Rheinhart v. Nissan N. Am., Inc.

• Citation: 92 Cal.App.5th 1016,309 Cal.Rptr.3d 859
• Docket Number: D079940
• Decision Date: 27 June 2023
• Parties: Derek RHEINHART, Plaintiff and Appellant, v. NISSAN NORTH AMERICA, INC., et al., Defendants and Respondents.
• Court: California Court of Appeals Court of Appeals

92 Cal.App.5th 1016

309 Cal.Rptr.3d 859

Derek RHEINHART, Plaintiff and Appellant,

v.NISSAN NORTH AMERICA, INC., et al., Defendants and Respondents.

D079940

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

Filed June 27, 2023

Law Offices of Robert B. Mobasseri, Robert B. Mobasseri and David Alan Cooper, Los Angeles, for Plaintiff and Appellant.

Wilson Turner Kosmo, Robert Allen Shields and Hang Alexandra Do, San Diego, for Defendants and Respondents.

O'ROURKE, J.

Civil Code ¹ section 1790.1 of the Song-Beverly Consumer Warranty Act (Song-Beverly Act or at times the Act; § 1790 et seq.) provides that "[a]ny waiver by the buyer of consumer goods of the provisions of this chapter, except as expressly provided in this chapter, shall be deemed contrary to public policy and shall be unenforceable and void." ( § 1790.1.) This appeal involves the effect of this antiwaiver provision on a release executed as part of a pre-litigation settlement between plaintiff and appellant Derek Rheinhart and defendants and respondents Nissan North America, Inc. and Mossy Nissan, Inc. (collectively Nissan)² over issues that had arisen with Rheinhart's leased Nissan vehicle. After Rheinhart entered into the settlement agreement and release, he filed a lawsuit alleging violations of the Act and seeking repurchase of his vehicle as well as other statutory remedies. Nissan moved for summary judgment on grounds the settlement agreement and release, which Rheinhart admitted he read and had an opportunity to review before signing, extinguished his claims. The trial court granted the motion, finding section 1790.1 applies to waivers of consumer warranties in connection with a product purchase, not to releases negotiated to end disputes about those warranties, and thus rejected Rheinhart's argument that the settlement was unenforceable under section 1790.1.

Rheinhart contends the court erred. He argues the settlement agreement and release violates section 1790.1 and is unenforceable as a matter of law. Rheinhart maintains the court's ruling is contrary to the remedial purpose of the Act and bad public policy in that it defeats the statute's purpose to remove defective vehicles from the road and marketplace. Rheinhart further contends the release is unconscionable given he was not represented by counsel.

Though we reject the trial court's reading of section 1790.1, we do not interpret the Act's antiwaiver provision to categorically prohibit all settlement agreements. However, we conclude under the circumstances of this case the settlement agreement and release contravenes Rheinhart's substantive rights under the Act and is void and unenforceable as against public policy. We reverse the summary judgment.

FACTUAL AND PROCEDURAL BACKGROUND

The material facts are undisputed. In June 2019, Rheinhart leased a new Nissan vehicle³ from Mossy Nissan, paying $6,000 at signing and agreeing to monthly payments of $214.36. Twice in July and once in August 2019 (when the vehicle had only 1,603 miles), he brought the vehicle back to Mossy Nissan, complaining about several issues, including on all three occasions malfunctioning of the rear-view camera screen. Between his first and second visits in July 2019, Rheinhart asked Nissan to repurchase the vehicle. Nissan declined to do so. Before Rheinhart's third visit in August 2019, Nissan offered to pay Rheinhart $2,000, then $2,500 as a compromise. When on August 20, 2019, Rheinhart counteroffered with a demand for $3,548.40, Nissan accepted it. Rheinhart retained the vehicle.

Nissan thereafter sent Rheinhart a written settlement agreement and release (the Release), which Rheinhart reviewed, asking questions about some of its language. In response, Nissan referred him to the Release's language that he "agrees he was given the opportunity to review this Release with a lawyer of his choice and acting on his behalf, and that he has read this Settlement Agreement and Release and fully understand [sic ] it." Rheinhart, who elected not to consult counsel, signed the Release on October 16, 2019. That same month, he received the settlement check from Nissan.

