Title: John L. Hughes v. Chrysler Motors Corporation

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
 
 
 
 
No.  93-0208 
 
STATE OF WISCONSIN             :                IN SUPREME COURT 
                                                                   
 
 
John L. Hughes, 
 
 
Plaintiff-Respondent, 
 
 
v. 
 
Chrysler  Motors Corporation, 
 
 
Defendant-Appellant-Petitioner. 
 
 
FILED 
 
 
JAN 17, 1996 
 
 
 Marilyn L. Graves 
  Clerk of Supreme Court 
  
Madison, WI  
                                                                
   
 
 
 
REVIEW of a decision of the Court of Appeals affirming a 
circuit court judgment.  Affirmed. 
 
WILLIAM A. BABLITCH, J.   Mr. Hughes bought a new car in 
1990.  It was, unfortunately, a lemon, a fact admitted by all 
parties.  After the manufacturer failed to respond within the time 
limits set by law, Mr. Hughes sued the manufacturer, Chrysler, 
seeking among other things the amount of money he paid for the van 
as pecuniary damages.  Under Wisconsin's "lemon law," any 
pecuniary damages awarded to a successful plaintiff are doubled.  
Chrysler argues that the purchase price of the car to the consumer 
is not a pecuniary damage within the meaning of the lemon law.  We 
disagree.  One purpose of the law, among others, is to provide an 
 
No. 93-0208 
 
 
 
2 
incentive for a manufacturer to put the purchaser of a new car 
back to the position the purchaser thought he or she was in at the 
time they bought the car.  We conclude that the legislature 
intended to include the purchase price of the car to the consumer 
as pecuniary damages.  Accordingly, we affirm. 
 
 The facts are not in dispute.  Hughes purchased a new Dodge 
Caravan on January 11, 1990.  During his first year of ownership, 
Hughes took the vehicle to a dealer to repair transmission defects 
on seven separate occasions.  Hughes retained counsel after the 
repair efforts proved to be unsuccessful.  On June 19, 1991, 
Hughes' counsel wrote to CT Corporation Systems, Chrysler's 
registered agent in Wisconsin, and demanded that Chrysler replace 
Hughes' car within 30 days with a "comparable new motor vehicle" 
without 
any 
further 
charge 
to 
him. 
 
Wisconsin 
Stat. 
§ 
218.015(2)(b)2.a and (c).   
 
Having received no response within the 30 days provided by 
the statute, Hughes' counsel contacted Chrysler on July 29, 1991, 
and at Chrysler's request, mailed a copy of the June 19 demand 
letter.  After Chrysler received a copy of the letter, Chrysler 
attempted to reach Hughes' counsel by telephone before discovering 
that Hughes had filed suit on August 22, 1991.  On August 23, 
1991, Chrysler sent Hughes a letter offering to replace his 
vehicle without any charge for a model year upgrade or the mileage 
on his vehicle.  
 
No. 93-0208 
 
 
 
3 
 
The circuit court granted Hughes' motion for summary 
judgment.  The court then entered judgment for Hughes in the 
amount of $74,371, which included double the amount he paid for 
the vehicle, attorney fees, and prejudgment interest.   The court 
of appeals affirmed the circuit court.  We granted Chrysler's 
petition for review.  
 
The first issue is whether the purchase price of the car to 
the 
consumer 
is 
pecuniary 
damages 
within 
the 
meaning 
of 
Wisconsin's so-called lemon law, Wis. Stat. § 218.015(7)(1993-94), 
the 
relevant 
part 
of 
which 
is 
cited 
below.1 
 
Statutory 
construction is a question of law which this court decides de novo 
without deference to the decisions of the lower courts.  Eby v. 
Kozarek, 153 Wis. 2d 75, 79, 450 N.W.2d 249 (1990).  "The cardinal 
rule in all statutory interpretation, as this court has often 
said, is to discern the intent of the legislature."  Scott v. 
First State Ins. Co., 155 Wis. 2d 608, 612, 456 N.W.2d 152 (1990). 
 This court ascertains that intent by examining the language of 
the statute and the scope, history, context, subject matter and 
                     
    1 All future statutory references are to the 1993-94 volume 
unless otherwise indicated.  Wisconsin Stat. § 218.015(7) states: 
 
In addition to pursuing any other remedy, a consumer may 
bring an action to recover for any damages 
caused by a violation of this section.  The 
court shall award a consumer who prevails in 
such an action twice the amount of any 
pecuniary 
loss, 
together 
with 
costs, 
disbursements and reasonable attorney fees, 
and any equitable relief the court determines 
appropriate. 
 
