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How Do You Calculate the Lemon Law Mileage Offset in a Lease?

mileage

Mileage Offset Lemon Law

When we explain to our prospective and actual clients that the threshold remedy in a lemon law case is a “buyback”, we are often asked what the term “buyback” means. In most cases, the buyback process essentially consists of the following:

  1. You give the car back to the manufacturer.
  2. The manufacturer pays off any loan on the car and takes the car title.
  3. The manufacturer reimburses you for the monies you actually paid: down payment, monthly payments, collateral charges such as tax, title tag, etc.
  4. The manufacturer receives an offset to the reimbursement amount for mileage driven before the problem started.

The logic behind item #4, mileage offset in lemon law, is that a consumer should pay depreciation for the reasonable use he or she was able to get out of the vehicle before the problem started. When a manufacturer has already conceded to a buyback, the amount of this calculation often moves to center stage as the main topic of negotiation. California’s mileage offset lemon law provides the following formula for calculation of the mileage offset in the text of the statute:

# of miles driven
________ X
120,000
Actual Price
“Paid & Payable”
= Deduction Amount

The first topic of this debate is the number of miles to use as the numerator in the fraction. This often boils down to legal and factual argument about which repair visit in the repair history counts as the first repair for the purposes of the lemon law issue. Manufacturers often make arguments that early repairs aren’t linked or don’t count in the mileage offset lemon law analysis, so this can actually be a complicated negotiation.

Even more complicated is arguing about how to calculate the mileage offset for lemon law in the case of leased vehicles. The statute uses the term “actual purchase price paid and payable” to define both the base amount of reimbursement before deduction, and to apply the above formula toward in calculating the offset (See California Civil Code §§1793.2(d)(2)(B) and 1793.2(d)(2)(C)).

It is well established that California lemon law applies to leases as well as purchases. But what is the actual purchase price in the case of a lease? To explain how opinions can differ, we can point to a recent lemon law settlement we handled involving a major automobile manufacturer.

Settling a Leased Car Claim

The manufacturer agreed to buy the car back following our demand, leaving the issue of the mileage offset for negotiation. There was no dispute in this case about the mileage at the first repair attempt. However, without initially showing its math, the manufacturer provided a reimbursement figure which was substantially lower than our calculation.

When pressed to explain, the manufacturer admitted that it defined “paid and payable” to mean the amount of lease payments for base reimbursement (i.e. California Civil Code §1793.2(d)(2)(B)), but defined the exact same words, “paid and payable”, to mean the agreed upon value of the car at lease inception for purposes of calculating the mileage offset.

This can be confusing. To explain in simpler terms, the manufacturer defined the same words to mean a smaller number for purposes of reimbursement, and a larger number for purposes of the deduction from that reimbursement.

The manufacturer didn’t fully explain its logic or reference legal points or authorities that bolstered its position, only telling us that it was taking a “consistent” position with respect to its calculation. What “consistent” means is unclear, but it presumably means that these are the terms that manufacturer offers other customers from whom they buy back leased vehicles in lemon law settlement cases.

The Manufacturer Increased the Settlement Value

In the end, we successfully persuaded the manufacturer to raise its lemon law settlement amount for our client. But this is just one example of how the intricacies of lemon law cases can be more complicated than it seems they should.

If you need legal advice on mileage offset in lemon law for leased vehicles, contact Goldsmith West for a free consultation. We offer years of experience in state and federal lemon law.

 

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Troubling Automaker News Surrounding Big Manufacturers

We expect auto manufacturers to have customers’ best interest at heart — and In most cases, they do. However, as the following automaker news reports show, some auto manufacturers occasionally throw ethics aside and engage in practices that are simply unfair to consumers.
rollback

Ferrari Odometer Roll Back

A salesman at a Ferrari dealership claims he was fired for whistleblowing about a tool that allowed Ferrari dealership employees to roll back odometers with the help of Ferrari North America.

An odometer roll back could result in hundreds of thousands of dollars of falsely inflated value in a single Ferrari. It’s the worst piece of automaker news to hit Ferrari in a long time.

odometer fraud

Whether or not Ferrari knowingly had a role in odometer fraud affecting its customers, the company appears to have reacted immediately to the negative publicity by issuing an internal memo which indicates it knew odometer fraud was possible.

