Judge Bruce G. Iwasaki, Case 20STCV30383 2023-02-21 Tentative Ruling

This is an action under the Song-Beverly Act in which Jorge Salazar and Jocelyn Vargas (Plaintiffs) allege defects in a used, 2013 Chevrolet Cruze (Vehicle). The Complaint asserts breach of express and implied warranties and negligent repair against General Motors, LLC (Defendant or GM). In December 2022, Plaintiffs filed the First Amended Complaint with added allegations under the Commercial Code and Magnuson-Moss Warranty Act.

Plaintiffs purchased the Vehicle on August 29, 2015 from the Hertz Corporation, with 56,524 miles on the odometer. The Vehicle was originally sold to “Dublin Chevrolet Cadillac” on March 22, 2013. The warranty consisted of a bumper-to-bumper coverage of the earlier of 36 months or 36,000 miles, while the powertrain warranty covered the earlier of 60 months or 100,000 miles. At the time of sale to Plaintiffs, they also purchased an optional “Fidelity Warranty” (Fidelity) that covered an additional 60 months or 60,000 miles.

Plaintiffs brought the Vehicle for service to GM’s authorized repair facility on numerous occasions. On December 21, 2015, April 25, 2016, June 28, 2017, and January 23, 2018, the Vehicle was brought in for a recall related to low coolant levels. After these visits, the repair facility submitted its claims for reimbursement to Fidelity. On September 24, 2018, Plaintiffs again brought the Vehicle in for repair because the “check engine light” turned on and the facility replaced various valves and the compressor clutch. At the last repair on May 21, 2020, Plaintiffs reported problems with the ignition.

Defendant moves for summary adjudication of the first two claims for breach of implied and express warranties, and to cap the amount of damages. GM principally contends that because the Vehicle was purchased used, the Song-Beverly Act does not apply under a recent Court of Appeal decision, Rodriguez v. FCA US, LLC (2022) 77 Cal.App.5th 209 (Rodriguez). Plaintiffs oppose the Motion, contending that Rodriguez is not binding because the California Supreme Court has granted the petition for review, and that Jensen v. BMW of North America, Inc. (1995) 35 Cal.App.4th 112 (Jensen) governs, which held that cars sold with a balance remaining on the manufacturer’s warranty constitute a “new motor vehicle” under the Song-Beverly Act.[1] Defendant reiterated its arguments in reply.

Plaintiffs’ objections, which are solely directed to introduction of the sale contract by which Plaintiffs purchased the vehicle, are all overruled.

In the Separate Statement, Plaintiffs inserted improper argument in their responses. For example, in response to at least eight of Defendant’s Undisputed Material Facts, Plaintiffs insert in argument that Rodriguez does not apply because the Supreme Court has granted review and that section 1793.2 applies to “reasonable number of attempts” to repair. The Separate Statement is not the proper place for objections or argument.

A party may move for summary judgment “if it is contended that the action has no merit or that there is no defense to the action or proceeding.” (Code Civ. Proc., § 437c,¿subd. (a).) “[I]f all the evidence submitted, and all inferences reasonably deducible from the evidence and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law,” the moving party will be entitled to summary judgment. (Adler v. Manor Healthcare Corp.¿(1992) 7 Cal.App.4th 1110, 1119.)

The moving party has the initial burden of production to make¿a prima facie¿showing of the nonexistence of any triable issue of material fact, and if he does so, the burden shifts to the opposing party to make¿a prima facie¿showing of the existence of a triable issue of material fact. (Aguilar v. Atlantic Richfield Co.¿(2001) 25 Cal.4th 826, 850; accord Code Civ. Proc., § 437c,¿subd. (p)(2).) A Defendant moving for summary judgment may meet its initial burden by proving that for each cause of action alleged, plaintiff cannot establish at least one element of the cause of action. (Code Civ. Proc., § 437c(p)(2).)

Preliminarily, as part of their opposition, Plaintiffs contend that because they filed the Complaint prior to Rodriguez, the case should not be retroactively applied to them based on equity. This argument is without merit. (Evangelatos v. Superior Court (1988) 44 Cal.3d 1188, 1207 [citing to Justice Rehnquist in United States v. Security Industrial Bank (1982) 459 U.S. 70, 79-80 that “[t]he principle that statutes operate only prospectively, while judicial decisions operate retrospectively, is familiar to every law student”]; Newman v. Emerson Radio Corp. (1989) 48 Cal. 3d 973, 978-982 [“general rule that judicial decisions are given retroactive effect is basic to our legal tradition”].) Thus, the Court fully considers Rodriguez and Jensen.

