12 CONSUMER LOSES SUIT vs. MONTANA DEALER A February 2022 decision by the Montana Supreme Court upheld a Summary Judgment Order by Hon. Mike Menahan, First Judicial District Judge in Helena, in favor of Lithia Motors, dismissing a consumer lawsuit brought over the installation of a replacement engine in an eight-year-old Subaru Legacy with 100,000 miles on the odometer. On September 12, 2017, Lee purchased a used 2008 Subaru Legacy from Lithia. At the time of purchase, the vehicle was eight years old and had almost 100,000 miles on it. Lee also purchased a twoyear extended service agreement on the vehicle from First Extended Service Corporation (FESC) to cover the cost of any unexpected repairs to the vehicle. In November 2017, Lee began experiencing problems with the engine. He took the vehicle back to Lithia for repair. FESC paid the service department to rebuild a portion of the vehicle’s engine pursuant to its extended service contract. The engine continued to experience issues following this repair, and Lee took the vehicle back to Lithia. Lithia recommended a full engine replacement with a remanufactured engine. FESC approved payment for the replacement engine under Lee’s extended service agreement. Lee initially declined FESC’s offer to have the engine replaced. The remanufactured engine had already been delivered to Lithia, so Lithia had to pay over $1,000 to have the remanufactured engine returned. Lee then filed suit. After Lithia’s counsel inquired as to why Lee had declined the benefits of his extended service agreement with FESC, Lee changed his mind and agreed to allow FESC to pay for the installation of a remanufactured engine. An appointment to install the new engine was scheduled. As the date approached, Lee’s counsel advised Lithia that Lee was also experiencing issues with the vehicle’s clutch. Lithia’s counsel telephoned Lee’s counsel to discuss a settlement agreement. During this call, Lithia offered to have its service department replace the clutch on Lee’s vehicle at Lithia’s expense in exchange for a release of Lee’s claims against Lithia. Lee’s attorney sent a one-line email to Lithia’s counsel stating as follows: “Mr. Lee will accept the offer to have the clutch replaced in exchange for settling all his claims against Lithia.” Later that day, Lithia’s counsel sent a reply email stating that this was “great news” and scheduled the repair work for the clutch. In his reply, Lithia’s counsel also promised to send a more formal release for Lee to sign at a later date. Lithia installed the remanufactured engine for which FESC paid and replaced the clutch at its own expense. The total cost to FESC to replace the engine was $7,352.06, and the cost to Lithia to replace the Subaru’s clutch was $1,293.99. After the clutch was replaced and the remanufactured engine installed, Lee continued to drive the Subaru for nine more months and 17,349 miles. He then took it back to Lithia, claiming the new engine had many issues. Lithia’s inspection revealed no significant issues with the vehicle. Lee ultimately traded in the Subaru to Lithia for a new Jeep Compass at a discounted price. LEGAL UPDATE R. J. “JIM” SEWELL, JR. MTADA GENERAL COUNSEL
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