Indiana Lemon Law - A Brief Overview

Almost every new car has a couple of kinks that need to be fixed, but after you have a few miles on your new vehicle, you expect it to run like a charm – and it should. But what can you do when your new ride has a serious defect and the dealer can’t (or won’t) fix it? Under Indiana lemon law, you do have rights. Sergei Lemberg, an attorney specializing in lemon law, offers an overview of our lemon law, and tips to preserve your Indiana lemon law rights.

Q: What vehicles are covered under the lemon law in Indiana?

Sergei: Indiana's lemon law covers new passenger vehicles, SUVs, vans, and trucks with a gross vehicle weight rating of less than 10,000 pounds. It also covers used vehicles that are sold during the new car warranty period.

Q: What’s considered a “lemon”?

Sergei: In order to be considered a “lemon,” the vehicle must have one or more defects that affect the use, safety, or value of the vehicle. The defect must first manifest itself during the first 18 months from the delivery date or the first 18,000 miles on the odometer – whichever comes first. In addition, the vehicle must have been taken in for four unsuccessful repairs of the same problem or been out of service for 30 business days and the problem still exists. Plus, you have to notify the manufacturer of a claim after the four repairs or 30 days but while the problem still exists.

Q: How do you pursue a lemon law claim?

Sergei: First, look in your owner’s manual to see if the manufacturer requires that you file a request for arbitration with the manufacturer’s arbitration program. If so, you need to go through arbitration first – but only if the manufacturer’s arbitration is certified by the Indiana Attorney General (as of April, 2008, this included General Motors, Volkswagen, Mitsubishi, Saturn, Kia and Isuzu). If not, you can take the manufacturer to court. Keep in mind, though, that manufacturers have teams of lawyers that do nothing but fight lemon law claims, and that you’ll only be on equal footing if you have a lemon law attorney at your side. Because Indiana’s lemon law says that, in a successful lemon law action, the manufacturer has to pay your attorney fees, you shouldn't have to. Often, with the help of a lawyer, you can get a refund, replacement vehicle, or cash settlement without having to go through the entire lemon law process.

Q: What kind of award can you get with a lemon law claim?

Sergei: If you’re successful, you can get a replacement vehicle or a monetary award, which includes the full contract price, credits and allowances for any trade-in vehicle, finance charges, tax and registration fees, dealer-installed options, vehicle towing and rental costs, and attorneys’ fees. If you opt for a refund, there will be a deduction for your use of the vehicle, which is calculated according to a specific formula.

Q: What should you do if you think you have a lemon?

Sergei: There are a number of steps you should take if you think you have a lemon. First, keep a log of every communication you have with the dealer or manufacturer. Also, note every time and date that you have a problem with the vehicle, as well as the days that the vehicle is out of service, either because it’s in the shop or because it’s not in working condition. Second, keep all of your repair records; never leave the shop without a copy of the work order. Third, keep any written correspondence you have. Indiana requires that you send the manufacturer a demand letter prior to filing suit, so make sure you have the paperwork to back that up. Finally, contact a lemon law attorney, such as Robert Duff at the Indiana Consumer Law Group, after the third repair attempt. He or she can help guide you through the final steps that will legally establish your vehicle as a lemon.

Q: What should you do if your vehicle isn’t considered a lemon under the law?

Sergei: Even if your vehicle doesn’t meet the stringent definitions of Indiana lemon law, there are other types of federal and state laws that can help you get the compensation you deserve. Consult an attorney to find out your options.

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Can Poor Gas Mileage Make My Car A Lemon?

Q: I purchased a new car six months ago. The gas mileage is horrible. I am probably getting 75% of what I'm supposed to get. I've taken it in to the dealer and reported this problem many times, and they just tell me they can't find anything wrong. Do I have a lemon?

A: With gas prices what they are today, everyone is paying more attention to their gas mileage. If you're not getting the mileage you expected, there's a reason: no one else is either. That's because the mileage figures posted on the window of a new car are ESTIMATES prepared by the EPA. They are usually quite inflated because they are based on a formula from 20 years ago that reflects perfect driving conditions and doesn't take into account raised speed limits, traffic conditions, weather, individual driving styles and the like.

