Review of Lemon Law Arbitration Awards by Trial Court

Review of Lemon Law Arbitration Awards by Trial Court

Trial De Novo & Evidentiary Presumptions Under Lemon Law

Connecticut’s statutory framework regarding new automobile warranties has had much “traffic.” In common parlance, the statute is known as the Lemon Law.[1] The “Lemon” reference pertains to a motor vehicle. Judicial analysis of the Lemon Law has led to legislative changes regarding the review procedures of an arbitration award.

Brief Overview of Connecticut’s Lemon Law Legislation

In 1982, Connecticut made legislative history by pioneering the country’s first Lemon Law [Lemon Law I],[2] now codified at General Statutes § 42-179. For consumer buyers of new motor vehicles, the act provides supplemental remedies of repair, replacement and refund to facilitate the enforcement of express warranties made by the manufacturers of such vehicles. These supplemental remedies come into play whenever a manufacturer or authorized dealer, after a reasonable number of repair attempts, is unable substantially to conform a new vehicle to the terms of the express warranty.

In 1984, the legislature enacted Lemon Law II,[3] now codified as General Statutes §§ 42-181 through 42-184. The purpose of Lemon Law II is to provide, for consumer purchasers of new motor vehicles, an alternative to civil litigation. The key provision is § 42-181, which authorized the Department of Consumer Protection to establish an independent arbitration procedure for the settlement of disputes between consumers and manufacturers of motor vehicles which do not conform to all applicable warranties under the terms of § 42-179.

The Lemon Law allows a consumer to obtain a refund or a replacement if their motor vehicle meets the requisite statutory criteria. The law defines the meaning of a “Lemon.”[4] Once statutory prerequisites are met, a presumption that the motor vehicle has deficiencies is established for the consumer. The statutory relief is intended to be non-judicial, expeditious, and inexpensive. An attorney is not needed, although any party can appear with counsel.

Essentially, Lemon Law arbitration is an informal alternative dispute resolution proceeding. The statute does, however, permit a trial de novo subsequent to these informal proceedings. The written Lemon Law arbitration “decision”has an evidentiary presumption of correctness in the subsequent de novo judicial proceeding.

In order to qualify for relief under the Lemon Law, a motor vehicle must possess a “nonconformity.” The statute defines “nonconformity” as a condition that substantially impairs value, safety, or use. Basically, it establishes a defect, but obviously this statutory conclusion can be quite subjective. A Lemon Law arbitration panel is the one to decide if a nonconformity in the motor vehicle exists. If a qualified motor vehicle is found to be a statutory “Lemon,” a repurchase by the manufacturer or a new vehicle replacement is required.

A motor vehicle is also defined in the statute.[5] Not every vehicle on the highways falls within the statute. Recreational campers and heavy trucks do not, although the vast majority of consumer vehicles such as passenger cars, sports utility vehicles pickup trucks and motorcycles are covered.

The initial decision-maker in a conflict between a consumer and the automobile manufacturer is the Arbitration Panel. This structure was first created by legislative amendments to the Lemon Law in 1984. Before the Panel existed, there was no enforcement mechanism for the consumer, except litigation. The legal rights were created, but the remedy has to be obtained in court.

Connecticut’s statute provides for de novo review on “questions of law raised in the application.”[6] The court will also consider questions of fact raised, as well.[7] Under the statute, arbitrators are appointed by the Commissioner of Consumer Protection.[8] The Department may also refer the dispute to the American Arbitration Association.[9]

No Right to Jury Trial for Lemon Law Claims

In Motor Vehicle Manufacturer’s Ass’n v. O’Neill,[10] the Connecticut Supreme Court held that the manufacturer’s right to a jury trial, with a lemon law claim, had not been unconstitutionally denied. The manufacturers had claimed that the statutory arbitration procedures contained in CGS § 42-181(c) unconstitutionally deprived them of their right to trial by jury, in violation of Article First, § 19, of the Connecticut Constitution, which provides: “The right of trial by jury shall remain inviolate.” In determining whether a statutory cause of action must preserve the litigant’s right of access to a jury, Connecticut courts have regularly applied a historical test: would this cause of action have been triable to a jury prior to the constitution of 1818? If Lemon Law II were characterized as essentially an enhanced cause of action for breach of express warranties, then such Lemon Law claims could be triable to a jury. The Court, however, that that statute created a new cause of action that was essentially an equitable claim for specific performance or rescission and restitution, and thus no right to a jury trial or enforcement or defense of Lemon Law II claims existed.

De Novo Civil Proceedings

The Connecticut statute allows the consumer, if dissatisfied with the arbitration award, to initiate a de novo civil proceeding.[11] For the manufacturer, however, its de novo review is more limited, similar to a judicial review after a formal arbitration proceeding.[12]

The legal interpretations of a Lemon Law arbitration decision is a de novo review, and the factual findings are subject to the substantial evidence test; i.e., substantial evidence will be found to exist if the administrative records supplies a substantial basis of fact from which the court reasonably can infer the fact in issue. Nonetheless, the burden of proof is on the party challenging the award.[13]

Remedial Nature of Lemon Law

It should be noted that the Lemon Law is remedial in nature and is to be construed liberally in favor of those whom the legislature intended to benefit, in this case the consumer.[14]

Mandatory versus Consensual Arbitration

Since Lemon Law arbitrations are mandatory, more judicial intervention is permitted than if the arbitration was consensual, in which case minimal judicial intervention is permitted. Every reasonable presumption and intendment in a mandatory arbitration does not have to be indulged in favor of the award as it does in a consensual arbitration. In a consensual and unrestricted arbitration, as for the arbitrator’s decision of the legal questions, the court will not review such questions.

