Lemon Law

missourimerchandisingpracticesIf you own a product you feel is defective or does not meet your expectations, there are two main “lemon laws” that can provide additional help, beyond just another repair attempt and another repair attempt and another repair attempt…

The word “lemon” has been used to refer to something that is unsatisfactory since Shakespeare, in “Love’s Labour’s Lost,” Act V, Scene II. The first “lemon law” to protect vehicle owners was passed in Connecticut in 1982. That law is still on the books as Title 42, Chapter 743b of the General Statutes of Connecticut. Since then, all 50 states have passed a lemon law, including Missouri in 1984.

The Missouri state lemon law applies to Missouri residents and/or Missouri vehicles. So long as “any material fact in connection with the sale or advertisement” was “in or from the state of Missouri,” our lemon law may apply. Materials facts may include the residence of the purchaser, the location of the bank where the down payment money originated, the location of the lien holder, advertisements placed in Missouri, where car is now parked, or repair attempts that were performed in Missouri.

The Missouri lemon law, section 407.571, shifts the burden of proof to a Defendant when a Plaintiff proves that a vehicle has had, in the first 12 months after purchase, either (1) 4 of more repairs for a particular problem, or (2) 30 or more days out of service. In other words, a vehicle that has had 4 or more repairs, or has been out-of-service for 30 or more days, is presumed to be a lemon. This means that if a consumer puts on evidence of 4 or more repair attempts (or 30 or more days out of service), and the manufacturer offers nothing, the consumer wins. A judge or jury would be required to find that the vehicle was a lemon. The number of repair attempts is automatically persuasive evidence.

When a consumer wins a Missouri lemon law claim, the statute provides that the “manufacturer shall, at its option, either replace the new motor vehicle with a comparable new vehicle acceptable to the consumer, or take title of the vehicle from the consumer and refund to the consumer the full purchase price, including all reasonably incurred collateral charges, less a reasonable allowance for the consumer’s use of the vehicle.”

This means the manufacturer has 2 options: replace the vehicle, or repurchase the vehicle. While the statute does seem to allow the manufacturer to make the choice, no one can force a consumer to agree to a deal they don’t want to take.

If a consumer prefers a replacement, the vehicle must be “comparable.” Typically, this means a consumer must accept the same year, make, and model they currently own. If a newer model year is available, a consumer may be able to upgrade, but would also be responsible for any increase in MSRP. Under a Missouri lemon law replacement, the consumer would still be responsible for paying the manufacturer a “reasonable allowance” for the use of the vehicle.

The repurchase option requires a manufacturer to take the vehicle back and refund the full purchase price of the vehicle, including “all reasonably incurred collateral charges.” The Missouri lemon law helpfully defines “collateral charges” as including all sales tax, license fees, registration fees, title fees and motor vehicle inspections. Whether finance charges should be included will the subject of a later post.

What does that mean? Generally, you get back everything you have paid, though Missouri law allows a manufacturer can subtract “a reasonable allowance for the consumer’s use of the vehicle.” The Missouri legislators were aware that other state laws give more precise formulas, yet chose not to enact a statute with such guidance. The only conclusion we can draw is that Missouri wanted this offset to be negotiated on a case-by-case basis. Unlike many other states, Missouri law emphasizes “use” instead of mileage attributable to the consumer. Depending on a consumer’s use of the vehicle, different amounts of offset may be reasonable.

The Missouri lemon law defines a motor vehicle as “those vehicles propelled by power other than muscular power.” This certainly covers almost all cars and trucks on the road, which use an engine and/or battery power. The Flintstones’ car, though, would not be covered. The Missouri lemon law also covers the “chassis, engine, powertrain and component parts” of Recreational Vehicles (RVs). The Missouri lemon law excludes off-road vehicles, mopeds, and motorcycles.

In 1975, the federal government passed a law, the Magnuson-Moss Warranty Act, designed to protect consumers of almost product, including cars and trucks and electronics and appliances, as long as it came with a warranty. This lemon law applies in all 50 states, including Missouri.

To have a case under the Magnuson-Moss Warranty Act, your vehicle must: (1) have had an unreasonable number of repair attempts, or (2) have been at the dealership for repair attempts an unreasonable length of time. One repair attempt may be unreasonable, if it lasts for too long, for example, 30 days. Similarly, many short repair attempts may also be unreasonable, even if they are for different problems with the vehicle.

Any consumer product is covered. Tt is the common, or normal, use of a product that determines whether it is a consumer product under the federal lemon law. The actual use the product by the consumer may not necessarily be the same as the “normal” use of that product. For example, automobiles are often used for both personal and business uses, but under the federal lemon law, they should nevertheless be considered a consumer product. Even if a manufacturer tries to label its product as “commercial,” that by no means guarantees that the majority of consumers actually use the product for a business purpose.

Generally, you have 4 years to bring a federal lemon law case in court, but this time limit may sometimes be extended. A cause of action accrues “from the date on which the defect was or should have been discovered.” 400.2-725(2) R.S.Mo. This means that a consumer probably does not know on the day of purchase that the vehicle is going to be a lemon. One court decisions says the date the defect was discovered was the first repair attempt, and the 4 year time limit starting running from that date. Another court decision suggested that the statute of limitations cannot expire before the actual warranty expires, so you get the full benefit of any warranties that are longer than four years.

If a consumer prevails under the federal lemon law, the court awards damages, that is, an amount of money for the harm suffered. The monetary award is like an after-the-fact rebate, where the manufacturer acknowledges that the price paid for the vehicle as too much, given its problems. The amount of money is determined by taking the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted. In other words, The damage formula seeks to determine the “actual value” of the vehicle if a consumer, armed with foreknowledge of events, such as the true repair history of the vehicle an, could be sent back to the date of purchase. We can’t send a consumer back in time to the date of purchase to conduct the experiment of continuing the negotiation on the purchase price, but it is certainly possible that a reasonable person would not have bought the vehicle. Thus, a consumer can argue for a full refund, since the difference between the purchase price and 0 is the full purchase price. Unlike the Missouri state lemon law, the consumer keeps the vehicle for the federal lemon law, and the title of the vehicle, the warranty of the vehicle, and any outstanding loans remain unaffected. As a practical matter, therefore, most manufactures will not agree to a full refund, because it would result in the consumer getting the car for free. Nevertheless, the car may not be worthless, but certainly worth less than the purchase price.

An important feature of both the Missouri state lemon law and the Magnuson-Moss Warranty Act federal lemon law is the provision that the manufacturer is responsible for paying the consumer’s attorney’s fees. This means that we can handle cases on contingency – where we keep track of the amount of time that we spend working on a case, but do not ask the client to pay those bills up front. Instead, we seek to have the manufacturer pay all of the fees. A consumer therefore need to spend any money out of pocket. Since we don’t get paid unless we win or settle your case, we have become very good at picking out winning cases. Moreover, if we lose, the consumer never owes us any attorney’s fees. That is the risk we are willing to take to get to handle these types of cases.

Contact Brody & Cornwell today for a free consultation. There is never a fee to talk to us.