Title: Kerry S. Dieter v. Chrysler Corporation

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2000 WI 45 
 
SUPREME COURT OF WISCONSIN 
 
 
Case No.: 
98-0958 
 
 
Complete Title 
of Case: 
 
Kerry S. Dieter and Donna D. Hermes,  
 
Plaintiffs-Appellants-Petitioners, 
 
v. 
Chrysler Corporation, 
a foreign corporation  
 
Defendant-Respondent.  
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
Reported at:  229 Wis. 2d 481, 600 N.W.2d 201 
 
 
(Ct. App. 1999-Published) 
 
 
Opinion Filed: 
May 26, 2000 
Submitted on Briefs: 
      
Oral Argument: 
February 9, 2000 
 
 
Source of APPEAL 
 
COURT: 
Circuit 
 
COUNTY: 
Waukesha 
 
JUDGE: 
Marianne E. Becker 
 
 
JUSTICES: 
 
Concurred: 
      
 
Dissented: 
      
 
Not Participating:       
 
 
ATTORNEYS: 
For the Plaintiffs-Appellants-Petitioners there 
were briefs by William S. Pocan, Vincent P. Megna, Terrence M. 
Polich and Jastroch & LaBarge, S.C., Waukesha, and oral argument 
by Vincent P. Megna. 
 
 
For the Defendant-Respondent there was a brief by 
Shawn M. Govern and Petrie & Stocking, S.C., Milwaukee, and oral 
argument by Shawn M. Govern. 
 
 
 
 
Amicus Curiae brief by Stephen E. Meili and 
Lawrence A. Towers, Madison, for the Center for Public 
Representation, Inc. 
 
 
2000 WI 45 
 
NOTICE 
This opinion is subject to further editing 
and modification.  The final version will 
appear in the bound volume of the official 
reports. 
 
 
No. 98-0958 
 
STATE OF WISCONSIN               :  
IN SUPREME COURT 
 
 
Kerry S. Dieter and Donna D. Hermes,  
 
          Plaintiffs-Appellants- 
          Petitioners, 
 
     v. 
 
Chrysler Corporation, 
a foreign corporation  
 
          Defendant-Respondent. 
 
 
REVIEW of a decision of the Court of Appeals.  Reversed and 
cause remanded.  
 
¶1 
DIANE S. SYKES, J.   This is a "lemon law" case.  The 
issue is whether consumers who are aware of defects in a motor 
vehicle at the time they accept delivery may nevertheless sue 
the vehicle manufacturer under the lemon law when repair efforts 
fail.  Kerry Dieter and Donna Hermes purchased a Chrysler truck 
and ordered some accessories installed before delivery.  The 
dealer damaged the truck in the process of installing the 
accessories, but assured the buyers that the damagescratches in 
the truck's finishwould be repaired.  Dieter and Hermes 
FILED 
 
MAY 26, 2000 
 
Cornelia G. Clark 
 Clerk of Supreme Court 
Madison, WI 
 
 
 
 
 
No. 
98-0958 
 
 
2 
accepted delivery, and when repair attempts were unsuccessful, 
sought relief from Chrysler under the lemon law. 
¶2 
The court of appeals held that because the lemon law 
was meant to protect consumers from hidden defects discovered 
after delivery of a new vehicle, Dieter and Hermes, who knew 
about the paint scratches before delivery of the truck, could 
not recover. The lemon law, however, contains no "hidden defect" 
limitation on its applicability.  It also specifically provides 
that its protections cannot be waived.  So we reverse. 
¶3 
The relevant facts are undisputed.  On December 12, 
1995, Kerry Dieter and Donna Hermes signed a contract to 
purchase a 1996 Dodge Ram pick-up truck from Frascona Chrysler-
Plymouth-Dodge, an authorized Chrysler dealership.  The contract 
also provided for the purchase and installation of several 
after-market accessories for the truck, including a tonneau 
(truck 
box) 
cover, 
bug 
deflector, 
fender 
shield, 
and 
rustproofing.  These accessories were all Chrysler-approved 
MOPAR1 parts.  Frascona was to install the accessories before 
Dieter and Hermes took delivery of the truck.  At the time of 
sale, the truck's finish was not scratched. 
¶4 
During the installation of 
the accessories, the 
truck's paint finish was scratched in many places, apparently by 
Frascona's technician.  On December 16, 1995, when Dieter and 
Hermes returned to pick up their truck, they discovered the 
                     
