Montana Lemon Law

Montana Lemon Law 61-4-501.

Definitions.

For purposes of this part, the following definitions apply:

1. “Collateral charge” means all governmental charges, including but not limited to sales tax, property tax, license and registration fees, and fees in lieu of tax.
2. “Consumer” means the purchaser, other than for purposes of resale, of a motor vehicle that has not been brought into nonconformity as the result of abuse, neglect, or unauthorized modifications or alterations by the purchaser, any person to whom the motor vehicle is transferred during the duration of an express warranty applicable to the motor vehicle, or any other person entitled by the terms of the warranty to the benefits of its provisions.
3. “Incidental damage” means incidental and consequential damage as defined in 30-2-715.
4. “Manufacturer” has the meaning applied to that word in 61-4-201.
5. “Motor vehicle” means a vehicle, including the nonresidential portion of a motor home as defined in 61-1-130, propelled by its own power, designed primarily to transport persons or property upon the public highways, and sold in this state. The term does not include a truck with 10,000 pounds or more gross vehicle weight rating or a motorcycle as defined in 61-1-105. Motor vehicle does not include components, systems, fixtures, appliances, furnishings, accessories, and features that are designed, used, and maintained primarily for residential purposes.
6. “Reasonable allowance for use” is an amount directly attributable to use of the motor vehicle by the consumer and any previous consumers prior to the first written notice of the nonconformity to the manufacturer or its agent and during any subsequent period when the vehicle is not out of service because of nonconformity. The reasonable allowance for use shall be computed by multiplying the total contract price of the vehicle by a fraction having as its denominator 100,000 and having as its numerator the number of miles that the vehicle traveled prior to the manufacturer’s acceptance of its return.
7. “Warranty period” means the period ending 2 years after the date of the original delivery to the consumer of a new motor vehicle or during the first 18,000 miles of operation, whichever is earlier.

History: En. Sec. 1, Ch. 144, L. 1983; amd. Sec. 1, Ch. 744, L. 1985; amd. Sec. 2, Ch. 300, L. 1991.Montana Lemon Law 61-4-502. Notice — warranty enforceable after warranty period — when.

1. If a consumer notifies in writing the manufacturer or its agent during the warranty period that a new motor vehicle does not conform to all applicable express warranties, the repairs necessary to conform the new motor vehicle to the express warranties shall be made by or at the expense of the warrantor, regardless of the expiration of the warranty period after notification of nonconformity is given by the consumer.
2. The warranty period of an express warranty is extended to equal the time that repair services are not available because of war or invasion or because of strike or fire, flood, or other natural disaster. The presumption provided herein may not apply against a manufacturer who has not received prior written notification from or on behalf of the consumer and has not had an opportunity to cure the alleged defect.
3. The manufacturer must clearly and conspicuously disclose to the consumer in the warranty or owner’s manual that written notification of a nonconformity is required before a consumer may be eligible for a refund or replacement of the vehicle. The manufacturer must include with the warranty or owner’s manual the name and address where the written notification must be sent.

History: (1)En. Sec. 2, Ch. 144, L. 1983; (2)En. Sec. 5, Ch. 144, L. 1983; amd. Sec. 2, Ch. 744, L. 1985.Montana Lemon Law 61-4-503. Replacement for nonconformity to warranty.

1. If after a reasonable number of attempts the manufacturer or its agent or authorized dealer is unable, during the warranty period, to conform the new motor vehicle to any applicable express warranty by repairing or correcting any defect or condition that substantially impairs the use and market value or safety of the motor vehicle to the consumer, the manufacturer shall replace it with a new motor vehicle of the same model and style and of equal value, unless for reasons of lack of availability such replacement is impossible, in which case the manufacturer shall replace it with a vehicle of comparable market value.
2. As an alternative to replacement, the manufacturer may accept return of the new motor vehicle from the consumer upon refund to him of the full purchase price, plus reasonable collateral charges and incidental damages, less a reasonable allowance for the consumer’s use of the motor vehicle. The refund shall be paid to the consumer and to a lienholder, if any, in proportion to their interests.

History: En. Sec. 3, Ch. 144, L. 1983; amd. Sec. 3, Ch. 744, L. 1985.Montana Lemon Law 61-4-504. Reasonable number of attempts — presumption.

A reasonable number of attempts to conform a new motor vehicle to the applicable express warranties is presumed to have been made for purposes of 61-4-503(1) if:

1. the same nonconformity has been subject to repair four or more times by the manufacturer or its agent or authorized dealer during the warranty period but the nonconformity continues to exist; or
2. the vehicle is out of service because of nonconformity for a cumulative total of 30 or more business days during the warranty period after notification of the manufacturer, agent, or dealer.