Odometer fraud carries criminal and civil penalties, in addition to any actual damages suffered by ferrari consumers.
Ferrari North America public relations issued a statement saying, “Resetting an odometer to zero in case of a malfunction of the odometer when the pre-repair mileage is unknown is consistent with the federal odometer law.”

That may be true, but the Federal Odometer Act (49 United States Code Chapter 327) requires a notice attached to the door frame when the odometer is reset. It will be interesting to see whether the roll backs Ferrari was involved with were properly disclosed.

GM Ignition Switch Scandal

vehicle recall graphic
GM Recall; Image Courtesy of Associated Press, https://www.ap.org/en-us/

General Motors is set to pay over $6 million dollars to settle attorney general charges in the State of Arizona due to faulty ignition switch technology that the company hid from consumers. Apparently, General Motors hid the issue for years before recalling Buick, Cadillac, Chevrolet, Pontiac, GMC, and Saturn models, for which there were reports of hundreds of injuries and deaths.

According to a news release that announced the settlement, “Certain employees of GM and General Motors Corporation knew as early as 2004 that the ignition switch posed a safety defect because it could cause airbag non-deployment.”

Tesla Quality Control Issues

tesla

A Tesla worker claims the company consciously sold lemon vehicles. While we respect what Tesla is supposed to stand for, there is too much information about Tesla’s product quality problems to ignore — and where there’s smoke, as the old saying goes, there is fire.

From bad paint jobs that don’t withstand the elements to power steering rack failures, Tesla has been the subject of various pieces of troublesome automaker news. We can only hope the issues stem from the automaker being relatively new to the market, and that the company will work out the technological problems with its cars in the near future.

Volkswagen Diesel Debate

co2

Even after years of opposition, Volkswagen remains an automaker that stills see diesel propulsion fuel systems as a viable way to power its cars. However, according to a recent report, the rubber isn’t exactly meeting the road.

According to The Truth About Cars (TTAC), “Despite a multi-billion-dollar emissions scandal, a massive corporate black eye, and all signs pointing towards a future devoid of diesel passenger cars, Volkswagen Group… isn’t willing to let go of the past.”

Volkswagen’s situation goes to show the power of fuel efficiency and emissions in the goals automakers set today, as well as the traps they sometimes set for themselves in doing so. Volkswagen’s dedication to diesel isn’t the worst piece of automaker news in this list. However, going forward, it looks like bad news for consumers, the environment, and the company itself.

Aston Martin Roll Away

Aston Martin

A single Aston Martin Recall affected a larger number of vehicles that Aston Martin sold last year. The recall was a serious one, as it involves a risk of the cars rolling away when left with the transmission in “Park.”

According to a report from The Drive, “The recall includes 3,493 DB9, DBS, Rapide, Virage and Vanquish cars built between 2009 to 2016 for transmission problems that can cause the transmission park pawl not to engage. This means that if the transmission is in park and the parking brake isn’t on, the car could still roll away.”

Contact Us Today

Goldsmith West passionately represents consumers in lemon car cases. If your vehicle has a safety defect or a persistent defect of any kind, you may have a lemon on your hands. For more information about lemon models from the manufacturers discussed above and others, please call us today at 310.200.6705, or send us an email through our contact form.

 

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How Legal Fees Work in Lemon Law

Lemon Law Attorney Fees

At Goldsmith West, we make it clear that we will evaluate your case for free and not charge you lemon law attorney fees if we accept the case. Consumers may understandably wonder how this can be. While we have described the concept of fee-shifting in our FAQ section, we feel it is worth providing more detail about lemon lawyer cost in consumer claims.

In the American law system, each party generally pays its own legal fees. When a plaintiff’s attorney takes a case without an upfront charge, it is often said that the attorney is taking the case “on contingency.” This usually means that the attorney recognizes a proper claim, and is willing to take the case without guarantee of payment in exchange for the rights to a portion of any proceeds from the litigation.

Fee-Shifting Provisions

Some laws require the defendant to pay the plaintiff’s lemon law attorney fees if the plaintiff prevails. These rules are known as “fee-shifting” provisions. California’s state lemon law (the Song Beverly Consumer Warranty Act) and the federal Magnusson-Moss Warranty Act, along with various other consumer protection laws, have fee-shifting provisions.

