Judge Holly J. Fujie, Case Number: 22STCV10932, Date: 2024-05-16 Tentative Ruling

MOVING PARTY: Defendant Kia America, Inc. (“Defendant” or “Moving Defendant”))

Plaintiffs’ complaint (the “Complaint”) alleges causes of action arising from the purchase of an allegedly defective vehicle (the “Vehicle”) manufactured by Defendant. The Complaint alleges the following causes of action: (1) Violation of the Song-Beverly Act – Breach of Express Warranty; (2) Violation of the Song-Beverly Act – Breach of Implied Warranty; (3) Violation of the Song-Beverly Act Section 1793.2; (4) Fraudulent Inducement – Concealment; and (5) Fraudulent Inducement – Intentional Misrepresentation. [1]

According to the Complaint, on August 31, 2019, Plaintiffs purchased a 2020 Kia Soul, VIN: KNDJ53AF2L7094694, (the “Vehicle”). The Complaint alleges that: express warranties accompanied the sale of the Vehicle to Plaintiffs, by which Defendant undertook to preserve or maintain the utility or performance of the Vehicle or to provide compensation if there was a failure in its utility or performance. (Compl. ¶ 11.) The Vehicle was manufactured by Defendant and delivered to Plaintiffs with a defective engine (the “Engine Defect”). (Compl. ¶ 18.) The Complaint alleges that the Engine Defect in certain Kia vehicles equipped with GDI engines led to an unacceptable risk of spontaneous vehicle fires due to restricted oil flow to engine parts, premature wear and eventual engine failure. (Compl. ¶¶ 18-22.)

The Court notes that most of the allegations regarding knowledge of vehicle defects made in the Complaint are addressed to Hyundai Motor Company (“Hyundai”) and its vehicles and to Kia vehicles that are not of the same model and year as the Vehicle. (See, e.g., Compl. ¶¶ 19-26.) Hyundai is not a defendant in this case, and the only connection alleged between Hyundai and Kia is that Hyundai is the largest shareholder of Kia Motors Corporation (“KMC”), the parent company of Defendant, owning only 33.3388 percent of KMC’s stock. (Compl ¶¶ 4-6.) The Complaint asserts that Hyundai’s “knowledge and concealment of the defects can be imputed to Defendant.” (Compl. ¶ 62.) The Complaint’s allegations regarding Defendant’s prior knowledge of the Engine Defect are thus apparently based upon the alleged knowledge of a minority shareholder in Defendant’s parent company. (Compl. ¶¶ 60-72.)

The Complaint alleges that Plaintiffs’ Vehicle was equipped with a GDI engine. (Compl. ¶ 83.) On August 31, 2019, Plaintiffs visited Kia of Carson in Carson, California, intending to purchase a new 2020 Kia Soul. (Compl. ¶ 84.) Before purchasing, they were allegedly influenced by marketing materials—brochures, television, and radio commercials—approved by Defendant's officers and managers, which notably omitted information about the engine defect. The Complaint alleges that this lack of disclosure was crucial to their decision to buy the Vehicle, as they would not have proceeded with the sale had they been aware of the Engine Defect. (Compl. ¶ 85.)

The Vehicle required repairs twice. The first occasion was around August 21, 2020, for a check engine warning and tire leaks. A technician discovered scoring in cylinder 2 and replaced the engine, and the Vehicle was returned to Plaintiffs 32 days later with assurances of its safety. (Compl. ¶ 86.) The second repair, around July 5, 2021, addressed transmission judder issues, requiring a double clutch replacement and other adjustments, and after 19 days the Vehicle was again returned to Plaintiffs, purportedly safe to drive. (Compl. ¶ 87.)

On December 15, 2023, Moving Defendant filed a Motion for Summary Judgment, or in the alternative Summary Adjudication, as to the Complaint (the “MSJ”) on the grounds that there are no triable issues of material fact as to the causes of action for breach of express warranty, breach of implied warranty and violation of Section 1793.2 of the California Song-Beverly Consumer Warranty Act (“Song-Beverly” or the “Act”). Moving Defendant also asserts that Plaintiffs’ claims for civil penalties under Song-Beverly fail because Plaintiffs cannot show that Moving Defendant acted willfully in how it handled Plaintiffs’ vehicle repairs and repurchase request. Additionally, Moving Defendant asserts that Plaintiffs’ claims for attorneys’ fees fail because none of Plaintiffs’ attorneys’ fees and costs can be deemed reasonable or necessarily incurred because Defendant promptly offered to replace the Vehicle, pre-litigation.

