound by the test cases
under the principles of stare decisis and res judicata and, therefore, that he
must administer the New Car Lemon Law in conformity with the statutory
interpretation already utilized by the Courts. At best, petitioners contend that
the only issue before this Court is whether the Attorney General is legally
bound by the test cases. In fact, petitioners contend that this Court need not
even reach the issue of whether the Attorney General's new interpretation of the
repair presumption is the correct interpretation. However, petitioners contend
that to the extent that the Court "feels compelled to revisit" the issue of the
correct interpretation of GBL §198-a (d)(1), a review of the matter shows that
the old interpretation was correct and that the repair presumption requires
proof of an existing defect at the time of a hearing or trial in order for a
consumer to recover under the New Car Lemon Law using this presumption.
[30] THE COURT'S FINDINGS:
[31] At the outset, the Court finds no merit to petitioners' contentions that
the doctrines of stare decisis and res judicata required the Attorney General to
return to the old interpretation of the repair presumption and preclude this
Court's consideration of the issue of the proper interpretation of GBL §198-a
(d)(1). First, in regards to res judicata and more appropriately, collateral
estoppel, such doctrines are designed to put an end to a matter once duly
decided. Each doctrine has a distinctive application. Res judicata, or claim
preclusion, is invoked when parties seek to relitigate entire causes of action
between them and applies to matters which were actually litigated or could have
been litigated in the earlier action. Collateral estoppel, or issue preclusion,
is invoked when the cause of action in the second proceeding is different from
that in the first and applies to a prior determination of an issue which was
actually and necessarily decided in the earlier case. It is confined to the
point actually determined and applies only to issues which were actually
litigated, not to those which could have been litigated. See O'Connor v. G & R
Packing Co., 53 N.Y.2d 278 (1981); Malloy v. Trombley, 50 N.Y.2d 46 (1980);
Reilly v. Reid, 45 N.Y.2d 24 (1978); Manitou Sand & Gravel Co., Inc., v. Town of
Ogden, 81 A.D.2d 1019 (4th Dep't, 1981), rev. 55 N.Y.2d 790 (1981).
[32] In order for the doctrine of res judicata to apply, the party to be
precluded in the current action must have been a party to the prior action where
the claim at issue was litigated or could have been litigated. In order for the
doctrine of collateral estoppel to apply, two requirements must be satisfied:
the party seeking the benefit of the doctrine must prove that the identical
issue was decided in the prior action and is decisive in the current action, and
that the party to be precluded from relitigating the issue had a full and fair
opportunity to contest the prior determination. New York State Dam Ltd.
Partnership v. Niagara Mohawk Power Corp., 222 A.D.2d 792 (3rd Dep't 1995).
Here, since the Attorney General was not a party to either the tests cases or
Kutcher and never had the opportunity to present his arguments concerning the
proper interpretation of GBL §198-a (d)(1) to the Court until now, none of the
requirements for either res judicata or collateral estoppel to apply have been
satisfied to preclude this Court from addressing the issue of the proper
interpretation of the repair presumption within the context of the New Car Lemon
Law.
[33] In regards to stare decisis, "[w]hether a judicial construction of a
statute is a binding precedent depends on the court by which it was rendered and
the rank of the tribunal in the judicial hierarchy." Statutes §72(b). More
specifically, as is relevant here, "[a] decision of a court of equal or inferior
jurisdiction is not necessarily controlling, though entitled to respectful
consideration." See McKinney's Cons. L. of N.Y. Ann. Book 1,Statutes §72, at p.
143. Thus, contrary to petitioners' assertions, the test cases and Kucher are
not binding upon this Court in rendering a decision concerning the proper
interpretation of the repair presumption since the test cases were decided by
courts of jurisdiction equal to this Court and Kucher was decided by a court of
inferior jurisdiction.
[34] Nevertheless, this Court has respectfully considered the test cases and
Kucher in rendering its decision here. The Court finds it significant that in
the test cases and Kucher, the courts did not have the opportunity to hear the
arguments of the Attorney General in support of his new interpretation. This
Court has also considered other case law that concerns this issue which
includes, for example, Bouchard v. Savoca, 129 Misc. 2d 506 (Sup. Ct., Albany
Co., 1985), a case completely ignored by petitioners where the Court construed a
similar repair presumption contained in the Used Car Lemon Law and found that
the fact that the car was fixed and in "superior condition" at the time of trial
did not deprive the consumer of the repair presumption or preclude recovery
against the seller.
