More Juice for the Lemon Law

Casal v. Hyundai Motor America, 436 N.J. Super. 296 (App. Div. 2014).  In this case under the Lemon Law, N.J.S.A. 56:12-32(a)(1), which includes a fee-shifting provision for successful claimants, the issue on appeal related to attorneys’ fees.  As Judge Higbee summarized it in her opinion for the panel today, “[t]he trial judge found that a substantial portion of counsel’s time was expended in obtaining relief from the cost to Casal of optional vehicle protection contracts that Casal purchased through the dealer from third party vendors.”  In connection with his Lemon Law claim, plaintiff tried himself to cancel those contracts.  There was such resistance to cancellation that he eventually got his attorney involved.  The attorney too faced significant difficulties in effecting cancellation, which meant more time expended on that endeavor.  When the case concluded, plaintiff included counsel’s efforts regarding the cancellation of those third party contracts as part of his fee application.  The Law Division denied recovery of the fees incurred in that regard.  Plaintiff appealed, and the Appellate Division reversed and remanded for further consideration of the proper fee award.

Defendant argued that it could not be responsible under the Lemon Law’s fee-shifting provision for fees incurred in cancelling the vehicle protection contracts because the dealer was not party to those agreements.  The Law Division adopted that contention, ruling that these were not “direct costs imposed on the transaction.”

Judge Higbee disagreed.  The Lemon Law is to be interpreted liberally to protect new car consumers.  The Lemon Law requires a refund of not only the purchase price, but “the cost of any options or other modifications arranged, installed or made by the manufacturer or its dealer within 30 days after the original delivery, and any other charges or fees including, but not limited to, sales tax, license and registration fees, [and] finance charges,” among other itemized things.  There were “no words in the statute that suggest that ‘options or other modifications arranged’ by the dealer are limited to physical changes to the vehicle.”

Moreover, Judge Higbee observed that some of the charges for which the statute requires reimbursement, such as taxes, registration fees, and finance charges, “are all costs from third parties, not a party to the contract.”  And though the Lemon Law lists those items, it also states that reimbursement is not limited to those things.  Thus, the Law Division’s rationale that these were not “direct costs imposed on the transaction” could not stand.  “It is clear from the statute that the consumer is to be made whole for all costs associated with the purchase as long as they are arranged by the dealer.”

Defendant might have avoided this problem entirely had the dealer not placed the burden of cancelling the contracts on the vehicle consumer.  Judge Higbee said that, given the dealer’s ongoing industry relationships with the third parties, the dealer could have dealt with the issue more quickly than plaintiff or his counsel could have.  If the dealer leaves that to the consumer, and the consumer finds that counsel is needed for that task, the Lemon Law requires payment of the counsel fees incurred.  The panel remanded the case to the Law Division to determine the appropriate fee.