New York Court of Appeals Reports

IN THE MATTER OF DAIMLER CHRYSLER v. SPITZER, 174 (N.Y.
12-14-2006) In the Matter of Daimler Chrysler Corporation,
et al., Appellants, v. Eliot Spitzer, & c. et al.,
Respondents., In the Matter of General Motors Corporation,
Appellant, v. James Warner, Respondent. 174, 175. Court of
Appeals of the State of New York. December 14, 2006.

Paul A. Feigenbaum, for appellants.

Thomas G. Conway, for respondent Spitzer.

Mark W. Blanchfield, for respondent New York State Dispute
Resolution Association.

Paul A. Feigenbaum, for appellant.

Douglas R. Hirsch, for respondent.

GRAFFEO, J.

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 NY2d 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 “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 consumer’s guide and forms stated that a consumer
would be eligible for a refund or replacement vehicle only
when the purchaser could demonstrate that a defect still
existed as of the date of arbitration. But in 2002, in
response to Matter of Bay Ridge Toyota v Lyons (272 AD2d
397 [2d Dept 2000]),[fn1] the Attorney General reconsidered
his interpretation of General Business Law § 198-a
(d), and concluded that the presence of a defect at the
time of arbitration or trial was not a prerequisite for
recovery. In accordance with this view, the Attorney
General amended the consumer guide and forms, effective in
2003, to explain that a consumer may be entitled to relief
if, within the first 18,000 miles or two years, the vehicle
was subject to four or more unsuccessful repair attempts or
out of service for 30 days, notwithstanding that the
condition was subsequently repaired.

Matter of DaimlerChrysler Corporation v Spitzer

Petitioners DaimlerChrysler Corporation, General Motors
Corporation and Saturn Corporation (collectively, the
manufacturers) object to the Attorney General’s new
interpretation of the statute to the extent that it permits
consumers relying on the repair presumption to seek relief
when their vehicles have been fixed after more than four
attempts. The manufacturers commenced CPLR article 75
proceedings to vacate a series of arbitration awards in
which the arbitrators had applied the Attorney General’s
new construction of the repair presumption in granting
relief to consumers.[fn2] The courts vacated the awards,
determining that a consumer relying on the repair
presumption must demonstrate that the defect “continues to
exist” at the time of the arbitration hearing.[fn3]

Relying on these decisions, the manufacturers brought this
CPLR article 78 proceeding to enjoin the Attorney General
and respondent New York State Dispute Resolution
Association from using the new interpretation of General
Business Law § 198-a (d) (1) in the Lemon Law
arbitration system.[fn4] Supreme Court denied the petition
and dismissed this proceeding. The Appellate Division
affirmed. We granted the manufacturers leave to appeal.

Matter of General Motors Corporation (Warner)

In March 2003, respondent James Warner bought a new truck
from a dealership known as LaQua’s 481. The vehicle was
manufactured by petitioner General Motors Corporation.
Shortly after acquiring the truck, Warner discovered a
transmission problem, which LaQua attempted to fix on five
occasions between April and November 2003. In December
2003, Warner filed a request for arbitration under the New
Car Lemon Law. After a hearing, the arbitrator found that
there had been four or more attempts to repair the same
defect and that the problem persisted following the fourth
attempt. The arbitrator awarded Warner a refund of
approximately $30,000.

General Motors brought this article 75 proceeding to vacate
the award, arguing that Warner could not prevail unless he
demonstrated that LaQua’s final repair attempt proved
unsuccessful such that the vehicle remained defective at
the time of the commencement of the arbitration hearing.
Supreme Court granted the petition to the extent it sought
a new hearing to determine whether the problem had in fact
been remedied prior to the hearing. The Appellate Division
reversed and reinstated the arbitration award. We granted
General Motors leave to appeal.

Analysis

In these cases, the manufacturers contend that a plain
reading of the repair presumption in General Business Law
§ 198-a (d) (1) requires a consumer to establish
that the defect continues to exist at the time of trial or
arbitration. They submit that the Legislature must have
intended such a result based on the placement of the phrase
“continues to exist” in the statute. Under their reading of
the provision, a consumer may seek Lemon Law relief after
four unsuccessful repair attempts but, if a consumer
voluntarily decides to give the manufacturer additional
repair opportunities that prove successful in eliminating
the problem, the consumer is precluded from recovery. We
disagree.

