Stephen L. Thompson
Cecil, Barth & Thompson
Charleston, West Virginia
Attorney for the Appellee
Peggy L. Collins
Kopelman, Collins & Dodrill
Charleston, West Virginia
Attorney for the Appellants
JUSTICE MILLER delivered the Opinion of the Court.
1. Under W. Va. Code, 46A-6A-4(d) (1984), the
applicable time period for filing a civil action for a violation of
the "lemon law" is "within one year of the expiration of the
express warranty term."
2. "'"An adjudication by a court having jurisdiction of
the subject-matter and the parties is final and conclusive, not
only as to the matters actually determined, but as to every other
matter which the parties might have litigated as incident thereto
and coming within the legitimate purview of the subject-matter of
the action. It is not essential that the matter should have been
formally put in issue in a former suit, but it is sufficient that
the status of the suit was such that the parties might have had the
matter disposed of on its merits. An erroneous ruling of the court
will not prevent the matter from being res judicata." Point 1,
Syllabus, Sayre's Adm'r v. Harpold et al., 33 W. Va. 553 [11 S.E.
16 (1890)].' Syl. pt. 1, In re Estate of McIntosh, 144 W. Va. 583,
109 S.E.2d 153 (1959) (emphasis in original)." Syllabus Point 1,
State ex rel. Division of Human Services v. Benjamin P.B., 183
W. Va. 220, 395 S.E.2d 220 (1990).
3. "When a note is created as a result of a consumer
transaction, an assignee of such a note takes the note subject to
all claims and defenses, regardless of whether the assignee is a
holder in due course. W. Va. Code 46A-2-102 [1990]." Syllabus
Point 1, One Valley Bank of Oak Hill, Inc. v. Bolen, ___ W. Va.
___, ___ S.E.2d ___ (No. 21266 12/16/92).
4. Under W. Va. Code, 46A-2-102(3) (1990), there are
several procedural provisions which deal with the buyer's claims,
defenses, or right of setoff under the Consumer Credit Protection
Act, W. Va. Code, 46A-2-101, et seq, when sued. The buyer can
assert a claim of defective product as a defense to the assignee's
suit to collect the balance owed. Ordinarily, this must be done as
a defense or setoff to the assignee's claim. However, if the
assignee does not institute suit, the buyer may do so to obtain
cancellation of the debt.
5. "W. Va. Code, 46A-2-102(5) [1974], allows the
consumer to recover an amount not to exceed the amount owing to the
assignee at the time of such assignment. Its exception for an
additional amount because of fraud is controlled by W. Va. Code,
46A-5-101 (1974), and W. Va. Code, 46A-2-1-2(5) (1974)." Syllabus
Point 3, One Valley Bank of Oak Hill, Inc. v. Bolen, ___ W. Va.
___, ___ S.E.2d ___ (No. 21266 12/16/92).
6. Where a consumer is sued for the balance due on a consumer transaction, any asserted defense, setoff, or counterclaim available under the Consumer Credit Protection Act, W. Va. Code, 46A-2-101, et seq, may be asserted without regard to any limitation of actions under W. Va. Code, 46A-5-102 (1974).
Miller, Justice:
This appeal involves several procedural points in our
"lemon law" statute, W. Va. Code, 46A-6A-1, et seq., and our
Consumer Credit Protection Act (CCPA), W. Va. Code, 46A-2-101, et
seq. The first issue is the statute of limitations for bringing an
action under our "lemon law." The second is whether a claim for a
defective consumer product can be asserted under the CCPA as a
defense to a suit to recover the purchase price of the product.
The appellants, James and Cynthia Copley, had purchased
a car from the Chrysler Motor Corporation in 1985. The purchase
was financed through Chrysler Credit Corporation. The Copleys
claimed that the car was defective and ultimately ceased making
payments in January of 1990. As a result of nonpayment, the
Chrysler Credit Corporation sued the Copleys in March of 1991 in
the Circuit Court of Kanawha County for the balance due. In April
of 1991, the Copleys' attorney filed an answer raising several
affirmative defenses, among which was the defective nature of the
automobile.