Thankfully, the EPA is revising its formula for gas mileage estimates on its 2008 models. These figures should be more realistic and should reflect more accurately real life mileage figures for all 2008 new vehicles.

So when you say "what I'm supposed to get," you are probably basing that on the EPA estimate. The manufacturer has not promised the vehicle would get that mileage, and so it is very difficult to make a successful lemon law claim based on poor mileage. Your mileage has to be really bad, I mean REALLY bad, like maybe half of the EPA estimate, before we can establish that the vehicle has a defect. (Click here to see the text of Indiana's lemon law and read what defects can make your car a lemon.)

While the mileage you're getting is bad, I don't think it rises to the level necessary to make your car a lemon. You might want to think about trading the vehicle in for a more fuel efficient model.

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Indiana's Lemon Law, How Does It Compare? (Part 3)

So far in this series, we have determined that the Indiana Motor Vehicle Protection Act, Indiana's lemon law, is the least consumer friendly of our neighboring states' lemon laws with regard to: the deduction the manufacturer receives for the mileage on a vehicle in a buyback situation (Part 1) and the kind of vehicles to which the law applies (Part 2). This time, let's take a look at what's called the "term of protection," which is the period of time the law applies following a new car purchase.

Indiana's lemon law is straightforward. Indiana Code 24-5-13-7 states that the term of protection begins on the date the vehicle is delivered to the buyer, and expires eighteen months from that date or when the car has been driven 18,000 following delivery, whichever comes first. Fine, you say, but what has to happen within the term of protection? Does my lemon lawsuit have to be filed within that time? No, it does not.

Indiana Code 24-5-13-8 makes it (mostly) clear that if the buyer first reports the particular repair issue within the term of protection, then the vehicle can subsequently be deemed a lemon based on that particular repair issue even though the vehicle actually becomes a lemon (four unsuccessful repair attempts or 30 or more days out of service) outside the term of protection. So it's only critical that the repair issue manifest itself within the term of protection (and get reported to the dealer). Then, the only other limitation is that the lemon lawsuit be filed within two years of the first repair attempt.

If the repair issue does not first manifest itself within the term of protection, the buyer does not have a lemon law claim in Indiana. However, if the repair issue manifests itself outside the term of protection but within the term of the manufacturer's warranty, the buyer may still have a claim under the Magnuson-Moss Warranty Act.

Let's take a look at the term of protection in other states.

Illinois

In Illinois, the term of protection is called the "statutory warranty period." Surprisingly, it is significantly more restrictive that Indiana's lemon law. The statutory warranty period in Illinois is 12 months or 12,000 miles. But importantly, for the lemon law to be violated, the vehicle must be subject to four repairs or out of service for at least 30 days within the statutory warranty period.

Michigan

Interestingly, Michigan has no mileage limitation. The repair issue must be reported within a year. The vehicle is then presumed a lemon if there are three more unsuccessful repairs within the next two years. Michigan also presumes the vehicle a lemon if it has been out of service for 30 or more days, but only if that occurs in the first year.

Ohio

The term of protection under Ohio's lemon law is twelve months or 18,000 miles from the date of delivery, whichever comes first. The repair issue need only be initially reported during the term of protection. In what seems like a strange twist, at least to me, and one certainly favorable to consumers in Ohio, a lawsuit under Ohio's lemon law must be brought within two years of the expiration of the manufacturer's express warranty term. For some manufacturers (like Hyundai, for example) that could be a long time. There's another twist, too, that appears to make Ohio's law unique. To prove a violation of the statute, the buyer must show that the repair issue substantially impairs the use, safety, or value of the motor vehicle to the consumer after a reasonable number of repair attempts. A reasonable number of repair attempts is presumed to have been undertaken if there have been three unsuccessful repair attempts or the vehicle has been out of service for at least 30 days, either of which must have occurred during the term of protection. I don't practice in Ohio, but it sure appears to me that if some of the attempts or time out of service occurs outside the term of protection, a buyer can still prove they have a lemon; the buyer just doesn't get to take advantage of the presumption and must prove that a reasonable number of repair attempts were undertaken. Interesting.

