Chrysler Corp. v. Maiocco, s. 13474

• Decision Date: 17 January 1989
• Docket Number: Nos. 13474,13475,s. 13474
• Court: Connecticut Supreme Court
• Parties: CHRYSLER CORPORATION v. Richard MAIOCCO et al.

Page 1207

552 A.2d 1207

209 Conn. 579

CHRYSLER CORPORATION v. Richard MAIOCCO et al.

Nos. 13474, 13475.

Supreme Court of Connecticut.

Argued Nov. 8, 1988.

Decided Jan. 17, 1989.

Stephen R. Park, Asst. Atty. Gen., with whom were Garry Desjardins, Asst. Atty. Gen., Robin Bruce Sandler, New Haven, and, on the brief, Joseph I. Lieberman, Atty. Gen., and Robert M. Langer, Asst. Atty. Gen., for appellants (defendants).

Thomas R. Legenhausen, with whom, on the brief, was Mark R. Kravitz, New Haven, for appellee (plaintiff).

Before PETERS, C.J., and SHEA, CALLAHAN, GLASS and HULL, JJ. HULL, Associate Justice.

This case raises the issue of whether, in an arbitration proceeding pursuant to General Statutes Chapter 743b (Lemon Law I and II), arbitrators have the power to award attorney's fees to the consumer. We conclude that the arbitrators do have such power and find error in the trial court's judgment vacating that part of the arbitration award granting attorney's fees to the named defendant, Richard Maiocco.

The factual and procedural posture of this case is not in dispute. On June 10, 1985, Maiocco bought a new Jeep Laredo from Stahls, Inc., a Derby automobile dealer. He returned the vehicle to the dealer four times because of a "hesitation" problem. The dealer eventually diagnosed the problem and attempted to repair it in April, 1987. While Maiocco was on a vacation trip to Lake George, New York, on July 22, 1987, "the car hesitated while climbing a hill, made a clanking noise, and stopped." Maiocco had the car towed back to his home in Orange.

Maiocco filed a request for arbitration with the department of consumer protection on September 4, 1987. In response, the plaintiff, on November 13, 1987, offered to buy back the car. Maiocco rejected the manufacturer's offer because it did not address additional damages. He thereafter filed for arbitration pursuant to General Statutes § 42-181. ¹ On September 21 1987, the department of consumer protection reviewed the request for arbitration and determined that the statutory requirements were met under § 42-181 and scheduled an arbitration hearing for December 17, 1987. After the December 17, 1987 hearing, the arbitration panel made a written award in favor of Maiocco, finding that the vehicle was returned to the dealer more than four times for hesitation and that the vehicle was in a condition that severely impaired its use, value and safety. The plaintiff has not challenged these findings. The arbitration panel awarded Maiocco broad remedies under § 42-181 including a refund of the purchase price and various items of consequential damages. The arbitrators also awarded Maiocco $1125 in attorney's fees, finding that "these were incurred as the direct result of the vehicle's defect."

On January 20, 1988, the plaintiff filed an application with the Superior Court seeking an order vacating the arbitration award between itself and Maiocco. ² The plaintiff claimed that General Statutes §§ 42-179 through 42-184 (chapter 743b, entitled Automobile Warranties) violated its right to a jury trial guaranteed by article second of the Connecticut constitution and violated the separation of powers provision of article second as well as article fifth, § 1, of the Connecticut constitution. The plaintiff did not press these constitutional claims at the hearing on its petition but rather sought to have that portion of the award granting attorney's fees to Maiocco vacated on the ground that the arbitrators had exceeded their powers in awarding them. On March 1, 1988, the court granted the motion of the department of consumer protection to be made a party defendant.

The trial court concluded that: (1) the controlling statutes defined the powers of the arbitrators; (2) nowhere in chapter 743b are arbitrators expressly authorized to award attorney's fees; (3) the legislative history of chapter 743b offers no guidance as to the intent of the legislature regarding authorization of arbitrators to award attorney's fees; (4) as a general rule, absent contractual or statutory authorization for an award of attorney's fees, each party must pay its own attorney's fees; and (5) the words of chapter 743b do not manifestly express the intent to authorize arbitrators to award attorney's fees in a chapter 743b arbitration. The court rendered judgment vacating that portion of the award allowing attorney's fees, and this appeal followed. The defendants briefed the single issue of whether the trial court erred in concluding that in an arbitration proceeding under chapter 743b of the General Statutes, the arbitrators exceeded their powers in awarding attorney's fees to Maiocco.

