Lemon law lawyers whose clients settled with car manufacturers through mediation before civil claims were filed are out of luck when it comes to getting those carmakers to pay attorney fees.
A Philadelphia judge has found the state’s Lemon Law does not provide for attorney fees in any context other than when civil claims are actually filed. Lemon law firm Kimmel & Silverman is now appealing to the Pennsylvania Superior Court.
Ambler, Pa.-based Kimmel & Silverman represented 17 purchasers of vehicles who looked to get reimbursement for, or replacement of, their defective vehicles under the Lemon Law as well as the Pennsylvania Unfair Trade Practices Act and the Magnuson-Moss Warranty Act. The law firm represented the vehicle owners on a “no-fee-to-be-paid-by-the-consumer basis,” Philadelphia Court of Common Pleas Judge Annette M. Rizzo said in Volkswagen Group of America v. Kimmel & Silverman.
Before the car owners could file civil claims under Section 1958 of the Lemon Law, they first are required under Section 1959 to participate in the manufacturers’ Informal Dispute Settlement Procedures. Through either a settlement with the manufacturer or an award from a neutral involved in the process, all of Kimmel & Silverman’s clients accepted a repurchase or replacement of their vehicles. No civil complaints were filed, Rizzo said in her November 2 opinion.
None of the IDSPs provide for attorney fees and none of Kimmel & Silverman’s clients were awarded fees in the process. The law firm obtained an assignment of rights from its clients to pursue additional claims not satisfied through IDSP. They acknowledged that the threshold question central to all of the cases was whether attorney fees incurred through IDSPs are recoverable under the Lemon Law.
Rizzo ultimately found that because Section 1958 expressly provides for attorney fees in civil suits and Section 1959 is silent on the issue of fees, the General Assembly did not intend for fees to be available in the IDSP process. Rizzo noted that Section 1959 does not reference attorney fees when outlining the remedies available to a consumer under the section.
Rizzo further examined the legislative intent behind the Lemon Law, noting discussions by legislators about the bill only broached the subject of attorney fees in the context of civil suits. Rizzo said indirect comments by the legislators indicated they didn’t envision lawyers being used in the IDSP process, which she said implied they didn’t think recovering attorney fees would be necessary.
Volkswagen Group of America, Nissan North America, Toyota Motor Sales and Kia Motors America were either parties or intervened in the case. They all argued the intent of Section 1959 and the IDSP process was to offer a “‘quick, expedient, cost-effective resolution for consumers,’” Rizzo said. The manufacturers argued they wouldn’t be willing to entertain the IDSP process if they also had to pay attorney fees.
Rizzo had to look to the federal lemon law, known as the Magnuson-Moss Warranty Act, as well as other state decisions for guidance on the issue.
Rizzo said the Federal Trade Commission, which enforces the MMWA, said in a 2005 advisory that the goal of IDSPs is to offer manufacturers a last-chance opportunity to remedy the situation before being subjected to damages and attorney fees.
“The FTC staff thus viewed IDSPs as beneficial to manufacturers because they could thereby avoid liability for attorneys’ fees and as beneficial to consumers because they could thereby obtain rapid relief at a relatively minor cost,” Rizzo said, acknowledging the federal statute doesn’t necessarily extend to the Lemon Law.
Rizzo further noted that Delaware and Florida have each recently ruled IDSPs do not provide for attorney fees through a separate civil action after the IDSP process.
The manufacturers and Kimmel & Silverman had differing views on who benefits more from the IDSP process. The automakers argued the process is consumer-friendly, requires car owners to fill out a simple form and is a nonbinding process on the consumer that allows them to proceed with a civil action if they are unhappy with the result even though the process is binding on the manufacturer.
Kimmel & Silverman argued that, because the manufacturers fund and operate the IDSPs, they have too much control over what the purchasers hear and what they are entitled to under the law. The law firm said the nonlawyer technical representatives the manufacturers send are “‘hired guns’” who specialize in pre-litigation matters.
Rizzo said the process issues the parties raise are better left for the legislature than the judiciary.
“This court finds that the plain words of Section 1959 of the Pennsylvania Lemon Law do not allow a consumer recovery of attorneys’ fees incurred through participation in a manufacturer’s [IDSP],” Rizzo said. “This interpretation is supported by the rationale behind the federal law on which the Lemon Law was based and by the decisions of courts in other states faced with a similar issue.”
In its statement of matters complained of on appeal, Kimmel & Silverman further argued Rizzo erred when she dismissed all 17 of its cases along with an 18th case brought by attorney David Gorberg in Ardmore, Pa. The firm argued it still had a right to continue on in the suit for remedies under the PUTPCPL.
Rizzo ruled, however, that the PUTPCPL is subsumed by the Lemon Law claims. The Lemon Law makes any violation of its provisions a per se violation of the PUTPCPL. Rizzo said the General Assembly viewed the two claims as being brought simultaneously and “presumably expected them to be resolved jointly” in the context of an IDSP. A contrary ruling would undermine the purpose of the IDSP as an efficient alternative to civil claims, Rizzo said.
Robert A. Rapkin of Kimmel & Silverman represented his firm in the case. Anne S. Burris of Lindabury, McCormick, Estabrook & Cooper in Philadelphia represented Volkswagen and Nissan. Heather R. Fine and Dennis P. Ziemba of Eckert Seamans Cherin & Mellott in Philadelphia represented Toyota and Kia.