Judge: Daniel S. Murphy, Case: 21STCV14964, Date: 2024-07-29 Tentative Ruling

Case Number: 21STCV14964    Hearing Date: July 29, 2024    Dept: 32

BACKGROUND

            On April 20, 2021, Plaintiffs Victor Ruiz and Amelia Perez filed this action against Defendant Toyota Motor Sales U.S.A., Inc., asserting causes of action for violations of the Song-Beverly Act.

            On June 13, 2024, the jury returned a verdict in favor of Plaintiffs on the breach of implied warranty claim in the amount of $48,481. Judgment was entered accordingly on July 9, 2024.

            On June 25, 2024, Plaintiffs filed the instant motion for prejudgment interest. Defendant filed its opposition on July 15, 2024. Plaintiffs filed their reply on July 23, 2024.  

DISCUSSION

I. Mandatory Prejudgment Interest

“A person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in the person upon a particular day, is entitled also to recover interest thereon from that day . . . .” (Civ. Code, § 3287(a).) Prejudgment interest is allowable as a matter of right when damages are fixed or readily ascertainable, but not when there is conflicting evidence over the amount owed which requires a judicial determination to resolve. (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 991.) “The test for determining certainty under section 3287(a) is whether the defendant knew the amount of damages owed to the claimant or could have computed that amount from reasonably available information.” (Howard v. American National Fire Ins. Co. (2010) 187 Cal.App.4th 498, 535.)

Prejudgment interest is properly denied in a Song-Beverly claim where “[d]etermination of the award required the jury to determine (1) whether any of the many defects alleged in the complaint represented a nonconformity, (2) whether any such nonconformity ‘substantially impaired [the] use, value, or safety’ of the vehicle, and (3) then to determine—for any such nonconformity—the mileage at which plaintiffs first presented the car to defendant for repair.” (Duale v. Mercedes-Benz USA, LLC (2007) 148 Cal.App.4th 718, 729.)

Plaintiffs seek prejudgment interest solely on the purchase price of the vehicle ($39,689) because the price was certain from the sales contract. Plaintiffs acknowledge that incidental damages, consequential damages, and finance charges were uncertain before trial and therefore do not seek prejudgment interest on those amounts. 

            Prejudgment interest is inappropriate in this case because of disputes over issues similar to the ones in Duale. Plaintiff takes issue with Defendant’s reliance on Duale and insists that Duale has been limited by Doppes v. Bentley Motors, Inc. (2009) 174 Cal.App.4th 1004, 1010. However, Doppes did not discuss the certainty of damages under section 3287. Rather, the issue in Doppes was whether the Song-Beverly Act allows recovery of prejudgment interest at all. (Id. at p. 1006.) The defendant in Doppes improperly relied on Duale for the proposition that Song-Beverly bars prejudgment interest. (Id. at p. 1010.) The court clarified that “[t]he Duale court did not hold prejudgment interest may never be recovered in a Song-Beverly Consumer Warranty Act case, but only that prejudgment interest was unrecoverable under section 3287 in that particular case . . . .” (Ibid.) The court in Doppes went no further and did not discuss the certainty of damages under section 3287(a). Doppes did not limit Duale to its precise facts, nor did it undermine the legal reasoning in Duale. Because Defendant does not attempt to argue that Song-Beverly completely precludes prejudgment interest, Doppes is inapplicable. 

Plaintiffs fail to show any material distinction between the damages issues disputed in this case and the ones disputed in Duale. (See Duale, supra, 148 Cal.App.4th at p. 729.) Plaintiffs accuse Defendant of making the absurd argument that “a defendant must outright admit liability for prejudgment interest to be possible.” (Reply 5:6-8.) However, Defendant makes no such argument, nor does Defendant use Duale for that proposition. Instead, Defendant argues that because the extent of its liability was contested and required resolution by trial, damages were not certain under section 3287(a). This is a correct interpretation of Duale and is also supported by the caselaw summarized above. (See Thompson, supra, 6 Cal.App.5th at p. 991; Howard, supra, 187 Cal.App.4th at p. 535.)

Plaintiffs accuse Defendant of manufacturing disputed issues to create the illusion that damages were uncertain, but Plaintiffs themselves concede that various aspects of their damages could not be ascertained until a jury verdict. (See Mtn. 2:12-15.) Plaintiffs acknowledge that “the actual damages” awarded at trial were “significantly higher” than just the vehicle purchase price. (Mtn. 2:15-16.) Notably, Plaintiffs advocated at trial for an award of $58,821.47, which included (i) $3,790 for transportation and manufacturer-installed options and (ii) $5,819.89 for incidental and consequential damages. However, the jury found that Plaintiff incurred $0 for those items and only awarded $48,481 total. In other words, “the award was dependent upon the jury's resolution of several disputed warranty-related issues, and thus, the amount of the award could not have been determined before trial.” (Warren v. Kia Motors America, Inc. (2018) 30 Cal.App.5th 24, 44.) 

