This case was last updated from Los Angeles County Superior Courts on 11/22/2021 at 18:06:01 (UTC).

NOEMI E PEREZ SANCHEZ VS FORD MOTOR COMPANY

Case Summary

On 02/02/2018 NOEMI E PEREZ SANCHEZ filed a Contract - Other Contract lawsuit against FORD MOTOR COMPANY. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is DANIEL S. MURPHY. The case status is Disposed - Judgment Entered.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****2823

  • Filing Date:

    02/02/2018

  • Case Status:

    Disposed - Judgment Entered

  • Case Type:

    Contract - Other Contract

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

DANIEL S. MURPHY

 

Party Details

Petitioner and Plaintiff

SANCHEZ NOEMI E.

Defendants and Respondents

DOES 1 TO 10

FORD MOTOR COMPANY

Attorney/Law Firm Details

Petitioner and Plaintiff Attorneys

MIKHOV STEVEN B. ESQ.

MIKHOV STEVE BORISLAV ESQ.

WILSON SCOT D

Defendant and Respondent Attorneys

SHACKELFORD RICK L.

MORTENSON MICHAEL DONN

 

Court Documents

Order - ORDER RE PLAINTIFF'S MOTION TO COMPEL PRODUCTION OF DEFENDANT'S PERSON MOST KNOWLEDGEABLE

7/12/2019: Order - ORDER RE PLAINTIFF'S MOTION TO COMPEL PRODUCTION OF DEFENDANT'S PERSON MOST KNOWLEDGEABLE

Order Appointing Court Approved Reporter as Official Reporter Pro Tempore

7/12/2019: Order Appointing Court Approved Reporter as Official Reporter Pro Tempore

Minute Order - MINUTE ORDER (HEARING ON MOTION TO COMPEL MOTION TO COMPEL A COMPETENT PERS...)

7/12/2019: Minute Order - MINUTE ORDER (HEARING ON MOTION TO COMPEL MOTION TO COMPEL A COMPETENT PERS...)

Notice of Change of Address or Other Contact Information

7/29/2019: Notice of Change of Address or Other Contact Information

Stipulation and Order - STIPULATION AND ORDER (JOINT) AND [PROPOSED] ORDER TO CONTINUE TRIAL DATE AND HEARING ON DEFENDANT FORD MOTOR COMPANYS MOTION FOR SUMMARY JUDGMENT

8/5/2019: Stipulation and Order - STIPULATION AND ORDER (JOINT) AND [PROPOSED] ORDER TO CONTINUE TRIAL DATE AND HEARING ON DEFENDANT FORD MOTOR COMPANYS MOTION FOR SUMMARY JUDGMENT

Stipulation and Order - STIPULATION AND ORDER JOINT STIPULATION AND [PROPOSED] ORDER TO CONTINUE TRIAL DATE AND HEARING ON DEFENDANT FORD MOTOR COMPANYS MOTION FOR SUMMARY JUDGMENT

11/4/2019: Stipulation and Order - STIPULATION AND ORDER JOINT STIPULATION AND [PROPOSED] ORDER TO CONTINUE TRIAL DATE AND HEARING ON DEFENDANT FORD MOTOR COMPANYS MOTION FOR SUMMARY JUDGMENT

Stipulation and Order - STIPULATION AND ORDER TO CONTINUE HEARING ON MOTION FOR SUMMARY JUDGMENT

12/30/2019: Stipulation and Order - STIPULATION AND ORDER TO CONTINUE HEARING ON MOTION FOR SUMMARY JUDGMENT

Ex Parte Application - EX PARTE APPLICATION PLAINTIFF'S EX PARTE APPLICATION FOR AN ORDER CONTINUING THE HEARING DATE ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT, OR IN THE ALTERNATIVE, SUMMARY ADJUDIC

2/28/2020: Ex Parte Application - EX PARTE APPLICATION PLAINTIFF'S EX PARTE APPLICATION FOR AN ORDER CONTINUING THE HEARING DATE ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT, OR IN THE ALTERNATIVE, SUMMARY ADJUDIC

Minute Order - MINUTE ORDER (HEARING ON EX PARTE APPLICATION FOR AN ORDER CONTINUING THE H...)

