Judge Gail Killefer, Case 22STCV01969 2022-11-21 Tentative Ruling

Tentative: Defendant’s demurrer is sustained. Plaintiff is granted 30 days leave to amend. Defendant is to give notice.

This is a lemon law action arising out of the purchase by Marine Ter-Haroutunian (“Plaintiff”) of a 2017 Maserati Ghibli (the “Vehicle”) manufactured by Maserati North America, Inc. (“Defendant”) on or about November 24, 2020. Plaintiff alleges that she received various warranties in connection with the Vehicle in which Defendant undertook to preserve or maintain the performance of the Vehicle and to repair the Vehicle in the event of any defects during the warranty period for four years or fifty thousand miles (“Limited Warranty”). Plaintiff alleges that the Vehicle developed numerous defects during the warranty period including defects to the rear differential unit, seat wiring harnesses, engine software, and suspension. Plaintiff allegedly presented the Vehicle to Defendant and its authorized dealers for repair on multiple occasions, but Defendant allegedly failed to repair the Vehicle and conform it to warranty despite this.

Plaintiff’s operative First Amended Complaint (“FAC”) alleges causes of action as follows: (1) breach of implied warranty of merchantability under Song-Beverly Warranty Act; (2) breach of express warranty under Song-Beverly Warranty Act—violation of Civil Code § 1793.2(d); (3) violation of Civil Code § 1793.2; (4) breach of implied warranty under Magnuson-Moss Warranty Act; and (5) breach of express warranty of merchantability under Magnuson-Moss Warranty Act.

Defendant now demurs to the FAC’s each cause of action. Plaintiff opposes the motion.

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (CCP § 430.30(a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) The court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . .” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525 (Berkley).) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (CCP § 452; see also Stevens v. Sup. Ct. (1999) 75 Cal.App.4th 594, 601.) “When a court evaluates a complaint, the plaintiff is entitled to reasonable inferences from the facts pled.” (Duval v. Board of Trustees (2001) 93 Cal.App.4th 902, 906.)

The general rule is that the plaintiff need only allege ultimate facts, not evidentiary facts. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) “All that is required of a plaintiff, as a matter of pleading, even as against a special demurrer, is that his complaint set forth the essential facts of the case with reasonable precision and with sufficient particularity to acquaint the defendant with the nature, source and extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp. (1945) 26 Cal.2d 149, 156-157.) “[D]emurrers for uncertainty are disfavored and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 848, fn. 3, citing Lickiss v. Fin. Indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.) In addition, even where a complaint is in some respects uncertain, courts strictly construe a demurrer for uncertainty “because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

Demurrers do not lie as to only parts of causes of action where some valid claim is alleged but “must dispose of an entire cause of action to be sustained.” (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.) “Generally it is an abuse of discretion to sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)

A. First, Second, and Third Causes of Action: Song-Beverly Warranty Act Claims

The Song-Beverly Consumer Warranty Act (“SBA”; Civil Code §§ 1790 et seq.) provides enhanced remedies to consumers who buy new consumer goods accompanied by a manufac-turer’s express warranty. (Civ. Code § 1793.2; see also Kiluk v. Mercedes-Benz USA, LLC (2019) 43 Cal.App.5th 334, 336 [same].) The same protections generally apply to sale of used goods accompanied by an express warranty, except that the distributor or retail seller is bound, as opposed to the manufacturer. (Civ. Code § 1795.5; Kiluk, 43 Cal.App.5th at p. 336.) However, manufacturers can be liable under SBA § 1795.5 where the manufacturer has “partnered with a dealership to sell used vehicles directly to the public by offering an express warranty as part of the sales package” such that the manufacturer has “stepped into the role of a [distributor or] retailer and [is] subject to the obligations of a [distributor or] retailer under section 1795.5.” (Kiluk, supra, 43 Cal.App.5th at pp. 339-40; see, e.g., Ruiz Nunez v. FCA US LLC (2021) 61 Cal.App.5th 385, 399 [“[P]laintiff presented no evidence that defendant was ‘a distributor or retail seller of used consumer goods’ (§ 1795.5), or in any way acted as such”].)