1 MOPAR parts are parts approved by Chrysler for dealer 
installation.  
No. 
98-0958 
 
 
3 
scratches and announced their intention to cancel the sale.  A 
Frascona representative informed them that if they cancelled the 
sale, they would forfeit their deposit.2  The representative 
assured them that the damage to the truck's finish would be 
repaired.  After weighing their options, Dieter and Hermes took 
delivery of the truck. 
¶5 
In April of 1996, Frascona arranged for B&G Body 
Repair, Inc. to repaint the truck, at Chrysler's expense.  
Dieter and Hermes told B&G not to "buff" the finish after 
repainting, but B&G did so anyway.  The buffing left "swirls" in 
the truck's finish and Dieter and Hermes were unhappy with the 
result.  The record reflects that Frascona made at least three 
more attempts to fix the truck's finish (again at Chrysler's 
expense), the last in October 1996. 
¶6 
Dissatisfied with the unsuccessful attempts to solve 
the problem, Dieter and Hermes sought relief under the lemon 
law.  On November 19, 1996, their attorneys issued a demand 
letter to Chrysler stating that the truck qualified as a "lemon" 
under Wis. Stat. § 218.015 (1993-94)3 and asked that Chrysler 
repurchase the vehicle as provided by the lemon law.  Chrysler 
refused.  On February 3, 1997, Dieter and Hermes sued Chrysler 
                     
2 Pursuant to the terms of the contract to purchase and 
Wisconsin law, Wis. Stat. § 218.01(5m), cancellation of the sale 
would also have subjected Dieter and Hermes to a suit for 
damages by Frascona for up to five percent of the cash price of 
the truck.    
3 Unless otherwise noted, all references to the Wisconsin 
statutes are to the 1993-94 version.  
No. 
98-0958 
 
 
4 
in Waukesha County Circuit Court, claiming: 1) violation of the 
lemon law, Wis. Stat. § 218.015; 2) violation of Wis. Stat. 
§ 402.608; 3) relief under Wis. Stat. § 402.719; 4) breach of 
contract; and 5) violation of the Magnuson-Moss Warranty Act (15 
U.S.C. §§ 2301-2312). 
¶7 
The warranty on the truck provided coverage for "any 
item 
on 
[the] vehicle . . . that's 
defective 
in 
material, 
workmanship, or factory preparation."  The warranty contained 
exclusions for damage to the truck due to accidents, abuse, 
negligence, 
misuse, 
repairs 
necessitated 
by 
improper 
maintenance, modification of the truck, or the installation of 
non-Chrysler parts.  There was an exception to the exclusion, 
however, for "genuine MOPAR accessories approved by Chrysler for 
dealer installation."   
¶8 
Chrysler 
moved 
for 
summary 
judgment, 
claiming 
initially that the accessories installed by Frascona were not 
Chrysler MOPAR parts covered by the warranty, and therefore the 
lemon law was not applicable under Malone v. Nissan Motor Corp., 
190 Wis. 2d 436, 442, 526 N.W.2d 841 (Ct. App. 1994).4  The 
                     
4 In Malone v. Nissan Motor Corp., 190 Wis. 2d 436, 439-40, 
526 N.W.2d 841 (Ct. App. 1994), a car buyer purchased a new 
Nissan and at the same time ordered a spoiler installed on the 
vehicle.  The spoiler was not manufactured by Nissan, and was 
not covered by Nissan's warranty.  Id. at 440.  The spoiler 
proved to be defective, and the car buyer sued Nissan under the 
lemon law.  Id.  The court of appeals held that the lemon law 
was not intended "to make automobile manufacturers 'super 
warrantors' of all automobile parts and products, particularly 
those which the automobile manufacturer does not manufacture, 
sell or supply."  Id. at 442. 
No. 
98-0958 
 
