Report Title:

New Motor Vehicle and Motorcycle Lemon Law

Description:

Repeals and replaces Hawaii Revised Statutes chapter 481I, Motor Vehicle Express Warranty Enforcement (Lemon Law), with a new chapter based on Wisconsin Statutes section 218.0171 and entitled Repair, Replacement, and Refund Under New Motor Vehicle Warranties (Lemon Law).

HOUSE OF REPRESENTATIVES

H.B. NO.

1753

TWENTY-THIRD LEGISLATURE, 2005

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to the lemon law.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

REPAIR, REPLACEMENT, AND REFUND UNDER NEW MOTOR VEHICLE WARRANTIES (LEMON LAW)

§ -1 Definitions. As used in this chapter, unless the context otherwise requires:

"Collateral costs" means expenses incurred by a consumer in connection with the repair of a nonconformity, including the costs of obtaining alternative transportation.

"Consumer" means any of the following:

(1) A motor vehicle purchaser;

(2) A motor vehicle transferee;

(3) A person who may enforce the motor vehicle warranty; or

(4) A motor vehicle lessee.

"Demonstrator vehicle" means a vehicle used primarily for the purpose of demonstration to the public.

"Early termination cost" means:

(1) Any expense or obligation a motor vehicle lessor incurs as a result of both the termination of a written lease before the termination date set forth in that lease; and

(2) Any expense related to the return of a motor vehicle to a manufacturer under section -3(b).

"Early termination cost" includes a penalty for prepayment under a finance arrangement.

"Early termination savings" means any expense or obligation a motor vehicle lessor avoids as a result of both the termination of a written lease before the termination date set forth in that lease and the return of a motor vehicle to a manufacturer under section -3(b). "Early termination savings" includes an interest charge the motor vehicle lessor would have paid to finance the motor vehicle or, if the motor vehicle lessor does not finance the motor vehicle, the difference between the total amount for which the lease obligates the consumer during the period of the lease term remaining after the early termination and the present value of that amount at the date of the early termination.

"Executive" vehicle means a vehicle used primarily by an executive of a licensed manufacturer, distributor or dealer, and not used for demonstration to the public.

"Manufacturer" means any person, resident or nonresident, who:

(1) Manufactures or assembles motor vehicles;

(2) Manufactures or installs on previously assembled truck chassis, special bodies, or equipment, which:

(A) When installed, form an integral part of the motor vehicle;

(B) Constitutes a major manufacturing alteration; and

(C) Completed unit is owned by the manufacturer and agents of the manufacturer, including an importer, a distributor, factory branch, distributor branch, and any warrantors of the manufacturer’s motor vehicles, but not including a motor vehicle dealer.

"Motor vehicle" means any motor driven vehicle required to be registered under section 286-41 or 286-54, including a demonstrator or executive vehicle not titled or titled by a manufacturer or a motor vehicle dealer, which a consumer purchases or accepts transfer of in this state. "Motor vehicle" does not mean a moped, semitrailer, or trailer designed for use in combination with a truck or truck tractor.

"Motor vehicle dealer" means any person, firm, or corporation who, for commission, money, or other thing of value, sells, leases, exchanges, buys, offers, or attempts to negotiate a sale, consumer lease, or exchange of an interest in motor vehicles, or is engaged wholly or in part in the business of selling or leasing motor vehicles, including motorcycles, whether the motor vehicles are owned by that person, firm, or corporation. The term "motor vehicle dealer" does not include:

(1) Receivers, trustees, personal representatives, guardians, or other persons appointed by or acting under the judgment or order of any court;

(2) Employees of persons, corporations, or associations when engaged in the specific performance of their duties as employees of the enumerated persons, corporations, or associations;

(3) Sales finance companies or other loan agencies who sell or offer for sale motor vehicles repossessed or foreclosed on by those sales finance companies or other loan agencies under terms of an installment contract, or motor vehicles taken in trade on such repossessions; or

(4) Sales finance companies when engaged in purchasing or otherwise acquiring consumer leases from a motor vehicle dealer, or in renegotiating consumer leases previously purchased or otherwise acquired by them.

"Motor vehicle lessee" means a person who leases a motor vehicle from a motor vehicle lessor under a written lease.

