USED CAR LEMON LAW TRANSMISSION DEFECT and
NEW JERSEY LEMON LAW
State of New Jersey
OFFICE OF ADMINISTRATIVE LAW
OAL DKT. NO. CMA 02403-06
THE AUTO TOY STORE OF NEW JERSEY, INC.,
petitioner, pro se
Gregory R. Singleton, Esq., for respondent
Record Closed: April 26, 2006 Decided: May 3 2006
BEFORE LAURA SANDERS, Chief ALJ:
STATEMENT OF THE CASE AND PROCEDURAL HISTORY
On January 17, 2006, Biljana Mudrinic signed an application for Lemon Law Dispute Resolution, seeking relief under the provisions of N.J.S.A. 56:8-67 through 80 (the Used Lemon Law) for her 2001 Volkswagon Jetta. The application was received by the New Jersey Division of Consumer Affairs on February 7, 2006, and was eventually transferred as a contested matter, N.J.S.A. 52:14B-1 through 15 and N.J.S.A. 52:14F-1 through 13 to the Office of Administrative Law (OAL), where it was filed on April 12, 2006. A hearing was held on April 25, 2006 with the record left open to allow Ms. Mudrinic to supply one additional piece of documentation. The piece having been supplied, the record closed on April 26.
The factual issue is whether the auto has a serious transmission problem. The legal issues are whether the repair record is sufficient to trigger the statutory presumptions under the Used Lemon Law and whether the auto has a substantial defect that impairs the use, value or safety of the vehicle.
testimony and other evidence
The following is not in dispute. Ms. Mudrinic purchased a 2001 Volkswagon Jetta Sedan from the Auto Toy Store on October 21, 2005, at a total vehicle price of $12,079. The salesman involved was Paul Collier, now Finance Manager for the Auto Toy Store. The purchase included a one-year, unlimited miles warranty provided through Great Lakes Warranty Corporation. The warranty was subject to a $100 deductible per occurrence per category. One of the categories was the transmission, defined as the transmission case and all internal parts requiring lubrication, plus the torque converter and converter housing. At the time of the filing of the Lemon Law complaint, the car had been driven 57,100 miles.
$12,079 was the purchase price of the vehicle. The vehicle was delivered to Ms. Mudrinic with 50,647 miles on the odometer. At the time of the latest evidence concerning mileage, which was an invoice from Burlington Imports dated January 24, 2006, the odometer reading was 57,252. The 2006 Internal Revenue Service standard mileage rate is 44.5 cents per mile.
In December 2005, Ms. Mudrinic brought the car to the store to complain that it was not running properly. The Auto Toy Store’s in-house repair group evaluated the car, reported that no codes appeared, and advised that nothing was wrong.
On the next day, Ms. Mudrinic returned, complaining that the transmission had problems, including a check engine light on, revving, and the indicator needle showing rpms in the red zone. At that point, the Auto Toy Store requested that another repair facility which is affiliated with a local Sunoco station, evaluate the vehicle. That facility reported that the Jetta did, in fact, require repairs to its transmission. The Auto Toy Store directed repair of the vehicle by Precision Transmissions pursuant to the Warranty.
From that point, memories diverge with regard to both timing and detailed facts. Mr. Collier stated that after it was determined to send the car for repair work, Ms. Mudrinic called to discuss the warranty. She called again several days later to ask where her car was. At that point, Mr. Collier said, he directed her to another manager, as he himself had no further knowledge about the car or authority to address problems with it. He stated that the car was returned to her somewhere within seven to 12 days of the time she brought it to the Auto Toy Store. Within a day or two of return of the car, Ms. Mudrinic again called to say her car broke down. He told her to call Precision about the problem as Precision had fixed the car.
According to Ms. Mudrinic, the date on which she brought the car in for the second evaluation was December 27, 2005. It was about a week later when she asked where her car was, and on January 5, 2006, Precision Transmissions called her to sign papers authorizing the repair work. The work was completed on January 13, 2006. The invoice from Precision Transmissions stated that the customer would be responsible for $260 -- $100 for the deductible, $120 for sales tax and $40 for the difference between the warranty’s payment and Precision Transmissions’ price. The work listed was “rebuild 01M VW transmission, R&R transmission and rebuild. Replace all necessary parts, flush cooler lines, install rebuilt torque converter…” Although the copy of the payment for $260 to Precision Transmissions is dated January 2, 1995, Ms. Mudrinic’s debit card statement for January 13, 2006 shows a payment of $260 to Precision Transmissions.