 
5 
circuit court, the Honorable Marianne E. Becker, initially 
granted summary judgment for Chrysler.  Counsel for Dieter and 
Hermes 
objected 
that 
Chrysler 
had 
not 
proven 
that 
the 
accessories were not Chrysler MOPAR parts.  The circuit court 
asked for affidavits on the issue and scheduled a second 
hearing. 
¶9 
At the second hearing, the circuit court concluded 
that whether or not the parts in question were Chrysler MOPAR 
parts, the warranty and 
thus the 
lemon 
law 
were 
still 
inapplicable because the parts were not the problem, the 
installation was, and that was the responsibility of the dealer, 
not the manufacturer.  The circuit court again granted summary 
judgment for Chrysler, and Dieter and Hermes appealed.5 
¶10 On appeal, Chrysler conceded that the accessories were 
in fact MOPAR parts, but continued to argue that it was not 
responsible for damage caused by their negligent installation by 
the dealer.  The court of appeals ordered supplemental briefs on 
the issue of the applicability of the lemon law when the 
consumer is aware of the defect at the time of delivery. 
¶11 The court of appeals affirmed, but decided the case on 
different grounds than the circuit court.  Dieter v. Chrysler 
Corp., 229 Wis. 2d 481, 600 N.W.2d 201 (Ct. App. 1999).  The 
court of appeals rejected Chrysler's argument under Malone, 
apparently because it was now established that the accessories 
                     
5 The circuit court dismissed the case in its entirety, 
including the UCC, contract and Magnuson-Moss claims, citing 
Malone. 
No. 
98-0958 
 
 
6 
were MOPAR parts covered by the warranty, and Malone was thus 
distinguishable.  Id. at 484.   
¶12 However, the court of appeals concluded that the 
purpose of the lemon law is to protect consumers from hidden 
defects in their new vehicles and therefore the lemon law is not 
applicable where the consumer is aware of nonconformities before 
delivery, but accepts the vehicle anyway.  Id. at 484-86.  
Because Dieter and Hermes knew about the scratches when they 
took delivery of the truck, the court concluded that the lemon 
law did not apply.  Id. at 485.  The court suggested that any 
remedy under these circumstances was with the dealer, not the 
manufacturer.  Id. at 488.6 
¶13 We accepted review.  Dieter and Hermes argue that the 
court of appeals has added a "hidden defect" or "lack of 
knowledge" element to the lemon law that is not contained in its 
language and not consistent with its purpose.   
¶14 This case was decided on summary judgment, which we 
review independently, guided by the same methodology as the 
circuit court.  Malone, 190 Wis. 2d at 441.  Summary judgment is 
appropriate where there is no genuine issue of material fact in 
dispute and the moving party is entitled to judgment as a matter 
of law.  Wis. Stat. § 802.08(2).   
¶15 Our first task is to determine whether Chrysler's 
express warranty covers the scratches to the truck that resulted 
                     
6 The court of appeals did not specifically address the UCC, 
breach of contract or Magnuson-Moss claims, nor are we asked to 
on this review.   
No. 
98-0958 
 
 
7 
from the dealer's installation of the MOPAR parts, since the 
lemon law comes into play only where there is manufacturer 
warranty coverage.  Wis. Stat. § 218.015(2)(a); Malone, 190 
Wis. 2d at 442.  We review the interpretation of a warranty or 
any other contract de novo, and in doing so, our primary purpose 
is to ascertain and give effect to the intent of the parties.  
Gorton v. Hostak, Henzl & Bichler, 217 Wis. 2d 493, 502, 577 
N.W.2d 617 (1998).  We look first for that intent in the plain 
language of the warranty.  Where the terms are unambiguous, we 
must construe the warranty as it is written.  Dykstra v. Arthur 
G. McKee & Co., 92 Wis. 2d 17, 38, 284 N.W.2d 692 (Ct. App. 
1979), affirmed, 100 Wis. 2d 120, 301 N.W.2d 201 (1981).  
Contractual language is ambiguous only when it is "reasonably 
and fairly susceptible to more than one construction."  Jones v. 
Jenkins, 88 Wis. 2d 712, 722, 277 N.W.2d 815 (1979).  If the 
language is ambiguous, we construe the ambiguities against the 
drafter.  Strong v. Shawano Canning Co., 13 Wis. 2d 604, 609, 
109 N.W.2d 355 (1961).   
¶16 Chrysler's warranty provides: 
 