Fee-shifting provisions make it possible for an attorney to take your case on contingency under more favorable terms. Rather than claiming a portion of your proceeds, the attorney on a fee-shifting case can expect a qualified claim to earn a separate right to the payment of lemon law attorney fees.

Despite the fee-shifting provisions in lemon law, some plaintiff’s law firms will claim a portion of the claimant’s recovery — as is standard in non-fee-shifting claims — while also claiming the payment of the claimant’s lemon lawyer cost under the fee-shifting provision.

Consumers should be careful to consider this situation before retaining an attorney, even on a contingency basis. The manner in which an attorney’s fees are structured can have a significant impact on the compensation consumers receive through settlement or in court.

Need Lemon Case Advice?

At Goldsmith West, we evaluate your lemon law case for free. If we accept the case, we don’t charge you attorney’s fees. We have no incentive to encourage you to pursue a claim that isn’t worth your time, because we only receive payment if you make a recovery. If you think there is a possibility that you have a lemon claim, let us help you evaluate it. Schedule a free consultation today.

 

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Federal Lemon Law: The Magnusson-Moss Warranty Act

The Magnusson-Moss Warranty Act is a United States federal law (15 U.S.C. § 2301 et seq.) that governs consumer product warranties. It can be thought of as the “federal lemon law.” Like most state lemon laws, the act provides for relief in the event that a product under warranty is not repaired within a reasonable number of attempts. Also, like most state laws, it provides for the payment of the consumer’s legal fees.

Magnusson-Moss vs. Song Beverly

Claims under the Magnusson-Moss Warranty Act can be brought alongside — or instead of — claims under the relevant state lemon law. Quite often, attorneys plead causes of action (i.e., formal lawsuit allegations) under both laws simultaneously.

The California state lemon law — also known as the Song Beverly Consumer Warranty Act — has more teeth than federal lemon law for the following reasons:

  1. It allows for a presumption that the vehicle is a lemon, shifting the burden to prove otherwise to the manufacturer or other warrantor;
  2. It makes available civil penalty damages of up to two times the actual damages;
  3. It has an undisputed threshold remedy of repurchase or replacement of the vehicle or other product.

Point #1 means that, instead of the consumer having to prove the vehicle is a lemon in court, the manufacturer has the burden of disproving the vehicle is a lemon, so long as certain numbers of repair attempts or time in the shop is available. In practice, if the presumption is clearly available, there will often be a quick settlement.

Point #2 means that the manufacturer is potentially on the hook for a much greater amount of damages. In addition to increasing the value of the case, in practice, the potential of a civil penalty also provides a greater incentive for the manufacturer to settle.

Point #3 is complex. As with Song Beverly, a violation is established under federal lemon law when the product is not repurchased or replaced after a reasonable number of repair opportunities. However, case law says that, in the event of a violation, the measure of damages under Magnusson-Moss should be “diminution in value”, which is the difference in value between the product as sold and the product as warranted. This would theoretically assign a cash value to the defect, rather than simply requiring the warrantor to buy back or replace the product.

To summarize, if both the state law and the federal law are options in a lemon case, the state law will often be preferable because it may be easier to prove a violation, and also because the damages are greater and easier to prove under state law.

Additional Considerations

Magnusson-Moss also makes it possible for manufacturers to require consumers to (a) make a written notification of a violation and (b) make prior resort to a qualified third party dispute resolution program (usually private arbitration) prior to filing a lemon lawsuit. Lemon law attorneys on both sides should pay attention to these requirements, as they are frequently misunderstood. Under Song Beverly, these are requirements for use of the presumption but not the lemon law itself.

If the Magnusson-Moss Warranty Act has more requirements, may make a lemon case harder to prove, and may provide less in recoverable damages, why would someone file a federal lemon law claim instead of a state lemon law claim?

The answer is that Magnusson-Moss is often broader in application than state lemon law. Because it is a federal law, it does not require purchase in any particular state, whereas case law says that Song Beverly requires delivery in the state of California. Magnusson-Moss is more readily available to used car purchases, and it may be available even after time requirements under certain state lemon laws have elapsed.

Need Lemon Case Advice?

Deciding whether to pursue a lemon claim under state or federal law can be difficult without the help of an attorney. If you think you have a lemon and need advice on which statutes to pursue a case under, the experienced lemon lawyers at Goldsmith West are here to help. Contact us today for a free consultation.

 

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