Civil Code § 1793.2(a)(3) provides: “every manufacturer of consumer goods sold in this state and for which the manufacturer has made an express warranty shall” “[m]ake available to authorized service and repair facilities sufficient service literature and replacement parts to effect repairs during the express warranty period.”

The SBA provides for implied warranties of merchantability and fitness for “consumer goods”—i.e., new products. (Civ. Code, §§ 1791.1(c), 1792; see also Rodriguez v. FCA US, LLC (2022) 77 Cal.App.5th 209, 218.) These implied warranties may not last less than 60 days or more than one year after the sale of the consumer goods to which they apply, and liability for their breach lies with the manufacturer. (Civ. Code, §§ 1791.1(c), 1792; see also Rodriguez, supra, 77 Cal.App.5th at p. 218.)

The Act also provides implied warranties for used products, which are shorter than the implied warranties for new products; their maximum duration is three months. (Civ Code, § 1795.5(c); see also Rodriguez, supra, 77 Cal.App.5th at p. 218.) As is the case with liability for breach of express warranties, “in the sale of used consumer goods, liability for breach of implied warranty lies with distributors and retailers, not the manufacturer,” unless the manufacturer issues a new warranty along with the sale of the used good. (Ruiz Nunez, supra, 61 Cal.App.5th at p. 398; see also Kiluk, supra, 43 Cal.App.5th at pp. 339-40 [“The Song-Beverly Act provides similar remedies in the context of the sale of used goods, except that the manufacturer is generally off the hook”].)

The Court here notes that despite the fact the Supreme Court of California has granted review of Rodriguez, the Supreme Court has directed that Rodriguez “may be cited, not only for its persuasive value, but also for the limited purpose of establishing the existence of a conflict in authority that would in turn allow trial courts to exercise discretion under Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 456, to choose between sides of any such conflict.” (See Rodriguez v. FCA US (Jul. 13 2022) 295 Cal.Rptr.3d 351.)

Here, Defendant contends the first, second, and third causes of action are all insufficiently pled, citing Rodriguez to contend the FAC fails to show liability against Defendant here as the manufacturer. (Demurrer, 8-10.) Defendant further cites Kiluk v. Mercedes-Benz USA, LLC (2019) 43 Cal.App.5th 334 to contend the manufacturer is held “off the hook” regarding the duty to repair or replace for used vehicle. Kiluk specifically explains that where a manufacturer has “partnered with a dealership to sell used vehicles directly to the public by offering an express warranty as part of the sales package” that manufacturer has “stepped into the role of a [distributor or] retailer and [is] subject to the obligations of a [distributor or] retailer under section 1795.5.” (Kiluk, supra, 43 Cal.App.5th at pp. 339-40.)

Defendant contends the circumstances here are similar to those in Rodriguez, namely that “Plaintiff alleges she purchased a used vehicle with some balance remaining on the manufacturer’s express warranty. Plaintiff fails to allege from whom she purchased the Subject Vehicle.” (Dem., 10.) As such, Defendant further contends the Subject Vehicle cannot be considered a new vehicle for the purposes of the Song-Beverly Act. (Id.)

In opposition, Plaintiff contends the FAC defines the Subject Vehicle as a new vehicle, states Defendant is the manufacturer, and makes a claim for breaches of warranties pursuant to Song-Beverly Warranty Act. (Opposition, 5-6.) Further, Plaintiff contends Defendant’s demurrer goes beyond the relevant inquiry by looking to the Retail Installment Sales Contract, which Plaintiff did not incorporate into her FAC. (Opp., 6.) While Plaintiff contends Defendant may only challenge defects on the face of the pleading, Defendant’s contentions that the Subject Vehicle’s status as a new vehicle have not been defined sufficiently do exactly that.