Although the O’Neill court found it unconstitutional that the consumer has more judicial opportunities available that the manufacturer, its analysis centered around the traditional scope of review depending upon whether the procedure is deemed to be compulsory versus voluntary arbitration.[15] The substantial evidence standard is inapposite in the context of consensual arbitration awards, because the use of that standard is statutorily prescribed for lemon law cases.[16] Indeed, the use of the substantial evidence standard, which permits judicial review that is broader than that traditionally available for Conn. Gen. Stat. § 52-418 review of voluntary arbitration awards, for the judicial review of awards that result from arbitration that is statutorily compelled, saves those statutes from constitutional jeopardy under clauses protecting rights to due process and access to the court.[17]

Administrative Standard Governs Judicial Review of Lemon Law Arbitration Panels

The Connecticut Supreme Court, in the 1989 O’Neill decision, concluded that the substantial evidence test that governs judicial review of the factual findings of an administrative agency pursuant to the Uniform Administrative Procedure Act[18] did not govern judicial review of the factual findings of an arbitration panel pursuant to Conn. Gen. Stat. § 42-181. In 1990, however, the legislature amended§ 42-181 to provide that the administrative standard governs judicial review of factual findings of lemon law arbitration panel.[19]

The substantial evidence standard is highly deferential and permits less judicial scrutiny than a clearly erroneous or weight of the evidence standard of review.[20] The substantial evidence rule is similar to the sufficiency of the evidence standard applicable in judicial review of jury verdicts.[21]

Judicial Review of Lemon Law Awards

Judicial review of lemon law arbitration awards is governed by Conn. Gen. Stat. § 42-181(c)(4), which provides in relevant part: “The court shall conduct a de novo review of the questions of law raised in the application. … In reviewing questions of fact, the court shall uphold the award unless it determines that the factual findings of the arbitrators are not supported by substantial evidence in the record. …” Pursuant to this test, a reviewing court must determine whether there is substantial evidence in the record to support the arbitrators’ findings of fact and whether the conclusions drawn from those facts are reasonable.[22]

Moreover, in determining whether an arbitration panel’s finding is supported by substantial evidence, a court must defer to the arbitration panel’s right to believe or disbelieve the evidence presented by any witness, even an expert, in whole or in part.[23] This limited standard of review dictates that, with regard to questions of fact, it is neither the function of the trial court nor of the appellate court to retry the case or to substitute its judgment for that of the arbitration panel.[24]

In General Motors Corp. v. Dohmann,[25] the Connecticut Supreme Court reviewed the factual record to determine if substantial evidence supported the arbitration board’s decision. That review is more limited, and by statute the Connecticut Legislature tied judicial review of lemon law arbitration decisions to the same standard as an administrative agency. A Connecticut de novo review is not a trial de novo. The court will simply determine whether there is a basis for the factual findings and it will not substitute its judgment for that of the arbitration board. The law does provide, however, that questions of law are determined de novo by the court. Since an arbitration board is not a legally trained body, any issue of law must be determined by a court.

1

[1] The “Lemon Law” is a nickname for Connecticut General Statute Chapter 743b, “Automobile Warranties.”

[2] Public Acts 1982, No. 82-287.

[3] Public Acts 1984, No. 84-338.

[4] CGS § 42-179(b).

[5] “Motor vehicle” means a passenger motor vehicle, a passenger and commercial motor vehicle or a motorcycle, as defined in CGS § 14-1, which is sold or leased in Connecticut. CGS § 42-179(a)(2). This section was amended in 1997 to specifically include “motorcycle,” after the Connecticut Supreme Court decision the previous year, which held that motorcycles were not covered by the Lemon Law. SeeCagiva N. Am. v. Schenk, 239 Conn. 1 (1996).

[6]Conn. Gen. Stat. § 42-181(c)(4).

[7] The statute provides, “the court shall uphold the award unless it determines that the factual findings of the arbitrators are not supported by substantial evidence in the record and that the substantial rights of the moving party have been prejudiced.” Conn. Gen. Stat. § 42-181(c)(4).

[8]Conn. Gen. Stat. § 42-181(a).

[9]Conn. Gen. Stat. § 42-181(a).

[10]212 Conn. 83 (1989).

[11] CGS § 42-181(f).

[12]See CGS § 42-181(f); CGS §§ 42-179(i), 42-181(c)(4), 52-417 to 52-420.

[13]General Motors Corp. v. Garito, 1997 Conn. Super. LEXIS 3413.

[14]SeeChrysler Corp. v. Maiocco, 209 Conn. 579, 595-96 (1989).

[15]212 Conn. 83, 96-97 (1989).

[16] CGS § 42-181(c)(4).

[17]O’Neill,supra, 212 Conn. 83, 94 (1989); see alsoChmielewski v. Aetna Casualty & Surety Co., 218 Conn. 646 660-663 (1991) (factual determinations in compulsory arbitration in uninsured motorist cases pursuant to CGS § 38 -175c to be reviewed under substantial evidence standard applicable to factual determinations by administrative agencies).

[18] CGS § 4-166 et seq.

[19]See Public Acts 1990, No. 90-8, § 1; see also 33 H.R. Proc., Pt 4, 1990 Sess., p. 1065.

[20]Jim’s Auto Body v. Commissioner of Motor Vehicles, 285 Conn. 794, 817 (2008).

[21]DaimlerChrysler Corp. v. Allard, 272 Conn. 1, 6 (2004).

[22]Connecticut Light & Power Co. v. Dept. of Public Utility Control, 216 Conn. 627, 639 (1990).

[23]Chmielewski v. Aetna Casualty & Surety Co., 218 Conn. 646, 660-61 n.15 (1991).

[24]New England Cable Television Assn., Inc. v. Dept. of Public Utility Control, 247 Conn. 95, 117-18 (1998).

[25] 247 Conn. 274 (1998).