Judge Kerry Bensinger, Case Number: 22STCV09188, Date: 2024-02-01 Tentative Ruling

Counsel may submit on the tentative ruling by emailing Dept. 31 before 8:30 the morning of the hearing. The email address is smcdept31@lacourt.org. Please do not call the court to submit on the tentative. Please do not submit to the tentative ruling on behalf of the opposing party. Please do not e-mail the Court if you plan to appear and argue.

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The tentative rulings authored by this court reflect that the court has read and considered all pleadings and evidence timely submitted to the court in connection with the motion, opposition, and reply (if any). Because the pleadings were filed, they are part of the public record.

Oral argument is not an opportunity to simply regurgitate that which a party set forth in its pleadings. Nor, is oral argument an opportunity to "make a record" when there is no court reporter present and the statements and arguments of counsel are already part of the record because they were set forth in the pleadings. Finally, simply because a party or attorney disagrees with the court's analysis and ruling or is not satisfied with it does not necessarily warrant oral argument when no new arguments will be articulated.

If you submit on the tentative, you must immediately notify all other parties email that you will not appear at the hearing. If you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the motions. If all parties to the motion submit, this tentative ruling will become the final ruling after the hearing date and it will be memorialized in a minute order. This tentative ruling is not an invitation, nor an opportunity, to file further documents relative to the hearing in question. No such document will be considered by the Court.

**Tentative rulings on Motions for Summary Judgment will only be available for review in the courtroom on the day of the hearing.

This is a lemon law case. Plaintiff Maria Hernandez (“Plaintiff” or “Hernandez”) purchased a 2020 Kia Forte (“Vehicle”) from Kia of Carson (“Dealer”) on February 18, 2020. The Vehicle had an express warranty. Plaintiff alleges the Vehicle’s air conditioning system was defective. She presented the Vehicle to an authorized Kia repair facility for repair. However, the repair facility was unable to conform the Vehicle to the applicable express warranty after a reasonable number of attempts. The Vehicle qualified as a “lemon” under the Song-Beverly Act (the “Act”). Plaintiff demanded that Defendant Kia America, Inc. (“Defendant” or “Kia”) repurchase the Vehicle. Three weeks after the demand was made, Kia offered Plaintiff two options: repurchase of the Vehicle or restitution. Plaintiff did not accept either offer. This suit followed.

On March 15, 2022, Hernandez filed a Complaint against Kia for (1) Violation of Song-Beverly Act - Breach of Express Warranty, and (2) Violation of the Song-Beverly Act - Breach of Implied Warranty.

Kia timely filed this Motion for Summary Judgment, or in the alternative, Summary Adjudication. Plaintiff filed an opposition. Kia replied.

In reviewing a motion for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent’s claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.)

“[T]he initial burden is always on the moving party to make a prima facia showing that there are no triable issues of material fact.” (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.) A defendant moving for summary judgment or summary adjudication “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 cause of action . . . cannot be established, or that there is a complete defense to the cause of action.” (Code Civ. Proc., § 437c, subd. (p)(2).) A moving defendant need not conclusively negate an element of plaintiff’s cause of action. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854.)

To meet this burden of showing a cause of action cannot be established, a defendant must show not only “that the plaintiff does not possess needed evidence” but also that “the plaintiff cannot reasonably obtain needed evidence.” (Aguilar, supra, 25 Cal.4th at p. 854.) It is insufficient for the defendant to merely point out the absence of evidence. (Gaggero v. Yura (2003) 108 Cal.App.4th 884, 891.) The defendant “must also produce evidence that the plaintiff cannot reasonably obtain evidence to support his or her claim.” (Ibid.)¿ The supporting evidence can be in the form of affidavits, declarations, admissions, depositions, answers to interrogatories, and matters of which judicial notice may be taken. (Aguilar, 25 Cal.4th at p. 855.)

“Once the defendant … has met that burden, the burden shifts to the plaintiff … to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subd. (p)(2).) The plaintiff may not merely rely on allegations or denials of its pleadings to show that a triable issue of material fact exists, but instead, “shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action.” (Ibid.) “If the plaintiff cannot do so, summary judgment should be granted.” (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467.)

