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HF 1199

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Bill Text Versions

Engrossments
Introduction Posted on 02/21/2005

Current Version - as introduced

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A bill for an act
relating to commerce; extending the motor vehicle
lemon law to include motor boats; amending Minnesota
Statutes 2004, section 325F.665.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2004, section 325F.665, is
amended to read:


325F.665 NEW deleted text begin MOTOR VEHICLE deleted text end new text begin MOTORCRAFT new text end WARRANTIES;
MANUFACTURER'S DUTY TO REPAIR, REFUND, OR REPLACE.

Subdivision 1.

Definitions.

For the purposes of this
section, the following terms have the meanings given them:

(a) "consumer" means the purchaser or lessee, other than
for purposes of resale or sublease, of a new deleted text begin motor vehicle
deleted text end new text begin motorcraft new text end used for personal, family, or household purposes at
least 40 percent of the time, a person to whom the new deleted text begin motor
vehicle
deleted text end new text begin motorcraft new text end is transferred for the same purposes during
the duration of an express warranty applicable to the deleted text begin motor
vehicle
deleted text end new text begin motorcraftnew text end ;

(b) "manufacturer" means a person engaged in the business
of manufacturing, assembling or distributing deleted text begin motor
vehicles
deleted text end new text begin motorcraftnew text end , who will, under normal business conditions
during the year, manufacture, assemble or distribute to dealers
at least ten new deleted text begin motor vehicles deleted text end new text begin motorcraftnew text end ;

(c) "manufacturer's express warranty" and "warranty" mean
the written warranty of the manufacturer of a new deleted text begin motor vehicle
deleted text end new text begin motorcraft new text end of its condition and fitness for use, including any
terms or conditions precedent to the enforcement of obligations
under that warranty;

(d) "lease" means a contract in the form of a lease or
bailment for the use of personal property by a natural person
for a period of time exceeding four months, used for personal,
family, or household purposes at least 40 percent of the time,
whether or not the lessee has the option to purchase or
otherwise become the owner of the property at the expiration of
the lease;

(e) "motor vehicle" means (1) a passenger automobile as
defined in section 168.011, subdivision 7, including pickup
trucks and vans, and (2) the self-propelled motor vehicle
chassis or van portion of recreational equipment as defined in
section 168.011, subdivision 25, which is sold or leased to a
consumer in this state;

(f) "informal dispute settlement mechanism" means an
arbitration process or procedure by which the manufacturer
attempts to resolve disputes with consumers regarding deleted text begin motor
vehicle
deleted text end new text begin motorcraft new text end nonconformities and repairs that arise during
the vehicle's warranty period;

(g) " deleted text begin motor vehicle deleted text end new text begin motorcraft new text end lessor" means a person who
holds title to a deleted text begin motor vehicle deleted text end new text begin motorcraft new text end leased to a lessee
under a written lease agreement or who holds the lessor's rights
under such agreement; deleted text begin and
deleted text end

(h) "early termination costs" means expenses and
obligations incurred by a deleted text begin motor vehicle deleted text end new text begin motorcraft new text end lessor as a
result of an early termination of a written lease agreement and
surrender of a deleted text begin motor vehicle deleted text end new text begin motorcraft new text end to a manufacturer under
subdivision 4, including penalties for prepayment of finance
arrangementsnew text begin ;
new text end

new text begin (i) "motor boat" means a boat equipped with a motor or a
motor purchased separately from a boat but designed to be used
to propel a boat, which is sold or leased to a consumer in this
state; and
new text end

new text begin (j) "motorcraft" means a motor vehicle or a motor boatnew text end .

Subd. 2. [MANUFACTURER'S DUTY TO REPAIR.] If a new deleted text begin motor
vehicle
deleted text end new text begin motorcraft new text end does not conform to all applicable express
warranties, and the consumer reports the nonconformity to the
manufacturer, its agent, or its authorized dealer during the
term of the applicable express warranties or during the period
of two years following the date of original delivery of the new
deleted text begin motor vehicle deleted text end new text begin motorcraft new text end to a consumer, whichever is the earlier
date, the manufacturer, its agent, or its authorized dealer
shall make the repairs necessary to conform the vehicle to the
applicable express warranties, notwithstanding the fact that the
repairs are made after the expiration of the warranty term or
the two-year period.

