Paduano v. American Honda Motor Co., Inc.

• Decision Date: 12 January 2009
• Docket Number: No. D050112.,D050112.
• Citation: 88 Cal. Rptr. 3d 90,169 Cal.App.4th 1453
• Parties: GAETANO PADUANO, Plaintiff and Appellant, v. AMERICAN HONDA MOTOR COMPANY, INC., Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

169 Cal.App.4th 1453

88 Cal. Rptr. 3d 90

GAETANO PADUANO, Plaintiff and Appellant, v. AMERICAN HONDA MOTOR COMPANY, INC., Defendant and Respondent.

No. D050112.

Court of Appeals of California, Fourth District, Division One.

January 12, 2009.

Michael E. Lindsey for Plaintiff and Appellant.

Mayer Brown and Donald M. Falk for Defendant and Respondent.

OPINION

AARON, J.

I. INTRODUCTION

Appellant Gaetano Paduano appeals from a judgment of the trial court in favor of defendant American Honda Motor Company, Inc. (Honda). Paduano purchased a new 2004 Honda Civic Hybrid in June 2004, and subsequently became displeased with the fuel efficiency of the vehicle. Paduano was achieving approximately half of the Environmental Protection Agency's (EPA) fuel economy estimate that was disclosed on the federally mandated new car label. After Paduano was informed by a service employee at a Honda dealership that driving conditions affect the fuel efficiency of hybrid vehicles more than that of conventional vehicles, and that his Civic Hybrid could achieve higher fuel efficiency only if he significantly altered his driving habits, Paduano requested that Honda repurchase the vehicle from him. When Honda refused, Paduano filed this action in which he alleges one federal and two state law causes of action for breach of warranty, and two state law causes of action for deceptive advertising.

Honda filed a motion for summary judgment in which it argued that the federal Energy Policy and Conservation Act (EPCA; 42 U.S.C. § 6201 et seq.) preempts all of Paduano's claims. In the alternative, Honda maintained that summary judgment was appropriate because Paduano's claims lack substance under California law. Specifically, Honda asserted that Paduano's warranty claims fail because there is no evidence that Honda warranted that Paduano would achieve a particular level of fuel economy. Honda further argued that there is no evidence that Paduano's vehicle suffers from any defect that would cause it to attain poor mileage. With regard to Paduano's claims of deceptive advertising, Honda asserted in its motion for summary judgment that its advertising was not, in fact, misleading. The trial court agreed with all of Honda's claims and granted the motion for summary judgment.

On appeal, Paduano contends that the trial court erred in concluding that federal law preempts his claims. He also argues that there remain triable issues of material fact with respect to all of his causes of action.

We conclude that the trial court correctly granted summary adjudication in favor of Honda on Paduano's warranty claims. We therefore affirm the portion of the trial court's judgment pertaining to those claims. However, with respect to Paduano's claims of deceptive advertising, we conclude that summary adjudication was not appropriate. Paduano raises claims that are not preempted by federal law, and there remain triable issues of material fact as to whether certain of Honda's advertising claims were false and/or misleading. We therefore reverse the trial court's judgment as to Paduano's state law causes of action for deceptive advertising.

II. FACTUAL AND PROCEDURAL BACKGROUND

A. Factual background

On June 15, 2004, Paduano purchased a 2004 Honda Civic Hybrid that had a continuously variable transmission.¹ The federally mandated label² that was on Paduano's vehicle at the time he purchased it showed that the Civic Hybrid with continuously variable transmission had received an EPA rating of 47 miles per gallon (mpg) for city driving and 48 mpg for highway driving. The label also stated, as required by federal regulations, "ACTUAL MILEAGE will vary with options, driving conditions, driving habits and vehicle[']s condition."

Paduano stated that he had read and relied on statements Honda made in an advertising brochure describing the attributes of the 2004 Civic Hybrid in deciding to purchase the vehicle. The brochure highlighted an EPA estimate of 51 mpg for the manual transmission version of the Civic Hybrid, but noted that this estimate did not apply to the continuously variable transmission version. The brochure contained other statements about the vehicle, as well.³

Paduano drove the vehicle for approximately a year and became increasingly dissatisfied with his vehicle's fuel economy performance. During this time, the vehicle achieved less than half of the EPA estimated fuel economy level. Paduano took the vehicle to several Honda dealerships during the summer and fall of 2004 to attempt to find out "how [he] could get higher mileage out of [his] car." Paduano was told that the Civic Hybrid engine required a "break-in" period before it would achieve improved fuel economy. The break-in period was described variously to Paduano as 3,000 miles, 5,000 to 10,000 miles, and 7,500 miles. However, a Honda representative testified during a deposition in this case that, in actuality, no such break-in period is required in order for a Civic Hybrid to achieve "improved" mileage.

