Judge Holly J. Fujie, Case 20STCV22092 2022-08-16 Tentative Ruling

This action arises out of the purchase of an allegedly defective pre-owned Chevrolet Silverado (the “Vehicle”) that was manufactured by Moving Defendant. The currently operative second amended complaint (the “SAC”) alleges: (1) violations of the Song-Beverly Consumer Warranty Act; (22) violations of the Magnuson-Moss Warranty Act; (3) violations of the Consumers Legal Remedies Act; (4) violations of the Unfair Competition Law; (5) violations of Vehicle Code sections 11713 and 11713.18; and (6) bond liability.

The relevant allegations are as follows: Plaintiff purchased the Vehicle, which was sold as a certified pre-owned (“CPO”) vehicle from Defendant Keyes Chevrolet (the “Dealer”) on April 3, 2017. (SAC ¶ 6.) Plaintiff received a 12-month, 12,000 warranty from Moving Defendant when she purchased the Vehicle. (SAC ¶ 1.) The Vehicle had manufacturing defects, which Moving Defendant knew about due to a Technical Service Bulletin (“TSB”). (Id.) In addition, the Dealer sold the Vehicle to Plaintiff under false pretenses because the Dealer had secretly installed “aftermarket” parts. (Id.) Plaintiff also received the following warranties from Moving Defendant in connection with her purchase of the Vehicle: (1) a “CBG Certified Pre-Owned Limited Warranty” with an effective date on Plaintiff’s purchased date of April 3, 2017 with the effective odometer at 40,064 miles with no deductible for the earlier of 12 months or 12,000 miles; (2) a “Certified Pre-Owned Powertrain Limited Warranty” with an end date of January 31, 2020 or end miles at 100,008; and (3) a Special Coverage N182202780 warranty for “Brake Assist Decreased due to Vacuum Loss” with an end date of January 31, 2024 or end miles at 150,008. (SAC ¶ 7.) Pre-existing manufacturing defects, exacerbated by the presence of the aftermarket devices installed in the Vehicle, caused the Vehicle to be in a car accident in August 2019. (SAC ¶ 9.)

Moving Defendant filed a demurrer (the “Demurrer”) to the first, second and fourth causes of action on the grounds that the SAC fails to state facts sufficient to constitute a cause of action.

A demurrer tests the sufficiency of a complaint as a matter of law. (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1358.) The court accepts as true all material factual allegations and affords them a liberal construction, but it does not consider conclusions of fact or law, opinions, speculation, or allegations contrary to law or judicially noticed facts. (Shea Homes Limited Partnership v. County of Alameda (2003) 110 Cal.App.4th 1246, 1254.) With respect to a demurrer, the complaint must be construed liberally by drawing reasonable inferences from the facts pleaded. (Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 517.) A demurrer will be sustained without leave to amend if there exists no reasonable possibility that the defect can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

A plaintiff alleging breaches of express warranties under the Song-Beverly Act is required to plead and 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.)

Here, the SAC fails to allege what the Vehicle’s alleged defects which were covered by an express warranty issued by Moving Defendant. The Court therefore finds that Plaintiff has failed to allege a breach of an express warranty under the Song-Beverly Act.

Implied¿warranties¿do not impose a general requirement that goods precisely fulfill the expectation of the buyer. (American Suzuki Motor Corp.¿(1995) 37 Cal.App.4th 1291, 1296.) Instead, they provide for a minimum level of quality. (Id.) For purposes of the¿Song-Beverly¿Act, means that the consumer goods: (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; and (4) conform to the promises or affirmations of fact made on the container or label. (Civ. Code § 1791.1.)

Moving Defendant argues that the SAC fails to allege a breach of the implied warranty of merchantability because the implied warranty does not apply to the manufacturer of used vehicles. While this is generally true, manufacturers who partner with dealerships in the sale of used goods are treated differently under the Song-Beverly Act. (See Kiluk v. Mercedes-Benz USA, LLC (2019) 43 Cal.App.5th 334 (“Kiluk”). Kiluk involved the sale of a CPO vehicle that still had a portion of the new vehicle warranty remaining, and which was accompanied by an additional used vehicle warranty issued by the manufacturer. (Kiluk, supra, 43 Cal.App.5th at 336.) A defect manifested after the new vehicle warranty expired but during the duration of the used vehicle warranty. (Id.) A jury found the manufacturer liable for breach of both express and implied warranties. (Id.) The court of appeal upheld the jury’s decision on the express warranty claim, finding that by partnering with the dealership, the manufacturer stepped into the role of a retailer and was subject to the obligations of a retailer under Civil Code section 1795.5, which provides that a retailer's obligations are the “same” as a manufacturer under Civil Code section 1793.2. (Id. at 340.)

The Kiluk court did not analyze the jury’s findings with respect to the implied warranty claims because the trial court had stricken the damages for implied warranty breaches from the verdict. The Court notes, however, that the caselaw cited by Moving Defendant which discuss the inapplicability of the implied warranty of merchantability with respect to the manufacturer of used goods do not involve manufacturers of used cars sold as CPO vehicles. (See Nunez v. FCA US LLC (2021) 61 Cal.App.5th 385, 399 (“Nunez”).) Further, the Nunez court noted the exception articulated in Kiluk to the general rules governing manufacturers of used goods. (See id.)

Accordingly, the Court finds that the SAC adequately alleges breaches of the implied warranty of merchantability. Because the Magnuson-Moss Act claims are contingent upon the viability of the Song-Beverly Act claims, the Court finds that Plaintiff has also adequately alleged implied warranty violations under the Magnuson-Moss Act. The Court therefore OVERRULES the Demurrer to the first and second causes of action.

The Unfair Competition Law prohibits unfair competition, including unlawful, unfair, and fraudulent business acts. (Feitelberg v. Credit Suisse First Boston, LLC. (2005) 134 Cal.App.4th 997, 1008-09.)

Because Plaintiff has alleged violations of the Song-Beverly and Magnuson-Moss Acts, she has adequately alleged unlawful business acts and has therefore adequately alleged a claim under the Unfair Competition Law. The Court therefore OVERRULES the Demurrer to the fourth cause of action.

In consideration of the current COVID-19 pandemic situation, the Court strongly encourages that appearances on all proceedings, including this one, be made by LACourtConnect if the parties do not submit on the tentative. If you instead intend to make an appearance in person at Court on this matter, you must send an email by 2 p.m. on the last Court day before the scheduled date of the hearing to SMC_DEPT56@lacourt.org stating your intention to appear in person. The Court will then inform you by close of business that day of the time your hearing will be held. The time set for the hearing may be at any time during that scheduled hearing day, or it may be necessary to schedule the hearing for another date if the Court is unable to accommodate all personal appearances set on that date. This rule is necessary to ensure that adequate precautions can be taken for proper social distancing.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Hon. Holly J. Fujie

Judge of the Superior Court