Judge: Christopher K. Lui, Case: 22STCV06283, Date: 2022-10-26 Tentative Ruling
Case Number: 22STCV06283 Hearing Date: October 26, 2022 Dept: 76
Pursuant to California Rule of Court 3.1308(a)(1), the Court does not desire oral argument on the motion addressed herein. As required by Rule 3.1308(a)(2), any party seeking oral argument must notify ALL OTHER PARTIES and the staff of Department 76 of their intent to appear and argue. Notice to Department 76 may be sent by email to smcdept76@lacourt.org or telephonically at 213-830-0776. If notice of intention to appear is not given and the parties do not appear, the Court will adopt the tentative ruling as the final ruling.
Plaintiff alleges that she purchased a used vehicle which manifested serious defects within 30 days of the sale, and that she purchased a pre-paid repair contract, but the dealer failed to register the vehicle with the service contract company, so the company would not assist Plaintiff with repairs.
Defendants Nexxt Car, Inc. and
American Contractors Indemnity Company demur to the Second Amended Complaint.
TENTATIVE RULING
Defendants Nexxt Car, Inc. and American Contractors Indemnity Company’s demurrer to the Second Amended Complaint is OVERRULED as to the first cause of action and SUSTAINED without leave to amend as to the second cause of action.
Defendants are to answer the remaining allegations of the Second Amended Complaint within 10 days.
ANALYSIS
Demurrer
Request For Judicial Notice
Defendants’ request that the Court take judicial notice of the First Amended Complaint and the Court’s July 22, 2022 Order on Defendant’s Demurrer to the First Amended Complaint and Motion To Strike, and the Second Amended Complaint filed in this action is GRANTED per Evid. Code § 452(d)(court records). Defendants also request that the Court take judicial notice of the “Plaintiff’s Conditional Sale Contract and Security Agreement dated August 25, 2021. The request is GRANTED. On demurrer, judicial notice may be taken of documents which form the basis of the allegations in the complaint. (Ingram v. Flippo (1999) 74 Cal.App.4th 1280, 1285 n.3.)
Defendants also request that the
Court take judicial notice of California’s Department of Consumer Affairs,
Bureau of Automotive Repair’s database results of Test Records for the Used
2015 Chevrolet Cruz with VIN No. 1G1PA5SG4F7159633 (“Subject Vehicle”),
accessible to the public at https://www.bar.ca.gov/services/vehicle/pubtstqry.aspx.
The request is DENIED. Defendants are asking the Court to take judicial notice of
the hearsay database results of test records.
The hearsay rule
applies to statements contained in judicially noticed documents, and precludes
consideration of those statements for their truth unless an independent hearsay
exception exists. (See 1 Witkin, Cal. Evidence (4th ed. 2000) Judicial
Notice, § 25, p. 119.)
(North Beverly Park Homeowners Assn. v. Bisno (2007) 147 Cal.App.4th 762, 778 [bold emphasis added].)
Plaintiff requests that the Court take judicial notice of the Buyer’s Order contained with the purchase file provided to Plaintiff’s counsel as originating with the dealer Nexxt Car, Inc. for Plaintiff. This request is GRANTED. On demurrer, judicial notice may be taken of documents which form the basis of the allegations in the complaint. (Ingram, supra, 74 Cal.App.4th at 1285 n.3.)
Meet and Confer
The Declaration of Jordan R. Fisher does not reflect that Defendant’s counsel satisfied the meet and confer requirement set forth in CCP § 430.41 as to the Second Amended Complaint. (See Declaration of Jordan R. Fisher, ¶¶ 5-7.)
However, the Notice of Motion indicates that Defendants’ counsel met and conferred. (Notice of Joint Demurrer, Page 2:19-24.) Counsel is reminded that such meet and confer efforts must be presented in a declaration per CCP § 430.41. However, the Court will consider the meet and confer requirement as satisfied for purposes of this demurrer.
Discussion
Defendants Nexxt Car, Inc. and American Contractors Indemnity Company demur to the Second Amended Complaint as follows.
1. First Cause of Action (Violation of
Song-Beverly Consumer Warranty Act—Civil Code §§ 1790 et seq.)
