Texas Lemon Law

Texas Lemon Law


In Texas, the law applicable to most of the cases we pursue is the Texas Deceptive Trade Practices–Consumer Protection Act, also known as the DTPA, located in Chapter 17 of the Texas Business and Commerce Code. The statute is complex and comprehensive, but essentially gives a consumer who purchases a product in Texas the right to recover damages, including attorneys fees, for (1) breach of express warranty; (2) breach of implied warranty; or (3) a misrepresentation or failure to disclose by the sellerprior to the purchase. A breach of express warranty occurs when a manufacturer fails to repair your vehicle in accordance with the warranty you received. This occurs when a defect is not repaired after a reasonable number of attempts or when a repair that should be covered is denied. As a general rule, a manufacturer gets four repair attempts to cure a defect before a breach occurs, although that number could be more or less depending on the circumstances.

A warranty denial occurs when the dealer or manufacturer refuses to cover the repair because of an exclusion listed in the warranty such as lack of maintenance, modification, neglect, abuse, etc. In those cases, the customer is usually being blamed for the defect. If this occurs, the manufacturer must have proof that the defect was caused by something you did or did not do, specifically listed in the warranty.

Without such proof, you will have a claim under the DTPA. If defect exists after a reasonable number of repairs or if a warranty repair is wrongfully denied, you likely have a claim for breach of express warranty under the DTPA.Implied warranties are warranties provided by law and the two that we usually use are the implied warranty of merchantability and the implied warranty to perform repairs in a good and workmanlike manner. The implied warranty of merchantability is given by the manufacturer and seller, although most dealers exclude all implied warranties in the sales contract.

This warranty applies to new products only and requires that the product be merchantable, or fit for the purpose for which it was intended, at the time you purchase it. If your vehicle has major or numerous defects, immediately or shortly after purchase, then you may have a claim for breach of the implied warranty of merchantability. We rely on this claim in situations where the manufacturer is technically complying with its express warranty by making all of the repairs, but, for a new vehicle, there is simply an excessive number of defects or there are major failures occurring too soon.

The implied warranty to perform repairs in a good an workmanlike manner means that a repair facility must properly diagnose and repair your vehicle, as compared what is generally considered proficient in the industry. This does not require perfection or a successful repair on the first try, but if a repair facility makes an obvious mistake in diagnosing or repairing your vehicle, you may have a claim.The third claim we usually pursue under the DTPA applies almost always to the seller only and arises from a long “laundry” list of possible violations, which are based either on a misrepresentation or a failure to disclose. There is a common practice and policy among auto dealerships not to disclose “minor” repairs or body work performed on your new car, prior to your purchase, as long as it is under some arbitrary amount, such as $500 or $1000.

It is not unusual for a new vehicle to be damaged in transit or at the dealership or to need warranty service beforethe are sold. If this information is not disclosed, you may have a claim, if that information would have affected your decision to purchase that vehicle. Similarly, if you purchase a used vehicle from a reputable dealer and the dealer does not tell you that the vehicle has a history of problems or that it had been damaged and repaired, you may have a claim. This is especially true if you buy a used vehicle from a dealer who sells that brand of vehicle new and has access to the vehicle’s complete service history.

Failure to disclose such information to a buyer is usually a DTPA violation. Other examples would be (1) representing that a vehicle had been a “demo” or driven by a dealer employee when it had not; (2) failing to disclose that a used vehicle had been previously used by a car rental company; (3) failing to disclose that a new vehicle already has a known history of problems with that make and model, or one of its parts such as its engine or transmission; (4) stating that the vehicle would be “trouble free” when it was not; or (5) selling a vehicle with a tampered odometer. There are many other examples.

To better protect yourself from such misrepresentations, remember to ask the salesperson if the vehicle has had prior body work or has had prior mechanical repairs. This will make your case stronger if your later learn of prior damage or defects. Another valuable tip: after you agree on the price and you are presented with a stack of documents to sign, insist on taking them home so that you can read them and “sleep on it.” Tell them you will return the next day to sign them and complete the transaction. Many of my clients say that they were pressured and did not read the documents. Don’t let that happen to you. If your rights under the DTPA have been violated, then you are entitled to your actual damages and attorneys fees. Your available damages depend on many factors, and ultimately depend on how much a defendant is willing to pay to settle your case or how much a jury decides to award. The basic measure of damages in DTPA cases is referred to as diminished value and is described as the difference in value, on the date of purchase, between what you paid and the value of what you actually received.

For example, if you pay $20,000 for a car that leaves you stranded every time you get on the highway, the actual value of what you bought is substantially less than $20,000. On the other hand, if the vehicle has a persistent but annoying dash rattle, the vehicle would be worth less than $20,000, but not much. The amount of your damages depends on many factors such as purchase price, the number of repair visits, the nature of the defects, whether the defect is unrepairable, etc. It is an economic principle that’s sole function is to cover the loss you incurred when you bought something that was not worth what you paid for it. In addition, in some cases, you may be entitled to other damages such as loss of use, loss of income, cost of repair, or in extremely rare cases, mental anguish.