Two days later the Copleys filed a pro se motion to join
Chrysler Motor Corporation as an additional party, asserting it had
violated the "lemon law" when it sold them the vehicle.
Ultimately, the circuit court dismissed the Copleys' claim against
Chrysler under the "lemon law." It is this action which they
appeal to this Court.
It was asserted in the circuit court that the Copleys'
"lemon law" claim against Chrysler Motor Corporation was time
barred. Under W. Va. Code, 46A-6A-4(d) (1984), the applicable time
period for filing a civil action for a violation of the "lemon law"
is "within one year of the expiration of the express warranty
term."See footnote 1 We made this general statement in Syllabus Point 1 of
Adams v. Nissan Motor Corp., 182 W. Va. 234, 387 S.E.2d 288 (1989):
"The purpose behind the West
Virginia lemon law statute is to place upon
the manufacturer of motor vehicles 'the duty
to meet their obligations and responsibilities
under the terms of the express warranties
extended to the consumers of this State.'
W. Va. Code § 46A-6A-1(1) (1986)."
The basis for the circuit court's holding was that the
statute of limitations had been found to bar the Copleys' earlier
suit in Monongalia County against Chrysler Motor Corporation for
its violation of our "lemon law." The final order of the Circuit
Court of Monongalia County was filed in this case, and the Circuit
Court of Kanawha County concluded that the doctrine of res judicata
applied. We agree since the criteria contained in Syllabus Point
1 of State ex rel. Division of Human Services v. Benjamin P.B., 183
W. Va. 220, 395 S.E.2d 220 (1990), were met:
"'"An adjudication by a court having
jurisdiction of the subject-matter and the
parties is final and conclusive, not only as
to the matters actually determined, but as to
every other matter which the parties might
have litigated as incident thereto and coming
within the legitimate purview of the subject-matter of the action. It is not essential
that the matter should have been formally put
in issue in a former suit, but it is
sufficient that the status of the suit was
such that the parties might have had the
matter disposed of on its merits. An
erroneous ruling of the court will not prevent
the matter from being res judicata." Point 1,
Syllabus, Sayre's Adm'r v. Harpold et al., 33
W. Va. 553 [11 S.E. 16 (1890)].' Syl. pt. 1,
In re Estate of McIntosh, 144 W. Va. 583, 109
S.E.2d 153 (1959) (emphasis in original)."
Even though the Copleys could not sue Chrysler Motor
Corporation for a "lemon law" violation, they could, under the
CCPA, assert such defects as a defense to the suit by Chrysler
Credit Corporation as the assignee of the financing documents given
by the Copleys to Chrysler Corporation. Under W. Va. Code, 46A-2-102(1) (1990), an assignee of a consumer credit sale "shall take
and hold such instrument, contract or other writing subject to all
claims and defenses of the buyer[.]"See footnote 2 Recently, in One Valley Bank
of Oak Hill, Inc. v. Bolen, ___ W. Va. ___, ___ S.E.2d ___ (No.
21266 12/16/92), we summarized this point in Syllabus Point 1:
"When a note is created as a result
of a consumer transaction, an assignee of such
a note takes the note subject to all claims
and defenses, regardless of whether the
assignee is a holder in due course. W. Va.
Code 46A-2-102 [1990]."See footnote 3
Moreover, under W. Va. Code, 46A-2-102(3) (1990),See footnote 4 there
are several procedural provisions which deal with the buyer's
claims, defenses, or right of setoff under the CCPA when sued. The
buyer can assert a claim of defective product as a defense to the
assignee's suit to collect the balance owed. Ordinarily, this must
be done as a defense or setoff to the assignee's claim. However,
if the assignee does not institute suit, the buyer may do so to
obtain cancellation of the debt. In Syllabus Point 3 of One Valley
Bank of Oak Hill, supra, which dealt with the 1974 act, we made
this general summary as to the consumer's measure of recovery:
"W. Va. Code, 46A-2-102(5) [1974],
allows the consumer to recover an amount not
to exceed the amount owing to the assignee at
the time of such assignment. Its exception
for an additional amount because of fraud is
controlled by W. Va. Code, 46A-5-101 (1974),
and W. Va. Code, 46A-2-102(5) (1974)."
