Hawaii
Motor Vehicle Express Warranty Enforement
(Lemon Law),
Chapter 481i
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§481I-1. Legislative
intent.
The legislature recognizes that a
motor vehicle is a major consumer
purchase and that a defective motor
vehicle creates a hardship for the
consumer. The legislature further
recognizes that a duly franchised
motor vehicle dealer is an authorized
service agent of the manufacturer.
It is the intent of the legislature
that a good faith motor vehicle warranty
complaint by a consumer be resolved
by the manufacturer within a specified
period of time. It is further the
intent of the legislature to provide
statutory procedures whereby a consumer
may receive a replacement motor vehicle,
or a full refund, for a motor vehicle
which is not brought into conformity
with the applicable express warranties,
as provided in this chapter. Finally,
it is the intent of the legislature
to ensure that consumers are made
aware of their rights under this chapter
and are not refused the information,
documents, or service necessary to
exercise their rights.
Nothing in this chapter
shall in any way limit or expand the
rights or remedies which are otherwise
available to a consumer under any
other law. [L 1992, c 314, pt of §1]
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§481i-2. Definitions.
When used in this section unless the
context otherwise requires:
"Business day"
means any day during which the service
departments of authorized dealers
of the manufacturer of the motor vehicle
are normally open for business.
"Collateral
charges" means those additional
charges to a consumer wholly incurred
as a result of the acquisition of
the motor vehicle. For the purposes
of this chapter, collateral charges
include but are not limited to finance
and interest charges, manufacturer-installed
or agent-installed items, general
excise tax, license and registration
fees, title charges, and similar government
charges.
"Consumer"
means the purchaser, other than for
purposes of resale, or the lessee
of a motor vehicle, any person to
whom the motor vehicle is transferred
during the duration of the express
warranty applicable to the motor vehicle,
and any other person entitled to enforce
the obligations of the express warranty.
"Express warranty"
means any written warranty issued
by the manufacturer, or any affirmation
of fact or promise made by the manufacturer,
excluding statements made by the dealer,
in connection with the sale or lease
of a motor vehicle to a consumer,
which relates to the nature of the
material or workmanship and affirms
or promises that the motor vehicle
shall conform to the affirmation,
promise, or description or that the
material or workmanship is free of
defects or will meet a specified level
of performance.
"Incidental
charges" means those reasonable
costs incurred by the consumer, including,
but not limited to, towing charges
and the costs of obtaining alternative
transportation which are directly
caused by the nonconformity or nonconformities
which are the subject of the claim,
but shall not include loss of use,
loss of income, or personal injury
claims.
"Lemon law rights
period" means the term of the
manufacturer's express warranty, the
period ending two years after the
date of the original delivery of a
motor vehicle to a consumer, or the
first 24,000 miles of operation, whichever
occurs first.
"Lessee"
means any consumer who leases a motor
vehicle for one year or more pursuant
to a written lease agreement which
provides that the lessee is responsible
for repairs to such motor vehicle,
or any consumer who leases a motor
vehicle pursuant to a lease-purchase
agreement.
"Motor vehicle"
means a self-propelled vehicle primarily
designed for the transportation of
persons or property over public streets
and highways which is used primarily
for personal, family, or household
purposes. For purposes of this definition,
a "motor vehicle" also includes
a "demonstrator", which
means a vehicle assigned by a dealer
for the purpose of demonstrating qualities
and characteristics common to vehicles
of the same or similar model or type,
but does not include mopeds, motorcycles,
or motor scooters, as those terms
are defined in chapter 286, or vehicles
over 10,000 pounds, gross vehicle
weight rating. For purposes of this
definition, a "motor vehicle"
also includes (1) an individually
registered vehicle used for an individual's
business purposes and for personal,
family, or household purposes; and
(2) a vehicle owned or leased by a
sole proprietorship, corporation or
partnership which has purchased or
leased no more than one vehicle per
year, used for household, individual,
or personal use in addition to business
use.
"Nonconformity"
means a defect, malfunction, or condition
that fails to conform to the motor
vehicle's applicable express warranty
and that substantially impairs the
use, market value, or safety of a
motor vehicle, but does not include
a defect, malfunction, or condition
that results from an accident, abuse,
neglect, modification, or alteration
of the motor vehicle by persons other
than the manufacturer, its agent,
distributor, or authorized dealer.