"Motor vehicle lessor" means a person who holds title to a motor vehicle leased to a lessee, or who holds the lessor’s rights, under a written lease.

"Motor vehicle purchaser" means the purchaser of a new motor vehicle, if the motor vehicle was purchased from a motor vehicle dealer for purposes other than resale.

"Motor vehicle transferee" means a person to whom the motor vehicle is transferred for purposes other than resale, if the transfer occurs before the expiration of an express warranty applicable to the motor vehicle.

"Nonconformity" means a condition or defect that substantially impairs the use, value, or safety of a motor vehicle, and is covered by an express warranty applicable to the motor vehicle or to a component of the motor vehicle, but does not include a condition or defect that is the result of abuse, neglect, or unauthorized modification or alteration of the motor vehicle by a consumer.

"Reasonable attempt to repair" means any of the following occurring within the term of an express warranty applicable to a new motor vehicle or within one year after first delivery of the motor vehicle to a consumer, whichever is sooner:

(1) The same nonconformity with the warranty is subject to repair by the manufacturer, motor vehicle lessor, or any of the manufacturer’s authorized motor vehicle dealers at least four times and the nonconformity continues; or

(2) The motor vehicle is out of service for an aggregate of at least thirty days because of warranty nonconformities.

§ -2 Repair of nonconformity. If a new motor vehicle does not conform to an applicable express warranty, the nonconformity shall be repaired if the consumer:

(1) Reports the nonconformity to the manufacturer, the motor vehicle lessor, or any of the manufacturer’s authorized motor vehicle dealers; and

(2) Makes the motor vehicle available for repair before the earlier of:

(A) The expiration of the warranty; or

(B) One year after first delivery of the motor vehicle to a consumer.

§ -3 Replacement and refund. (a) At the direction of a consumer who is a purchaser or transferee of the motor vehicle, or person who may enforce the motor vehicle warranty, and after a reasonable attempt is made to repair the nonconformity and the nonconformity is not repaired, the manufacturer shall either:

(1) Accept return of the motor vehicle, provide a comparable new replacement motor vehicle, and refund any collateral costs; or

(2) Accept return of the motor vehicle and refund to the consumer and to any holder of a perfected security interest in the consumer’s motor vehicle, as their interest may appear, the full purchase price plus any finance charge, amount paid by the consumer at the point of sale, and collateral costs, less a reasonable allowance for use.

For the purposes of this subsection, "reasonable allowance for use" may not exceed the amount obtained by multiplying the full purchase price of the motor vehicle by a fraction, the denominator of which is 100,000 or, for a motorcycle, 20,000, and the numerator of which is the number of miles the motor vehicle was driven before the consumer first reported the nonconformity to the motor vehicle dealer.

(b) If the consumer is the lessee of the motor vehicle and a reasonable attempt is made to repair the nonconformity and the nonconformity is not repaired, the manufacturer shall:

(1) Accept return of the motor vehicle;

(2) Refund the current value of the written lease to the motor vehicle lessor and to any holder of a perfected security interest in the motor vehicle, as their interest may appear; and

(3) Refund to the consumer the amount the consumer paid under the written lease plus any collateral costs, less a reasonable allowance for use.

For the purposes of this subsection, "current value of the written lease" equals the total amount for which that lease obligates the consumer during the period of the lease remaining after its early termination, plus the motor vehicle dealer’s early termination costs, and the value of the motor vehicle at the lease expiration date if the lease sets forth that value, less the motor vehicle lessor’s early termination savings.

"A reasonable allowance for use" may not exceed the amount obtained by multiplying the total amount for which the written lease obligates the consumer by a fraction, the denominator of which is 100,000 and the numerator of which is the number of miles the consumer drove the motor vehicle before first reporting the nonconformity to the manufacturer, motor vehicle lessor, or motor vehicle dealer.

§ -4 Replacement and refund procedures; effect of refund on lease. (a) To receive a comparable new motor vehicle or a refund due under section -3(e), the consumer shall offer to transfer title of the motor vehicle having the nonconformity to the manufacturer of that motor vehicle. No later than thirty days after that offer, the manufacturer shall provide the

consumer with the comparable new motor vehicle or refund. When the manufacturer provides the new motor vehicle or refund, the consumer shall:

(1) Return the motor vehicle having the nonconformity to the manufacturer; and

(2) Provide the manufacturer with the certificate of title and all endorsements necessary to transfer title to the manufacturer.

