No pre-suit attorney fees under lemon law

Collateral or incidental damages under Virginia’s “Lemon Law” do not include pre-litigation attorney’s fees. “Therefore, when a manufacturer provides a refund, it is not required to pay pre-litigation attorney’s fees to satisfy its obligations under the Lemon Law.”

Background

After experiencing many problems with a new Hyundai vehicle, appellant Ranger, through his attorney, sent Hyundai Motor America a demand letter, seeking a refund under Virginia’s Lemon Law, Code § 59.1-207.9 et seq.

Hyundai offered to repurchase the vehicle and pay some of Ranger’s attorney’s fees. “Ranger refused the offer on the basis that Hyundai failed to sufficiently reimburse him for his pre-litigation attorney’s fees. Ranger then filed a complaint, alleging, as relevant here, a violation of the Lemon Law.

“Hyundai moved for summary judgment, contending that once it offered to repurchase the vehicle, it complied with the Lemon Law, and ‘[p]laintiff is barred from seeking relief under the statute as a matter of law.’

“The circuit court agreed and granted Hyundai’s motion for summary judgment.” The court dismissed the case with prejudice.

Lemon Law charges and damages

Under the Lemon Law, “if the manufacturer does not, or is unable to, bring a defective vehicle into conformity with the warranty within the specified time, the manufacturer must ‘[a]ccept return of the motor vehicle and refund to the consumer … the full contract price, including all collateral charges, incidental damages, less a reasonable allowance for the consumer’s use of the vehicle up to the date of the first notice of nonconformity that is given to the manufacturer, its agents or authorized dealer.’ …

“The statute thus specifies that a proper refund includes the recovery of ‘collateral charges’ and ‘incidental damages.’”

Under the statute, collateral charges include “‘any sales-related … charges including but not limited to sales tax, license fees, registration fees, title fees, finance charges and interest, transportation charges, dealer preparation charges or any other charges for service contracts, undercoating, rust proofing or installed options, not recoverable from a third party.’”

This definition does not include pre-litigation attorney’s fees.

The Uniform Commercial Code supplies the Lemon Law’s definition of “incidental damages.”

“[S]uch damages ‘include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach.”

Pre-litigation attorney’s fees are not mentioned in this definition, nor in the official commentary to this UCC provision.

Fees not available

“Although we could not find a Virginia case on point, the ‘overwhelming weight of authority’ from other courts concludes that attorney’s fees are not available under this provision of the Uniform Commercial Code. … We agree.

“Pre-litigation attorney’s fees are not a component of collateral or incidental damages under the Lemon Law. Therefore, when a manufacturer provides a refund, it is not required to pay pre-litigation attorney’s fees to satisfy its obligations under the Lemon Law.

“The Lemon Law further provides a judicial remedy in the event the manufacturer fails to abide by its obligations under the law. ‘Any consumer who suffers loss by reason of a violation of any provision of this [act] may bring a civil action to enforce such provision.’ …

“For there to be a civil action, however, there must be a ‘violation of any provision’ of the Lemon Law. If there is no violation, there can be no viable civil action. A manufacturer who has offered a refund that satisfies the Lemon Law requirements is not in violation of the statute.

“The only time a consumer can recover attorney’s fees is when a consumer has filed an action and prevailed. … In that instance, the consumer is entitled to ‘recover reasonable attorney’s fees, expert witness fees and court costs incurred by bringing such action[].’”

Summary judgment

“The record here establishes that the manufacturer offered the consumer a refund within the intendment of the statute, and that the only dispute was over the question of whether a proper refund under the statute included pre-litigation attorney’s fees. …

“We hold that the manufacturer did not violate the Lemon Law by failing to pay pre-litigation attorney’s fees because the Lemon Law does not provide for such fees.

“The refund offered by the manufacturer was in conformity with the requirements of the Lemon Law. The facts in dispute – the payment of and the amount of pre-litigation attorney’s fees – were not material under the law because Ranger was not entitled to recover those fees.

“Because there was no genuine dispute of material fact, the trial court correctly granted summary judgment to Hyundai.

“We hasten to add that if the manufacturer has not been able to bring a vehicle into conformity with the warranty, and also does not offer an acceptable replacement vehicle or a full refund as defined by the Lemon Law, then the consumer can bring an action for damages under the Lemon Law and, if the consumer prevails, recover attorney’s fees.

“This is not such a case.”

Affirmed.

Ranger v. Hyundai Motor America, Record No. 220058; (McCullough) April 6, 2023. From the Circuit Court of Accomack County. W. Aaron Cluett (Lemon Law Group Partners, on brief), for appellant. Robert L. Wise (Mark W. Skanes; Danielle Gibbons; Nelson, Mullins, Riley & Scarborough; RoseWaldorf, on brief), for appellee. VLW 023-6-008, 6 pp.