The court must “liberally construe the evidence in support of the party opposing summary judgment and resolve all doubts concerning the evidence in favor of that party,” including “all inferences reasonably drawn therefrom.” (Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1037; Aguilar, supra, 25 Cal.4th at pp. 844-45.) “On a summary judgment motion, the court must therefore consider what inferences favoring the opposing party a factfinder could reasonably draw from the evidence. While viewing the evidence in this manner, the court must bear in mind that its primary function is to identify issues rather than to determine issues. [Citation.] Only when the inferences are indisputable may the court decide the issues as a matter of law. If the evidence is in conflict, the factual issues must be resolved by trial.” (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 839.) “Put another way, have defendants conclusively negated a necessary element of the [plaintiff’s] case or demonstrated that under no hypothesis is there a material issue of fact that requires the process of trial?” (Jeld-Wen, Inc. v. Superior Court (2005) 131 Cal.App.4th 853, 860 [cleaned up].) Further, “the trial court may not weigh the evidence in the manner of a factfinder to determine whose version is more likely true. [Citation.] Nor may the trial court grant summary judgment based on the court’s evaluation of credibility. [Citation.]” (Id. at p. 840; see also Weiss v. People ex rel. Department of Transportation (2020) 9 Cal.5th 840, 864 [“Courts deciding motions for summary judgment or summary adjudication may not weigh the evidence but must instead view it in the light most favorable to the opposing party and draw all reasonable inferences in favor of that party”].)

In its Reply, Kia submits two objections to the Declaration of Jeffery Mukai. Specifically, Kia objects to (1) Exhibit 1 of the Mukai Declaration and (2) Exhibits 4 and 6 of the Mukai Declaration.

The Court need not rule on Kia’s objection to Exhibit 1 of the Mukai Declaration because it is not material to the disposition of the motion. (Code Civ. Proc., § 437c, subd. (q).)

As to Kia’s second objection, it is well-founded. Exhibit 6 is a deposition transcript of a witness in the matter of Treptow v. Kia Motors America, Inc., Case No. CVPS2104074. Attached to the deposition transcript is a “release agreement template” which is separately attached to the Mukai Declaration as Exhibit 4. Plaintiff relies on Exhibit 4 to argue that Kia’s pre-litigation offer to repurchase/pay restitution for the Vehicle would have included the release agreement template. Plaintiff further argues that the release agreement is illegal. Exhibits 4 and 6 are objectionable on multiple grounds. As Kia correctly contends, these documents lack authentication, foundation, appear to be part of settlement discussions, and are hearsay. (Evid. Code, §§ 403, 702, subd. (a), 1152, subd. (a), 1400, 1401.)

Accordingly, objection #2 relating to Exhibits 4 and 6 of the Mukai Declaration is SUSTAINED.

The following facts are not in dispute: In 2020, Plaintiff purchased the Vehicle at the cash price of $20,500. (Kia’s Undisputed Material Facts (UMF) 3.) Plaintiff purchased additional option contracts and gap insurance from the Dealer in the total sum of $4,695.00. (Id.) On October 4, 2021, Plaintiff contacted Kia customer service to discuss concerns with repairs of the Vehicle. She informed the customer service that she did not want to keep the Vehicle because she believed it was a lemon. (UMF 16.) On October 12, 2021, at Plaintiff’s request, a Spanish-speaking representative contacted Plaintiff to discuss her concerns with the Vehicle. (UMF 18.) Plaintiff requested that the Vehicle be evaluated for a buy-back. (Id.) The Kia representative explained to Plaintiff it would take two to three weeks to evaluate the buy-back request and requested documents from Plaintiff. (Id.) Plaintiff provided the documents on October 14, 2021. (UMF 19.) A Kia representative contacted Plaintiff on October 18, 2021 to inform Plaintiff would take between one and three weeks to review Plaintiff’s case. (UMF 20.) On October 25, 2021, a Kia representative emailed Plaintiff a letter which stated the following:

“We would like to make the following offer to either repurchase, or repair your vehicle. All options will require a signed settlement release agreement. Please review these options:

*In addition, Kia America will pay off the underlying vehicle loan. You may be entitled to a refund for any unused portion of an extended service contract or insurance product, if applicable. See a Kia dealer for cancellation information.

Kia will pay you the sum of four thousand dollars ($4,000.00) as a onetime goodwill gesture. You would keep the vehicle and accept this offer as full settlement of your concerns. The balance of any remaining Kia warranties on your vehicle would remain in full effect per the terms and limitations outlined in the Kia Warranty and Consumer Information Manual issued for your vehicle. Options #1 is 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.

