Marco A. Marquez v. Mercedes-Benz USA, LLC

1 printed pages contain little extracted OCR body text; searchable legal-body completeness has not been established for those pages.

OCR transcription for search; preserved printed pages are authoritative

Appeal No. 2010AP826 Cir. Ct. No. 2005CV2885
WISCONSIN COURT OF APPEALS

DISIRICT I
MARCO A. MARQUEZ,
PLAINIIFF-RESPONDENT-CROSS-APPELLANT, FILLED
V. APR 13, 2011
MERCEDES-BENZ USA, LLC, A. John Voel ker

Acting Clerk of
Suprene Court

DEFENDANT-APPELLANI-CROSS-RESPONDENT.

CERTIFICATION BY WISCONSIN COURT OF APPEALS

Before Brown, C,J., Neubauer, P.J., and Curley, P.J.

Pursuant to WIS. STAT. RULE 809.61 (2009-10)! this court certifies
the appeal in this case to the Wisconsin Supreme Court for its review and
determination.

ISSUE

What is the proper burden of proof to be applied to an allegation of
intentional bad faith on the part of a consumer in a lemon law action under WIS.
STAT. § 218.0171, an ordinary burden of proof ora middle burden of proof?

' All references to the Wisconsin Statutes are to the 2009-10 version unless otherwise
noted.

No. 2010AP826
2
BACKGROUND
Marco Marquez filed a lemon law action under WIS. STAT.
§ 218.0171 against Mercedes-Benz USA, LLC. The lemon law allows the
purchaser of a new car that does not conform to its warranty to receive a refund (or
a comparable new vehicle) after reasonable attempts to repair the car have failed.
Sec. 218.0171(1)(b)1., (2)(a)-(b). To initiate the refund process, the consumer
must offer to transfer the faulty vehicle’s title to the manufacturer. Sec.
218.0171(2)(c). The manufacturer then has thirty days to make the refund. Id. A
manufacturer who fails to meet this deadline may be subject to double damages,
attorney fees, costs, and equitable relief in a subsequent action. Sec. 218.0171(7).
Mercedes-Benz claims that the consumer, Marquez, intentionally thwarted its
attempt to make a refund by failing to provide necessary information about the
consumer’s auto loan. The refund was not issued within the thirty-day time period
and, as a result, Marquez claimed he was entitled to statutory remedies under
§ 218.0171 (2)(c) and (7). A general recitation of the facts submitted on summary
judgment are set forth in Marquez v. Mercedes-Benz USA, LLC, 2008 WI App
70, 312 Wis. 2d 210, 751 N.W.2d 859.2 Relevant to the narrow issue we certify,
however, is the following.
In Marquez, we concluded that a consumer has an obligation to act
in good faith in the context of a lemon law claim and that “a consumer fails to act
in good faith when he or she intentionally prevents the manufacturer from
complying with the statute.” Id., ¶¶2-3, 22. If a consumer fails to act in good
2 While these facts were further developed at the subsequent trial, the facts set forth in
Marquez v. Mercedes-Benz USA, LLC, 2008 WI App 70, 312 Wis. 2d 210, 751 N.W.2d 859,
provide an overview of the bad faith dispute at issue.

