Monday, May 20, 2019

Florida’s Lemon Law

Law Matters

A car with many problems is often referred to as a lemon. In an effort to assist the unlucky purchasers of new cars with problems, and turn lemon into lemonade, Florida’s legislature enacted the Motor Vehicle Warranty Enforcement Act in 1983. The Act provides an alternative to expensive lawsuits.

The Act applies only to new motor vehicles, it protects both purchasers and lessees. The Act includes motor vehicles designed to transport persons or property, including recreational vehicles, but there are some differences in procedures when recreational vehicles are involved. Living facilities of a recreational vehicle are excluded. Also excluded are vehicles run only on tracks, off-road vehicles, trucks over 10,000 pounds gross weight, and motorcycles.

The Act is limited to protecting a consumer’s rights under the manufacturer’s warranty. The manufacturer is required to provide written disclosure at time of purchase of any certified procedure established by the manufacturer for warranty claims and where to file a claim under its settlement procedure. If the manufacturer does not have a state certified settlement procedure or if the purchaser is unhappy with decision under its procedure, the purchaser can apply for arbitration.

Lemon Law protection does not last forever. The Lemon Law Rights Period ends 24 months after the date of the original delivery of a motor vehicle to a consumer.

The Act requires motor vehicle manufacturers make repairs needed under the warranty as long as the consumer first reports the problem during the Lemon Law Rights Period. That can even require repairs after expiration of that time. If the manufacturer is unable to repair the same non-conformity after three attempts, the consumer must give written notice, by registered or express mail to the manufacturer of the need to repair the non-conformity. The manufacturer has 10 days after receiving the notification to respond and give the consumer opportunity to have the motor vehicle repaired at a reasonably accessible facility. All too often, it ends up being the same dealer, who was unable to fix the problem. The manufacturer may send a “special” representative to oversee or do the work. If it’s still not fixed, the vehicle is officially not conforming.

Another part of the statute provides that if the motor vehicle is out of service by reason of repairs of one or more nonconformities for total of 15 or more days, not including down time for routine maintenance prescribed by the owner’s manual, a consumer can also notify the manufacturer by registered or express mail and give the manufacturer an opportunity to inspect or repair the vehicle.

If the manufacturer cannot conform the motor vehicle to the warranty by repair or correction after a reasonable number of attempts, the manufacturer must repurchase the motor vehicle and refund the purchase price to the consumer within 40 days, less a reasonable offset for use. Alternatively, the manufacturer can provide a replacement motor vehicle if the consumer will pay a reasonable offset for use. The refund or replacement must include all reasonably incurred collateral and incidental charges. The consumer has an unconditional right to choose a refund rather than a replacement. The refund is made to the consumer and any lien holder of record as their interest may appear. That means, if there is a loan secured by the vehicle the lender may get all of the refund and that might not even pay off the loan.

A reasonable number of attempts is presumed by statute to be three attempts plus a final attempt to cure the same nonconformity or when the vehicle has been out of service by reason of repair of one or more nonconformities for a cumulative 30 or more days.

Seem simple? Not necessarily. The Act allows the manufacturer to claim as a defense that the alleged nonconformity does not substantially impair the use, value, or safety of the motor vehicle; the nonconformity is the result of accident, abuse, neglect, or unauthorized modifications or alterations; or if that the claim is not filed in good faith.

The other problem with the statute is that it recognizes use of a motor vehicle by the consumer, even one that is defective, has a value. Reasonable offset for use is determined by multiplying the purchase price by the number of miles driven and then dividing that figure by 120,000.

Repurchase is not automatic and manufacturers frequently dispute the consumer’s claim that the motor vehicle is defective. If a manufacturer has a certified procedure under the Act, the consumer must file a claim under that procedure no later than 60 days after expiration of the Lemon Law Rights Period. If a decision is not rendered under the certified procedure promptly, the consumer may apply for the matter to be pursued under arbitration with the Florida New Motor Vehicle Arbitration Board. If the manufacturer does not have a certified procedure to address the issue, the consumer may apply directly to the board for arbitration. A consumer who has filed a claim with a certified procedure within 60 days after expiration of the Lemon Law Rights Period and is not satisfied with the manufacturer’s decision or compliance may also apply for arbitration. A manufacturer may not seek review of the decision made under a certified procedure.

Once accepted for arbitration, the procedure moves quickly. Hearing must be held within 40 days. A panel of arbitrators will hear the case and each side has opportunity to present witnesses and evidence, much like a trial. The Act mandates that the board grant relief if a reasonable number of attempts have been undertaken to correct the nonconformity or nonconformities without success. If either party is unhappy with the arbitration decision, appeal may be filed to circuit court with a trial de novo. The appealing party is required to submit a petition stating the action requested and the grounds for appeal and it must be filed within 30 days after receipt of the arbitration decision. If the appeal is not filed and the manufacturer does not comply with the arbitration decision within 40 days, the manufacturer may be fined up to $1,000 per day up to an amount twice the purchase price unless the manufacturer provides clear and convincing evidence that the delay was beyond its control or was acceptable to the consumer.
Few appeals are filed because of expense and because of the risk to the manufacturer. Even though the matter is heard as a trial de novo, which usually means you start from the beginning, courts have opined that the party appealing the arbitration decision must show why the arbitration decision should be changed. If the manufacturer appeals and loses, the consumer is not only entitled to the value of the award, but also attorney fees for the trial and all costs and continuing damages of $25 per day for each day beyond the 40 day period following the manufacturer receipt of the arbitration decision. If the court determines the manufacturer acted in bad faith filing the appeal or brought the appeal solely for delay or harassment, the court can double and may triple the amount of the total award.

Florida’s Lemon Law only provides consumers with procedure to enforce new motor vehicle warranties. The procedure can be effective if timely pursued, but only to the extent of the warranty. Because of the offset for use, it provides better protection for owners of vehicles with low mileage. The Act provides protection that can be pursued without an attorney. In practice, attorneys are still recommended due to the intricacy of presenting evidence and the case at arbitration or even trial. In any event, the Act provides an option to help consumers that should be quicker and cheaper than a lawsuit.

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