On December 13, 2021, after Plaintiff did not respond to Kia’s repurchase offer, a Kia representative contacted Plaintiff. Plaintiff stated she wanted to hire a lawyer because she did not like the offer. The Kia representative informed Plaintiff that the offer was negotiable. However, when asked, Plaintiff stated she did not have a number in mind. (UMF 25.) Kia did not receive further contact from Plaintiff prior to the filing of this lawsuit on March 15, 2022. (UMF 26.) In all, Plaintiff brought the Vehicle for repair 10 times prior to sitting for deposition. (UMF 5-12.) Plaintiff complained of problems with the Vehicle’s air conditioning on five occasions. (See UMF 6, 7, 9, 12, 13.)

Kia argues it is entitled to summary judgment because it fulfilled its obligations under the Song-Beverly Act (Act) by making a prompt and reasonable offer to repurchase the Vehicle from Plaintiff which Plaintiff refused to accept or negotiate. Alternatively, Kia seeks summary adjudication of the following issues: (1) whether the First Cause of Action fails because Plaintiff refused Kia’s pre-litigation offer to repurchase the Vehicle; (2) whether the Second Cause of Action fails because Plaintiff refused Kia’s pre-litigation offer to repurchase the Vehicle, (3) whether Plaintiff can show Kia acted willfully in handling repairs of the Vehicle and Plaintiff’s repurchase request; and (4) whether Plaintiff’s claims for attorneys’ fees and costs can be deemed reasonably incurred because Kia promptly offered to repurchase the Vehicle. The court addresses each argument in turn.

Summary Judgment and Issues 1 and 2: Whether Kia’s Pre-litigation Offer Entitles Kia to Summary Judgment or Summary Adjudication of the First Two Causes of Action.

Section 1793.2, subdivision (d)(2) sets forth the manufacturer's affirmative obligation to “promptly” repurchase or replace a defective vehicle it is unable to repair, providing that if a manufacturer is “unable to service or repair a new motor vehicle ... to conform to the applicable express warranties after a reasonable number of attempts, the manufacturer shall either promptly replace the new motor vehicle in accordance with subparagraph (A) or promptly make restitution to the buyer in accordance with subparagraph (B).” In turn, the restitution remedy in section 1793.2, subdivision (d)(2)(B) states that “the manufacturer shall make restitution in an amount equal to the actual price paid or payable by the buyer, ... including any collateral charges such as sales or use tax, license fees, registration fees, and other official fees, plus any incidental damages to which the buyer is entitled under Section 1794, including, but not limited to, reasonable repair, towing, and rental car costs actually incurred by the buyer.” (Kirzhner v. Mercedes-Benz USA, LLC (2020) 9 Cal.5th 966, 971.)

The promptness of the offer is not in dispute.[1] Kia argues summary judgment (and summary adjudication of the first two causes of action) is warranted because “Plaintiff ignored a reasonable offer to repurchase the Vehicle.” (Def. Mtn. at p. 6.) Kia’s argument stumbles out of the gate. Notably, Plaintiff did not ignore Kia’s offer. Plaintiff stated she did not like the offer, and she wanted to hire an attorney. (UMF 25.) To prevail, Kia must show that Plaintiff’s failure to accept Kia’s offer disqualifies her, as a matter of law, from relief under the Act. Kia fails to cite any authority for such a position. For the most part, Kia centers its argument on Dominguez v. American Suzuki Motor Corp. (2008) 160 Cal.App.4th 53 (Dominguez).

In Dominguez, the Court of Appeal reversed the trial court’s denial of summary judgment. The facts justify the reversal. Dominguez purchased a new 2004 Suzuki DL 1000 (Motorcycle) for $8,780.41. Over the next six months, Dominguez submitted the motorcycle for repair at least five times. Dominquez engaged counsel who requested that Suzuki repurchase or replace the motorcycle. Six weeks later, Suzuki offered to repurchase the motorcycle for $8,780.41, the full purchase price. Suzuki did not place any conditions or qualifications on its offer to repurchase the motorcycle. The sticking point became the attorney’s fees and costs. The appellate court stated, “Section 1793.2, subdivision (d)(1), requires a manufacturer that cannot repair consumer goods after a reasonable number of attempts to ‘either replace the goods or reimburse the buyer in an amount equal to the purchase price paid by the buyer....’ That is what happened here.” (Dominguez, supra, 160 Cal.App.4th at p. 59.)

