Wednesday, December 24, 2025
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Court of Appeal:
Judge Erred in Applying Offset to Award Under Lemon Law
Justices Say That Where Buyer Made a Demand That Hyundai Repurchase Defective Vehicle, Which Was Then Totaled in an Accident, Amount of Benefit Paid by Insurer Should Not Have Been Deducted From Damages
By a MetNews Staff Writer
The Court of Appeal for this district has held that the right of a purchaser under the state’s “lemon law” to damages where the manufacturer of an unrepairable automobile spurned a demand to take back the vehicle and refund the purchase price cannot be judicially impaired by hacking from an award the amount paid by an insurer after the car was totaled in a hit-and-run accident.
Presiding Justice Helen Zukin wrote the partially published opinion, filed Monday, saying that Los Angeles Superior Court Judge Yolanda Orozco erred in ordering the offset.
Plaintiff Daevieon Towns had purchased a Hyundai Elantra in 2016 for $26,673.30. The car was driven and maintained by his wife, Lashona Johnson.
On March 21, 2018, either Towns or Johnson—Zukin said it isn’t clear from the record which of them—made a demand to Hyundai for a repurchase of the automobile, pursuant to Civil Code §1793.2, a portion of the Song-Beverly Consumer Warranty Act, popularly dubbed the “lemon law.”
Statutory Language
That section provides:
“If the manufacturer or its representative in this state 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 shall either promptly replace the new motor vehicle…or promptly make restitution to the buyer….”
It adds that “the buyer shall be free to elect restitution in lieu of replacement” and specifies that an award would be reduced by “that amount directly attributable to use by the buyer prior to the discovery of the nonconformity.”
Towns and Johnson portray Hyundai as having rebuffed their demand; Hyundai contends the matter was in limbo awaiting receipt of requested information. In any event, the Elantra was wrecked on May 27, 2018, and Johnson’s insurer paid $14,710.91 to cover the loss.
The husband sued Hyundai under the lemon law. Orozco later granted leave for Johnson to be added as a plaintiff.
A jury’s verdict was that the plaintiffs were entitled to $28,718.98.
The primary issue on the appeal, brought by Towns and Johnson, was whether Orozco erred in deducting from the award the amount paid by the insurer. The plaintiffs argued that the California Supreme Court’s opinion last year in Niedermeier v. FCA US LLC supports their position; Hyundai maintained that it is inapposite.
Supreme Court Decision
In that case, plaintiff Lisa Niedermeier purchased a Jeep Wrangler from FCA US LLC; it turned out to be a “lemon”; FCA declined to buy back the vehicle; Niedermeier traded it in on the purchase of a GMC Yukon; the dealer gave her a $19,000 credit. The question was whether, in Niedermeier’s successful action against FCA, Los Angeles Superior Court Judge Daniel S. Murphy erred in denying an offset based on the credit.
Justice Kelli Evans wrote for the majority in saying that there was no error, reversing a contrary determination by Div. One of this district’s Court of Appeal.
Evans wrote:
“We conclude that in an action pursuant to section 1794, neither a trade-in credit nor sale proceeds reduce the statutory restitution remedy set forth in section 1793.2, subdivision (d)(2) at least where, as here, a consumer has been forced to trade in or sell a defective vehicle due to the manufacturer’s failure to comply with the Act.”
She declared that “[t]he statutory restitution remedy has clearly enumerated exceptions” to the obligation to make restitution—a refund of the purchase price—and that none of the exceptions set forth “includes the offset requested by FCA.”
Hyundai’s Position
Hyundai argued in its respondent’s brief that unlike the situation in Niedermeier, “Hyundai’s Song-Beverly violation did not force plaintiffs to sell the vehicle.” It set forth:
“[T]his case is the situation Niedermeier expressly said it was not deciding: where ‘a buyer sells or trades in a vehicle before a manufacturer has the opportunity to comply with its obligation to promptly pay restitution.’…Here, Hyundai did not have an opportunity to comply with its replace-or-buyback obligation before the crash. Hyundai could not comply because of plaintiffs’ failure to provide the information needed to calculate the restitution amount—including information Hyundai could only get from plaintiffs, such as the payment history and their incidental and consequential damages.”
The manufacturer continued:
“The correct rule of law is: Where the manufacturer did not have a reasonable opportunity to make restitution, or its failure to do so did not force the plaintiff to part with the vehicle, the plaintiffs damages must be reduced by the proceeds of selling the vehicle.”
Citing Civil Code §3358—which says that “[e]xcept as expressly provided by statute, no person can recover a greater amount in damages for the breach of an obligation, than he could have gained by the full performance thereof on both sides”—Hyundai posited:
“Overcompensation is prohibited by statute, except as expressly authorized by statute….The requirement for express statutory authorization for overcompensation distinguishes the case where the manufacturer’s violation forces the plaintiff to sell (as in Niedermeier) from the case where the manufacturer did not have an opportunity to comply and the plaintiff sells for unrelated reasons (as here).”
Zukin’s Opinion
Zukin wrote:
“It is true, as Hyundai points out, that Niedermeier involved a trade-in credit while here we have an insurance payment. However, this is not a relevant distinction; Niedermeier’s reasoning still applies. Section 1793.2, subdivision (d)(2) provides a specific formula for calculating damages, and courts may not add exceptions to that formula….The formula contains no exception for insurance payments, which likewise are not part of the ‘actual price paid or payable’ at the time the vehicle was purchased….The purpose of the Act is to protect consumers, and altering the statutory definition of restitution would not do that.”
She added:
“Further, the argument that full recovery would be a windfall for Towns and Johnson cuts both ways. As the Court noted in Niedermeier, Hyundai had an affirmative obligation to offer repurchase of the vehicle….Even though Hyundai was not the direct cause of the accident, the vehicle was destroyed during a delay in Hyundai’s performance of its obligations. Allowing Hyundai to benefit from the insurance proceeds could equally be considered a windfall for Hyundai. The purpose of the act is to protect consumers; allowing the manufacturer to benefit from the accidental destruction of the vehicle does not serve that purpose.”
Lack of Standing
Zukin said that Johnson should not have been added as a plaintiff because the lemon law creates rights for the a “buyer of consumer goods” and it was Towns who was the buyer.
The presiding justice said the correct award would be $24,085.83—the amount awarded by the jury “minus the $4,633.15 value of use calculation, as shown on the special verdict form.”
The jury also awarded $18,749.84 as a civil penalty which was not contested on appeal.
In an unpublished portion of the opinion, Zukin said the jury was justified in awarding pre-judgment interest, saying the Civil Code §3288 is applicable. It says:
“In an action for the breach of an obligation not arising from contract, and in every case of oppression, fraud, or malice, interest may be given, in the discretion of the jury.”
She explained that the action was grounded not on a breach of contract on the part of Hyundai but, rather, a breach of its obligations under the Song-Beverly Act. On remand, she directed, the interest is to be recalculated based on the correct award of damages.
The case is Towns v. Hyundai Motor America, 2025 S.O.S. 3809.
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