Kentucky

Kentucky law is identical to Illinois law on the term of protection. Four unsuccessful repair attempts or 30 days out of service must occur within 12 months or 12,000 miles (whichever comes first).

This time, it appears that Indiana's lemon law is the MOST favorable to consumers of all our neighboring states. The bottom line is that Indiana's lemon law protects new car purchasers longer than the other states' lemon laws. That's a good thing. I was beginning to get really down on Indiana's version!

One final comment of interest to attorneys. I noticed that the other states all use a presumption for a reasonable number of repair attempts, i.e.: If there are four unsuccessful attempts, it shall be presumed that a reasonable number of repair attempts has been undertaken. I don't know the other states' law, but to me that means that the presumption is rebuttable. I think that would be a tough row to hoe for a manufacturer, but I suppose in certain circumstances the manufacturer could argue that it should have been given one more chance to get it right. The presumption language does not exist in Indiana. The word "considered" is in place of presumed, which effectively makes it a conclusive presumption. This means that four unsuccessful attempts (amongst other requirements) equals a lemon. I'd be surprised if this issue virtually ever gets raised in the other states.

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Indiana's Lemon Law, How Does It Compare? (Part 2)

In Part 1 of this series, we compared the "reasonable allowance for use" provisions of Indiana's Motor Vehicle Protection Act (Indiana's "lemon law") against Indiana's neighboring states' lemon laws and found that Indiana's lemon law was the least favorable for consumers. In Part 2 of this series, I'd like to compare these lemon laws based on the kinds of vehicles to which they apply.

Indiana law reads:

Indiana Code 24-5-13-5 Sec. 1 5. As used in this chapter, "motor vehicle" or "vehicle" means any self-propelled vehicle that:

(1) has a declared gross vehicle weight of less than ten thousand (10,000) pounds;
(2) is sold to:
(A) a buyer in Indiana and registered in Indiana; or
(B) a buyer in Indiana who is not an Indiana resident (as defined in IC 9-13-2-78);
(3) is intended primarily for use and operation on public highways; and
(4) is required to be registered or licensed before use or operation.

The term does not include conversion vans, motor homes, farm tractors, and other machines used in the actual production, harvesting, and care of farm products, road building equipment, truck tractors, road tractors, motorcycles, mopeds, snowmobiles, or vehicles designed primarily for offroad use.

This definition basically limits Indiana's lemon law to passenger cars, pickup trucks and most vans. Notably, conversion vans and motor homes are specifically excluded.

Illinois law reads:

"New vehicle" means a passenger car, as defined in Section 1-157 of The Illinois Vehicle Code, a motor vehicle of the Second Division having a weight of under 8,000 pounds, as defined in Section 1-146 of that Code, and a recreational vehicle, except for a camping trailer or travel trailer that does not qualify under the definition of a used motor vehicle, as set forth in Section 1-216 of that Code.

It appears that the major difference here is that, in addition to the vehicles covered by Indiana's lemon law, motor homes are included. I can't say for sure but it appears to me that most conversion vans would also be included in Illinois' lemon law.

Michigan law reads:

“Motor vehicle” means a motor vehicle as defined in section 33 of the Michigan vehicle code, 1949 PA 300, MCL 257.33, that is designed as a passenger vehicle, or sport utility vehicle, but does not include a motor home, bus, truck other than a pickup truck or van, or a vehicle designed to travel on less than 4 wheels.

Michigan's law seems to cover mostly the same vehicles that Indiana's law covers, but in Michigan conversion vans appear to be covered and in Indiana they are not.

Ohio law reads:

"Motor vehicle" means any passenger car or noncommercial motor vehicle as defined in section 4501.01 of the Revised Code, or those parts of any motor home, as defined in section 4501.01 of the Revised Code, that are not part of the permanently installed facilities for cold storage, cooking and consuming of food, and for sleeping, but does not mean any mobile home as defined in division (O) of section 4501.01 of the Revised Code, recreational vehicle as defined in division (Q) of that section, or manufactured home as defined in division (C)(4) of section 3781.06 of the Revised Code.