No. 93-0208 
 
 
 
4 
purpose of the statute.  Id; see also  Voss v. City of Middleton, 
162 Wis. 2d 737, 749, 470 N.W.2d 625 (1991).  We are also aware 
that remedial statutes should be liberally construed to suppress 
the mischief and advance the remedy that the statute intended to 
afford.  Madison v. Hyland, Hall & Co., 73 Wis. 2d 364, 373, 243 
N.W.2d 422 (1976). 
 
Chrysler argues that a buyer's pecuniary loss is limited to 
the buyer's out-of-pocket expenses that were caused by the 
manufacturer's violation of the statute.  Hughes disagrees.  He 
argues that pecuniary loss within the meaning of the lemon law 
includes the purchase price of the car.  Hughes contends that 
allowing the consumer to recover double the purchase price of the 
automobile effectuates the purposes of the lemon law and 
strengthens the rights of consumers in dealing with vehicle 
defects.  We agree.     
 
The statute is silent as to whether pecuniary loss includes 
the purchase price of the vehicle.  To determine the legislative 
intent behind the statute, we first examine the history of lemon 
laws in general.  Lemon laws were enacted to deal with the 
increasing number of disputes between manufacturers and consumers 
over automobile warranties.  Joan Vogel, Squeezing Consumers:  
Lemon Laws, Consumer Warranties, and a Proposal for Reform, 1985 
Ariz. St. L.J. 589, 589.  Warranty disputes were directly 
responsible for a considerable amount of litigation and have led 
to numerous legislative proposals. Id.  The underlying reason for 
 
No. 93-0208 
 
 
 
5 
such legislation was clear.  Harold Greenberg, The Indiana Motor 
Vehicle Protection Act of 1988:  The Real Thing For Sweetening the 
Lemon or Merely a Weak Artificial Sweetener?, 22 Ind. L. Rev. 57, 
57 (1989).  For the average person, the purchase of an automobile 
was one of the most important of all consumer purchases in terms 
of significance and price. Id.  However, for thousands of 
purchasers each year, this highly significant purchase became a 
virtual nightmare when the automobile refused to function 
properly, and the seller was unable, or unwilling to take action 
to remedy the situation.  Julian B. Bell III, Ohio's Lemon Law:  
Ohio Joins the Rest of the Nation in Waging War Against the 
Automobile Limited Warranty, 57 U. Cin. L. Rev. 1015, 1015 (1989).  
 
Prior to the enactment of lemon laws, the only kinds of 
remedial relief available to consumers were the statutory remedies 
of revocation of acceptance and breach of warranty under the 
Uniform Commercial Code. See Wis. Stat. §§ 402-602; 402-608; 402-
313.  Federal remedies also existed through the Magnuson-Moss 
Federal Warranty Act.  See 15 U.S.C. §§ 2301-2312 (1982).  These 
state and federal remedies, however, did not adequately protect 
the interests of the consumer in a typical lemon vehicle claim.  
Clifford P. Block, Arkansas's New Motor Vehicle Quality Assurance 
Act -- A Branch of Hope for Lemon Owners, 16 U. Ark. Little Rock 
L. J. 493, 493 (1994).  Purchasers of defective cars had no 
recourse other than to repeatedly bring their cars in for repairs. 
 
 
 
No. 93-0208 
 
 
 
6 
 
The problems faced by the automobile consumer were accurately 
described in the following comments made at the hearings on a 
proposed federal Automobile and Warranty Repair Act: 
 
I think there is probably no subject of more  . . . emotional 
concern and irritation, frustration, aggravation and 
outrage than the question of the automobile that does 
not work.  When the consumer buys the car he thinks he 
is getting a car that will drive and that will service 
him.  He thinks his warranty is going to mean that if 
anything goes wrong it will be fixed up well and 
promptly.  The fact is that in all too many cases this 
does not happen . . . .  
Automobile Warranty and Repair Act:  Hearings on H.R. 1005 before 
the Subcomm. on Consumer Protection and Finance of the House Comm. 
on Interstate and Foreign Commerce, 96th Cong., 1st Sess. 1 (1979) 
(introductory remarks of Rep. James H. Scheuer, Subcommittee 
Chairman); see also Greenberg at 57.  By 1993, 48 states, 
including Wisconsin, had lemon laws available as remedial 
assistance to consumers who purchased defective new automobiles.  
See Block at 493.   
 