No. 2010AP826
3
faith, the consumer is not entitled to the lemon law’s statutory remedies of double
damages and attorney fees. Id., ¶3. We reversed the circuit court’s grant of
summary judgment to Marquez based on our conclusion that “the record presents a
genuine issue of material fact as to whether the consumer acted in bad faith.” Id.
Prior to the jury trial on remand, the parties disputed the appropriate
burden of proof to be applied to the allegation that Marquez intentionally failed to
act in good faith in dealing with Mercedes-Benz. The trial court applied an
ordinary burden; Marquez requested a middle burden. The jury found that
Marquez acted in bad faith; however, the trial court subsequently granted
Marquez’s postverdict motion to change the jury’s answer.3
DISCUSSION
Wisconsin recognizes two different degrees of persuasion in civil
cases. Ordinary civil actions are subject to an ordinary civil standard, which
requires the party having the burden of persuasion to prove its contention by the
greater weight of the credible evidence to a reasonable certainty. WIS JI—CIVIL
200. Civil cases with penal aspects or involving criminal-type behavior are
3 The burden of proof issue arises only if the trial court erred in granting Marquez’s
postverdict motion to change the jury’s answer. For purposes of this certification, we assume that
there was credible evidence to support the jury’s finding of bad faith and, therefore, the trial
court’s finding to the contrary was erroneous. Regardless of whether Marquez is entitled to
statutory double damages and attorney fees under WIS. STAT. § 218.0171, it is undisputed that he
is entitled to a refund from Mercedes-Benz.
Also at issue in the event of reversal is whether the trial court erred in excluding the
nonprivileged testimony of Marquez’s attorney. Mercedes-Benz contends that the attorney
possessed relevant information regarding what transpired on the thirtieth day of the refund period.

No. 2010AP826
4
subject to a middle burden of proof: by evidence that is clear, satisfactory and
convincing to a reasonable certainty. WIS JI—CIVIL 205.
The determination of the appropriate burden of proof to be applied to
this lemon law claim is a question of statutory interpretation, the principal
objective of which is to ascertain and give effect to the intent of the legislature.
See Carlson & Erickson Builders, Inc., v. Lampert Yards, Inc., 190 Wis. 2d 650,
658, 529 N.W.2d 905 (1995). While the lemon law statute contemplates both the
manufacturer and the consumer acting in good faith, Herzberg v. Ford Motor Co.,
2001 WI App 65, ¶18, 242 Wis. 2d 316, 626 N.W.2d 67, it is silent as to burden of
proof and no relevant statutory history exists. The parties therefore look to other
indicia of legislative intent.
Mercedes-Benz cites to Benkoski v. Flood, 2001 WI App 84, ¶18,
242 Wis. 2d 652, 626 N.W.2d 851, and Carlson, 190 Wis. 2d at 655-56, as
examples of courts rejecting the application of a middle burden of proof when
statutory double or treble damage awards are at issue. In Carlson, the supreme
court held that an ordinary civil burden of proof applies to a private, civil antitrust
claim. Carlson, 190 Wis. 2d at 661-62. The court reasoned that “the lower
burden of proof advances the legislature’s purpose in enacting the antitrust law,”
while a middle burden imposes a barrier to a claimant’s relief. Id.
Here, as with the antitrust law, the lemon law was enacted to
encourage private enforcement. Id. at 663. “Wisconsin’s lemon law was created
to be a self-enforcing consumer law that provides ‘important rights to motor
vehicle owners.’” Hughes v. Chrysler Motors Corp., 197 Wis. 2d 973, 981-82,
542 N.W.2d 148 (1996) (citing Memorandum from Bronson C. La Follette,
Attorney General, to Members of the Legislature, Re: AB 434, Auto “Lemon

No. 2010AP826
5
Law” Changes, Oct. 14, 1985, Wis. Act 205). The law was intended to encourage
consumers to act as private attorneys general in pursuing claims and to provide
attorneys with incentives to represent those consumers. In this case, the
application of a middle burden of proof would assist the consumer’s recovery
under the lemon law by imposing a higher burden of proof to the manufacturer’s
claim that the consumer was not acting in good faith.
However, while the statute advances enforcement by providing
financial incentives to private consumers, Mercedes-Benz argues that entirely
different public policy considerations are at play when addressing alleged bad
faith by the consumer. As we noted in Marquez:
The statutory penalties of the Lemon Law provide an
incentive for manufacturers to promptly comply with the
refund and exchange rules by making it costly to delay.
This purpose is not served if the consumer may, in essence,
inflict the penalties on the manufacturer even if the
manufacturer is attempting to comply with the law within
the proper time limit.
Marquez, 312 Wis. 2d 210, ¶21 (citation omitted). Indeed, Mercedes-Benz
contends that it would be absurd to conclude that the legislature intended to
encourage a consumer’s noncooperation by setting a higher bar for the burden of
proof. Marquez counters that a lower burden of proof would not comport with the
overall statutory purpose and would provide incentive for mischief on the part of
the manufacturer.
While the good faith requirements in the lemon law do not stem
from common law but from the lemon law itself, see Kiss v. General Motors
Corp., 2001 WI App 122, ¶30, 246 Wis. 2d 364, 630 N.W.2d 742, both parties
look to common law for guidance as to legislative intent. Both parties cite to case
law applying either the ordinary or middle burden of proof in cases that they