The court in Warren also rejected the argument that the “jury award was certain or capable of being made certain ‘by looking at the sale contract’” because the plaintiff “necessarily incurred her incidental and consequential damages after she purchased the vehicle . . . [which] could not be ascertained ‘by looking at the sale contract.’” (Warren, supra, 30 Cal.App.5th at pp. 43-45.) The court further explained that “[e]ven if Warren's breach-of-warranty damages were certain or capable of being made certain either from the sales contract or other information available to Kia before trial, Warren has not shown that her incidental and consequential damages of $2,707.10—a key component of her $17,455.57 jury award—were certain or capable of being made certain before trial—based on any information available to Kia.” (Id. at p. 45.)

In this case, multiple key components of Plaintiffs’ damages—including incidental and consequential damages—were similarly disputed, as Plaintiffs themselves acknowledge. (See Mtn. 2:12-15.) Therefore, damages were uncertain notwithstanding the sales contract. Accordingly, Plaintiffs are not entitled to mandatory prejudgment interest under Civil Code section 3287(a).

II. Discretionary Prejudgment Interest

            “Every person who is entitled under any judgment to receive damages based upon a cause of action in contract where the claim was unliquidated, may also recover interest thereon from a date prior to the entry of judgment as the court may, in its discretion, fix, but in no event earlier than the date the action was filed.” (Civ. Code, § 3287(b).)

            “California courts have not decided whether claims under the Song-Beverly Act qualify as contract actions under Section 3287(b).” (Zargarian v. BMW of N. Am., LLC (C.D.Cal. 2020) 442 F. Supp. 3d 1216, 1225.)  However, Song-Beverly claims are arguably contractual in nature. (See A&M Produce Co. v. FMC Corp. (1982) 135 Cal.App.3d 473, 496-97 [awarding prejudgment interest under section 3287(b) on causes of action for breach of express and implied warranties]; Bishop v. Hyundai Motor Am. (1996) 44 Cal.App.4th 750, 758 [holding that emotional distress damages are “unavailable in an action based on the Act” because “they may not be recovered in an action for breach of contract”].)

Nonetheless, discretionary interest depends on consideration of various factors, such as: (i) the time that has “passed between the time [plaintiff] filed its first complaint and the time judgment was entered;” (ii) whether an award would “penalize [defendant] for litigating a bona fide dispute;” and (iii) whether defendant’s rejection of an offer “plac[ed] the prejudgment interest amount at risk.” (See A&M Produce Co., supra, 135 Cal.App.3d at pp. 496-97.) Other factors include: (i) whether the defendant could have honored the injury sooner and avoided the lawsuit; (ii) the extent of the delay in getting restitution for the loss; (iii) what benefits or losses were incurred by the prevailing party from time the injury occurred; and (iv) how much the unsuccessful party benefitted from the monies it received. (See Esgro Cent., Inc. v. General Ins. Co. (1971) 20 Cal.App.3d 1054, 1065.)

Here, the 3.25 years that have passed between the filing of the complaint and the judgment is not extensive. Furthermore, there was a bona fide dispute over liability and the amount of damages. Notably, the jury found Defendant not liable for breach of express warranty or failure to repair, and substantially reduced the claimed damages under the implied warranty claim. Defendant did not reject an offer from Plaintiffs which placed the prejudgment interest at risk. To the contrary, Defendant itself made two offers, in May 2021 and May 2024. In particular, the May 2021 offer of $46,731 was nearly in the same amount as the trial verdict and was made one month after Plaintiffs filed the complaint. This shows that Defendant attempted to redress the injury sooner and avoid further litigation. The May 2024 offer of $61,000 was significantly higher than the trial award and further reflects Defendant’s attempt to address Plaintiffs’ claimed losses without trial. Defendant, a major auto manufacturer, did not substantially benefit from retaining Plaintiffs’ $39,689 over 3.25 years.

These factors weigh against awarding prejudgment interest. Therefore, the Court declines to award discretionary interest under Civil Code section 3287(b).                  

CONCLUSION

            Plaintiffs’ motion for prejudgment interest is DENIED.