“Rodriguez conflicts with decades-old precedent establishing that the Song-Beverly Act’s refund or replace remedies apply to all vehicles still under warranty and is likely to be overturned or at the very least depublished. [sic] Further, currently on appeal Rodriguez is only persuasive authority. The Supreme Court Rodriguez review is likely to be scheduled prior to trial in this matter.” (Opp., 7.)

Plaintiff further contends that any reliance on Kiluk is further unavailing, referring to a footnote of the opinion allowing for the imposition of liability where a transferable warranty has been found, and contending that any question “whether [Defendant’s] warranty is transferrable is a question of fact.” (Id.) However, Plaintiff fails to provide any support for her contention that such inquiries are questions of fact not to addressed at this junction.

In reply, Defendant reiterates earlier arguments that Plaintiff has failed to allege sufficient facts regarding her purchase of the Subject Vehicle to substantiate claims against Defendant under the Song-Beverly Warranty Act. (Reply, 2-3.) Defendant further contends that conclusory contentions regarding the new vehicle status of the Subject Vehicle are insufficient to support such claims. (Id.) “No facts have been alleged either in her FAC nor in her Opposition to support that MNA sold, or has ever sold, vehicles directly to consumers, much less selling three-year-old used vehicles directly to consumers.” (Reply, 4.) The court agrees.

As the court recognizes a split in authority and precedent, exemplified by the Rodriguez ruling under review, and as review of the FAC shows no factual allegations regarding the purchase of the Subject Vehicle in such a manner that would allow classification as a new vehicle, the court thus finds the first, second, and third causes of action to be insufficiently pled. Plaintiff has failed to allege the circumstances which justify imposing liability upon Defendant here, and has further failed to allege sufficient facts, which if taken as true, would support such claims of the Song Beverly Warranty Act against Defendant. Namely, Plaintiff has failed to allege what express warranties were made, whether Defendant was a contracting party such that warranties of merchantability would be made for a used vehicle, or whether the Subject Vehicle had a transferrable warranty.

For these reasons, Defendant’s demurrer is sustained as to the first, second, and third causes of action.

As an initial matter, the Song-Beverly Act does not apply to vehicles purchased outside of California. (Cummins, Inc. v. Superior Court (2005) 36 Cal.4th 478, 483.) The Song-Beverly Act’s “pro-consumer remedies are in addition to those available to a consumer pursuant to the Commercial Code (Civ. Code, § 1790.3) and the Unfair Practices Act (Civ. Code, § 1790.4).” (Murillo v. Fleetwood Enterprises, Inc. (1998) 17 Cal.4th 985, 990; emphasis added.) Civil Code section 1790.3 of the Song-Beverly Act expressly provides:

“The provisions of this chapter shall not affect the rights and obligations of parties determined by reference to the Commercial Code except that, where the provisions of the Commercial Code conflict with the rights guaranteed to buyers of consumer goods under the provisions of this chapter, the provisions of this chapter shall prevail. (Civ. Code, § 1790.3.)

Outside of the Song-Beverly Act claims, Plaintiff may still recover on his Magnuson-Moss claims of action because a Magnuson-Moss claim may be based on the warranty provisions of the California Commercial Code. (Orichian v. BMW of North America, LLC (2014) 226 Cal.App.4th 1322, 1332.) The Magnuson-Moss Act “authorizes a civil suit by a consumer to enforce the terms of an implied or express warranty. Magnuson–Moss ‘calls for the application of state written and implied warranty law, not the creation of additional federal law,’ except in specific instances in which it expressly prescribes a regulating rule.” (Daugherty v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824, 832–833.) The Commercial Code “provides a remedy for breach of express warranty,” with section 2313(1) defining an express warranty and section 2714 providing for damages for breach of warranty. (See Orichian, supra 226 Cal.App.4th at 1332; Cal. U. Comm. Code § 2714(1)-(2).)

