Title: INDUS. VALLEY BANK & TR. v. Howard

State: pennsylvania

Issuer: Pennsylvania Supreme Court

Document:

368 Pa. Superior Ct. 263 (1987) 533 A.2d 1055 INDUSTRIAL VALLEY BANK AND TRUST COMPANY v. Harry HOWARD, Appellant. Supreme Court of Pennsylvania. Argued September 22, 1987. Filed November 25, 1987. Mark R. Semisch, Willow Grove, for appellant. Peter M. McGonigle, Philadelphia, for appellee. Before CIRILLO, President Judge, and McEWEN and TAMILIA, JJ. *264 TAMILIA, Judge: Appellant, Harry Howard, appeals from a February 19, 1987 Order of the Court of Common Pleas of Montgomery County which sustained the preliminary objections of the appellee, Industrial Valley Bank and Trust Co. (IVB), and dismissed appellant's counterclaim with prejudice. The facts and procedural history of this appeal are as follows. Appellant entered a leasing arrangement with YBH Porshe Audi in August of 1984 for lease of an Audi for a five-year lease term, with total monthly payments in the amount of $37,779, and with an option to purchase the Audi at the end of the term for $13,075. On April 30, 1986, IVB filed a complaint against appellant, alleging the lease had been assigned to it in return for $48,715.60 consideration. It alleged appellant had not adhered to the agreed obligations because he had returned the car prior to the completion of the lease term, and this placed him in default. At the same time, appellee asserted it had complied with the terms and conditions of the lease. Appellee further claimed $19,911.81 was due and owing to it, it credited appellant with $4,158.49 for payments on the account, $15,690 for sale of the car, $10,248.73 for unearned interest, and added a $237.60 late charge and $1,054.83 interest from August 12, 1985. Additionally, appellee claimed it was entitled to reasonable attorney fees of twenty per cent or $3,932, together with costs of collection, repossession, storage, sale and other charges. Appellee demanded judgment in the amount of $23,893.81 plus the cost of the suit and interest. On June 17, 1986, appellant filed an answer, new matter and counterclaim. In the answer, he denied he was in default of the lease and alleged, Answer and new matter of appellant, 6/17/86, p. 1. Appellant further responded IVB had deliberately and consciously breached the agreement by refusing to exercise its rights under the Automobile Lemon Law (73 P.S. § 1951 et seq.), by refusing to provide appellant with a vehicle fit for the purpose for which leased, by refusing to sell the car at its fair market value, by refusing to answer phone calls and letters, and otherwise attempting to coerce appellant by threats to ruin his credit. Appellant also denied the damages sought by IVB, arguing the car, which was valued at $35,000, was "given away" by IVB for $15,690 despite its ability to sell the car at fair market value. Had IVB sold the car at its fair market value, it would have recovered all sums it believed were due it and, moreover, any loss suffered by IVB was self-imposed by reason of its failure to exercise rights under the Lemon Law. Appellant's new matter and counterclaim read as follows: Appellee, on August 25, 1986, filed preliminary objections to appellant's counterclaim, alleging: Appellee's preliminary objections also contained a motion to strike the counterclaim for failure to conform to the legal requirements for the statement of a cause of action for defamation, and a motion for a more specific pleading, to allege with specificity the allegedly defamatory words attributable to IVB and the facts and circumstances surrounding them. These preliminary objections were sustained by a February 19, 1987 Order, and the appellant's counterclaim was dismissed with prejudice. Appellant filed this timely appeal on February 27, 1987. On appeal, appellant-lessee argues the preliminary objections of the appellee were improperly sustained and he contends the court erred in its determination that the assignment of warranties clause of the lease agreement includes an assignment of rights under the Lemon Law, and that the disclaimer clause of the lease agreement includes rights under the Lemon Law. He further urges the responsibility of bringing a Lemon Law action rests on the lessor, as the lessor is the purchaser of the car. After a thorough review of the record and of applicable law, this Court finds appellant's counterclaim does not state a cause of action for IVB's failure to bring a Lemon Law action. In Aetna Electroplating Co., Inc. v. Jenkins, 335 Pa.Super. 283, 484 A.2d 134 (1984), we said: Id., 335 Pa.Superior Ct. at 285, 484 A.2d at 135 (citations omitted). In the case before us, it "appears with certainty" the law will not permit recovery by the appellant from appellee for appellee's failure to institute a Lemon Law action. The Lemon Law, 73 P.S. § 1951 et seq., provides: The right to bring an action rests with purchasers: The Act, at § 1952, defines purchaser as: "Purchaser. A person, or his successors or assigns, who has obtained ownership of a new motor vehicle by transfer or purchase or who has entered into an agreement or contract for the purchase of a new motor vehicle which is used or bought for use primarily for personal, family or household purposes." The Pennsylvania Lemon Law does not speak to lessees, nor is there any appellate level case law determining whether a lessee or lessor of a motor vehicle is the purchaser for purposes of the Lemon Law. Our research nationally of all *271 states which have enacted lemons laws, provides scant assistance.