Ohio law is a bit more expansive. It includes passenger cars, trucks and vans, motor homes (except for expressly excluded parts), motorcycles and basically any motorized, self-propelled vehicle that is not construction equipment, farm machinery, or a truck designed to carry more than a ton of payload.

Kentucky law reads:

"Motor vehicle" means every vehicle which is self-propelled, and which is intended primarily for use and operation on the public highways and required to be registered or licensed in the Commonwealth prior to such use or operation; however, "motor vehicle" shall not include:

(a) Any vehicle substantially altered after its initial sale from a dealer to an individual;
(b) Motor homes;
(c) Motorcycles;
(d) Mopeds;
(e) Farm tractors and other machines used in the production, harvesting, and care of farm products; or
(f) Vehicles which have more than two (2) axles.

Kentucky law appears to be slightly less restrictive than Indiana's lemon law; motorcycles, motor homes, and farm equipment vans are all excluded. It does appear, however, that Kentucky would include within its lemon law most conversion vans and some large trucks that might be excluded under Indiana's lemon law because of weight.

CONCLUSION

Again it appears that, with regard to what vehicles are included, Indiana's lemon law is the least favorable to consumers. Ohio's lemon law again appears to be the most favorable to consumers of the states we examined.

This time, however, I can't say I feel strongly that this provision of Indiana law should be changed. I know Northern Indiana has a large motor home and conversion van industry, and so I think it's unlikely this provision would be amended. I'm not aware of a large number of lemon motorcycles in the state either. But perhaps most importantly, owners of these vehicles often have another option besides Indiana's lemon law. The Magnuson-Moss Warranty Act is a federal law that allows consumers to sue to enforce written or implied warranties that were given with the vehicle. The remedies available under Magnuson-Moss can be, depending on the circumstances, just as good as the remedies under the lemon law.

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Indiana's Lemon Law, How Does It Compare (Part 1b)

In Part 1a, we looked at how Indiana law handles the "reasonable allowance for use" calculation and how it encourages manufacturers to delay the resolution of claims. Let's take a look at how some of our neighbor states handle reasonable allowance for use:


Illinois

The Illinois statutory provision reads: "A reasonable allowance for consumer use of a vehicle is that amount directly attributable to the wear and tear incurred by the new vehicle as a result of its having been used prior to the first report of a nonconformity to the seller, and during any subsequent period in which it is not out of service by reason of repair." Surprisingly, it does not appear that this provision has ever been interpreted, at least in a published opinion, by an Illinois appellate court. Since I don't practice in Illinois, I can't say how they put this provision into practice, but I believe I've heard that they often use the IRS mileage reimbursement figure.

Michigan

Michigan law seems a little more consumer-friendly. The statute uses the 100,000 mile benchmark used by Indiana, but also provides that any mileage incurred from the date any defect is first reported up to 25,000 miles is excluded from the calculation, as well as any mileage incurred after 25,000 during which the vehicle "did not provide reliable transportation for ordinary personal or household use." I think these additional consumer protections would make excellent additions to Indiana's statute.

Ohio

Ohio's lemon law has NO provision to account for the use (mileage) of the motor vehicle! If a vehicle is bought back under Ohio law, the vehicle owner is entitled to a refund of the entire purchase price.

Kentucky

Kentucky's lemon law provides that the manufacturer is entitled to a reasonable allowance for use when refunding the purchase price of a lemon. The only mileage exclusion is for mileage incurred during "those time periods when the vehicle is out of service due to the nonconformity." (Huh? I guess dealership test drives are excluded. What else????) However, it does not explicitly state, like Indiana's statute, that the miles continue to accrue even after the owner has tendered the vehicle (by letter) to the manufacturer.


The conclusion? Looking purely at the respective statutes, Indiana's statute would appear to be the least favorable to consumers among all its neighbors, followed by Illinois and Kentucky, then Michigan, and finally Ohio, because if you have a lemon in Ohio, you can drive the car like crazy and still get a full refund.