Wisconsin's lemon law, Wis. Stat. § 218.015, became effective 
on November 3, 1983.  Prior to its passage, Wisconsin consumers 
relied on the same inadequate, uncertain and expensive remedies of 
the Uniform Commercial Code or the Magnuson-Moss Warranty Act.  
Stephen J. Nicks, Lemon Law II, Wis. Bar Bulletin, Vol. 60, No. 7, 
July 1987, at 8.  Wisconsin's lemon law provides that if a new 
motor vehicle does not conform to an applicable express warranty, 
the nonconformity shall be repaired before the expiration of the 
 
No. 93-0208 
 
 
 
7 
warranty or one year after delivery of the vehicle, whichever is 
sooner.  Section 218.015(2)(a).  If the nonconformity is not 
repaired after a reasonable attempt to repair, the manufacturer 
must accept return of the vehicle, and at the direction of the 
consumer, either replace the vehicle or refund to the consumer the 
full purchase price plus any sales tax, finance charge, costs, 
less a reasonable allowance for use.  Section 218.015(2)(b)1 and 
2.  A reasonable attempt to repair means either that the 
nonconformity 
is 
subject 
to 
repair 
four 
times 
and 
the 
nonconformity continues or that the vehicle is out of service for 
an 
aggregate 
of 
at 
least 
30 
days 
because 
of 
warranty 
nonconformities.  Section 218.015(1)(h)1 and 2.   
 
The Wisconsin lemon law is violated when the manufacturer 
fails to voluntarily replace or repurchase the lemon vehicle 
within 30 days after receipt of the consumer's Wis. Stat. § 
218.015(2)(c) demand.  This failure to voluntarily comply with the 
lemon law establishes a violation of the law and triggers the § 
218.015(7) remedies of the law.  Section 218.015(7) provides that: 
The court shall award a consumer who prevails in such an 
action twice the amount of any pecuniary loss, together 
with costs, disbursements and reasonable attorney fees, 
and 
any 
equitable 
relief 
the 
court 
determines 
appropriate. 
 
Wisconsin's lemon law was created to be a self-enforcing 
consumer law that provides "important rights to motor vehicle 
 
No. 93-0208 
 
 
 
8 
owners."  Memorandum from Bronson C. La Follette, Attorney 
General, to Members of the Legislature, Re:  AB 434, Auto "Lemon 
Law" Changes, Oct. 14, 1985, Wis. Act 205.   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."  
Statement by Vernon Holschbach, co-sponsor of the bill, "Lemon" 
Car Bill Has Sweet, Sour Sides, Wisconsin State Journal, March 2, 
1983.  In Hartlaub v. Coachmen Ind., Inc., 143 Wis. 2d 791, 422 
N.W. 2d 869 (Ct. App. 1987), the court of appeals stated that, 
"[a]s to legislative object, Wisconsin's Lemon Law is obviously 
remedial in nature.  As such, we should construe the statute with 
a view towards the social problem which the legislature was 
addressing when enacting the law." Id. at 801.     
 
In the 1985-86 legislative session, Wis. Stat. § 218.015(7) 
was amended to make the award of double damages and reasonable 
attorney fees mandatory rather than discretionary.  Nicks, Lemon 
Law II at 11.   In the initial section, the statute stated that a 
consumer "may bring an action for twice the amount of any 
pecuniary loss . . . ."  Id.  The amended language states that the 
"court shall award a consumer who prevails . . . twice the amount 
of any pecuniary loss . . . ."  Section 218.015(7)(1985)(emphasis 
added).  This amendment clarified that when a consumer prevails in 
a court action under the lemon law, the court must award double 
damages and attorney fees.   
 
No. 93-0208 
 
 
 
9 
 
Based on this history, we conclude that the legislature 
intended to include the purchase price of the car as pecuniary 
damages.  We come to this conclusion for the following reasons.   
 
First, if we accept Chrysler's definition of pecuniary loss, 
then the remedy provided by the statute does not significantly 
improve upon those remedies available to the consumer before the 
enactment of the lemon law.  See the Magnuson-Moss Warranty Act, 
15 U.S.C. §§ 2301-2312.  Certainly the law is intended to do more 
than simply parrot the remedies previously available to the 
consumer.   
 
Second, by including the purchase price of the car as part of 
the pecuniary loss, the statute provides an incentive to the 
manufacturer to promptly resolve the matter by making it far more 
costly to delay.  If the only damages available were out of pocket 
costs, the statute would provide scant incentive to move with 
dispatch.  The imposition of double damages as punishment for a 
failure to comply with the statute provides the necessary 
incentive. 
Another reason to allow double or triple damages is to 
persuade manufacturers to settle legitimate warranty 
disputes so that consumers are not forced to litigate.  
The manufacturer will have to consider more carefully 
the costs of litigating the dispute when there is the 
prospect of double damages as well as attorney's fees 
and other costs. 
Vogel, Squeezing Consumers at 662 (discussing the importance of 
Wisconsin's lemon law as the only lemon law to allow for the 
recovery of double damages).   
 