The first cause of action is for violation
of the implied warranty of merchantability under the Song-Beverly Act.
Defendants argue that the 2AC still
fails to plead necessary facts alleging the
Subject
Vehicle experienced an actual defect rendering the vehicle unfit for its
ordinary purpose as an automobile (i.e., unmerchantable). Defendants argue that
Plaintiff cannot base this cause of action on the speculative allegation that
the vehicle could suffer a future malfunction if many systems fail simultaneously.
The Song-Beverly Act provides at
Civil Code § 1791.1:
As used in this chapter:
(a) “Implied warranty of merchantability” or “implied warranty
that goods are merchantable” means that the consumer goods meet each of the
following:
(1) Pass without objection in the trade under the contract
description.
(2) Are fit for the ordinary purposes for which such goods are
used.
(3) Are adequately contained, packaged, and labeled.
(4) Conform to the promises or affirmations of fact made on the
container or label.
(Civ Code § 1791.1.)
In generic terms, the elements of any
cause of action are wrongdoing, causation and harm. (Fox v. Ethicon
Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807 [27 Cal.Rptr.3d 661, 110 P.3d
914] [claims for strict liability, negligence and breach of implied warranty].)
Here the alleged wrongdoing is a breach of the implied warranty of
merchantability imposed by the Song-Beverly Consumer Warranty Act (Civ. Code, § 1790 et seq.). Under the
circumstances of this case, which involves the sale of a used automobile, the
element of wrongdoing is established by pleading and proving (1) the plaintiff
bought a used automobile from the defendant, (2) at the time of purchase, the
defendant was in the business of selling automobiles to retail buyers, (3) the
defendant made express warranties with respect to the used automobile, and (4)
the automobile was not fit for ordinary purposes for which the goods are used.
(Civ. Code, §§ 1792, 1791.1, subd. (a)(2) [definition of implied warranty of
merchantability], 1795.5 [sale of used consumer goods]; see CACI No. 3210.)
Generally, “[t]he core test of merchantability is fitness for the ordinary
purpose for which such goods are used.” (Atkinson v. Elk Corporation of Texas
(2006) 142 Cal.App.4th 212, 228 [48 Cal.Rptr.3d 247].)
Stating a complete cause of action for
a breach of the Song-Beverly Consumer Warranty Act’s implied warranty of
merchantability also requires the plaintiff to allege facts establishing the
generic elements of causation and [*1247] harm. These elements are addressed by the
statutory provisions that define the relief available for a breach of the
implied warranty. For instance, Civil Code section 1791.1, subdivision (d)
states: “Any buyer of consumer goods injured by a breach of the implied
warranty of merchantability … has the remedies provided in Chapter 6
(commencing with Section 2601) and Chapter 7 (commencing with Section 2701) of
Division 2 of the Commercial Code, and, in any action brought under such
provisions, Section 1794 of this chapter shall apply.”
Similarly, Civil Code section 1794,
subdivision (a) states that “[a]ny buyer of consumer goods who is damaged by a
failure to comply with any obligation … under an implied … warranty … may bring
an action for the recovery of damages or other legal and equitable relief.” In
accordance with these provisions, the buyer of consumer goods must plead he or
she was injured or damaged by the alleged breach of the implied warranty of
merchantability.
(Gutierrez v. Carmax Auto Superstores Cal. (2018) 19 Cal.App.5th 1234, 1246-47.)
Here, in the (now superseded) 1AC, Plaintiff
included bare-bones pleading that her car manifested certain problems within 30
days of her purchase of the vehicle: the Check Engine Light had illuminated on
the dashboard, the vehicle was leaking coolant and oil, and the vehicle was
making an odd noise coming from the front of the engine, i.e., the timing
cover. (1AC, ¶ 11.) These symptoms manifested during the 30-day implied
warranty period, which expired on September 25, 2021 based on the August 25,
2021 purchase date (1AC, ¶ 6), even though their likely cause was diagnosed
outside the warranty period, on October 19, 2021. (1AC, ¶ 12, alleging that an independent
mechanic diagnosed the vehicle with engine knock, oxygen sensor not reading
properly, leaking water pump, the timing belt and tensioner needed to be
replaced, and the crankshaft seal needed to be replaced.)