2/28/2020: Minute Order - MINUTE ORDER (HEARING ON EX PARTE APPLICATION FOR AN ORDER CONTINUING THE H...)

Stipulation and Order to use Certified Shorthand Reporter

2/28/2020: Stipulation and Order to use Certified Shorthand Reporter

Order - ORDER [PROPOSED] ORDER CONTINUING THE HEARING DATE ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT, OR IN THE ALTERNATIVE, SUMMARY ADJUDICATION

2/28/2020: Order - ORDER [PROPOSED] ORDER CONTINUING THE HEARING DATE ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT, OR IN THE ALTERNATIVE, SUMMARY ADJUDICATION

Notice - NOTICE OF ENTRY OF ORDER

3/5/2020: Notice - NOTICE OF ENTRY OF ORDER

Certificate of Mailing for - CERTIFICATE OF MAILING FOR (COURT ORDER) OF 03/30/2020

3/30/2020: Certificate of Mailing for - CERTIFICATE OF MAILING FOR (COURT ORDER) OF 03/30/2020

Minute Order - MINUTE ORDER (COURT ORDER)

3/30/2020: Minute Order - MINUTE ORDER (COURT ORDER)

Certificate of Mailing for - CERTIFICATE OF MAILING FOR (COURT ORDER) OF 04/01/2020

4/1/2020: Certificate of Mailing for - CERTIFICATE OF MAILING FOR (COURT ORDER) OF 04/01/2020

Minute Order - MINUTE ORDER (COURT ORDER)

4/1/2020: Minute Order - MINUTE ORDER (COURT ORDER)

Notice - NOTICE OF HEARING ON MOTION FOR SUMMARY JUDGMENT / FINAL STATUS CONFERENCE

4/1/2020: Notice - NOTICE OF HEARING ON MOTION FOR SUMMARY JUDGMENT / FINAL STATUS CONFERENCE

Minute Order - MINUTE ORDER (COURT ORDER)

4/15/2020: Minute Order - MINUTE ORDER (COURT ORDER)

69 More Documents Available

 

Docket Entries

  • 11/03/2020
  • Docketat 08:30 AM in Department 32, Daniel S. Murphy, Presiding; Jury Trial - Not Held - Vacated by Court

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  • 10/22/2020
  • Docketat 08:30 AM in Department 32, Daniel S. Murphy, Presiding; Final Status Conference - Not Held - Vacated by Court

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  • 07/31/2020
  • DocketMemorandum of Costs (Summary); Filed by Ford Motor Company (Defendant)

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  • 07/28/2020
  • Docketat 08:30 AM in Department 32, Daniel S. Murphy, Presiding; Jury Trial - Not Held - Advanced and Continued - by Court

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  • 07/17/2020
  • DocketNotice (of Entry of Judgment); Filed by Ford Motor Company (Defendant)

    Read MoreRead Less
  • 07/09/2020
  • Docketat 08:30 AM in Department 32, Daniel S. Murphy, Presiding; Final Status Conference - Not Held - Advanced and Continued - by Court

    Read MoreRead Less
  • 07/07/2020
  • DocketJudgment (Proposed); Filed by Ford Motor Company (Defendant)

    Read MoreRead Less
  • 06/30/2020
  • Docketat 08:30 AM in Department 32, Daniel S. Murphy, Presiding; Jury Trial - Not Held - Advanced and Continued - by Court

    Read MoreRead Less
  • 06/29/2020
  • Docketat 08:30 AM in Department 32, Daniel S. Murphy, Presiding; Hearing on Motion to Compel (Motion to Compel a Competent Person Most Knowledgeable) - Held

    Read MoreRead Less
  • 06/29/2020
  • Docketat 08:30 AM in Department 32, Daniel S. Murphy, Presiding; Hearing on Motion to Compel (Motion to Compel Deposition Attendance of a More Competent Person Most Knowledgeable) - Held

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106 More Docket Entries
  • 05/08/2018
  • DocketNOTICE OF CASE MANAGEMENT CONFERENCE

