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In addition to a myriad of other consumer protection matters, Golden & Cardona-Loya, LLP represents Californians dealing with Lemon Law issues. The “Lemon Law” is found in California’s Song-Beverly Consumer Warranty and Tanner Consumer Protection Acts. One key aspect of these laws is the consumer protection component, meaning the laws apply to “Consumer goods” which the Song-Beverly Act defines as “any new product or part thereof that is used, bought, or leased for use primarily for personal, family, or household purposes, except for clothing and consumables.” (Cal. Civil Code § 1791(a), emphasis added.) As you can see, the law covers more than just new cars, but for now, we’ll stick with vehicle sales.
Here’s a guideline in analyzing what vehicles, consumers, and problems are covered. Please note this information is not exhaustive and is only meant to highlight some of the more common issues consumers have experienced.
The Lemon Law covers a “new motor vehicle” (including the chassis cab of a motor home, a dealer-owned vehicle, a “demonstrator”, or other vehicle sold with a manufacturer’s new car warranty) that is used or bought for use primarily for personal, family or household purposes, or has a gross vehicle weight under 10,000 pounds and be bought or used primarily for business purposes by any person or business to which at least one but not more than five motor vehicles are registered in California.
The vehicle must also have been purchased/leased at retail in California or purchased/leased by a full-time active duty member of the Armed Forces who were stationed or residing in California at the time of purchase or lease or at the time the claim is filed.
The Lemon Law covers “nonconformities” meaning any vehicle defect or malfunction that is covered by the manufacturer’s written new vehicle warranty and substantially impairs the use, value, or safety of the vehicle to the consumer. Nonconformities caused by the unauthorized or unreasonable use of the vehicle after-sale are not covered.
The manufacturer must be provided an opportunity to repair the nonconformities before a consumer can seek relief under the Lemon Law. If the vehicle cannot be repaired after a reasonable number of attempts, the manufacturer must either replace or repurchase (commonly referred to as a “buy-back”) the vehicle. The manufacturer must be provided more than one attempt to repair the vehicle (each occasion that is an opportunity for repairs counts as an attempt, even if no repairs are actually done). Thus, before we could take on a case it is important you have tried to get the issue fixed.
So what’s a reasonable number of attempts? The Lemon Law is noncommittal regarding a specific number of attempts, but provides a presumption (that may possibly be “rebutted” by the manufacturer) that a reasonable number of repair attempts have been made if, within 18 months from delivery to the first retail buyer/lessee or 18,000 miles on the vehicle odometer, whichever comes first, one or more of the following occurs:
The 30-day time period in #3 is extended only if repairs cannot be performed due to conditions beyond the control of the manufacturer or its agents. The notification requirement in #s 1 and 2 apply only if the manufacturer clearly and conspicuously disclosed, in the warranty or owner’s manual, the provisions of the lemon law and the direct notice requirement.
Replacement: The manufacturer would provide a replacement vehicle that must be new and substantially identical to the vehicle replaced. (The replacement would be accompanied by all express and implied warranties that normally accompany new vehicles of that kind.) The manufacturer must pay for collateral charges incurred in connection with the replacement vehicle but not for those incurred in connection with the original vehicle’s purchase. In addition, the manufacturer must reimburse the purchaser for any reasonable incidental damages (e.g. having to use Uber, Lyft, public transportation, etc.). If a vehicle is replaced, the consumer may be required to pay for the original vehicle’s use. (More on the vehicle use deduction, below).
Repurchase (aka “Buy Back”): This remedy works differently depending on whether you own or leased the vehicle.
The repurchase of an owned vehicle results in a refund to you of:
The repurchase of an owned vehicle may also result in a deduction of the vehicle’s reasonable use. The formula for the deduction is found at Civil Code § 1793.2(d)(2)(C) and is calculated as follows:
Purchase price x # of miles driven prior to first delivery for the repair of the defect
So how does a repurchase look like in the real world? See the table below for an example. (Please note the table is an example and not a guarantee of any kind of result; this arrangement also reflects a negotiation not involving any litigation).
How the repurchase of a leased vehicle works is not included in California’s Lemon Law, but a relied upon guideline is provided by the California Arbitration Review Program considering the repurchase of a leased vehicle as a proper remedy.
Here, the lessor (who you make payments to) receives the pay-off amount due on the lease agreement minus the amount of any security deposit held by the lessor and minus the amount of any refund due to the lessor for the unexpired term of a service contract or insurance included in the lease agreement.
The lessee (you, the consumer), receives (1) Collateral charges (official fees paid by you including sales tax, license fees, and registration fees); (2) Incidental damages (reasonable expenses incident to the vehicle problem for which the manufacturer is repurchasing the vehicle, not including charges for which the consumer is justly responsible, such as reasonable repair, towing and rental car costs actually incurred by the consumer, and prepayment penalties, early termination charges and earned finance charges, if actually paid, incurred, or to be incurred by the consumer); (3) Base monthly payments (total monthly payment minus collateral charges) made by the lessee to the lessor up to the time of repurchase; (4) The amount of any trade-in or deposit made by the lessee (capitalized cost reduction); and (5) The amount of any security deposit held by the lessor.
The repurchase of a leased vehicle may also result in a use deduction as explained above.
The Lemon Law may still apply to the sale of a defective used vehicle. “[T]he obligation of a distributor or retail seller of used consumer goods in a sale in which an express warranty is given shall be the same as that imposed on manufacturers….” (Civ. Code § 1795.5, emphasis added.) California State and Federal cases support this. (Jensen v. BMW of North America, Inc. (1995) 35 Cal.App.4th 112, 123, fn. 2, citing Civ. Code § 1795.5; accord Dagher v. Ford Motor Co. (2015) 238 Cal.App.4th 905, 918; Reveles v. Toyota By the Bay (1997) 57 Cal.App.4th 1139, 1155-1158; and Johnson v. Nissan North America, Inc. (N.D. Cal. 2007) 272 F.Supp.3d 1168, 1178.)
So as long as your purchase of a used car also involved an express warranty provided to you, the Lemon Law can still apply!
“‘Express warranty’ is defined in the Song-Beverly Act as including, ‘[a] written statement arising out of a sale to the consumer of a consumer good pursuant to which the manufacturer, distributor, or retailer undertakes to preserve or maintain the utility or performance of the consumer good or provide compensation if there is a failure in utility or performance…. [Citation.]’” (Reveles, 57 Cal.App.4th at 1155, quoting Civ. Code § 1791.2(a)(1).)
Even if there is no warranty, you may have other possible claims if the car dealer made misrepresentations in its sale of the used vehicle under the California Consumers Legal Remedies Act and common law fraud.
If you believe you purchased a “Lemon” or were otherwise defrauded in purchasing a vehicle, please contact the attorneys at Golden & Cardona-Loya, LLP for a free consultation. Keep in mind the passing of time and mileage may affect your rights and/or possible recovery, so it is important to address Lemon Law issues as early as possible.