Finally, we note that W. Va. Code, 46A-5-102 (1974), a
part of the CCPA, provides: "Rights granted by this chapter may be
asserted as a defense, setoff or counterclaim to an action against
a consumer without regard to any limitation of actions." Thus,
where a consumer is sued for the balance due on a consumer
transaction, any asserted defense, setoff, or counterclaim
available under the CCPA may be asserted without regard to any
limitation of actions under W. Va. Code, 46A-5-102 (1974). This
waiver of the statute of limitations for a buyer when sued for the
balance due in a consumer transaction is one of the unique features
of the CCPA.
In this case, the Copleys had the right to assert the
defective nature of the automobile as a setoff or a complete
defense to the balance due on the financing papers held by Chrysler
Credit Corporation. This asserted defense or setoff was
specifically exempt from any statute of limitations once the
Copleys were sued by Chrysler Credit Corporation.
Thus, it would appear that the circuit court was correct
in holding that the plaintiffs' claim against Chrysler Motor
Corporation was barred by the statute of limitations. However, the
plaintiffs could assert the defective nature of the product as a
defense or setoff against Chrysler Credit Corporation to defeat its
claim for further payment on the debt owed.
The judgment of the Circuit Court of Kanawha County is,
therefore, affirmed and this case is remanded for further
proceedings consistent with this opinion.See footnote 5
Affirmed and remanded.
"If the nonconformity results in
substantial impairment to the use or market
value of the new motor vehicle and the
manufacturer has not replaced the new motor
vehicle pursuant to the provisions of section
three [§ 46A-6A-3] of this article, or if the
nonconformity exists after a reasonable
number of attempts to conform the new motor
vehicle to the applicable express warranties,
the consumer shall have a cause of action
against the manufacturer in the circuit court
of any county having venue."
Subsection (d) provides: "An action brought under this section by the consumer must be commenced within one year of the expiration of the express warranty term."
"Notwithstanding any term or
agreement to the contrary or the provisions
of article two [§ 46-2-101 et seq.], chapter
forty-six of this code or section two hundred
six [§ 46-9-206], article nine of said
chapter forty-six, an assignee of any such
instrument, contract or other writing shall
take and hold such instrument, contract or
other writing subject to all claims and
defenses of the buyer or lessee against the
seller or lessor arising from that specific
consumer credit sale or consumer lease of
goods or services[.]"
We have quoted the 1990 version of this section, but the 1974 provision contained language similar to the above-quoted language. See W. Va. Code, 46A-2-102(5) (1974). Consequently, we need not decide which statutory provision was applicable to this suit which was filed in 1991.
"A claim or defense which a buyer
or lessee may assert against an assignee of
such instrument, contract or other writing
under the provisions of this section may be
asserted only as a matter of defense to or
setoff against a claim by the assignee:
Provided, That if a buyer or lessee shall
have a claim or defense which could be
asserted under the provisions of this section
as a matter of defense to or setoff against a
claim by the assignee were such assignee to
assert such claim against the buyer or
lessee, then such buyer or lessee shall have
the right to institute and maintain an action
or proceeding seeking to obtain the
cancellation, in whole or in part, of the
indebtedness evidenced by such instrument,
contract or other writing or the release, in
whole or in part, of any lien upon real or
personal property securing the payment
thereof: Provided, however, That any claim
or defense founded in fraud, lack or failure
of consideration or a violation of the
provisions of this chapter as specified in
section one hundred one, article five of this
chapter, may be asserted by a buyer or lessee
at any time, subject to the provisions of
this code relating to limitation of actions."
This same provision was found in W. Va. Code, 46A-2-102(7) (1974).