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2006 Minnesota Statutes

This is a historical version of this statute section. Also view the most recent published version.

325F.665 NEW MOTOR VEHICLE WARRANTIES; MANUFACTURER'S DUTY TO
REPAIR, REFUND, OR REPLACE.
    Subdivision 1. Definitions. (a) For the purposes of this section, the terms in paragraphs (b) to
(i) have the meanings given them.
(b) "Consumer" means the purchaser or lessee, other than for purposes of resale or sublease,
of a new motor vehicle used for personal, family, or household purposes at least 40 percent of the
time, and a person to whom the new motor vehicle is transferred for the same purposes during
the duration of an express warranty applicable to the motor vehicle. The term also includes an
ambulance service licensed under chapter 144E that has purchased or leased a new motor vehicle
of the type specified in paragraph (f), and a person to whom the ambulance is transferred for the
same purpose during the duration of any applicable express warranty.
(c) "Manufacturer" means a person engaged in the business of manufacturing, assembling
or distributing motor vehicles, who will, under normal business conditions during the year,
manufacture, assemble or distribute to dealers at least ten new motor vehicles.
(d) "Manufacturer's express warranty" and "warranty" mean the written warranty of the
manufacturer of a new motor vehicle of its condition and fitness for use, including any terms or
conditions precedent to the enforcement of obligations under that warranty.
(e) "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.
(f) "Motor vehicle" means (1) a passenger automobile as defined in section 168.011,
subdivision 7
, including pickup trucks and vans, (2) the self-propelled motor vehicle chassis or
van portion of a recreational vehicle as defined in section 168.011, subdivision 25, which is sold
or leased to a consumer in this state, and (3) the self-propelled motor vehicle chassis or van
portion of an ambulance as defined in section 144E.001, subdivision 2.
(g) "Informal dispute settlement mechanism" means an arbitration process or procedure by
which the manufacturer attempts to resolve disputes with consumers regarding motor vehicle
nonconformities and repairs that arise during the vehicle's warranty period.
(h) "Motor vehicle lessor" means a person who holds title to a motor vehicle leased to a
lessee under a written lease agreement or who holds the lessor's rights under such agreement.
(i) "Early termination costs" means expenses and obligations incurred by a motor vehicle
lessor as a result of an early termination of a written lease agreement and surrender of a motor
vehicle to a manufacturer under subdivision 4, including penalties for prepayment of finance
arrangements.
    Subd. 2. Manufacturer's duty to repair. If a new motor vehicle 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 motor vehicle 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 motor vehicle to any applicable express
warranty by repairing or correcting any defect or condition which substantially impairs the use or
market value of the motor vehicle to the consumer after a reasonable number of attempts, the
manufacturer shall either replace the new motor vehicle with a comparable motor vehicle 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 vehicle 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 vehicle not exceeding ten cents per mile driven or ten percent of
the purchase price, whichever is less. If the manufacturer offers a replacement vehicle under
this section, the consumer has the option of rejecting the replacement vehicle 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. Refunds shall include the
amount stated by the dealer as the trade-in value of a consumer's used motor vehicle, plus any
additional amount paid by the consumer for the new motor vehicle. 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 motor vehicle, 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. 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 motor vehicle 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
motor vehicle 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 motor vehicle 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 motor vehicle to a consumer, whichever is the earlier date, but
the nonconformity continues to exist, or (2) the vehicle 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 motor vehicle and is likely to cause death or serious bodily injury if the vehicle is driven, it is
presumed that a reasonable number of attempts have been undertaken to conform the vehicle 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 motor vehicle
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 motor vehicle 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 VEHICLE 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 VEHICLE. 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 vehicle was purchased less an
amount equal to the tax paid multiplied by a fraction, the denominator of which is the purchase
price of the vehicle and the numerator of which is the allowance deducted from the refund for
the consumer's use of the vehicle.
    Subd. 4. Manufacturer's duty to consumers with leased vehicles. A consumer who leases
a new motor vehicle has the same rights against the manufacturer under this section as a consumer
who purchases a new motor vehicle, except that, if it is determined that the manufacturer must
accept return of the consumer's leased vehicle pursuant to subdivision 3, then the consumer
lessee is not entitled to a replacement vehicle, but is entitled only to a refund as provided in this
subdivision. In such a case, the consumer's leased vehicle shall be returned to the manufacturer and
the consumer's written lease with the motor vehicle 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 motor vehicle lessor with a full refund of the vehicle's original
purchase price plus any early termination costs, not to exceed 15 percent of the vehicle's original
purchase price, less the amount actually paid by the consumer on the written lease.
    Subd. 5. Resale or re-lease of returned motor vehicle. (a) If a motor vehicle 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 VEHICLE 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 motor vehicle for full term of
the warranty required under this subdivision.
(b) Notwithstanding the provisions of paragraph (a), if a new motor vehicle 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 motor
vehicle likely to cause death or serious bodily injury if the vehicle was driven, the motor vehicle
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 motor vehicles in this state, or
offering express warranties on its motor vehicles 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 vehicle 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 motor vehicle, 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.
(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 vehicle 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 vehicle,
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 motor vehicle 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 motor vehicle 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 vehicle 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.
History: 1983 c 108 s 1; 1985 c 284 s 1; 1986 c 422 art 1 s 1; 1986 c 444; 1987 c 52
s 1; 1987 c 268 art 4 s 23; 1989 c 43 s 1; 1990 c 408 s 2,3; 1995 c 49 s 1,2; 1997 c 187 art 3
s 30; 2006 c 212 art 1 s 23; 2006 c 249 s 4

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