History: En. Sec. 4, Ch. 144, L. 1983.

Montana Lemon Law 61-4-505. Dealer exemption — liability to manufacturer.

1. Nothing in this part imposes any liability on a dealer or creates a cause of action by a consumer against a dealer under 61-4-503.
2. A dealer is not liable to a manufacturer for any refunds or vehicle replacements in the absence of evidence indicating that repairs made by the dealer were carried out in a manner inconsistent with the manufacturer’s instructions.

History: En. Sec. 8, Ch. 144, L. 1983; amd. Sec. 4, Ch. 744, L. 1985.Montana Lemon Law 61-4-506. Provisions nonexclusive — applicability of U.C.C. — defenses.

1. The provisions of this part do not limit the rights or remedies available to a consumer under any other law.
2. All express warranties arising from the sale of a new motor vehicle are subject to the provisions of Title 30, chapter 2, part 3.
3. It is an affirmative defense to a claim brought under this part that an alleged 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 modification or alteration of a motor vehicle by the consumer.

History: En. Sec. 6, Ch. 144, L. 1983; amd. Sec. 5, Ch. 744, L. 1985.Montana Lemon Law 61-4-507. Exhaustion of remedies under federal law.

The provisions of 61-4-503 are not applicable against a manufacturer who has established an informal dispute settlement procedure certified by the department of commerce to be in substantial compliance with the provisions of Title 16, Code of Federal Regulations, part 703, as those provisions read on October 1, 1983, unless the consumer has first resorted to that procedure without satisfaction. History: En. Sec. 7, Ch. 144, L. 1983; amd. Sec. 6, Ch. 744, L. 1985.

Montana Lemon Law 61-4-508 through 61-4-510 reserved.Montana Lemon Law 61-4-511. Manufacturer’s dispute settlement procedure — certification — prohibited contents.

1. A manufacturer who has established an informal dispute settlement procedure under the provisions of Title 16, Code of Federal Regulations, part 703 (16 CFR, part 703), as those provisions read on October 1, 1983, shall submit a copy of the procedure to the department of commerce. The department of commerce shall issue a certificate of approval to a manufacturer whose procedure complies in all respects with such federal regulations and subsection (2). The department of commerce shall report to the department of justice all manufacturer’s procedures certified. The department of commerce may issue subpoenas requiring the attendance of witnesses and the production of records, documents, or other evidence necessary to it in an investigation related to the certification of a manufacturer’s informal dispute settlement procedure.
2. A manufacturer’s informal dispute settlement procedure must afford the consumer or his representative an opportunity to appear and present evidence in Montana at a location reasonably convenient to the consumer and, further, may not include any practices that:
   1. delay a decision in any dispute beyond 60 days after the date on which the consumer initially resorts to the dispute settlement procedure;
   2. delay performance of remedies awarded in a settlement beyond 10 days after a decision, except that a manufacturer may have 30 days following the date of decision to replace a motor vehicle or make refund to the consumer as provided in 61-4-503;
   3. require the consumer to make the vehicle available for inspection by a manufacturer’s representative more than once;
   4. fail to consider in decisions any remedies provided by this part; or
   5. require the consumer to take any action or assume any obligation not specifically authorized under the federal regulations referred to in subsection (1).

History: En. Sec. 7, Ch. 744, L. 1985; amd. Sec. 13, Ch. 503, L. 1985.Montana Lemon Law 61-4-512. Annual audit — revocation or suspension of certification.

1. A manufacturer establishing an informal dispute resolution procedure shall file with the department of commerce a copy of the annual audit required under Title 16, Code of Federal Regulations, part 703 (16 CFR, part 703), as those provisions read on October 1, 1983, along with any additional information the department of commerce may require, including the number of refunds and replacements made by the manufacturer during the period audited.
2. The department of commerce may, after notice and hearing as provided in Title 2, chapter 4, suspend or revoke the certification of a manufacturer’s informal dispute resolution procedure upon a finding that the procedure is being used to create hardship to consumers. The department of commerce shall notify the department of justice of any revocation or suspension of a certification. The department of justice may consider the revocation or suspension in licensing manufacturers under Title 61, chapter 4, part 2.

History: En. Sec. 8, Ch. 744, L. 1985; amd. Sec. 13, Ch. 503, L. 1985.Montana Lemon Law 61-4-513 and 61-4-514 reserved.Montana Lemon Law 61-4-515. Arbitration procedure.