Subd. 3. [MANUFACTURER'S DUTY TO REFUND OR REPLACE.] (a)
If the manufacturer, its agents, or its authorized dealers are
unable to conform the new deleted text begin motor vehicle deleted text end new text begin motorcraft new text end to any
applicable express warranty by repairing or correcting any
defect or condition which substantially impairs the use or
market value of the deleted text begin motor vehicle deleted text end new text begin motorcraft new text end to the consumer
after a reasonable number of attempts, the manufacturer shall
either replace the new deleted text begin motor vehicle deleted text end new text begin motorcraft new text end with a
comparable deleted text begin motor vehicle deleted text end new text begin motorcraft new text end or accept return of the
vehicle from the consumer and refund to the consumer the full
purchase price, including the cost of any options or other
modifications arranged, installed, or made by the manufacturer,
its agent, or its authorized dealer within 30 days after the
date of original delivery, and all other charges including, but
not limited to, sales or excise tax, license fees and
registration fees, reimbursement for towing and rental
deleted text begin vehicle deleted text end new text begin motorcraft new text end expenses incurred by the consumer as a result
of the vehicle being out of service for warranty repair, less a
reasonable allowance for the consumer's use of the deleted text begin vehicle
deleted text end new text begin motorcraft new text end not exceeding ten cents per mile deleted text begin driven deleted text end new text begin traveled new text end or
ten percent of the purchase price, whichever is less. If the
manufacturer offers a replacement deleted text begin vehicle deleted text end new text begin motorcraft new text end under this
section, the consumer has the option of rejecting the
replacement deleted text begin vehicle deleted text end new text begin motorcraft new text end and requiring the manufacturer to
provide a refund. Refunds must be made to the consumer, and
lienholder, if any, as their interests appear on the records of
the registrar of motor vehicles new text begin or of the Department of Natural
Resources, as appropriate
new text end . Refunds shall include the amount
stated by the dealer as the trade-in value of a consumer's
used deleted text begin motor vehicle deleted text end new text begin motorcraftnew text end , plus any additional amount paid
by the consumer for the new deleted text begin motor vehicle deleted text end new text begin motorcraftnew text end . A
manufacturer must give to the consumer an itemized statement
listing each of the amounts refunded under this section. If the
amount of sales or excise tax refunded is not separately stated,
or if the manufacturer does not apply for a refund of the tax
within one year of the return of the deleted text begin motor vehicle deleted text end new text begin motorcraftnew text end ,
the Department of Public Safety may refund the tax, as
determined under paragraph (h), directly to the consumer and
lienholder, if any, as their interests appear on the records of
the registrar of motor vehicles new text begin or of the Department of Natural
Resources, as appropriate
new text end . A reasonable allowance for use is
that amount directly attributable to use by the consumer and any
previous consumer during any period in which the use and market
value of the deleted text begin motor vehicle deleted text end new text begin motorcraft new text end are not substantially
impaired. It is an affirmative defense to any claim under this
section (1) that an alleged nonconformity does not substantially
impair the use or market value, or (2) that a nonconformity is
the result of abuse, neglect, or unauthorized modifications or
alterations of a deleted text begin motor vehicle deleted text end new text begin motorcraft new text end by anyone other than
the manufacturer, its agent or its authorized dealer.

(b) It is presumed that a reasonable number of attempts
have been undertaken to conform a new deleted text begin motor vehicle deleted text end new text begin motorcraft
new text end to the applicable express warranties, if (1) the same
nonconformity has been subject to repair four or more times by
the manufacturer, its agents, or its authorized dealers within
the applicable express warranty term or during the period of two
years following the date of original delivery of the new deleted text begin motor
vehicle
deleted text end new text begin motorcraft new text end to a consumer, whichever is the earlier date,
but the nonconformity continues to exist, or (2) the deleted text begin vehicle
deleted text end new text begin motorcraft new text end is out of service by reason of repair for a
cumulative total of 30 or more business days during the term or
during the period, whichever is the earlier date.

(c) If the nonconformity results in a complete failure of
the braking or steering system of the new deleted text begin motor vehicle
deleted text end new text begin motorcraft new text end and is likely to cause death or serious bodily injury
if the deleted text begin vehicle deleted text end new text begin motorcraft new text end is driven, it is presumed that a
reasonable number of attempts have been undertaken to conform
the deleted text begin vehicle deleted text end new text begin motorcraft new text end to the applicable express warranties if
the nonconformity has been subject to repair at least once by
the manufacturer, its agents, or its authorized dealers within
the applicable express warranty term or during the period of two
years following the date of original delivery of the new deleted text begin motor
vehicle
deleted text end new text begin motorcraft new text end to a consumer, whichever is the earlier date,
and the nonconformity continues to exist.

(d) The term of an applicable express warranty, the
two-year period and the 30-day period shall be extended by any
period of time during which repair services are not available to
the consumer because of a war, invasion, strike, or fire, flood,
or other natural disaster.