The Court hereby rules on Defendant’s objections to the Declaration of Jeffrey Mukai:

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) Code of Civil Procedure (“CCP”) section 437c, subdivision (c) requires the judge to grant summary judgment if 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. (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)

“[T]he party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he or she is entitled to judgment as a matter of law.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 828.) Once the moving party has met its burden, the burden then shifts to the non-moving party to show that there is a triable issue as to any material fact. (Id. at 849.) With respect to a motion for summary judgment, “the moving party’s affidavits are strictly construed while those of the opposing party are liberally construed.” (Walker v. Blue Cross of California (1992) 4 Cal.App.4th 985, 990.) With respect to a motion for summary judgment “if it is not set forth in the separate statement, it does not exist.” (San Diego Watercrafts, Inc. v. Wells Fargo Bank, N.A. (2002) 102 Cal.App.4th 308, 313.)

“A defendant . . . has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the causes of action . . . cannot be established, or that there is a complete defense to the cause of action.” (CCP § 437c(p)(2).) “Summary adjudication motions are procedurally identical to summary judgment motions.” (Serri v. Santa Clara University (2014) 226 Cal.App.4th 830, 859.) “A party may not avoid summary judgment based on mere speculation and conjecture . . . but instead must produce admissible evidence raising a triable issue of fact.” (Compton v. City of Santee (1993) 12 Cal.App.4th 591, 595-596.) In the context of a summary judgment motion, “[t]he mere existence of a scintilla of evidence in support of the plaintiff’s position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff.” (Anderson v. Liberty Lobby, Inc. (1986) 477 U.S. 242, 252.)

Once the moving party has met its burden, the burden shifts to the opposing party to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.) The opposition papers must include a separate statement that responds to each of the material facts that the moving party claims to be undisputed. (CCP § 437c, subd. (b)(3).) If the opposing party disputes a fact, then the opposing party must reference supporting evidence. (Id.)

Moving Defendant argues that summary judgment is appropriate on all of Plaintiffs’ Song-Beverly claims, including their express warranty claims, because Plaintiffs ignored a reasonable offer by Moving Defendant to repurchase the Vehicle (the “Offer”). Moving Defendant argues that it met its obligations under Song-Beverly when it made a prompt and reasonable repurchase Offer in response to Plaintiffs’ request, thus negating any claim of failure to comply with the Act.

Moving Defendant contends that its Offer was prompt — it responded to Plaintiffs’ buy-back request within five days, initiating a review process and making a repurchase offer only thirteen days after the request. (Defendant’s Undisputed Material Facts “UMF” nos. 34-35.) This Offer included three options: a replacement vehicle, repurchase of the Vehicle, or a $10,000 goodwill payment should Plaintiffs choose to keep the Vehicle. (UMF nos. 34-39.) Moving Defendant highlights that this response time is significantly prompt by legal standards, and the Offer was reasonable and compliant with Song-Beverly, but Plaintiffs failed to respond to the Offer or to three follow-up emails regarding the Offer. (UMF nos. 40-41.) Moving Defendant states that deductions for non-manufacturer optional third-party contracts (such as protective products, service contracts, and gap insurance) from its repurchase Offer are properly aligned with Song-Beverly’s provisions, as Song-Beverly excludes charges for non-manufacturer items installed by a dealer or the buyer from restitution or replacement to restore the buyer’s original expenditure status. Thus, Moving Defendant’s deductions for items like CILAJET surface protection and various service contracts and gap insurance were appropriate, as these are “nonmanufacturer item(s).” (UMF, Nos. 27, 39.)

Moving Defendant also maintains that its mileage offset in the repurchase offer was lawfully calculated, focusing on the Vehicle’s usage before its first delivery for the correction of the problem causing nonconformity. Despite the Vehicle’s being serviced for “rough idle” issues at 14,872 miles, Moving Defendant chose to base the mileage deduction on an earlier problem—a check engine light at 8,490 miles (UMF, No. 33), which it asserts was a generous approach in its calculation. Moreover, Moving Defendant argues that since Plaintiffs ignored Moving Defendant’s Offer and instead brought this action, this indicates that litigation was pursued solely for the purpose of recovering fees and penalties such that Plaintiffs should be equitably estopped from seeking such remedies.

