Bishop v. Hyundai Motor America

• Decision Date: 27 March 1996
• Docket Number: No. D019557,D019557
• Citation: 52 Cal.Rptr.2d 134,44 Cal.App.4th 750
• Court: California Court of Appeals Court of Appeals
• Parties: , 29 UCC Rep.Serv.2d 834, 96 Cal. Daily Op. Serv. 2760, 96 Daily Journal D.A.R. 4457 Cathy BISHOP, Plaintiff and Respondent, v. HYUNDAI MOTOR AMERICA, Defendant and Appellant.

Page 134

52 Cal.Rptr.2d 134

44 Cal.App.4th 750, 29 UCC Rep.Serv.2d 834,

96 Cal. Daily Op. Serv. 2760,

96 Daily Journal D.A.R. 4457

Cathy BISHOP, Plaintiff and Respondent, v. HYUNDAI MOTOR AMERICA, Defendant and Appellant.

No. D019557.

Court of Appeal, Fourth District, Division 1, California.

March 27, 1996.

As Modified April 17, 1996.

Martin, Wilson, Fingal & MacDowell, Thomas L. Wilson, Santa Ana, Greines, Martin, Stein & Richland, Kent L. Richland, Alison M. Turner and Shelley Levine, Beverly Hills, for Defendant and Appellant.

Preuss Walker & Shanagher, Sheila I. Doyle and Alan J. Lazarus, San Francisco, as Amici Curiae on behalf of Appellant.

Rosner, Law & McGee and William R. McGee, San Diego, for Plaintiff and Respondent.

WORK, Acting Presiding Justice.

Hyundai Motor America (Hyundai) appeals a judgment awarding Cathy Bishop "Lemon Law" penalties under the Song-Beverly Consumer Warranty Act (the Act), and damages for emotional distress, "loss of use" of her vehicle and certain incidental monetary damages. We conclude Bishop was not entitled to emotional distress damages or damages for "loss of use" of her vehicle during a period in which she incurred no expense or other monetary loss. We reject Hyundai's contention the court's error in permitting the jury to consider evidence of Bishop's emotional distress prejudicially permeated the jurors' verdict on other issues and conclude its claim of prejudice from any error in the court's instructing the jury on the element of willfulness as applied to the Act, was waived by Hyundai's failure to object to the arguably ambiguous instruction. Accordingly, we modify the judgment by striking the awards for "loss of use" and emotional distress. As modified, we affirm the judgment.

I

When she was 17 years old, Bishop's parents signed a purchase contract for a new Hyundai automobile on which she made all ensuing payments. She was the primary driver of the vehicle and while it was still under warranty a manufacturing defect resulted in a fire damaging it beyond reasonable repair. Although Hyundai was promptly notified and soon acknowledged responsibility for the fire, offers of replacement vehicles were rejected because they were not equivalent to the one destroyed, and monetary offers were rejected as being below its actual value. After Hyundai stated its final offer would expire on June 3, 1992 (some six months after negotiations began), Bishop's counsel demanded restitution pursuant to CIVIL CODE SECTION 1793.2¹, subdivision (d)(2)(B). The demand notified Hyundai that its failure to comply would be considered "willful" and result in civil penalties under section 1794, subdivision (c). Following Hyundai's perceived dilatory response, Bishop sued for reimbursement of the vehicle's purchase price, incidental and general damages, asking they be trebled by way of penalty for willfully violating the Act as provided by section 1794, subdivision (c).

At trial, Bishop testified at length to her emotional distress resulting from the unavailability of her car upon which she had relied to attend college classes, and from her inability to procure new transportation, due in part because of her obligation to make the car payments to the lender. It was stipulated Bishop's restitution damages were $8,312.18, a sum the jury awarded while adding damages for "loss of use" in the amount of $17,223, incidental damages of $1,444 and emotional distress damages of $5,000. The jury found Hyundai's "Lemon Law" violation willful, making its total award $95,937.54. Bishop was awarded more than $50,000 in costs and attorney fees.

II

Hyundai argues the damages awarded for emotional distress and "loss of use" not involving actual monetary loss, are not recoverable under the Act. Bishop contends the Act does not limit its scope to recovering actual monetary losses and those obtainable for breach of contract, but permits awards for emotional distress and non-monetary losses as incidental or consequential damages which could be awarded under traditional tort theories. Section 1793.2, subdivision (d)(2)(B) states that in the case of restitution, the situation here, a buyer is also entitled to incidental damages as described in section 1794, including, "but not limited to, reasonable repair, towing, and rental car costs actually incurred by the buyer." (Italics added.) Section 1794 permits a civil penalty not exceeding two times the amount of actual damages on a showing of willful failure by the seller to comply with the provisions of the Act, "and other legal and equitable relief."

