Court: Court of Appeals of Wisconsin; July 17, 2018; Wisconsin; State Appellate Court
Mercedes-Benz USA, LLC (Mercedes-Benz) appeals a ruling that denied its post-verdict motions and awarded judgment and costs to Michelle Hinkley in a lemon law dispute. The case arose when Hinkley leased a Mercedes-Benz vehicle and subsequently sent a "Motor Vehicle Lemon Law Notice" on July 7, 2014, demanding a refund under WIS. STAT. 218.0171(2)(b). Mercedes-Benz responded on August 5, 2014, agreeing to provide a refund of $572.22, calculated by deducting a reasonable use allowance and a prior loan balance from Hinkley's lease payments.
Disputes over the refund amount escalated, with Hinkley's counsel demanding $7,058.81 by the August 7 deadline. Mercedes-Benz did not respond to this demand. Instead, on August 11, 2014, it filed a declaratory judgment action, seeking to compel Hinkley to accept its calculated refund and return the vehicle, while simultaneously depositing the $572.22 check with the court. Hinkley countered with her own action for Mercedes-Benz's failure to issue a refund within the statutory thirty-day period, leading to the consolidation of both cases.
Both parties sought summary judgment regarding violations of the lemon law. The trial court denied the motions but later determined that Mercedes-Benz violated the law by failing to provide the refund check to Hinkley or her counsel within the required timeframe, as it only deposited the check after the thirty-day period had expired. The court confirmed that this constituted a breach of Mercedes-Benz's obligations under the lemon law.
The trial centered on Mercedes-Benz's allegation that Hinkley intentionally interfered with its ability to issue a refund within the statutory thirty-day period by refusing to return the vehicle unless her requested refund was provided. The trial court directed a verdict in favor of Hinkley, stating that Mercedes-Benz could have sent a refund to Hinkley’s legal representatives and lacked sufficient evidence to establish intentional interference. Mercedes-Benz argued for judgment notwithstanding the verdict, claiming Hinkley and her attorneys obstructed the refund process. The trial court denied this motion, affirming that Hinkley had made a valid lemon law demand and that Mercedes-Benz failed to issue a proper refund. The court highlighted that the refund had never been tendered to Hinkley or her counsel, focusing on the amount due under the Lemon Law rather than the reasonableness of the refund calculation. Ultimately, the court awarded Hinkley $409,275.67, calculated as double her lease obligation, attorney fees, and costs. Mercedes-Benz appealed the decision. The standard for reviewing a directed verdict is to assess whether any evidence supports a defense or cause of action, while statutory interpretation is reviewed de novo. The case involves the application of WIS. STAT. 218.0171.
Mercedes-Benz's appeal arguments assert that Hinkley is responsible for its failure to timely issue a refund due to her refusal to return the vehicle without meeting her refund demands. This claim is framed as one of impossibility of performance. Specific points raised by Mercedes-Benz include: 1) Hinkley’s lemon law notice became invalid when she refused to return the vehicle unless offered remedies beyond those mandated by the lemon law; 2) the company contends it made a refund "available" by proposing to issue a check if Hinkley visited the dealership the next day; and 3) Hinkley is accused of intentionally interfering with the company's ability to process the refund. Consequently, Mercedes-Benz seeks either a judgment in its favor or a new trial.
The Wisconsin Lemon Law, referenced in WIS. STAT. 218.0171, protects consumers of defective new vehicles, requiring manufacturers to remedy faults within the first year. If repairs are unsuccessful and the vehicle is out of service for a specified time, consumers can demand a refund or replacement. WIS. STAT. 218.0171(2)(c) outlines reciprocal duties: consumers must offer to transfer title of the defective vehicle, and manufacturers must issue a refund within 30 days. Both parties' obligations are sequential, dependent on the other's performance.
Failure to comply with these duties can lead to damages as stipulated in WIS. STAT. 218.0171(7)(a), allowing consumers to recover pecuniary losses within 36 months of vehicle delivery, along with costs and reasonable attorney fees. Furthermore, WIS. STAT. 218.0171(2)(b)2. specifies that the refund amount includes the full purchase price plus taxes and fees, minus a reasonable allowance for use, which is calculated based on mileage before the consumer reported the defect.
Once a consumer offers to transfer title, the manufacturer has a thirty-day timeframe to issue a refund, irrespective of any disputes regarding the amount. If the manufacturer fails to refund within this period, the consumer may seek statutory remedies. In cases of disagreement about the refund amount, the manufacturer can either pay the consumer's requested amount or an amount it deems appropriate within the thirty-day window. If the manufacturer pays the lesser amount, the consumer may take legal action to challenge it. A court will determine if the refund amount was correct, affecting whether the manufacturer incurs penalties under the Lemon Law.
If a manufacturer fails to provide a refund, the consumer may pursue damages under WIS. STAT. 218.0171(7)(a), which allows for recovery of pecuniary losses, costs, attorney fees, and potential equitable relief, provided the action is initiated within 36 months of the vehicle's delivery.
In the case at hand, Mercedes-Benz disputed the refund amount owed to Hinkley but failed to issue either the demanded $7058.81 or its calculated refund of $572.22. Mercedes-Benz argued it complied by "making available" a refund through Hinkley’s counsel, claiming it was not obligated to pursue an uncooperative consumer. However, the court rejected this argument, clarifying that Mercedes-Benz was aware Hinkley had directed all communications through her attorneys, thus its actions constituted a violation of statutory obligations. The law mandates that refunds be delivered directly to the consumer within thirty days of a lemon law notice, which Mercedes-Benz did not fulfill.
The Court of Appeals for the Seventh Circuit interpreted the Wisconsin Lemon Law to mandate that manufacturers must issue refunds within 30 days, rather than merely agreeing to do so. In James Michael Leasing Co. v. PACCAR, Inc., it clarified that delivering a refund to a dealership's sales manager or sending a fax to a consumer's attorney does not satisfy the requirement of delivering the refund to the consumer. The court further stated that if a manufacturer claims the consumer obstructed the refund process, it must prove that this obstruction was intentional. In Marquez v. Mercedes-Benz USA, LLC, the Wisconsin Supreme Court emphasized that the 30-day deadline is strictly enforced, even if the consumer's negotiations complicate matters or if the consumer has explicitly requested a refund. The court ruled that mere negotiation does not equate to intentional interference by the consumer. In this case, Mercedes-Benz's claim of Hinkley's intentional obstruction was unsupported, as the negotiations did not demonstrate intent to prevent the refund. Additionally, depositing a refund check after the 30-day period did not fulfill the statutory obligation. The court affirmed the trial court's ruling and rejected Mercedes-Benz's arguments, noting that the calculation of the refund involved determining the vehicle’s remaining useful life, which was ultimately set at 100,000 miles by the jury. Mercedes-Benz's motion for judgment notwithstanding the verdict was also noted. All references pertain to the 2015-16 version of the Wisconsin Statutes.
