State Lemon Law Coverage Terms: Dissecting the Differences Philip R

Loyola Consumer Law Review Volume 11 | Issue 1 Article 5 1998 State Lemon Law Coverage Terms: Dissecting the Differences Philip R. Nowicki PhD. Executive Dir. Of the International Assoc. of Lemon Law Administrators Follow this and additional works at: http://lawecommons.luc.edu/lclr Part of the Consumer Protection Law Commons Recommended Citation Philip R. Nowicki PhD. State Lemon Law Coverage Terms: Dissecting the Differences, 11 Loy. Consumer L. Rev. 39 (1998). Available at: http://lawecommons.luc.edu/lclr/vol11/iss1/5 This Feature Article is brought to you for free and open access by LAW eCommons. It has been accepted for inclusion in Loyola Consumer Law Review by an authorized administrator of LAW eCommons. For more information, please contact [email protected]. State Lemon Law Coverage Terms: Dissecting the Differences by Philip R. Nowicki, Ph.D. State "lemon laws" provide consumers statutory protection against The author did his doctoral defects when purchasing vehicles. dissertationon lemon laws in 1987 Attorneys and consumers should be at the Syracuse University Maxwell aware of the fact that state "lemon School of Citizenship & Public laws" differ significantly from state to Affairs. From 1988-96, he served as state. Uninformed consumers, Executive Directorof the Lemon Law unaware of the differences in state ArbitrationProgram in the Florida lemon laws, may inadvertently Office of the Attorney General. He relinquish critical statutory protections has drafted model lemon law across state when purchasing vehicles legislationfor the Council of State lines. Governments in 1988 and the This article analyzes the lemon law coverage terms in effect July 1, 1997, in National Conference of State all 50 states as well as the District of Legislatures in 1990. Last year, he Columbia.1 Section I addresses general served as Executive Directorof the warranty coverage terms, differing InternationalAssociation of Lemon impairment standards, and issues Law Administrators (IALLA), a non- relating to place of purchase or profit organizationformed in 1997. registration. Section II delineates The author thanks Janet Smith, coverage term issues of non-traditional FloridaAssistant Attorney General, vehicles and non-traditional usage of for her help in editing the article. vehicles. Section III addresses coverage term issues pertaining to rights and reporting periods and attempts by purchased. The place of purchase consumers to repair defects. This determines which state's law the article concludes by analyzing the 1997 consumer must look to for protection. legislation and the possible impact it After determining the applicable state consumer must look to the may have on lemon law coverage law, the terms. general warranty coverage terms since each state's general warranty coverage differs significantly. Finally, a state's SECTION I definition of impairment may create A threshold issue for any lemon law barriers for consumer protection. These case is where the vehicle was three issues are addressed in this 1998 Loyola Consumer Law Review * 39 section. coverage determinant. Seven other states are even more restrictive, Place of Purchase or Registration limiting coverage to those consumers who purchase (or, if applicable, lease) In 25 states, lemon law coverage is and register vehicles in those states.8 limited to vehicles purchased in that However, in one of these states, 2 state. Fifteen of these states explicitly Indiana, nonresidents who purchase or cover leased vehicles which must be lease the vehicle in that state are also acquired in those states for the lessees covered. 3 to receive protection. Another state, The coverage variations create Iowa, covers vehicles purchased or interesting scenarios. For example, leased in that state and vehicles Maryland consumers who buy in West purchased or leased in other states if Virginia can opt for coverage under the consumer is an Iowa resident at the both lemon laws. Conversely, West time his or her rights are asserted. Virginia consumers who buy in Some lemon laws, such as those of Maryland become lemon law "nomads," Arizona, Illinois, South Dakota and falling outside the scope of either Virginia, are silent as to the place or state's criteria. Across the country, type of transaction that triggers double or no coverage is more the rule, coverage, but agency officials are and single state coverage the exception, inclined to deem an in-state sale (or, if when consumers buy their vehicle in applicable, lease transaction) as the one state and register it in another. 