State by Abrams v. Ford Motor Co.

• Decision Date: 28 November 1989
• Citation: 74 N.Y.2d 495,548 N.E.2d 906,549 N.Y.S.2d 368
• Parties: , 548 N.E.2d 906, 58 USLW 2356 In the Matter of STATE of New York, by Robert ABRAMS, as Attorney-General of the State of New York, Respondent, v. FORD MOTOR COMPANY, Appellant.
• Court: New York Court of Appeals Court of Appeals

Page 368

549 N.Y.S.2d 368

74 N.Y.2d 495, 548 N.E.2d 906, 58 USLW 2356

In the Matter of STATE of New York, by Robert ABRAMS, as Attorney-General of the State of New York, Respondent, v. FORD MOTOR COMPANY, Appellant.

Court of Appeals of New York.

Nov. 28, 1989.

Jerome G. Shapiro, Philip A. Lacovara, William R. Stein and Ross Lipman, New York City, for appellant.

Robert Abrams, Atty. Gen. (Thomas G. Conway, O. Peter Sherwood, Peter H. Schiff, Rachel Kretser and Wayne L. Benjamin, Albany, of counsel), for respondent.

Richard J. Davis, Craig M.J. Allely, New York City, William H. Crabtree and Charles H. Lockwood, II, for Motor Vehicle Mfrs. Ass'n of the United States, Inc., and another, amici curiae.

OPINION OF THE COURT

BELLACOSA, Judge.

New York's "Lemon Law", enacted in 1983, represents this State's comprehensive program to protect consumers purchasing new cars (General Business Law § 198-a [L.1983, ch. 444]. Pertinently, it prohibits motor vehicle manufacturers from charging for warranty-covered repairs made during the earlier of the vehicle's first two years or 18,000 miles (General Business Law § 198-a[b]. We are called upon to determine whether that statute is violated when an automaker requires a new car owner to pay a $100 deductible against the cost of covered warranty repairs. We hold that the deductible charging practice violates the Lemon Law. We also uphold the constitutionality of the statute in this respect and verify the authority of the Appellate Division of the Supreme Court to review and to grant the discretionary remedy of restitution.

Appellant Ford Motor Company issues a two-stage warranty for its new automobiles and light trucks. In its primary stage, the basic warranty covers the entire vehicle (except tires) and is effective for the vehicle's first year or 12,000 miles, whichever occurs first. Repairs covered by this primary warranty, by its terms, are cost-free to consumers. Solely at issue is the $100 deductible facet of Ford's extended warranty, which applies for the remainder of the statutory period, i.e., the earlier of the vehicle's second year or 18,000th mile. The extended warranty reduces the protections of the primary warranty in two ways: coverage is limited to the powertrain and certain other major components, and the first $100 towards the cost of any repair is imposed against the vehicle owner.

Respondent Attorney-General brought a special proceeding under Executive Law § 63(12) seeking to enjoin the automaker from charging the deductible and requesting restitution for those who had already paid it. Supreme Court declared the deductible to be in violation of the express warranty provision of the Lemon Law (General Business Law § 198-a[b]. The Appellate Division upheld the judgment in that respect and also granted the Attorney-General's petition for restitution and a refund program. 136 A.D.2d 154, 526 N.Y.S.2d 637.

We first address the issue whether Ford may impose a deductible on repairs covered by the extended warranty during the period governed by General Business Law § 198-a(b). It is undisputed that Ford's extended warranty is within the purview of the Lemon Law, which defines a warranty as "including any terms or conditions precedent to the enforcement of obligations under that warranty" (General Business Law § 198-a[a][3]. Ford argues that its $100 charge is a "condition precedent" to the ignition of its extended warranty obligations and is therefore in compliance with New York's Lemon Law.

Our cardinal function in interpreting a statute should be to " 'attempt to effectuate the intent of the Legislature, and where the statutory language is clear and unambiguous, the court should construe it so as to give effect to the plain meaning of the words used' " (Doctors Council v. New York City Employees' Retirement Sys., 71 N.Y.2d 669, 674-675, 529 N.Y.S.2d 732, 525 N.E.2d 454, quoting Patrolmen's Benevolent Assn. v. City of New York, 41 N.Y.2d 205, 208, 391 N.Y.S.2d 544, 359 N.E.2d 1338). It is difficult to imagine the disputed $100 deductible being more easily resolved than by the Legislature's plain expression: When a new motor vehicle does not conform to all express warranties for the earlier of its first two years or 18,000 miles, "[t]he manufacturer * * * shall correct said nonconformity * * * at no charge to the consumer" (General Business Law § 198-a[b] [emphasis added].

Yet, the automaker would interpose a condition precedent, "an act or event, other than a lapse of time, which must exist or occur before a duty to perform a promised performance arises" (Calamari & Perillo, Contracts § 11-2, at 438 [3d ed.]. By its expressly warranting the performance of the powertrain and other major components during the extended portion of the statutory period, there arose, however, by operation of the Lemon Law, an unconditional duty by Ford to repair any warranted nonconformities (an apparent euphemism for defect) "at no charge" to the consumer. Even if the deductible can be legally transformed into a condition precedent, it would be in direct contravention of the legislative expression and intent found in the statute itself. Moreover, the automaker's characterization is not even so described in the terminology of the written extended warranty between the parties. It simply reads: "You will be required to pay the first $100 of the warranty repair charge for each covered visit".

The Lemon Law's legislative history further supports the conclusion that warranty-covered repairs must be made free of charge to the owner if the "nonconformity" occurs during the earlier of the vehicle's first two years or 18,000 miles (see, e.g., Mem. of New York City's Legislative Representative, 1983 McKinney's Session Laws of N.Y. at 2554-2555). To accept appellant automaker's condition precedent theory would drain the statute of a central and significant consumer protection, in effect setting the stage to swallow the rule by allowing automakers to impose other unilateral charges for warranty-covered repairs merely by sticker-labeling them "conditions precedent".

The important public policy consumer statutory protection at issue here would be contradicted by imposing on it a legal condition precedent. We are obligated to insure faithfulness to the protections afforded by the statute so that our rulings do not add jurisprudential insult to the consumer injury sustained by the purchase of a defective and unsatisfactory product.

On a second rung, Ford attacks the Appellate Division's order of restitution, objecting to the grant of that relief by that court in the first instance. As appellant frames it, the Appellate Division acted ultra vires because Supreme Court did not abuse its discretion by denying restitution, making that denial conclusive and unalterable. The fundamental fallacy of appellant's approach is that the Appellate Division of Supreme Court "possess[es] coordinate authority" (State of New York v. Barone, 74 N.Y.2d 332, 336, 547 N.Y.S.2d 269, 546 N.E.2d 398) with the trial court on all questions of fact and law (N.Y. Const., art. VI, § 4; see, Merritt Hill Vineyards v. Windy Hgts. Vineyard, 61 N.Y.2d 106, 110-111, 472 N.Y.S.2d 592, 460 N.E.2d 1077; CPLR 5501 [c]; Broida v. Bancroft, 103 A.D.2d 88, 93, 478 N.Y.S.2d 333 [per Titone, J.P.: "(W)e are not limited to determining whether Special Term abused its discretion * * * (and) may exercise discretion independently" ]; see also, Project, The Appellate Division of the Supreme Court of New York: An Empirical Study of its Powers and Functions as an Intermediate Court, 47 Fordham L.Rev. 929, 930).

To bolster its unorthodox premise that de novo relief in the Appellate Division requires a finding of abuse of discretion in the Supreme Court as a kind of condition precedent to the exercise of the Appellate Division's plenary review jurisdiction, Ford adverts to this being an ...