"Purchase price"
means the cash price appearing in
the sales agreement or contract and
paid for the motor vehicle, including
any net allowance for a trade-in vehicle.
Where the consumer is a second or
subsequent purchaser and the arbitration
award is for a refund of the motor
vehicle, "purchase price"
means the purchase price of the second
or subsequent purchase not to exceed
the purchase price paid by the original
purchaser.
"Reasonable
offset" for use means the number
of miles attributable to a consumer
up to the date of the third repair
attempt of the same nonconformity
which is the subject of the claim,
the date of the first repair attempt
of a nonconformity that is likely
to cause death or serious bodily injury,
or the date of the thirtieth cumulative
business day when the vehicle is out
of service by reason of repair of
one or more nonconformities, whichever
occurs first. The reasonable offset
for use shall be equal to one per
cent of the purchase price for every
thousand miles of use.
"Replacement
motor vehicle" means a motor
vehicle which is identical or reasonably
equivalent to the motor vehicle to
be replaced, as the motor vehicle
to be replaced existed at the time
of original acquisition, including
any service contract, undercoating,
rustproofing, and factory or dealer
installed options.
"Settlement"
means an agreement for repurchase
or replacement of a motor vehicle
entered into between a manufacturer
and a consumer that occurs after a
dispute is submitted to an informal
dispute resolution procedure or arbitration
program or after a dispute is approved
for arbitration under section 481I-4.
"Settlement" does not include
an agreement for a motor vehicle to
be repurchased pursuant to a guaranteed
repurchase or satisfaction program
advertised by the manufacturer in
which the vehicle was not alleged
or found to have a nonconformity as
defined in this section.
"Substantially
impairs" means to render the
motor vehicle unfit, unreliable, or
unsafe for warranted or normal use,
or to significantly diminish the value
of the motor vehicle. [L 1992, c 314,
pt of §1; am L 1998, c 197, §§1,
2; am L 2000, c 44, §1]
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§481i-3. Motor vehicle: express
warranties, return.
(a) If a motor vehicle does not conform
to all applicable express warranties,
and the consumer reports the nonconformity
in writing to the manufacturer, its
agent, distributor, or its authorized
dealer during the term of the lemon
law rights period, then the manufacturer,
or, at its option, its agent, distributor,
or its authorized dealer, shall make
such repairs as are necessary to conform
the vehicle to such express warranties,
notwithstanding the fact that such
repairs are made after the expiration
of such term.
(b) If the manufacturer,
its agents, distributors, or authorized
dealers are unable to conform the
motor vehicle to any applicable express
warranty by repairing or correcting
any defect or condition which substantially
impairs the use, market value, or
safety of the motor vehicle after
a reasonable number of documented
attempts, then the manufacturer shall
provide the consumer with a replacement
motor vehicle or accept return of
the vehicle from the consumer and
refund to the consumer the following:
the full purchase price including
but not limited to charges for undercoating,
dealer preparation, transportation,
installed options, and all collateral
and incidental charges, and less a
reasonable offset for the consumer's
use of the motor vehicle.
If either a replacement
motor vehicle or a refund is awarded,
an "offset" may be made
for damage to the vehicle not attributable
to normal wear and tear, if unrelated
to the nonconformity. If a replacement
motor vehicle is awarded, a reasonable
offset shall be made for the use of
the motor vehicle and an additional
offset may be made for loss to the
fair market value of the vehicle resulting
from damage beyond normal wear and
tear, unless the damage resulted from
the nonconformity. When the manufacturer
supplies a replacement motor vehicle,
the manufacturer shall be responsible
for the general excise tax, and license
and registration fees. Refunds made
pursuant to this subsection shall
be deemed to be refunds of the sales
price and treated as such for purposes
of section 237-3. Refunds shall be
made to the consumer and lienholder,
if any, as their interests may appear
on the records of ownership. If applicable,
refunds shall be made to the lessor
and lessee pursuant to rules adopted
by the department of commerce and
consumer affairs.
(c) It shall be an
affirmative defense to any claim under
this section that a nonconformity
is the result of abuse, neglect, or
unauthorized modifications or alterations
of a motor vehicle by a consumer.