No. 2010AP826
6
analogize to this lemon law case. Marquez first contends that Mercedes-Benz’s
allegation of bad faith should be treated in the same manner as a bad faith
insurance tort claim. Citing to DeChant v. Monarch Life Ins. Co., 200 Wis. 2d
559, 569, 547 N.W.2d 592 (1996), and Johnson v. American Family Mut. Ins.
Co., 93 Wis. 2d 633, 645, 287 N.W.2d 729 (1980), Marquez argues that bad faith
is an intentional breach of a duty and must be proven by clear and convincing
evidence. However, a bad faith allegation in an insurance dispute arises from a
special fiduciary relationship an insurer owes its insured. DeChant, 200 Wis. 2d
at 570.
Marquez next contends that the allegation involves wrongful
conduct. He points to cases requiring a middle burden of proof which include
fraud, undue influence, and prosecutions of civil ordinance violations which are
also crimes under state law. See State v. Walberg, 109 Wis. 2d 96, 102, 325
N.W.2d 687 (1982). In such cases “a greater degree of certitude is required before
there is a finding against a defendant who will be subjected to the stigma attached
to the commission of certain classes of acts.” Layton Sch. of Art and Design v.
WERC, 82 Wis. 2d 324, 262 N.W.2d 218 (1978).
Marquez cites to numerous civil cases in which a middle burden of
proof was applied. However, consistent with the court’s observation in Walberg,
many of these cases involved conduct that could also be crimes under state law.
See Layton, 82 Wis. 2d at 336, 342, 362-63 (defendant accused of unfair labor
practices, based partially on a finding of perjury, was not entitled to criminal
burden of proof when the proceeding is not criminal and legislature expressly
requires a middle burden of proof); Ziegler v. Hustisford Farmers Mut. Ins. Co.,
238 Wis. 238, 298 N.W. 610 (1941) (middle burden applies when an insurer
denying coverage on grounds of arson; need not prove beyond a reasonable

No. 2010AP826
7
doubt); Macherey v. Home Ins. Co., 184 Wis. 2d 1, 16-17, 516 N.W.2d 434 (Ct.
App. 1994) (insured entitled to middle burden of proof when insurer denied
coverage based on allegation of intentional bodily injury, noting that insured could
be “subjected to the stigma attached to a person who intentionally runs over an
individual with an automobile”); State v. Fonk’s Mobile Home Park and Sales,
Inc., 133 Wis. 2d 287, 301, 395 N.W.2d 786 (Ct. App. 1986) (alleged
administrative code violations subjected the defendant to criminal penalties).
Acknowledging that the alleged conduct at issue here is not criminal,
Marquez nevertheless argues that the stigma associated with the allegations
against him are “harmful to [his] character and reputation as well as that of his
counsel.” He likens the bad faith allegation in this case to one of common law
fraud which requires a middle burden of proof. See Kensington Dev. Corp. v.
Israel, 142 Wis. 2d 894, 905, 419 N.W.2d 241 (1988) (“It is well established that
a common law claim sounding in fraud must be established by the middle burden
of proof.”); compare Kain v. Bluemound E. Indus. Park, Inc., 2001 WI App 230,
¶42, 248 Wis. 2d 172, 635 N.W.2d 640 (ordinary burden applies to claim of
negligent misrepresentation). Marquez also cites to actions in which, as in
common law fraud cases, the middle burden applies, presumably because a stigma
is associated with the action. See Kuehn v. Kuehn, 11 Wis. 2d 15, 20-21, 104
N.W.2d 138 (1960) (middle burden of proof applies to undue influence claim),
WIS JI—CIVIL 2520 and WIS JI—CIVIL 1707.1 (middle burden applies to punitive
damages in defamation and nonproducts liability actions); WIS JI—CIVIL 2780
(middle burden applies to allegations of intentional interference with contractual
relationship); WIS JI—CIVIL 2401 cmt. (middle burden applies to claim of
misrepresentation by intentional deceit).