Plaintiff has amended to include in
the 2AC the following factual allegations:
14. Plaintiff did not have funds to pay
for the repairs Star Auto Center recommended, which totaled well-over
$1,000. Plaintiff drove the Vehicle
sparingly for the next several weeks. The Vehicle continue to exhibit the same
symptoms that had been present within 30 days of sale, i.e. the Check Engine
Light illuminating and then turning off and then illuminating again, the oil
and coolant leaks, and the rattle noise from the front of the engine. Dealer eventually repossessed the Vehicle on
December 16, 2021. Plaintiff had, by
then, paid almost $6,000 for the Vehicle.
15. A vehicle needing a crankshaft-seal
replacement is suffering from a lower-engine oil leak, necessitating at a
minimum that the engine be hoisted out of the vehicle so that the
crankshaft-seal can be pried out and a new seal pressed into the engine using
specialized tools.
16. A vehicle needed both a timing belt
and a timing-belt tensioner is suffering from the failure of the system which
regulates the timing of the air/fuel ignition within the engine, necessitating several
additional hours to remove the old timing belt and timing-belt tensioner system
and install
new components.
17. A vehicle needing a new water pump
is suffering from the failure of the primary cooling mechanism of the vehicle
which regulates the pressure at which coolant is pumped through the engine
block and radiator, necessitating additional hours to remove the old water pump
and install
a new pump.
18. A vehicle suffering from the
failure of these three systems simultaneously (failures of the lower-engine oil
seal, the timing belt and tensioner, and the water pump) is suffering from the failure
of three critical systems regulating the lubrication, cooling and ignition of
the vehicle. A vehicle with these three
systems malfunctioning is at risk for engine overheating and seizing while on
the highway or at an intersection. Such a vehicle suffers from both lack of
ordinary functionality and is a safety hazard.
The foregoing allegations are
sufficient to allege that Defendants sold the vehicle to Plaintiff with existing
defects which are of such a nature that failure of one or more is inevitable:
it is not a question of if they will fail, but when and, of they do, may
cause the vehicle to suddenly become inoperable under hazardous conditions such
as freeway driving. At the very least, Plaintiff has sufficiently pled that she
drove the car sparingly after the problems were diagnosed. (2AC, ¶¶ 13, 14.)
We reject the notion that merely because a vehicle
provides transportation from point A to point B, it necessarily does not
violate the implied warranty of merchantability. A vehicle that smells,
lurches, clanks, and emits smoke over an extended period of time is not fit for
its intended purpose.
(Isip v. Mercedes-Benz USA, LLC (2007) 155 Cal.App.4th 19, 27.)
Plaintiff is entitled to have an
expert testify as to the impairment of the vehicle for ordinary purposes given
the above defects, and a jury may find that the implied warranty of
merchantability was breached at the time the vehicle was sold to Plaintiff.
Based upon its reading of Mexia
v. Rinker Boat Co., Inc. (2009) 174, Cal.App.4th 1297, the Court
interprets the Song-Beverly implied warranty duration to mean as follows: Mexia
held that the duration provision did not limit when the defect must be discovered, but instead, limited the period
during which the implied warranty existed:
[T]he plain language of the statute,
particularly in light of the consumer protection policies supporting the
Song-Beverly Act, make clear that the statute merely creates a limited,
prospective duration for the implied warranty of merchantability; it does not create a deadline for
discovering latent defects or for giving notice to the seller.
Mexia, supra, 174
Cal.App.4th at 1301 (bold emphasis added).
The duration provision provides, in
essence, that the duration of the implied warranty of merchantability shall be
the same as the duration of any reasonable express warranty that accompanies
the product, but in no event shorter than 60 days or longer than one year.
(Civ. Code, § 1791.1, subd. (c).) There is nothing that suggests a requirement
that the purchaser discover and report
to the seller a latent defect within
that time period.
Mexia, supra, 174
Cal.App.4th at 1310 (bold emphasis added).