In opposition, Plaintiffs argue that Moving Defendant’s conditional Offer does not comply with Song-Beverly because it was not fully transparent, lacking the full disclosure of its terms. (Plaintiff’s Additional Material Facts “AMF” Nos. 1-3, 5, 7.) They contend that an offer must be clear, definite, explicit and leave nothing open for negotiation to be considered a valid legal offer under contract law, citing precedent that supports the need for an offer to be complete and unambiguous to form a contract. (Alexander v. Codemasters Gp. Ltd. (2002) 104 Cal.App.4th 129.) Plaintiffs further assert that Moving Defendant’s undisclosed release agreement required Plaintiff Humberto Nunez to indemnify Moving Defendant, which is not permissible under Song-Beverly. They argue that mandatory compliance with the Act cannot be conditioned on a consumer’s acceptance of such indemnification. (AMF No. 9.)

Additionally, Plaintiffs claim that Moving Defendant’s release agreement improperly conditioned compliance with Song-Beverly on Plaintiffs’ waiver of other legal rights, which is against the principle that Song-Beverly’s remedies are cumulative and should not restrict any remedy that is otherwise available. (AMF No. 6.) Plaintiffs also argue that Moving Defendant’s pre-litigation response was improperly conditioned on the current condition of the Vehicle, requiring the Vehicle to be returned in good working order except for claimed nonconformities, and that any damage beyond ordinary wear and tear was to be repaired at the consumer’s expense or deducted from the settlement payment. (AMF No. 4, 10.)

Plaintiffs reference MacQuiddy v. Mercedes-Benz USA, LLC (2015) 233 Cal.App.4th 1036 and Valdez v. Seidner-Miller, Inc. (2019) 33 Cal.App.5th 600 to support their position that such conditions are not allowed by Song-Beverly. Lastly, Plaintiffs argue that Moving Defendant’s Offer contained improper deductions prohibited by Song-Beverly and was essentially a “low ball” Offer. They note that the Act permits only specific deductions from the restitution calculation and does not allow for deductions like those made by Moving Defendant for service contracts and gap insurance. Plaintiffs assert that the failure to include reimbursement for incidental damages like registration and insurance from the date the Vehicle first qualified for a repurchase is further evidence that Moving Defendant’s Offer did not comply with the statutory requirements, potentially exposing Moving Defendant to liability for civil penalties. (AMF Nos. 12, 13, 15.)

In reply, Moving Defendant contends that its Offer was valid under Song-Beverly, which supports settlement negotiations and the execution of release agreements in the context of vehicle reacquisition. Moving Defendant points out that Song-Beverly explicitly allows for such agreements as long as they do not include prohibited confidentiality clauses, arguing that their Offer did not contravene any statutory requirements. Moving Defendant asserts that its attempt to repurchase the Vehicle was a legitimate offer of performance aimed at extinguishing its obligation, which Plaintiffs refused, thereby defaulting their position and preventing Moving Defendant from complying with its statutory duties. Additionally, Moving Defendant disputes Plaintiffs’ claim regarding improper deductions and the failure to reimburse incidental damages. Moving Defendant states that Song-Beverly explicitly allows the exclusion of non-manufacturer items from restitution calculations and that its deductions for service contracts and GAP insurance were legally justified.

Moving Defendant also addresses Plaintiffs’ inaction in response to its Offer, particularly their failure to negotiate or even engage with the terms presented. This lack of engagement, Moving Defendant argues, is at odds with the cooperative spirit that Song-Beverly envisages for resolving disputes over vehicle nonconformities. By failing to respond or provide requested documentation on incurred expenses, Moving Defendant contends that Plaintiffs hindered Moving Defendant’s ability to fulfill its obligations.

The Court finds that Moving Defendants did not fail to disclose all material terms when Moving Defendant made its Offer and the Offer is not invalid by including improper terms. First, the Court notes that Plaintiffs do not dispute that the Offer was promptly made by Moving Defendant, and the Court finds that the Offer was made promptly as a matter of law. Second, the Offer states that the parties would enter into a full release agreement if Plaintiffs accepted the Offer, but Plaintiffs did not accept the Offer. (UMF No. 16.) Thus, it appears that there was no need to include the full release agreement. Further, Moving Defendant correctly points out in its reply that “The question here is not ‘is there an enforceable contract,’ but rather, ‘did [Defendant] do what Song-Beverly requires?’ [Defendant] did—it tried to repurchase the Vehicle, and Plaintiffs rebuffed it.” (Reply p. 3.)