These damages are limited or unrecoverable in many cases, but if you have incurred or suffered such damages, and can prove them, you may be entitled to compensation. The DTPA also allows for “treble” damages which are essentially punitive damages available when the DTPA violation was committed “knowingly.” An obvious example would be where a vehicle is wrecked on a test drive, repaired at the dealership, and then sold without disclosing the damage or repair. In that case, the dealership knew about the damage and repair and “knowingly” failed to disclose it. In such a case, the jury can award punitive damages, but they will be limited to twice the amount of actual damages. Again, treble damages are available under the DTPA, but that does not mean that you will actually receive them. Finally, and most importantly, you must file your DTPA claim within two years of discovering the facts that give rise to your DTPA claim, and it is a good rule of thumb to use the first defect as the date to start the clock. In other words, once you start having problems or discover that your DTPA rights were violated, you should keep in mind that you need to file suit within two years. Many consumers wait too long because the dealer or manufacturer keeps promising to fix the problem or they first try to file a BBB complaint or a Lemon Law claim with the Texas Department of Transportation. You will lose your rights under the DTPA if you wait too long so you should always be aware of the two-year limit.

The Texas UCC

The Texas Uniform Commercial Code (the “UCC”), which is found in Chapter 2 (sales) and Chapter 2A (leases) of the Texas Business and Commerce Code, applies to nearly all sales transactions. This statute is the origin of the express and implied warranty claims we already discussed under the DTPA as well some other aspects of your case. The UCC helps you in two main respects. First, the statute of limitations under the UCC is four years from the date of purchase. So, even if the DTPA is no longer available, the UCC provides you an alternative theory to pursue against the seller and manufacturer, only without some of the benefits of DTPA, such as the availability of treble damages.The UCC does provide one additional cause of action that can be very beneficial if it applies to your case. It is referred to as revocation of acceptance and essentially states that if (1) your vehicle has a defect that has not been repaired after a reasonable number of attempts, (2) the defect substantially impairs the value of the vehicle to you, and (3) you notify the seller that you intend to revoke, then you are entitled to return the vehicle for a full refund, less some amount for your use of the vehicle. You also may be entitled to some other damages and attorneys fees. The keys here are that the defect must still exist and you must tell the dealer, as early as possible, that you want to return the vehicle and get your money back, preferably in writing. In some cases, especially involving motor homes and travel trailers that tend to depreciate rapidly, this can be a valuable remedy.

The Texas Lemon Law

One of the most misunderstood laws in Texas is the Texas Lemon Law. The Lemon Law is applicable only if you elect to file a Lemon Law complaint with the Texas Department of Transportation, Motor Vehicle Division. It has no applicability in civil lawsuits. Some of the benefits of the Lemon Law are:
(1) the process is generally consumer-friendly;
(2) you do not have to use an attorney;
(3) the process is usually faster than court;
(4) the manufacturer can be ordered to repurchase your vehicle.
However, you should consider the following before selecting this route:
(1) the time you spend in the Lemon Law proceeding (approximately 6-9 months) may cause you to lose your rights under the DTPA due to the two-year limitations discussed above;

(2) generally, a lemon law complaint must be filed within 30,000 miles or 30 months from the date of purchase;

(3) for the most part, there must be a particular defect which has been repaired four times and that defect must still exist at the time of the hearing;

(4) if you have had many different problems, but none were repeated a sufficient number of times, you are not eligible for relief;

(5) if you had one problem that was repaired, even though it took 20 attempts, you are not eligible for relief;

(6) in most cases, you cannot recover any money damages;

(7) if you win your case, but you are upside down in your vehicle, financed some negative equity from your trade when you bought the car, or are assessed a large mileage charge, you will likely owe money to your finance company after your vehicle is bought back;

(8) if you lose your lemon law case, it may affect your ability to file suit;

(9) the relief is basically all or nothing–either you are awarded a repurchase if you win or you get nothing if you lose.
If you are considering this route, we will be happy to discuss your options with you so that you make the best decision for your case. The Lemon Law was created to provide an efficient and friendly way for consumers to get rid of their lemons. The process is fair and run by competent and knowledgeable people who will help you with the process. Just remember that the relief is dependent on meeting very specific requirements that just do not apply to many vehicles. Many of these consumers, however, still have other rights and remedies that we can pursue through the courts.

The Magnuson-Moss Warranty Act (the “MMWA”)

Citizens of Texas are fortunate that they are adequately protected by Texas state laws such as the DTPA, the UCC, and the Lemon Law. Therefore, in most cases, we do not pursue a claim under the federal warranty statute, the MMWA. In states without good consumer protection laws, the MMWA is used extensively, as it governs warranties and provides remedies for breaches of warranties. Passed by Congress in 1975, the Act requires manufacturers and sellers of consumer products to provide consumers with detailed information about warranty coverage. In addition, it affects both the rights of consumers and the obligations of warrantors under written warranties.
In limited situations, we may decide to allege a claim under the MMWA, and we will discuss any questions you may have about whether the MMWA should be invoked in your case.

Patrick Law Firm, P.C.