(d) It shall be presumed
that a reasonable number of attempts
have been undertaken to conform a
motor vehicle to the applicable express
warranties, if, during the lemon law
rights period, any of the following
occurs:
(1) The same nonconformity
has been subject to examination or
repair at least three times by the
manufacturer, its agents, distributors,
or authorized dealers, but such nonconformity
continues to exist; or
(2) The nonconformity
has been subject to examination or
repair at least once by the manufacturer,
its agents, distributors, or authorized
dealers, but continues to be a nonconformity
which is likely to cause death or
serious bodily injury if the vehicle
is driven; or
(3) The motor vehicle
is out of service by reason of repair
by the manufacturer, its agents, distributors,
or authorized dealers for one or more
nonconformities for a cumulative total
of thirty or more business days during
the lemon law rights period.
The term of the lemon
law rights period and such thirty-day
period shall be extended by any period
of time during which repair services
are not available to the consumer
because of a war, invasion, strike,
fire, flood or other natural disaster.
The presumptions
provided in this subsection shall
not apply unless the manufacturer
has received a written report of the
nonconformity from the consumer and
has had a reasonable opportunity to
repair the nonconformity alleged.
Upon a second notice
of the nonconformity, or, if the motor
vehicle has been out of service by
reason of repair in excess of twenty
business days, the dealer shall notify
the manufacturer of the nonconformity.
(e) During the lemon
law rights period, the manufacturer
or its agent, distributor, or authorized
dealer shall provide to the consumer,
each time the consumer's vehicle is
returned from being diagnosed or repaired
under the warranty, a fully itemized,
legible statement or repair order
indicating any diagnosis made and
all work performed on the vehicle,
including, but not limited to, a general
description of the problem reported
by the consumer or an identification
of the defect or condition, parts
and labor supplied, the date and the
odometer reading when the vehicle
was submitted for repair, and the
date when the vehicle was made available
to the consumer. The consumer shall
sign and receive a copy of the statement
or repair order.
(f) Upon request
from the consumer, the manufacturer,
or at its option its agent, distributor,
or authorized dealer, shall provide
a copy of any report or computer reading
regarding inspection, diagnosis, or
test-drive of the consumer's motor
vehicle, and shall provide a copy
of any technical service bulletin
related to the nonconformity issued
by the manufacturer regarding the
year and model of the consumer's motor
vehicle as it pertains to any material,
feature, component, or the performance
thereof.
Upon receipt of a
consumer's written report of a nonconformity
to the manufacturer, the manufacturer
or, at its option, its agent, distributor,
or authorized dealer, shall inform
the consumer of any technical service
bulletin or report relating to the
nonconformity, and shall advise the
consumer of the consumer's right to
obtain a copy of such report or technical
service bulletin.
(g) The manufacturer,
its agent, distributor, or authorized
dealer, shall provide the consumer
at the time of purchase of the motor
vehicle a written notice setting forth
the terms of a state certified arbitration
program and a statement of the rights
of the consumer under this section
in plain language, the form of which
has been previously reviewed and approved
by the department of commerce and
consumer affairs for substantial compliance
with title 16, Code of Federal Regulations,
part 703, as may be modified by the
requirements of this chapter. The
written notice must specify the requirement
that written notification to the manufacturer
of the motor vehicle nonconformity
is required before the consumer is
eligible for a refund or replacement
of the motor vehicle. The notice must
also include the name and address
to which the consumer must send such
written notification. The provision
of this statement is the direct responsibility
of the dealer, as that term is defined
in chapter 437.
(h) The consumer
shall be required to notify the manufacturer
of the nonconformity only if the consumer
has received a written notice setting
forth the terms of the state certified
arbitration program and a statement
of the rights of the consumer as set
out in subsection (g).
(i) Where the state
certified arbitration program is invoked
by the consumer of a motor vehicle
under express warranties, a decision
resolving the dispute shall be rendered
within forty-five days after the procedure
is invoked. However, the failure of
an arbitrator to render a decision
within forty- five days because of
unforeseen circumstances shall not
void any subsequent decision.
Any decision rendered
resolving the dispute shall provide
appropriate remedies including, but
not limited to, the following:
(1) Provision of
a replacement motor vehicle; or
(2) Acceptance of
the motor vehicle from the consumer,
refund of the full purchase price,
and all collateral and incidental
charges.