Do I think Indiana's statute should be amended? Yes. I think a reasonable compromise would be to cap the "reasonable allowance for use" to the miles incurred before the defect that caused the vehicle to be a lemon appeared.

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Indiana's Lemon Law, How Does It Compare? (Part 1a)

I recently read an article about the Tennessee Division of Consumer Affairs' lemon law website. Apparently that website had incorrect information about Tennessee's lemon law up for about four years! Tennessee's lemon law was amended in 2003 to require three instead of four repair attempts and 15 instead of 30 days out-of-service, but the information on the website was never changed. Duuoohhhh!

Anyway, this got me thinking about how Indiana's lemon law compares to other states' lemon laws. Rather than comparing the entire statutes in broad terms, let's get down to the nitty gritty and compare specific provisions. This is Part 1, of what will hopefully be a series, comparing certain provisions of Indiana's lemon law to the corresponding provisions in other states' lemon laws. My general, relatively uneducated impression is that Indiana's lemon law is among the least consumer friendly in the nation, but I guess we'll see.

In my opinion, one of the harshest provisions in Indiana's lemon law is the manufacturer's reimbursement for "a reasonable allowance for use." The basic premise is that if the lemon purchaser wants his or her money back, the manufacturer should be entitled to deduct from that refund a reasonable allowance for the mileage the purchaser put on the vehicle. On it's face, this seems reasonable, but there is a problem with the way this reasonable allowance is calculated under the statute that, in some situations, makes it unfair to Indiana consumers.

Continue reading "Indiana's Lemon Law, How Does It Compare? (Part 1a)" »

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Indiana Lemon Law Seminar Update

I attended the Indiana Lemon Law continuing legal education seminar last week. The seminar was put on by two attorneys of the Law Offices of Connie J. Postelli, Connie Postelli and Rebecca Letourneaux, and a mediator Ms. Postelli uses a lot named Paul Petticrew. Ms. Postelli's firm represents General Motors all over the States of Indiana and Illinois and Ford Motor Co. in Northern Indiana.

Interestingly, the seminar was titled: "PLEASE Sue My Clients for Violation of the Indiana Lemon Laws (And get your fees paid too!)." It was very informative and all presenters did a good job of relaying the basics of lemon law in Indiana. Ms. Postelli spent a significant amount of time talking about the disservice the Internet Boys (her term for the big out-of-state Internet lemon law firm currently representing around 90% of all lemon law plaintiffs in the state) were doing to their clients, the reputation of lawyers and the practice of law in general.

Having practiced against this "law firm" in the past, I would have to wholeheartedly agree. Their practice is built on volume, and because of this, individual attention to each client is intentionally kept to a minimum. Ms. Postelli noted that this results in a multitude of problems, from clients with unrealistic expectations, to attorneys who don't know their client's case, to clients who are dissatisfied with their entire experience with the judicial system.

The title of the seminar arose out of Ms. Postelli's desire to see other attorneys throughout the state handle more of these cases. She related that her clients had approved this approach. In keeping with this theme, Ms. Postelli was more than generous in offering her assistance, by phone or e-mail, to any lawyer in the state desiring to handle a plaintiff's lemon law claim.

Because of the nature of the seminar, it did not get into much of the specifics and nuances of the law in this area. It would have been nice, but that's OK. Overall, it was well done. My thanks and appreciation go out to Ms. Postelli, Ms. Letourneaux, and Mr. Petticrew.

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Indiana Lemon Law Seminar February 22, 2007

Attorneys who practice lemon law in Indiana may want to attend a seminar on the subject on February 22, 2007. The continuing legal education seminar is put on by ICLEF and will be held at ICLEF's Conference Facility located at 230 E. Ohio St. in Indianapolis. The faculty of the half-day seminar is comprised of two defense lawyers and a mediator.

I do not recall another lemon law seminar in Indiana, so it's interesting to see that lemon law as a practice area has developed enough to support such a seminar. Still, I can't imagine there will be that many attorneys in attendance.

For those interested, you can contact ICLEF at 317-637-9102. The seminar cost is $185 for non Indiana State Bar Association members, or $135 for members. I'll see you there!

