Crayton v. Fca U.S. LLC

• Court: California Court of Appeals
• Citation: 63 Cal.App.5th 194,276 Cal.Rptr.3d 810
• Decision Date: 30 March 2021
• Docket Number: B294528, B296241
• Parties: Brandon CRAYTON, Plaintiff and Appellant, v. FCA US LLC, Defendant and Respondent.

63 Cal.App.5th 194
276 Cal.Rptr.3d 810

Brandon CRAYTON, Plaintiff and Appellant,
v.
FCA US LLC, Defendant and Respondent.

B294528, B296241

Court of Appeal, Second District, Division 5, California.

Filed March 30, 2021
As Modified April 22, 2021

Certified for Partial Publication.^*

Rosner, Barry & Babbitt, Halen D. Rosner and Michelle A. Cook, San Diego; Strategic Legal Practices, Payam Shahian and Jacob Cutler, Los Angeles, for Plaintiff and Appellant.

Gibson, Dunn & Crutcher, Thomas H. Dupree, Jr. and Matt Gregory ; Gates, Gonter, Guy, Proudfoot & Muench, Matthew M. Proudfoot, for Defendant and Respondent.

KIM, J.

63 Cal.App.5th 199

I. INTRODUCTION

Plaintiff and appellant Brandon Crayton leased a new vehicle manufactured by defendant and respondent FCA US LLC that developed unrepairable defects. He sued defendant, alleging violations of the Song-Beverly Consumer Warranty Act ( Civ. Code, § 1790 et seq. ).¹ The trial court entered a judgment awarding plaintiff restitution and civil penalties under the Act, followed by an order awarding him attorney fees.

On appeal from the judgment and order, plaintiff contends that the trial court erred by not including in the award restitution based on the residual value of the leased vehicle and incidental damages for the amounts he paid for annual registration renewal fees and insurance premiums. Plaintiff also contends that the court abused its discretion by arbitrarily reducing the amount of attorney fees awarded for the legal services rendered after defendant admitted liability. We affirm in part, reverse in part, and remand with directions.

276 Cal.Rptr.3d 813

II. FACTUAL AND PROCEDURAL BACKGROUND

A. Vehicle Lease

In July 2015, plaintiff leased a new 2016 Dodge Charger from a dealership, which then assigned the lease and sold the vehicle to Ally Financial Trust

63 Cal.App.5th 200

(Ally). Under the terms of the lease, plaintiff paid at signing $5,055.31, a first monthly lease payment of $500.12, and sales tax, as well as title, registration, and other fees, for a total of $6,750. He also agreed to pay an additional 47 monthly lease payments of $500.12 each, for a total amount of future monthly lease payments of $23,505.64. The lease defined "[r]esidual value" as "[t]he value of the vehicle at the end of the lease" and included a purchase option under which plaintiff could "buy the vehicle at the end of the lease term for [the residual value of] $24,458.60 ...."

B. Complaint and Amended Answer Admitting Liability

Approximately eight months after plaintiff leased the Charger, he filed an action against defendant asserting six causes of action for statutory violations, including violations of the Act. Plaintiff alleged that, soon after he leased the Charger, it developed a number of defects that defendant was unable to service or repair after a reasonable number of opportunities. Plaintiff further alleged that defendant failed to replace promptly the Charger or provide restitution under sections 1793.1, subdivision (a)(2) and 1793.2, subdivision (d). And plaintiff alleged that defendant's failure to replace promptly the Charger or provide restitution was willful, entitling him to civil penalties of two times his actual damages pursuant to section 1794, subdivision (c).

Defendant initially answered the complaint and denied liability. The parties then stipulated that defendant would file an amended answer that admitted liability and offered to compensate plaintiff for the actual damages he was entitled to receive, including incidental damages but excluding the residual value of the Charger. Defendant also offered to pay plaintiff a civil penalty under the Act in the amount of two times his actual damages.

C. Bench Trial on Damages

Following defendant's admission, the parties proceeded to a bench trial on damages. Prior to trial, the parties stipulated, among other things, that plaintiff was "entitled to recover his actual damages pursuant to ... section 1793.2[, subdivision] (d)(2)(B) and 1794[, subdivision] (b) ... [¶] ... [and] a civil penalty of two times his actual damages pursuant to ... section 1794[, subdivision] (c)."

