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Ryan v. American Honda Motor Co.

February 27, 2006

CHRISTOPHER RYAN, PLAINTIFF-RESPONDENT, AND TARA STROUT, PLAINTIFF,
v.
AMERICAN HONDA MOTOR CO., INC., DEFENDANT-APPELLANT.



On certification to the Superior Court, Appellate Division, whose opinion is reported at 376 N.J. Super. 185 (2005).

SYLLABUS BY THE COURT

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

The issue in this appeal is whether a motor vehicle lessee may invoke the provisions of a manufacturer's warranty under the Magnuson-Moss Warranty Federal Trade Commission Improvement Act. 15 U.S.C.A. §§ 2301-2312.

Christopher Ryan entered into a closed-end vehicle lease with Burns Honda, an authorized dealer and repair facility for defendant, American Honda Motor Co., Inc. (American Honda). American Honda Finance Corp. administered the lease. The vehicle, a new 1999 Honda Passport, carried a three-year/36,000 mile manufacturer's new vehicle limited warranty. Ryan's lease agreement included the following relevant provisions in the "vehicle warranties" section: (1) "If the Vehicle is new, it is covered by the Manufacturer's New Vehicle Warranty," and (2) "Lessor assigns to me all of its rights in the above specified warranties."

Fifteen months and 22,000 miles into the lease term, Ryan's vehicle manifested engine problems. Burns Honda denied coverage. In November 2001, the vehicle was repossessed. In July 2001, Ryan filed a complaint against American Honda alleging, among other things, that it violated Magnuson-Moss and the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -20. The trial judge dismissed those claims, holding essentially that Ryan, as a lessee, was not a consumer under Magnuson-Moss and thus was not entitled to warranty protection. Because there was no breach of warranty, the Consumer Fraud Act claim also failed.

Ryan appealed and the Appellate Division reversed, declaring that a lessee is a consumer under Magnuson Moss and that because Ryan's Consumer Fraud Act claim was dismissed without analysis, it required further explanation by the trial judge.

The Supreme Court granted American Honda's petition for certification.

HELD: After carefully reviewing this record in light of the challenges presented, the Court affirms the ultimate determination of the Appellate Division -- that Ryan's Magnuson-Moss claim should be reinstated.

1. In order to invoke the provisions of Magnuson-Moss, a plaintiff must fall within one of three definitions of "consumer": "[A] buyer.of any consumer product, any person to whom such product is transferred during the duration of an implied or written warranty (or service contract) applicable to the product, and any other person who is entitled by the terms of such warranty (or service contract) or under applicable State law to enforce against the warrantor (or service contractor) the obligations of the warranty (or service contract)." The Appellate Division agreed that Ryan satisfies the second and third definitions and reinstated his Magnuson-Moss claim. We agree, though on a narrower basis. We hold only that a lessee satisfies the third definition -- "any other person entitled by the terms of the warranty or under applicable state law to enforce the warranty." 15 U.S.C.A. § 2301(3). We take our lead from Voelker v. Porsche Cars N. Am. Inc., 353 F. 3d 516 (7th Cir. 2003), which held, in circumstances nearly identical to those in this case, that although neither of the first two definitions applies, a new car lessee falls within the third definition of consumer under Magnuson-Moss. Although we are not bound by the decisions of the circuit courts, it is well-established that under principles of comity, and in the interests of uniformity, federal interpretations of federal enactments are entitled to our respect. Ryan, as the assignee of the dealer's warranty, is entitled to enforce the warranty under New Jersey law. (Pp. 4-8)

The judgment of the Appellate Division is AFFIRMED as modified.

JUSTICE RIVERA-SOTO filed a separate opinion, concurring in part and dissenting in part, stating that Magnuson-Moss requires that there be a "sale of a consumer product" to a "consumer" and that plaintiff, a lessee, did not meet the statutory definition of a "consumer" and thus could not claim the remedies available under Magnuson-Moss.

CHIEF JUSTICE PORITZ and JUSTICES LONG, LaVECCHIA, ZAZZALI, ALBIN, and WALLACE join in this opinion. JUSTICE RIVERA-SOTO filed a separate opinion, concurring in part and dissenting in part.

Per curiam.

Argued January ...


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