Daimlerchrysler Corp. v. Spitzer

Decision Date14 December 2006
Citation7 N.Y.3d 653,860 N.E.2d 705
PartiesIn the Matter of DAIMLERCHRYSLER CORPORATION et al., Appellants, v. Eliot SPITZER, as Attorney General of the State of New York, et al., Respondents. In the Matter of the Arbitration between General Motors Corporation, Appellant, and James Warner, Respondent.
CourtNew York Court of Appeals Court of Appeals

Rose Law Firm, PLLC, Albany (Paul A. Feigenbaum, Keith B. Rose and Justin E. Proper of counsel), for appellants in the first above-entitled proceeding.

Eliot Spitzer, Attorney General, New York City (Thomas G. Conway, Caitlin J. Halligan, Michelle Aronowitz, Jane M. Azia, Matthew J. Barbaro, Stephen Mindell and Herbert Israel of counsel), respondent pro se in the first above-entitled proceeding.

Hiscock & Barclay, LLP, Albany (Mark W. Blanchfield of counsel), for New York State Dispute Resolution Association, respondent in the first above-entitled proceeding.

Rose Law Firm, PLLC, Albany (Paul A. Feigenbaum, Keith B. Rose and Justin E. Proper of counsel), for appellant in the second above-entitled proceeding.

Sadis & Goldberg, LLC, New York City (Douglas R. Hirsch, Francis Bigelow, David Kasell and Jarret Kahn of counsel), for respondent in the second above-entitled proceeding.

OPINION OF THE COURT

GRAFFEO, J.

The purchaser of a new motor vehicle is entitled to a "repair presumption" and therefore can seek relief under the New Car Lemon Law when the consumer can demonstrate that the vehicle has been subject to repair four or more times within a prescribed time period and the same substantial defect continues to exist. The common issue in these two appeals is whether a consumer, who claims the benefit of the presumption, must also establish that the vehicle remains defective at the time of trial or arbitration. We conclude that the statute does not require such a showing and therefore affirm the orders of the Appellate Division so holding.

New Car Lemon Law

In 1983, the Legislature enacted the New Car Lemon Law (General Business Law § 198-a) "to provide New York consumers greater protection than that afforded by automobile manufacturers' express limited warranties or the Federal Magnuson-Moss Warranty Act" (Motor Veh. Mfrs. Assn. of U.S. v. State of New York, 75 N.Y.2d 175, 179, 551 N.Y.S.2d 470, 550 N.E.2d 919 [1990]). The statute obligates manufacturers to repair, without charge, any new motor vehicle which fails to conform to all express warranties during the first 18,000 miles of operation or for two years immediately following delivery of the vehicle, whichever comes first (see General Business Law § 198-a [b][1]). If, within this time frame, a manufacturer is unable to correct a defect that "substantially impairs" the value of the vehicle "after a reasonable number of attempts," the manufacturer—at the consumer's option—must either replace the vehicle or accept the return of the vehicle in exchange for a refund of the purchase price (General Business Law § 198-a [c][1]).

Under the statute, a presumption that the consumer has met the "reasonable number of attempts" requirement arises in two circumstances: if the same defect has been subject to repair "four or more times" but "continues to exist"—commonly termed the "repair presumption" (General Business Law § 198-a [d][1]); or if the vehicle has been out of service for a total of 30 or more days—referred to as the "days-out-of-service presumption" (General Business Law § 198-a [d][2]). The triggering of either presumption does not ensure that a consumer will recover. A manufacturer may attempt to rebut the presumption and is afforded an affirmative defense when it can show either that the defect "does not substantially impair" the vehicle's value or the condition resulted from "abuse, neglect or unauthorized modifications or alterations of the motor vehicle" (General Business Law § 198-a [c] [3][i], [ii]).

As originally enacted, the New Car Lemon Law required consumers to commence a legal action to obtain relief from manufacturers (see General Business Law § 198-a [j]). In 1986, the Legislature amended the statute to give consumers the option of resolving disputes by arbitration and directed the Attorney General to establish and supervise the arbitration hearing process (see General Business Law § 198-a [k]). In addition to promulgating regulations that govern the relevant procedures (see 13 NYCRR part 300), the Attorney General created a written consumer's guide to Lemon Law procedures and standard forms for use in arbitration. Beginning in 1987, the consumer's guide and forms stated that a consumer would be eligible for a refund or replacement vehicle only when the purchaser could demonstrate that a defect still existed as of the date of arbitration. But in 2002, in response to Matter of Bay Ridge Toyota v. Lyons, 272 A.D.2d 397, 707 N.Y.S.2d 205 (2d Dept.2000),1 the Attorney General reconsidered his interpretation of General Business Law § 198-a (d), and concluded that the presence of a defect at the time of arbitration or trial was not a prerequisite for recovery. In accordance with this view, the Attorney General amended the consumer guide and forms, effective in 2003, to explain that a consumer may be entitled to relief if, within the first 18,000 miles or two years, the vehicle was subject to four or more unsuccessful repair attempts or out of service for 30 days, notwithstanding that the condition was subsequently repaired.