By comparison, that is not what happened here. Kia did not make an unconditional and unequivocal offer to repurchase the car. As Plaintiff points out, Kia’s offer included several conditional terms. First, Kia stated that, “All options will require a signed settlement release agreement.” (UMF 23.) That settlement release agreement, however, was not included in the offer.[2] The terms are unknown. Unknown terms are certainly grounds to reject the offer. Second, the asterisk accompanying the total settlement amount states that: “In addition, Kia America will pay off the underlying vehicle loan. You may be entitled to a refund for any unused portion of an extended service contract or insurance product, if applicable. See a Kia dealer for cancellation information.” (UMF 23.) Here too, the terms are unknown. Finally, the offer states that Option #1 (which is the repurchase option) “is 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 damage beyond normal wear and tear will be required prior to Kia’s fulfillment of the terms contained in this settlement.” (UMF 23.) This contingency is fraught with problems. It’s unclear who will conduct the physical inspection; what constitutes excessive wear and tear; and whether plaintiff can challenge the amount. These qualifications and contingencies distinguish this case significantly from the flat-out, unencumbered offer made to repurchase Dominguez’s motorcycle, for the full purchase price.[3] Based upon these vagaries, Kia’s offer was not, as the court said in Dominguez, an offer to “either replace the goods or reimburse the buyer in an amount equal to the purchase price paid by the buyer....” (Dominguez, supra, 160 Cal.App.4th at p. 59.)

Plaintiff was entitled to reject the offer and seek assistance of counsel.[4] In a slightly different context involving 998 offers, the court in Etcheson v. FCA US LLC (2018) 30 Cal.App.5^th 831, reversed a trial court’s reduction of attorney’s fees. The reasonableness of the defendant’s offer was relevant to the court’s consideration of the issues. The court of appeal, reviewing several other cases stated, “[t]he import of both Goglin and McKenzie is that where a defendant's settlement offer contains unfavorable provisions or is otherwise invalid, as FCA's offers were here, it is not unreasonable for a plaintiff to reject that offer.” (Id. at pp. 845–846.) The Court of Appeal pointed out that the plaintiff was correct to reject both offers: the first, because it required plaintiffs to sign a release without stating any release terms; the second, because it was insufficiently specific. (Etcheson, at p. 846.) Both problems are present here with Kia’s prelitigation offer. Plaintiff did not act unreasonably when she rejected the offer and sought the assistance of counsel.

Defendant has not established that its offer satisfies the requirements of the Act as a matter of law.[5] Recognizing its offer had deficiencies and maybe too low, Defendant then faults Plaintiff for failing to negotiate over the terms. Defendant fails to cite any authority for the proposition that a Plaintiff is obligated under the Act to negotiate over the terms to obtain relief or prior to seeking the assistance of counsel.

Defendant’s motion summary judgment and summary adjudication of the first two causes of action is denied.

Issue 3: Whether Kia Acted Willfully in Handling Repairs of the Vehicle and Plaintiff’s Repurchase Request

Kia argues summary adjudication of Plaintiff’s civil penalties claim is warranted because Kia did not refuse to repurchase or replace the vehicle. As such, there is no evidence of willful conduct to support imposition of civil penalties under the Act.

“If the buyer establishes that the failure to comply was willful, the judgment may include, in addition to the amounts recovered under subdivision (a), a civil penalty which shall not exceed two times the amount of actual damages. This subdivision shall not apply in any class action under Section 382 of the Code of Civil Procedure or under Section 1781, or with respect to a claim based solely on a breach of an implied warranty.” (Civ. Code, § 1794, subd. (c).)

A manufacturer’s noncompliance is “willful” when it knows “of its obligations but intentionally decline[s] to fulfill them.” (Schreidel v. American Honda Motor Co. (1995) 34 Cal.App.4th 1242, 1249, 1250, quotations omitted.) “[A] violation is not willful if the defendant’s failure to replace or refund was the result of a good faith and reasonable belief the facts imposing the statutory obligation were not present. This might be the case, for example, if the manufacturer reasonably believed the product did conform to the warranty, or a reasonable number of repair attempts had not been made, or the buyer desired further repair rather than replacement or refund. [¶] Our interpretation of section 1794(c) is consistent with the general policy against imposing forfeitures or penalties against parties for their good faith, reasonable actions.” (Kwan v. Mercedes-Benz of N. Am., Inc. (1994) 23 Cal.App.4th 174, 185.)

Here, it is undisputed that Kia offered to repurchase Hernandez’s vehicle or pay restitution. (UMF 113.) But the offer suffered from several problems, as discussed above. True, Kia’s representative specifically stated to Hernandez that the offer was negotiable, and the representative further asked Hernandez whether she had a buyback/restitution number in mind. Nonetheless, Kia’s conduct and its flawed offer raise triable issues of material fact with respect to whether Kia knew of its obligations but intentionally declined to fulfill them.