(e) The presumption contained in paragraph (b) applies
against a manufacturer only if the manufacturer, its agent, or
its authorized dealer has received prior written notification
from or on behalf of the consumer at least once and an
opportunity to cure the defect alleged. If the notification is
received by the manufacturer's agent or authorized dealer, the
agent or dealer must forward it to the manufacturer by certified
mail, return receipt requested.

(f) The expiration of the time periods set forth in
paragraph (b) does not bar a consumer from receiving a refund or
replacement vehicle under paragraph (a) if the reasonable number
of attempts to correct the nonconformity causing the substantial
impairment occur within three years following the date of
original delivery of the new deleted text begin motor vehicle deleted text end new text begin motorcraft new text end to a
consumer, provided the consumer first reported the nonconformity
to the manufacturer, its agent, or its authorized dealer during
the term of the applicable express warranty.

(g) At the time of purchase or lease, the manufacturer must
provide directly to the consumer a written statement on a
separate piece of paper, in 10-point all capital type, in
substantially the following form: "IMPORTANT: IF THIS new text begin MOTOR
new text end VEHICLE new text begin OR MOTOR BOAT new text end IS DEFECTIVE, YOU MAY BE ENTITLED UNDER
THE STATE'S LEMON LAW TO REPLACEMENT OF IT OR A REFUND OF ITS
PURCHASE PRICE OR YOUR LEASE PAYMENTS. HOWEVER, TO BE ENTITLED
TO REFUND OR REPLACEMENT, YOU MUST FIRST NOTIFY THE
MANUFACTURER, ITS AGENT, OR ITS AUTHORIZED DEALER OF THE PROBLEM
IN WRITING AND GIVE THEM AN OPPORTUNITY TO REPAIR THE new text begin MOTOR
new text end VEHICLE new text begin OR MOTOR BOATnew text end . YOU ALSO HAVE A RIGHT TO SUBMIT YOUR
CASE TO THE CONSUMER ARBITRATION PROGRAM WHICH THE MANUFACTURER
MUST OFFER IN MINNESOTA."

(h) The amount of the sales or excise tax to be paid by the
manufacturer to the consumer under paragraph (a) shall be the
tax paid by the consumer when the deleted text begin vehicle deleted text end new text begin motorcraft new text end was
purchased less an amount equal to the tax paid multiplied by a
fraction, the denominator of which is the purchase price of
the deleted text begin vehicle deleted text end new text begin motorcraft new text end and the numerator of which is the
allowance deducted from the refund for the consumer's use of the
deleted text begin vehicle deleted text end new text begin motorcraftnew text end .

Subd. 4. [MANUFACTURER'S DUTY TO CONSUMERS WITH LEASED
VEHICLES.] A consumer who leases a new deleted text begin motor vehicle deleted text end new text begin motorcraft
new text end has the same rights against the manufacturer under this section
as a consumer who purchases a new deleted text begin motor vehicle deleted text end new text begin motorcraftnew text end ,
except that, if it is determined that the manufacturer must
accept return of the consumer's leased deleted text begin vehicle deleted text end new text begin motorcraft
new text end pursuant to subdivision 3, then the consumer lessee is not
entitled to a replacement deleted text begin vehicle deleted text end new text begin motorcraftnew text end , but is entitled
only to a refund as provided in this subdivision. In such a
case, the consumer's leased deleted text begin vehicle deleted text end new text begin motorcraft new text end shall be returned
to the manufacturer and the consumer's written lease with
the deleted text begin motor vehicle deleted text end new text begin motorcraft new text end lessor must be terminated. The
manufacturer shall then provide the consumer with a full refund
of the amount actually paid by the consumer on the written
lease, including all additional charges set forth in subdivision
3, if actually paid by the consumer, less a reasonable allowance
for use by the consumer as set forth in subdivision 3. The
manufacturer shall provide the deleted text begin motor vehicle deleted text end new text begin motorcraft new text end lessor
with a full refund of the deleted text begin vehicle's deleted text end new text begin motorcraft's new text end original
purchase price plus any early termination costs, not to exceed
15 percent of the deleted text begin vehicle's deleted text end new text begin motorcraft's new text end original purchase
price, less the amount actually paid by the consumer on the
written lease.

Subd. 5.

Resale or re-lease of returned deleted text begin motor
vehicle
deleted text end new text begin motorcraftnew text end .