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  • 04/18/2018
  • DocketNotice of Case Management Conference; Filed by Clerk

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  • 04/18/2018
  • DocketNOTICE OF CASE MANAGEMENT CONFERENCE

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  • 03/06/2018
  • DocketDEFENDANT FORD MOTOR COMPANY'S ANSWER TO PLAINTIFF NAOMI E. PEREZ SANCHEZ'S COMPLAINT

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  • 03/06/2018
  • DocketAnswer; Filed by Ford Motor Company (Defendant)

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  • 02/08/2018
  • DocketPROOF OF SERVICE SUMMONS

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  • 02/02/2018
  • DocketComplaint; Filed by Noemi E. Sanchez (Plaintiff)

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  • 02/02/2018
  • DocketDEMAND FOR JURY TRIAL

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  • 02/02/2018
  • DocketCOMPLAINT 1. VIOLATION OF SONG-BEVERLY ACT -BREACH OF EXPRESS WARRANTY ;ETC

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  • 02/02/2018
  • DocketSUMMONS

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Tentative Rulings

Case Number: BC692823    Hearing Date: June 29, 2020    Dept: 32

noemi e. perez sanchez,

Plaintiff,

v.

FORD MOTOR COMPANY, et al.

Defendants.

Case No.: BC692823

Hearing Date: June 29, 2020

[TENTATIVE] order RE:

Motion for summary judgment or, alternatively, summary adjudication

Background

Plaintiff Noemi E. Perez Sanchez (Plaintiff) commenced this action against Defendant Ford Motor Company (Ford) on February 2, 2018. Plaintiff asserts causes of action for (1) violation of the Song-Beverly Act – breach of express warranty, (2) violation of the Song-Beverly Act – breach of implied warranty, and (3) violation of the Song-Beverly Act ­section 1793.2. Plaintiff alleges that she purchased a new 2016 Ford Mustang (Vehicle) on November 8, 2016. Plaintiff alleges that the Vehicle contained or developed serious transmission and electrical system defects within the express warranty period. Plaintiff alleges that she delivered the Vehicle to an authorized Ford repair facility for repair of the defects and that Ford was unable to repair the Vehicle after a reasonable number of attempts.

Statement of Facts

On November 8, 2016, Plaintiff purchased the Vehicle from Puente Hills Ford. (DUMF 1.) To finance the purchase, Plaintiff traded in her 2014 Honda Civic (Civic). (DUMF 2.) At the time of the trade-in, Plaintiff owed $14,000 dollars on her Civic loan. (DUMF 3.) Plaintiff accepted the offered value of $10,000 for the Honda Civic, and the remaining $4,000 of negative equity was added to the amount financed for the purchase of the Vehicle. (DUMF 4-5.)

On November 19, 2016, Plaintiff presented the Vehicle to Puente Hills Ford for repairs for the first time. (DUMF 6.) That same day, Puente Hills Ford returned the Vehicle to Plaintiff. (DUMF 7.)

On December 5, 2016, Plaintiff presented the Vehicle to Puente Hills Ford for repairs for the second time. (DUMF 8.) On December 9, 2016, Puente Hills Ford returned the Vehicle to Plaintiff. (DUMF 9.)

On December 15, 2016, Plaintiff presented the Vehicle to Puente Hills Ford for repairs for the third time. (DUMF 10.) On January 6, 2016, Puente Hills Ford returned the car to Plaintiff. (DUMF 11.)

On March 20, 2017, during a call with a Ford customer service representative, Plaintiff stated that she no longer wanted the Vehicle. (DUMF 12.)

On April 11, 2017, Plaintiff presented the Vehicle to Puente Hills Ford for repairs for the fourth time. (DUMF 13.) Puente Hills Ford returned the Vehicle to Plaintiff on April 28, 2017. (DUMF 15.)

On April 19, 2017, Ford sent Plaintiff a conditional settlement offer to replace or purchase the Vehicle. (Pl. Depo., Ex. 3.) In May 2017, Plaintiff indicated that she was interested in pursuing a buyback of the Vehicle from Ford and agreed to send Ford the necessary documents for Ford to process the buyback. (DUMF 16.)