In part, the Release states that in consideration for Nissan's cash payment, Rheinhart "hereby release[s] and forever discharge[s] Nissan North America, Inc., and all its associated or affiliated companies ... from any and all claims, lawsuits, liens, debts, dues, damages, judgments. executions and demands of every kind, whether currently known or unknown, and whether arising in the past or present ... which relate to [Rheinhart's vehicle]." It further provides that Rheinhart "does not waive any unrelated personal injury or breach of warranty claims or causes of action, which may arise after the execution of this Release." In the Release, Rheinhart agreed that in the event Nissan later repurchased his vehicle from him, the repurchase amount would be offset or reduced by the amount Nissan paid in consideration for the Release. The Release states that Nissan North America, Inc. would continue to honor the terms of the car's new vehicle limited warranty.

In May 2020, Rheinhart sued Nissan for violations of the Act. He alleged the vehicle he leased suffered from repeated malfunctions of its dashboard media and safety camera system that had not been repaired, and Nissan "failed in [its] affirmative obligation to repurchase or replace the Vehicle."⁴ Among other relief, he sought rescission and restitution of all payments for the vehicle, reimbursement, imposition of civil penalties, attorney fees, and other litigation costs under sections 1793.2, subdivision (d) and 1794.

Nissan moved for summary judgment or alternatively summary adjudication of issues. In part, it argued all of the vehicle's nonconformities arising before October 16, 2019, were barred by the Release, which no facts showed was obtained by fraud, deception, misrepresentation, duress or undue influence. Nissan presented evidence that Rheinhart admitted he had read the Release and understood all of its provisions, that he was given an opportunity to review it with an attorney of his choice but did not, and that by signing the Release, he agreed to be bound by it.⁵

In opposition, Rheinhart argued the Release was void as a matter of law under section 1790.1, which deems contrary to public policy, unenforceable and void "[a]ny waiver by the buyer of consumer goods of the provisions of this chapter, except as expressly provided in this chapter ...." He cited to federal authorities involving manufacturers' attempted disclaimers of Song-Beverly Act rights ( Gusse v. Damon Corporation (C.D.Cal. 2007) 470 F.Supp.2d 1110 ; Clark v. LG Electronics U.S.A., Inc. (S.D.Cal., June 7, 2013, No. 13-cv-485) 2013 WL 2476145, as well as cases in the Proposition 65 context ( Consumer Defense Group v. Rental Housing Industry Members (2006) 137 Cal.App.4th 1185, 40 Cal.Rptr.3d 832 ; Consumer Advocacy Group, Inc. v. Kintetsu Enterprises of America (2006) 141 Cal.App.4th 46, 45 Cal.Rptr.3d 647 ) in which courts reversed settlements or consent judgments reached by the parties due to lack of adequate corrective action. Rheinhart maintained Nissan could not attempt a similar strategy by settling the case and thereby avoiding its affirmative statutory duty under section 1793.2 to offer him a repurchase or replacement of his vehicle. According to Rheinhart, Nissan's failure to abide by its statutory obligations endangered vehicle owners and the public by allowing a malfunctioning and unsafe vehicle to remain on the road. In reply, Nissan objected to some of Rheinhart's evidence.

Overruling Nissan's objections, the trial court granted Nissan's motion. Observing there was no California authority applying the Act's antiwaiver provision, the court ruled "a reasonable and commonsense interpretation of section 1790.1 is that it[ ] applies to waivers of consumer warranties sought on the front end , in connection with the purchase of a product—not to releases negotiated to end disputes about those warranties. Indeed, if a lemon law plaintiff is prohibited from waiving the provisions of the Song-Beverly Act in order to settle, no settlement would ever be possible. That would contradict the well-established public policy in California that favors and encourages settlement of litigation. [Citations.] [¶] Accordingly, the Release bars plaintiff's express warranty claim—which is based on the presentations made in June, July, and August 2019—as a matter of law."

Rheinhart filed this appeal from the ensuing judgment.

DISCUSSION

I. Standard of Review

The applicable review standards are settled: A motion for summary judgment "shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." ( Code Civ. Proc., § 437c, subd. (c).) "[F]rom commencement to conclusion, the party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law. ... There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of the fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof." ( Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850, 107 Cal.Rptr.2d 841, 24 P.3d 493.) The moving party bears the initial burden of production to show the nonexistence of a triable factual issue, and if that party does so, the burden switches to the opposing party to make a prima facie showing that such an issue exists. ( Ibid. )

"[T]he placement and quantum of the burden of proof at trial [are] crucial for purposes of summary judgment." ( Aguilar v. Atlantic Richfield Co., supra , 25 Cal.4th at p. 851, 107 Cal.Rptr.2d 841, 24 P.3d 493.) How the parties moving for and opposing summary judgment may each carry their burden of persuasion and/or production depends on "...