Opinion ID: 1301748
Heading Depth: 2
Heading Rank: 1

Heading: Overview of Wisconsin's Lemon Law

Text: ¶ 28 The Wisconsin Lemon Law is one of Wisconsin's preeminent consumer protection statutes. It was first adopted in 1983, 1983 Wis. Act 48, § 1, and has been revised and extended several times in the intervening years. [11] The statute is designed to assist consumers who have purchased or leased a new motor vehicle that does not function properly. State Farm Mut. Auto. Ins. Co. v. Ford Motor Co., 225 Wis.2d 305, 345-46, 592 N.W.2d 201 (1999). In a dispute, the statute reduces the disparity between a motor vehicle manufacturer and a consumer by equalizing the bargaining power of the consumer. It creates standards of conduct for manufacturers of new motor vehicles and their agents as well as potent consequences for violations of those standards. ¶ 29 Subsection (1) of Wis. Stat. § 218.0171 embodies a list of definitions for the section, including consumer, § 218.0171(1)(b); motor vehicle, § 218.0171(1)(d); nonconformity, § 218.0171(1)(f); and reasonable attempt to repair, § 218.0171(1)(h). The term consumer includes the purchaser of a new motor vehicle, if the motor vehicle was purchased from a motor vehicle dealer for purposes other than resale, § 218.0171(1)(b)1., and also [a] person who leases a motor vehicle from a motor vehicle lessor under a written lease, § 218.0171(1)(b)4. [12] ¶ 30 Subsection (2) imposes obligations upon motor vehicle manufacturers and their agents. The first obligation is the obligation of repair located in paragraph (a): (a) If a new motor vehicle does not conform to an applicable express warranty and the consumer [1] reports the nonconformity to the manufacturer, the motor vehicle lessor or any of the manufacturer's authorized motor vehicle dealers and [2] makes the motor vehicle available for repair [3] 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. § 218.0171(2)(a) (emphasis added). ¶ 31 Under subsection (2)(a), the manufacturer or the manufacturer's agent has an obligation to repair a nonconformity, which is defined as a condition or defect which substantially impairs the use, value or safety of a motor vehicle. Wis. Stat. § 218.0171(1)(f). ¶ 32 Recovery under the statute is provided in both subsection (2)(a) and (2)(b). Kletzien v. Ford Motor Co., 668 F.Supp. 1225, 1228 (E.D.Wis.1987). Subsection (2)(a) was discussed by the court of appeals in Vultaggio v. General Motors Corp., 145 Wis.2d 874, 890-91, 429 N.W.2d 93 (Ct.App.1988). [13] The court concluded that subsection (2)(a) creates an obligation of repair and that a consumer may bring suit for violation of that obligation under Wis. Stat. § 218.0171(7). Id. The court stated its decision as follows: Subsection (2)(a) protects the consumer from those instances in which the consumer is unable to establish the reasonable attempt to repair necessary under sec. [218.0171(2)(b) ], but can show that the dealer has not, cannot, or will not repair a nonconformity brought to its attention during the warranty period. In accord with the remedial purpose of sec. [218.0171], that consumer should still be afforded relief. Id. at 891, 429 N.W.2d 93 (emphasis added). Thus, a manufacturer who fails to repair a nonconformity reported to it pursuant to [218.0171(2)(a)] has violated its [obligation], id. at 890, 429 N.W.2d 93, and the consumer may bring suit under § 218.0171(7) for the violation of that obligation, even though the consumer is not able to take advantage of the remedies of refund or replacement under Wis. Stat. § 218.0171(2)(b). Id. at 891, 429 N.W.2d 93. ¶ 33 If the remedies of refund or replacement are not available for a violation of subsection (2)(a) alone, the consumer may recover any damages caused by a violation of subsection (2)(a) and collect twice the amount of that pecuniary loss, together with costs, disbursements and reasonable attorney fees, and any equitable relief the court determines appropriate. Wis. Stat. § 218.0171(7). [14] ¶ 34 The point of this discussion is that the Wisconsin Lemon Law has been interpreted for more than 20 years as providing recovery for a violation of subsection (2)(a). If this interpretation is correct, it suggests that when damages caused by a violation of this section are determined under subsection (7), they should be linked to a specific violation of the statute and vary based on the facts of each case. ¶ 35 Subsections (2)(b) and (c) impose additional obligations on manufacturers and their agents: (b) 1. If after a reasonable attempt to repair the nonconformity is not repaired, the manufacturer shall carry out the requirement under subd. 2. or 3., whichever is appropriate. 