California Supreme Court Rules In Favor Of Consumers: Trade-In Credit Cannot Be Used As Deduction

In an important move to protect the lemon law rights of consumers in California, the California Supreme Court ruled 9-0 in favor of our client in Niedermeier v. FCA, striking down an Appeals Court ruling that would have allowed FCA to use trade-in credits as a deduction on the $98,961.08 award that we won for our client.

The Court said in its Opinion that if FCA could use the trade-in credit as a deduction on the award, FCA would have been rewarded for “would reward defendant for its delay in replacing the car or refunding plaintiff’s money when defendant had complete control over the length of that delay, and an affirmative statutory duty to replace or refund promptly.”

In 2011, our client, Lisa Niedemeier purchased a Jeep Wrangler for approximately $40,000. The Jeep Wrangler experienced serious problems with its transmission, engine and exhaust system throughout the warranty period. Vehicle problems included jerking, rattling and grinding noises, noxious gas emissions, and floorboards heating up in such a manner that made it difficult for Niedemeier to brake, turn or accelerate.

Within four years, Niedemeier brought her Wrangler to FCA’s repair facilities 16 times, but FCA was unable to repair the vehicle. In 2015, Niedemeier thrice asked FCA to repurchase the vehicle. FCA refused each time. After the third request, Niedemeier traded in the Jeep Wrangler for a GMC Yukon and received $19,000 in trade-in credit.

FCA tried to use that trade-in credit as a deduction. Had FCA abided by its affirmative duty to repurchase or replace a defective vehicle, it would not have incurred a civil penalty of $59,376.65, which had resulted in the final $98,961.08 award amount.

“This case shows we will fight the hardest to ensure consumers get everything they are entitled to under the lemon law, and we’re pleased the court decided in our client’s favor,” said Roger Kirnos, Managing Partner of Knight Law Group.

When an auto manufacturer refuses to honor its obligations the way FCA has to Niedemeier, our lemon law attorneys argue our clients’ cases and fight to preserve not just the consumer rights of our immediate clients, but anyone who may need the protection of the California Lemon Law.

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