Hawaii Lemon Law

Hawaii Lemon Law Statute

Hawaii Revised Statutes §§481I-1 to 481I-4

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.

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, 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 (30th) 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 percent
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,
rust proofing, and factory or dealer installed options. 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.

“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.

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 and installed options, and all collateral
and incidental charges, excluding finance and interest 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. 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 lien holder, 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 exists; 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. If no decision is rendered within forty-five days
as required by this subsection, the dispute shall be submitted to the
regulated industries complaints office of the department of commerce and
consumer affairs for investigation and hearing. 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 subsection (b) may be sold or leased 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 HAWAII
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.

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, non-affiliation 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 non-binding 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 non-binding 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 658.