(b) To receive a refund due under section -3(b):

(1) The consumer shall offer to return the motor vehicle having the nonconformity to the manufacturer of the vehicle. No later than thirty days after that offer, the manufacturer shall provide the refund to the consumer. When the manufacturer provides the refund, the consumer shall return the motor vehicle having the nonconformity to the manufacturer; or

(2) A motor vehicle lessor shall offer to the manufacturer of the motor vehicle having the nonconformity to transfer title of that motor vehicle to that manufacturer. No later than thirty days after that offer, the manufacturer shall provide the refund to the motor vehicle lessor. When the manufacturer provides the refund, the motor vehicle lessor shall provide to the manufacturer the certificate of title and all endorsements necessary to transfer title to the manufacturer.

No person may enforce the lease against the consumer after the consumer receives a refund due under section -3(b).

§ -5 Disclosure before subsequent sale or lease. No motor vehicle returned by a consumer or motor vehicle lessor in this state under this chapter or by a consumer or motor vehicle lessor in another state under a similar law of that state, may be sold or leased again in this state unless full disclosure of the reasons for return is made to any prospective buyer or lessee.

§ -6 Refund of general excise tax to manufacturer. The department of taxation shall refund to the manufacturer any general excise tax paid on the gross proceeds of the sale of a motor vehicle if the manufacturer provides to the department of taxation a written request for a refund, along with evidence that the general excise tax was paid when the motor vehicle was purchased and that the manufacturer refunded the general excise tax to the consumer when a refund was provided under section     -3.

§ -7 Informal dispute settlement procedure. (a) If there is available to the consumer an informal dispute settlement procedure which is certified under this section, the consumer must first follow the informal dispute settlement procedure before bringing an action under section -8.

(b) The department of commerce and consumer affairs shall adopt rules under chapter 91 specifying the requirements with which each informal dispute settlement procedure shall comply. The rules shall require each person establishing an informal dispute settlement procedure to:

(1) Provide rights and procedures at least as favorable to the consumer as under the rules adopted by the department of commerce and consumer affairs; and

(2) If after a reasonable attempt to repair the nonconformity is not repaired, require the manufacturer to provide a remedy as set forth under section -3.

(c) The department of commerce and consumer affairs:

(1) Shall investigate each informal dispute settlement procedure provided in this state to determine whether it complies with the rules adopted under subsection (b);

(2) Shall certify each informal dispute settlement procedure that complies; and

(3) May revoke certification if it determines that an informal dispute settlement procedure no longer complies with the rules adopted under subsection (b).

The department of commerce and consumer affairs shall annually publish a report evaluating the informal dispute settlement procedures provided in this state, stating whether those procedures are certified and stating the reasons for the failure of any procedure to obtain certification or for the revocation of any certification.

(d) Any person who establishes an informal dispute settlement procedure the certification of which is denied or revoked by the department of commerce and consumer affairs may appeal that denial or revocation pursuant to chapter 91.

(e) Any person who establishes an informal dispute settlement procedure shall annually file with the department of commerce and consumer affairs a copy of the annual audit in the form required by the department to evaluate informal dispute settlement procedures.

(f) The department of commerce and consumer affairs may consider whether a manufacturer obtains certification under this section in determining whether to issue a manufacturer’s license to do business in this state.

§ -8 Action for damages. In addition to pursuing any other remedy, a consumer may bring an action to recover any damages caused by a violation of this section after meeting the requirements of section -7. The court shall award a consumer who prevails in such an action twice the amount of any pecuniary loss, together with costs, disbursements, reasonable attorney fees, and any equitable relief the court determines appropriate.

§ -9 Consumer waiver of rights void Any waiver by a consumer of rights under this chapter is void.

§ -10 Other rights and remedies preserved. This chapter does not limit rights or remedies available to a consumer under any other law."

SECTION 2. Chapter 481I, Hawaii Revised Statutes, is repealed.

SECTION 3. This Act shall take effect upon its approval.

INTRODUCED BY:

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