In vehicle sales, the implied warranty of merchantability “means that the goods ‘[p]ass without objection in the trade under the contract description,’ and are ‘fit for the ordinary purposes for which such goods are used.’ ” (Brand v. Hyundai Motor Am. (2014) 226 Cal.App.4th 1538, 1545.) “[A] new car need not ‘be perfect in every detail’; rather, its implied merchantability ‘requires only that a vehicle be reasonably suited for ordinary use.’ ” (Id. at p. 1546.) A plaintiff must show that at the time of purchase “the product did not possess even the most basic degree of fitness for ordinary use.” (Mocek v. Alfa Leisure, Inc., 114 Cal.App.4th 402, 406.) For a vehicle, this means whether it was fit for driving and the “ordinary purpose of providing transportation.” (American Suzuki Motor Corp. v. Superior Court (1995) 37 Cal.App.4th 1291, 1296.)

Defendant argues that this claim fails because Plaintiffs did not purchase the used vehicle from GM. Plaintiffs oppose and contend that the Vehicle was a “new motor vehicle” and the implied warranties under Civil Code sections 1792 and 1793 apply.

Here, Plaintiffs do not dispute that the Vehicle was purchased used. They contend that this fact is irrelevant. (See generally, Defendant’s Separate Statement of Undisputed Facts (SS) 1, 2.) But this fact is decisive. “[I]n the sale of used consumer goods, liability for breach of implied warranty lies with distributors and retailers, not the manufacturer, where there is no evidence the manufacturer played any role in the sale of the used car to plaintiff.” (Ruiz Nunez v. FCA US LLC (2021) 61 Cal.App.5th 385, 398 (Nunez).) “[O]nly distributors or sellers of used goods—not manufacturers of new goods—have implied warranty obligations in the sale of used goods.” (Id. at p. 399, original italics.) Plaintiffs purchased the used vehicle from the Hertz Corporation, not from GM directly. (SS 2.) Defendant has met its initial burden of showing that it is not liable for breach of implied warranty for the used vehicle.

Plaintiffs’ opposition merely cites the general provisions of an implied warranty under Civil Code sections 1792 and 1793 that accompany the sale of new consumer goods. (Civ. Code, § 1791, subd. (a) [defining consumer goods as “any new product”].) And while they cite to Nunez, they fail to distinguish or even discuss the case. Plaintiffs fail to meet their burden to raise an issue of fact to counter Defendant’s showing.

“ ‘A plaintiff pursuing an action under the [Song-Beverly] Act has the burden to prove that (1) the vehicle had a nonconformity covered by the express warranty that substantially impaired the use, value or safety of the vehicle (the nonconformity element); (2) the vehicle was presented to an authorized representative of the manufacturer of the vehicle for repair (the presentation element); and (3) the manufacturer or his representative did not repair the nonconformity after a reasonable number of repair attempts (the failure to repair element).’ ” (Donlen v. Ford Motor Co. (2013) 217 Cal.App.4th 138, 152.)

GM’s argument for summary adjudication relies heavily on Rodriguez and distinguishes Jensen. At issue in both Rodriguez and Jensen is the meaning of “new motor vehicle” under the Song-Beverly Act. In relevant part, the statutory language states:

“New motor vehicle” includes the chassis, chassis cab, and that portion of a motor home devoted to its propulsion, but does not include any portion designed, used, or maintained primarily for human habitation, a dealer-owned vehicle and a “demonstrator” or other motor vehicle sold with a manufacturer’s new car warranty.

In Rodriguez, the “sole issue in the case [was] whether the phrase ‘other motor vehicle sold with a manufacturer’s new car warranty’ covers sales of previously owned vehicles with some balance remaining on the manufacturer’s express warranty.” The Rodriguez plaintiff purchased a used truck from a third-party used car dealership that had 55,000 miles on it. The plaintiff did not purchase any additional warranties, though the original powertrain warranty was still in effect at the time of purchase. (77 Cal.App.5th at p. 209.) The trial court granted the vehicle manufacturer’s motion for summary judgment because the vehicle was used. The Fourth District affirmed the order, finding that the statutory text[2] and legislative history supported its reasoning that a used vehicle with some balance of the original warranty was not a “new motor vehicle” under the Song-Beverly Act. (Id. at pp. 219-223.) The Court of Appeal further noted that it was unclear whether the third-party dealership issued any warranties to plaintiffs, “but that would be the only way they could seek a refund or replacement under the Act.” (Id. at p. 223.) The court concluded “that the phrase ‘other motor vehicles sold with a manufacturer’s new car warranty’ refers to cars sold with a full warranty, not to previously sold cars accompanied by some balance of the original warranty.” (Id. at p. 225.)