Whether a manufacturer willfully violated its obligations under the Act is a jury question. “In regard to the willful requirement of Civil Code section 1794, subdivision (c), a civil penalty may be awarded if the jury determines that the manufacturer ‘knew of its obligations but intentionally declined to fulfill them.” (Schreidel, supra, 34 Cal.App.4th at pp. 1249-1250, emphasis added; see also Oregel v. American Isuzu Motors, Inc. (2001) 90 Cal.App.4th 1094, 1104 [“Whether a manufacturer willfully violated its obligation to repair the car or refund the purchase price is a factual question for the jury that will not be disturbed on appeal if supported by substantial evidence.”].)

Kia argues Plaintiff cannot recover attorney fees and costs because she filed this “tactical lawsuit for the purpose of recovering fees and civil penalties.” However, this argument turns upon the validity of Kia’s prelitigation offer. Having previously found Plaintiff was entitled to reject the offer, Kia’s motion for summary adjudication of Plaintiff’s claims for attorney fees and costs is denied.

Accordingly, the Motion for Summary Judgment is DENIED. The alternative Motion for Summary Adjudication is DENIED.

[1] Plaintiff concedes the offer was prompt.

[2] Plaintiff argues the phantom release agreement is illegal. Plaintiff relies on a template release agreement from another case in support of this argument. The court has sustained Kia’s objection to the template release agreement. Suffice it to say here, the terms of the proposed release agreement are unknown.

[3] Plaintiff also argues Kia’s “offer was not made in compliance with the Song-Beverly Act for numerous reasons, including but not limited to that Defendant made improper deductions such as deducting gap insurance and service contracts – both of which were included in the vehicle’s total sales price.” (Complaint, ¶ 20.) While the court need not resolve this issue, the weight of authority suggests service contract and gap insurance are nonmanufactured items and are properly subject to offset provisions. (See Carillo v. FCA USA, LLC (C.D. Cal. 2021) 546 F.Supp.3d 995, 1002 [“Because the Song-Beverly Act excludes restitution for “non-manufacturer items installed by a dealer or buyer,” this optional charge must be excluded from the purchase price of the vehicle for purposes of the restitution calculation. Cal. Civ. Code § 1793.2(d)(2)(B).”]; see also Canesco v. Ford Motor Co. (S.D. Cal. 2021) 570 F.Supp.3d 872, 893 [“The $,2,275.00 included as part of the purchase price for the “Optional Service Contract” is not a proper item of damages “[b]ecause the Song-Beverly Act excludes restitution for ‘non-manufacturer items installed by a dealer or buyer.”]; Velazquez v. Ford Motor Co. (E.D. Cal., July 13, 2021, No. 1:21-cv-00258-DAD-EPG) 2021 WL 2948649, at *2-3 [deducting the amounts paid for the identified service and gap contracts for purposes of calculating the amount in controversy]; Rupay v. Vokswagen Group of Am. (C.D. Cal., Nov. 15, 2012, No. CV 12–4478–GW FFMX) 2012 WL 10634428, at *5 [“neither GAP insurance nor a third party service contract are ‘manufacturer-installed items,” and they are in fact ‘non-manufacturer items,’ as they are not manufactured by anyone, as they are both service contracts”]; But see, Landa v. FCA US LLC 2021 WL 1565800, at *4 [“…Plaintiff contends that Defendant's offer improperly deducted amounts she paid for an extended service contract and GAP insurance. (Citation omitted.) The Court agrees with Plaintiff.”].)

[4] Citing CACI No. 336 on Affirmative Defense –Waiver, Kia argues that Hernandez waived her rights under the Song-Beverly Act when she ignored Kia’s offer. The argument fails. Kia did not plead waiver as an affirmative defense. Indeed, Kia still disputes all liability under the Song-Beverly Acy and denies that any defect or nonconformity was not caused by Kia. (Answer, ¶ 7.) Additionally, the Song-Beverly Act provides that its protections cannot be waived except as delineated in the statute. (See Civ. Code, § 1790.1.)

[5] Even if Defendant’s evidence could be viewed as sufficient to shift the burden, Plaintiff’s reference to the caveats and qualifications embedded in Kia’s offer raises triable issues of material fact regarding whether Kia’s offer provides full restitution.