[1] To begin with, virtually all of the statutes speak of "consumer" rather than "purchaser". Tennessee, however, gives a "consumer" a lemon-type action. Tenn. Code Ann. § 55-24-201 et seq. (1987). The Tennessee Code, at § 55-24-201, defines consumer as "the purchaser (other than for purposes of resale) or the lessee of a motor vehicle." The Code, at § 55-24-204, specifically provides a refund scheme for leased vehicles whereby the lessee receives the lease price less the aggregate deposit and rental payments previously paid to the lessor for the leased vehicle. The Lemon Law of the state of Missouri also places lemon action rights with the consumer of a new motor vehicle. Mo.Ann.Stat. § 407.560 et seq. (Vernon 1985). Missouri defines the term "new motor vehicle" to include demonstrators or lease-purchase vehicles as long as a manufacturer's warranty was issued as a condition of sale. See also Va.Code § 59.1-207.9 et seq., (1984) which resembles the Missouri treatment, supra. Florida's act, at Fla.Stat. Ann. § 681.101 et seq. (West 1984), likewise defines "consumer" to include the lessee of a motor vehicle primarily used for personal, family or household purposes. New York state, in 1986, amended its act to include lessees in the definition of consumer. That Code now reads: N.Y.Gen.Bus.Law § 198-a (Consol. 1987). See also id. at 1986 Amendments. A recent New York Supreme Court case addressed the question of whether the 1986 amendment should be given retroactive application. In that case, a lessee who entered into a lease agreement in 1984 for the lease of a 1984 *272 Maserati brought action against Maserati Automobile, Inc. and others alleging, among other things, that Maserati had breached G.B.L. Section 198-a, the "Lemon Law". The Court noted: Stuart Becker & Co. v. Steven Kessler Motor Cars, Inc., 135 Misc.2d 1069, 1073, 1074, 517 N.Y.S.2d 692, 695 (1987). It appears legislative action is necessary to establish whether lessees or lessors of new motor vehicles have a right to proceed under the Lemon Law and to determine who bears the responsibility of making a claim. Since this Court may only interpret the law as it stands, we find the statute does not provide that the lessor has a right or the responsibility for bringing such a claim, thus appellee IVB committed no breach of any duty as is argued by the appellant in his counterclaim. Appellee would have this Court find the Pennsylvania Lemon Law is an extension of the manufacturer's warranty, which under the lease is assigned to appellant and, therefore, the Lemon Law is to be pursued by the lessee/appellant, while appellant alleges the lessor/appellee is the owner of the car and it has the *273 duty to proceed. Neither is correct. Neither lessee nor lessor in a lease situation qualifies as a purchaser within the clear meaning of the language in 73 P.S. § 1952. While the lessor retains legal possession, it is not a purchaser for use primarily for personal or household purposes. While the lessee may be using the vehicle for those purposes, he is not a purchaser.[2] The lease contains so many provisions which divide the rights and responsibilities of a purchaser between the lessee and lessor that the application of the Lemon Law is not possible. In the event of "fleet" leases, the problem becomes even more complex. The preliminary objections of the appellee were, therefore, properly sustained, as the appellant could not have stated a cause of action against IVB on this allegation. If transfer of the warranty triggered the Lemon Law, then appellant was the person qualified to exercise its provisions. If only a purchaser could qualify as having a right to proceed under the Lemon Law, neither appellant nor IVB meet the statutory definition of purchaser.[3] Nor did appellant's *274 pleadings show he had made out a cause of action in defamation for IVB's alleged intentional destruction of appellant's credit rating. To the contrary, any erosion of appellant's credit was caused by his breach of the lease agreement. Order affirmed. [1] The appendix in Brooks v. Ford Motor Co., et al., 36 Cumberland L.J. 760, 763 lists 32 jurisdictions which have "lemon laws" and the terminology used for purchaser, consumer or buyer. [2] In Brooks v. Ford Motor Co., et al., supra, passing on the applicability of the Lemon Law to a lease of an automobile with option to purchase, the Cumberland County court found the lessee to be covered by the Lemon Law as a "purchaser" within the meaning of the Uniform Commerical Code, the Magnason-Moss Warranty Act and the Pennsylvania Unfair Trade Practices and Consumer Protection Law. The rationale hinges on the transfer and interpretation of the new car warranty, similar to the rationale employed in Henderson v. Benson-Hartman Motors, Inc., 33 Pa.D. & C.3d 6 (Allegheny, 1983), wherein it was held that warranties apply to leases as well as to purchases. The Lemon Law is not derivative of or subject to the new car warranty but is a unique and specific piece of legislation that is independent of the warranty. [3] This case, while resolvable without determining the meaning of the term "purchaser" and whether it incorporates a lease with option to purchase, calls out for legislative action to resolve any possible ambiguity in that term, similar to legislation in our sister states of Tennessee, Missouri, Florida and New York, which includes lessee in the term "consumer". We are constrained to go further than the plain language of the statute. In Molineux v. Reed, 516 Pa. 403 n. 4, 532 A.2d 792 n. 4 (1987), the Supreme Court, speaking of a discovery rule construed by this Court, held: "We do not think Appellee's attorneys were entitled to rely on Superior Court's creation of such a grace period, directly contrary to the precise wording of the statute, unless and until this Court gave its approval." We are, therefore, reluctant to extend the term "purchaser" in the context of this case.