The California Supreme Court has granted review of Rodriguez, and the case can only be cited for its persuasive value. (Cal. Rules of Court, rule 8.1115(e)(3).)

The Rodriguez Court discussed Jensen, supra, 35 Cal.App.4^th 112. In distinguishing the earlier case, it concluded that while Jensen was “correctly decided,” its interpretation of section 1793.22 should be limited to the facts before it. (Rodriguez, supra, 77 Cal.App.5^th at p. 224.) Jensen concluded that under section 1793.22, “cars sold with a balance remaining on the manufacturer’s new motor vehicle warranty are included within its definition of ‘new motor vehicle.’ ” (35 Cal.App.4^th at p. 123.)

Plaintiffs argue that Jensen should govern here. That case involved a plaintiff who leased a vehicle that had 7,565 miles from a manufacturer-affiliated dealer. The salesman incorrectly represented that it “had been used as a demonstrator for the dealership.” (35 Cal.App.4th at p. 119.) The lease was issued with a “36,000-mile warranty on top of the miles already on the car.” The Third District engaged in statutory analysis, finding that “the words of section 1793.22 are reasonably free from ambiguity” because “[t]he use of the word ‘or’ in the statute indicates ‘demonstrator’ and ‘other motor vehicle’ are intended as alternative or separate categories of ‘new motor vehicle’ if they are ‘sold with a manufacturer’s new car warranty.’” [3] (Id. at p. 123.) The court noted the “peculiar grammatical structure” of the section and further reviewed the amendments, documents relating to legislative proceedings, and the overall statutory scheme, concluding that “section 1793.22 includes cars sold with a balance remaining on the new motor vehicle warranty.” The court cited to the “Act’s purpose as a remedial measure” and to protect “ ‘any individual to whom the vehicle is transferred during the duration of a written warranty.’ ” (Id. at p. 126.)

In distinguishing Jensen, the Rodriguez Court emphasized that “Jensen involved a lease by a manufacturer-affiliated dealer who issued a full new car warranty along with the lease.” (Rodriguez, supra, 77 Cal.App.5th at p. 223, original italics.) Allowing that Jensen was “correctly decided,” Rodriguez commented that its statutory interpretation should be limited to the unique facts in that case: the manufacturer had issued a full warranty at the time of sale. Several other cases in the Fourth District have distinguished Jensen on similar grounds. (Kiluk v. Mercedes-Benz USA, LLC (2019) 43 Cal.App.5th 334, 340, n.4 [questioning Jensen’s broad holding that “every car sold with any portion of a new-vehicle warranty remaining is a new motor vehicle] (Kiluk); Dagher v. Ford Motor Co. (2015) 238 Cal.App.4th 905, 923 [limiting Jensen to the facts in the case which involved a lease from the dealer, not a private party].)

Despite the Jensen Court’s conclusion that the “other motor vehicle” provision of section 1793.22, subdivision (e)(2) is “reasonably free from ambiguity” (35 Cal.App.4^th at p. 123.), this Court finds the text obscure. The statute’s “peculiar grammatical structure” (Ibid.) has yielded contrary appellate interpretations. Our Supreme Court may soon clarify the matter. This Court finds that the Rodriguez analysis persuasively highlights the broader implications and unanswered questions that arise from the Jensen Court’s conclusion that a used car with the balance of a manufacturer’s new car warranty is a new motor vehicle.

Until a more definitive ruling is issued, this Court seeks to harmonize the two precedents. Rodriguez did so, after a fashion, concluding that Jensen was correct based on its facts. GM argues that this case should be guided by Rodriguez because in Jensen, the plaintiff purchased from a manufacturer-affiliated dealer and was issued a new warranty. But on the record presented here, there remains a factual dispute on these issues.

Defendant GM bears the burden of persuasion to demonstrate there is no triable issue of fact. (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 845.) As a manufacturer, GM may face liability under the Song-Beverly Act if it “sells directly to the public” by partnering with a dealership to sell used vehicles directly to the public.” (Kiluk, supra, 43 Cal.App.5th at p. 340 .) By doing so, a manufacturer can “step[] into the role of a retailer and [may be] subject to the obligations of a retailer under section 1795.5,” which is the same as a manufacturer under section 1793.2. (Kiluk, supra, 43 Cal.App.5th at p. 340 .) In other words, there may be a triable issue of fact on whether Plaintiffs purchased the vehicle from an authorized dealership, which may impose the same obligations as a manufacturer under section 1793.2.