1. The department of commerce shall provide an independent forum and arbitration procedure for the settlement of disputes between consumers and manufacturers of motor vehicles that do not conform to all applicable warranties under the provisions of this part. The procedure must conform to Title 27, chapter 5. All arbitration shall take place in Montana at a place reasonably convenient to the consumer.
2. Except as provided in 61-4-520, a consumer owning a motor vehicle that fails to conform to all applicable warranties may bring a grievance before an arbitration panel only if the manufacturer of the motor vehicle has not established an informal dispute settlement procedure which has been certified by the department of commerce under 61-4-511.

History: En. Sec. 10, Ch. 744, L. 1985; amd. Sec. 23, Ch. 744, L. 1985.Montana Lemon Law 61-4-516. Composition of arbitration panel.

An arbitration panel hearing a grievance under this part must consist of three members. One member must be chosen by the consumer, one member must be chosen by the manufacturer, and one member must be chosen by mutual agreement of the parties. The department of commerce may maintain a list of persons willing to serve on panels from which the third member may be chosen. History: En. Sec. 11, Ch. 744, L. 1985.

Montana Lemon Law 61-4-517. Implementation of arbitration.

1. A consumer may initiate a request for arbitration by filing a notice with the department of commerce. The consumer shall file, on a form prescribed by the department of commerce, any information considered relevant to the resolution of the dispute and shall return the form, along with a $50 filing fee, within 5 days after receiving it. The complaint form must offer the consumer the choice of presenting any subsequent testimony orally or in writing, but not both.
2. The department of commerce shall determine whether the complaint alleges the violation of any applicable warranty under this part. If the department of commerce determines that a complaint does not allege a warranty violation, it must refund the filing fee.
3. Upon acceptance of a complaint, the department of commerce shall notify the manufacturer of the filing of a request for arbitration and shall obtain from the manufacturer, on a form prescribed by the department of commerce, any information considered relevant to the resolution of the dispute. The manufacturer must return the form within 15 days of receipt, with a filing fee of $250.
4. Fees collected under this section shall be deposited in a special revenue fund for the use of the department of commerce in administering this part.
5. The manufacturer’s fee provided in subsection (3) is due only if the department of commerce arbitration procedures are utilized.

History: En. Sec. 12, Ch. 744, L. 1985.Montana Lemon Law 61-4-518. Arbitration — role of department of commerce — expert.

1. The department of commerce shall investigate, gather, and organize all information necessary for a fair and timely decision in each dispute. The department of commerce may, on behalf of the arbitration panel, issue subpoenas to compel the attendance of witnesses and the production of documents, papers, and records relevant to the dispute.
2. If requested by the panel, the department of commerce may forward a copy of all written testimony and documentary evidence to an independent technical expert certified by the national institute of automotive excellence. The expert may review the material and be available to advise and consult with the panel. The expert may sit as a nonvoting member of the panel whenever oral testimony is presented. The department of justice may suggest an expert at the request of the department of commerce.

History: En. Sec. 13, Ch. 744, L. 1985; amd. Sec. 13, Ch. 503, L. 1985.Montana Lemon Law 61-4-519. Action by arbitration panel — decision.

1. The arbitration panel shall, as expeditiously as possible, but not later than 60 days after the department of commerce has accepted a complaint, render a fair decision based on the information gathered and disclose its findings and its reasoning to the parties.
2. The decision shall provide appropriate remedies, including but not limited to:
   1. repair of the vehicle;
   2. replacement of the vehicle with an identical vehicle or a comparable vehicle acceptable to the consumer;
   3. refund as provided in 61-4-503 (2);
   4. any other remedies available under the applicable warranties or 15 U.S.C. 2301 through 2312, as in effect on October 1, 1983; or
   5. reimbursement of expenses and costs to the prevailing party.
3. The decision shall specify a date for performance and completion of all awarded remedies. The department of commerce shall contact the prevailing party within 10 working days after the date for performance to determine whether performance has occurred. The parties shall act in good faith in abiding by any decision. In addition, if the decision is not accepted, the parties shall follow the provisions of Title 27, chapter 5. If it is determined by the court that the appellant has acted without good cause in bringing an appeal of an award, the court, in its discretion, may grant to the respondent his costs and reasonable attorney fees.

Montana Lemon Law 61-4-520. Nonconforming procedure — arbitration de novo.