(a) If a deleted text begin motor vehicle deleted text end new text begin motorcraft new text end has been
returned under the provisions of subdivision 3 or a similar
statute of another state, whether as the result of a legal
action or as the result of an informal dispute settlement
proceeding, it may not be resold or re-leased in this state
unless:

(1) the manufacturer provides the same express warranty it
provided to the original purchaser, except that the term of the
warranty need only last for 12,000 miles or 12 months after the
date of resale, whichever is earlier; and

(2) the manufacturer provides the consumer with a written
statement on a separate piece of paper, in 10-point all capital
type, in substantially the following form: "IMPORTANT: THIS
new text begin MOTOR new text end VEHICLE new text begin OR MOTOR BOAT new text end WAS RETURNED TO THE MANUFACTURER
BECAUSE IT DID NOT CONFORM TO THE MANUFACTURER'S EXPRESS
WARRANTY AND THE NONCONFORMITY WAS NOT CURED WITHIN A REASONABLE
TIME AS PROVIDED BY MINNESOTA LAW."

The provisions of this section apply to the resold or
re-leased deleted text begin motor vehicle deleted text end new text begin motorcraft new text end for full term of the warranty
required under this subdivision.

(b) Notwithstanding the provisions of paragraph (a), if a
new deleted text begin motor vehicle deleted text end new text begin motorcraft new text end has been returned under the
provisions of subdivision 3 or a similar statute of another
state because of a nonconformity resulting in a complete failure
of the braking or steering system of the deleted text begin motor vehicle
deleted text end new text begin motorcraft new text end likely to cause death or serious bodily injury if the
deleted text begin vehicle deleted text end new text begin motorcraft new text end was driven, the deleted text begin motor vehicle deleted text end new text begin motorcraft new text end may
not be resold in this state.

Subd. 6.

Alternative dispute settlement mechanism.

(a)
Any manufacturer doing business in this state, entering into
franchise agreements for the sale of its deleted text begin motor vehicles
deleted text end new text begin motorcraft new text end in this state, or offering express warranties on its
deleted text begin motor vehicles deleted text end new text begin motorcraft new text end sold or distributed for sale in this
state shall operate, or participate in, an informal dispute
settlement mechanism located in the state of Minnesota which
complies with the provisions of the Code of Federal Regulations,
title 16, part 703, and the requirements of this section. The
provisions of subdivision 3 concerning refunds or replacement do
not apply to a consumer who has not first used this mechanism
before commencing a civil action, unless the manufacturer allows
a consumer to commence an action without first using this
mechanism.

(b) An informal dispute settlement mechanism provided for
by this section shall, at the time a request for arbitration is
made, provide to the consumer and to each person who will
arbitrate the consumer's dispute, information about this section
as approved and directed by the attorney general, in
consultation with interested parties. The informal dispute
settlement mechanism shall permit the parties to present or
submit any arguments based on this section and shall not
prohibit or discourage the consideration of any such arguments.

(c) If, in an informal dispute settlement mechanism, it is
decided that a consumer is entitled to a replacement deleted text begin vehicle
deleted text end new text begin motorcraft new text end or refund under subdivision 3, then any refund or
replacement offered by the manufacturer or selected by a
consumer shall include and itemize all amounts authorized by
subdivision 3. If the amount of excise tax refunded is not
separately stated, or if the manufacturer does not apply for a
refund of the tax within one year of the return of the deleted text begin motor
vehicle
deleted text end new text begin motorcraftnew text end , the Department of Public Safety may refund
the excise tax, as determined under subdivision 3, paragraph
(h), directly to the consumer and lienholder, if any, as their
interests appear on the records of the registrar of motor
vehicles new text begin or of the Department of Natural Resources, as
appropriate
new text end .

(d) No documents shall be received by any informal dispute
settlement mechanism unless those documents have been provided
to each of the parties in the dispute at or prior to the
mechanism's meeting, with an opportunity for the parties to
comment on the documents either in writing or orally. If a
consumer is present during the informal dispute settlement
mechanism's meeting, the consumer may request postponement of
the mechanism's meeting to allow sufficient time to review any
documents presented at the time of the meeting which had not
been presented to the consumer prior to the meeting.

(e) The informal dispute settlement mechanism shall allow
each party to appear and make an oral presentation in the state
of Minnesota unless the consumer agrees to submit the dispute
for decision on the basis of documents alone or by telephone, or
unless the party fails to appear for an oral presentation after
reasonable prior written notice. If the consumer agrees to
submit the dispute for decision on the basis of documents alone,
then manufacturer or dealer representatives may not participate
in the discussion or decision of the dispute.

(f) Consumers shall be given an adequate opportunity to
contest a manufacturer's assertion that a nonconformity falls
within intended specifications for the deleted text begin vehicle deleted text end new text begin motorcraft new text end by
having the basis of the manufacturer's claim appraised by a
technical expert selected and paid for by the consumer prior to
the informal dispute settlement hearing.

