Ranger v. Hyundai Motor Am.

• Docket Number: Record No. 220058
• Decision Date: 06 April 2023
• Citation: 885 S.E.2d 156
• Parties: Nicholas David RANGER v. HYUNDAI MOTOR AMERICA
• Court: Virginia Supreme Court

885 S.E.2d 156

Nicholas David RANGER

v.HYUNDAI MOTOR AMERICA

Record No. 220058

Supreme Court of Virginia.

April 6, 2023

W. Aaron Cluett (Lemon Law Group Partners, on brief), for appellant.

Robert L. Wise (Mark W. Skanes ; Danielle Gibbons, Richmond; Nelson, Mullins, Riley & Scarborough; RoseWaldorf, on brief), for appellee.

PRESENT: All the Justices

OPINION BY JUSTICE STEPHEN R. McCULLOUGH

Nicholas David Ranger appeals from the circuit court's grant of summary judgment in a case arising under Virginia's "Lemon Law," Code § 59.1-207.9 et seq. The case turns on whether a proper refund under the Lemon Law includes the recovery of pre-litigation attorney's fees. We conclude that to satisfy the refund requirements under Virginia's Lemon Law, a manufacturer is not required to pay pre-litigation attorney's fees. Because the manufacturer's refund satisfied the requirements of the Lemon Law, we will affirm the trial court's grant of summary judgment.

BACKGROUND

Ranger purchased a new Hyundai vehicle in 2018. Ranger experienced some problems with the vehicle, and it had to be repeatedly repaired. He retained a lawyer, who wrote a demand letter to Hyundai. The letter demanded a refund of the purchase price "along with all interest paid on the finance note as well as attorney fees and incidental and consequential damages." Hyundai responded by offering to repurchase the vehicle "pursuant to the applicable statutes" and offered to pay some of the attorney's fees. Ranger refused the offer on the basis that Hyundai failed to sufficiently reimburse him for his pre-litigation attorney's fees. Ranger then filed a complaint, alleging, as relevant here, a violation of the Lemon Law.

Hyundai moved for summary judgment, contending that once it offered to repurchase the vehicle, it complied with the Lemon Law, and "[p]laintiff is barred from seeking relief under the statute as a matter of law." The circuit court agreed and granted Hyundai's motion for summary judgment. The court entered a final order dismissing the case with prejudice. This appeal followed.

ANALYSIS

I. COLLATERAL AND INCIDENTAL DAMAGES UNDER THE LEMON LAW .

The Lemon Law is a statutory creation. This statute offers some advantages to both consumers and manufacturers. The statute benefits consumers by prodding manufacturers to repair a vehicle, replace a vehicle, or offer a refund. The statute benefits manufacturers, because compliance avoids costly litigation – litigation that can be more expensive than the cost of repairing or replacing a vehicle, or of offering a refund. The General Assembly's stated intent is that "a good faith motor vehicle warranty complaint by a consumer should be resolved by the manufacturer, or its agent, within a specified period of time" and that "a consumer may receive a replacement motor vehicle, or a full refund, for a motor vehicle which cannot be brought into conformity with the express warranty issued by the manufacturer." Code § 59.1-207.10.

More specifically, if the manufacturer does not, or is unable to, bring a defective vehicle into conformity with the warranty within the specified time, the manufacturer must

[a]ccept return of the motor vehicle and refund to the consumer ... the full contract price, including all collateral charges, incidental damages, less a reasonable allowance for the consumer's use of the vehicle up to the date of the first notice of nonconformity that is given to the manufacturer, its agents or authorized dealer.

Code § 59.1-207.13(A)(2). The statute thus specifies that a proper refund includes the recovery of "collateral charges" and "incidental damages."

The term "collateral charges" is specifically defined to cover "any sales-related ... charges including but not limited to sales tax, license fees, registration fees, title fees, finance charges and interest, transportation charges, dealer preparation charges or any other charges for service contracts, undercoating, rust proofing or installed options, not recoverable from a third party." Code § 59.1-207.11. This definition does not mention or contemplate attorney's fees.

The Lemon Law defines "incidental damages" by referencing the definition found in a provision of the Uniform Commercial Code. Code § 59.1-207.11 (incorporating by reference Code § 8.2-715 ). The definition of "incidental damages" found in the applicable provision of the Uniform Commercial Code provides that such damages

include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach.

Code § 8.2-715(1). This definition of "incidental damages" also does not mention or contemplate attorney's fees. The official commentary to this provision explains that this subsection "is intended to provide reimbursement for the buyer who incurs reasonable expenses in connection with the handling of rightfully rejected goods or goods whose acceptance may be justifiably revoked, or in connection with effecting cover where the breach of the contract lies in non-conformity or non-delivery of the goods." U.C.C. § 2-715 cmt. 1. The official commentary also makes no mention of attorney's fees.

According to one writer discussing incidental damages under the U.C.C.,

[w]hen the goods involved in the breached contract are vehicles, typical items of incidental damages include: sales tax paid on the purchase price; insurance costs following rejection or revocation; interest or finance charges paid for any loan on the purchase price; [and] the cost of license plates, storage charges, and related items from the time of rejection or revocation until entry of judgment.

Roy Ryden Anderson, Incidental and Consequential Damages , 7 J.L. & COM. 327, 347 (1987) (footnotes omitted).

Although we could not find a Virginia case on point, the "overwhelming weight of authority" from other courts concludes that attorney's fees are not available under this provision of the Uniform Commercial Code. Nick's Auto Sales, Inc. v. Radcliff Auto Sales, Inc. , 591 S.W.2d 709, 711 (Ky. Ct. App. 1979) (collecting cases). We agree. Pre-litigation attorney's fees are not a component of collateral or incidental damages under the Lemon Law. Therefore, when a manufacturer provides a refund, it is not required to pay pre-litigation attorney's fees to satisfy its obligations under the Lemon Law.

The Lemon Law further provides a...