SENATE BILL REPORT

EHB 1103

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

Senate Hearing Date(s):March 16, 1989; March 21, 1989

Majority Report:  Do pass as amended.

      Signed by Senators Lee, Chairman; Anderson, Vice Chairman; McMullen, Murray, Saling, Smitherman, Warnke, Williams.

Senate Staff:Charles A. Woods (786-7452)

                  March 22, 1989

AS REPORTED BY COMMITTEE ON ECONOMIC DEVELOPMENT & LABOR, MARCH 21, 1989

BACKGROUND:

In 1987, the Legislature made substantial changes in the law governing enforcement of warranties on new motor vehicles (the "lemon law").  If a vehicle has a nonconformity which remains uncorrected after a reasonable number of attempts to correct it, the consumer may request the manufacturer to replace or repurchase the vehicle.  A reasonable number of attempts shall be deemed to have occurred if the same nonconformity has been subject to diagnosis or repair four or more times and the nonconformity continues to exist.  If the nonconformity 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" and no explicit requirement exists that the defect continue to exist.

The Attorney General was directed to contract with private entities to set up 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, a 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 to the consumer all collateral charges.

If a manufacturer fails to comply with the board decision or 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:

Diagnostic attempts to repair the vehicle, as well as actual repair attempts, are to be counted in determining whether the two required attempts have occurred when the vehicle has a serious safety defect.  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 a board hold a hearing within 30 days is changed to 45 days. (However, the 60 day limit for issuing a decision is retained.) A 60 day limit is placed on the consumer 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.

Several changes are made in the calculation of awards.  The definition of collateral charges is clarified and prepayment penalties are added.  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.

Several additional procedural changes are made.  Language is added authorizing arbitrators to impose sanctions for failure to comply with a subpoena.  Personal service is added as an acceptable method for service of documents.

Other changes include modifying and clarifying the provisions governing the boards and making vehicles which are issued nonresident military temporary licenses eligible for arbitration.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

Effective Date:The bill contains an emergency clause and takes effect immediately.

SUMMARY OF PROPOSED SENATE AMENDMENTS:

The manner in which payments are to be made in case of leased automobiles repurchased by manufacturers is clarified.

Senate Committee - Testified: FOR: Ken Eikenberry, Attorney General; Sally Sterling, Lemon Law Administrator for Attorney General; Paul Corning, Attorney General's Office; Steve Gilyeart, National Vehicle Leasing Association; Janet Cunningham, Washington State Auto Dealers Association; Norbert Mueller