A consumer injured by the operation of any procedure that does not conform with procedures established by a manufacturer pursuant to 61-4-511 and the provisions of Title 16, Code of Federal Regulations, part 703, as in effect on October 1, 1983, may appeal any decision rendered as the result of such a procedure by requesting arbitration de novo of the dispute by a department of commerce panel. Filing procedures and fees for appeals must be the same as those required in 61-4-515 through 61-4-517. The findings of the manufacturer’s informal dispute settlement procedure are admissible in evidence at the department of commerce arbitration panel hearing and in any civil action arising out of any warranty obligation or matter related to the dispute. History: En. Sec. 16, Ch. 744, L. 1985.

Montana Lemon Law 61-4-521 through 61-4-524 reserved.Montana Lemon Law 61-4-525. Notice on resale of replaced vehicle.

A motor vehicle which is returned to the manufacturer and which requires replacement or refund may not be sold in the state without a clear and conspicuous written disclosure of the fact that the vehicle was returned. The department of justice may prescribe by rule the form and content of the disclosure statement and a procedure by which the disclosure may be removed upon a determination that the vehicle is no longer defective. History: En. Sec. 9, Ch. 744, L. 1985; amd. Sec. 13, Ch. 503, L. 1985.

Montana Lemon Law 61-4-526. Records of disputes.

The department of commerce shall maintain records of each dispute as it determines, including an index of disputes by brand name and model. The department of commerce shall, at intervals of no more than 6 months, compile and maintain statistics indicating the record of compliance with arbitration decisions and the number of refunds or replacements awarded. A copy of the statistical summary must be filed with the department of justice and must be considered by it in determining the issuance of any manufacturer license required under Title 61, chapter 4, part 2. History: En. Sec. 15, Ch. 744, L. 1985; amd. Sec. 13, Ch. 503, L. 1985.

Montana Lemon Law 61-4-527 through 61-4-530 reserved.Montana Lemon Law 61-4-531. Nondelegable.

The liabilities and obligations contained in this part may not be delegated or assigned to or assumed by any other person or entity.

Montana Lemon Law 61-4-532. Rulemaking.

The department of commerce may adopt rules to implement the provisions of this part. History: En. Sec. 18, Ch. 744, L. 1985.

Montana Lemon Law 61-4-533. Penalty.

A violation of any provision of this part is an unfair or deceptive trade practice under Title 30, chapter 14, part 2, and the penalties provided in 30-14-224(1) apply.

The Magnuson-Moss Warranty Act

The Magnuson-Moss Warranty Act is a Federal Law that protects the buyer of any product which costs more than $25 and comes with an express written warranty. This law applies to any product that you buy that does not perform as it should.

Your car is a major investment, rationalized by the peace of mind that flows from its expected dependability and safety. Accordingly, you are entitled to expect an automobile properly constructed and regulated to provide reasonably safe, trouble-free, and dependable transportation – regardless of the exact make and model you bought. Unfortunately, sometimes these principles do not hold true and defects arise in automobiles. Although one defect is not actionable, repeated defects are as there exists a generally accepted rule that unsuccessful repair efforts render the warrantor liable. Simply put, there comes a time when “enough is enough” – when after having to take your car into the shop for repairs an inordinate number of times and experiencing all of the attendant inconvenience, you are entitled to say, ‘That’s all,’ and revoke, notwithstanding the seller’s repeated good faith efforts to fix the car. The rationale behind these basic principles is clear: once your faith in the vehicle is shaken, the vehicle loses its real value to you and becomes an instrument whose integrity is impaired and whose operation is fraught with apprehension. The question thus becomes when is “enough”?

As you know, enough is never enough from your warrantor’s point of view and you should simply continue to have your defective vehicle repaired – time and time again. However, you are not required to allow a warrantor to tinker with your vehicle indefinitely in the hope that it may eventually be fixed. Rather, you are entitled to expect your vehicle to be repaired within a reasonable opportunity. To this end, both the federal Moss Warranty Act, and the various state “lemon laws,” require repairs to your vehicle be performed within a reasonable opportunity.

Under the Magnuson-Moss Warranty Act, a warrantor should perform adequate repairs in at least two, and possibly three, attempts to correct a particular defect. Further, the Magnuson-Moss Warranty Act’s reasonableness requirement applies to your vehicle as a whole rather than to each individual defect that arises. Although most of the Lemon Laws vary from state to state, each individual law usually require a warrantor to cure a specific defect within four to five attempts or the automobile as a whole within thirty days. If the warrantor fails to meet this obligation, most of the lemon laws provide for a full refund or new replacement vehicle. Further, this reasonable number of attempts/reasonable opportunity standard, whether it be that of the Magnuson-Moss Warranty Act or that of the Lemon Laws, is akin to strict liability – once this threshold has been met, the continued existence of a defect is irrelevant and you are still entitled to relief.