Matter of DaimlerChrysler Corporation v. Spitzer

Petitioners DaimlerChrysler Corporation, General Motors Corporation and Saturn Corporation (collectively, the manufacturers) object to the Attorney General's new interpretation of the statute to the extent that it permits consumers relying on the repair presumption to seek relief when their vehicles have been fixed after more than four attempts. The manufacturers commenced CPLR article 75 proceedings to vacate a series of arbitration awards in which the arbitrators had applied the Attorney General's new construction of the repair presumption in granting relief to consumers.2 The courts vacated the awards, determining that a consumer relying on the repair presumption must demonstrate that the defect "continues to exist" at the time of the arbitration hearing.3

Relying on these decisions, the manufacturers brought this CPLR article 78 proceeding to enjoin the Attorney General and respondent New York State Dispute Resolution Association from using the new interpretation of General Business Law § 198-a (d)(1) in the Lemon Law arbitration system.4 Supreme Court denied the petition and dismissed this proceeding. The Appellate Division affirmed. We granted the manufacturers leave to appeal.

Matter of General Motors Corporation (Warner)

In March 2003, respondent James Warner bought a new truck from a dealership known as LaQua's 481. The vehicle was manufactured by petitioner General Motors Corporation. Shortly after acquiring the truck, Warner discovered a transmission problem, which LaQua attempted to fix on five occasions between April and November 2003. In December 2003, Warner filed a request for arbitration under the New Car Lemon Law. After a hearing, the arbitrator found that there had been four or more attempts to repair the same defect and that the problem persisted following the fourth attempt. The arbitrator awarded Warner a refund of approximately $30,000.

General Motors brought this article 75 proceeding to vacate the award, arguing that Warner could not prevail unless he demonstrated that LaQua's final repair attempt proved unsuccessful such that the vehicle remained defective at the time of the commencement of the arbitration hearing. Supreme Court granted the petition to the extent it sought a new hearing to determine whether the problem had in fact been remedied prior to the hearing. The Appellate Division reversed and reinstated the arbitration award. We granted General Motors leave to appeal.

Analysis

In these cases, the manufacturers contend that a plain reading of the repair presumption in General Business Law § 198-a (d)(1) requires a consumer to establish that the defect continues to exist at the time of trial or arbitration. They submit that the Legislature must have intended such a result based on the placement of the phrase "continues to exist" in the statute. Under their reading of the provision, a consumer may seek Lemon Law relief after four unsuccessful repair attempts but, if a consumer voluntarily decides to give the manufacturer additional repair opportunities that prove successful in eliminating the problem, the consumer is precluded from recovery. We disagree.

When presented with a question of statutory interpretation, our primary consideration "is to ascertain and give effect to the intention of the Legislature" (Riley v. County of Broome, 95 N.Y.2d 455, 463, 719 N.Y.S.2d 623, 742 N.E.2d 98 [2000] [internal quotation marks and citation omitted]). The statutory text is the clearest indicator of legislative intent and courts should construe unambiguous language to give effect to its plain meaning (see Majewski v. Broadalbin-Perth Cent. School Dist., 91 N.Y.2d 577, 583, 673 N.Y.S.2d 966, 696 N.E.2d 978 [1998]; Matter of State of New York v. Ford Motor Co., 74 N.Y.2d 495, 500, 549 N.Y.S.2d 368, 548 N.E.2d 906 [1989]). At the same time, because the New Car Lemon Law is remedial in nature, it should be liberally construed in favor of consumers (see Matter of White v. County of Cortland, 97 N.Y.2d 336, 339, 740 N.Y.S.2d 288, 766 N.E.2d 950 [2002]). And where, as here, "the question is one of pure statutory reading and analysis, dependent only on accurate apprehension of legislative intent, there is little basis to rely on any special competence or expertise of the administrative agency"—in this case, the Attorney General's office (Matter of Gruber [New York City Dept. of Personnel—Sweeney], 89 N.Y.2d 225, 231, 652 N.Y.S.2d 589, 674 N.E.2d 1354 [1996] [internal quotation marks and citation omitted])...

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