[35] Turning to the real issue at hand, there is no dispute that the New Car
Lemon Law, which was enacted in 1983, is a remedial statute. Hynson v. American
Motors Sales Corp., 164 A.D.2d 41, 48 (2nd Dep't 1990); See (L.1983, Ch. 444);
1983 McKinney's Session Laws of N.Y., at 840. In the Governor's Executive
Memorandum dated July 15, 1983, which accompanied the approval of the New Car
Lemon Law, the purpose of the law was to "provide remedies to consumers for new
motor vehicles that do not conform to all applicable express warranties....".
See 1983 McKinney's Session Laws of N.Y., at 2772. Therefore, as a remedial
statute, the New Car Lemon Law must be liberally construed in favor of those the
statute was enacted to protect - new car consumers. See Motor Vehicle Mfrs.
Ass'n v. State of New York, 75 N.Y.2d 175, 179-80 (1990); Levine v. American
Motors Corp., 134 Misc. 2d 1088, 1090 (Sup. Ct., Monroe Co., 1987); See also
White v. County of Cortland, 97 N.Y.2d 336, 339 (2002); Jensen v. General Elec.
Co., 82 N.Y.2d 77, 83 (1993).
[36] In so construing the statute, the Court finds, as the parties have found,
that this proceeding presents a straightforward question of statutory
interpretation and analysis. In such circumstances, the Court need not accord
any deference to either the Attorney General's old or new interpretation of the
repair presumption and is free to ascertain the proper interpretation of the
repair presumption from the statutory language and legislative intent. See e.g.
Matter of Raritan Development Corp. v. Silva, 91 N.Y.2d 98 (1997); Matter of
Toys "R" Us v. Silva, 89 N.Y.2d 411 (1996); Matter of Gruber, 89 N.Y.2d 225
(1996); Kurcsics v. Merchants Mut. Ins. Co., 49 N.Y.2d 451 (1980). The Court,
therefore, looks first to the language of the repair presumption itself to give
effect to the plain meaning thereof. See Majewski v. Broadalbin-Perth Cent. Sch.
Dist., 91 N.Y.2d 577, 583 (1998); Rosner v. Metro. Prop. & Liab. Ins. Co., 96
N.Y.2d 475, 479 (2001).
[37] In this endeavor, it is clear to the Court that the New Car Lemon Law
permits a consumer who has purchased a vehicle that has any defect or condition
during the first 18,000 miles of operation or during the two years following
delivery of the vehicle to the consumer, which substantially impairs the value
of the vehicle to the consumer, to obtain either a full refund of the purchase
price or a replacement vehicle if the vehicle cannot be repaired after "a
reasonable number of attempts." See GBL §198-a (b)(1), (c)(1). The statute then
clearly defines in both the repair presumption and the 30 day presumption what
constitutes a reasonable number of repair attempts. See GBL §198-a (d)(1) and
(2). In regards to the repair presumption, a reasonable number of repair
attempts is when the same defect or condition occurring within the first 18,000
miles or two years of ownership has been subject to at least four repair
attempts and the defect continues to exist. See GBL §198-a (d)(1). The Court
recognizes further that the repair presumption clearly contemplates the
situation where a consumer has allowed his vehicle to be subject to more than
four repair attempts and the defect still exists, hence the language "four or
more times." See GBL §198-a (d)(1). If the consumer's circumstances satisfy this
definition, the consumer is entitled to a presumption that a reasonable number
of repair attempts has occurred which then entitles him or her to a recovery
under the New Car Lemon Law unless the presumption is rebutted or the
manufacturer can successfully demonstrate one of the statutorily provided
affirmative defenses. See GBL §198-a (c)(3). This is the plain meaning of the
repair presumption within the context of the New Car Lemon Law.
[38] Petitioners assert that the "four or more" language coupled with the
language "but such nonconformity, defect or condition continues to exist"
necessarily means that no matter how many repair attempts the consumer affords
the manufacturer, the defect or condition must continue to exist not only after
the last repair attempt that was afforded to the manufacturer, but also until
the time of the arbitration hearing or trial. However, the Court finds that
petitioners' interpretation of the repair presumption erroneously focuses on
whether a consumer is entitled to recover under the New Car Lemon Law and not on
whether the consumer is entitled to a presumption that permits the consumer to
make a Lemon Law claim - a presumption which can be rebutted. In addition, the
Court finds that petitioners' interpretation completely ignores the purpose of
the statute which is to impose an obligation on the manufacturer to repair a
defective vehicle within a reasonable time, thereby giving a consumer a remedy
if the manufacturer does not satisfy this obligation.
