FINAL BILL REPORT

HB 1103

                                  C 347 L 89

BYRepresentatives Vekich, Cole, Patrick, O'Brien, Wang, Winsley, P. King, Beck and May; by request of Attorney General

Revising provisions for motor vehicle warranties.

House Committe on Commerce & Labor

Senate Committee on Economic Development & Labor

SYNOPSIS AS ENACTED

BACKGROUND:

In 1987, the Legislature made substantial changes in the law governing enforcement of warranties on new motor vehicles - the "lemon law".  If a manufacturer is unable to correct a defect covered by warranty in a reasonable number of repair attempts, the consumer may request the manufacturer to replace or repurchase the vehicle.  A reasonable number of attempts is deemed to have occurred if the same defect has been subject to diagnosis or repair four or more times and the defect continues to exist.  If the defect is a serious safety defect, the defect must have been subject to repair two or more times.  Diagnosis alone does not count as an attempt to repair a serious safety defect.  There is no explicit requirement that the serious safety defect continue to exist.

As part of the 1987 legislation, the Attorney General was directed to contract for arbitration boards to settle disputes between consumers and manufacturers.  Upon receiving a request for arbitration, an arbitration board has 30 days to hear the dispute and 60 days to render a decision.  If the consumer accepts the board's decision, the manufacturer has 40 days to comply with the decision or 30 days to appeal to superior court.  No time limit is specified for the consumer to accept or reject a board decision or to appeal.

The board may award repurchase or replacement of the vehicle.  When repurchasing the vehicle, the manufacturer must refund all collateral charges to the consumer.  Collateral charges are sales related charges.

If a manufacturer fails to comply with the board decision or to file an appeal, the attorney general may impose fines on the manufacturer.

If the consumer prevails in an appeal, the consumer is entitled to attorneys' fees and costs incurred in the superior court action.  There is no provision, however, for the recovery of attorneys' fees and costs incurred at the board hearing.

Manufacturers do not have a cause of action against dealers under the lemon law, but may pursue rights and remedies in other proceedings in accordance with the manufacturer-dealer franchise agreement.

SUMMARY:

A number of changes are made to the lemon law.

The determination of whether the required repair attempts have occurred to establish a consumer's rights is modified in the case of serious safety defects.  Diagnostic attempts to repair the vehicle, as well as actual repair attempts, are counted.  The serious safety defect must continue to exist for a lemon law claim to be made.

Time limits are modified and established.  The requirement that an arbitration board hold a hearing within 30 days is changed to 45 days.  The consumer has 60 days to accept or reject a board decision.  Failure to respond in 60 days is considered a rejection.  A consumer has 120 days from rejection to appeal to superior court.

Several changes are made in the calculation of awards.  The definition of collateral charges is clarified to include sales and lease related charges.  Prepayment penalties are specifically included as collateral charges.  Language is added to clarify the calculation in cases where the vehicle is leased and where the consumer is a subsequent owner.  Also clarified is the manufacturer's responsibility to pay sales tax and license and registration fees when providing a replacement vehicle.

If the attorney general prevails in an enforcement action regarding fines against a manufacturer, the attorney general is entitled to attorneys' fees and costs.

If a manufacturer is represented by counsel at a board hearing and the consumer prevails, the board shall award attorneys' fees and costs to the consumer.

The provision expressly allowing manufacturers to pursue rights and remedies in other proceedings in accordance with the manufacturer-dealer franchise agreement is deleted.

Other changes include authorizing arbitrators to impose sanctions for failure to comply with subpoenas and making vehicles which are issued nonresident military temporary licenses eligible for arbitration.

VOTES ON FINAL PASSAGE:

      House 93   0

      Senate    43     0 (Senate amended)

      House             (House refused to concur)

Conference Committee

      Senate    44     0

      House 97   0

EFFECTIVE:June 1, 1989