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A Westchester, N.Y., Supreme Court justice has joined what appears to be a growing majority of trial courts in New York state in holding that the federal Magnuson-Moss Warranty Act applies not only to automobiles purchased outright but also to those that are leased. In so holding, Justice Barbara Gunther Zambelli disagreed with a decision by her Westchester County Supreme Court colleague Justice John P. DiBlasi, who ruled earlier this year that the Magnuson-Moss Act did not apply to auto leases. And in a matter of first impression, Zambelli also ruled that the car dealer may not disclaim the implied warranty given to the consumer by the manufacturer in cases where an agency relationship has been created by the conduct of the car maker and the dealership. In Tarantino v. DaimlerChrysler Corp., 03074, Zambelli disagreed with one of her Westchester County colleagues and sided with courts in New York, Kings and Suffolk counties in saying that the federal consumer-protection law covered people who leased their cars. Under the Magnuson-Moss Warranty Act, the seller of consumer goods creates an implied warranty that the items are merchantable. If the goods do not function properly, and repairs are not made, the buyer may receive damages, costs, fees and expenses from the seller. DaimlerChrysler, which has been the defendant in five similar cases decided this year, has argued that leased vehicles are not the subject of an actual “sale” within the meaning of the federal law. The Magnuson-Moss claims are being litigated in state courts as opposed to federal because the cases also allege violations of the state Uniform Commercial Code and General Business Law. Zambelli said that “[j]udicial authority both within New York and from other jurisdictions is far from conclusive on this issue,” but that the legislative history of the act indicates THAT its framers would have intended it to apply to auto leasing transactions. INTENT OF LEGISLATION “The Magnuson-Moss Warranty Act was, in fact, directed at car manufacturers and their performance under new car warranties,” Zambelli said. Moreover, the characteristics of the lease transaction are so similar to those of a sale that “it [is] squarely within the realm of an ownership equivalent for the duration of the lease term.” The modern auto lease, she said, is promoted by manufacturers and dealers and viewed by consumers as “an alternate means of financing a new vehicle.” Zambelli said that leases with or without an option to buy at the end of the lease term were akin to sales. On that point, Zambelli’s holding is broader than that of Justice Walter B. Tolub in August, who, in DiCintio v. DaimlerChrysler, NYLJ (Supreme Ct. New York Co.), said that leases with options to buy are similar to sales. OTHER COURTS DiBlasi, in Miceli v. DaimlerChrysler Corp., 19188/99 (June 23, 2000), ruled that the language of the federal consumer protection law limited its force and effect to cases where consumer goods were sold. But Zambelli emphasized the relationship between car dealers and buyers, pointing out that few consumers would choose to lease a vehicle “in lieu of a purchase with knowledge that in doing so he would be waiving the statutory protections which apply to a purchaser of the same new vehicle.” Earlier this year, courts in Kings County, Carter-Wright v. DaimlerChrysler Corp., and Suffolk County, Beyer v. DaimlerChrysler Corp., 00-1065 also held that the federal law applies to auto leases. In another holding in Tarantino — this one of first impression — Zambelli said that because the auto dealer also gave the consumer a written warranty, it could not disclaim the warranty implied under the Magnuson-Moss Act. But the plaintiffs must prove that the dealership, Westchester Chrysler Plymouth Jeep Eagle Inc., acted as an agent of the car manufacturer, DaimlerChrysler Corp. If such an agency relationship existed, then both the manufacturer and dealer are in privity of contract with the consumer plaintiff. Douglas R. Hirsch, of Sadis & Goldberg in Manhattan, is the plaintiff’s lawyer in the case. Paul A. Feigenbaum and Keith B. Rose of Couch White in Albany, N.Y., are defense counsel for DaimlerChrysler and Westchester Chrysler.

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