(g) Where there has been a recent attempt by the
manufacturer to repair a consumer's deleted text begin vehicle deleted text end new text begin motorcraftnew text end , but no
response has yet been received by the informal dispute mechanism
from the consumer as to whether the repairs were successfully
completed, the parties must be given the opportunity to present
any additional information regarding the manufacturer's recent
repair attempt before any final decision is rendered by the
informal dispute settlement mechanism. This provision shall not
prejudice a consumer's rights under this section.

(h) If the manufacturer knows that a technical service
bulletin directly applies to the specific mechanical problem
being disputed by the consumer, then the manufacturer shall
provide the technical service bulletin to the consumer at
reasonable cost. The mechanism shall review any such technical
service bulletins submitted by either party.

(i) A consumer may be charged a fee to participate in an
informal dispute settlement mechanism required by this section,
but the fee may not exceed the conciliation court filing fee in
the county where the arbitration is conducted.

(j) Any party to the dispute has the right to be
represented by an attorney in an informal dispute settlement
mechanism.

(k) The informal dispute settlement mechanism has all the
evidence-gathering powers granted an arbitrator under section
572.14.

(l) A decision issued in an informal dispute settlement
mechanism required by this section may be in writing and signed.

Subd. 7.

Effect and admissibility of decision by informal
dispute settlement mechanism.

The decision issued in an
informal dispute settlement mechanism required by this section
is nonbinding on the parties involved, unless otherwise agreed
by the parties. Any party, upon application, may remove the
decision to district court for a trial de novo. If the
manufacturer is aggrieved by the decision of the informal
dispute settlement mechanism, an application to remove the
decision must be filed in the district court within 30 days
after the date the decision is received by the parties. If the
application to remove is not made within 30 days, then the
district court shall, upon application of a party, issue an
order confirming the decision. A written decision issued by an
informal dispute settlement mechanism, and any written findings
upon which the decision is based, are admissible as nonbinding
evidence in any subsequent legal action and are not subject to
further foundation requirements.

Subd. 8.

Treble damages for bad faith appeal of
decision.

If the district court finds that a party has removed
a decision of an informal dispute settlement mechanism in bad
faith, by asserting a claim or defense that is frivolous and
costly to the other party, or by asserting an unfounded position
solely to delay recovery by the other party, then the court
shall award to the prevailing party three times the actual
damages sustained, together with costs and disbursements,
including reasonable attorney's fees.

Subd. 9.

Civil remedy.

Any consumer injured by a
violation of this section may bring a civil action to enforce
this section and recover costs and disbursements, including
reasonable attorney's fees incurred in the civil action. In
addition to the remedies provided herein, the attorney general
may bring an action pursuant to section 8.31 against any
manufacturer for violation of this section.

Subd. 10.

Limitation on actions.

A civil action brought
under this section must be commenced within three years of the
date of original delivery of the new deleted text begin motor vehicle deleted text end new text begin motorcraft new text end to
a consumer; except that, if the consumer applies to an informal
dispute settlement mechanism within three years of the date of
original delivery of a new deleted text begin motor vehicle deleted text end new text begin motorcraft new text end to a
consumer, and if the consumer is aggrieved by the decision of
the informal dispute settlement mechanism, then any civil action
brought under this section must be commenced within six months
after the date of the final decision by the mechanism.

Subd. 11.

Remedy nonexclusive.

Nothing in this section
limits the rights or remedies which are otherwise available to a
consumer under any other law.

Subd. 12.

Disclosure requirement.

In addition to any
investigative powers authorized by law, the attorney general may
inspect the records of the informal dispute settlement mechanism
upon reasonable notice, during regular business hours, and may
make available to the public information about the operation of
the mechanism, but data on an individual may not be disclosed
without the prior consent of the individual.

Subd. 13.

Dealer liability.

Nothing in this section
imposes liability on a dealer or creates an additional cause of
action by a consumer against a dealer, except for written
express warranties made by the dealer apart from the
manufacturer's warranties. The manufacturer shall not charge
back or require reimbursement by the dealer for any costs,
including, but not limited to, any refunds or deleted text begin vehicle deleted text end new text begin motorcraft
new text end replacements, incurred by the manufacturer arising out of this
section, unless there is evidence that the related repairs had
not been carried out by the dealer in a timely manner or in a
manner substantially consistent with the manufacturer's
published instructions.

Sec. 2. new text begin EFFECTIVE DATE.
new text end

new text begin Section 1 is effective for new motor boats purchased on or
after August 1, 2005.
new text end