WHAT'S COVERED . . . The 'Basic Warranty' covers the 
cost of all parts and labor needed to repair any item 
on your truck . . . that's defective in material, 
workmanship, or factory preparation.  You pay nothing 
for these repairs.  The 'Basic Warranty' covers every 
Chrysler supplied part of your truck EXCEPT its tires 
and cellular telephone. 
There is an exclusion for non-Chrysler parts and repairs 
occasioned by the installation of non-Chrysler parts: 
 
No. 
98-0958 
 
 
8 
WHAT'S NOT COVERED . . . [Y]our Chrysler Warranties 
don't cover any part which is not a Chrysler supplied 
part.  These warranties also don't cover the costs of 
any repairs or adjustments that might be caused by or 
needed because of the use or installation of non-
Chrysler parts, equipment, materials or additives. 
(Emphasis added.)  But there is an exception to the exclusion: 
 
Examples of the types of alterations that are not 
covered 
include, 
but 
are 
not 
limited 
to 
the 
installation of accessories (except for genuine MOPAR 
accessories 
approved 
by 
Chrysler 
for 
dealer 
installation) such as sun roofs, window tinting, 
trailer hitches, theft alarm systems, rustproofing or 
other 
protection 
products, 
or 
the 
use 
of 
any 
refrigerant other than that approved by Chrysler. 
(Emphasis added).  So repairs to, or necessitated by, the 
installation of "genuine MOPAR accessories approved by Chrysler 
for dealer installation" are covered by the warranty, because 
they are excepted from the exclusion by the plain language of 
the warranty.  The defect in this vehiclescratches to its paint 
finishresulted from the installation of MOPAR parts by a 
Chrysler dealer.  So there is warranty coverage. 
¶17 Chrysler argues, however, that the damage occurred 
before the warranty start date (here, the date of delivery) and 
therefore there is no coverage.  But the warranty contains no 
time limitation pertaining to the date the defect or damage was 
created.  It simply covers repair costs that are incurred during 
the warranty period for qualifying defects and damage.  Here, 
the damage in question meets the definition of "what's covered," 
read together with the exception to "what's not covered," and 
the repair costs were incurred during the warranty period.  When 
this is the case, the customer "pay[s] nothing for these 
No. 
98-0958 
 
 
9 
repairs," according to the plain language of the warranty.7  In 
other words, there is warranty coverage.  So the prerequisite to 
lemon law applicabilityexpress warranty coveragehas been 
established, and we reach the statutory interpretation issue in 
the case. 
¶18 The court of appeals held that the lemon law does not 
apply when the consumer is aware of the defect in the vehicle 
before delivery.  Dieter, 229 Wis. 2d at 485.  The court 
grounded this conclusion in the remedial purposes of the lemon 
law: 
 
Our conclusion that the Lemon Law covers only 
those defects that manifest themselves to the consumer 
after delivery is in keeping with the purpose behind 
the Lemon Law.  The Lemon Law was enacted to protect 
the consumer who makes a large investment in a brand 
new vehicle only to find that the vehicle is a dud. He 
or she drives the new vehicle home, expecting problem-
free dependability.  Problems develop, but it is too 
late for the consumer to back out of the deal.  The 
Lemon Law protects this consumer from a seller who is 
                     
7 In addition to being contrary to the language of the 
warranty, Chrysler's argument regarding the warranty start date 
makes little sense.  What good would a vehicle warranty be if it 
is read to exclude defects that originate prior to the warranty 
start date?  Most, by definition, do.  The main point of a 
manufacturer's warranty is to cover defects created during 
manufacture (which necessarily originates prior to the warranty 
start date).  This particular warranty also allocates to the 
manufacturer responsibility for defects created by the dealer's 
installation of the manufacturer's parts.  The warranty start 
date language clearly would not be read to exclude warranty 
coverage if the defect in the vehicle had been created by 
Chrysler before the warranty start date; otherwise, the warranty 
would be almost completely illusory.  That the particular defect 
in this case originated with the dealer and not Chrysler does 
not mean that the warranty start date language should be read 
any differently.   
No. 
98-0958 
 
 
10
unable or unwilling to repair the defective vehicle.  
See Hughes, 197 Wis. 2d at 979, 542 N.W.2d at 150. 
 