In Motor Vehicle Manufacturers Assn. of the United States, Inc. v. O'Neill, 203 Conn. 63, 67-74, 523 A.2d 486 (1987), we analyzed the statutory background of this case: "In 1982, the Connecticut legislature enacted Public Acts 1982, No. 82-827 (Lemon Law I)." That act is codified as General Statutes § 42-179. For consumer buyers of new motor vehicles, the act provides supplemental remedies of repair, replacement and refund to facilitate the enforcement of express warranties made by the manufacturers of such vehicles. These supplemental remedies come into play whenever a manufacturer or authorized dealer, after a reasonable number of repair attempts, is unable substantially to conform a new vehicle to the terms of the express warranty....

"In 1984, the legislature enacted Public Acts 1984, No. 84-338 (Lemon Law II), now codified as General Statutes §§ 42-181 through 42-184. The purpose of Lemon Law II is to provide, for consumer purchasers of new motor vehicles, an alternative to civil litigation. The key provision is § 42-181, which authorizes the department of consumer protection to establish 'an independent arbitration procedure for the settlement of disputes between consumers and manufacturers of motor vehicles which do not conform to all applicable warranties under the terms of section 42-179.' Whether to invoke arbitration under the act is a decision for the consumer: only the consumer may initiate arbitration proceedings, and the consumer may decide whether to accept the decision of the arbitration panel. General Statutes § 42-181(b), (c). Once a consumer has brought a grievance to the statutory arbitration panel, the manufacturer must cooperate, in good faith, with all aspects of the arbitration procedure. General Statutes §§ 42-181(b), (c) and 42-184. The department of consumer protection has promulgated the necessary regulations, effective December 18, 1984, to create the automobile dispute settlement panels mandated by Lemon Law II. Regs., Conn. State Agencies § 42-1-181 et seq.

"The legislature amended both Lemon Law I and Lemon Law II in 1985, when it enacted Public Acts 1985, No. 85-331, codified as General Statutes § 42-179a and as amendments to §§ 42-179, 42-181, 42-182 and 42-185. The amendments, in addition to making a number of procedural changes, empowered the attorney general to certify a manufacturer's informal dispute settlement mechanism as complying with 16 C.F.R. § 703 et seq., thus avoiding the state's arbitration panels under Lemon Law II. To date, no manufacturer has obtained such certification. A report of the attorney general that has been made an exhibit criticizes existing private programs for, inter alia, their 'exclusion of consequential damages' from the arbitration process.

"The state has begun to implement and enforce Lemon Law II according to its terms. Arbitration panels have heard and resolved numerous consumer complaints pursuant to the applicable statutory and regulatory provisions." (Emphasis added.) Section 42-181 was further amended by Public Acts 1987, No. 87-522, § 3, in procedural aspects not pertinent here.

To focus clearly on the issue in this case we must first point out the four separate statutory areas involved in the overall Lemon Law apparatus that do authorize payment of attorney's fees. The first is General Statutes § 42-180 (added to chapter 743b [Lemon Law I] by Public Acts 1983, No. 83-351), which provides: "COSTS AND ATTORNEY'S FEES IN BREACH OF WARRANTY ACTIONS. In any action by a consumer against the manufacturer of a motor vehicle, or the manufacturer's agent or authorized dealer, based upon the alleged breach of an express or implied warranty made in connection with the sale of such motor vehicle, the court, in its discretion, may award to the plaintiff his costs and reasonable attorney's fees or, if the court determines that the action was brought without any substantial justification, may award costs and reasonable attorney's fees to the defendant."

It is important to note that Lemon Law I made no provision for attorney's fees, but left the dissatisfied consumer to his ordinary civil remedies without the possibility of such an award. Two additional facets of § 42-179 (Public Acts 1982, No. 82-287, [Lemon Law I] deserve attention. The first is the carrot and stick provision now contained in § 42-179(i), which provides: "[I]f a manufacturer has established an informal dispute settlement procedure which is certified by the attorney general as complying in all respects with the provisions of Title 16 Code of Federal Regulations Part 703, as in effect on October 1, 1982, and with the provisions of subsection (b) of section 42-182, the provisions of subsection (d) of this section concerning refunds or replacement shall not apply to any consumer who has not first resorted to such procedure." This subsection shows an emerging legislative awareness of the need for a more practical and economical means of resolving disputes over vehicle warranties than civil litigation. The second factor we note is that Lemon Law I, in § 42-179(g), provides that "[a]ll express and implied warranties arising from the sale of a new motor vehicle shall be subject to the provisions of part 3 of article 2 of title 42a [General Statutes §§ 42a-2-301 through 42a-2-326, the...