What is the California Lemon Law?
The California Lemon Law is a legal recourse available for consumers who have purchased or leased new or used motor vehicles that have defects significantly impairing the vehicle’s use, value or safety. The law is applicable to all vehicles that comply with the Secretary of State’s rules for registration under Section 4000 .
Lemon law also extends to the following categories:
• Trucks or vans of more than 10,000 pounds
• Motorhomes, motorcycles and trailers if they are sold with a 60-day express warranty
• Used motor vehicles that are sold with 10 or more manufacturer, dealer or third-party warranties that cover the same defect
Additionally, while the law covers dealers, many dealerships prefer to invoke their arbitration clause if one exists. In these cases, it may be possible to convince the dealer to ignore the rather lengthy and expensive arbitration process, and save the customer money and time by having their defective vehicle repurchased by the dealer right away.
How The Lemon Law Buyback Process Works
To initiate a buyback, the consumer must first file a complaint with the California Department of Consumer Affairs’ Arbitration Certification Program (ACAP). The ACAP complaint must state that the consumer made an informal request for a "buyback" through the manufacturer’s customer service or district manager, but was refused. Once the ACAP complaint is filed, the manufacturer must respond. If the manufacturer denies the buyback, a hearing will be scheduled and held. The consumer must attend the hearing and have all information supporting their demand for a buyback available to present at the hearing. A failure by the consumer to attend a scheduled ACAP hearing can result in a loss of their claim and denial of a buyback by the arbitrator.
The ACAP is a free, fast, and relatively simple consumer arbitration program. It is required to be conducted within 40 days from the date the manufacturer files its answer to the request for a buyback with the ACAP. The ACAP sets its own rules for the conduct of each arbitration. These rules are not legally binding on the arbitrator unless they are set forth in the printed pamphlet the ACAP provides upon the filing of any ACAP request.
The ACAP arbitrator hears the case and issues a written decision as if it were a legal proceeding. A more formal AFIP Arbitration process is also available to consumers. All the dealer and manufacturer is obligated to participate, as well as the consumer and the consumer’s experienced Lemon Law Counsel.
A significant problem associated with a buyback occurs because the owner almost always has title to the vehicle, while the ACAP Arbitrator cannot order a title transfer. As a result, some manufacturers make a cash settlement to resolve the problem. However, even with a cash settlement, the costs of litigation may exceed the cash received as a result of the settlement. For example, if there are two or more defects requiring repair, the consumer suffers a loss each time the vehicle is taken to the dealership for repairs. A loss of wages may also occur while the consumer is forced to rent a vehicle or borrow a vehicle from family and friends.
Another major problem arises when a sufficient number of vehicles are produced containing the same defect or a problem which is approximately 2% of the total number of vehicles produced. In such a case, the consumer may seek class action certification of their lawsuit against the prescribed dealer and manufacturer. A class action lawsuit requires the lawyers to produce a "damage estimate" saying how much each class member is owed. This requires extensive and expensive research to determine the number of owners who are entitled to receive damages. Because of the expense to the manufacturer, the consumer will more often than not recover more money if they pursue the remedy available under the California Lemon Law, rather than pursuing a class action.
The Formula Used To Determine a Buyback Amount
As noted above, if your case qualifies under the Lemon Law, the manufacturer or dealer must buy back your lemon vehicle. But, how do they determine how much money they will pay you? That is another excellent question!
Fortunately for you, California is very fair in that a California Lemon Law Buyback formula is provided by statute.
Essentially, the Lemon Law Buyback formula provides that the merchant must provide payment or credit for the following:
The amount of money paid for the Lemon Vehicle;
The amount paid for any added accessories, etc. (like bed covers and custom rims);
The amount of money paid for tax, license, and registration fees;
Any incidental damages, loss of use of the Lemon Vehicle, diminution in value, which can be calculated, but, in most cases, it will not be worth the time and effort to do so;
And, of course, all of the Lemon Law attorney fees incurred and paid to the Plaintiff’s lawyer;
So then, what about all those miles put on the car after the Lemon Law violation first occurred? Simple! Under the California Lemon Law statute, the manufacturer will deduct a certain amount from the total bill for every 100 miles driven. The formula used by manufacturers is 15 cents per mile driven; and sometimes, 25 cents per mile driven – 25 cents is better.
But, keep in mind that this 15 cents deduction merely refers to the miles driven after the first Lemon Law violation. If the manufacturer is allowed to deduct 15 cents per mile, and the car has 75,000 miles on it, the manufacturer has swindled the consumer out of about $11,250.00. Obviously, this is not fair – and it’s not the law.
The Numbers That Count When a Buyback is Calculated
There are several factors that come into play with regard to the calculation of the buy back figure in a lemon law case. It is important to note that the figure is not calculated exclusively under California Civil Code Section 1793.2(a), as most lemon law cases are brought under both California Civil Code sections 1793.2 and 1793.23.