One of the most important parts of the Magnuson-Moss Warranty Act is its fee shifting provision. This provision provides that you may recover the attorney fees incurred in the prosecution of your case if you are successful – independent of how much you actually win. That rational behind this fee shifting provision is to twofold: (1) to ensure you will be able to vindicate your rights without having to expend large sums on attorney’s fees and (2) because automobile manufacturers are able to write off all expenses of defense as a legitimate business expense, whereas you, the average consumer, obviously does not have that kind of economic staying power. Most of the Lemon Laws contain similar fee shifting provisions.

You may also derive additional warranty rights from the Uniform Commercial Code; however, the Code does not allow you in most states to recover your attorney fees and is also not as consumer friendly as the Magnuson-Moss Warranty Act or the various state lemon laws.

The narrative information on Magnuson-Moss, UCC and Montana lemon laws on these pages is provided by Marshall Meyers, attorney.

Uniform Commercial Code Summary

The Uniform Commercial Code or UCC has been enacted in all 50 states and some of the territories of the United States. It is the primary source of law in all contracts dealing with the sale of products. The TARR refers to Tender, Acceptance, Rejection, Revocation and applies to different aspects of the consumer’s “relationship” with the purchased goods.

TENDER –The tender provisions of the Uniform Commercial Code contained in Section2-601 provide that the buyer is entitled to reject any goods that fail in any respect to conform to the contract. Unfortunately, new cars are often technically complex and their innermost workings are beyond the understanding of the average new car buyer. The buyer, therefore, does not know whether the goods are then conforming.

ACCEPTANCE –The new car buyer accepts the goods believing and expecting that the manufacturer will repair any problem he has with the goods under the warranty.

REJECTION –The new car buyer may discover a problem with the vehicle within the first few miles of his purchase. This would allow the new car buyer to reject the goods. If the new car buyer discovers a defect in the car within a reasonable time to inspect the vehicle, he may reject the vehicle. This period is not defined. On the one hand, the buyer must be given a reasonable time to inspect and that reasonable time to inspect will be held as an acceptance of the vehicle. The Courts will decide this reasonable time to inspect based on the knowledge and experience of the buyer, the difficulty in discovering the defect, and the opportunity to discover the defect. The following is an example of a case of rejection: Mr. Zabriskie purchase a new 1966 Chevrolet Biscayne. After picking up the car on Friday evening, while en route to his home 2.5 miles away, and within 7/10ths of a mile from the dealership, the car stalled and stalled again within 15 feet. Thereafter, the car would only drive in low gear. The buyer rejected the vehicle and stopped payment on his check. The dealer contended that the buyer could not reject the car because he had driven it around the block and that was his reasonable opportunity to inspect. The New Jersey Court said;

It is suggested that Courts will tend to excuse use by consumers if possible.

REVOCATION –What happens when the consumer has used the new car for a lengthy period of time? This is the typical lemon car case. The UCC provides that a buyer may revoke his acceptance of goods whose non-conformity substantially impairs the value of the goods to him when he has accepted the goods without discovery of a non-conformity because it was difficult to discover or if he was assured that non-conformities would be repaired. Of course, the average new car buyer does not learn of the nonconformity until hundreds of thousands of miles later. And because quality is job one, and manufacturers are competing on the basis of their warranties, the consumer always is assured that any noncomformities he does discover will be remedied. What is a noncomformity substantially impairing the value of the vehicle?

1. A noncomformity may include a number of relatively minor defects whose cumulative total adds up to a substantial impairment. This is the “Shake Faith” Doctrine first stated in the Zabrisikie case. “For a majority of people the purchase of a new car is a major investment, rationalized by the peace of mind that flows from its dependability and safety. Once their faith is shaken, the vehicle loses not only its real value in their eyes, but becomes an instrument whose integrity is substantially impaired and whose operation is fraught with apprehension”.
2. A substantial noncomformity may include a failure or refusal to repair the goods under the warranty. In Durfee V. Rod Baxter Imports, the Minnesota Court held that the Saab owner that was plagued by a series of of annoying minor defects and stalling, which were never repaired after a number of attempts, could revoke, “if repairs are not successfully undertaken within a reasonable time”, the consumer may elect to revoke.
3. Substantial Non Conformity and Lemon Laws often define what may be considered a substantial impairment. These definitions have been successfully used to flesh out the substantial impairment in the UCC.

Additional narrative information on Magnusson-Moss, UCC and Montana lemon laws on these pages is provided by T. Michael Flinn, attorney.