Denike v. Mathew Enter., Inc.

• Decision Date: 16 March 2022
• Docket Number: H046420
• Citation: 291 Cal.Rptr.3d 480,76 Cal.App.5th 371
• Parties: Timothy DENIKE, Plaintiff and Respondent, v. MATHEW ENTERPRISE, INC., Defendant and Appellant.
• Court: California Court of Appeals Court of Appeals

76 Cal.App.5th 371

291 Cal.Rptr.3d 480

Timothy DENIKE, Plaintiff and Respondent,

v.MATHEW ENTERPRISE, INC., Defendant and Appellant.

H046420

Court of Appeal, Sixth District, California.

Filed March 16, 2022

Rosner, Barry & Babbitt, Hallen D. Rosner, Gregory T. Babbitt, Arlyn L. Escalante, San Diego, for Plaintiff and Respondent.

Auto Legal Group, Ali Kamarei, Palo Alto, Peter Reisenauer, In-House Counsel, Mathew Enterprise, Inc., for Defendant and Appellant.

Wilson, J. In June 2014, Timothy DeNike purchased a 2014 Jeep Wrangler with a hardtop from Mathew Enterprise, Inc., doing business as Stevens Creek Chrysler Jeep Dodge (SCJ). Soon after the purchase, DeNike discovered that the vehicle was originally manufactured as a soft top and that the hardtop had been installed at some point after it left the factory. DeNike ultimately filed a lawsuit against SCJ and a jury found in favor of DeNike on his claims under the Consumers Legal Remedies Act (CLRA) ( Civ. Code, § 1750 et seq. ),¹ the Song-Beverly Consumer Warranty Act (Song-Beverly Act) (§ 1790 et seq.), and for intentional misrepresentation. The trial court subsequently issued a permanent injunction against SCJ and, in a postjudgment order, awarded DeNike attorney fees.²

In addition to receiving the parties' briefs, we granted an application by the California New Car Dealers Association (Association) to file a brief as amicus curiae. DeNike filed a response to Association's brief.

On appeal, SCJ argues: (1) the trial court erred by (a) permitting the jury to consider DeNike's claim for restitution under the CLRA, and (b) excluding evidence of its offers of correction under the CLRA; (2) there was insufficient evidence of reasonable reliance to support the verdict on the intentional misrepresentation cause of action; (3) the trial court misinstructed the jury on the Song-Beverly Act cause of action; and (4) the trial court erred in granting DeNike's request for injunctive relief under the CLRA.

As set forth below, we agree that DeNike's claim for restitution under the CLRA was barred, but reject the remainder of SCJ's arguments.

I. FACTUAL AND PROCEDURAL BACKGROUND

In May 2014, DeNike began searching for a soft top Jeep Wrangler to replace the one he owned but intended to give to his son. In June, a salesman at SCJ returned DeNike's call and told him that he could procure a Jeep Wrangler which met his specifications from another dealership. DeNike agreed to travel by train from his home in Sacramento to San Jose on June 14 to pick up the vehicle which he would then drive home.

On June 13, the salesman called DeNike and told him he could not get the Jeep from the other dealership. The salesman said he had a vehicle at SCJ that fit DeNike's requirements except that it was a hardtop rather than a soft top. DeNike asked if everything on the vehicle was "factory installed"³ and the salesman assured him it was.

DeNike took the train to San Jose the next day and the salesman gave him a ride to SCJ. DeNike took the vehicle for a test drive, but noticed that it was dusty and had no stickers on it other than a temporary registration. DeNike asked the salesman about the new vehicle stickers and the salesman said he would look for them.

Following the test drive, DeNike went to the finance office and signed the purchase documents. The salesman brought DeNike out to the vehicle, which had been washed, and handed DeNike the vehicle stickers. DeNike did not review the stickers, but placed them in a folder with the purchase documents and started driving home.

During the drive to Sacramento, DeNike tried using the wipers to clear bugs from the windshield, but no fluid came out. When he stopped at a gas station, DeNike put water in the fluid reservoir but did not try the wipers again. About a week later, when DeNike tried to fill the reservoir again, he heard water splashing underneath the car and saw water on the ground. He tried the rear wiper, but it did not work at all. DeNike then made an appointment with a Jeep dealership in Sacramento.

At the Sacramento dealership, DeNike learned that the vehicle had left the factory as a soft top and that the hardtop had been subsequently (and improperly) installed. DeNike decided that he wanted to return the vehicle.

DeNike contacted the salesman at SCJ and told him he wanted to return the vehicle because the hardtop was not factory installed as promised. DeNike looked at the stickers the salesman provided and saw that one of the stickers indicated that vehicle had a soft top. The "addendum sticker" did not list anything underneath the heading of "Dealer Installed Options." DeNike's efforts to resolve the situation over the telephone were unsuccessful.

On November 18, 2014, DeNike's counsel wrote to SCJ asking for rescission of the purchase agreement, payment of the vehicle loan, plus attorney fees and costs pursuant to the CLRA. The letter also informed SCJ that DeNike intended to seek injunctive relief as well.

On December 2, 2014, SCJ responded to DeNike's CLRA demand letter and offered to: (1) repair the vehicle if DeNike still wanted it, and provide a loaner vehicle while it was repaired; or (2) rescind the purchase agreement, refund all payments DeNike had made, pay off the remaining balance on the vehicle, reimburse DeNike for any repairs or out-of-pocket costs, and pay DeNike's "reasonable attorney's [sic ] fees." The parties exchanged additional letters seeking to resolve the dispute, but negotiations ultimately failed when they could not reach an agreement on the amount of attorney fees.

DeNike filed a complaint against SCJ alleging violations of the CLRA, fraud by intentional misrepresentation and/or concealment, and violations of the Song-Beverly Act.

Following a trial, the jury found that SCJ violated the CLRA, made an intentional misrepresentation to DeNike (but did not commit fraud by concealment), and violated the Song-Beverly Act. The jury determined DeNike was entitled to an award of $36,192.79, consisting of $26,001.61 for restitution/rescission, plus incidental damages of $10,191.18.

Following a bench trial on DeNike's request for injunctive relief, the trial court enjoined SCJ from: "a. selling a new vehicle that has been modified, and/or had additions made to it, from its factory-delivered condition without an addendum sticker attached to the vehicle disclosing such modification and/or addition as required by law; and [¶] b. failing to disclose to a customer as required by law the fact or existence of a modification and/or addition having been made to a new vehicle from its factory-delivered condition before the customer enters into a written agreement to purchase the vehicle." The trial court further ordered SCJ to "implement policies, procedures, and training to apprise its employees of, and to ensure compliance with" the terms of the injunction.

SCJ timely appealed.

II. DISCUSSION

A. CLRA

SCJ argues the trial court, after ruling that its pretrial offer of correction under the CLRA was "reasonable" and "appropriate" thereby precluding "actual damages under the CLRA," erred by nevertheless instructing the jury on the CLRA. The trial court further erred by not allowing SCJ to introduce any evidence of its pre-litigation offers to remedy DeNike's complaints. In SCJ's view, the trial court misinterpreted the interplay between section 1780 and section 1782.⁴ We agree.

1. Relevant background

Prior to trial, the court reviewed the parties' "chain of correspondence" and concluded that DeNike could not pursue a claim for "actual damages" under the CLRA because SCJ made a "reasonable [ ] and appropriate" response to DeNike's CLRA demand letter. The trial court further ruled that the issue of "good faith" was also "out of the picture because it only goes to actual damages."

The trial court subsequently instructed the jury, over objection by SCJ, as to DeNike's CLRA claim as follows: "Any consumer who establishes that a person used or employed a method, act, or practice declared to be unlawful by the [CLRA] may rescind a contract and recover restitution. Rescission extinguishes a contract, terminates further liability, and restores the parties to their former positions by requiring them to return whatever consideration they have received." The jury verdict form included the following question: "What amount for restitution/rescission is Mr. DeNike entitled to for [SCJ's] violations of the [CLRA]?"

2. Statutory interpretation

" ‘ "Statutory construction is a question of law which requires the exercise of our independent judgment." [Citation.]’ [Citation.] ‘We apply well-settled principles of statutory construction. Our task is to discern the Legislature's intent. The statutory language itself is the most reliable indicator, so we start with the statute's words, assigning them their usual and ordinary meanings, and construing them in context. If the words themselves are not ambiguous, we presume the Legislature meant what it said, and the statute's plain meaning governs. On the other hand, if the language allows more than one reasonable construction, we may look to such aids as the legislative history of the measure and maxims of statutory construction. In cases of uncertain meaning, we may also consider the consequences of a particular interpretation, including its impact on public policy.’ [Citation.] ‘ "If possible, significance should be given to every word, phrase, sentence and part of an act in pursuance of the legislative purpose." [Citation.] ... "[A] construction making some words surplusage is to be avoided." [Citation.] "When used in a statute [words] must be construed in context, keeping in mind the nature and obvious purpose of the statute where they appear." [Citations.] Moreover, the various parts of a statutory enactment must be harmonized by considering the particular clause or section in the context of the statutory framework as a whole.’ ( Moyer v. Workmen's Comp. Appeals Bd. (1973) 10 Cal.3d 222, 230, 110 Cal.Rptr. 144, ...