Wilcox Legal Group, P.C.

Arizona Supreme Court Rules in Two Automobile Warranty Cases

The Arizona Supreme Court deals with automobile warranties, service contracts and lemon law issues in recent legal decisions.


Phoenix, AZ -- (ReleaseWire) -- 10/09/2006 --The Arizona Supreme Court recently decided two cases involving motor vehicle warranty issues. In the first, Parrot v. DaimlerChrysler Corporation, 130 P.3d 530; 473 Ariz. Adv. Rep. 32, the questions revolved around an automobile lease situation, the Arizona Lemon law and the Magnuson-Moss Warranty Act. The second case, Johnson v. Earnhardt's Gilbert Dodge, Inc., 132 P.3d 825; 476 Ariz. Adv. Rep. 33, also involved the Magnuson-Moss Warranty Act as well as a service contract issue.

A. Parrot v. DaimlerChrysler (full text of case available at http://www.wilcoxlegal.com)

In denying Mr. Parrot relief under both the Magnuson-Moss Warranty Act (hereinafter the “Warranty Act”) and the Arizona Motor Vehicle Warranties Act (commonly referred to as Arizona’s Lemon Law), the Arizona Supreme Court wrestled with two primary issues, including whether Mr. Parrot was a consumer as defined by the Warranty Act and whether the limited relief available to consumers under Arizona’s Lemon Law was available to him. In overturning the Arizona Court of Appeals decision that favored Mr. Parrot, the Arizona Supreme Court ruled that neither the federal Warranty Act nor the state Lemon Law allowed Mr. Parrot the relief he sought.

1. Magnuson-Moss Warranty Act ((15 U.S.C. §§ 2301-2312)

Unfortunately for Mr. Parrot, the Arizona Supreme Court found that Mr. Parrot was not a consumer under the Warranty Act because Mr. Parrot’s lessee status prevented him from qualifying as a consumer for purposes of applying the Warranty Act to his vehicle dispute. No qualifying sale to him was made and that meant the Warranty Act did not provide him relief. Upon disposing of the Warranty Act claims brought by Mr. Parrot, the court turned to the Arizona Lemon Law.

2. Arizona Motor Vehicle Warranties Act

As it did with its analysis under the Warranty Act, the Arizona Supreme Court decided against Mr. Parrot essentially because of his status as a lessee and not an owner. Although the court noted that the definition of consumer under the Lemon Law was different than under the Warranty Act, the court decided against Mr. Parrot on other grounds.

Under the Arizona Lemon Law, two remedies are available: (a) a consumer may return the vehicle to the manufacturer, or (b) the consumer may have the vehicle replaced. However, the court noted that these remedies only apply if the consumer is the owner of the vehicle. Mr. Parrot leased the vehicle and did not own it; therefore, the Lemon Law provided him no relief.

B. Johnson v. Earnhardt’s Gilbert Dodge (full text of case available at http://www.wilcoxlegal.com)

One month after the Parrot case, above, the Arizona Supreme Court ruled on another case involving the Magnuson-Moss Warranty Act, DaimlerChrysler and an allegedly malfunctioning automobile. However, in this case, the car was purchased, not leased, as it was in Parrot. In addition, although the vehicle purchased was a Kia, Ms. Johnson purchased a service contract from DaimlerChrysler for the vehicle through the Chrysler dealership from which she bought the car. The Arizona Supreme Court reviewed the case after the trial court granted Earnhardt’s Motion for Summary Judgment and the Arizona Court of Appeals reversed the trial court in favor of Johnson. Two key issues were presented to the Arizona Supreme Court.

1. Service Contract

The Arizona Supreme Court examined the issue of whether Earnhardt had entered into a service contract with Ms. Johnson or if the service contract was only with DaimlerChrysler since they were the entity that provided the service contract.

The court found that the circumstances surrounding the service contract were ambiguous and that a grant of summary judgment was inappropriate on that basis. Some of the ambiguous facts included that Earnhardt, the dealer, had sold the contract and was to provide repair services under the contract as signed by the dealership. In addition, simply put, the language of the contract itself was confusing and conflicting as were the statements of the witnesses. For example, the language of the contract variously states that DaimlerChrysler is the responsible party but also that Earnhardt had responsibility under the contract, too, while Ms. Johnson stated in her affidavit that she was told it was a joint warranty agreement with the dealership and DaimlerChrysler being responsible. The dealership, on the other hand, denied it was a party to the service contract. The conflict facts meant that the case had to be remanded to the trial court to determine whether Earnhardt was a party to the service contract.

2. Magnuson-Moss Warranty Act (15 U.S.C. §§ 2301-2312)

After concluding that the evidence surrounding the service contract created a question of fact allowing that issue to survive summary judgment, the Arizona Supreme Court next turned to the issue of whether the service contract was a warranty as defined by the Warranty Act. Although the Arizona Court of Appeals concluded that the service contract was such a warranty, the Supreme Court disagreed reasoning that the separate consideration paid for the service contract means that the service contract cannot also be a written warranty under the definition contained within the Warranty Act.

Thus, the Arizona Supreme Court remanded the Johnson case back to the trial court for further proceedings consistent with its reasoning.