The Delaware Lemon Law May Be “Lemon” Aid
What are your rights and options if you buy a car, truck, or motor home and discover it has a serious problem? One of your options is to file a lawsuit under the Delaware Lemon Law. The Lemon Law says, in essence, that if you buy a new car with a serious problem that can’t be fixed in four repair opportunities, or if it has any number of problems that keep it out of service for 30 days or more, and either of those things happened during the first year after purchase, the vehicle is presumed to be a “Lemon.” You can get a replacement automobile or cancel the sale and get your money back. In either case you can also force the manufacturer to pay your attorney fees as well.
Use your Warranty
The first course of action is to promptly take your new car to the dealer for repair under warranty. Courts have said that the purpose of the warranty is to give the manufacturer a reasonable opportunity to repair the automobile and to give the consumer a properly operating automobile in a reasonable amount of time. This is also required for the Lemon Law.
The Delaware Automobile Warranties Act, 6 Del. C. Ch. 50, is commonly known as the “Lemon Law.” It crystallizes the law of warranty for automobiles. It announces the duty of a manufacturer to repair a new automobile in a “reasonable period of time.”1 One of the great innovations of the Lemon Law is that it creates two “bright line” standards to clarify when a manufacturer has had “a reasonable period of time” to make warranty repairs:
- If, during the first year, a new car is “subject to repair” four times and remains unrepaired, or
- If during the first year, the car is out of service awaiting repair for a cumulative total of 30 days or more,
- Then, it is presumed that the manufacturer has had a reasonable number of attempts or a reasonable period of time to make warranty repairs.
A consumer can also prove violation of the duty without the presumption. For example, if a dealer or manufacturer told a consumer after the first repair attempt not to bring the car back because they couldn’t fix it, the Lemon Law remedies would still be available. It is important to make at least one repair visit during the first year for the Lemon Law to apply.
The Choice of Remedies Belongs to the Consumer
If an automobile is not repaired in a reasonable time, the Lemon Law gives the consumer the following two options:
- To have the vehicle replaced “with a comparable new automobile acceptable to the consumer,” without new or different financial arrangement, or
- To have the manufacturer repurchase the car for the original purchase price, plus other out of pocket expenses, such as taxes, tags and the like, less a “reasonable allowance for use.” The “allowance for use” only affects repurchases, and is also set by a statutory formula: Purchase Price multiplied by mileage at first report of the Lemon problem, divided by 100,000. This usually results in a very small sum.
The Lemon Law also permits the consumer to recover attorney’s fees and costs regardless of which remedy is selected.
To be covered by Delaware’s Lemon Law, an automobile must be purchased in Delaware or registered in Delaware. Many cars purchase out of state are covered once they are registered in Delaware.
Limitations: The Lemon Law Applies Only to “New” Cars
The Lemon Law imposes the duty only to “new” automobiles. “New” is not defined by the Lemon Law. However, the definition of a “consumer” makes it clear that the Lemon Law applies to demonstrator cars, as well as other new vehicles. The definition of a “consumer” includes not only the purchaser of a new automobile, but also “a person to whom an automobile is transferred during the duration of an express warranty applicable to the automobile,” such as the manufacturer’s express written warranty that comes with an automobile. Therefore, demonstrators that have been in use by the dealer are covered by the Lemon Law as are leased vehicles, and even relatively new used cars, so long as the manufacturer’s written warranty coverage is still in effect at the time of purchase.
The definitions allow the Lemon law to cover cars purchased by businesses and used for business, so long as they are the same type that a consumer would purchase.
Some Vehicles Are Not Covered by the Lemon Law
Only passenger motor vehicles are covered by Delaware’s Lemon Law. Motorcycles are specifically excluded from coverage as are the living quarters of motor homes. Commercial vehicles, such as commercial trucks or their cabs are also excluded. The test is whether it is unusual for a consumer to purchase a particular vehicle for personal, family or household purposes.
However, even without Lemon Law coverage, nearly the same remedies are available under general warranty statutes. The major exception is that attorney’s fees cannot be recovered for “commercial” products that are not usually used for personal, family or household purposes.
Substantial Impairment of the Vehicle is Required
The Lemon Law does not give a consumer remedies for every problem with a car that is not fixed in four attempts. A “nonconformity” to the manufacturer’s warranty is a “defect or condition” which “substantially impairs the use, value, or safety of an automobile.”
The inclusion of the term “condition” means that a consumer does not usually need to identify a specific part that is defective, but can describe what happens while driving. A car can stall for any number of reasons. A consumer is not generally expected to know more than the factory- trained mechanics who cannot fix a problem. It is enough that a consumer complain that the car has a “condition” of stalling intermittently. It helps even more if the service department confirms the problem too.
It is not enough that the defect or condition merely impair the use, value, or safety of the car. It must be “substantially impaired.” A “thought experiment” for this purpose is often useful. Imagine that a buyer is considering buying one of two cars: your car with its “condition” and another car of identical year, make, model, equipment, and appearance, except it does not have your car’s “condition.” If the buyer knows of the “condition” will he even buy your car? Will he pay the same as for the car that is not afflicted? In most cases, common sense is all that is required to satisfy the substantiality test. Usually the consumer’s own testimony is all that is required.