When presented with a question of statutory interpretation,
our primary consideration “is to ascertain and give effect
to the intention of the Legislature” (Riley v County of
Broome, 95 NY2d 455, 463 [2000] [internal quotation marks
and citation omitted]). The statutory text is the clearest
indicator of legislative intent and courts should construe
unambiguous language to give effect to its plain meaning
(see Majewski v Broadalbin-Perth Cent. School Dist., 91
NY2d 577, 583 [1998]; Matter of State of New York v Ford
Motor Co., 74 NY2d 495, 500 [1989]). At the same time,
because the New Car Lemon Law is remedial in nature, it
should be liberally construed in favor of consumers (see
Matter of White v County of Cortland, 97 NY2d 336, 339
[2002]). And where, as here, “the question is one of pure
statutory reading and analysis, dependent only on accurate
apprehension of legislative intent, there is little basis
to rely on any special competence or expertise of the
administrative agency” — in this case, the Attorney
General’s office (Matter of Gruber [New York City Dept. of
Personnel — Sweeney], 89 NY2d 225, 231 [1996]
[internal quotation marks and citation omitted]).

The substantive remedy provision of the New Car Lemon Law
states, in relevant part:

“If, within [the first 18,000 miles or two years], the
manufacturer or its agents or authorized dealers are
unable to repair or correct any defect or condition which
substantially impairs the value of the motor vehicle to
the consumer after a reasonable number of attempts, the
manufacturer, at the option of the consumer, shall replace
the motor vehicle with a comparable motor vehicle, or
accept return of the vehicle from the consumer and refund
to the consumer the full purchase price” (General
Business Law § 198-a [c] [1] [emphasis added]).

Under this statute, a consumer’s eligibility for recovery
hinges on whether the manufacturer was unable to repair the
vehicle after a reasonable number of attempts. Nothing in
this section indicates that the vehicle’s condition on the
date of trial or arbitration has any relevance.

The New Car Lemon Law gives tangible meaning to the phrase
“reasonable number of attempts” through the repair and
days-out-of-service presumptions. Specifically, General
Business Law § 198-a (d) provides:

“It shall be presumed that a reasonable number of
attempts have been undertaken to conform a motor vehicle
to the applicable express warranties, if:

“(1) the same nonconformity, defect or condition has been
subject to repair four or more times by the manufacturer
or its agents or authorized dealers . . . but such
nonconformity, defect or condition continues to exist; or

“(2) the vehicle is out of service by reason of repair of
one or more nonconformities, defects or conditions for a
cumulative total of thirty or more calendar days”
(emphasis added).

Construing these two presumptions together with the
substantive remedy provision (see Matter of Charter Dev.
Co., L.L.C. v City of Buffalo, 6 NY3d 578, 581 [2006]), it
is obvious that subdivision (d) simply quantifies the
minimum that presumptively amounts to a reasonable number
of repair attempts. Although the manufacturers concede that
a consumer whose vehicle has been out of service for 30 or
more days gains the presumption regardless of whether the
vehicle is fixed after the 30-day mark (see General
Business Law § 198-a [d] [2]), they argue that a
consumer relying on the repair presumption (General Business
Law § 198-a [d] [1]) must show that the defective
condition continues at the time of trial or arbitration.

We do not read the repair presumption as requiring a
consumer to establish that the vehicle defect continued to
exist until the trial or hearing date. Rather, the plain
language of the provision obligates a consumer to
demonstrate that the vehicle was subject to repair at least
four times and that the same defective condition remained
unresolved after the fourth attempt. Therefore, once a
consumer has met the four-repair threshold, the presumption
arises regardless of whether the manufacturer later
remedies the problem. After four attempts, it is presumed
that the manufacturer has been given a reasonable number of
opportunities to fix the vehicle. The determination of
whether a reasonable number of attempts took place for a
consumer to recover does not turn on whether the car was
ultimately repaired. If the Legislature intended to
condition recovery on such a requirement, it easily could
have said so.[fn5]

