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Court of Appeal:
Defendant in ‘Lemon Law’ Case Not Entitled to Offset for Trade-In Value of Vehicle
By a MetNews Staff Writer
A plaintiff who prevailed in an action under the Song-Beverly Consumer Warranty Act—the “lemon law”—was entitled to an award based on the full price of the defective vehicle plus costs incurred, minus the value of using it, without a credit for the $29,500 he garnered in trading-in the truck, the Third District held yesterday, repudiating a contrary conclusion reached in a 2020 decision by this district’s Div. One.
“Although it may at first blush seem reasonable that a buyer’s restitution under the Act should exclude a credit the buyer received for trading in the defective vehicle,” Acting Presiding Justice Ronald B. Robie said in yesterday’s opinion, “we conclude the language of the restitution provision, our Supreme Court’s prior interpretation of the term ‘price’ in the restitution provision, and the legislative history indicate otherwise.”
The restitution provision is contained in Civil Code §1793.2(d)(2)(B), and applies where the defendant has refused to replace the defective vehicle. It says:
“In the case of restitution, the manufacturer shall make restitution in an amount equal to the actual price paid or payable by the buyer, including any charges for transportation and manufacturer-installed options, but excluding nonmanufacturer items installed by a dealer or the buyer, and 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.”
Robie indicated his disagreement with the decision in Niedermeier v. FCA U.S. LLC. A petition for was granted in that case by the California Supreme Court on Feb. 10, 2021, but a request for depublication was denied.
Bendix’s Opinion
In Niedermeier, Justice Helen I. Bendix said:
“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…, 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.’ ”
That decision was followed in 2021 by this district’s Div. Five in Crayton v. FCA US LLC.
Gilbert’s Decision
However, it was but rejected last year by this district’s Div. Six in Figueroa v. FCA US, LLC. Div. Six’s presiding justice, Arthur Gilbert wrote:
“Undaunted by the lack of statutory authority, FCA argues that public policy requires that it can be credited with the cash Figueroa received from the sale. FCA’s position is that having sold Figueroa a defective vehicle and having willfully violated the Song-Beverly Act by refusing to promptly replace or repurchase the vehicle, it is entitled to be benefitted with the cash Figueroa received. FCA complains that Figueroa received a windfall at FCA’s expense. What FCA refuses to acknowledge is that any such windfall is the direct result of FCA’s willful violation of the Song-Beverly Act. Had FCA fulfilled its duty under the Act to promptly replace or repurchase the truck, there would be no such windfall. We are aware of no public policy that requires FCA be compensated for its own willful violation of the law.”
He went on to say:
“We disagree with Niedermeier. First, the Legislature used the term “restitution,” but it defines what it means by restitution in section 1793.2, subdivision (d)(2)(B). The definition does not include a set-off for the cash received by the vehicle owner on sale of the vehicle or the vehicle’s trade-in value. Second, FCA cannot complain that the vehicle’s owner has received an unjustified windfall when it could have avoided such a result by complying with the Song-Beverly Act. Third, it is FCA, and not the vehicle’s owner, who undercuts the act’s labeling and notification requirements by refusing to repurchase the vehicle as required by the act. The labeling and notification requirements only apply where the manufacturer replaces or repurchases the vehicle, something FCA has refused to do.”
A petition for review is pending in that case.
Robie’s View
Robie pointed to the California Supreme Court’s 2020 decision in Kirzhner v. Mercedes-Benz USA, LLC. There, Justice Joshua P. Groban wrote for a unanimous court in saying that under the lemon law, registration renewal and nonoperation 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.”
The case did not deal with whether there is an offset for the amount received from a trade-in. Robie wrote:
“From Kirzhner, we glean the phrase ‘actual price paid or payable’ in the restitution provision means the cost to obtain the vehicle at the time of purchase, whether that cost is paid at the time of purchase or payable thereafter. The subsequent trade-in value (or sale) of a defective vehicle thus cannot form part of the ‘actual price paid or payable.’ ”
He commented:
“We disagree with the Niedermeier court’s reasoning that the Legislature’s use of the word ‘restitution’ in the Act indicates an intent to import the common law meaning of restitution into the statute, overriding a literal reading of the restitution provision.”
The opinion reverses a judgment which reduced the award by the amount plaintiffs Melissa A. Williams and Geoffrey G. Williams received in trading in their truck.
The case is Williams v. FCA US LLC, C091902.
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