[39] If petitioners' interpretation prevailed, it would induce consumers to stop
trying to repair their vehicles after the fourth unsuccessful repair attempt and
either drive defective vehicles or let them sit idle in order to be entitled to
the repair presumption and to recover at the time of the hearing or trial since
affording the manufacturer even one additional repair attempt could extinguish
the presumption and preclude recovery if the vehicle happened to be repaired by
that time. This is something few consumers can afford to do. Nor is this a
reasonable result. On the other hand, if consumers pursue the repair of their
vehicles, petitioners' interpretation would mean that whether it took five
repair attempts or twenty five repair attempts, the consumer could never reach a
"reasonable" number of repair attempts and could never be entitled to the repair
presumption or recovery if the defect happens to be repaired by the time the
arbitration hearing or trial occurs. This result simply puts the burden on the
consumers to keep giving the manufacturer opportunities to repair their vehicles
without any benefit to the consumer or any consequences to the manufacturer.
[40] It is therefore clear to the Court that the repair presumption arises when
at least four repair attempts have occurred and the defect continues to exist
and it is not extinguished simply because the consumer continues to permit the
manufacturer or any other repair garage additional attempts to repair the
vehicle and the vehicle is ultimately repaired before a hearing or trial can
occur. In fact, the Court finds that there is absolutely nothing in the language
of the repair presumption which makes the entitlement to the presumption
contingent upon the condition of the vehicle at the time of the hearing or
trial. See e.g. Bouchard v. Savoca, supra. In deed, the Court agrees with the
Attorney General that reading the phrase "but . . . continues to exist" in its
immediate context makes it clear that it has nothing to do with the condition of
the vehicle at the time of hearing or trial. The phrase "but . . . continues to
exist" refers to and modifies the number of repair attempts which are reasonable
for a consumer to undertake before he or she may be eligible for relief under
the New Car Lemon Law. The phrase means just what it says: the defect must
continue to exist, at a minimum, after the fourth repair attempt. The phrase
clearly intends to exclude from Lemon Law relief defects that are fixed in four
or fewer attempts. Without the words "but such nonconformity, defect or
condition continues to exist," four repair attempts would be sufficient to
trigger a presumption of unreasonableness even if the vehicle was repaired on
the fourth attempt.
[41] The Court also fails to find that it is stated elsewhere in the New Car
Lemon Law that the defect complained of under the repair presumption must exist
at the time of the arbitration hearing or trial. To require that the defect
exist at the time of the hearing or trial would be tantamount to adding language
to the statute and effectively amending it, which the Court cannot do. See
Statutes §73 and §74. In short, the Court finds that the old interpretation of
the repair presumption, that a defect must exist until the time of an
arbitration hearing or trial, which is petitioners' interpretation, is contrary
to the statute's plain language and purpose. Rather, the Attorney General's new
interpretation of the repair presumption is correct and clearly supported by the
statute's plain language and purpose.
[42] At this point, resort to any further means of statutory interpretation is
unnecessary and the Court could end its resolution of the matter right here
since the repair presumption is free from ambiguity and expresses, plainly,
clearly and distinctly the legislative intent of protecting new car consumers
who purchase "lemon" vehicles and cannot get them repaired after four
unsuccessful attempts. See Statutes §76. However, the Court finds that the
cannons of construction, the legislative history and the circumstances
surrounding the statute's passage all buttress the Attorney General's new
interpretation of the repair presumption. See Statutes §124; Giuliani v. Hevesi,
90 N.Y.2d 27, 39 (1997); Matter of Auerbach v. Board of Education, 86 N.Y.2d
198, 204 (1995).
[43] In particular, in looking at the statute as a whole and harmonizing all
parts with each other and the general intent of the statute, as well as
considering the object, spirit and purpose of statute and the harm to consumers
which is sought to be remedied as the canons on construction require, the Court
finds it significant that it is beyond dispute that the 30 day out of service
presumption, which is not at issue in this case, is available to a consumer
whose vehicle has been out of service for a total of thirty days during the
covered period regardless of whether the vehicle's defect is repaired by the
time of the hearing or trial. See e.g., Bay Ridge v. Lyons, supra; GBL §
198-a(d)(2). The Court notes that similar to the repair presumption, the 30 day
presumption states "thirty or more" days out of service, again clearly only
stating a minimum to define a "reasonable number of attempts" at repair.