The following are the four costs that generally must be calculated before arriving at a final buy back figure:
1) All repairs made to the vehicle on behalf of the consumer, and any mileage deduction against the buy back figure for reasonable repair attempts that were made beyond a manufacturer’s express warranty period. It is important to understand that only "reasonable" repair attempts must be deducted from the buy back figure. The California Department of Consumer Affairs has defined "reasonable" as attempts made during an original warranty period, repairs made during a seller’s service contract warranty period, and repairs that were made by another mechanic as a result of defective repairs.
The following are not generally considered reasonable repair attempts, and therefore would not normally be deducted from the buy back figure:
2) Any collision/accident damage to the vehicle, unless the genesis of the collision was related to a defect in the vehicle. For example, if the steering column suddenly broke, the sudden loss of steering could be the basis for liability (as well as negligence claims) against the manufacturer as well as theifying collision. However, if the driver of the vehicle collides with another driver, it is generally deemed an accident and the manufacturer would not be liable for the damages caused by the collision and neither would the costs be added back to the buy back figure.
Items 1 and 2 above are fairly easy to calculate, however items 3 and 4 require a little bit of guess work, but it is how lemon law buy back figures are calculated .
3) Fees associated with the consumer’s inability to use his/her vehicle while the case is pending. I do not believe there are any case directly on point, but most California courts have held that fees associated with one’s inability to use their car, (payments to mechanics, interest on credit cards, etc.), are typically recovered under the "lost use" or consequential damages sections of the California Lemon Law, California Civil Code section 1794(a)(2). Since this type of damages is not specifically listed under the Civil Code, it is left to the discretion of the judge/jury to decide what is and what is not reasonable under the circumstances.
For example, if a consumer took their car to Columbia in downtown Los Angeles, which charges $18.00 a day for a rental car, and the car was in the shop for 30 days, the respective judge/jury would decide if $540.00 is reasonable. Different judges/juries will see things differently, i.e. whether the right of "lost use" should be interpreted narrowly or broadly. Some will hold that $540.00 is a reasonable figure, and others will award nothing.
4) This is similar to item 3 above. If a consumer has to rent a car and/or hire a driver because they are unable to drive their car, it is then left to the judge/jury to argue whether these are reasonable. For example, if Mrs. Jones’ husband has to drive her around, and Mr. Jones makes $75.00 an hour and therefore uses his time sheets as evidence he should be compensated for 3 hours at $75.00 an hour, courts that favor more liberal interpretations of damages awards the full amount. Direct awards for lost use are very difficult to prove and present, and therefore some courts/judges do not award it. Under current law, you clearly can get a vehicle bought back, but you never know if you can get any additional damages for breach of contract or loss of use.
Situations that Hurt a Buyback
Buybacks cannot be processed until the dealer is able to buyback the vehicle from the manufacturer. This does not always occur in a quick and efficient manner. Buying back a lemon vehicle does not entail the dealer simply buying the vehicle from the consumer and refunding them the original purchase price. In most cases the dealer must first contact the manufacturer’s representative to obtain a pre-approved buyback amount for the lemon vehicle. The dealership must acquire the amount of money paid by the consumer, minus taxes, registration fees and other dealer-related fees. Then the dealer must contact the manufacturer’s representative to get a check cut by the manufacturer, and until that happens the entire buyback procedure is halted. The second major delay is with payment itself. Often, dealerships will withhold payment for a period of time "to ensure that there are no checks or balances," thereby delaying the consumer’s receipt of payment ever further.
How to Increase a Buyback Claim
The key to a successful Lemon Law buyback claim is to document everything and to do as much research of your case as possible before submitting a demand. Simply because your car has an issue doesn’t mean you are covered by the Lemon Law. Here are some tips: Make sure your car qualifies as a lemon under the CA lemon law. CA lemon law only covers new cars that have defects affecting the use, value or safety of the car and that remain unfixed after a reasonable number of repair attempts. You must prove your vehicle is defective. Maintain copies of all service receipts. If your car has a defect, make sure to keep all repair invoices and detailed notes of your service visits with your dealership and warranty company. Keep a record of all conversations. Record the dates and times of each correspondence with your dealership and authorized repair facility . Your attorneys can access call records from your mobile phone and can also obtain this information from your dealership through discovery. Keep detailed notes of every repair attempt. List your case number for the repair attempt, the date of the repair, the issue, the resolution and the promised repair date. Contact your manufacturer and ask for replacement parts. In many cases an authorized dealership will not order the needed part until you complain to the owner of the dealership and to the manufacturer. Contact other owners of the same vehicle. Often if you learn of other owners of your make and model of vehicle who have similar issues you will have a stronger case. Consider hiring a lemon law attorney. A lemon law attorney can help to ensure that you provide the right documentation and pursue the buyback option. At the very least, an attorney can provide a free consultation and explain your options.