To that end, GM seemingly attempted to preempt the issue by asserting that “Hertz is not a GM-authorized dealership.” (SS 3; Kay Decl., ¶ 4.) Plaintiffs disputed this fact, stating “[a]s highlighted in Plaintiffs’ Objections to Evidence, this fact is unsupported by admissible evidence.” This objection in the Separate Statement is invalid. (Whitehead v. Habig (2008) 163 Cal.App.4th 896, 902 [objections to the separate statements do not constitute evidentiary objections where they fail to include any argument or citations to authorities].) Plaintiffs separately submit a document titled “Objections to Declarations of Ryan Kay.” However, none of the objections refer to Paragraph 4 of the Kay Declaration averring that Hertz is not a GM-authorized dealership. Instead, there are three objections, all directed to “Exhibit A” of the Kay Declaration, which is the Retail Installment Sales Contract. First, it is puzzling why Plaintiffs are objecting to the primary basis for their Song-Beverly claims. Should the Court sustain those objections, then there are no warranties on the Vehicle and summary adjudication should be granted. Second, because Plaintiffs do not comply with making the objection under California Rules of Court, rule 3.1354, this is a basis to overrule the objection. (Schmidt v. Citibank, N.A. (2018) 28 Cal.App.5th 1109, 1118 [“The trial court acted well within its discretion in overruling the objections for failing to meet [rule 3.1354] standards”].)

Nevertheless, the Court declines to consider Paragraph 4 of the Kay Declaration. (People v. Viray (2005) 134 Cal.App.4th 1186, 1208 [“The court may of course exclude evidence on its own motion”].) There is no basis for counsel Ryan Kay to aver that Hertz is not a GM-authorized dealership. He does not establish the foundation for his personal knowledge of that information. Moreover, unlike Rodriguez, the seller here offered an additional warranty extension, which Plaintiffs purchased.[4]

Thus, because Defendant has not put forth any evidence that Hertz is not an authorized dealership, a triable issue of fact remains as to whether GM partnered with Hertz and directly sold the Vehicle to the Plaintiffs. (Cf. Rodriguez, supra, 77 Cal.App.5th at p. 216 [“FCA presented evidence that the Pacific Auto Center is an unaffiliated, third party reseller and therefore was not one of its representatives at the time of sale”]; see also Kiluk, supra, 43 Cal.App.5th at p. 340.) Accordingly, summary adjudication is denied on the second cause of action.

Defendant also requests that the Court “cap the amount of ‘actual damages’ that Plaintiffs may seek at trial.” To the extent that Defendant is requesting a pre-trial ruling regarding the potential applicability of certain offsets under the Song-Beverly Act in a case that has not yet proceeded to trial, this is improper as the parties have not stipulated to this issue. (Code Civ. Proc., § 437c, subd. (t)(1)(A).)

The motion for summary adjudication is granted on the first cause of action for breach of implied warranty but denied as to the second cause of action for breach of express warranty. Defendant’s request to cap damages is denied.

[1] Plaintiffs also spend half their opposition arguing points that Defendant did not raise in its motion for summary judgment, such as whether there were a reasonable number of repair attempts. Since this issue was not raised in the moving papers, the Court disregards these arguments.

[2] The Rodriguez Court reasoned that section 1793.22(e)(2) referred to a list of “two vehicles (dealer-owned vehicles ‘and’ demonstrators) followed by an adjectival clause qualifying or describing those vehicles.” It explained that the lack of a comma in the phrase “dealer-owned vehicle and a ‘demonstrator’ or other motor vehicle sold with a manufacturer’s new car warranty” suggested that the latter phrase of “other motor vehicle” was “intended to function as a catchall provision to cover a narrow class vehicle – the previously driven, but basically new (i.e., not previously sold) car.” (77 Cal.App.5th at p. 220.)

[3] In contrast to Rodriguez, the Jensen Court did not emphasize the lack of a comma in the phrase “dealer-owned vehicle and a ‘demonstrator’ or other motor vehicle sold with a manufacturer’s new car warranty,” but instead focused on the word “or” to hold that this phrase created an additional category of “new motor vehicle.” (Ibid.) Thus, while Rodriguez concluded that the clause defined two additional types of vehicles as “new,” the Jensen Court concluded that the clause defined three: dealer-owned vehicles, demonstrators, and other vehicles sold with a manufacturer’s new car warranty.

[4] The Court recognizes that the warranty was labeled as “Fidelity Warranty Service.” But GM also fails to support its statement that this was a “non-GM service contract” with any evidence. (SS 6.) GM does not attach an actual copy of that warranty, instead submitting a “Pre-Contract Disclosure” form, which is uninformative. (Kay Decl., Ex. B.)

Department 58