The following summary of Montana’s Lemon Law is taken from Attorney General Austin Knudsen’s website. Although dealers are generally right in the middle of lemon law claims, resolution of those claims is the obligation of the manufacturer, not the dealer and involves an administrative process supervised by the AG’s office. The following information can be provided to your affected customers, or you can refer the customer to the AG’s website. 

What the Lemon Law Covers

• Vehicles purchased, titled or leased in Montana, provided they are less than two years old and have 18,000 miles or less on the odometer. Motorcycles and the chassis of qualifying motor homes are included.
• Substantial defects that impair the use, market value or safety of the vehicle

What the Lemon Law Does Not Cover

• Vehicles purchased for business use
• Vehicles over 10,000 lbs. GVW
• Non-motorized and off-road vehicles
• The “residential” portion of motor homes
• Defects resulting from accident, abuse, neglect, modification or alteration by anyone other than the manufacturer or authorized dealer

Warranty Period

The warranty period ends two years after the date of the vehicle’s original delivery to the consumer or after the first 18,000 miles of operation, whichever occurs first. This period can be extended for up to a year if a defect is reported, in writing, to the dealer or manufacturer during the warranty period but has not been cured by the expiration of the period.

Required Documentation

Keep all records of warranty repairs and all written communications with dealers and manufacturers. Work orders provide the best proof as to when a problem was first reported.

To prove that a vehicle is a lemon, be prepared to produce:

• All purchase (or lease) documents
• All maintenance records
• All repair orders
• Receipt for maintenance supplies
• Certified letter of notification to the manufacturer (copy)
• Any and all other documents relating to the defect

The Lemon Law Process

Notify the manufacturer. If the problem is a substantial defect or condition that recurs or still exists after the third repair attempt, notify the manufacturer by certified mail, return receipt requested, of the need to repair the defect or condition on the fourth attempt. This notification procedure is not required under the Lemon Law, but does serve as notice to the manufacturer of your intentions.

If the manufacturer fails to correct any substantial defect or condition following your written notification, the manufacturer must either refund the full purchase price — plus any reasonable expenses directly incurred because of the vehicle’s condition — or provide an identical or reasonably similar replacement vehicle. If the vehicle is bought back, the manufacturer can deduct an amount for the use of the vehicle calculated based on the odometer reading at the time of repurchase.

Time Limits

A Lemon Law claim arises from violation of a state law, so the time to file the claim is within two years. Mont. Code Ann. §27-2-211(a). The Montana Department of Justice has approved a filing period of one year after the earlier of (1) two years after original delivery to a consumer, or (2) the first 18,000 miles of operation. It may be that a lemon law claim can be filed as late as within two years of the expiration of that period under Vader v. Fleetwood Enterprises, Inc., 2009 MT 6, 201 P.3d 139, 348 Mont. 344 (Mont. 2009). The customer should promptly contact legal counsel regarding this issue if that time frame has or is about to expire.

The Vader case referred to above appears to be the only lemon law case to reach the Montana Supreme Court and offers a lesson for dealers: carefully document all the customer’s complaints, particularly when you find you will have difficulty repairing the vehicle. In the Vader case, David and Donna Vader bought a new 2000 Pace Arrow Vision motor home in November 2000 for about $119,000 from a Fleetwood dealer in Nebraska. Fleetwood sold and warranted the motor home, while Ford separately manufactured and warranted the chassis. Soon after purchase, the Vaders experienced multiple defects with the leveling jacks, hot water heater and ice maker, but the central problem was severe, dangerous swaying/handling while driving, which they said made them fear for their safety and avoid traffic.

The Vaders claimed they complained early, including by a January 2001 letter (that neither side could produce) and made repeated efforts over roughly two years to get the swaying fixed through Fleetwood dealers, Ford dealers and Fleetwood’s factory, with other issues mostly repaired but the swaying not addressed and often referred to Ford. In July 2004, they sued Fleetwood and Ford; Ford settled before trial. The case went to a jury in 2007 on warranty, Consumer Protection Act, and Lemon Law claims, and the jury found for the Vaders and awarded $84,000.

Activities by the various dealers that the Vaders took their motor home to factored into the Court’s decision. Dealer documentation and alleged refusal to create work orders mattered because Fleetwood argued the Vaders could not meet the Lemon Law’s “reasonable number of attempts” requirement within the warranty period without documented repair attempts — claiming the first real attempt was not until July 2003, after the warranty period.

The Vaders countered with testimony that they repeatedly brought the motor home to Fleetwood dealerships during the warranty period and complained about the swaying, but the dealers refused to attempt repairs or even document the complaint in a work order, telling them it was a Ford chassis issue.

The Supreme Court held the Lemon Law’s “reasonable number of attempts” requirement under § 61-4-503 must be satisfied within the warranty period, but that a consumer may prove those attempts through testimony even if dealers refused to create work orders or other documentation; accordingly, dealers should carefully document customer complaints and repair visits, particularly where a condition is difficult to diagnose or repair. The Court and the jury were entitled to believe the explanation for the missing documentation.

Fleetwood appealed after a jury found it liable to the Vaders, most notably a dangerous swaying/handling problem, under Montana’s Lemon Law, the Consumer Protection Act (CPA), and breach of implied/express warranties. The Montana Supreme Court affirmed: there was enough evidence for the jury to find that the Vaders made a “reasonable number of attempts” to obtain repairs within the warranty period, even if dealers refused to document the swaying complaint. The Court also upheld Consumer Protection Act liability (including via the Lemon Law violation) and agreed the jury could treat marketing promises like a “flawless ride” as an express warranty. The trial court’s decision to double (not triple) damages under the CPA was within its discretion, and the case was remanded to calculate appellate attorney’s fees.

If you think your customer may be entitled to a refund or replacement and the manufacturer is unwilling to provide either remedy, advise the customer that they must first submit the dispute to the state-certified dispute settlement program approved by the Montana Department of Justice. Contact the Office of Consumer Protection for further assistance. 

Clearly documenting all the customer’s complaints will likely be essential to keep the dealership from being named as a party defendant in the suit.