Muzzy v. Chevrolet Div., General Motors Corp.

• Citation: 571 A.2d 609,153 Vt. 179
• Decision Date: 01 December 1989
• Docket Number: No. 87-272,87-272
• Parties: Terry and Robert MUZZY v. CHEVROLET DIVISION, GENERAL MOTORS CORP.; State of Vermont, Intervenor.
• Court: United States State Supreme Court of Vermont

Page 609

571 A.2d 609

153 Vt. 179

Terry and Robert MUZZY v. CHEVROLET DIVISION, GENERAL MOTORS CORP.;

State of Vermont, Intervenor.

No. 87-272.

Supreme Court of Vermont.

Dec. 1, 1989.

Stephen Cosgrove, Rutland, for plaintiffs-appellees.

Jeffrey L. Amestoy, Atty. Gen., Susan M. Sussman, Asst. Atty. Gen., Montpelier, for intervenor-appellee State.

Charles M. Hurt, Jr. of Downs, Rachlin & Martin, St. Johnsbury, for defendant-appellant.

Before ALLEN, C.J., PECK and DOOLEY, JJ., KEYSER, J. (Ret.) and COSTELLO, District Judge (Ret.), Specially Assigned.

DOOLEY, Justice.

Terry and Robert Muzzy (appellees) purchased a new Chevrolet from an authorized General Motors Corporation dealer in February, 1985. After numerous repair attempts, appellees sought statutory remedies under the New Motor Vehicle Arbitration Act (Act), 9 V.S.A. §§ 4170-4181. The Vermont Motor Vehicle Arbitration Board (Board), created to hear consumer complaints arising under the statute, found appellees entitled to relief. The Board ordered General Motors Corporation (GM) to refund a portion of the purchase price and other expenses. GM appealed to the Washington Superior Court, which affirmed the Board's decision. GM here contends that the superior court erred in affirming the Board's decision. We affirm.

The facts relevant to this case are brief. Appellees purchased a new vehicle from a Rutland dealer and found that it ran roughly and stalled in traffic. The dealer tried on five separate occasions in April, May and June of 1985 to repair the defect. When these attempts failed, appellees went to the Board seeking a new vehicle from GM. ¹ GM made a last attempt at repair and installed a special valve. Although GM alleged that the new valve cured the defect, the Board made no finding on whether the vehicle was repaired. Appellees were dissatisfied with the results of GM's last repair attempt because the problem might reoccur and the warranty was about to expire.

On the above facts, the Board found that the vehicle had a substantial defect which affected its safety or market value. Since the vehicle was not repaired in three attempts, the Board found that appellees made out a prima facie case for relief. It found that GM's last repair attempt, whether or not successful, was not relevant because appellees were not satisfied with it. ² Accordingly, it ordered GM to refund the purchase price, together with the amount of any interest, taxes, registration fees, credit fees and credit insurance premiums incurred by appellees.

On appeal, the superior court upheld the Board determination that the vehicle had a substantial defect which adversely affected safety or market value. It further held that although GM had a right to attempt a final repair, this right was subject to the consumer's satisfaction with the repair. Since the consumers were not satisfied with the final repair attempt and exercised their judgment "honestly and in good faith," the court found that they could recover. The court upheld the constitutionality of the Act against claims that it impaired the obligation of the contract and denied GM due process of law and equal protection of the laws. It affirmed the remedy fashioned by the Board except for the refund of the purchase and use tax, which it found to be beyond the authority of the Board.

On appeal in this Court, GM raises three claims of error: (1) the Board erred in holding that the test of consumer satisfaction is wholly subjective; (2) the Board failed to make findings on essential elements of the case; and (3) the Board awarded damages for items not covered by the Act. We take these claims in order after first setting out the statutory scheme and addressing the standard of review.

I. Statutory Scheme

This is the second case to reach this Court under the "lemon law." The basic operation of the statute is set forth in the first case, Pecor v. General Motors Corp., 150 Vt. 23, 547 A.2d 1364 (1988). In that case, we held that the consumer does not have to prove an existing defect, or warranty nonconformity, to recover under the Act. 150 Vt. at 25, 547 A.2d at 1366. Instead, the Act creates an obligation in the manufacturer to replace a motor vehicle if the manufacturer, or dealer, is unable to repair the vehicle "after a reasonable number of attempts." 9 V.S.A. § 4172(e). It presumes that a reasonable number of attempts have been made in either of two circumstances: (1) the defect has been subject to three repair attempts and "the same nonconformity continues to exist"; or (2) the vehicle has been out of service a cumulative total of 30 days during the warranty period. 9 V.S.A. *612s 4172(g). Pecor holds that if the vehicle remains out of conformity with the warranty ³ after the reasonable number of repair attempts have been made, liability attaches and the consumer does not have to prove, and the Board does not have to find, nonconformity at the time of the Board hearing. 150 Vt. at 25-26, 547 A.2d at 1366.

