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What to Do When the Lemon Law Limits Have Been Exceeded or Do Not Apply to Your Vehicle

The New York Lemon Law applicable to new and used vehicles is provided under New York General Business Law Sections 198-a (new vehicles) or Section 198-b (used vehicles), et sec.

One of the first steps in analyzing a consumer’s rights against the manufacturer (for new vehicles) or against a dealer (for used vehicles) is to determine whether or not the favorable Lemon Law statutes referenced above are applicable.  The outer time limit is a four (4) year statute of limitations from the date of delivery of the vehicle to the commencement of an action or proceeding under the Lemon Law.  In addition, the following time and mileage limitations need be considered:

 

NEW VEHICLES: 4 repairs or 30 days out of service within: 18,000 miles or 2 years, whichever comes first.
USED VEHICLES: 3 repairs or 15 days out of service within:

90 days or  4,000 miles for vehicles with 18,001 – 36,000 mile at time of delivery
60 days or 3,000 miles  for vehicles with 36,001 – 79,999 miles at time of delivery
30 days or 1,000 miles for vehicles with 80,000 – 100,000 miles at time of delivery

It is often difficult for a consumer to satisfy the short time and mileage limitations of the Used Car Lemon Law, which does not apply to any used vehicle sold with excess of 100,000 miles.  The question for the consumer and dilemma for the attorney consumer advocate is to determine what, if anything, can be done to assist the consumer with a defective vehicle or expensive repairs that falls outside of the foregoing Lemon Law limits?  The answer depends on the variety of factors including, among others, the following:

In cases of fraud, such as odometer roll backs or tampering or deliberate concealment of material defects or failure to give written required disclosure of prior substantial accidents or otherwise illegally selling a vehicle that cannot pass inspection or is missing required safety equipment such as airbags or inoperative anti-lock braking systems, etc., an action for fraud maybe commenced within the New York six (6) year statute of limitations as well as other claims maybe alleged in the complaint.

Fraud cases are rare and there are many more instances where the consumer purchases a used vehicle and shortly thereafter finds same to be defective or subject to the breakdowns and expensive repairs.  That is the type of situation to which this blog considers.

It is most important to note that the Lemon Law statutes of New York and other states are not an exclusive remedy, but rather additional protection afforded to a consumer / purchaser of a car, motorcycle, motor home, all terrain vehicle or motorized wheelchair, which can include breach of contract and breach of express and / or implied warranties under various statutes.  Under Federal Law, the Magnuson-Moss Warranty Act can assist purchasers of vehicles that may otherwise not qualify under the Lemon Law, such as instances of vehicles used for commercial rather then personal uses or beyond the above-stated time and mileage limitations.  That is a complex topic that is beyond the scope of this blog.

It is also important to note that under the Uniform Commercial Code, Article 2 Sale of Goods, there are various express and implied warranties applicable to sellers and / or merchants and it is likewise important to distinguish between an individual or casual seller and a merchant, since the implied warranties under the Uniform Commercial Code only apply to those sellers those who are found to be merchants under the statute.  The implied warranties of merchantability and fitness for particular or ordinary purposes are very helpful to consumers who otherwise do not qualify under the Lemon Law Statutes or where short warranties have expired.


For illustrative purposes, I direct the reader’s attention to the New York Small Claims case of Alex Diaz v. Your Favorite Auto RPR decided by Judge Reginald Boddie on May 29, 2012 in the Civil Court of the City of New York, Kings County, Small Claims Part Under Index Number 4404/2011, which provided as follows:

Claimant commenced this small claims action against defendant to recover $3,000 for the cost of repairs to an allegedly defective vehicle he purchased from defendant on April 28, 2011. Claimant purchased a 2002 Audi A6 with 122,519 miles on the odometer. Claimant alleges that within two weeks of purchase he returned with the vehicle because it was not running properly. Claimant alleges the timing belt, water pump, pulley, fan belt, torque converter, and transmission were defective and needed to be replaced. Defendant admits that claimant returned to the dealership with the vehicle and acknowledges that the transmission needed to be replaced. Defendant indicated the water pump was replaced prior to selling the vehicle. Defendant contends that it was not required to replace the transmission because the anticipated cost, $2,200, was greater than the alleged profit on the sale, $350. Defendant further contends that because the vehicle’s mileage exceeded 100,000 at the time of sale warranty of the vehicle is excluded under NY Gen Business Law 198-b, commonly referred to as the “Used Car Lemon Law,” and claimant has no remedy in law.