Plaintiffs claim that the undisclosed release agreement renders the Offer invalid because it required Plaintiffs to indemnify Moving Defendant and improperly conditioned compliance with the Act on Plaintiffs’ agreeing to waive other legal rights. Plaintiffs cite Goglin v. BMW of North America, LLC (2016) 4 Cal.App.5th 462, where the court found that “[r]ejecting the prelitigation settlement because of [] unfavorable extraneous terms” and a confidentiality clause “was not unreasonable.” (Id. at 1170.) Plaintiffs also rely on McKenzie v. Ford Motor Company (2015) 238 Cal.App.4th 695, where the court found that the plaintiff “acted reasonably in rejecting [the 998 offer]” which “amounted to an abuse of discretion in the circumstances of [that] case.” (Id. at 708.) The court pointed out that there were “extraneous and improper nonfinancial terms incorporated into the release Ford included in that proposed compromise, McKenzie acted reasonably in rejecting it. And McKenzie’s prompt service of a counteroffer with essentially identical financial terms, but stripped of the extraneous provisions, reflected his willingness to complete a settlement.” (Id.)

The Court finds Goglin and McKenzie to be distinguishable from the facts at hand. Unlike the plaintiff in Goglin who engaged in communications with BMW regarding the terms in the Offer letter, here, Plaintiffs failed to engage in any negotiations regarding the Offer. Indeed, the court in Goglin noted that “Goglin’s counsel [] unambiguously communicated in a letter countering the offer that Goglin was unwilling to agree to a general release or a confidential clause.” (Goglin, supra, 4 Cal.App.5th at 472.) In McKenzie, the initial settlement offer included a confidentiality provision that was “expressly prohibited by statute (see Civ. Code, § 1793.26, subd. (a)(2)),” whereas here, Plaintiffs fail to show any invalid or improper terms in the Offer. (McKenzie, supra, 238 Cal.App.4th at 705.) Plaintiffs fail to provide any legal precedent or authority that a settlement agreement is invalid if it includes an indemnification clause and release of rights. Rather, Song Beverly allows parties to enter into release agreements. (Civil Code § 1793.26.)

The Court finds that the Offer was not improperly conditioned on the current condition of the Vehicle. Plaintiffs provide no case law that requires a vehicle distributor or manufacturer to accept any vehicle regardless of its condition whatsoever or that a prelitigation offer that includes a similar condition as that contained in the Offer is invalid. The Offer stated that replacement and repurchase were “contingent on the physical inspection of the vehicle for damage and/or excessive wear and tear. A cashier’s check made payable to Kia America, Inc., for any damages beyond normal wear and tear will be required prior to Kia’s fulfillment of the terms contained in this settlement.” (UMF No. 4.)

Plaintiffs’ reliance on MacQuiddy is misplaced. MacQuiddy is distinguishable, mainly on the fact that it was based on a section 998 offer, which encourages settlements by potentially shifting costs based on the final judgment compared to the offer. There, the 998 offer “limited compliance to repurchase of the car, ‘in an undamaged condition, save normal wear and tear.’” (MacQuiddy, supra, 233 Cal.App.4th at 1050.) The issue there was with the ambiguity of the term “undamaged,” which the court stated was not clearly defined, leading to uncertainty about what would qualify as acceptable for the repurchase. The court in MacQuiddy stated that it failed to see how “the [trial] court could compare the value of obtaining the repurchase of the car without regard to its condition to the offer requiring that the car be ‘undamaged,’ in order to determine whether MacQuiddy received a more favorable judgment than the offer.” (Id.)

The court explained in MacQuiddy that “[s]uch an evaluation would require a factual determination of whether the car was damaged, which was not an issue otherwise relevant to the proceedings. Because of the undefined and subjective nature of the term that Mercedes-Benz would repurchase the ‘undamaged’ car, we conclude the section 998 offer was at least ambiguous, and was therefore not valid.” (Id.) In contrast, the present case does not involve a section 998 offer but rather a prelitigation settlement offer, which does not carry the same legal implications for cost recovery and does not require the same level of scrutiny regarding the fairness of the Offer’s terms. Plaintiff’s reliance on McKenzie fails for similar reasons given that that case also involved a 998 offer.

The Court finds that the Offer did not contain improper deductions nor did it fail to include reimbursement for incidental damages. “When a buyer seeks restitution from an automobile manufacturer for a defective vehicle under section 1793.2, subdivision (d)(2)(B) (restitution provision), the buyer is entitled to ‘an amount equal to the actual price paid or payable by the buyer,’ as specified. ‘The manufacturer must also pay for any “collateral charges” [citation] and “incidental damages” incurred [citation].” [Citation.] The manufacturer is, however, entitled to an offset for the buyer’s use of the vehicle prior to the buyer first delivering the vehicle for repair, as specified. (Section 1793.2, subd. (d)(2).)” (Williams v. FCA US LLC (2023) 88 Cal.App.5th 765, 771.)