This case involves another part of the statute not involved in Pecor. A consumer seeking a remedy under the Act may apply to the Board, ⁴ which must normally arbitrate the consumer's complaint within 45 days. 9 V.S.A. § 4173(c). Within this 45-day period, the manufacturer is given one final opportunity to correct the defect. 9 V.S.A. § 4173(d). The statutory language governing this opportunity is as follows:

(d) Within the 45-day period set forth in subsection (c) of this section, the manufacturer shall have one final opportunity to correct and repair the defect which the consumer claims entitles him or her to a refund or replacement vehicle. If the consumer is satisfied with the corrective work done by the manufacturer or his delegate, the arbitration proceedings shall be terminated without prejudice to the consumer's right to request arbitration be recommenced if the repair proves unsatisfactory for the duration of the express warranty.

Id. GM interprets this section as establishing an objective standard so that if the defect is in fact repaired the proceedings before the Board must terminate. Appellees urge adoption of a subjective standard, with the question being whether the consumer is in fact satisfied.

II. Standard of Review

The Act specifies the standard of review on an appeal from the Board. See 9 V.S.A. § 4176. Under the Act the decision of the Board is "final" unless a party proves "by clear and convincing evidence" that one of four grounds apply. For purposes of this case, the only arguably applicable ground is that "the board exceeded its powers." 9 V.S.A. § 4176(a)(3).

The grounds for reversal in 9 V.S.A. § 4176 are identical in substance to those contained in 12 V.S.A. § 5677, part of the Vermont Arbitration Act. ⁵ Similarly, the grounds in 12 V.S.A. § 5677 are identical in substance to the judicial review provisions of the Federal Arbitration Act, 9 U.S.C. § 10(d). ⁶ In addition, the statutory limitations on judicial review imposed by 9 U.S.C. § 10(d) seek to "further the objective of arbitration, which is to enable parties to resolve disputes promptly and inexpensively." Office of Supply, Government of Republic of Korea v. New York Navigation Co., 469 F.2d 377, 379 (2d Cir.1972). This purpose parallels language contained in 9 V.S.A. § 4170, entitled "Legislative intent," where the Legislature declared that manufacturers ought to "provide speedy and less costly resolution of automobile warranty problems." 9 V.S.A. § 4170.

The standard of review on issues of law is very limited. We do not sit as an appellate court on errors of fact or law made by the Board. See, e.g., Board of Directors of Maine School Administrative District No. 33 v. Teachers' Association of Maine, 395 A.2d 461, 463 (Me.1978); see also Matzen Construction, Inc. v. Leander Anderson Corp., 152 Vt. 174, ----, 565 A.2d 1320, 1322 (1989) (scope of review is to ensure proceedings fall within the boundaries of due process); In re Subaru of America (McKelvey), 141 Misc.2d 41, ----, 532 N.Y.S.2d 617, 618 (Sup.Ct.1988) (under New York lemon law, court will not set aside arbitration award for errors of law or fact unless award is irrational). Only under extreme circumstances can we intervene to correct an error of law. See Freeport Construction Co. v. Star Forge, Inc., 61 Ill.App.3d 999, 1006-07, 19 Ill.Dec. 57, 63-64, 378 N.E.2d 558, 564-65 (1978). In the federal courts, an award may be vacated for an error of law only if the arbitrator manifestly disregards the law. Wilko v. Swan, 346 U.S. 427, 436-37, 74 S.Ct. 182, 187-88, 98 L.Ed. 168 (1953); Office of Supply, Government of Republic of Korea, 469 F.2d at 379-80. This standard is severely limited. The Second Circuit Court of Appeals recently described it as follows:

Although the bounds of ["manifest disregard of the law"] have never been defined, it clearly means more than error or misunderstanding with respect to the law. The error must have been obvious and capable of being readily and instantly perceived by the average person qualified to serve as an arbitrator. Moreover, the term "disregard" implies that the arbitrator appreciates the existence of a clearly governing legal principle but decides to ignore or pay no attention to it. To adopt a less strict standard of judicial review would be to undermine our well established deference to arbitration as a favored method of settling disputes when agreed to by the parties. Judicial inquiry under the "manifest disregard" standard is therefore extremely limited. The governing law alleged to have been ignored by the arbitrators must be well defined, explicit, and clearly applicable. We are not at liberty to set aside an arbitration panel's award because of an arguable difference regarding the meaning or applicability of laws urged upon it.

Merrill, Lynch, Pierce, Fenner & Smith, Inc. v. Bobker, 808 F.2d 930, 933-34 (2d Cir.1986) (citations omitted).

The legislative intent is clearly that the standard of review be even narrower...