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This Indiana Attorney Understands

Over and over again I have personally witnessed a lemon law plaintiff tear up or actually begin to cry while recounting the numerous repairs involved with their vehicle. Back when I defended lemon law cases, I can recall being amazed at how emotional these people became. I understood that numerous time-consuming trips to the dealership, sometimes for the same thing over and over again, could be very frustrating. But sometimes the reaction seemed to go beyond that...

A recent AP-AOL Autos poll emphasizes how much our car means to some of us. The Indianapolis Star reported the following summary of poll results:

GENDER DIFFERENCES: Women, 26 percent, were more likely than men, 16 percent, to have nicknames for their cars. Unmarried women, 30 percent, were more likely than men or married women to give their cars nicknames. Nearly four in five, 78 percent, said they enjoy driving, while 20 percent consider it more of a bother. Women were more likely than men to think of their cars as female — 27 percent to 19 percent. Almost half of women, 44 percent, said they have thought their car had a personality of its own, compared with 30 percent of men. Over half, 55 percent, of single women said they have thought their car had a personality of its own, compared with 36 percent of married women and 33 percent of single men.

ENJOY DRIVING: Young adults, 88 percent, and seniors, 83 percent, were more likely than those 30-39, 68 percent, to say they enjoy driving. White men, 81 percent, were more likely than white women, 74 percent, to say they enjoy driving. Those with a high school education or less were more likely to say they enjoy driving, 83 percent, than those with college degrees, 73 percent. Women college grads, 66 percent, were less likely than other groups to say they enjoy driving. People who make less than $25,000, 86 percent, were more likely than those who make more than $75,000, 75 percent, to say they enjoy driving.

CARS AND PERSONALITY: Nearly three-fourths, 73 percent, of those in their 40s felt you could tell at least something about a car owner’s personality from the kind of car he or she owns. Seven in ten of those making $75,000 or more said one can tell something about a person’s personality from the kind of car he or she drives; of those making less than $25,000, 57 percent felt that way. Slightly over one-third, 37 percent, said they have ever thought their car had a personality of its own. Those with a high school diploma or less were more likely to have thought that than those with a college degree, 41 percent to 31 percent. Those making less than $50,000 a year were more likely than those making $75,000 or more a year to have thought their car had a personality of its own — 45 percent to 30 percent.

After all, the purchase of an automobile is typically the second largest purchase a person makes, and often is the second largest payment a person has. It is a big deal in terms of money. It's also a big deal in terms of time. The average commute to work in this country is just under 25 minutes. That's nearly an hour a day driving to and from work. Combine that with our utter dependence as a society on automobile transportation, and it's not hard to discern why some people are so devastated to find they own a lemon.

If you find yourself in this position, discover your options and ease the strain by consulting an Indiana lemon law lawyer, like myself for example! You'll be glad you did.

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Indiana Lemon Law Appellate Opinions 2006

As 2006 comes to a close, I thought I would take a look back at Indiana's courts of appeal opinions on the Indiana Motor Vehicle Protection Act, also known as Indiana's lemon law. Actually, there wasn't much. There was only one published opinion dealing with Indiana's lemon law.

On November 2, 2006, the Indiana Court of Appeals decided the case of Walker v. DaimlerChrysler Corporation. William Walker, though not apparently an employee of DaimlerChrysler, purchased the truck at a discount under DaimlerChrysler's Employee New Vehicle Purchase/Lease Program (remember the "buy at the price our employees pay" advertising?). In exchange for the employee discount, Mr. Walker signed an agreement giving up the right to file a lawsuit and instead submit to binding arbitration.

After the trial court dismissed his lawsuit, Mr. Walker appealed. Whether the Magnuson-Moss Warranty Act and Indiana's lemon law allowed sellers to make mandatory binding arbitration part of sale was an issue of first impression in Indiana. The Indiana Court of Appeals, following the majority of states but going against the Federal Trade Commission's explicit opinion, first found that the Magnuson-Moss Warranty Act does not prohibit mandatory binding arbitration.

Continue reading "Indiana Lemon Law Appellate Opinions 2006" »

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