7 N.Y.3d 653, 2006-09322, DaimlerChrysler Corp. v. Spitzer

Docket Nº:2006-09322
Citation:7 N.Y.3d 653, 827 N.Y.S.2d 88
Party Name:DaimlerChrysler Corp. v. Spitzer
Case Date:December 14, 2006
Court:New York Court of Appeals

Page 653

7 N.Y.3d 653

827 N.Y.S.2d 88

In the Matter of DaimlerChrysler Corporation et al., Appellants


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


New York Court of Appeal

December 14, 2006

Argued November 14, 2006

Page 654


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.

Page 655

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.

Page 656

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.

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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 [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

Page 658

"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...

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