Unload Your Lemon

Lemon Law Woman

Unload Your Lemon

By Ed Henry
Adapted from Kiplinger's Personal Finance

Drivers with chronic clunkers are putting the squeeze on carmakers. After 30 years of driving Toyota Tercels, Celicas and Camrys, Al Pinsky of Yardley, Pa., stepped up to the luxury-car ranks with the purchase of a spanking-new 1997 BMW 318i. But the step up to a BMW turned out to be a step down to disappointment.

Two months later, the "check engine" light came on, which proved to be just a foreshadowing of things to come. (For the engine light alone he made four trips to the shop in three years.) Then a throttle cable broke, a side-view mirror wouldn't heat up and a ratchet to hold the seat belts tight failed. The steering-wheel lock, door locks and fuel gauges all had to be repaired.

Throughout the ordeal, Pinsky followed Pennsylvania's Lemon Law procedures, keeping records and corresponding with the manufacturer in hopes of getting the car replaced. The goal of the Lemon Laws in the 50 states and the District of Columbia is to get a chronically problematic car replaced or bought back without your necessarily hiring an attorney or going to court. Typically, you're eligible for relief after four attempts (three in some states) to have a "substantial defect" repaired. (A substantial defect is defined as something that impairs the use and value of the vehicle.) You can also seek relief if your car is out of service for 30 days.

Despite Pinsky's patient compliance with the procedures, all he got from BMW was an apology and a recommendation that he take his car to another dealership 30 miles from home. Pinsky endured the 60-mile round-trip for a time, but eventually he got fed up and took his case to a lawyer who specializes in Lemon Law cases.

Early this year the case was settled. BMW returned the full value of Pinsky's $28,500 car, minus a $300 mileage assessment, and paid his $2,000 in legal fees.

His lawyer, Craig Kimmel, whose firm has handled 17,000 Lemon Law cases in the past decade, says: "You can stomp and storm and act like a raving lunatic, but as soon as you hire a lawyer, manufacturers are ready to settle." Kimmel's strategy was to sit down with the manufacturer's attorneys and work out a solution.

You may be tempted by the simplicity of the Lemon Law process. And the process often does work effectively (see "The Do-it-Yourself Remedy"). But when the problems are serious and the manufacturer isn't offering any real remedies, don't be afraid to hire a lawyer.

One reason to get a lawyer is to make sure you don't feel outgunned when facing a manufacturer, which will likely have representation. In fact, in New Jersey manufacturers are required to have an attorney represent them at a Lemon Law hearing. There's no such requirement for consumers. Says Robert Russo, president of the International Association of Lemon Law Administrators and director of New Jersey's Lemon Law unit: "Many people go in alone thinking they've got a good case. But the company attorneys can convince the judge, arbitrators or mediators otherwise."

Your attorney can also sue, or threaten to sue, under the federal Magnuson-Moss Warranty Act, which supersedes state laws. Under the act, automakers are liable for as long as the car is under warranty - whether it's two years/24,000 miles on a Volkswagen, or ten years/100,000 miles on a Kia. (In contrast, most Lemon Laws cease to apply after two years.) Magnuson-Moss also makes hiring a lawyer financially feasible by forcing auto companies to pay your legal fees if you win.

And because those fees can run to tens of thousands of dollars, the risk of losing a case gives the carmaker a strong incentive to settle. "No manufacturer wants to run up $30,000 in fees in an argument over a $2,000 claim," says Douglas Hirsch of Sadis & Goldberg, in New York City.

While car quality has improved in the past two decades, laws to protect people from having to accept chronic problems with their cars have made an even greater leap. About 1,000 cars were bought back by manufacturers in 1980, but that number had soared to 50,000 by 1990, according to the Center for Auto Safety, an independent consumer-advocacy group. Today, about 100,000 lemons are bought back by manufacturers each year. The number of lawyers who handle only Lemon Law cases has risen from "a handful" in 1980 to about 500 today, according to Clarence Ditlow, executive director of the center.

No statistics are kept on how many cars were bought back through the work of Lemon Law lawyers versus the efforts of consumers themselves. But Ditlow credits the rise in the lawyers' ranks for having a "significant impact," both directly and indirectly.

