Last year we reported on a case pending in one of the appellate courts in Ohio involving the definition of a new motor vehicle and delivery date under the Ohio Lemon Law. In the case of Curl v. Volkswagen, a dealership purchased a Volkswagen Beetle in July of 2001 and took title. The vehicle was then used by the dealership as a rental vehicle for the next 11 months and driven for over 10,000 miles. The vehicle was then subsequently sold to Plaintiff, Mr. Curl in June of 2002. In August of 2002, the Plaintiff began to experience problems with the vehicle and took it into the dealership. It was then out of service for more than 30 days. Plaintiff then filed a complaint alleging that since the vehicle was out of service for more than 30 days in the first year or 18,000 miles of delivery to him, the vehicle was presumed to be a lemon. Volkswagen argued that the vehicle was out of the one-year presumption period. The Ohio appellate court ruled in favor of the plaintiff, ruling that the statutory presumption period of one year or 18,000 miles under Ohio’s Lemon law did not begin to run until Mr. Curl actually took title of the vehicle. In so ruling, the court ruled that the delivery date of the vehicle was the date that the vehicle was delivered to a consumer. Because the dealership was not a consumer, the presumption period did not begin to run until the first consumer, i.e., Mr. Curl, actually purchased the vehicle.
The court also found in favor of the plaintiff on his implied warranty claim ruling that privity was not required in a claim for breach of implied warranty against the manufacturer. However, the Ohio Supreme Court reversed the appellate court and has now provided a clear decision regarding both the privity requirement in an implied warranty of merchantability claim and the statutory definition of a new vehicle.
First, with regard to the implied warranty of merchantability claim, the Court stated that Ohio law dictates purchasers of automobiles may assert a contract claim for breach of implied warranty of merchantability, pursuant to the Magnuson-Moss Warranty Act, only against parties with whom they are in privity of contract. Thus, the Court has reversed a recent trend of cases suggesting that a manufacturer could be held liable even if it was not in privity with a consumer. Under this new decision, it is clear that when a party brings claims arising out of a purchase of an automobile, the claim of implied warranty of merchantability will not be able to be presented against the manufacturer, unless, of course, the manufacturer sold the vehicle directly to the plaintiff. This is an important decision from the standpoint that it eliminates one of the potential causes of action that has been raised against manufacturers over the last several years.
Second, the Supreme Court also interpreted the term new vehicle as used in the Lemon Law statute. The Court cleared up the issue and defined new motor vehicle as a vehicle within the period of one year or 18,000 miles of operation following the date of its original delivery, whichever occurs earlier. Thus, for purposes of the Lemon Law, the statutory presumption period will begin to run from the date of its original delivery. In this case, the Court determined the date of delivery was the date when the dealership placed the vehicle into service in the dealership’s rental fleet.
A word of caution, this does not mean that each time a vehicle is delivered to a dealership solely for the purpose of resale, that the original delivery date will be the date it was delivered to the lot. The difference in this case was that the vehicle was being used by the dealership for a period of time and the warranty was in effect. Thus, if a vehicle is delivered to the dealership and is not being used as a service vehicle or a rental vehicle, but it is merely sitting on the lot waiting to be resold, the original delivery date will still be the date it is sold to the first purchaser of the vehicle.
If you would like a copy of the decision or have any questions involving product liability exposures in Ohio or Kentucky, feel free to call one of our products liability practice area leaders.