The implied warranty of merchantability
may be breached by a latent defect undiscoverable at the time of sale. (See
Moore v. Hubbard & Johnson [*1305] Lumber Co. (1957) 149
Cal.App.2d 236, 241 [308 P.2d 794]; Brittalia Ventures v. Stuke Nursery Co.,
Inc. (2007) 153 Cal.App.4th 17, 24 [62 Cal. Rptr. 3d 467]; Garlock Sealing
Technologies, LLC v. NAK Sealing Technologies Corp. (2007) 148 Cal.App.4th 937,
950–952 [56 Cal. Rptr. 3d 177].) Indeed, “[u]ndisclosed latent defects … are
the very evil that the implied warranty of merchantability was designed to
remedy.” (Willis Mining, Inc. v. Noggle (1998) 235 Ga.App. 747, 749 [509 S.E.2d
731].) In the case of a latent defect, a product is rendered unmerchantable,
and the warranty of merchantability is
breached, by the existence of the unseen defect, not by its subsequent
discovery.
Mexia, supra, 174 Cal.App.4th at 1304-05
(bold emphasis and underlining added).
As for damages, at the very least,
Plaintiff may recover so much of the price paid, in addition to damages:
Section 1794, subdivision (a),
provides: "Any buyer of consumer goods who is damaged by a failure to
comply with any obligation under this
[*621] chapter or under an
implied or express warranty or service contract may bring an action for the
recovery of damages and other legal and equitable relief." Subdivision
(b)(1) of the same statute continues: "Where the buyer has rightfully
rejected or justifiably revoked acceptance of the goods or has exercised any
right to cancel the sale, Sections 2711, 2712, and 2713 of the Commercial Code
shall apply."
California Uniform Commercial Code
section 2711 provides that when a buyer rightfully rejects or justifiably
revokes acceptance of goods, the buyer may cancel and recover specified damages
"in addition to recovering so much of the price as has been paid[.
(Italics added.) Thus, in the event of a breach of the implied warranty of
merchantability, the buyer is entitled to cancel the contract and recover any
amounts paid toward the purchase of the goods. (§ 1791.1, subd. (d), 1794,
subds. (a), (b)(1); Cal. U. Com. Code, § 2711.)
(Music Acceptance Corp. v. Lofing
(1995) 32 Cal.App.4th 610, 620-21.)
As amended, this cause of action is
sufficiently pled.
The demurrer to the first cause of action is OVERRULED.
2. Second Cause of Action (Bond Liability).
Plaintiff alleges that pursuant to Vehicle Code §§ 11710(a) and 11711, the bond issued to Dealer is payable to Plaintiff due to any loss or damage by reason of any fraud practiced on Plaintiff or fraudulent representation made to Plaintiff by Dealer or one of Dealer’s salespersons acting for Dealer, provided Plaintiff has possession of a written instrument furnished by Dealer or one of Dealer’s salespersons containing stipulated provisions and guarantees which Plaintiff believes have been violated by the licensee. (2AC, ¶ 27.)
Plaintiff alleges at ¶ 28:
28. Dealer, within the written Conditional Sale Contract and Security
Agreement furnished by Dealer, represented to Plaintiff within itemized lines
10 and 11 that the Vehicle was sold with a passing emissions test. Plaintiff
was even charged $58.25 for that passing emissions-test certificate. Plaintiff relied, in part, on that written
promise in her decision to purchase the Vehicle. Yet, that written promise was false. No passing emissions test was obtained by
Dealer. Plaintiff would not have
purchased the Vehicle if she had realized Dealer had not been truthful in that written
representation.
Defendants argue that the judicially-noticed
sale contract and security agreement does not include an itemized lines 10 and
11, so her allegation that there were misrepresentations on those lines is
untruthful. However, the Court has also taken judicial notice of a document presented
by Plaintiff which does include lines 10 and 11 and includes a $50.00 Smog Fee
and $8.25 for Smog Certificate. (Opp. RJN, Exh. F.) As such, it appears
Plaintiff is referring to this document. Further, as the Court has not taken
judicial notice of the hearsay statements contained in the California Automotive
Repair database, Defendants’ argument based on test results is not persuasive.