The decision shall
specify a date for performance and
completion of all awarded remedies.
(j) Any action brought
under this section must be initiated
within one year following expiration
of the lemon law rights period.
(k) No vehicle transferred
to a dealer or manufacturer by a buyer
or a lessee under this chapter or
by judgment, settlement, or arbitration
award in this State or in another
state may be sold, leased, or auctioned
by any person unless:
(1) The nature of
the defect experienced by the original
buyer or lessee is clearly and conspicuously
disclosed on a separate document that
must be signed by the manufacturer
and the purchaser and must be in ten-point,
capitalized type, in substantially
the following form:
"IMPORTANT:
THIS VEHICLE WAS RETURNED TO THE MANUFACTURER
BECAUSE A DEFECT(S) COVERED BY THE
MANUFACTURER'S EXPRESS WARRANTY WAS
NOT REPAIRED WITHIN A REASONABLE TIME
AS PROVIDED BY LAW.";
(2) The defect is
corrected; and
(3) The manufacturer
warrants to the new buyer or lessee,
in writing, that if the defect reappears
within one year or 12,000 miles after
the date of resale, whichever occurs
first, it will be corrected at no
expense to the consumer.
(l) A violation of
subsection (k) shall constitute prima
facie evidence of an unfair or deceptive
act or practice under chapter 480.
[L 1992, c 314, pt of §1; am
L 1993, c 58, §1; am L 1998,
c 197, §§3 to 5; am L 2000,
c 44, §2]
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§481i-4. Arbitration mechanism.
(a) The department of commerce and
consumer affairs shall establish and
monitor a state certified arbitration
program which is in substantial compliance
with title 16, Code of Federal Regulations,
part 703, as may be modified by this
section, and shall adopt appropriate
rules governing its operation.
(b) The director
of commerce and consumer affairs may
contract with an independent arbitration
organization for annual term appointments
to screen, hear, and resolve consumer
complaints which have been initiated
pursuant to section 481I-3.
The following criteria
shall be considered in evaluating
the suitability of independent arbitration
mechanisms: capability, objectivity,
experience, nonaffiliation with manufacturers
of or dealers in new motor vehicles,
reliability, financial stability,
and fee structure.
(c) If a consumer
agrees to participate in and be bound
by the operation and decision of the
state certified arbitration program,
then all parties shall also participate
in, and be bound by, the operation
and decision of the state certified
arbitration program. The prevailing
party of an arbitration decision made
pursuant to this section may be allowed
reasonable attorney's fees.
(d) The submission
of any dispute to arbitration in which
the consumer elects nonbinding arbitration
shall not limit the right of any party
to a subsequent trial de novo upon
written demand made upon the opposing
party to the arbitration within thirty
calendar days after service of the
arbitration award, and the award shall
not be admissible as evidence at that
trial. If the party demanding a trial
de novo does not improve its position
as a result of the trial by at least
twenty-five per cent, then the court
shall order that all of the reasonable
costs of trial, consultation, and
attorney's fees be paid for by the
party making the demand.
If neither party
to a nonbinding arbitration demands
a trial de novo within thirty days
after service of the arbitration award,
the arbitrator's decision shall become
binding on both parties upon the expiration
of the thirty-day period.
(e) Funding of the
state certified arbitration program
shall be provided through an initial
filing fee of $200 to be paid by the
manufacturer and $50 to be paid by
the consumer upon initiating a case
for arbitration under this section.
Every final decision in favor of the
consumer issued by the independent
arbitration mechanism shall include
within its relief the return of the
$50 filing fee to the consumer. The
director of commerce and consumer
affairs may establish a trust fund
for the purpose of administering fees
and costs associated with the state
certified arbitration program.
(f) The failure of
a manufacturer to timely comply with
a binding decision of a state certified
arbitration program shall be prima
facie evidence of an unfair or deceptive
act or practice under chapter 480
unless the manufacturer can prove
that it attempted in "good faith"
to comply, or that the failure was
beyond the manufacturer's control,
the result of a written agreement
with the consumer, or based on an
appeal filed under chapter 658A. [L
1992, c 314, pt of §1; am L 1996,
c 185, §1; am L 2001, c 265,
§4]