On June 5, 2017, Ford sent Plaintiff a “Refund Worksheet” outlining the numbers associated with its buyback offer. (DUMF 17.) Ford’s worksheet excluded the negative equity costs and third party service contract costs from its offer. (DUMF 18.)

Plaintiff rejected Ford’s buyback offer. (DUMF 19.) Plaintiff testified at deposition that she rejected the offer because it did not provide compensation for the negative equity related to her Civic. (DUMF 20.)

Plaintiff commenced this action on February 18, 2019. (DUMF 21.)

Discussion

Ford moves for summary judgment of the Complaint or, in the alternative, summary adjudication of Plaintiff’s prayer for civil penalties under Civil Code section 1794.[1]

A. Summary Adjudication of Plaintiff’s Prayer for Civil Penalties

As Plaintiff notes, Ford’s request for summary adjudication of her civil penalties claim is improper. “A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for claims for damages, or one or more issues of duty.” (CCP § 437c(f)(1).) Under CCP section 437c(f)(1), the phrase “one or more claims for damages” is “qualified by, and limited to, punitive damages” under Civil Code section 3294. (DeCastro West Chodorow & Burns, Inc. v. Superior Court (1996) 47 Cal.App.4th 410, 421.) Because Plaintiff’s civil penalties claim does not fall within the ambit of the summary judgment statute and the parties did not jointly stipulate to adjudication of this claim (CCP § 437c(t)), Ford cannot obtain summary adjudication of this claim.

B. Summary Judgment of Plaintiff’s Causes of Action

Ford contends that it is entitled to summary judgment because it complied with its obligations under the Song-Beverly Act by promptly offering to repurchase or replace the Vehicle. Plaintiff responds that there are triable issues of material fact as to whether Ford’s buyback offer was prompt and adequate.[2]

1. Promptness of Buyback Offer

Civil Code section 1793.2(d)(2) states in pertinent part: “If the manufacturer or its representative in this state 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 … or promptly make restitution to the buyer….” (Emphasis added.)

Determining whether Ford’s buyback offer was prompt requires resolution of two interrelated questions: (1) how should promptness be measured and (2) was Ford’s buyback offer prompt as a matter of law?

a. Measuring Promptness

Ford contends that Plaintiff’s request for restitution or replacement triggered its obligation to tender Plaintiff a buyback offer. Plaintiff responds that Ford’s failure to repair the Vehicle after a “reasonable number of attempts” triggered Ford’s obligation to tender Plaintiff a buyback offer.

In support of her position, Plaintiff cites Krotin v. Porsche Cars North America, Inc. (Krotin) (1995) 38 Cal.App.4th 294. The Krotin court noted that, unlike the Commercial Code provisions on warranties, the Song-Beverly Act “contains no ‘reasonable time’ requirement by which the consumer must invoke the Act or lose rights granted by that statutory scheme. Rather, the Act creates an affirmative duty upon the manufacturer or its representative to provide restitution or replacement when a covered defect, i.e. a nonconformity [Citation], is not repaired after a reasonable number of attempts.” Because the Act imposes this affirmative duty on manufacturers, the Krotin court deduced that “the consumer’s request [for repurchase or replacement] is not mandated by any provisions in the Act.” (Krotin, supra, 38 Cal.App.4th at 303.) To wit, “the Act does not require consumers to take any affirmative steps to secure relief for the failure of a manufacturer to service or repair a vehicle to conform to applicable warranties — other than, of course, permitting the manufacturer a reasonable opportunity to repair the vehicle.” (Id. at 302 (emphasis in original).)

Plaintiff’s reliance on Krotin is unavailing. The issue in this motion is not whether Ford had an affirmative duty to provide, or offer to provide, restitution or replacement after failing to repair a nonconformity in the Vehicle after a reasonable number of attempts. That issue is uncontested for purposes of this motion. The issue is how to measure promptness. Krotin did not address the requirement of promptness at all. (State Farm Fire & Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 614 (“Cases are not authority for propositions not considered therein.”).)

