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James Michael Leasing Co. LLC v. Paccar, Inc.

United States Court of Appeals, Seventh Circuit

November 26, 2014

PACCAR, INCORPORATED, Defendant-Appellant

Argued: June 2, 2014.

Appeal from the United States District Court for the Eastern District of Wisconsin. No. 2:11-cv-00747 -- Lynn Adelman, Judge.

For JAMES MICHAEL LEASING COMPANY LLC, Plaintiff - Appellee: Susan Marie Grzeskowiak, Attorney, Vincent P. Megna, Attorney, AIKEN & SCOPTUR, Milwaukee, WI.

For PACCAR, INCORPORATED, doing business as KENWORTH TRUCK COMPANY, Defendant - Appellant: Jeffrey S. Fertl, Attorney, HINSHAW & CULBERTSON, Milwaukee, WI.

Before FLAUM and WILLIAMS, Circuit Judges, and DOW, District Judge.[*]


Page 816

Robert M. Dow, District Judge.

James Michael Leasing Company, LLC purchased a brand-new semi-truck from PACCAR, Incorporated, in 2007. Approximately four years and 3,000 miles later, James Michael Leasing concluded that the truck was a lemon and sought a refund from PACCAR pursuant to Wisconsin's Lemon Law, Wis. Stat. § 218.0171.[1] PACCAR agreed to refund the purchase price, but the parties' dealings turned sour when a dispute arose over reimbursement of a $53.00 title fee. This seemingly insignificant quibble escalated into a debate over the " reasonable allowance for use" to which PACCAR was entitled and drove a wedge between the parties that culminated in an interest-bearing judgment of $369,196.06, plus $157,697.25 in attorneys' fees, for James Michael Leasing. PACCAR contends that it complied with all relevant provisions of the Lemon Law and that the district court erred in calculating James Michael Leasing's pecuniary loss. We disagree and affirm the judgment of the district court in all respects.



The facts of this case are largely undisputed. Wisconsin-based James Michael Leasing (" JM Leasing" ) purchased a brand-new, PACCAR-manufactured 2008 Kenworth T800 semi-truck from a Wisconsin PACCAR dealer in late August 2007. (PACCAR is organized under the laws of Delaware and has its principal place of business in Washington; this case is in federal court under the diversity jurisdiction statute, 28 U.S.C. § 1332.) JM Leasing financed the purchase with a loan from PACCAR Financial Corporation, a wholly owned subsidiary of PACCAR.

After experiencing trouble with the truck over the next four years and 3,076 miles, JM Leasing sent PACCAR a notice seeking refund of the purchase price and other amounts due under Wisconsin's Lemon Law, Wis. Stat. § 218.0171. PACCAR received the concededly proper notice on June 7, 2011. PACCAR's receipt of the notice triggered a 30-day period in which PACCAR was required to " [a]ccept return of the motor vehicle and refund to the consumer and to any holder of a perfected security interest in the consumer's motor vehicle, as their interest may appear, the full purchase price plus any sales tax, finance charge, amount paid by the consumer at the point of sale and collateral costs, less a reasonable allowance for use." Wis. Stat. § § 218.0171(2)(b)(2.b), 218.0171(2)(c). For its part, JM Leasing, upon receipt of the refund, would be obligated to return the truck to PACCAR and take any steps necessary to transfer title back to PACCAR. Wis. Stat. § 218.0171(2)(c). The 30-day period was scheduled to end on July 7, 2011. On June 28, 2011, PACCAR employee Shawn Miller sent an e-mail to JM Leasing

Page 817

employee Janie Kincaid. Miller advised Kincaid that PACCAR would issue a refund, which it had calculated as follows:

Purchase price, inclusive of federal excise tax:


Collateral costs:






Less lien payoff through June 30, 2011:


Total amount due to JM Leasing:


The next day, Miller further advised Kincaid that PACCAR planned to mail two checks to JM Leasing, both payable to JM Leasing. One of the checks, in the amount of $61,647.05, was intended to fulfill PACCAR's obligation to pay off the lien. The other, in the amount of $117,741.85, represented PACCAR's calculation of the amount JM Leasing itself was due.

Kincaid responded to Miller that same day. She informed him that the refund to JM Leasing was short $53.00, the amount of a title fee that JM Leasing had paid when it purchased the truck. Kincaid further advised Miller that JM Leasing did not want to bear responsibility for paying off the lien.

On June 30, Miller wrote back that PACCAR would add the disputed $53.00 to JM Leasing's refund amount. Miller also advised Kincaid that the $53.00 increase would be tempered by a $3,751.24 " reasonable use allowance" deduction that PACCAR calculated by multiplying what it deemed to be the full purchase price of the truck ($121,952.00, the invoice price minus the federal excise tax of $13,895.00) by 3,076, the number of miles the truck had been driven before a problem was reported, and then dividing the product by 100,000. PACCAR's calculation was derived from Wis. Stat. ยง 218.0171(2)(b)(2.b)., which provided that " a reasonable allowance for use may not exceed the amount obtained by multiplying the full purchase price of the motor vehicle by a fraction, the denominator of which is 100,000, or, for a motorcycle, 20,000, and the numerator of which is the number of miles the motor vehicle was driven before the consumer first reported the nonconformity to the motor vehicle dealer." After the $53.00 was added ...

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