by David Ziemer
A recent decision by U.S. District Court Judge William C. Griesbach addresses a host of issues that can arise when a Lemon Law case is, or is arguably, subject to diversity jurisdiction in federal court.

First, a vehicle that is purchased out of state is not subject to Wisconsin’s Lemon Law.

Second, a federal court may entertain a claim under the Magnuson-Moss Warranty Act, even if there is no valid claim under the Lemon Law.

Finally, under Wisconsin law, privity of contract must exist between a manufacturer and a consumer to create an implied warranty.

Wisconsin residents Lawrence and Carol Lamont bought a new Winnebago recreational vehicle (RV) from Crystal Valley RV, a motor home dealership in Illinois. They made an initial $1,000 deposit over the phone with a credit card, but picked up the RV and paid the balance in Illinois.

The Lamonts experienced a number of problems with the RV, and demanded that Winnebago Industries give them a different one, pursuant to Wisconsin’s Lemon Law, sec. 218.0171.

When Winnebago refused to do so, the Lamonts filed suit in state court, alleging that Winnebago violated the Lemon Law and the Magnuson-Moss Warranty Act.

Winnebago removed the case to federal court, which granted summary judgment in favor of Winnebago on the Lemon Law claim, but not the Magnuson-Moss claim.

Lemon Law

The court first held that Wisconsin’s Lemon Law was not applicable because the RV was purchased in Illinois.

The Lamonts argued that, by making a down payment via credit card over the telephone from their home in Wisconsin, they purchased the RV in Wisconsin.

However, the court disagreed, because the dealer never came to Wisconsin. Because the Lamonts went to Illinois to pay the balance and take delivery, the court concluded the purchase occurred there.

Accordingly, the court granted summary judgment to Winnebago on the state Lemon Law claim.

Magnuson-Moss

The court then held that it had jurisdiction over the Magnuson-Moss warranty claim.

A claim under the Act can be brought in federal court if the damages exceed $50,000.

In Schimmer v. Jaguar Cars, Inc., 384 F.3d 402 (7th Cir. 2004), the Seventh Circuit held that the jurisdictional limit was not met, even though the plaintiff was seeking a refund of the price he paid for a car (almost $70,000). The Seventh Circuit concluded that the actual damages (the price paid less the value of the defective car) were less than $50,000.

In the case at bar, Judge Griesbach acknowledged that the same was probably true of the defective RV. Nevertheless, he exercised jurisdiction, because the record did not reveal the RV’s present value.

Judge Griesbach also concluded that the interests of efficiency and economy of resources warranted exercising jurisdiction.

Implied Warranty

Turning to the merits, the court concluded that there was no implied warranty of merchantability between Winnebago and the Lamonts.

While some states have judicially imposed such a warranty between manufacturers and the ultimate consumers, the court found Wisconsin has not done so. Absent any privity of contract between Winnebago and the Lamonts, the court held that no implied warranty existed.

However, the court concluded there was a jury question whether the Lamonts were covered by an express limited warranty on Winnebago’s part.

The RV came with a warranty from Winnebago for 12 months or 15,000 miles, whichever occurred first. However, it excluded certain items from coverage, including the chassis.

The court acknowledged that most of the Lamonts’ complaints concern the chassis, but, based on the record, it could not conclude that this was true as to all of the defects alleged.

Accordingly, the court denied summary judgment on the claim alleging that Winnebago failed to meet its obligations under the written warranty.

Analysis

Griesbach’s conclusion that there must be privity between a consumer and a manufacturer to bring an implied warranty claim under Magnuson-Moss is interesting, because, if such a rule exists, it seems to be commonly disregarded.

The court acknowledged that the Wisconsin Supreme Court case of Mayberry v. Volkswagen of America, Inc., 2005 WI 13, 278 Wis.2d 39, 692 N.W.2d 226, involved just such a claim.

Griesbach wrote, “Although the Court in Mayberry addressed the measure of damages for breach of an implied warranty of merchantability that was alleged to have arisen under similar circumstances, the decision contains no discussion as to whether and how such a warranty arose in the first place. Apparently, the issue had never been raised. The Lamonts have pointed to no Wisconsin case that abolishes the requirement of privity of contract for implied warranty claims.”

However, Mayberry is not the only such case.

In Peterson v. Volkswagen of America., Inc., 2005 WI 61, 281 Wis.2d 39, 697 N.W.2d 61, the buyer also brought implied warranty claims against a manufacturer, despite the absence of privity. Yet, that was never raised as an issue in that case either.

The same is true of a much older, unpublished opinion from the Wisconsin Court of Appeals, Schrimpf v. General Motors, 107 Wis.2d 739, 321 N.W.2d 364 (Table) 1982 WL 171949 (Wis.App., Mar. 10, 1982).

It may be the case that privity is still essential for a valid implied warranty claim under Wisconsin law. However, it appears that the rule may be observed more in the breach than in the observance.