An employee at one of the Honda dealerships that Paduano visited conducted a road test, during which the employee claimed that Paduano's car had achieved 49.1 mpg.⁴ That employee informed Paduano that in order to achieve the kind of gas mileage that the EPA had estimated for his vehicle, a driver must drive the vehicle in a specialized manner. The employee told Paduano that "it is very difficult to get MPG on [the] highway and to drive with traffic in a safe manner," and further indicated that the specialized driving that would be required in order to achieve the estimated mileage "would create a driving hazard."

Paduano called Honda's customer service telephone line and was informed that Honda had received "`[a] high number of complaints about customers not receiving the posted and advertised mileage.'" The Honda representative also told Paduano that "`both Honda and Toyota have'. . . [¶] `[a]pproached' [¶] `[t]he EPA to change [the] mileage' ... [¶] `[r]ating,'" to be more in line with the mileage drivers were achieving in their hybrid vehicles.

In a letter dated May 11, 2005, Paduano requested that Honda repurchase his vehicle, and sent notice as required under the Consumers Legal Remedies Act (CLRA; Civ. Code. § 1750 et seq.) in May 2005. In his letter, Paduano stated that he had "consistently gotten 23 to 30 miles per gallon" from his vehicle. Honda declined Paduano's repurchase demand in a letter dated May 25, 2005.

B. Procedural background

Paduano filed a complaint on August 15, 2005, in which he alleged two causes of action for violations of the Song-Beverly Consumer Warranty Act (Song-Beverly) (Civ. Code, § 1793.2, subd. (d)), one cause of action for a violation of the federal Magnuson-Moss Warranty-Federal Trade Commission Improvement Act (Magnuson-Moss) (15 U.S.C. § 2301 et seq.); one cause of action for violation of the CLRA (Civ. Code, § 1770, subd. (a)); and one cause of action for violation of the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.).

On September 22, 2005, Honda filed an answer to Paduano's complaint. Honda did not raise the issue of federal preemption in its answer.

On January 13, 2006, Honda filed a case management statement in which Honda notified the court that it expected to file a motion for summary adjudication, and that plaintiff's deposition and the deposition of Honda's designated representative would be completed by the end of January 2006. Honda said nothing about amending its answer, nor did Honda indicate that it planned to raise a federal preemption defense. The parties attended a case management conference on January 13, 2006, at which Honda again made no mention of the federal preemption defense.

On May 12, 2006, Honda moved for summary judgment, arguing both that federal law preempts all of Paduano's claims, and that Paduano's claims must fail because there had been no breach of warranty or deceptive advertising, as a matter of law.

On June 8, 2006, Honda filed a motion for leave to amend its answer to allege three additional affirmative defenses.⁵ The three affirmative defenses related to Honda's assertion that Paduano's causes of action were preempted by federal law. Honda argued that it should be permitted to plead these new affirmative defenses because the defenses clarified Honda's original third affirmative defense in which it asserted that Paduano failed to state a cause of action. On July 14, 2006, the trial court granted Honda's motion for leave to amend its answer. On the same day, Paduano filed his opposition to Honda's motion for summary judgment.

The trial court tentatively ruled in favor of Honda at the July 28, 2006, hearing on Honda's motion for summary judgment. Paduano sought a continuance of the hearing. In early September, Paduano filed a supplemental opposition to Honda's motion for summary judgment. Honda filed a supplemental reply.

On September 15, 2006, the trial court ruled that Honda was entitled to summary judgment. The court concluded that "[a]s to plaintiff's contention that his gas mileage was so bad that there must be a defect in the car, no evidence is presented to show the car had any manufacturing defect." In addition, the trial court determined that "the representations in [Honda's] brochure appear to comply with 16 C.F.R. 259.2." The court also reaffirmed a number of its tentative rulings, including that (1) Paduano's state law warranty claims are preempted by federal law; (2) Honda made no express warranty as to gas mileage; (3) section 32908(d) of 49 United States Code clarifies that Honda's disclosures regarding gas mileage do not constitute a warranty under state or federal law; (4) Paduano's deceptive advertising and misrepresentation claims are preempted by section 32919 of 49 United States Code; and (5) the brochure "does not contain any representation or warranty that plaintiff would be able to obtain a certain fuel efficiency while driving his car in his customary...