However, it is entirely conceivable that a vehicle out of service could be
repaired on the thirty first day or the fortieth day. Following petitioners'
position in this proceeding to its conclusion, the 30 day presumption should be
extinguished if the vehicle is repaired by the time of the hearing or trial.
This result of course would not impose on the manufacturer a requirement to
repair the vehicle within a defined reasonable time and thus clearly does not
offer a consumer a real remedy if it does not. The Court finds that the same
empty remedy results if petitioners' position is followed under the repair
presumption.
[44] Petitioners, however, urge that because the 30 day presumption does not
contain the "but . . . continues to exist" language, it make sense not to
require that the defect exist at the time of hearing or trial under this
presumption. The Court finds, however, that the absence of this language is of
no moment since to have added the "but . . . continues to exist" language to the
30 day presumption would have been superfluous. If a car is out of service, it
is clear that the defect continues to exist as long as the car is out of
service. Thus, the Court finds that the absence of this language in the 30 day
presumption does not provide a basis to interpret each presumption provided
under the New Car Lemon Law so differently. It simply makes no sense to the
Court to find that the repair presumption requires that the vehicle must be
still be defective at the time of a hearing or trial and that the 30 day
presumption does not. See Statutes §95 - §98, §143, §145.
[45] Moving on, in looking at the legislative history of the New Car Lemon Law
and the circumstances surrounding its enactment, the Court cannot find any basis
whatsoever for petitioners' and the Attorney General's old interpretation of the
repair presumption, but finds solid support for the Attorney General's new
interpretation. It is clear that the statute was intended to address widespread
consumer frustration in dealing with defective motor vehicles by providing clear
and prompt standards for redress to consumers who purchase defective vehicles
that cannot be repaired within a reasonable time. According to Senator Bruno,
one of the statute's sponsors, the statute contained "clearly expressed
guidelines to establish the maximum number of repair attempts which can be
required prior to a refund or replacement of the car." Mem. of Senator Joseph L.
Bruno, 1983 N.Y. Legisl. Ann., at 200. In addition, as described by then Mayor
Edward Koch in his letter in support of the legislation:
[46] "Most importantly, the bill clearly defines when a manufacturer must refund
the purchase price or replace a "lemon." This will greatly assist the consumer
who has purchased an automobile with a defect so substantial and persistent that
it cannot be repaired within a reasonable period of time. By clearly defining
what constitutes a reasonable attempt at repair, the bill provides clear rights
for consumers victimized by the purchase of chronically defective automobiles."
[47] Letter in Support of Mayor Edward I. Koch, dated June 17, 1983, Bill Jacket
at 000031-32. See also Memorandum of the law's sponsors Senator Joseph Bruno and
Assemblyman Arthur J. Kremer ("Sponsor Memorandum in Support"), Bill Jacket at
000063 ("This bill contains clearly expressed guidelines in determining when a
'reasonable number' of repair attempts has been surpassed."); New York Public
Interest Research Group, Inc., ("NYPIRG") Letter in Support, dated July 14,
1983, Bill Jacket at 000015 ("This legislation considerably improves current law
by: (a) providing a bright line test which triggers consumer rights. . . .This
bill provides that a manufacturer will have to replace or refund the value of
the car if within the earlier of the first 18,000 miles of operation or two
years the car is out of service for 30 or more days or repaired four or more
times for the same nonconformity, defect or condition.").
[48] The statutory presumptions regarding what constitutes a reasonable number
of repair attempts were also specifically intended to ensure that consumers not
be subjected to an endless round of repair attempts. As stated by Assemblyman
Kremer, the other sponsor of the statute:
[49] "When a new automobile is purchased, a consumer should not be subjected to
being out of service for unreasonable periods of time or under continuous repair
without the defect or condition rectified."
[50] Memorandum of Arthur J. Kremer, dated June 23, 1983 ("Kremer Memorandum"),
Bill Jacket at 000019-20; See also Statement of the New York State Automobile
Association, April 27, 1983, Bill Jacket at 000038 ("If enacted, it would
statutorily define the conditions that differentiate a 'lemon' automobile and
empower consumers to discontinue the endless pursuit of satisfactory repairs
once those conditions are met.").