Here, the alleged defects in Dieter and Hermes' 
truck were apparent when they accepted the vehicle.  
They had the chance to back out before the sale was 
final.  Instead, they negotiated further with Frascona 
and 
ultimately 
accepted 
the 
vehicle 
subject 
to 
Frascona's promise to repair.  They could have walked 
away and pursued a refund of their deposit.  But they 
chose to strike a bargain with Frascona.  That they 
are now unhappy with the result of that bargain has 
nothing to do with Chrysler.  That Frascona is a 
Chrysler 
dealer 
does 
not 
bring 
these 
visible, 
predelivery defects within the purview of the Lemon 
Law. 
Dieter, 229 Wis. 2d at 486 (footnote omitted). 
¶19 Whether a statute applies to a particular fact 
situation is a question of law that this court reviews de novo. 
 Tomczak v. Bailey, 218 Wis. 2d 245, 252, 578 N.W.2d 166 (1998). 
 Our first step in interpreting any statute is to determine the 
intent of the legislature by looking at the plain language of 
the statute itself.  Lake City Corp. v. City of Mequon, 207 
Wis. 2d 155, 162, 558 N.W.2d 100 (1997).  Remedial statutes like 
the lemon law are to be construed "with a view towards the 
social problem which the legislature was addressing when 
enacting the law."  Hughes v. Chrysler Motor Corp., 197 Wis. 2d 
973, 982, 542 N.W.2d 148 (1996). 
¶20 The lemon law does not, on its face, speak to whether 
the vehicle defect must be "hidden" or the consumer unaware of 
its existence at the time of delivery in order to trigger 
relief.  The relevant lemon law language states: 
 
If a new motor vehicle does not conform to an 
applicable express warranty and the consumer reports 
No. 
98-0958 
 
 
11
the nonconformity to the manufacturer, the motor 
vehicle lessor or any of the manufacturer's authorized 
motor vehicle dealers and makes the motor vehicle 
available for repair before the expiration of the 
warranty or one year after first delivery of the motor 
vehicle to a consumer, whichever is sooner, the 
nonconformity shall be repaired. 
Wis. 
Stat. 
§ 218.015(2)(a). 
 
The 
statute 
defines 
a 
"nonconformity" as: 
 
[A] condition or defect which substantially impairs 
the use, value or safety of a motor vehicle, and is 
covered by an express warranty applicable to the motor 
vehicle or to a component of the motor vehicle, but 
does not include a condition or defect which is the 
result of abuse, neglect or unauthorized modification 
or alteration of the motor vehicle by a consumer. 
Wis. Stat. § 218.015(1)(f). 
¶21  Nothing in the plain language of the lemon law 
requires that the consumer be unaware of the nonconformity 
before accepting delivery of the vehicle in order for the law to 
apply. 
 
Nothing 
limits 
its 
applicability 
to 
vehicle 
nonconformities that are hidden.  Had the legislature intended 
to restrict its application in this way, it could easily have 
done so.  It did not.  Where the language of the statute clearly 
and unambiguously sets forth the legislative intent, we do not 
look beyond it to ascertain its meaning.  Reyes v. Greatway Ins. 
Co., 227 Wis. 2d 357, 365, 597 N.W.2d 687 (1999). 
¶22 Furthermore, the legislature explicitly provided that 
the protections of the lemon law cannot be waived.  Wis. Stat. 
§ 218.015(6) ("[a]ny waiver by a consumer of rights under this 
statute is void").  The court of appeals' conclusion that the 
law does not apply when the consumer is aware of the defect is 
No. 
98-0958 
 