The court disagrees. The Used Car Lemon Law is not an exclusive remedy (NY Gen Business Law 198-b [d] [2]). Article 2 of the Uniform Commercial Code also governs contracts for the sale of automobiles, as here. Claimant’s purchase of the vehicle from defendant on April 28, 2011, for $5,200, is a contract for the sale of goods governed by UCC 2-201. Section 2-105 of the Uniform Commercial Code defines goods, in relevant part, as “all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid.” The vehicle at issue is considered a good under UCC 2-105 (1). Contracts for the sale of goods by a merchant, by their very nature, include an implied warranty of merchantability (UCC 2-314 [1]). The defendant here is a merchant since his principle business includes the sale and repair of automobiles (UCC 2-104 [1]). Therefore, unless such warranty is waived or modified, the implied warranty of merchantability guarantees that the goods are fit for the ordinary purposes for which such goods are used (UCC 2-314 [2] [c]). It is well-settled under New York law that “to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in the case of a writing must be conspicuous” (UCC 2-316 [2]).

Here, the defendant merchant failed to effectively disclaim the implied warranty of merchantability. Defendant merely indicated “over 100k, no warranty” on the bill of sale. The court finds that these words alone are not conspicuous as required by UCC 1-201 (10) and are insufficient to disclaim the implied warranty of merchantability (UCC 2-316 [2]; Bimini Boat Sales, Inc. v. Luhrs Corp., 69 AD3d 782, 783 [2d Dept 2010], [holding that defendant failed to effectively disclaim the implied warranty of merchantability since the purported disclaimer did not mention “merchantability”]).

Furthermore, here claimant alleges the vehicle was not fit for ordinary use due to a failed transmission and it required a timing belt, fan belt, torque converter, pulley and water pump. The defendant did not dispute that the vehicle required a transmission and water pump. Defendant however states the water pump was replaced prior to sale of the vehicle. Claimant tendered two estimates for replacement of the water pump and no paid receipt. The court finds defendant’s  testimony regarding replacement of the water pump more credible than claimant.

The court also finds that although the vehicle may require a new timing belt, fan belt, and pulley, such are part of a regular tune up and did not render the vehicle unfit for normal use. Nor did claimant establish that defendant knew or had reason to know that replacement of the timing belt, fan belt, and pulley were necessary. Claimant also did not establish the need for a new torque converter.

Finally, the court finds that the vehicle as sold was not merchantable due to the defective transmission, which defendant should have known at the time of sale, and acknowledged shortly thereafter (UCC 2-314; McCormack v. Lynn Imports, Inc., 114 Misc 2d 905, 910-911 [Nassau Dist Ct 1982]). At the very least, a car must be sold in a condition fit for reasonable and safe use on the road (McCormack, 114 Misc 2d at 910-911). A car cannot be operated safely and in a reasonable fashion on the roads with a defective transmission (McCormack at 910-911). The fact that repairing such costs more than defendant alleges it received as a profit is not a defense. In any event, defendant did not establish the amount of profit with admissible evidence.

Section 2-714 (1) of the Uniform Commercial Code allows a buyer who has accepted goods and given proper notification, as here, to recover “damages for any non-conformity of tender the loss resulting in the ordinary course of events from the seller’s breach as determined in any manner which is reasonable.” Non-conformity includes breach of warranties, as here (UCC 2-714 [1], Comment 2).

“The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount” (UCC 2-714 [2]). “Put another way, the measure of damages for breach of contract or warranty with respect to accepted goods is the difference between the fair market value of the goods accepted and their fair market value if they had been as warranted” (Ferraro v. Perry’s Brick Co., 30 Misc 3d 1213 [A], 2011 NY Slip Op 50055[U] [2011], citations omitted). However, Official Comment 3 to UCC §2-714 (2) makes clear that the standard of damages set forth in section 2-714 (2) “is not intended as an exclusive measure.” “Read together, subsections (1) and (2) of section 2-714 provide that plaintiff may recover for its direct damages in any manner which is reasonable” (Ferraro, 2011 NY Slip Op 50055[U], *8, quoting Am. Elec. Power Co. v. Westinghouse Elec. Corp., 418 F Supp 435, 454 n 34 [SD NY 1976], citing see Happy Dack Trading Co. Ltd. v. Agro-Industries, Inc. et al, 602 F Supp 986, 994 [SD NY 1984]).

In this case, it is the mandate of the Small Claims Court to provide the parties with substantial justice according to the rules of substantive law (UCCA 1804, 1805 [a]). Here, claimant proffered two estimates of the cost to replace the transmission in the amounts of $1,102.73 and $922.50. Accordingly, judgment is granted to the claimant in the amount of $922.50, plus statutory costs and interest from August 3, 2011. The remainder of the claim is dismissed.

This constitutes the decision and order of the court.


In view of the foregoing decision and statutes,  a consumer / purchaser of a vehicle or automobile having defects or expensive repairs may, in addition to other claims, bring an action under the Uniform Commercial Code express and / or implied warranties within four (4) years of the date of purchase and may do so within the monetary limits of the Small Claims Courts, District Courts or the Supreme Court depending upon the amount of damages and costs of repair.  The reader is suggested to promptly report and document all defects and claims with the manufacturer of new vehicles or dealer of used vehicles and to promptly consult with counsel to further consider the best means of recovering any damages and / or compel rescission of the contract and repurchase of the vehicle.

©2012  Anthony T. Ballato, Esq. (516) 541-9080