No. 2010AP826
8
Mercedes-Benz argues that this is an “ordinary civil action” and
likens its claim to that of breach of the duty of good faith and fair dealing.
Mercedes-Benz contends that neither bad faith analysis necessarily involves an
element of malicious intent or improper motive. Mercedes-Benz cites to the
RESTATEMENT (SECOND) OF CONTRACTS § 205 cmt. d (1981), “Duty of Good
Faith and Fair Dealing,” which includes interference with or failure to cooperate in
the other party’s performance as one type of bad faith:
Good faith performance. Subterfuges and evasions
violate the obligation of good faith in performance even
though the actor believes his [or her] conduct to be
justified. But the obligation goes further: bad faith may be
overt or may consist of inaction, and fair dealing may
require more than honesty. A complete catalogue of types
of bad faith is impossible, but the following types are
among those which have been recognized in judicial
decisions: evasion of the spirit of the bargain, lack of
diligence and slacking off, willful rendering of imperfect
performance, abuse of a power to specify terms, and
interference with or failure to cooperate in the other
party’s performance. (Emphasis added.)
See also Foseid v. State Bank of Cross Plains, 197 Wis. 2d 772, 797, 541 N.W.2d
203 (Ct. App. 1995) (citing with approval RESTATEMENT (SECOND) CONTRACTS
§ 205 cmt. d). Marquez counters that Marquez requires intentional bad faith
which carries greater stigma than bad faith as defined in the context of good faith
and fair dealing in contract law. See Northern Crossarm, Inc. v. Chemical
Specialties, Inc., 332 F. Supp. 2d 1181, 1188 (W.D. Wis. 2004) (“Wisconsin law
does not limit breaches of the duty of good faith to intentional acts taken in bad
faith. It construes the duty as applying to constructive bad faith and including
such acts as failure to act, carelessness, neglect and actions that frustrate the
purpose of the agreement.”).

No. 2010AP826
9
The parties agree that the obligation to act in good faith arises not
under common law, but under the lemon law. Thus the purpose and policies under
the lemon law are paramount to the statutory interpretation in this case. As there
is no law governing the burden of proof to be applied when an allegation of
intentional bad faith arises, we request the guidance of the supreme court.
Here, Mercedes-Benz alleges that Marquez intentionally prevented it
from complying with the lemon law statute by failing to cooperate; Marquez
argues that the manufacturer failed to attempt the refund until the last possible day
and then neglected to obtain the necessary payoff information from obvious
sources. We concluded in Marquez that, among other things, “the differing
recollections of the conversations between Marquez and the [Mercedes-Benz]
representative creat[ed] an issue of fact about what was requested of, and agreed
to, by Marquez.” On remand, the jury found that Marquez “fail[ed] to act in good
faith in his dealings with Mercedes-Benz.” The trial court, however, disagreed.
Given the disputed facts at issue, the applicable burden of proof could be
dispositive. We therefore respectfully request the supreme court’s guidance as to
the appropriate burden of proof given the need to balance the policies underlying
the lemon law with the obligation of the consumer to act in good faith in dealing
with the manufacturer.

No. 2010AP826
10