On the next day, Ms. Mudrinic stated, she had difficulty starting the car, and on following days the car continued to manifest problems, including the brakes not working when the car was in back-up mode. In order to stop the car while backing up, she had to shift to neutral, then apply the brakes. Ms. Mudrinic testified that on January 19, the car broke down entirely, and was towed back to Precision Transmissions. She said the company kept the car two days. The invoice, dated January 20, 2006 stated, “Remove Valve Body Assembly and fix.” She was not charged for the repairs.
Ms. Mudrini said when the problems with rough running and brakes not working in back-up mode continued, she decided to take the vehicle to a Volkswagon dealer for diagnostics. An invoice from Burlington Imports dated January 25, 2006 describes the reason for undertaking repair as “customer states the engine sputters.” The invoice provides the following description: “no fault codes for transmission need more time to check fluid level…exchange hanger missing, engine harness ground near throttle body was not secure missing locking nut, will need to check fluid level to determine whether if it was over or under filled that can cause this type of problem….vehicles does need a tuneup…lower engine cover missing serpentine belt is cracked.” She said she did not authorize the repairs needed because of the cost, which she stated was several thousand dollars. She has continued to use the vehicle.
The first factual question for resolution is how many days the vehicle was out of service as a result of problems. While Mr. Collier stated that the car was out of service on the second repair attempt for no more than 12 days, both he and Ms. Mudrinic ascribed primary responsibility for directing the repair to another manager, which would, of necessity, give Mr. Collier less first-hand knowledge of the path that repairs took. Additionally, 12 days would have meant that the car was presented for repair in early January, not December, and Mr. Collier did not testify that the second repair attempt occurred entirely in January. While the 1995 date on the Precision Transmissions receipt is puzzling, the bank statement debit date matches the invoice date, and therefore I FIND as FACT that the car was released from Precision Transmissions on January 13, 2006. Further, Ms. Mudrinic’s account concerning the dates involved in that particular repair period was highly credible. I FIND as FACT that the car was at the Auto Toy Store for one day in early to mid December; 18 days at a combination of the Auto Toy Store and Precision Transmissions between December 27, 2005 and January 13, 2006. I also FIND that the auto was at Precision Transmissions for two additional days -- January 19 and 20, 2006.
The second factual question is the magnitude of the problem with the car. It is clear from the invoices that both repairs at Precision Transmissions involved substantial transmission work. The third invoice from Burlington Imports is more equivocal, as it reports no fault codes for transmission, but details several other problems, including missing parts, a cracked belt, and a faulty fluid level. Although the respondent sought to suggest that the absence of transmission fault codes on the Burlington Imports invoice should be interpreted as the car having been fixed, the invoice cites the need to undertake further analysis of fluid levels and additional diagnosis. Additionally, it is noted that the Auto Toy Store repair group originally reported no diagnostic codes for transmission problems, when shortly afterward, the auto manifested the need for $2,000 in transmission work. Based on the testimony, the pattern of difficulties with the car, and various invoices, I FIND as FACT that the vehicle had a significant transmission problem, which was not entirely fixed despite three requests for repair, and that on January 27, 2006, it still suffered from transmission problems, as well as other mechanical problems, including a cracked belt and missing parts.
Under the New Jersey Used Lemon Law, N.J.S.A. 56:8-67 et seq., if a consumer reports a material defect within the warranty period, the dealer or his agent must make all repairs necessary to correct the nonconformity within a reasonable time. N.J.S.A. 56:8-71. A statutory presumption arises that the dealer is unable to correct a material defect if the same defect has been subject to three or more unsuccessful repair attempts by the dealer within the warranty period or if the vehicle has been out of service awaiting repairs for a cumulative total of 20 or more days. N.J.S.A. 56:8-71 (c).
