Terry
and Robert Muzzy v. Chevrolet Division, General Motors Corp.; State of
Vermont, Intervenor
Supreme Court of Vermont
153 Vt. 179; 571 A.2d 609; 1989 Vt.
LEXIS 263
December 1, 1989, Opinion filed
Terry and Robert Muzzy (appellees) purchased a new Chevrolet
from an authorized General Motors Corporation dealer in February, 1985.
After numerous repair attempts, appellees sought statutory remedies
under the New Motor Vehicle Arbitration Act (Act). The Vermont Motor
Vehicle Arbitration Board
(Board), created to hear consumer complaints arising under the statute,
found appellees entitled to relief. The Board
ordered General Motors Corporation (GM) to refund a portion of the
purchase price and other expenses. GM appealed to the Washington
Superior Court, which affirmed the Board's
decision. GM here contends that the superior court erred in affirming
the Board's decision. We affirm.
The facts relevant to this case are brief. Appellees purchased a new
vehicle from a Rutland dealer and found that it ran roughly and stalled
in traffic. The dealer tried on five separate occasions in April, May
and June of 1985 to repair the defect. When these attempts failed,
appellees went to the Board seeking a new vehicle from GM. n1 GM made a
last attempt at repair and installed a special valve. Although GM
alleged that the new valve cured the defect, the Board made no finding
on whether the vehicle was repaired. Appellees were dissatisfied with
the results of GM's last repair attempt because the problem might
reoccur and the warranty was about to expire.
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n1 Appellees subsequently amended their petition to seek a refund of
the purchase price. Under 9 V.S.A. § 4172(e), the consumer may
choose the proper remedy between a replacement vehicle and a refund of
the purchase price. There is no indication that appellant was willing
to provide either remedy since it has insisted that appellees have no
right to relief from the Board.
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On the above facts, the Board found that the vehicle had a substantial
defect which affected its safety or market value. Since the vehicle was
not repaired in three attempts, the Board found that appellees made out
a prima facie case for relief. It found that GM's last repair attempt,
whether or not successful, was not relevant because appellees were not
satisfied with it. Accordingly, it ordered GM to refund the purchase
price, together with the amount of any interest, taxes, registration
fees, credit fees and credit insurance premiums incurred by appellees.
On appeal, the superior court upheld the Board determination that the
vehicle had a substantial defect which adversely affected safety or
market value. It further held that although GM had a right to
attempt a final repair, this right was subject to the consumer's
satisfaction with the repair. Since the consumers were not satisfied
with the final repair attempt and exercised their judgment "honestly
and in good faith," the court found that they could recover. The court
upheld the constitutionality of the Act against claims that it impaired
the obligation of the contract and denied GM due process of law and
equal protection of the laws. It affirmed the remedy fashioned by the
Board except for the refund of the purchase and use tax, which it found
to be beyond the authority of the Board.
On appeal in this Court, GM raises three claims of error: (1) the Board
erred in holding that the test of consumer satisfaction is wholly
subjective; (2) the Board failed to make findings on essential elements
of the case; and (3) the Board awarded damages for items not covered by
the Act. We take these claims in order after first setting out the
statutory scheme and adressing the standard of review.
I.
Statutory Scheme
This is the second case to reach this Court under the "lemon law." The
basic operation of the statute is set forth in the first case, Pecor v.
General Motors Corp., 150 Vt. 23, 547 A.2d 1364 (1988). In that case,
we held that the consumer does not have to prove an existing defect, or
warranty nonconformity, to recover under the Act. Instead, the Act
creates an obligation in the
manufacturer to replace a motor vehicle if the manufacturer, or dealer,
is unable to repair the vehicle "after a reasonable number of
attempts." It presumes that a reasonable
number of attempts have been made in either of two circumstances: (1)
the defect has been subject to three repair attempts and "the same
nonconformity continues to exist"; or (2) the vehicle has been out of
service a cumulative total of 30 days during the warranty period. Pecor
holds that if the vehicle remains out of
conformity with the warranty n3 after the reasonable number of repair
attempts have been made, liability attaches and the consumer does not
have to prove, and the Board does not have to find, nonconformity at
the time of the Board hearing.
