HOW IS A REFUND CALCULATED IN A LEMON LAW CASE?
Dec. 14, 2021
You’ve just purchased or leased a new vehicle and something doesn’t seem right. There’s a defect or malfunction that keeps the car from performing as you anticipated. You take it back to the dealer under warranty and after repeated visits, the problem just doesn’t go away.
Then, the thought dawns on you: “This vehicle is a lemon. What are my rights? Can I get a refund or replacement vehicle?” The answer under both Michigan and Ohio law is often yes, provided certain conditions have been met.
If you find yourself with what you believe to be a lemon vehicle that you purchased or leased in either Ohio or Michigan, contact Ronald S. Weiss, Attorney.
We are located in West Bloomfield, Michigan, and Toledo, Ohio, and we handle cases throughout both states. The Lemon Laws in both states protect you from vehicles with defects or conditions that prove to be beyond repair or too burdensome to repair and a great part of the law is that the manufacturer must provide for my fees in successful cases!
Most states have Lemon Laws on their books and so does the federal government.
The federal statute is known as the Magnuson-Moss Warranty Act. This act mainly specifies how warranties are to be worded and how the consumer can seek repairs or relief, but it also requires that warrantors must repurchase or replace defective goods if they are unable to repair them after a reasonable number of attempts. The definition of "goods" includes motor vehicles.
The Michigan Lemon Law protects a consumer whose new motor vehicle has a "defect or condition that impairs the use or value of the new motor vehicle to the consumer."
The Ohio statute states: “A ‘lemon’ is a new motor vehicle that has one or more warranty-covered problems that substantially impair the use, value, or safety of the vehicle. The problem(s) must occur within the vehicle’s first year or first 18,000 miles, whichever comes first.”
To generalize, under Lemon Laws in Ohio and Michigan, to qualify as a lemon, a car must:
Have a significant defect that is covered by the warranty that occurred within a specific period or after a number of miles traveled
Have a substantial defect that can't be fixed after a reasonable number of repair attempts; or
Have spent 30 days or more at the dealership for repairs within the first year of purchase
If you are in Ohio, additional provisions include:
Eight or more repairs in an effort to fix various problems, or
One attempt to repair a defect that was likely to cause death or serious injury.
If your vehicle meets the standards listed above, then you can request a comparable replacement vehicle or a refund of your full purchase price. You must notify the manufacturer in writing of the problem. Most likely, the manufacturer will offer to make further attempts at fixing the problem. Keep in mind that if you are close to meeting the law, but don't technically meet it, don't be discouraged, you should definitely call us. The manufacturer may also attempt to force the matter to arbitration, again, this is a time to reach out to Ronald S. Weiss, in order to discuss your options. Remember, the manufacturer has to provide for the attorney fees.
Every situation is different, but the manufacturers generally favor arbitration and that should make you stop and wonder whether it is in your best interest. Often, you may need to resort to non-binding arbitration before filing a lawsuit, but there are likely alternative paths. In Ohio, the arbitration program must have been approved by the Attorney General or you are under no obligation to submit to it. In general, unless the arbitration clause conforms to the requirements of the Federal Trade Commission (FTC), you are not obligated to agree to it.
Calculating the Refund
If you qualify, there are a number of factors that will be taken into consideration in calculating the amount of the refund and those factors vary by state.
Once it is determined that you qualify for a refund, the manufacturer should refund the “full purchase price” of the vehicle which includes:
“The purchase price for the car plus the costs for transportation, dealer preparation, delivery, dealer-installed accessories, and other services.
The costs for financing and credit insurance, as well as any warranty and service contract charges.
Taxes and any other government charges, including state sales tax, license fees, and registration fees.”
Source: Ohio Attorney General
If the vehicle was a lease, the refund should include the capitalized cost reduction, security deposit, taxes, title fees, all monthly lease payments, the residual value of the vehicle, and all finance, credit insurance, warranty, and service contract charges incurred by the consumer.
The Ohio Lemon Law does not allow the manufacturer to deduct an amount for the use of the vehicle. That is certainly a helpful provision.
In Michigan, eligible refunds include the "purchase price" of the vehicle which is the actual vehicle sales price listed on the buyer's order including any cash payment, trade-in allowance, sales tax, license and registration fees, and other government charges.
In the case of a leased vehicle, the refund will be calculated using the actual sales price paid by the lessor and includes the same additions as the "purchase price." Debts from other transactions as well as customer discounts, rebates, and incentives will be excluded.
Any additional options or modifications that were made by or for the manufacturer should also be included in the refund less a reasonable allowance for use of the vehicle and any damages that are not considered general “wear and tear.”
Generally, the formula for calculating the “reasonable allowance for use” is mileage up to the first repair + all miles over 25,000)/100,000 * purchase price
Towing costs and reasonable costs for a comparable rental vehicle that were incurred as a direct result of the defect or condition should also be included in the refund.
How Ronald S. Weiss, Attorney Can Help
If you do end up with a purchased or leased lemon vehicle in Ohio or Michigan, you can imagine the manufacturer is going to use every trick and tactic in their arsenal to keep you from prevailing in your request for replacement or refund. Obtaining the services of an experienced and knowledgeable attorney, from the beginning, can facilitate the process and help you obtain the best result possible. Moreover, they pay attorney fees, so you don't have to.
Ronald S. Weiss, Attorney has assisted many others like you, for decades, in their Lemon Law actions, and we stand ready to help you too. Contact us today if you believe your vehicle qualifies as a lemon or you have been given the runaround by the dealer or manufacturer. We even want to talk to you if your vehicle is close, but doesn't quite fit the requirements of the law.