Wirtz Law Blog

When you are stuck with a lemon and the manufacturer has failed or refused to repurchase your defective vehicle, you may be tempted to trade in the vehicle toward the purchase of a new vehicle. While you don’t need to still possess your vehicle to bring a lemon law claim in California, a recent California court decision makes it clear that trading in your vehicle will reduce the amount you can recover from the manufacturer.

In Niedermeier v. FCA US LLC, B293960, the California Court of Appeal held that when a vehicle owner trades in their lemon the trade-in value is deducted from the amount the manufacturer must pay to you to buy back your vehicle:

“As a matter of first impression, we hold that the Act’s restitution remedy, set at “an amount equal to the actual price paid or payable” for the vehicle (§ 1793.2, subd. (d)(2)(B)), does not include amounts a plaintiff has already recovered by trading in the vehicle at issue.”

In reaching this decision, the Court dismissed two obvious problems created by this conclusion. First, by permitting deducting the amount of the trade-in value from the buyback amount, auto manufacturers and distributors will be incentivized to delay offering a buyback to consumers in hopes that the consumer will trade in the defective vehicle, thereby reducing the amount to be paid for the buyback. Second, by having the consumer trade in the vehicle, the auto manufacturer and distributors avoid having to brand the title of the car as a “lemon.” Instead, the court reasoned that any other decision would incentivize consumers to trade in their vehicles rather than returning them to the manufacturer at the time of buyback so that they can be properly branded as lemons before they are resold in the used car market.

This decision will also have a chilling effect on the California Lemon law policy of protecting consumers and punishing automakers and discouraging them from their business practices designed to not buy back defective cars. By reducing the number of buyback damages, the automakers also receive a windfall when calculating civil penalties against them for their willful failures to buy back defective cars. The civil penalty against the automaker for failure to buy back cars can be as much as two times the amount of actual damages. In effect, by reducing the amount of the buyback, the automakers also get a reduction of civil penalties equal to as much as two times the amount of the trade-in.

The bottom line: you can still trade in your lemon, but doing so will reduce your ultimate recovery under the lemon law by up to three times the trade-in value.

For more information call the experienced trial attorneys at (858) 259-5009 for a free case evaluation.

Disclaimer.  The information provided in this post is for informational and educational purposes only regarding aspects of the California Lemon Law.  It is intended for California Consumers only.  This post is considered an advertisement by attorney Richard M. Wirtz and Wirtz Law APC. You should not rely on any of the information provided in this advertisement and no legal advice is given by the advertisement. No attorney-client relationship is established by viewing this advertisement. A written signed engagement agreement between you and Wirtz Law APC is required to create an attorney-client relationship. You should immediately consult an attorney who is experienced in California Lemon Law. Attorney Richard M. Wirtz is responsible for the content of this post. Prior results do not guarantee a similar outcome.