[51] Both supporters and opponents of the New Car Lemon Law recognized that the
clear cut guidelines established by the statute would permit consumers to obtain
a refund or replacement vehicle after four unsuccessful repair attempts. See,
e.g., Kremer Memorandum, Bill Jacket at 000019 ("If . . . the defect or
nonconformity is not corrected after four attempts . . . the consumer would, at
his or her option, be entitled to replacement of such automobile or receive a
refund of the purchase price. . ."); State of New York Department of Commerce
Memorandum in opposition, dated July 13, 1983, Bill Jacket at 000044 (the bill
would "require the manufacturer of an automobile to replace or refund the price
of a 'lemon' automobile if not repaired after four attempts"); Memorandum of
State of New York Consumer Protection Board in support dated July 5, 1983, Bill
Jacket at 000051 (owners of new cars would be entitled to a refund or
replacement vehicle if "the manufacturer, its agent or authorized dealer has not
repaired the defect after either four attempts or 30 cumulative days out of
service"); New York Chamber of Commerce memorandum in opposition, June 30, 1983,
Bill Jacket at 000064 ("This bill would require an automobile manufacturer to
replace or repurchase a vehicle if the "same nonconformity" has been subject to
repair four times . . .") (emphasis in original); Memorandum in Support, Bill
Jacket at 000068 ("This would require motor vehicle manufacturers to replace or
give a refund for a vehicle where that vehicle has defects which are not
remedied after four attempts...."). Even the Motor Vehicle Association of
America ("MVMA"), which opposed the bill, recognized that Lemon Law remedies
attach after the fourth unsuccessful repair attempt and therefore argued in its
memorandum in opposition to the legislation that it was "essential that the
manufacturer be notified of an alleged 'lemon car' prior to the fourth repair
attempt of the same defect." MVMA memorandum in opposition, dated June 20, 1983,
Bill Jacket at 000072 (emphasis in original).
[52] In view of the legislative history, the Court finds that petitioners'
interpretation of the repair presumption would undermine the statute's central
purpose by muddying the presumption in regards to what constitutes a "reasonable
number of attempts." In other words, petitioners' interpretation would take some
of the guidelines out of the guidelines. The Court cannot countenance such an
interpretation of the repair presumption since it simply penalizes consumers by
allowing manufacturers unlimited additional opportunities to repair a vehicle
after a reasonable number of attempts - four attempts - have failed.
[53] Once again, although the Court need go no further, the Court is compelled
to also recognize that petitioners' interpretation of the repair presumption
also conflicts with judicial decisions construing comparable repair presumptions
in Lemon Laws from other states such as Connecticut, Vermont, New Jersey,
Delaware, Wisconsin and Ohio. The Court could repeat verbatim the demonstration
made by the Attorney General which shows that his new interpretation of New
York's repair presumption is the same interpretation utilized by these states'
courts when they interpreted very similar or identical language contained in
their states' respective repair presumptions. However, for the sake of brevity,
the Court finds it sufficient to state that there is ample support in the
decisions from other state courts for this Court's determination that the
Attorney General's new interpretation of GBL §198-a (d)(1) is correct. See e.g.
Conn. Gen. Stat. §42-179(e) and General Motors Corp. v. Garito, CV 970572553,
1997 Conn. Super. LEXIS 3413 (Conn. Super. Ct. Dec. 12, 1997); 9 Vt. Stat. Ann.
§4172(g) and Muzzy v. Chevrolet, 571 A.2d 609, 615 (Sup. Ct. Vt. 1989); N.J.
Stat. § 56:12-33(a) and DiVigenze v. Chrysler Corp., 785 A.2d 37 (N.J. Super.
Ct. App. Div. 2001); 6 Del. C. §5004(a) and Jackson v. Hyundai Motor America,
No. 95-CV-1768, 1997 U.S. Dist. LEXIS 2741 (E.D. Pa. Mar. 6, 1997); Wis. Stat.
218.0171(1)(h) and Regal v. General Motors Corp., No. 02-0632, 2003 Wisc. App.
LEXIS 634, at *13-*14; 668 N.W.2d 562 (Wisc. Ct. App. July 9, 2003); O.R.C. Ann.
§1345.73 and Reddin v. Toyota Motor Distributors, Inc., No. WD-90-2, 1991 Ohio
App. LEXIS 712 (Ohio Ct. App. Feb. 22, 1991).
[54] Finally, the Court is compelled to reiterate that petitioners have not been
stripped of their defenses to New Car Lemon Law claims premised on the repair
presumption simply because this Court finds that the repair presumption does not
require that the defect complained of exist at the time of an arbitration
hearing or trial in order for the consumer to be entitled to the presumption. As
noted above, recovery is precluded by a consumer if a manufacturer can
demonstrate as an affirmative defense that (1) the nonconformity, defect or
condition does not substantially impair the value of the vehicle to the
consumer; or (2) the nonconformity, defect or condition is the result of abuse,
neglect or unauthorized modifications or alterations of the motor vehicle. See
GBL §198-a (c)(3). The Court finds it significant that the fact that a vehicle
may be repaired by the time of a hearing or trial is not an affirmative defense
statutorily provided to manufacturers.