 
12
essentially a rule of waiver by notice.  This would contravene 
the nonwaiver provision of the lemon law.   
¶23 The lemon law was enacted to provide consumers with 
remedies 
beyond 
the 
"inadequate, 
uncertain 
and 
expensive 
remedies of the Uniform Commercial Code or the Magnuson-Moss 
Warranty Act."  Hughes, 197 Wis. 2d at 980 (citing Stephen J. 
Nicks, Lemon Law II, Wis. Bar Bulletin, Vol. 60, No. 7, July 
1987, at 8).  It is a warranty enforcement statute, "a self-
enforcing consumer law that provides 'important rights to motor 
vehicle owners.' . . . The intent behind the law was to 'improve 
auto 
manufacturers' 
quality 
control . . . [and] 
reduce 
the 
inconvenience, the expense, the frustration, the fear and [the] 
emotional trauma that lemon owners endure.'"  Id. at 981-82.  
The law also was designed to provide an incentive to a 
manufacturer to restore a purchaser of a "lemon" to the position 
he was in at the time of the purchase.  Id. at 976. 
¶24 Chrysler contends that applying the lemon law to this 
situation does nothing to further these purposes and puts Dieter 
and Hermes in a better position than they were in at the time 
they took delivery of their truck.  We disagree.  The UCC and 
Magnuson-Moss Act remedies are no less inadequate, and the 
inconvenience and frustration just as great, when the consumer 
is aware of the defect and accepts the vehicle on the dealer's 
promise to arrange for warranty repair than when the consumer is 
wholly unaware of the defect.  Furthermore, applying the lemon 
law here does not put Dieter and Hermes in a better position 
than when they bought or took delivery of their truck.  When 
No. 
98-0958 
 
 
13
they signed the contract they thought they were getting a 
scratch-free truck; when they took delivery they thought they 
were getting a scratched truck that was warranted for repair and 
thus would be restored to its original condition.  Applying the 
lemon law to these circumstances does not enhance their 
position, it merely enforces the warranty. 
¶25 Chrysler also argues, and the court of appeals held, 
that because Dieter and Hermes could have rejected delivery of 
the truck once they discovered the scratches, but instead chose 
to negotiate with the dealer regarding repair, their remedy is 
with the dealer, not the manufacturer.  This ignores the fact 
that 
Chrysler 
assumed 
warranty responsibility 
for repairs 
necessitated by the installation of MOPAR parts by its dealers; 
along with this warranty responsibility comes potential lemon 
law liability. 
¶26 Chrysler warned at oral argument that lemon law 
applicability in this situation would create a loophole for 
"street smart" consumers 
who would 
intentionally purchase 
damaged vehicles and then pursue relief under the lemon law.  We 
perceive no such danger.  The lemon law is a warranty 
enforcement statute.  A consumer's first resort is to the 
warranty, which generally covers repairs.  Only after repairs 
have failed within the meaning of the statute (four or more 
attempts or 30 days loss of use of the vehicle) do the 
replacement or repurchase remedies kick in.  Wis. Stat. 
§ 218.015(2)(b).  And only after replacement or repurchase has 
been refused do the litigation remedies come into play.  Wis. 
No. 
98-0958 
 
 
14
Stat. § 218.015(7).  This is hardly fertile territory for 
fortune hunters.  Furthermore, because lemon law applicability 
is dependent upon warranty coverage, manufacturers will only be 
liable for that which they agree to cover in their warranties.8   
¶27 We conclude that the plain language of Chrysler's 
warranty provides coverage for damage inflicted by its dealers 
during the installation of Chrysler-approved MOPAR parts.  We 
also find, based upon its unambiguous language, that the lemon 
law 
contains 
no 
"hidden 
defect" 
or 
"lack 
of 
knowledge" 
requirement.  Therefore, Dieter and Hermes' awareness of the 
scratches to their truck at the time they took delivery does not 
make the lemon law inapplicable. 
By the Court.—The decision of the court of appeals is 
reversed and the cause is remanded.   
 
 
 
 
 
                     
8 The example cited by Chrysler's counsel at oral argument 
was a person who intentionally buys a hail-damaged car and then 
sues the manufacturer under the lemon law.  We note that 
Chrysler's warranty expressly excludes damage resulting from 
environmental factors or acts of God, including hail damage. 
No. 
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15
 
No. 
98-0958 
 
 
1