Section 1794, subdivision (b)(2) states "[w]here the buyer has accepted the goods [as here], sections 2714 and 2715 of the [California Uniform] Commercial Code shall apply, and the measure of damages shall include the cost of repairs necessary to make the goods conform." California Uniform Commercial Code section 2714 states that in a "proper case" any incidental or consequential damages under the next section may also be recovered. The next section, California Uniform Commercial Code section 2715, defines consequential damages resulting from a seller's breach to include "[a]ny loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise." (Italics added.)

III

In Kwan v. Mercedes-Benz of North America, Inc. (1994) 23 Cal.App.4th 174, 188, 28 Cal.Rptr.2d 371, the court construed section 1794 of the Act, concluding its clear mandate "is that the compensatory damages recoverable for breach of the Act are those available to a buyer for a seller's breach of a sales contract." As to the statute's reference to California Uniform Commercial Code sections 2714 and 2715 regarding consequential damages, it construed those as damages normally accruing from breaches of contract.

At the outset, we are faced with certain principles of statutory construction in determining the scope of the damages provisions applicable to this case. The Legislature's intent as interpreted in Kwan v. Mercedes-Benz of North America, Inc., supra, 23 Cal.App.4th at pages 191-192, 28 Cal.Rptr.2d 371, establishes it intended to limit damages available under the Act to those presently available in California Uniform Commercial Code sections 2711 through 2715. (Sen. Com. on Judiciary, Analysis of Assem. Bill No. 3560 (1981-1982 Reg. Sess.).)

Bishop relies solely on the provision in California Uniform Commercial Code section 2715 relating to consequential damages to argue she could recover for her emotional distress and "loss of use" damages for the period in which she did not have a replacement vehicle even though incurring no out-of-pocket loss. There are problems with her position. First, the commentary following California Uniform Commercial Code section 2715 discusses the legislative intent regarding the type of consequential damages available under the Act. Examples of consequential damages recoverable under prior California law are the recovery of lost resale profits contemplated at the time of the contract, and recovery of damages for time and money spent in efforts to make goods conform to warranty under which they were sold. The purposes, changes and new material added at the time California Uniform Commercial Code section 2715 was enacted in 1963, show the consequential damage provision was legislatively limited by this enactment. "Although the older rule at common law which made the seller liable for all consequential damages of which he had 'reason to know' in advance is followed, the liberality of that rule is modified by refusing to permit recovery unless the buyer could not reasonably have prevented the loss by cover or otherwise ... [and] modifies the rule by requiring first that the buyer attempt to minimize his damages in good faith, either by cover or otherwise." (Deering's Ann.Cal.U.Com.Code, § 2715 (1986 ed.), com. 2, p. 274).

The concept of "covering" is relevant only in the context of commercial transactions in which the buyer has an opportunity to purchase or obtain substitute goods to mitigate damages, and in such context, the buyer has a reasonable obligation to do so. (See Cal. U. Com.Code, § 2712.) "Cover" is a term describing a mechanism available to avoid lost profits in a commercial transaction where there is a failure to perform. The only decisions applying that section, other than those relating to injury to person or property, are those which relate to commercial transactions in which there were lost profits because of buyers' inability to resell or otherwise commercially use property of which the sellers' breach deprived them. There is no such issue in this case.

Although Bishop cites no cases in which consequential damages as defined in the California Uniform Commercial Code section 2715 have been determined to include noncommercial situations involving "loss of use" of personal vehicles, she nonetheless argues the provision is broad enough to permit both her emotional distress and "loss of use" damages. She cites "rental value" awards made in negligence and other tort cases which permitted damages to include the reasonable rental value of a replacement vehicle even for periods during which no expense was incurred. In light of the relevant legislative history and express language in the Act, we conclude California Uniform Commercial Code section 2715's reference to losses must be construed and applied in the context of monetary losses actually incurred.

A.

Bishop does not claim she has incurred any reimbursable expense or that she lost a financial advantage during the period she was without a replacement vehicle. Bishop's claim for damages for "loss of use" expenses not actually incurred is akin to one for aggravation or distress, similar to thatrejected in Kwan v. Mercedes-Benz of North America, Inc., supra, 23 Cal.App.4th 174, 28 Cal.Rptr.2d 371, as relating to...