Martinez v. Enterprise Rent-a-Car Co.

• Citation: 13 Cal.Rptr.3d 857,119 Cal.App.4th 46
• Decision Date: 28 May 2004
• Docket Number: No. F042715.,F042715.
• Court: California Court of Appeals
• Parties: David MARTINEZ et al., Plaintiffs and Appellants, v. ENTERPRISE RENT-A-CAR COMPANY et al., Defendants and Respondents.

13 Cal.Rptr.3d 857

119 Cal.App.4th 46

David MARTINEZ et al., Plaintiffs and Appellants, v. ENTERPRISE RENT-A-CAR COMPANY et al., Defendants and Respondents.

No. F042715.

Court of Appeal, Fifth District.

May 28, 2004.

Review Denied August 18, 2004.^*

Cotchett, Pitre, Simon & McCarthy, Niall P. McCarthy, Burlingame, Laura Schlichtmann, San Francisco, and Richard A. Dana; William M. Krieg & Associates and William M Krieg for Plaintiffs and Appellants.

Folger Levin & Kahn, Michael A. Kahn, Margaret E. Murray, San Francisco, Dominique R. Shelton, Los Angeles, and Eric M. Lode, San Francisco, for Defendants and Respondents.

Latham & Watkins, Christopher L. Byers and Charles S. Treat, San Francisco, for Thrifty Rent-A-Car System, Inc., as Amicus Curiae on behalf of Defendants and Respondents.

Gibson, Dunn & Crutcher, Gail E. Lees, Austin V. Schwing, Los Angeles, and Darren Lisitza for Avis Rent A Car System, Inc., and Budget Rent A Car System, Inc., Amici Curiae on behalf of Defendants and Respondents.

OPINION

LEVY, J.

Under California law, a dealer cannot sell a new or used vehicle that is not in compliance with the Vehicle Code. However, a dealer-to-dealer sale is exempt from this requirement. At issue is whether this exemption applies to an alleged title defect.

Appellants, David and Gloria Martinez, claimed in their class action that respondent, Enterprise Leasing Company West, violated the law when it did not obtain a total loss salvage certificate for a damaged rental car before selling that car to another dealer. However, the trial court disagreed. The court concluded that the dealer-to-dealer exemption applied and therefore Enterprise Leasing Company West could not be held liable to appellants for any failure to comply with the Vehicle Code. The court further opined that the subject car did not qualify as a total loss salvage vehicle in any event.

This appeal challenges the trial court's statutory construction. As discussed below, the trial court was correct. The dealer-to-dealer exemption applies to all Vehicle Code requirements. Further, a vehicle is not a total loss salvage vehicle unless, based on an objective standard, the cost of repairs exceeds the vehicle's predamage retail value. Accordingly, the judgment will be affirmed.

BACKGROUND

Respondent, Enterprise Leasing Company West (ELCW), was in the car rental business. In January 2000, a Pontiac Grand Am owned by ELCW was involved in an accident and sustained front-end damage. At that time, the Kelley Blue Book wholesale value of this 2000 Grand Am was $13,800 and its retail value was $16,240. ELCW obtained a repair estimate of $7,542 from an independent automobile body shop.

Enterprise Rent-A-Car Company (ERACC), a Missouri corporation, was the parent company of ELCW. ERACC set corporate guidelines regarding damaged rental cars. These guidelines provided that any vehicle damaged in the amount of 80 percent or more of its wholesale value would be considered a salvage vehicle. Any vehicle that had damage equaling 40 percent to 79 percent of its wholesale value would be pulled from service and sold in its damaged condition unless a general manager approved its repair. ELCW's practice with respect to damaged vehicles followed these guidelines.

In February 2000, ELCW sold the 2000 Pontiac Grand Am to Ansaldi Auto Sales (Ansaldi), "as is" with clean title, through an auction conducted by Copart, Inc. At the time of the sale, both ELCW and Ansaldi were licensed automobile dealers.

In July 2000, appellants purchased the Grand Am through a newspaper ad from Ansaldi's owner, Carlos Ansaldi, for $12,700. Mr. Ansaldi told appellants the car had never been in an accident and offered its clean title as proof.

Within a few days of their purchase, appellants discovered that the Grand Am had sustained serious front-end damage and had been improperly repaired. A Pontiac dealer advised appellants that it would be too expensive to repair the car properly and that the car was unsafe to drive. Appellants tried to return the car for a refund but Mr. Ansaldi refused.

Appellants filed a class action for unfair business practices and fraud against ERACC, ELCW, and Copart. This action was based on appellants' claim that it was unlawful to sell the Grand Am without first obtaining a salvage title for the car. Thereafter, appellants brought three other Enterprise subsidiaries into the lawsuit, Enterprise Rent-A-Car Company of Los Angeles (ERACC-LA), Enterprise Rent-A-Car Company of Sacramento (ERACC-SAC), and Enterprise Rent-A-Car Company of San Francisco (ERACC-SF). According to appellants, these entities were involved in the conspiracy to commit a fraud on the public.

