U.S. District Court rules lemon Law does not apply to Illinois purchase.

• Author: Ziemer, David

Byline: David Ziemer

A recent decision by U.S. District Court Judge William C. Griesbach addresses a host of issues that can arise when a Lemon Law case is, or is arguably, subject to diversity jurisdiction in federal court.

First, a vehicle that is purchased out of state is not subject to Wisconsin's Lemon Law.

Second, a federal court may entertain a claim under the Magnuson-Moss Warranty Act, even if there is no valid claim under the Lemon Law.

Finally, under Wisconsin law, privity of contract must exist between a manufacturer and a consumer to create an implied warranty.

Wisconsin residents Lawrence and Carol Lamont bought a new Winnebago recreational vehicle (RV) from Crystal Valley RV, a motor home dealership in Illinois. They made an initial $1,000 deposit over the phone with a credit card, but picked up the RV and paid the balance in Illinois.

The Lamonts experienced a number of problems with the RV, and demanded that Winnebago Industries give them a different one, pursuant to Wisconsin's Lemon Law, sec. 218.0171.

When Winnebago refused to do so, the Lamonts filed suit in state court, alleging that Winnebago violated the Lemon Law and the Magnuson-Moss Warranty Act.

Winnebago removed the case to federal court, which granted summary judgment in favor of Winnebago on the Lemon Law claim, but not the Magnuson-Moss claim.

Lemon Law

The court first held that Wisconsin's Lemon Law was not applicable because the RV was purchased in Illinois.

The Lamonts argued that, by making a down payment via credit card over the telephone from their home in Wisconsin, they purchased the RV in Wisconsin.

However, the court disagreed, because the dealer never came to Wisconsin. Because the Lamonts went to Illinois to pay the balance and take delivery, the court concluded the purchase occurred there.

Accordingly, the court granted summary judgment to Winnebago on the state Lemon Law claim.

Magnuson-Moss

The court then held that it had jurisdiction over the Magnuson-Moss warranty claim.

A claim under the Act can be brought in federal court if the damages exceed $50,000.

In Schimmer v. Jaguar Cars, Inc., 384 F.3d 402 (7th Cir. 2004), the Seventh Circuit held that the jurisdictional limit was not met, even though the plaintiff was seeking a refund of the price he paid for a car (almost $70,000). The Seventh Circuit concluded that the actual damages (the price paid less the value of the defective car) were less than $50,000.

In the case at bar, Judge Griesbach...