No. 93-0208 
 
 
 
10 
 
Third, a potential recovery must be large enough to give 
vehicle owners the incentive to bring suits against these 
corporations. Nicks, Lemon Law II at 48.  The threat of double 
damages increases the bargaining power of individual consumers. 
These corporations not only have the wealth and will to 
exhaust an individual litigant, but also 
control vast amounts of technical expertise 
on the very mechanical aspects the consumer 
is challenging.  Without the sweetener of 
double damages in a sufficient amount and 
reasonable attorneys' fees, few consumers 
would bring such actions. 
Id. at 48. 
 
The only case to address the appropriate measure of damages 
under Wis. Stat. § 218.015(7) is Nick v. Toyota Motor Sales, 160 
Wis. 2d 373, 466 N.W.2d 215 (Ct. App. 1991).  The issue in Nick 
was whether the term "pecuniary loss" included the purchase price 
of the consumer's vehicle.  The court of appeals held that 
pecuniary loss included the amount of the purchase price he 
actually paid, whether by down payment or loan payments.  Id. at 
383.     
 
The Nick rule produces anomalous results depending on whether 
a consumer borrows money to buy a car or pays for the car entirely 
in cash.  See Stephen J. Nicks, A New Twist on the Lemon Law, 
Wisconsin Lawyer, Oct. 1991 at 25.  For example, if a consumer 
 
No. 93-0208 
 
 
 
11 
pays $20,000 in cash for a car and proves lemon law liability, 
Nick says that the pecuniary loss of that consumer is $20,000 
which is then doubled as damages of $40,000.  However, if this 
same consumer did not pay cash but merely gave a down payment of 
$2,000, Nick says the pecuniary loss would be $2,000 (the amount 
actually paid out by the consumer) and only that amount would be 
subject to doubling.  The consumer would then recover double 
damages of $4,000.  The secured creditor would receive the unpaid 
principal and any interest owed.  The amount owing to the secured 
creditor would not be subject to doubling. 
 
Therefore, calculating damages under Nick produces major 
double damage differences, depending on how the consumer paid for 
the vehicle. Id.  Based on the above example, the first consumer 
gets $40,000 ($20,000 doubled) and the second consumer gets $4,000 
($2,000 doubled).   
 
Nick did not address this double damage disparity.  However, 
under Nick's rationale, a credit purchaser with little down 
payment or trade-in is in a significantly weaker position with 
respect to the manufacturer than is a consumer who pays the full 
purchase price of the vehicle.  The converse is equally true.  
This result is inconsistent with the legislative goal of 
encouraging manufacturers to deal promptly and fairly with all 
purchasers of new vehicles.  For that reason, any language in Nick 
contrary to our holding here that pecuniary loss includes the full 
purchase price of the vehicle to the consumer is overruled. 
 
No. 93-0208 
 
 
 
12 
 
We realize that car manufacturers do not deliberately set out 
to manufacture a lemon.  Quite the opposite.  In fact, it is in 
their own best interest not to do so.  However, an unfortunate 
fact of life, seemingly as inevitable as night following day, is 
that occasionally a "lemon" will slip through the line.  And when 
that happens, another unfortunate fact of modern day life is that 
the cost to the unlucky consumer who purchases that "lemon" is far 
more than the cost of the car:  interrupted, delayed, or even 
cancelled schedules; the time and the trouble, as well as the 
anxiety and stress that accompany those changes, the apprehensions 
that result every time the consumer gets back into that automobile 
wondering "what next?"  Dependability is a prime objective of 
every new car buyer.  When that is taken away, the loss is far 
greater than the cost of the car.  It is this fact that the 
legislature recognized when they enacted the lemon law.  Its 
principle motivation is not to punish the manufacturer who, after 
all, would far prefer that no "lemons" escape their line.  Rather, 
it seeks to provide an incentive to that manufacturer to promptly 
return those unfortunate consumers back to where they thought they 
were when they first purchased that new automobile.2 
                     
    2  In Hartlaub v. Coachman Ind., Inc., 143 Wis. 2d 791, 422 
N.W. 2d 869 (Ct. App. 1987), the court of appeals stated that the 
recovery of such "damages are imposed for punitive purposes." Id. 
at 804.  Failure to comply, of course, results in the imposition 
of punishment.  The consumer's pecuniary loss is doubled. 
 