The trial court granted summary judgment in favor of ERACC and ELCW. The court found that ERACC had no direct involvement whatsoever in the sale of the subject vehicle to appellants and consequently there was no basis upon which to hold it liable for the alleged wrongful acts or omissions of ELCW. The court expressed its view that the Grand Am was not a "total loss salvage vehicle" under section 544 because the cost of repairs did not exceed the predamage retail value. With respect to ELCW, the court concluded that under the dealer-to-dealer sale exemption contained in Vehicle Code¹ section 24007, subdivision (a)(1), ELCW had no legal obligation to obtain a salvage certificate even if the Grand Am had qualified as a total loss salvage vehicle. Accordingly, the court found there was no basis upon which to find ELCW liable.

Thereafter, the trial court sustained the demurrers filed by ERACC-LA, ERACC-SAC, and ERACC-SF. Appellants conceded that these entities did not own the subject vehicle and that appellants had no direct dealings with them. Consequently, appellants could not maintain a class action against these entities. The court further concluded that appellants did not sufficiently allege a conspiracy to commit a fraud on the public.

DISCUSSION

1. Standard of Review.

The trial court's interpretation of two Vehicle Code sections, 24007, subdivision (a)(1), and 544, compelled the grant of summary judgment. On appeal, this statutory construction is reviewed de novo. (Padres Hacia Una Vida Mejor v. Davis (2002) 96 Cal.App.4th 1123, 1130, 117 Cal.Rptr.2d 727.)

When a statute is clear and unambiguous, there is no need to construe its meaning. However, where the provisions are ambiguous or conflict, the court must engage in statutory construction. (Santa Ana Unified School Dist. v. Orange County Development Agency (2001) 90 Cal.App.4th 404, 408, 108 Cal.Rptr.2d 770.)

In construing a statute, the court's fundamental task is to ascertain the intent of the Legislature so as to effectuate the purpose of the law. (Calatayud v. State of California (1998) 18 Cal.4th 1057, 1064, 77 Cal.Rptr.2d 202, 959 P.2d 360.) To begin, the court examines the language of the statute, giving the words their usual, ordinary, and commonsense meaning. (California Teachers Assn. v. Governing Bd. of Hilmar Unified School Dist. (2002) 95 Cal.App.4th 183, 191, 115 Cal.Rptr.2d 323.) Nevertheless, the language should not be given a literal meaning if doing so would result in absurd consequences. (Calatayud v. State of California, supra, 18 Cal.4th at pp. 1064-1065, 77 Cal.Rptr.2d 202, 959 P.2d 360.) Moreover, a statute cannot be construed in isolation, but rather must be read "`"with reference to the entire scheme of law of which it is part so that the whole may be harmonized and retain effectiveness."'" (Id. at p. 1065, 77 Cal.Rptr.2d 202, 959 P.2d 360.)

The trial court's decision to grant summary judgment is also reviewed de novo. (Silva v. Lucky Stores, Inc. (1998) 65 Cal.App.4th 256, 261, 76 Cal.Rptr.2d 382.) This court must independently identify the issues framed by the pleadings, determine whether the moving party has negated the opponent's claims, and determine whether the opposition has demonstrated the existence of a triable, material factual issue. (Ibid.) Thus, appellate review focuses on the trial court's ruling, not its rationale. (Ibid.)

Similarly, de novo review is required for the trial court's order sustaining the demurrers filed by the Los Angeles, Sacramento, and San Francisco Enterprise subsidiaries. This court must exercise its independent judgment to determine whether, as a matter of law, the complaint states a cause of action against these defendants. (Flying Dutchman Park, Inc. v. City and County of San Francisco (2001) 93 Cal.App.4th 1129, 1132, 1134, 113 Cal.Rptr.2d 690.)

2. Summary judgment was properly granted in favor of ELCW.

Section 11515, subdivision (e), requires the owner of a "total loss salvage vehicle" to obtain a properly endorsed "salvage certificate" before selling the vehicle. The crux of appellants' lawsuit is the allegation that ELCW violated this section when it sold the Grand Am to Ansaldi with "clean," as opposed to "salvage," title. Appellants' underlying premise is that the Grand Am was a "total loss salvage vehicle." Thus, it is appropriate to discuss the concept at this juncture.²

Section 544, subdivision (a), defines "total loss salvage vehicle" as

"A vehicle, other than a nonrepairable vehicle, of a type subject to registration that has been wrecked, destroyed, or damaged, to the extent that the owner, leasing company, financial institution, or the insurance company that insured or is responsible for repair of the vehicle, considers it uneconomical to repair the vehicle and because of this, the vehicle is not repaired by or for the person who owned the vehicle at the time of the event resulting in damage."

Accordingly, the Grand Am would qualify as a "total loss salvage vehicle" under this section only if it was not repaired for ELCW because ELCW considered it uneconomical to do so. Thus, the critical terms are "total loss," "uneconomical to repair," and "considers." In construing this statute, these terms must be given their usual, ordinary, and commonsense...