And if you do have a chronic car problem, there's a good chance a lawyer will take your case. "From 60% to 70% of the people who call us have a valid Lemon Law claim," says Vince Megna, a lawyer with Jastroch & LaBarge, in Waukesha, Wis.

You can find Lemon Law lawyers with Web sites through Lemon Law America or the Center for Auto Safety. For a more complete list, send a stamped, self-addressed envelope to CAS Lemon Lawyers, 1825 Connecticut Ave., N.W., Suite 330, Washington, DC 20009.

Here are some examples in which attorneys made the difference in winning a Lemon Law case for a consumer.

Lease protection

If you lease your car, you may wonder whether the manufacturer is responsible for chronic problems. In most cases, it is, even though manufacturers argue that it's the leasing company's problem.

Jose Smith Jr. of Long Beach, Cal., leased a new Kia Sportage three years ago thinking he was getting a good deal. After all, he put down only $800 up front, and his payments ran $300 a month - considerably less than he would have paid for a Honda CRV or Toyota RAV4. But within a few months the windows didn't work, the stereo needed to be replaced and the air conditioner ran out of refrigerant. Those problems were trivial, however, compared with the day the hot engine coolant poured onto the car's floor.

It took about a week to replace the heater core, during which time Smith had to rent a car. His car continued to boil over and was repaired five more times. At that point, according to the Lemon Law, Smith was leasing an "unsafe" car. He reported the problem to Kia, but the manufacturer referred him back to the dealership's service manager. So Smith contacted Elizabeth Delevie Agmon, a Tarzana, Cal., Lemon Law lawyer.

Kia told Agmon her client was being uncooperative by declining further repairs. The company offered $2,000 in compensation while it took another stab at fixing the car but said it wouldn't buy it back. The response surprised Agmon. "This was a safety case," she says. "I told them, 'You're lucky a passenger wasn't scalded.'"

Agmon persuaded Kia to settle within two months. The automaker agreed to pay $3,000 for legal fees and $8,000 to Smith, which covered his down payment, monthly lease payments, registration fees and rental-car costs. He now drives a Honda Civic.

Get it in writing

Keeping records of your contact with dealers, especially service orders when repairs are made, will make your case much stronger. But even if a dealer doesn't issue a service order for a repair, you still have recourse.

Several unsuccessful attempts to fix the transmission on their Mercury Tracer forced Constance and David Degnitz of West Bend, Wis., to turn to the state's Lemon Law. Ford refused to take back the car, arguing that the Degnitzes had only three service orders and the Lemon Law called for four attempts to get the car fixed before the couple could seek relief. But the Degnitzes said they had taken the car in four times and had not received a service order for one of those repairs.

The couple sued and a judge agreed with their attorney that you don't need a repair order to establish a repair attempt. Wisconsin law awards double damages to the winner of a Lemon Law suit. Including other penalties, Ford had to pay $40,806 to buy back the Degnitzes' $16,508 car and $61,000 in lawyer's fees.

Careful what you sign

Signing a waiver in which you give up future rights in a settlement dispute is a bad idea, especially when the settlement doesn't resolve the problem. But even if you sign such a waiver, you have recourse.

One tactic widely used by Kia is to ask consumers to waive their right to make future claims in exchange for a cash payment. Kia denies it is trying to trick customers into signing away their rights. "It's common for every car company in the U.S. to seek a release of liability saying that this is the end of your pursuit," says Geno Effler, a Kia spokesman.

But consider the case of Sara Johnson, a Milwaukee medical technician. In 1998 Johnson purchased a Kia Sephia that developed serious engine problems within two months. As in many such situations, the car underwent numerous repairs.

Kia refused to take back the car. Instead, in a "goodwill" gesture the company offered to make four of Johnson's payments. To qualify, Johnson had to sign a release form saying, in effect, that even if the problems persisted, she couldn't seek legal redress. "For a few thousand bucks," says Megna of Jastroch & LaBarge, "they buy people out of a warranty that could protect them for up to ten years."

"I was hopping mad," says Johnson - so mad that she later sued. The court said Kia had to live up to the warranty despite the release and ordered the company to pay Johnson $27,288 for her $12,609 car and $24,000 in legal fees.

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