Niedermeier v. FCA US LLC

• Decision Date: 30 October 2020
• Docket Number: B293960
• Citation: 271 Cal.Rptr.3d 43,56 Cal.App.5th 1052
• Parties: Lisa NIEDERMEIER, Plaintiff and Respondent, v. FCA US LLC, Defendant and Appellant.
• Court: California Court of Appeals Court of Appeals

56 Cal.App.5th 1052

271 Cal.Rptr.3d 43

Lisa NIEDERMEIER, Plaintiff and Respondent,

v.FCA US LLC, Defendant and Appellant.

B293960

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

Filed October 30, 2020

Gibson, Dunn & Crutcher, Thomas H. Dupree, Jr., Matt Gregory, Washington, DC, Shaun Mathur, Irvine; Clark Hill and David L. Brandon, Los Angeles, for Defendant and Appellant.

Knight Law Group, Steve Mikhov, Amy Morse, Los Angeles; Hackler Daghighian Martino & Novak, Sepehr Daghighian, Beverly Hills, Erik K. Schmitt ; Greines, Martin, Stein & Richland, Cynthia E. Tobisman, Los Angeles, and Joseph V. Bui for Plaintiff and Respondent.

BENDIX, J.

Defendant FCA US LLC, an automobile manufacturer,¹ appeals from a judgment in favor of plaintiff Lisa Niedermeier. Plaintiff brought claims under the Song-Beverly Consumer Warranty Act ( Civ. Code,² § 1790 et seq. ) (the Act), commonly known as the "lemon law." (See Warren v. Kia Motors America, Inc. (2018) 30 Cal.App.5th 24, 28, 241 Cal.Rptr.3d 263.) The jury awarded plaintiff the full purchase price of her defective vehicle, offset by mileage accrued before she first delivered it for repair, plus incidental and consequential damages and a civil penalty.

Following the jury's verdict, the trial court denied defendant's motion to reduce plaintiff's damages by the $19,000 credit plaintiff received towards the purchase price of a new vehicle when she traded in her defective vehicle to a GMC dealer. The trial court ruled that reducing the damages here would reward defendant for its delay in providing prompt restitution as required under the Act. On appeal, defendant challenges that ruling.

As a matter of first impression, we hold that the Act's restitution remedy, set at "an amount equal to the actual price paid or payable" for the vehicle (§ 1793.2, subd. (d)(2)(B)), does not include amounts a plaintiff has already recovered by trading in the vehicle at issue. The Legislature chose to call the Act's refund remedy "restitution," indicating an intent to restore a plaintiff to the financial position in which she would have been had she not purchased the vehicle. Granting plaintiff a full refund from defendant in addition to the proceeds of the trade-in would put her in a better position than had she never purchased the vehicle, a result inconsistent with "restitution."

Allowing plaintiff a full refund also would undercut other parts of the Act. The Act contains extensive provisions requiring manufacturers to label vehicles reacquired under the Act as "Lemon Law Buybacks," and to notify potential purchasers of the reacquired vehicles of that designation as well as the vehicles’ history of deficiencies. These provisions apply only when the manufacturer reacquires or assists another in reacquiring the vehicle. Yet if a buyer could trade in a defective vehicle in exchange for a reduction in the price of a new car while still receiving a full refund from the manufacturer, few if any buyers would sacrifice the extra money by returning the vehicle. This would render the labeling and notification provisions largely meaningless, a consequence the Legislature could not have intended.

Accordingly, we reduce the damage award to reflect the value of plaintiff's trade-in, and also reduce the civil penalty, which is capped at twice the amount of actual damages. (§ 1794, subd. (c).) As modified, we affirm the judgment.

FACTUAL BACKGROUND

Plaintiff purchased a new Jeep Wrangler in January 2011 for approximately $40,000. Over the several years she owned the vehicle, plaintiff experienced numerous problems with it and brought it in for repair multiple times.

Around April 2015, plaintiff requested that defendant, the Jeep's manufacturer, buy back the vehicle. Defendant did not do so. Plaintiff then traded in the vehicle to a GMC dealership, in exchange for which she received $19,000 off the purchase price of a GMC Yukon. Plaintiff's counsel represented to the trial court that the sticker price of the Yukon was $80,000.

PROCEDURAL BACKGROUND

In October 2016, plaintiff filed a lawsuit against defendant alleging, inter alia, causes of action for breach of express and implied warranty under the Act.³

In advance of trial, plaintiff filed a motion in limine to exclude "evidence or argument relating to a monetary offset based on plaintiff's sale of the subject vehicle." (Capitalization omitted.) The trial court granted the motion, and stated it would address the issue of an offset after trial if plaintiff prevailed.