In Williams, the parties disagreed as to whether the “manufacturer was entitled to a credit for the trade-in value of the truck in calculating ‘the actual price paid or payable by the buyer’ under the restitution provision.” (Williams, supra, 88 Cal.App.5th at 771.) The court explained that the term “‘actual price paid or payable’ in the restitution provision means the cost to obtain the vehicle at the time of purchase, whether that cost is paid at the time of purchase or payable thereafter.” (Williams, supra, 88 Cal.App.5th at 779-780.) The court pointed out that “interpretations that would significantly vitiate a manufacturer’s incentive to comply with the Act should be avoided.” (Id.) In Williams, the manufacturer sought to reduce the amount to be paid to the buyer by the trade-in value for the defective vehicle. (Id. at 771.)

The Court finds Williams to be distinguishable because that case involved deduction of the trade-in value while this case involves service contracts and GAP insurance. Moving Defendant relies on federal cases to support its claim that the service contracts and GAP insurance were non-manufacturer items that were rightfully deducted. (Carillo v. FCA USA, LLC (C.D. Cal. 2021) 546 F.Supp.3d 995, 1002; see also Velazuez v. Ford Motor Co. (E.D. Cal. July 13, 2021) 2021 WL 2948649, at 2-3 [service contract and gap insurance were “nonmanufacturer items”].) On the other hand, Plaintiffs claim that service contracts and gap insurance are not “installed” items but are rather payment for services and insurance more akin to finance fees and charges. (Mitchell v. Blue Bird Body Co. (2000) 80 Cal.App.4th 32, 37 [finding that the “Legislature intended to allow a buyer to recover the entire amount actually expended for a new motor vehicle, including paid finance charges.”].) Although Moving Defendant cites to federal cases, the Court finds them to be persuasive in demonstrating that the service contract and gap insurance should be viewed as non-manufacturer items which may be deducted. The Court notes that Section 1793.2’s remedial nature is designed to protect consumers and should be construed to provide broad relief, however, Plaintiffs fail to show that the service contracts and gap insurance were paid as part of the “actual price paid or payable” for the Vehicle.

The Court also finds that Moving Defendant did not fail to include reimbursement for incidental damages. Plaintiffs fail to rebut Moving Defendant’s showing that the Offer properly included reimbursement. Moving Defendant asserts that it offered to reimburse Plaintiffs’ initial fee, which was rolled into the total sale price of the Vehicle. (See Kirzhner v. Mercedes-Benz USA, LLC (2020) 9 Cal.5th 966, 972 [“only the initial registration fee paid at the time of the lease or purchase of the vehicle and not any subsequent registration renewal or nonoperation fees are recoverable”].) Moving Defendants assert that Plaintiffs were invited to ask Defendant about any such damages on several occasions, to which they did not respond. Plaintiffs do not provide any sufficient evidence to rebut this. Indeed, the only evidence Plaintiffs provide regarding Moving Defendants’ failure to include reimbursement for incidental damages is AMF No. 12, which states: “Defendant did not offer to reimburse for insurance and registration expenses incurred. (Johal Decl., Ex. 2.);” however, this statement fails to raise a triable issue of fact as to whether Moving Defendant’s Offer was not appropriate. Thus, Moving Defendant sufficiently discharged its obligations under the Song-Beverly Act by providing a valid Offer.

Thus, the motion for summary adjudication as to issue 1, breach of express warranty is GRANTED.

Moving Defendant states that Plaintiffs’ breach of implied warranty claim cannot stand because Plaintiffs disregarded its repurchase Offer and continued to use the Vehicle. Moving Defendant points out that the Vehicle was first brought in for repairs on August 21, 2020, and that a written repurchase Offer was made on August 11, 2021, which Plaintiffs ignored, and Plaintiffs chose instead to file this lawsuit. (UMF, Nos. 53, 57-64.) Further, despite the repairs, Moving Defendant argues that the Vehicle remains reasonably suited for ordinary use, as evidenced by Plaintiffs’ continued use of the Vehicle for years thereafter, including weekly use after filing this lawsuit. This continued use, Moving Defendant argues, demonstrates that the Vehicle meets the criteria for being reasonably suited for ordinary use as required for the satisfaction of an implied warranty. (UMF, No. 69.) Finally, Moving Defendant notes that Plaintiffs’ only ongoing complaint with the Vehicle is moderate “trembling.” (UMF, Nos. 67-68.)