No. 93-0208 
 
 
 
13 
 
Chrysler makes one further argument.  Chrysler contends that 
because it offered to give Hughes a new vehicle 35 days after the 
deadline, Hughes' pecuniary loss should be limited to the out-of-
pocket expenditures Hughes made during those 35 days.  We find no 
merit in this argument.  If we were to accept Chrysler's approach, 
a manufacturer could routinely refuse to provide a replacement 
vehicle to a consumer in order to wait and see whether the 
consumer would actually file suit.  The statute demands that a 
manufacturer 
respond 
within 
30 
days. 
 
Wisconsin 
Stat. 
§ 
218.015(2)(c).  Chrysler did not respond within the 30 days 
required by the law.  We will not rewrite the statute. 
 
Given all the above, we hold that Hughes can recover double 
the amount of the purchase price of his automobile.  This result 
is both consistent with the court of appeals' decision in Nick and 
consistent with the underlying purposes and goals of the lemon 
law. 
 
Chrysler asks us to address one further issue:  whether the 
circuit court erroneously exercised its discretion by awarding 
Hughes $35,141 in attorney's fees.  Chrysler claims that Hughes' 
counsel spent an unreasonable amount of time on the case, and that 
the total amount billed by Hughes' counsel exceeded that charged 
by other attorneys doing similar work.   
 
Appellate review of an award of attorney's fees is limited to 
whether the circuit court properly exercised its discretion.  
Chmill v. Friendly Ford-Mercury, 154 Wis. 2d 407, 412, 453 N.W.2d 
 
No. 93-0208 
 
 
 
14 
197 (Ct. App. 1990).  A circuit court properly exercises its 
discretion if it "employs a logical rationale based on the 
appropriate legal principles and facts of record."  Village of 
Shorewood v. Steinberg, 174 Wis. 2d 191, 204, 496 N.W.2d 57 
(1993)(citing Petros v. City of Watertown, 152 Wis.2d 692, 696, 
449 N.W.2d 72 (Ct. App. 1989)).   
 
In this case, we conclude that the circuit court did not 
erroneously exercise its discretion by determining and awarding 
attorney fees.  The circuit court made an exhaustive, detailed 
review of the fees as reflected in the record.  Although we might 
decide otherwise, this determination is discretionary with the 
circuit court.  A review of the extensive record made by the court 
as to this issue precludes us from finding an erroneous exercise 
of discretion.  Accordingly, we affirm the court of appeals in all 
respects. 
 
By the Court.- The decision of the court of appeals is 
affirmed.   
 
 
No. 93-0208 
 
 
 
 
SUPREME COURT OF WISCONSIN 
 
                                                              
 
Case No.: 
 
93-0208 
                                                              
 
Complete Title 
of Case: 
John L. Hughes, 
 
 
 
 
Plaintiff-Respondent, 
 
 
 
 
v. 
 
 
 
Chrysler Motors Corporation, 
 
 
 
 
Defendant-Appellant-Petitioner. 
 
 
 
________________________________________ 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
 
 
 
Reported at:  188 Wis. 2d 1, 523 N.W.2d 197 
 
 
 
 
 
 
 
(Ct. App. 1994) 
 
 
 
 
 
 
 
PUBLISHED 
 
 
 
 
 
                                                              
 
Opinion Filed:  
January 17, 1996 
Submitted on Briefs: 
 
Oral Argument: 
September 5, 1995 
 
                                                              
 
Source of APPEAL 
 
COURT: 
Circuit 
 
COUNTY: 
Rock 
 
JUDGE: 
J. R. LONG 
 
                                                              
 
JUSTICES: 
 
 
Concurred: 
 
 
Dissented: 
 
 
Not Participating: 
 
                                                              
 
ATTORNEYS:  
For the defendant-appellant-petitioner there were 
briefs by Jeffrey S. Fertl, Susan R. Tyndall and Hinshaw & 
Culbertson, Milwaukee and oral argument by Jeffrey S. Fertl. 
 
 
For the plaintiff-respondent there was a brief by Edward 
Grutzner, Christofer C. Helwig and Grutzner, Holland & Vollmer, 
S.C., Beloit and oral argument by Edward Grutzner. 
 
No. 93-0208 
 
 
 
93-0208  Hughes v. Chrysler Motors 
 
 
Amicus curiae brief was filed by Lawrence Alan Towers, 
Milwaukee for The Center for Public Representation. 
 
 
Amicus curiae brief was filed by Dorothy H. Dey and Quale, 
Feldbruegge, Calvelli, Thom & Croke, S.C., Milwaukee for the 
American 
Manufacturers 
Association 
and 
Association 
of 
International Automobile Manufacturers.