At the time that Ms. Mudrinic signed her original complaint, January 17, 2006, the auto had been out of service 19 days. However, before February 6, 2006, the date on which Consumer Affairs actually received the complaint, the car was out of service an additional two days. Although the dealer argued that the car was not out of service long enough to meet the standard of the law, I CONCLUDE that the affirmative defense is not available to the dealer, as Ms. Mudrinic has demonstrated that the car was out of service for 21 days.
A material defect under the Used Lemon Law is a malfunction subject to a warranty, which substantially impairs its use, value or safety. Ms. Mudrinic’s warranty expressly covered the transmission, which continued to pose problems despite being presented for work on three different occasions. A vehicle that runs roughly despite recent, extensive repairs to the transmission, and which still requires extensive repairs will inevitably suffer diminished value in the marketplace. I CONCLUDE, therefore, that a material defect exists which substantially impairs the use and value of Ms. Mudrinic’s vehicle.
N.J.S.A. 56:8-71 and N.J.A.C. 13:45A-26F.14a provide for a refund to a consumer and lienholder, if any, as their interests shall appear on the records kept by the Motor Vehicle Commission, which shall include the total purchase price of the used motor vehicle excluding sales taxes, title and registration fees or any similar governmental charges, and also excluding a personal use deduction (as that term is defined at N.J.A.C. 13:45A-26.F.2).
N.J.A.C. 13:45A-26F.2 defines “Deduction for personal use” as the mileage allowance set by the Federal Internal Revenue Service for business usage of a motor vehicle in effect on the date a used motor vehicle is repurchased by a dealer multiplied by the total number of miles a used motor vehicle is driven by a consumer from the date of purchase of that vehicle until the time of its repurchase.
The purchase price of the vehicle was $12,089. The latest mileage evidence, which was from the Burlington Imports Invoice, reported an odometer reading of 57,252, indicating that the car had been driven 6,242 miles since the time of purchase. The total purchase price minus the deduction for usage (6,605 x .445) equals $9,139.78. I conclude therefore, the Auto Toy Store should accept the return of the vehicle, and that the reimbursement to Ms. Mudrinic should be $9,139.78, minus any additional mileage driven.
It is ORDERED that the Auto Toy Store reimburse petitioner and the Lienholder in the total amount of $9,139.78 minus .445 times any additional mileage driven, based on the odometer reading at the time of return.
It is further ORDERED that petitioner shall return the subject vehicle, free and clear of any body damage no later than 15 days from the final agency decision in this matter. Petitioner shall also endorse any papers needed to transfer title to the Auto Toy Store or its designee.
I hereby FILE my initial decision with the DIRECTOR OF THE DIVISION OF CONSUMER AFFAIRS for consideration.
This recommended decision may be adopted, modified or rejected by the DIRECTOR OF THE DIVISION OF CONSUMER AFFAIRS, who by law is authorized to make a final decision in this matter. If the Director of the Division of Consumer Affairs does not adopt, modify or reject this decision within fifteen (15) days, this recommended decision shall become a final decision in accordance with N.J.S.A. 56:12‑37(b).
Any party may file written exceptions with the DIRECTOR OF THE DIVISION OF CONSUMER AFFAIRS, ATTENTION: LEMON LAW UNIT, PO Box 45027, Newark, New Jersey 07101, marked "Attention: Exceptions." Exceptions must be received by the Division of Consumer Affairs no later than eight (8) days from the date on which this recommended decision was mailed to the parties. Exceptions shall not exceed three (3) pages in length. A copy of any exceptions must be sent to the judge and to the other parties.
DATE LAURA SANDERS, CHIEF ALJ
Mailed to Division of Consumer Affairs:
DATE OFFICE OF ADMINISTRATIVE LAW
Mailed to Parties:
DATE OFFICE OF ADMINISTRATIVE LAW
Petitioner– Biljana Mudrinic
R-1 The Auto Toy Store of NJ, Inc. Bill of Sale
R-2 Great Lakes Warranty
R-3 Lemon Law complaint
R-4 Receipt from 1/2/1995
Respondent – The Auto Toy Store of New Jersey, Inc.
A-1 Precision Transmissions Invoice dated 1/13/2006
A-2 Precision Transmissions Invoice dated 1/20/2006
A-3 Towing bill dated 1/19/2006
A-4 Invoice from Burlington Motors dated 1/25/2006
A-5 Finance Contract
A-6 Bank Statement