In opposition, Plaintiffs assert that Moving Defendant’s argument for their Song-Beverly claims based on its Offer of restitution does not apply to the implied warranty claim because such a claim does not require the manufacturer to provide a replacement or restitution as a precondition. Unlike express warranty claims that necessitate a reasonable number of repair attempts within 30 days before seeking rescission, Plaintiffs point out that the implied warranty of merchantability claim is concerned with fundamental defects and does not impose such a requirement on the buyer. (Civ. Code, § 1791.1; Isip v. Mercedes-Benz USA, LLC (2007) 155 Cal.App.4th 19, 26-27; Mocek v. Alfa Leisure, Inc. (2003) 114 Cal.App.4th 402, 406-408; Brand v. Hyundai Motor America (2014) 226 Cal.App.4th 1538, 1545.)

Plaintiffs assert that the law distinguishes between express and implied warranties, with Section 1793.2 specific to express warranties and irrelevant to implied warranties of merchantability. Thus, Plaintiffs contend that Moving Defendant’s assertion that no breach of implied warranty occurred due to the Plaintiffs’ continued use of the Vehicle does not negate Song-Beverly rights or diminish damages (CACI 3230). Moreover, Plaintiffs state that Moving Defendant acknowledges the Vehicle’s persistent engine and transmission issues, [UMF No. 7, 10, 21, and 22], with Plaintiff Humberto Nunez affirming that these problems were unresolved. (AMF No. 17.) Therefore, Plaintiffs conclude that Moving Defendant has not demonstrated that there is no triable issue of fact as to the breach of the implied warranty claim.

In reply, Moving Defendant asserts that its Offer provided restitution exceeding the potential damages from such a breach, making Plaintiffs’ revocation moot. Moving Defendant asserts that for a full refund recovery under an alleged breach of the implied warranty, the law provides that revocation of acceptance requires specific buyer actions beyond those stated in section 1793.2 (d), including timely action and before any substantial vehicle condition change. (Gavaldon v. Daimler Chrysler Corp. (2004) 32 Cal.4th 1246, 1264). Moving Defendant argues that Plaintiffs did not meet these criteria, by filing suit two years post-purchase and after driving the Vehicle approximately 14,000 miles (UMF Nos. 1,11), which does not support a timely revocation for a full refund based on an alleged breach of the implied warranty.

Furthermore, Moving Defendant asserts that the Vehicle is deemed fit for its ordinary purposes without a breach of the implied warranty, supported by the fact that Plaintiffs continued using the Vehicle. Moving Defendant states that their non-expert status (Evid. Code § 803) and continued Vehicle use, including an option to disable the turbo to prevent alleged “shaking,” indicate their claims about the Vehicle’s condition are speculative and insufficient to establish a dispute of material fact for summary judgment. (Mukai Decl., Ex. 7 at p. 18:1-6; p. 20:3-17; p. 21:5-8). Moving Defendant also states that the absence of third-party expert testimony on the Vehicle’s functionality further undermines Plaintiffs’ position, aligning with the principle that speculation cannot establish a material fact dispute in summary judgment proceedings.

Here, the central issue is whether the vehicle’s continued use by Plaintiffs and Moving Defendant’s offer of restitution negate the breach of implied warranty claim. Even though Plaintiffs’ continued use alone may not negate their claim, the Court finds that Defendant’s Offer to repurchase negates Plaintiffs’ implied breach of warranty claim which came after the Offer.

The Court finds that a repurchase Offer made in good faith and covering the full value of the product may serve as a way to rectify any defects and adequately compensate the consumer; however, if a defect becomes known after sale or delivery, it may still provide grounds for an implied warranty claim. “[A] breach of the implied warranty of merchantability may be based on a defect which becomes known after a sale or delivery to a buyer.” (Jones v. Credit Auto Center, Inc. (2015) 237 Cal.App.4th Supp. 1, 9.) Here, Plaintiffs allege the same defect that was covered in the repurchase Offer. The defect in this case does not cover new defects that were not addressed in the Offer. The Court finds that the Offer to repurchase sufficiently addressed the defects that form the basis of Plaintiffs’ warranty claim. In essence, Moving Defendant acknowledged the existence of the issue and took steps to resolve it by proposing to take back the Vehicle in exchange for compensation reflective of its original value.

Thus, the motion for summary adjudication as to issue 2, breach of implied warranty is GRANTED.