“Conditions” that satisfy the requirement of substantiality include:
- Repeated stalling
- Rain seepage into the passenger compartment
- Badly peeling paint
- Defective doors that close improperly
- Defective transmission
- Defective brakes
Occasionally there is an issue that may require expert testimony. For example, I once called a used car salesman to refute the testimony of a mechanic that a car that had been flooded with water was perfectly acceptable and suffered no substantial impairment in its value. In another case a salesman testified that a moldy odor substantially impaired the value of a new car.
In yet another case, the manufacturer contended that the substantiality impaired test required the consumer to prove that the stalling condition impaired all three: use, and value, and safety. The manufacturer intended to argue that since the car was operable, its value was not substantially impaired. The Superior Court instructed the jury that any one factor need be proved in order to be substantially impaired.
The manufacturer in that case also argued that since the car had not stalled for several months before trial, and that the manufacturer’s inspection immediately before trial showed the car had been driven 60,000 miles, it no longer qualified for protection under the Lemon Law. After all, how could it be substantially impaired if it had been driven all those miles? In closing argument the manufacturer made an analogy that if the car was a steak, plaintiff had been sold a whole steak, and was asking the jury to return only the steak bone to the manufacturer.
The court again rejected the argument, instructing the jury that the relevant time for evaluating the condition of the car was after the fourth repair attempt. If the car was unrepaired at that time, its condition at the time of trial was irrelevant. The right to claim the remedies of the Lemon Law attaches when the statutory requirements are met and demanded. That ruling was in recognition that the Lemon Law contemplates that a manufacturer will refuse to accept return of the car on demand, and allows a consumer to continue to use the car until the case is resolved. (I argued in rebuttal, that the manufacturer gave our consumer a bad steak, and by not taking it back, left her no alternative but to eat the bad steak.)
Notice to the Manufacturer Resolves Several Issues
The presumptions created by the Lemon Law do not apply against the manufacturer “unless the manufacturer has received prior written notification from or on behalf of the consumer, and has had an opportunity to repair or correct the nonconformity….” However, courts recognize that return of the vehicle to an authorized dealer is notice to the manufacturer. If asked, dealer service personnel will confirm this based upon submission of warranty claims to the manufacturer for payment.
A detailed demand letter satisfies a notice requirement under the Magnuson Moss Warranty Improvements Act and is necessary for recovery of attorney’s fees if the Lemon Law count is defeated, as is sometimes the case. It may become evidence that either is presented to a jury, or may prompt admission that notice is not contested.
Collect Key Documentation
Preparing a Lemon Law case requires every document obtained in the purchase or repair of the vehicle, including:
- Sales invoice
- Installment sales contract
- Warranty booklet
- Owners’ manual
- Any other documentation pertaining to the purchase of the automobile
- All service and repair invoices
- All documents concerning out of pocket expenses, including rental cars, towing, and the like.
- A copy of the sales brochure for the year and model of the vehicle is very useful as well.
The consumer should visit the service department and request a copy of the service history printout, as well as copies of all repair invoices, including the “mechanic’s hard copy” as this is where the mechanic’s notes are found. A dealership will usually give these to their customer, but is reluctant to give this information to the attorney representing their customer. Often these notes prove the extent of the repair effort, the notice to the manufacturer as well as other valuable information.
Order a certified title history. For $15.00 the Delaware Division of Motor Vehicles will assemble certified copies of all documents of title. The documents include the “Certificate of Origin” showing sale and delivery to a dealer (sometimes not the selling dealer), as well as each title that has issued and the mileage at each sale. More than once, the certified title history has shown a sale to a purchaser prior to the Lemon Law consumer. This may require addition of allegations of Consumer Fraud for selling a used car as new. Under Delaware titling law, a motor vehicle is “new” only until a title is issued to the first purchaser. Thereafter, it is a used car. If sold again as “new,” there may be consumer fraud. This occurs because of the dealer’s practice of “spot delivery” or giving an unqualified buyer a car while still trying to obtain a loan. If the financing falls through after the title has been issued, the car is used as to the next purchaser, but is often sold as new. It can also occur if a car was a lemon and taken back right away by a dealer.
Other damages that consumers can recover include the finance charges included in the loan payments and pre-judgment interest. These damages increase daily.
Finally, damages for the consumer’s ”aggravation and inconvenience” can be recovered. Delaware Courts have allowed the recovery for the car buyer’s “aggravation and inconvenience” in Lemon Law and breach of warranty cases.
Manufacturers seldom negotiate until suit papers are filed, so a suit is usually necessary. Suit is not a quick process, despite the Lemon Law. Cases can take as little as 6 months (rare) to 5 or six years (also rare), if there is a trial and an appeal.
The following article is informational only and not intended as legal advice. Speak with a licensed attorney about your own specific situation. © Copyright 2011 MacElree Harvey, Ltd. All rights reserved.