At trial, plaintiff testified regarding her failed attempts to sell the car before ultimately trading it in to the GMC dealer. In light of this testimony, the trial court allowed defense counsel to elicit testimony regarding the value of the trade-in. Defense counsel asked plaintiff: "You sold it to a GMC dealership for $19,000; right?" Plaintiff replied, "Right."

Following the close of evidence, defendant requested that the trial court add an offset for the trade-in of the Jeep to the special verdict form. The trial court declined the request, preferring to decide the offset issue itself after trial. Plaintiff agreed with this approach.

The jury found in favor of plaintiff on her cause of action for breach of express warranty. The jury awarded damages of $39,584.43, which included $39,799 for the purchase price of the Jeep plus certain specified charges, taxes, and fees; $5,000 in incidental and consequential damages; and a deduction of $5,214.57 reflecting the use plaintiff obtained from the vehicle before first bringing it in for repairs. The jury also awarded a civil penalty of $59,376.65, one-and-a-half times the damages award, for a total award of $98,961.08.⁴

Defendant then filed a motion requesting the trial court reduce the damages by $19,000 to reflect the trade-in of the Jeep. Because the jury had imposed a civil penalty one-and-a-half times the damages, defendant requested the civil penalty be set at one-and-a-half times the reduced damages, for a total award of $51,461.07.

The trial court denied the motion. Relying primarily on Martinez v. Kia Motors America, Inc. (2011) 193 Cal.App.4th 187, 122 Cal.Rptr.3d 497 ( Martinez ) and Jiagbogu v. Mercedes-Benz USA (2004) 118 Cal.App.4th 1235, 13 Cal.Rptr.3d 679 ( Jiagbogu ), the trial court concluded that reducing the damages and penalty would be "inconsistent with the proconsumer policy supporting the Act," and would "reward defendant for its delay in replacing the car or refunding plaintiff's money when defendant had complete control over the length of that delay, and an affirmative statutory duty to replace or refund promptly." The trial court stated that " ‘[i]nterpretations that would significantly vitiate a manufacturer's incentive to comply with the Act should be avoided.’ " (Quoting Jiagbogu , at p. 1244, 13 Cal.Rptr.3d 679.)

Defendant filed motions for a new trial and to set aside and vacate the judgment, again arguing that the damages and civil penalty should be reduced to reflect the $19,000 trade-in. The trial court denied the motions.

Defendant timely appealed.

STANDARD OF REVIEW

This appeal presents "a question of statutory ... interpretation subject to our independent review." ( Dignity Health v. Local Initiative Health Care Authority of Los Angeles County (2020) 44 Cal.App.5th 144, 154, 257 Cal.Rptr.3d 422.) "To determine the Legislature's intent in interpreting [the Act], ‘[w]e first examine the statutory language, giving it a plain and commonsense meaning.’ [Citation.] We do not consider statutory language in isolation; instead, we examine the entire statute to construe the words in context. [Citation.] If the language is unambiguous, ‘then the Legislature is presumed to have meant what it said, and the plain meaning of the language governs.’ [Citation.] ‘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.’ " ( Kirzhner v. Mercedes-Benz USA, LLC (2020) 9 Cal.5th 966, 972, 266 Cal.Rptr.3d 346, 470 P.3d 56 ( Kirzhner ).) "[W]e may reject a literal construction that is contrary to the legislative intent apparent in the statute or that would lead to absurd results." ( Simpson Strong-Tie Co., Inc. v. Gore (2010) 49 Cal.4th 12, 27, 109 Cal.Rptr.3d 329, 230 P.3d 1117 ( Simpson Strong-Tie ).)

"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." ’ " ( Kirzhner , supra , 9 Cal.5th at p. 972, 266 Cal.Rptr.3d 346, 470 P.3d 56.)

DISCUSSION

A. The Song-Beverly Consumer Warranty Act

The Act "provides certain protections and remedies for consumers who purchase consumer goods such as motor vehicles covered by express warranties." ( Martinez , supra , 193 Cal.App.4th at p. 193, 122 Cal.Rptr.3d 497.) The Act requires that manufacturers of consumer goods covered by express warranties provide "service and repair facilities" in the state "to carry out the terms of those warranties." (§ 1793.2, subd. (a)(1)(A).) "In order to trigger the manufacturer's service and repair obligations, the buyer ... ‘shall deliver nonconforming goods to the manufacturer's service and repair facility within this state....’ " ( Martinez , at p. 193, 122 Cal.Rptr.3d 497, quoting § 1793.2, subd. (c).)⁵

Motor vehicles are nonconforming for purposes of the Act if the nonconformity "substantially impairs the use, value, or safety of the new motor vehicle to the buyer or lessee." (§ 1793.22, subd. (e)(1).)

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 must either "promptly replace the new motor vehicle" or "promptly make restitution to the buyer ...." (§ 1793.2, subd. (d)(2).) "In the case of restitution, the manufacturer shall make restitution in an amount equal to the actual price...