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n3 It is an affirmative defense that a warranty nonconformity "does not
substantially impair the use, market value or safety" of the vehicle or
that the nonconformity is the "result of abuse, neglect, or
unauthorized modifications or alterations" of the vehicle by the
consumer. 9 V.S.A. § 4172(f).
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This case involves another part of the statute not involved in Pecor. A
consumer seeking a remedy under the Act may apply to the Board, which
must normally arbitrate the consumer's complaint within 45 days.
Within this 45-day period, the manufacturer is
given one final opportunity to correct the defect. The statutory
language governing this opportunity is as
follows:
(d) Within the 45-day period set forth
in subsection (c) of this
section, the manufacturer shall have one final opportunity to correct
and repair the defect which the consumer claims entitles him or her to
a refund or replacement vehicle. If the consumer is satisfied with the
corrective work done by the manufacturer or his delegate, the
arbitration proceedings shall be terminated without prejudice to the
consumer's right to request arbitration be recommenced if the repair
proves unsatisfactory for the duration of the express warranty.
GM interprets this section as establishing an objective standard so
that if the defect is in fact repaired the proceedings before the Board
must terminate. Appellees urge adoption of a subjective standard, with
the question being whether the consumer is in fact satisfied.
III.
Last Opportunity to Repair
The main issue in this case is whether the Board must dismiss the
proceeding where the manufacturer's final opportunity to repair
pursuant to 9 V.S.A. § 4173(d) brings about an apparent repair
although the car-owner is not satisfied. We hold that it does not and
affirm the Board on its conclusion that the satisfaction standard under
the statute is essentially subjective. Although we find the legal
question to be fairly close, we have a number of reasons for our
conclusion.
Our first reason is that the Board's interpretation appears to comport
best with our rules of statutory construction. In construing a statute,
our primary mission is to give effect to the intent of the
Legislature. Where the
language of the statute is clear, we must ascertain the intent
from the wording of the statute using the plain, ordinary meaning of
the language used. Remedial statutes, like the "lemon law," are
entitled to a liberal construction in favor of those who are intended
to benefit from the legislation.
We cannot say that the language used here is unambiguous. There is
an unresolved tension between the consumer's right to relief after a
reasonable number of attempts fail to repair the vehicle and the
manufacturer's right to attempt a last repair. Nevertheless,
the choice of wording is more consistent with a subjective standard
than an objective one.
This Court has interpreted a similar use of the term"satisfied" in the
early case of McClure Bros. v. Briggs, 58 Vt. 82, 2 A. 583 (1886). In
McClure Bros., the defendant agreed to purchase an organ from plaintiff
if, on trying it, he was satisfied with it. Although an expert
determined that the tone of the organ was good, defendant was
dissatisfied with the tone of the organ. In plaintiff's suit for the
price of the organ, the Court found for defendant, rejecting
plaintiff's claim that defendant should be liable because he had no
reasonable grounds for dissatisfaction:
But it is said that he was bound to be
satisfied, as he had no ground
to be dissatisfied. He was bound to act honestly, and to give the
instrument a fair trial, and such as the seller had a right, in the
circumstances, to expect he would give it, and therein to exercise such
judgment and capacity as he had, for by the contract he was the one to
be satisfied, and not another for him. If he did this and was still
dissatisfied, and that dissatisfaction was real and not feigned, honest
and not pretended, it is enough, and plaintiffs have not fulfilled
their contract . . . .
We see no reason to
construe the word "satisfied" in the lemon law differently from the way
it is construed in McClure Bros. n9 Since there is no claim that
appellees' dissatisfaction in this case is feigned or dishonest, and
the trial court found it to be honest and in good faith, the McClure
Bros. construction supports the Board's conclusion in this case.
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n9 The contract law has developed in other states so that an objective
test of satisfaction is used for some contracts and a subjective test
for others. See generally Brook, Conditions of Personal Satisfaction in
the Law of Contracts, 27 N.Y.L. Sch. L. Rev. 103, 144-50 (1981). The
Restatement expresses a preference for an objective test where "it is
practicable to determine whether a reasonable person in the position of
the obligor would be satisfied." Restatement (Second) of Contracts
§ 228 (1981). Note that a comparison to a reasonable person is a
different test from that argued for by GM in this Court or before the
Board. GM would determine satisfaction solely by whether the Board
found the vehicle to be repaired.