“(d) Subject to subsections (a)(3) [relating to informal dispute settlement procedures that a warrantor may establish; discussed below] and (e) [relating to class actions], a consumer who is damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under this title [15 USCS §§ 2301 et seq.], or under a written warranty, implied warranty, or service contract, may bring suit for damages and other legal and equitable relief—

(A) in any court of competent jurisdiction in any State or the District of Columbia; or

(B) in an appropriate district court of the United States, subject to paragraph (3) of this subsection.”

Under the Magnuson-Moss Act, a consumer may not bring a civil action until the consumer has resorted to the informal dispute settlement procedure. Specifically, 15 U.S.C. § 2310 provides:

“(3) One or more warrantors may establish an informal dispute settlement procedure which meets the requirements of the Commission's rules under paragraph (2). If--

(B) such procedure, and its implementation, meets the requirements of such rules, and

(C) he incorporates in a written warranty a requirement that the consumer resort to such procedure before pursuing any legal remedy under this section respecting such warranty,

then (i) the consumer may not commence a civil action (other than a class action) under subsection (d) of this section unless he initially resorts to such procedure…”

Defendant here first contends Plaintiff’s fourth and fifth causes of actions are also insufficiently pled since Plaintiff “fails to properly plead breach of warranty claims under state law.” (Dem., 11-12.) Defendant further contends Plaintiff’s claims under the MMWA are insufficiently pled as Plaintiff has failed to allege that she participated in Defendant’s informal dispute settlement procedure pursuant to 15 U.S.C. § 2310(a)(3). (Dem., 12.)

In opposition, Plaintiff first contends that the MMWA claims are sufficiently pled because Defendant is defined as a manufacturer, and Plaintiff defined as a consumer pursuant to the Song-Beverly Act. (Opp., 8.) Further, Plaintiff also contends “Defendant cannot prove they complied with the MMWA in maintaining an informal dispute settlement procedure.” (Id.) “Defendant has not produced any evidence in its Answer or otherwise proving that its IDSP conforms to the minimum requirements determined by the act.” (Id.)

However, the purpose of this demurrer brought forth by Defendant is to challenge the defects of Plaintiff’s pleading, which Plaintiff has the burden to rebut and show sufficient factual allegations have been alleged to support each claim. Plaintiff does not substantiate or support her MMWA claims by pointing to alleged defects in Defendant’s pleadings. A review of the FAC shows Plaintiff has failed to make any factual allegations regarding the compliance 15 U.S.C. § 2310(a)(3), and has failed to point to any portion of the pleading which alleges any participation in Defendant’s predefined informal settlement procedures.

Liberally construing the allegations of the Complaint in favor of Plaintiff, the court finds the fourth and fifth causes of action insufficiently pled. As the court has already sustained the demurrer as to the Song-Beverly claims, and as the review of the FAC shows no allegations of compliance with relevant procedures pursuant to MMWA, the court finds Plaintiff has failed to plead sufficient allegations to support a claim for a violation of the Magnuson-Moss Act.

For these reasons, Defendant’s demurrer to the fourth and fifth causes of action are sustained.

Defendant’s demurrer is sustained. Plaintiff is granted 30 days leave to amend. Defendant is to give notice.

[1] Defendant submits the declaration of its counsel, Scott D. Sharp (“Sharp”) to demonstrate compliance with statutory meet and confer requirements. Sharp attests that on October 6, 2022, counsel sent Plaintiff’s counsel a meet and confer letter regarding the issues raised in this demurrer, requesting a phone call by October 17, 2022, and Plaintiff’s counsel has yet to respond. (Sharp Decl. ¶ 6.) The Sharp Declaration is insufficient for purposes of CCP §§ 430.41 and 435.5. The declaration clearly states the parties have not met and conferred surrounding these issues. However, as the failure to meet and confer is not grounds to overrule a demurrer, the court continues with the merits.