[55] More importantly, manufacturers also have the right to rebut the repair
presumption by showing that four repair attempts was not reasonable under the
circumstances and that whatever additional repair attempts were necessary to
repair the defect was reasonable. In fact, in the Memorandum sent by the
Attorney General to Lemon Law arbitrators concerning his new interpretation of
the repair presumption for both the New and Used Car Lemon Laws, the Attorney
General stated that:
[56] " In the event a manufacturer, dealer or consumer successfully rebuts the
statutory presumption (i.e. in a particular case you determine that 4
attempts/30 days down time for a new vehicle, or 3 attempts/15 days for a used
vehicle, are not reasonable under the circumstances, but rather more or fewer
attempts or days out are reasonable), the appropriate decision form on behalf of
the manufacturers, dealer or consumer should be used with the reason indicated
in the Arbitrator's Findings under 'other.' (emphasis added)"
[57] Thus, it is clear that arbitrators are required to find for the
manufacturers and not the consumer, if they successfully rebut the repair
presumption. Although petitioners complain that the arbitrator's decision form
does not make it clear that the manufacturer is entitled to rebut the repair
presumption, there is no dispute that arbitrators are instructed concerning this
right. In addition, the Court cannot pass on the sufficiency of decision form to
be used in favor of the manufacturer since the petitioners have only provided
the arbitrator's decision form for when a consumer is entitled to a refund.
[58] CONCLUSION:
[59] The parties agree that arbitration hearings occur on average about three
months after a Lemon Law arbitration claim is made and that a trial could occur
any number of months or years after a Lemon Law action is commenced. In light of
such realties and because the Court finds that it is contrary to the plain
language of the New Car Lemon Law, its extensive legislative history and
persuasive authority both in this state and in other states construing
comparable Lemon Laws, to require that a defect in a new car exist until the
time of an arbitration hearing or trial, the Court finds that the Attorney
General's new interpretation GBL §198-a (d)(1) is correct. A consumer is only
required to show that his or her vehicle has been subjected to at least four
repair attempts during the covered period and that the defect continued to exist
after the fourth attempt in order for the consumer to be entitled to a
presumption that a reasonable number of repair attempts have been undertaken to
conform a vehicle to applicable express warranties and therefore to make a Lemon
Law claim.
[60] Accordingly, because petitioners have not succeeded in demonstrating the
merits of their interpretation of the repair presumption, the petition is
dismissed and the relief requested therein is in all respects denied.
[61] This memorandum shall constitute both the decision and the order of the
Court. All papers, including this decision and order, are being returned to the
Attorney General. The signing of this decision and order shall not constitute
entry or filing under CPLR 2220. Counsel is not relieved from the applicable
provisions of that section relating to filing, entry and notice of entry.
[62] IT IS SO ORDERED!
[63] Dated: September 14, 2004
[64] JOSEPH R. CANNIZZARO, JUSTICE, SUPREME COURT
[65] The Court considered the following papers:
[66] By Petitioners:
[67] Order to Show Cause dated July 26, 2004;
[68] Verified Petition dated and verified July 23, 2004, with exhibits;
[69] Reply Affirmation of Keith B. Rose. Esq., dated August 10, 2004;
[70] Reply Memorandum of Law dated July 26, 2004, with exhibits;
[71] By Respondent Eliot Spitzer:
[72] Verified Answer dated and verified July 29, 2004;
[73] Affirmation in Support of Matthew J. Barbaro, Esq., dated July 30, 2004,
with exhibit;
[74] Memorandum of Law dated July 29, 2004.
[75] By Respondent NYSDRA:
[76] Verified Answer dated and verified July 29, 2004;
[77] Affirmation in Support of Michael L. Costello, Esq., dated July 30, 2004;
[78] By All Parties:
[79] Stipulation pertaining to commencement of action so ordered by Louis C.
Benza, JSC;
[80] Transcript of the oral argument conducted before Hon. Joseph Cannizzaro,
JSC, on August 25, 2004;
[81] Order Vacating Temporary Restraining Order dated August 27, 2004.
Keywords, failure to disclose, used car fraud, New York lemon law, failure to disclose prior lemon, deceptive practice.
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