Defendants argue that, because Plaintiff
admits the vehicle was repossessed, she cannot pursue an action for recovery on
a bond where she is no longer in possession of a valid written instrument
following default and subsequent repossession on December 16, 2021. (2AC, ¶
14.)
Vehicle Code § 11711(a) provides:
(a) If any person
(1) shall suffer any loss or damage by reason of any fraud practiced on him or
fraudulent representation made to him by a licensed dealer or one of such
dealer’s salesmen acting for the dealer, in his behalf, or within the scope of
the employment of such salesman and such person has possession of a written
instrument furnished by the licensee, containing stipulated provisions
and guarantees which the person believes have been violated by the licensee,
or (2) if any person shall suffer any loss or damage by reason of the violation
by such dealer or salesman of any of the provisions of Division 3 (commencing
with Section 4000) of this code, or (3) if any person is not paid for a
vehicle sold to and purchased by a licensee, then any such person shall have a
right of action against such dealer, his salesman, and the surety upon the
dealer’s bond[1], in an amount
not to exceed the value of the vehicle purchased from or sold to the dealer.
(Veh. Code § 11711(a)[bold emphasis added].)
Based upon the document attached to
Plaintiff’s RJN as Exhibit F, the Court finds that the “Buyer’s Order” does not
constitute a “written instrument” for purposes of Vehicle Code, § 11711(a). The
term “written instrument” is not defined in the Vehicle Code. In general, a “written
instrument” is understood to be a writing signed and delivered, transferring
title to or creating a lien on property, or giving a right to a debt or duty.
In an early case, Hoag v. Howard (1880)
55 Cal. 564, the California Supreme Court, in considering the provisions of the
Civil Code, stated that [*622] the word
"instrument" "will be invariably found to indicate some written paper or instrument signed and
delivered by one person to another, transferring the title to or creating a
lien on property, or giving a right to a debt or duty." (Id. at p. 565.)
The written paper or instrument need not represent an agreement. (Generes v. Justice Court (1980)
106 Cal. App. 3d 678, 684 [165 Cal. Rptr. 222].) In Generes, the court clarified the misconstruction of the
term, "written instrument," by the court in People v. Fraser (1913) 23 Cal. App.. 82 [137 P.
276]. In Fraser, the court wrote: "Generally the term
'instrument' as applied to documents necessarily imports a paper writing; but
every paper writing is not necessarily an instrument within the settled
statutory meaning of the term. With reference to writings the term
'instrument' as employed in our statutes has been defined to mean an agreement expressed in writing, signed, and delivered by one
person to another, transferring the title to or creating a lien on real
property, or giving a right to a debt or duty. [Citations.] This
definition of the term as applied to writings contemplated, created, and
controlled by various code provisions, has been repeatedly followed and applied
in a variety of cases. Thus, for example, it has been held that a notice
of lis pendens is not an instrument in the sense
contemplated by our statutes [citation]; that a map is not an instrument within
the meaning of the recording act [citation]; that neither an attachment nor a
judgment is an instrument within the meaning of section 1107 of the Civil
Code [citation], and that a notice of a claim of water-rights, although
required to be recorded by section 1415 of the Civil Code, is not an
instrument within the accepted definition of statutory instruments
[citation]." (Id. at pp. 84-85, italics added.)
Based on its interpretation, the court concluded that a birth certificate
did not constitute an "instrument" within the meaning of Penal Code
section 115. (Fraser, supra, 23 Cal. App..
at p. 86.)
(Plaza Freeway v. First Mt. Bank (2000) 81 Cal.App.4th 616, 621-22 [bold emphasis added].)
The Buyer’s Order submitted by Plaintiff does not transfer title to or create a lien on property, or give a right to a debt or duty. As such, the Court finds that it does not constitute a “written instrument” for purposes of Vehicle Code § 11711(a). This cause of action fails as a matter of law.
The demurrer to the second cause of action is SUSTAINED without leave to amend.
Defendants are to answer the remaining allegations of the Second Amended Complaint within 10 days.