Even if the Legislature intended to use the term satisfaction in the
same way as it is used in $S 228 of the Restatement of Contracts 2d, we
would find that it supports a subjective test here because it is not
"practicable" to use the objective test set forth in § 228 without
expensive proof that would seriously undermine the consumer's remedy.
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We also note that the Legislature has considered and rejected
amendments to 9 V.S.A. § 4173(d) to clearly adopt the meaning
advanced by GM in this case. Both the House and Senate voted down such
an amendment in 1986. 1986 House J. 364-65; 1986 Senate J. 784-85.
These amendments would have been unnecessary if the section had the
meaning urged by GM.
Second, we believe the Board's construction is most consistent with
legislative intent. That intent is specifically stated in 9 V.S.A.
§ 4170 and includes a declaration that "manufacturers,
distributors and importers of new motor vehicles should be obligated to
provide speedy and less costly resolution of automobile warranty
problems."
GM's repair in this case was the sixth one attempted. GM asserts that
the vehicle is repaired, but it is likely that a similar assertion was
made in good faith after each of the five other attempts. The only way
the issue can be resolved is by expert evaluations or by operation of
the vehicle over time. Neither of these methods are consistent with the
legislative intent. If the consumer must hire an expert to evaluate the
vehicle, the remedy will be more costly, not less costly as intended by
the Legislature. The dismissal sought by GM makes test operation of the
vehicle over time impossible; even if possible, it would delay any
remedy. In effect, GM's position leads to a treadmill of repair
attempts without end, not the speedy and less costly resolution of
automobile warranty problems contemplated by the Legislature.
Third, we believe that liberal construction consistent with the
remedial purpose favors the Board's conclusion here. As the New
Hampshire Supreme Court emphasized in Asciolla v. Manter
Oldsmobile-Pontiac, Inc., 117 N.H. 85, 89-90, 370 A.2d 270, 274 (1977),
the purchaser of a new car expects "to receive a vehicle upon whose
dependability and safety he could comfortably rely." Thus, the vehicle
is more than the sum of its components. It must be reliable and operate
well, day after day. What the "lemon law" really protects against is
the insecurity of ownership of a vehicle that is perceived to be
undependable. We share the sentiment of the Wisconsin Court of Appeals
that giving the manufacturer further attempts to repair, after the
failure within the "reasonable" number, can act to "eviscerate" the
lemon law. Hartlaub v. Coachman Industries, Inc., 143 Wis. 2d 791, 802
(Ct. App. 1988). The subjective satisfaction standard of
§ 4173(d) protects against that evisceration and fairly responds
to insecurity caused by past operation failures.
Finally, we reiterate that we have a limited review
standard here. At best, we are choosing between two arguable
constructions of the Act. We believe that in such a case the
Legislature intended that the Board's construction would prevail and
would not be second-guessed in this Court.
Affirmed.
DISSENT: Peck, J., dissenting.
Once again a majority of this Court demonstrates its unfortunate
dedication to unrestrained activism as one of the primary factors to be
applied in reaching its decisions. Without intending in any way to
impugn the honesty, good faith or integrity of any of the parties in
this specific case, the extreme activism being adopted as a philosophy
by this and other courts frequently serves as an open invitation to
judicially sanctioned fraud of the most obvious and egregious sort.
I recognize that there are situations in which the existence of a
relevant fact is not subject to objective tests or measurements.
Nevertheless, any result in the process of litigation which depends
entirely on the purely subjective statement or judgment of a party, and
has no objectiv support to establish the existence of a relevant fact,
should be approached with the greatest caution, giving full
consideration to the possibility of fraud, and an initial presumption
that the Legislature did not intend such a possibility; it should not
simply be swept aside with the indifference demonstrated by the
majority in this case.
The majority cites and relies on McClure Bros. v. Briggs, 58 Vt. 82, 2
A. 583 (1886); it is the essential keystone to the validity of its long
opinion. But McClure is not in point. As the majority correctly
describes that case, "the defendant agreed to purchase an organ from
plaintiff if, on trying it, he was satisfied with it." After playing
the instrument, defendant declined to complete the purchase because he
claimed personal dissatisfaction with its tone. The Court held for the
defendant.
Unlike the case before us, there was no mechanical or other
ascertainable defect in the organ. Even though an "expert" testified
that its tone was good, this Court pointed out that defendant "was the
one to be satisfied, and not another for him." In short, McClure was
one of those few instances in which, absent some
actual and determinable defect, the controlling condition in the
agreement is entirely subjective and personal to one of the parties; no
other test is possible.