Plaintiff submitted for trial his declaration authenticating a copy of his lease and a copy of a March 9, 2018, letter he received from his lessor, Ally, advising him of the amount he would be required to pay to terminate his lease early and purchase the Charger. According to Ally, plaintiff and "any co-lessee" could buy back the vehicle for $29,997.64, but if plaintiff "want[ed] to arrange for someone else to buy the vehicle, [he] must first buy

63 Cal.App.5th 201

it from [Ally]." Plaintiff also requested judicial notice of an excerpt from a transcript of a deposition in which a representative of the California Department of Consumer Affairs confirmed that vehicle manufacturers must comply with the replacement and repurchase calculations under section 1793.2, subdivision (d)(2) and that purchase and lease transactions were treated the same for purposes of such calculations.

In his trial brief, plaintiff argued that he was entitled to recover, among other amounts, the amount necessary for defendant to reacquire the vehicle, i.e., the residual value, as restitution. According to

276 Cal.Rptr.3d 814

plaintiff, "the only way [defendant could] reacquire the [v]ehicle from [p]laintiff [was] if [p]laintiff terminat[ed] the [l]ease by paying the lease payoff amount assessed by [Ally]." Plaintiff conceded that he "had no obligation to make such payment as of [the] lease signing," but argued that he thereafter became " ‘obligated to return the vehicle to [defendant] in order to recover restitution pursuant to [the Act].’ "

In its trial brief, defendant argued that plaintiff was only entitled to recover the amounts he actually paid, or which were payable, under the lease. According to defendant, because plaintiff was not obligated to pay the residual value at the time he entered into the lease, that amount should not be included in the restitution to which he was entitled under the Act. Defendant also maintained that the title branding and disclosure requirements of the Act did not require plaintiff to acquire title to the vehicle from Ally; instead, it was defendant's obligation to acquire the vehicle by paying the residual value directly to Ally. Finally, defendant asserted that registration renewal fees, insurance premiums, and amounts paid for dealer options were not recoverable as damages under the Act.

The trial court conducted a bench trial, noting at the outset that the parties had stipulated there were no factual disputes and that the case involved a legal issue: the amount of restitution to which plaintiff was entitled under the Act. After hearing argument, the court accepted defendant's position that " ‘actual price paid or payable by the buyer,’ " as set forth in section 1793.2, subdivision (d)(2)(B), did not include the residual value of the vehicle or the amounts paid by plaintiff for registration renewal fees or insurance premiums.

D. Judgment

The trial court entered a judgment that provided, as relevant to this appeal, as follows: "1. The civil penalty provisions of the ... Act ... do not extend to cover the residual value of [p]laintiff's vehicle after the lease period is completed. [¶] 2. Plaintiff may not recover any amount for registration renewal fees or insurance premiums. [¶] ... [¶] 5. The [c]ourt declined to

63 Cal.App.5th 202

make any ruling regarding the ‘branding’ of [p]laintiff's vehicle. [¶] 6. Defendant shall [pay off] the current loan on the vehicle and be given possession of the vehicle after it pays all sums due under this judgment. [¶] On the basis of these findings and [d]efendant's [a]mended [a]nswer ... IT IS ORDERED that defendant shall pay the amounts stated below: [¶] a. To plaintiff, the amount of $30,255.64 minus a mileage offset of $1,271.04 for a total of $28,984.60, with a two-time civil penalty in the amount of $57,969.20, for a total of $86,953.80; [¶] b. Attorneys’ fees, costs and pre-judgment interest (if any), per agreement of the parties, or alternatively, by way of a single noticed [m]otion, absent an agreement; [¶] c. The vehicle loan payoff shall be made directly to the lender."

E. Motion for Attorney Fees^**

Unpublished Text Follows

On November 15, 2018, plaintiff filed a motion for an award of attorney fees and costs. The motion included a request for attorney fees based on the billing statements of plaintiff's two law firms in the amount of $105,321.50, plus a multiplier of .35, that is, an additional $36,862, for a total fee request of $142,183.50. Defendant opposed the motion, arguing that plaintiff should not be awarded fees for services expended by his attorneys after defendant admitted liability. Defendant calculated that the reasonable fees incurred by plaintiff prior to defendant's admission of liability was $11,688.

In...