Moving Defendant asserts that Plaintiff’s claim for violation of Song-Beverly Section 1793.2 cannot stand because Plaintiffs failed to respond to its Offer. Moving Defendant references the requirement for manufacturers to provide service and repair facilities reasonably close to where their consumer goods are sold and to commence service and repair within a reasonable time. Moving Defendant assert it attempted to comply with Section 1793.2 by offering to replace or reimburse the Vehicle, but Plaintiffs did not respond, undermining their Section 1793.2 cause of action. Moving Defendant emphasizes that it did not have sufficient attempts to address and assess the Vehicle before Plaintiffs requested repurchase, given the request came shortly after the vehicle’s engine was replaced in August 2020 and after minimal repair attempts. (UMF, Nos. 70-92, 75-80.) Moving Defendant argues that any delay in servicing the Vehicle or assessing Plaintiffs’ claims for the purpose of making a repurchase Offer was due to the COVID-19 pandemic—a reason “beyond the control of the manufacturer or its representatives” as provided by Section 1793.2(d)(1). Moving Defendant state that the pandemic affected its business operations, including the automotive parts supply chain, and directly influenced the response time for servicing the Vehicle and making the repurchase offer. (UMF, No. 93.)

In opposition, Plaintiffs challenge Moving Defendant’s argument that it fulfilled its obligations under Song-Beverly through a conditional Offer letter on the grounds that it did not disclose all material terms, including the release agreement. Plaintiffs argue this omission is contrary to Song-Beverly’s consumer protection intent and lacks transparency necessary for a valid offer under contract law. Plaintiffs cite to Campbell-Ewald Co. v. Gomez (2016) 577 U.S. 153, in which the U.S. Supreme Court emphasized that an unaccepted offer does not moot a plaintiff’s case, further underscoring the necessity for actual restitution or replacement by the manufacturer when a vehicle cannot be repaired within a reasonable number of attempts as per Civil Code § 1793.2(d)(2). Plaintiffs point out Moving Defendant’s denial of the Vehicle’s qualification for repurchase and revocation of the Offer, maintaining that an offer’s validity does not negate the manufacturer’s duty to comply with Song-Beverly’s mandatory repurchase or replacement requirement. (AMF No. 11.)

Plaintiffs assert that the Vehicle’s eligibility for repurchase or replacement is a separate matter from the availability of civil penalties for willful non-compliance with Song-Beverly. They argue that Moving Defendant’s reliance on Dominguez v. American Suzuki Motor Corp. is misplaced due to differences in statutory application, the nature of the vehicle involved, and the circumstances surrounding the lawsuit and the offer’s conditions. Unlike in Dominguez, where the dispute did not center on the compliance with the Song-Beverly Act’s repurchase or replacement provisions, Plaintiffs in this case state that they seek to enforce Moving Defendant’s compliance following its failure to provide appropriate restitution without improper conditions and its subsequent denial of all liability. Plaintiffs contend that Defendant’s Motion should be denied as it attempts to reinterpret Song-Beverly in a manner that undermines consumer protections. (AMF No. 16.)

Further, Plaintiffs state that Moving Defendant’s justification for the delay in engine replacement during the thirty-two-day repair period in August 2020, attributed to the COVID-19 pandemic, lacks evidentiary support. They argue that Moving Defendant did not fulfill its legal obligation to conduct timely repairs within 30 days as required by Civil Code Section 1793.2, subd. (b) and CACI 3205, due to not providing concrete evidence that the delay was caused by pandemic-related supply chain issues specific to the parts needed for Plaintiffs’ vehicle. (UMF No. 93.) Plaintiffs point out that the absence of detailed information about how the COVID-19 pandemic directly impacted the availability of necessary parts for the repair leads Plaintiffs to conclude that Moving Defendant has not satisfactorily demonstrated that the delay was due to circumstances beyond its control, failing to meet its initial burden of proof.

In reply, Moving Defendant states that whether any delay in repairs happened in this case is irrelevant where Plaintiffs effectively ignored Moving Defendant’s repurchase Offer, as discussed above. Moving Defendant also states that there is no serious dispute that COVID-19 impacted Moving Defendant’s business and the service of KA Vehicles. (See UMF, Nos. 93 and 94.) While Plaintiffs dispute the impact of COVID-19, Moving Defendant points out that Plaintiffs do not present any evidence to rebut this showing.

For the reasons discussed above, the Court finds that the Offer was not improper and that Moving Defendant fulfilled its Song-Beverly obligations. Thus, Plaintiffs’ failure to respond to the Offer forecloses their section 1793.2 claims. Further, the undisputed facts show that COVID-19 impacted Moving Defendant’s business and the service of its Vehicles. (UMF, Nos. 93 and 94.) Plaintiffs on the other hand, fail to present any evidence to rebut this showing.

Thus, the motion for summary adjudication as to issue 3, Violation of the Song-Beverly Act Section 1793.2 is GRANTED.