2. At the direction of a consumer described under sub. (1)(b)1., 2. or 3., do one of the following: a. Accept return of the motor vehicle and replace the motor vehicle with a comparable new motor vehicle and refund any collateral costs. b. Accept return of the motor vehicle and refund to the consumer and to any holder of a perfected security interest in the consumer's motor vehicle, as their interest may appear, the full purchase price plus any sales tax, finance charge, amount paid by the consumer at the point of sale and collateral costs, less a reasonable allowance for use. Wis. Stat. § 218.0171(2)(b) (emphasis added). Subdivision b. then continues on, creating a ceiling on the amount that may be deducted as a reasonable allowance for use from a refund of the full purchase price. [15] Reasonable allowance for use is not a factor under subdivision a. See Wis. Stat. § 218.0171(2)(b)2.a. ¶ 36 Plainly, subsection (2)(b)2. applies to purchasers and others who acquire title to a new motor vehicle. See Wis. Stat. § 218.0171(1)(b)1.-3. Payment obligations are created when title to a motor vehicle is transferred to a purchaser. A consumer who is a purchaser (or other person who acquires title in conformity with Wis. Stat. § 218.0171(1)(b)) and who satisfies other statutory requirements, such as allowing the manufacturer a reasonable attempt to repair the vehicle, must offer to transfer title of the vehicle back to the manufacturer. See Wis. Stat. § 218.0171(2)(c). Once these requirements have been met, the consumer may direct the manufacturer either to replace the motor vehicle with a comparable new motor vehicle or refund the full purchase price, as provided. [16] Wis. Stat. § 218.0171(2)(b)2. The manufacturer or the manufacturer's agent has 30 days to provide the consumer with the comparable new motor vehicle or refund. Wis. Stat. § 218.0171(2)(c); see also Estate of Riley v. Ford Motor Co., 2001 WI App 234, ¶¶ 8-9, 248 Wis.2d 193, 635 N.W.2d 635. ¶ 37 A manufacturer's failure to comply with the obligations set out in subsection (2)(b)2. permits the consumer to file suit under subsection (7). See Gosse v. Navistar Int'l Transp. Corp., 2000 WI App 8, ¶ 12, 232 Wis.2d 163, 605 N.W.2d 896 (recognizing that Wis. Stat. § 218.015(7) (1997-98), now Wis. Stat. § 218.0171(7), allows the consumer to enforce the statute by bringing legal action). The consumer's pecuniary loss in subsection (7) is the loss caused by a violation of this section. Wis. Stat. § 218.0171(7). If the consumer prevails in such an action, the court  shall award ... twice the amount of any pecuniary loss, together with costs, disbursements and reasonable attorney fees, and any equitable relief the court determines appropriate. Id. (emphasis added). ¶ 38 A consumer acting under subsection (2)(b)2. may receive a comparable new motor vehicle or a refund of the full purchase price, as provided, but the consumer does not get double his purchase price, or attorney fees, or other add-ons not contemplated by (2)(b)2., as long as the manufacturer complies timely with the demand. A manufacturer that fails to comply timely with a consumer's demand under (2)(b)2. assumes the risk of paying twice the vehicle's full purchase price and other items mentioned in (2)(b)2.b.namely, any sales tax, finance charge[s], amount paid by the consumer at the point of sale and collateral costsplus the consumer's reasonable attorney fees, plus other costs and disbursements and even possible equitable relief, plus its own attorney fees, if any. See Wis. Stat. § 218.0171(7); Hughes, 197 Wis.2d at 976-77, 542 N.W.2d 148. Considering these potent consequences for violating the statute, the manufacturer must weigh very carefully when to hold 'em and when to fold 'em. [17] ¶ 39 Subsection (2)(b)3. applies to lessees. See Wis. Stat. § 218.0171(1)(b)4. If after a reasonable attempt to repair the nonconformity is not repaired, the manufacturer shall do the following: 3. a. With respect to a consumer described in sub. (1)(b)4., [namely, a lessee,] accept return of the motor vehicle, refund to the motor vehicle lessor and to any holder of a perfected security interest in the motor vehicle, as their interest may appear, the current value of the written lease and refund to the consumer the amount the consumer paid under the written lease plus any sales tax and collateral costs, less a reasonable allowance for use. b. Under this subdivision, the current value of the written lease equals the total amount for which that lease obligates the consumer during the period of the lease remaining after its early termination, plus the motor vehicle dealer's early termination costs and the value of the motor vehicle at the lease expiration date if the lease sets forth that value, less the motor vehicle lessor's early termination savings. Wis. Stat. § 218.0171(2)(b) (emphasis added). ¶ 40 These provisions, providing explicit protections for lessees, were approved in 1987. 1987 Wis. Act 105. They are obviously separate from the provisions protecting purchasers.