Judge: Jon R. Takasugi, Case: 20STCV26644, Date: 2024-01-29 Tentative Ruling

Case Number: 20STCV26644    Hearing Date: January 29, 2024    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

The parties submitted briefing on three issues:

I.                   The Offer

Defendant argues that Ford’s pre-suit offer complied with the Act.

            As a preliminary matter, Superior Court of Los Angeles, rule 8.92(b) is clear:

A motion in limine shall not be used for the purpose of seeking summary judgment or the summary adjudication of an issue or issues. Such motions may only be made in compliance with Code of Civil Procedure Section 437c and court rules pertaining thereto.

            Second, this issue was already considered and rejected in the Court’s ruling on Ford’s motion for summary judgment. There is a triable issue of fact as to whether or not Plaintiff’s offer was prompt and compliant. Therefore, unlike the issues below which concern questions of law, the Court does not adjudicate this issue, as this is not properly done through a motion in limine.

II.               Reimbursement for Negative Equity

Defendant argues that negative equity is not recoverable and is not required to be a part of the repurchase offer.

In opposition, Plaintiff argues that Song-Beverly does provide for a deduction of negative equity.

After review, the Court concludes negative equity is not recoverable. Despite engaging in analysis of Song-Beverly, Plaintiff did not cite any case where a court concluded that negative equity must be included as part of a repurchase offer. By contrast, Defendant as cited numerous cases that have found that negative equity is not required to be reimbursed as part of a repurchase offer and is not recoverable under the Song-Beverly Act.

Rivera v. Ford Motor Co., No. CV1807798 DSFPJWX, 2020 WL 1652534, at *4 (C.D. Cal. Feb. 10, 2020) is on point and instructive. There, as here, Ford offered to repurchase or replace the vehicle and sent a repurchase calculation that did not include the plaintiff’s negative equity. The plaintiff filed suit on the ground that the exclusion of negative equity was improper, and Ford moved for summary judgment on the ground that its repurchase offer complied with California law. The court granted summary judgment for Ford finding the exact same offer letter that is at issue in this case complied with California law. The court concluded: “The Court agrees with and adopts the analysis of these district courts and holds that a manufacturer is not required to include negative equity in a repurchase offer under the Song-Beverly Act. This conclusion is supported by the language of the statute and basic principles of restitution and equity.” (Ibid. (emphasis added).) The court further explained: “Such items are not part of the ‘new motor vehicle’ price and the manufacturer is not required to reimburse the buyer for their cost. Similarly, negative equity stems from a loan on a different vehicle made by a different manufacturer; it is not a component of the ‘new motor vehicle’ price and therefore need not be reimbursed.” (Ibid.)

Accordingly, the Court concludes, in accordance with other courts, that negative equity is not recoverable under the Act, and, accordingly, a manufacturer is not required to pay such amounts in connection with a vehicle repurchased under the Act.

III.            Reimbursement for Third-Party Contracts

Defendant argues that under Song-Beverly Act, a manufacturer is not required to include as part of any repurchase offer “nonmanufacturer items installed by a dealer or the buyer . . . .” Civ. Code 1793.2(d)(2)(B). While Plaintiff does not dispute that this includes the theft deterrent devices, Plaintiff does dispute that this also includes any optional third-party (nonmanufacturer) service or GAP contracts that Plaintiffs purchased from the dealer.

In opposition, Plaintiff argues that there is no persuasive argument to show why Plaintiff’s service contract and GAP insurance qualify as “nonmanufacturer items.”

Here, both sides are able to cite to cases which support their interpretation. Ultimately, the Court agrees with Plaintiff that service contracts and gap insurance do not qualify here because they are not “installed.” An installed item is something physically put on the vehicle such as an alarm system, window tinting, lift kit, etc. By contrast, extended service contracts and gap insurance more resemble finance fees and charges and as such are part of the paid or payable made by Plaintiffs on the Subject Vehicle. As such, the Court concludes that third-party contract are not “nonmanufacturer items installed by a dealer or the buyer . . . .”

It is so ordered.

Dated:  January    , 2024

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar.  For more information, please contact the court clerk at (213) 633-0517.