As to the civil penalty claim, Defendant states that its participation in a qualified third-party dispute resolution process precludes liability for civil penalties under Civil Code section 1794, subdivision (e)(2). Defendant states it participates in the Better Business Bureau (BBB) Autoline Program, compliant with California regulations for state certification, thus, meeting the statutory requirements and precluding liability for civil penalties as outlined by Civil Code section 1794, subdivision (e)(2). (UMF, No. 118.) Defendant disputes any willful violation of Song-Beverly, highlighting its prompt offer to repurchase or replace the Vehicle just thirteen days after Plaintiffs requested a buy-back, which contradicts Plaintiffs’ claim for civil penalties through either means provided in Civil Code section 1794, subdivisions (e) and (c). (UMF, Nos. 105-112.) Defendant argues that a violation is not willful if the manufacturer’s failure to replace or refund was based on a good faith and reasonable belief. Defendant’s offer to replace or repurchase the Vehicle, which was not accepted by Plaintiffs, is presented as evidence of its good faith and lack of willfulness.

As to attorneys’ fees, Defendant argues that the legislation does not automatically entitle consumers to attorneys’ fees whenever a manufacturer repurchases or replaces consumer goods, irrespective of litigation status. (Dominguez v. American Suzuki Motor Corp. (2008) 160 Cal.App.4th 53, 59-60). Defendant contends that it complied with Song-Beverly before this lawsuit was filed, thus preventing Plaintiffs from being the “prevailing party” necessary for recovering attorneys’ fees. (UMF, Nos. 119-141.) The lawsuit, according to Defendant, was tactically filed for fee recovery and civil penalties, not based on Defendant’s failure to comply with its obligations. Furthermore, Defendant points out that pursuing litigation merely to obtain fees or penalties does not warrant an award of attorneys’ fees as per Dominguez, supra. Since Defendant had already made a repurchase Offer before litigation—which Plaintiffs refused—the request for attorneys’ fees is deemed inequitable and unjustified, especially since Defendant is still willing to honor its initial repurchase offer made in 2021. (UMF, No. 137.) Therefore, Defendant asserts that any attorneys’ fees and costs claimed by Plaintiffs cannot be considered reasonable or necessary, justifying summary adjudication of this claim in its favor.

In opposition, Plaintiffs argue that Defendants’ motion for summary adjudication on the civil penalty and attorneys’ fee liability is not authorized by Code of Civil Procedure Section 437c, subd. (f), which only allows a party to move for summary adjudication on specific components of a case, such as causes of action, affirmative defenses, claims for damages, or issues of duty, only if doing so would completely resolve one of these elements. Plaintiffs state that this section aims to prevent partial adjudications that do not fully resolve any of these categories, and that the term “cause of action” refers to separate theories of liability reflected in a complaint’s grouped paragraphs. Plaintiffs state that summary adjudication on “claims for damages” under this provision is restricted to claims for punitive damages as specified in Civil Code § 3294. Since Plaintiffs are not seeking punitive damages under Civil Code § 3294, they claim that Defendant’s motion for summary adjudication on civil penalties and attorneys’ fees is not legally permissible. Additionally, for adjudication on narrower issues or other types of damages, Plaintiffs point out that section 437c, subd. (t) requires a joint stipulation and court authorization, procedures Defendant has not followed.

In reply, Defendant asserts that Code of Civil Procedure section 437c, subdivision (f)(1) allows a party to move for summary adjudication on claims for damages if there is no merit to such claims, specifically referring to those for punitive damages as outlined in Civil Code Section 3294. Defendant argues that the civil penalty under Song Beverly is comparable to punitive damages due to their shared purpose of punishment and deterrence, that there are cases which interpret civil penalties as being akin to punitive damages and that if the Legislature intended to allow double recovery for punitive and penal damages for the same acts, it would have made such provisions clear. As a result, Defendant states that seeking civil penalties and attorneys’ fees under Song-Beverly may imply a waiver of punitive damages under section 3294.

Civil Code section1794 subdivision (e)(1) states: “Except as otherwise provided in this subdivision, if the buyer establishes a violation of paragraph (2) of subdivision (d) of Section 1793.2, the buyer shall recover damages and reasonable attorney’s fees and costs, and may recover a civil penalty of up to two times the amount of damages.” Section 1793.2 provides for Song-Beverly claims, which the Court finds to fail as a matter of law. Accordingly, Plaintiffs’ claims for civil penalties and attorney’s fees cannot stand.

Thus, the motion for summary adjudication as to issue nos. 4 and 5: Civil Penalty Claim and Attorney’s Fees is GRANTED.

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.

[1] Plaintiffs filed a Request for Dismissal on February 14, 2023 of their Fourth and Fifth Causes of Action in the Complaint, which was entered that date by the Court.