DiCintio v. DaimlerChrysler Corp., 97 N.Y.2d 463 (2002)
The Magnuson-Moss Warranty Act does not extend to automobile leases because the Act’s definitions of “consumer,” “written warranty,” and “implied warranty” all require a sale, and a lease is not a sale under the Uniform Commercial Code (UCC).
Summary
Mark DiCintio leased a Jeep Grand Cherokee from Adzam Auto Sales, which assigned the lease to Chrysler Financial. The vehicle came with a standard DaimlerChrysler warranty. DiCintio experienced persistent mechanical problems and attempted to revoke acceptance of the vehicle. When DaimlerChrysler refused, he sued, alleging breach of warranty under the Magnuson-Moss Warranty Act. The New York Court of Appeals held that the Warranty Act does not apply to leases because the Act requires a “sale” to establish a consumer relationship, and a lease is not a sale under the UCC. Thus, DiCintio could not pursue a claim under the federal statute.
Facts
In June 1999, DiCintio leased a 1999 Jeep Grand Cherokee from Adzam Auto Sales. The lease was assigned to Chrysler Financial. The vehicle included a DaimlerChrysler “Warranty Information” booklet, which outlined warranty coverage for buyers and lessees alike. DiCintio experienced several mechanical issues shortly after taking possession of the vehicle, including transmission problems, pulling to one side, and stalling. He took the vehicle to authorized dealers for repair multiple times, but the problems persisted. In October 1999, DiCintio sought to terminate the lease or receive a replacement vehicle, but Adzam refused. He then notified DaimlerChrysler of his intent to revoke acceptance.
Procedural History
DiCintio sued DaimlerChrysler and Adzam, alleging breach of warranty under the Magnuson-Moss Warranty Act, breach of implied warranties, and improper delivery under the UCC. The Supreme Court initially held that the Warranty Act applied to the lease. The Appellate Division affirmed this holding and reinstated certain claims that had been dismissed. The Court of Appeals reversed, holding that the Warranty Act does not apply to leases.
Issue(s)
Whether the Magnuson-Moss Warranty Act applies to an automobile lease.
Holding
No, because the Magnuson-Moss Warranty Act requires a “sale” to establish a consumer relationship, and a lease is not a sale under the UCC.
Court’s Reasoning
The Court of Appeals focused on the definition of “consumer” under the Magnuson-Moss Warranty Act, which requires a “buyer” or a transferee of a product with a warranty. The Act defines “written warranty” and “implied warranty” as arising “in connection with the sale” of a consumer product. Because the Act does not define “sale,” the court turned to the UCC, which defines a sale as the “passing of title.” Since a lease does not transfer title, the court reasoned that DiCintio was not a “consumer” under the Act. The court acknowledged similarities between leases with purchase options and installment sales but emphasized that a lessee retains the option not to buy the vehicle. Furthermore, the court pointed to the Truth in Lending Act (TILA), which specifically includes leases, as evidence that Congress knew how to extend consumer protection to leases when it intended to do so. The court also noted that legislative history of the Warranty Act showed that suggestions to include lessees were not adopted. Finally, the Court noted that the New York Lemon Law was amended to include lessees showing the ability of legislatures to expand consumer protection to leases when they wish, but that the federal law did not do so.
The court stated, “Thus, each test within the definition of ‘consumer’ requires courts to determine whether a ‘sale’ has occurred. Accordingly, the case hinges on whether DiCintio’s lease qualifies as a ‘sale.’”
The court concluded that because DiCintio’s transaction was a lease, not a sale, he was not a “consumer” under the Magnuson-Moss Warranty Act and therefore could not claim relief under the Act.