The state Attorney General’s Office has settled with a Fife, Wash., car dealership that sold used luxury cars that had been repurchased under a California lemon buyback law without the necessary disclosures to customers.

McCann Motors didn’t tell the 79 unsuspecting buyers who paid up to $50,000 to own secondhand Hummers and Cadillac Escalades that the vehicles, which previously had been returned to the manufacturer, could have potential problems, the AG’s office says.

They may have negotiated differently if they had received the Lemon Law disclosures required under Washington law, said Doug Walsh, chief of consumer protection division in the AG’s office.

Washington law requires that a bright yellow flier be placed in the window which reads, “Lemon Law Resale Notice of Nonconformity or Serious Safety Defect.”

As part of the settlement, the dealer will contact the buyers and work out a reasonable solution. The dealership also agreed to pay $12,000 in state attorneys’ fees and costs. McCann Motors didn’t admit to any wrongdoing.

The state’s complaint and settlement were filed today in Pierce County Superior Court.

If you live in Massachusett and is interested in buying a car learn the lemon law of that state, it could save you a tonne of money and headaches

First, the law only applies if you have a car less than a year old with fewer than 15,000 miles. It must have problems that affect the vehicle’s use, safety, and value. The manufacturer or dealer is allowed three tries to fix the problem, or until the car has been out of service for 15 days.

If the problem continues, you have to give the auto maker one more chance. They have up to seven business days to remedy the problem. If they fail or refuse, you can demand (by certified mail) a refund or replacement. If they don’t comply, an arbitration process begins. For more information, click on the Lemon Law link at www.mass.gov/oca.

By PHUONG CAT LE

Seventy-nine customers who bought secondhand Hummers and Cadillac Escalades from a dealership in Fife didn’t get all the legal disclosures about the vehicles’ history, according to the state Attorney General’s Office.

The AG’s office reached a settlement Friday with McCann Motors in which the auto dealership agreed to notify the customers of what happened and offer to work out a suitable resolution. The dealership did not admit wrongdoing but agreed to pay $12,000 in state attorneys’ fees and costs.

Buyers didn’t get a notice that the cars were reacquired by their manufacturer under California’s Lemon Law before being resold in Washington, the office said.

If you buy a car in Washington, the state’s Lemon Law and other consumer laws protect you by requiring certain disclosures about the vehicle.

“The price of prestige probably was too high for some of these buyers who paid up to $50,000 for luxury cars but may have negotiated differently had they received the required Lemon Law disclosures,” consumer protection division chief Doug Walsh said.

The buyers signed paperwork that included a notice that the cars had been repurchased under a California Lemon buyback law, but they didn’t get special disclosures that the state contends would have made it more obvious that these cars could have potential problems, he added.

State law requires that a bright yellow flier be placed in the window of the car that reads “Lemon Law Resale Notice of Nonconformity or Serious Safety Defect” and that customers get documents telling them that the title will include a statement that the vehicle was previously returned to the manufacturer and this may affect the vehicle’s future resale value.

The state alleged that failure to provide those disclosures violated state laws.

Q. I bought a new car recently and it has been a pain. I’ve brought it back to the dealer to get it repaired three times, and every time I get it back it seems to have another problem. The reason I got a new car was to avoid these kinds of problems. How does the state’s Lemon Law work and will it help me?

If you bought the car new in Florida, it could. There are a fair amount of hoops, though.

First, the problem has to something that “impairs the use, value or safety” of the car. If that is the case, you then have to have had the car (and documented it) toe the dealer or an authorized service shop at least three times for the same problem or have had the car out of commission for 15 total calendar days.

If that applies, you then have to notify (certified mail, with a receipt) the manufacturer of your claim under the Lemon Law. You should use this form: www.800helpfla.com/pdfs/DefectNotificationform.pdf

You then have to give the manufacturer one last shot at fixing your car. After that, you can request arbitration to resolve the situation.

For more information, go to www.800helpfla.com/lemonlaw/lemon-text.html

Q. I used a car service out of West Palm Beach recently and the driver didn’t know where he was going, the car was filthy and the driver was just plain rude. A friend told me that cabs and limos have to have a special license and permit. I’ve never noticed anything official-looking in the car I was in. What is the law?

A. In Palm Beach County, so-called vehicles for hire must have a county-issued permit, and all drivers have to wear an identification badge issued by the county’s Consumer Affairs office.

The licensing rules set minimum standards for the companies to try to ensure their vehicles are safe and insured.

In 2007, two companies were stripped of their permits for failing to get the proper insurance. AA Limousines of Delray Beach and Big Apple Limousine Service, which operates out of Pompano Beach, both had their right to operate in the county revoked. Big Apple, however, did straighten out its situation and, as of early August, had a valid license.

Having a regulated industry can give an advantage to consumers. If you run into a problem with a car service, whether it is a taxi or a limo, you can contact Palm Beach County Consumer Affairs and lodge a complaint. The number is (561) 712-6600.

Go to www.pbcgov.com/publicsafety/consumeraffairs/forhire/ to find out more about the rules and to get a list of licensed companies.