Los Angeles Times: Chrysler Lemon Law Refunds

Chrysler Lemon Law Refunds

By Martin Zimmerman, May 16, 2009

Checks to buyers bounced after the automaker filed for bankruptcy, lawyers said. Chrysler will reimburse bank fees stemming from the bounced checks ‘on a case by case basis.’

Chrysler says it will reissue checks to frustrated customers awaiting payments stemming from lemon law complaints against the automaker.

Lawyers throughout the country had reported that dozens of settlement checks had bounced in the wake of Chrysler’s April 30 bankruptcy filing.

“Consistent with Chrysler’s commitment to its customers, it will reissue checks to consumers that had not cleared prior to the date of the bankruptcy filing and which are not subject to the matters stayed by the bankruptcy court,” the automaker said in a statement. A spokesman said payments of lemon law claims are included.

“This is welcome news,” said Sergei Lemberg, a Stamford, Conn., attorney who handles lemon law cases. “I’m delighted they are doing the right thing, though it took some prompting on our part.”

Lemon laws vary by state, but their general purpose is to provide a legal avenue for car buyers who are stuck with a defective vehicle that can’t be repaired. If a vehicle is found to be a lemon, the laws typically require the manufacturer to repurchase the vehicle or give the buyer a cash settlement.

The buyer can sue the car company if a case can’t be settled through negotiation.

After Chrysler’s bankruptcy filing, settlement checks written by the automaker were bouncing.

In some cases, customers who had already returned their vehicles to Chrysler were left with neither a car nor the money to buy a new one.

Last week, representatives of several consumer groups met with members of the Obama administration’s auto task force to discuss the lemon law problems and other issues surrounding the Chrysler bankruptcy.

In addition, Lemberg wrote to the U.S. bankruptcy trustee in the Chrysler case asking that a committee be formed to represent consumers.

Chrysler said it would reimburse customers for bank fees stemming from the bounced checks “on a case-by-case basis.” Repayment claims can be made by calling the automaker’s customer service line: (800) 992-1997.

One of Lemberg’s clients, Jennifer Thom of Carthage, N.Y., said Friday that she was relieved that the lemon law logjam appears to be breaking up.

She and her husband — who is in the Army and deployed to Afghanistan — were awaiting a $9,000 check from Chrysler after settling a lemon law complaint over their 2007 Jeep Grand Cherokee.

“After the last two years of all the problems we’ve had to deal with this vehicle, we’re ecstatic that they’re making something positive come out of this situation,” Thom said.

Chrysler’s decision doesn’t apply to lemon law cases that are currently in litigation, which were stayed by the bankruptcy filing.

It’s possible that consumers in these cases could be treated as unsecured creditors of the company and would have to file a claim with the court for restitution, bankruptcy lawyers said.

Original story: At the Los Angeles Times