Lemon Law lawyers have struck out for the second time when it comes to getting attorney fees for the representation of clients who settled with car manufacturers before filing a civil suit.
The Pennsylvania Superior Court upheld a ruling by the Philadelphia Court of Common Pleas finding the Lemon Law only provides for manufacturers to pay attorney fees as a result of a civil suit, not under the pre-suit mediation process known as Informal Dispute Settlement Procedures.
Lemon Law firm Kimmel & Silverman sought redress after the firm represented 17 purchasers in the IDSP process at no cost to its clients.
"While K&S attempts to argue that the legislative intent behind the Lemon Law is to provide for a right to attorney fees at every stage of the Lemon Law process, the plain language of the Lemon Law includes provisions for recovery of reasonable attorney fees only where a purchaser files a civil action," Senior Judge Eugene B. Strassburger III said for the three-judge panel in Volkswagen Group of America v. Kimmel & Silverman.
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 and Consumer Protection Law 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 had said in her November 2, 2012, opinion in the case.
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' IDSP. 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.
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 filed 17 individual cases in the Philadelphia Court of Common Pleas and Volkswagen filed a separate declaratory judgment action seeking a ruling on whether Kimmel & Silverman had viable claims of violations of the Lemon Law.
Volkswagen, 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 had said. The manufacturers argued they wouldn't be willing to entertain the IDSP process if they also had to pay attorney fees.
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 consumers 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, according to Rizzo's opinion.
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 prelitigation matters, according to Rizzo's opinion.
Strassburger said the 17 purchasers Kimmel & Silverman represented were made whole by their IDSP settlements. Therefore, there were no remaining rights to assign to Kimmel & Silverman, the judge said.
The panel then looked at Kimmel & Silverman's claims under the Pennsylvania Unfair Trade Practices and Consumer Protection Law. The Lemon Law, Strassburger said, provides that a violation of the Lemon Law is a per se violation of the UTPCPL. But the judge noted the UTPCPL limits recovery to purchasers of goods who suffer loss of money or property as a result of unfair trade practices. Strassburger said Kimmel & Silverman was neither a purchaser nor lessor of the defective automobiles and therefore lacks standing to bring a UTPCPL claim against the manufacturers.
Judges Jack A. Panella and Judith F. Olson joined Strassburger on the panel.
David Gorberg of David J. Gorberg & Associates also joined in the case with Kimmel & Silverman as he represented one purchaser in a similar situation to Kimmel & Silverman's clients. He didn't return a call for comment.
Robert A. Rapkin of Kimmel & Silverman represented his firm in the case.
"We are obviously disappointed with the decision; however, our firm will continue to zealously advocate for consumers' rights in all aspects of litigation, including the [Better Business Bureau Auto Line Program] and [the National Center for Dispute Settlement], under the fee-shifting provisions of the consumer protections laws," Rapkin said.
Anne S. Burris of Lindabury, McCormick, Estabrook & Cooper in Philadelphia represented Volkswagen and Nissan and did not return a call for comment. Heather R. Fine and Dennis P. Ziemba of Eckert Seamans Cherin & Mellott in Philadelphia represented Toyota and Kia. They declined to comment.
(Copies of the nine-page opinion in Volkswagen Group of America v. Kimmel & Silverman, PICS No. 13-2181, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •