Kirzhner v. Mercedes-Benz United States, LLC

• Citation: 266 Cal.Rptr.3d 346,470 P.3d 56,9 Cal.5th 966
• Decision Date: 27 July 2020
• Docket Number: S246444
• Court: United States State Supreme Court (California)
• Parties: Allen KIRZHNER, Plaintiff and Appellant, v. MERCEDES-BENZ USA, LLC, Defendant and Respondent.

9 Cal.5th 966

470 P.3d 56

266 Cal.Rptr.3d 346

Allen KIRZHNER, Plaintiff and Appellant,

v.MERCEDES-BENZ USA, LLC, Defendant and Respondent.

S246444

Supreme Court of California.

July 27, 2020

Anderson Law Firm, Martin W. Anderson ; Law Office of Jeffrey Kane and Jeffrey Kane for Plaintiff and Appellant.

Universal & Shannon, Jon D. Universal, Marie L. Wrighten-Douglass, Patrea R. Bullock, Jay C. Patterson, Redwood City, and James P. Mayo, Sacramento, for Defendant and Respondent.

GROBAN, J.

This case involves the Song–Beverly Consumer Warranty Act (the Act), Civil Code section 1790 et seq.,¹ popularly known as the "lemon law." The Act allows buyers or lessees of new motor vehicles that are under warranty and have defects the manufacturer is unable to repair after a reasonable number of attempts to elect one of two remedies: Consumers may choose either a replacement vehicle or restitution "in an amount equal to the actual price paid or payable by the buyer." (§ 1793.2, subd. (d)(2)(B).) The manufacturer must also pay for any "collateral charges" (ibid. ) and "incidental damages" incurred (id. , subd. (d)(2)(A), (B)).

In this case, plaintiff Allen Kirzhner selected restitution and requested reimbursement for vehicle registration renewal and nonoperation fees he paid after the initial lease of his vehicle. The question before us is whether the Act requires defendant Mercedes-Benz USA, LLC (Mercedes) to reimburse these fees, either as collateral charges or as incidental damages. We hold that such fees are not recoverable as collateral charges because they are not auxiliary to and do not supplement the price paid for the vehicle, but they are recoverable as incidental damages if they were incurred as a result of the manufacturer's breach of its duty to promptly provide a replacement vehicle or restitution under the Act. Because Kirzhner has not yet had an opportunity to prove causation in this case, we reverse the judgment of the Court of Appeal and remand the case for further proceedings consistent with our opinion.

I. BACKGROUND

In 2012, Kirzhner leased a new vehicle from Mercedes. Kirzhner alleges that, during the warranty period, the vehicle exhibited a variety of defects that caused the command system, navigation system, and key fob to malfunction; the steering column adjustment mechanism and power seats to be inoperative; the coolant level warning light to illuminate; and smoke to emanate from the cigarette lighter. Kirzhner further alleges that he presented the vehicle to Mercedes for repair, but Mercedes was unable to remedy the defects after a reasonable number of repair attempts.

Nearly six months after filing suit, Kirzhner accepted a settlement offer Mercedes made pursuant to Code of Civil Procedure section 998 ( section 998 ).² Mercedes's section 998 offer does not specify a monetary amount it offers to pay Kirzhner to settle the case. Instead, the offer sets forth verbatim the replacement and restitution remedies provided by the Act and states that Mercedes will furnish one or the other of the remedies in exchange for the vehicle. The offer further states that the precise amount of restitution, including any collateral charges and incidental damages, will "be determined by court motion if the parties cannot agree." The trial court entered judgment in favor of Kirzhner in accordance with the terms of the offer.

Because the parties could not agree on the total amount Mercedes was required to pay in restitution pursuant to the section 998 offer, Kirzhner filed a postjudgment motion requesting the trial court to determine the amount owed. The trial court awarded $47,708.06 to Kirzhner. This amount included the initial vehicle registration fee of $101 paid at the time Kirzhner entered into the lease agreement. It excluded, however, vehicle registration renewal fees Kirzhner paid in 2013 and 2014. It also excluded a nonoperation fee—a fee that a vehicle owner may pay in lieu of a registration renewal fee upon "certification that the vehicle will not be operated, moved, or left standing upon a highway" ( Veh. Code, § 4604, subd. (a) )—Kirzhner paid in 2015. The excluded fees totaled $680. These fees were excluded based on the trial court's determination that the registration fees recoverable under the Act "do not include all registration fees that a buyer pays over the course of a lease."

The Court of Appeal affirmed, explaining, "The only registration fee that could be considered a ‘collateral charge’ associated with ‘the actual price paid or payable’ is the one which is paid when the vehicle is purchased or leased (or accounted for in financing). [Citation.] Registration fees for future years cannot be considered a ‘collateral charge’ because they are incurred and paid after the initial purchase or lease." ( Kirzhner v. Mercedes-Benz USA, LLC (2017) 18 Cal.App.5th 453, 458, 226 Cal.Rptr.3d 296 ( Kirzhner ).) The Court of Appeal further explained that incidental damages are limited to costs "incurred as a result of a vehicle being defective" and "[s]uch is not the case with vehicle registration renewal fees, which are more accurately characterized as a standard cost of owning any vehicle." ( Ibid. , italics omitted.)

We granted review.

II. DISCUSSION

We are asked to determine whether the Act requires a manufacturer to reimburse registration renewal and nonoperation fees, either as collateral charges or as incidental damages. Our resolution of these questions requires us to interpret several interrelated statutory provisions.

Section 1793.2, subdivision (d)(2) sets forth the manufacturer's affirmative obligation to "promptly" repurchase or replace a defective vehicle it is unable to repair, providing that if a manufacturer is "unable to service or repair a new motor vehicle ... to conform to the applicable express warranties after a reasonable number of attempts, the manufacturer shall either promptly replace the new motor vehicle in accordance with subparagraph (A) or promptly make restitution to the buyer in accordance with subparagraph (B)." In turn, the restitution remedy in subdivision (d)(2)(B) states that "the manufacturer shall make restitution in an amount equal to the actual price paid or payable by the buyer, ... including any collateral charges such as sales or use tax, license fees, registration fees, and other official fees, plus any incidental damages to which the buyer is entitled under Section 1794, including, but not limited to, reasonable repair, towing, and rental car costs actually incurred by the buyer." Finally, section 1794 is the Act's general damages provision, providing that a buyer may seek damages for a manufacturer's "failure to comply with any obligation under this chapter or under an implied or express warranty," the measure of which includes the restitution and replacement remedies as well as the remedies allowed by the California Uniform Commercial Code, including incidental damages. We must interpret the meaning of "collateral charges" under section 1793.2, subdivision (d)(2)(B), as well as the meaning of "incidental damages" as meant by that same section and relevant portions of the California Uniform Commercial Code.

To determine the Legislature's intent in interpreting these statutory provisions, "[w]e first examine the statutory language, giving it a plain and commonsense meaning." ( Coalition of Concerned Communities, Inc. v. City of Los Angeles (2004) 34 Cal.4th 733, 737, 21 Cal.Rptr.3d 676, 101 P.3d 563.) We do not consider statutory language in isolation; instead, we examine the entire statute to construe the words in context. ( West Pico Furniture Co. v. Pacific Finance Loans (1970) 2 Cal.3d 594, 608, 86 Cal.Rptr. 793, 469 P.2d 665.) If the language is unambiguous, "then the Legislature is presumed to have meant what it said, and the plain meaning of the language governs." ( Kizer v. Hanna (1989) 48 Cal.3d 1, 8, 255 Cal.Rptr. 412, 767 P.2d 679.) "If the statutory language permits more than one reasonable interpretation, courts may consider other aids, such as the statute's purpose, legislative history, and public policy." ( Concerned Communities , at p. 737, 21 Cal.Rptr.3d 676, 101 P.3d 563.) We keep in mind that the Act is " ‘manifestly a remedial measure, intended for the protection of the consumer; it should be given a construction calculated to bring its benefits into action.’ " ( Murillo v. Fleetwood Enterprises, Inc. (1998) 17 Cal.4th 985, 990, 73 Cal.Rptr.2d 682, 953 P.2d 858.)

A. The Fees Are Not Recoverable as Collateral Charges

The Act allows for recovery of restitution "in an amount equal to the actual price paid or payable by the buyer, ... including any collateral charges such as sales or use tax, license fees, registration fees, and other official fees." (§ 1793.2, subd. (d)(2)(B).) The parties do not dispute that the initial registration fee paid at the time of the purchase or lease of a vehicle is a recoverable collateral charge. Their dispute instead centers on whether subsequent registration renewal or nonoperation fees that are typically paid on an annual basis after the initial purchase or lease of the vehicle are recoverable as collateral charges. Based on the plain language of this section considered in its statutory context, we conclude that only the initial registration fee paid at the time of the lease or purchase of the vehicle and not any subsequent registration renewal or nonoperation fees are recoverable as collateral charges.

The Act makes clear that charges must be "collateral" to the "price paid or payable" to be recoverable. (§ 1793.2, subd. (d)(2)(B).) The word "price" means "[t]he cost at which something is obtained" or "[t]he consideration given for the purchase of a thing" (Black's Law Dict. (5th Ed. 1990) p. 1188, col. 2), and the word "collateral" means "[a]dditional or auxiliary; supplementary; co-operating; accompanying as a secondary fact" or "[r]elated to, complementary, accompanying as a co-ordinate" (id. at p. 261, col. 1)....