4 governing criteria. New Hampshire Consequently, the majority of and Ohio are also silent. However, transferred military personnel and New Hampshire recognizes in-state those who move to other states after acquisitions or registrations in its acquiring their vehicles will find criteria for eligibility for state-run themselves with a choice of lemon law arbitration.' Ohio covers in-state sales remedies, or none at all. and also recognizes coverage for vehicles registered in that state, but Warranty Coverage Terms purchased elsewhere, viewing it as a condition for manufacturers to be The terms of the vehicle's warranty licensed to do business in that state.6 can play a factor in what is and what is The District of Columbia and 12 other not covered under a state's lemon law. states, besides New Hampshire and For example, several states tie coverage Ohio, provide coverage for vehicles of a vehicle's defects to the terms of the purchased or registered in those states. manufacturer's written warranty. In However, Vermont requires the in-state Alabama, Alaska, Colorado, Georgia, registration to occur within 15 days of Kentucky, New York, South Carolina, lease or purchase. South Dakota and Wyoming, coverage Alaska, Maryland and Oklahoma of a vehicle's defects is tied to the terms use in-state vehicle registration as the of the manufacturer's written 409 Loyola Consumer Law Review Volume 11, number I warranty. Fifteen states, Arizona, Vermont, consumers get the benefit of California, Connecticut, Maine, any express warranty as that term is Montana, Nebraska, Nevada, North defined under their state's Uniform Carolina, North Dakota, Oklahoma, Commercial Code. It appears that, in Oregon, Tennessee, Texas, Utah and these states, certain representations Wisconsin, appear to have the same made by the dealer could create application. They limit warranty warranty rights that the manufacturer coverage to any applicable express would have to honor. Michigan has the warranty and the manufacturers' same provision, but limits such written warranties disclaim all other warranties to those made by the express warranties. manufacturer. Consumers in Idaho also Six states, Delaware, Louisiana, get the benefit of any express warranty, Minnesota, Ohio, Pennsylvania and other than statements of value, opinion West Virginia, also limit coverage to or commendation of the vehicle, or the manufacturer's written warranty as representations of general policy it "pertains to the vehicle's condition concerning buyer satisfaction. Indiana and fitness for use." New Jersey has consumers are covered when the defect the same provision, but also provides or condition does not conform to the implied warranty protection (discussed applicable manufacturer's warranty, or below). In Mississippi, Missouri and is one that substantially impairs the New Mexico, the consumer's warranty use, market value, or safety of the rights stem from the manufacturer's motor vehicle. The second provision is written affirmation of fact or promise unique for any state since it is set apart in connection with the sale of the from the first provision and the rest of vehicle which relates to the nature of the statute does not confine it to any the material or workmanship, or type of warranty. promises to meet a specified level of In the District of Columbia and New performance over a specified period of Jersey, consumers get the protections of time. In these states, a brochure the manufacturer's implied warranty. prepared by the manufacturer that Virginia and Washington consumers promises "an especially quiet ride" get the benefit of any implied warranty. may create a warranty obligation that In Kansas, Massachusetts and Rhode the manufacturer might otherwise not Island, consumers are covered in have to meet. Arkansas, Florida, similar fashion. The Massachusetts and Hawaii, Iowa, Virginia and Rhode Island laws cover defects that Washington have similar language, but do not conform to any applicable also apply it to other manufacturer express or implied warranty. In Kansas, expressions. Arkansas, Virginia and any applicable warranty can provide Washington consumers also get certain coverage. Maryland consumers get all implied warranty rights (discussed express and implied warranty coverage below). provided under that state's Uniform In Illinois, New Hampshire and Commercial Code. The implied 1998 Loyola Consumer Law Review 0 41 warranties are of merchantability and value are not likely to be covered, since fitness for a particular purpose.9 In they do not impair the vehicle's use. Arkansas, consumers get the benefit of States use the term "value" the implied warranty of merchantability. differently. For instance, Wyoming uses Consumers in these jurisdictions the term "fair market value" instead of should have implied warranty rights at "value." While twenty-five other states least for their respective state law's use "market value."' 5 The word term of protection, or the term of the "market" makes the impairment test manufacturer's express warranty, less subjective. Presumably, the test is whichever occurs first.1° whether the defect substantially reduces the resale price of the vehicle, Impairment Standard when compared to similar vehicles without the defect. In Texas, the defect One area where states appear to be must cause a substantial loss in market in agreement is the use of the term value. Massachusetts arbitrators must "impairment." In most states, to qualify consider "whether the motor vehicle's for relief, a defect or condition must market value is at least ten percent substantially impair the use, value or lower than it would have been, but for 11 safety of the vehicle.

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