Contrary to the manufacturers’ argument, our interpretation
gives meaning to all of the statutory language in the
context of the statute as a whole. The requirement that the
defect “continues to exist” is simply another way of saying
that the fourth repair attempt was unsuccessful. Without
that language, a consumer could meet the presumption even
if the defect was repaired on the fourth visit. The phrase
“or more” clarifies that consumers may opt to bring their
vehicles for repair more than four times yet still retain
eligibility for Lemon Law relief. The Legislature likely
included the phrase “or more” in the days-out-of-service
presumption for the same reason. In short, it is clear that
the Legislature intended to create two bright-line
presumptions by which a consumer can demonstrate that the
manufacturer was accorded a reasonable number of attempts to
alleviate the problem; neither presumption is dependent
upon a showing that the defect was not repaired at the time
of trial or arbitration.

This interpretation is also consistent with the remedial
nature of the New Car Lemon Law. The statutory construction
posited by the manufacturers would restrict its salutary
objectives by effectively requiring a consumer to leave the
new vehicle in an inoperable or malfunctioning state in
order to preserve the right to seek Lemon Law relief. As
the Appellate Division aptly observed:

“[T]he average consumer, who is typically obligated to
make monthly car payments and rely on the car for
employment, should not be forced to continue to drive a
defective new vehicle until the date of adjudication
simply to preserve his or her rights under the New Car
Lemon Law. Nor does the average consumer have the luxury
of simply casting a new, albeit defective, vehicle aside
while awaiting disposition of a New Car Lemon Law action
or proceeding” (26 AD3d at 92[footnote omitted]).

Finally, the result we reach today is buttressed by the
legislative history of the New Car Lemon Law, which
indicates that a consumer’s eligibility for relief under
the statute arises upon a fourth unsuccessful repair
attempt. The Sponsors’ Memorandum in support of the
legislation states:

“Presently, the Magnuson-Moss Act has a so called ‘lemon
provision’ which entitles the consumers to repair [or]
replacement of a defective product. Unfortunately, the
Magnuson-Moss Act fails to define a reasonable number of
attempts to remedy defects. This bill contains clearly
expressed guidelines in determining when a’ reasonable
number’ of repair attempts has been surpassed” (Sponsors’
Mem, Bill Jacket, L 1983, ch 444).

It further explains that the New Car Lemon Law would require
“the manufacturer to replace the automobile or refund to
the consumer the full purchase [price] after four attempts
have been made to repair the car or after the car has been
out of service for a total of 30 or more days” (id.). In
contrast, nothing in the legislative history indicates an
intention to require consumers to leave their vehicles in
disrepair pending arbitration or trial.

Accordingly, in each case the order of the Appellate
Division should be affirmed, with costs.

* * * * * * * * * * * * * * * * *

In each case: Order affirmed, with costs. Opinion by Judge
Graffeo. Chief Judge Kaye and Judges Ciparick, Rosenblatt,
Read, Smith and Pigott concur.

[fn1] In Lyons, the Second Department held that, under an
analogous provision of the Used Car Lemon Law (General
Business Law § 198-b [c] [2] [b]), once a car had
been out of service for 15 days, a presumption arose that
the manufacturer was afforded a reasonable number of
attempts to repair the defect, regardless of “whether the
car was presently operable” (272 AD2d at 397).

[fn2] The Attorney General was not a party to any of these
proceedings.

[fn3] In some of these proceedings, the courts granted the
petitions in their entirety, finding that the vehicles had
in fact been repaired before the hearing date. In others,
the courts granted the petitions to the extent of remitting
the matter for a new arbitration hearing to determine
whether the defect had been repaired.

[fn4] The New York State Dispute Resolution Association
administers the Lemon Law arbitration program under the
Attorney General’s supervision.

[fn5] Had the Legislature desired to immunize manufacturers
from Lemon Law liability when they repaired a vehicle, it
likely would have included such language in either the
substantive remedy provision (General Business Law §
198-a [c] [1]) or as an affirmative defense (see General
Business Law § 198-a [c] [3]).