Thus, when the opinion claims that in McClure this Court interpreted "a
similar use of the term 'satisfied'" to conform to the majority's
subjective interpretation in this case, it sweeps the clear
distinction between the two under the rug, or, to mix metaphors,
washes it away in a deluge of rhetoric and legalese. A more dissimilar
use of "satisfied" is hard to imagine. The whole tone and obvious
intent of the controlling statutes are undeniably related to mechanical
defects and warranties, and the right of the manufacturer to attempt
repairs, including the right to "have one final opportunity to correct
and repair the defect." 9 V.S.A. § 4173(d) (emphasis added).
It is one thing to say that dissatisfaction with a product which is not
based on ascertainable and possibly correctable defects can be, or well
may be, purely subjective. Such instances are typified by modern
advertising practices in which a product, such as a book, is offered
for a free examination period, with the right to return the product
before the end of the specified period at no cost or other obligation,
if the prospective purchaser is not satisfied. Dissatisfaction in
such instances may be purely subjective; it need not be based on
demonstrable defects.
The potential for outright fraud and bad faith if satisfaction,
following success of the final repair effort, as in fact occurred here,
is measurable by the purely subjective standard adopted by the
majority, constitutes judicial activism at its most unrestrained and
inexcusable. It is not difficult to suggest a hypothetical example of
an unintended benefit which might be realized by a purchaser under a
fact pattern similar to the case before us: the purchaser's original
order, which was duly filled, was for a blue vehicle; during the course
of the manufacturer's efforts to correct a defect, the purchaser
decides he prefers a red vehicle. By simply saying he is not satisfied
with the correction, and not being obligated to state any reason or
even show good faith, he can now satisfy his revised preference for a
new red car, or a refund with which to purchase one.
I conclude that McClure is not apposite; it is not on point because of
the distinction outlined above. Although the majority opinion is long
and replete with argumentative verbiage, McClure remains the underlying
basis for the result. But, in fact, it does not support the conclusion
reached by the Board or its affirmance by the majority. Assuming good
faith, subjective satisfaction in McClure was the only standard
available. It is as far removed from the correction of an ascertainable
defect, which was not even a factor in McClure, as dark is from light.
There are broad sweeping statements in the majority opinion that are
demonstrably questionable at best. To cite one example the majority,
admitting some ambiguity in § 4173(d), nevertheless concludes:
"the choice of wording is more consistent with a subjective standard
than an objective one." This is simply wrong; there is no better word
to describe it.
If a subjective standard (which does not even require a showing that
the expression of dissatisfaction is "real and not feigned, honest and
not pretended") was the intent of the Legislature, the language of
§ 4173(d) which grants the purchaser the right to recommence
"arbitration," even after he has expressed satisfaction "if the repair
proves unsatisfactory," is virtually meaningless. It is inconceivable
that many consumers will express satisfaction after the manufacturer's
last effort, and risk another painful round of arbitration, when all
they need to do is assert dissatisfaction, in order to obtain a brand
new vehicle or a refund with which another car may be purchased.
Contrary to the majority's ill-considered comment, the language of
§ 4173(d) is far more consistent with an objective standard, and
with a logical assumption that the Legislature did not intend to
countenance the opportunities for fraud and dishonesty created by the
majority.
The majority comments dealing with speedy resolutions of disputes, and
the "great" expense to the purchaser of retaining his own expert, are
grossly exaggerated for effect. I cannot accept the likelihood that the
fees of a qualified mechanic would be as prohibitive as the majority
would have us believe, nor does the opinion cite any support for its
contention. Moreover, any such expense should be recoverable if the car
owner prevails. And finally, I cannot visualize either that the mere
presentation of an expert witness at the hearing
before the Board will delay the final resolution of the dispute for any
measurable period of time, and the insurance against dishonesty and
fraud provided by such witnesses for both parties safeguards the
integrity of the procedure.
In my judgment the validity of the majority opinion and result crumbles
with the fallacy of McClure as the underlying support. The rest
deteriorates into an interesting but empty exercise in legal rhetoric
which I cannot accept in silence. Accordingly, I dissent; I would
reverse and remand.