Several district courts have adopted Ford’s stance. (De Leon v. Ford Motor Company (C.D. Cal., Nov. 13, 2019, No. CV187975PSGFFMX) 2019 WL 7195325, at *6 (collecting cases); Islas v. Ford Motor Company (C.D. Cal., July 29, 2019, No. 5:18-cv-02221-GW-SP) at *10-*11; Rivera v. Ford Motor Company (C.D. Cal., Feb. 10, 2020, No. CV1807798DSFPJWX) 2020 WL 1652534, at *6.) The logic underlying their holdings is compelling: a request for a buyback offer puts the manufacturer on notice that a buyback offer is sought and that conditions requiring a buyback may be present. Prior to a buyback offer request, the manufacturer is unable to determine that a buyback offer is sought and/or warranted. In line with these district court cases, the Court concludes that the buyer’s request for a buyback offer triggers the manufacturer’s duty to provide prompt restitution or replacement.

b. Promptness as a Matter of Law

Ford contends that its buyback offer was prompt as a matter of law. The undisputed evidence supports Ford’s contention. Ford sent Plaintiff a buyback offer 30 days after Plaintiff indicated to a Ford customer service representative that she no longer wanted the Vehicle. (DUMF 12; Pl. Depo. Ex. 3.) A buyback offer tendered within 30 days of the buyer’s request is prompt as a matter of law. (See De Leon, supra, 2019 WL 7195325, at *6 (noting that courts have found that a manufacturer makes a prompt offer when it is made within 50 days).)

Plaintiff’s reliance on Lukather v. General Motors, LLC (Lukather) (2010) 181 Cal.App.4th 1041 to show otherwise is unpersuasive. In Lukather, the buyer requested that GM repurchase his vehicle on March 8, 2007. On several occasions after making this request, the buyer was told by GM that he “would not be able” to get his money back. The buyer was then told “it would take several months for GM to decide whether to buy back” his vehicle. On April 12, 2007, after GM’s repeated delays with the buyer’s repurchase request, the buyer filed a complaint against GM. On May 23, 2007, six weeks after the lawsuit was filed, GM requested that the buyer provide GM with information about the vehicle in order to prepare a repurchase offer. On May 25, 2007, without having received further documentation, GM tendered a repurchase offer. (Lukather, supra, 181 Cal.App.4th at 1043.)

The trial court found that GM “did not act promptly in offering to repurchase the” vehicle. The appellate court affirmed. The appellate court rejected GM’s argument that the trial court erred in imposing the duty to make restitution on the “very same day it determined the [vehicle] was a lemon or in the very first call offering [the buyer] his options.” The appellate court stated that this argument mischaracterized the trial court’s rulings. The trial court had found that the buyer communicated his desire for a vehicle repurchase and “for weeks thereafter GM did not try to comply with his request, but instead tried ‘to persuade him to accept a replacement rather than the repurchase he initially and periodically requested.’ (Italics added.) Thus, the trial court found that GM stalled and frustrated [the buyer’s] attempts to obtain restitution for many weeks.” The appellate court also noted that the evidence supported the implied finding that GM had ample time in the period between March 8 and April 12, 2007 in order to comply with the Act. In support, the appellate court pointed out that it took GM two days — May 23 to May 25, 2007 — to obtain the appropriate information to calculate the repurchase offer, to make those calculations, and to send the buyer a letter with its offer. (Lukather, supra, 181 Cal.App.4th at 1049.)

In Lukather, the trial court’s promptness determination, which was upheld on appeal, was based on the manufacturer’s obvious stalling tactics and the 78-day delay between the date of the buyer’s repurchase request and the manufacturer’s repurchase offer. Accordingly, Lukather does not contradict the conclusion that a manufacturer’s repurchase offer made 30 days after Plaintiff’s repurchase request was prompt.

Plaintiff further contends that Lukather raises a triable issue of material fact as to the promptness of Ford’s finalized buyback offer. Plaintiff notes that in Lukather, GM provided a finalized offer within two days of requesting further information from the buyer. The Court disagrees. The trial court and appellate court in Lukather were plainly alarmed by GM’s dilatory tactics. GM had repeatedly attempted to deter the buyer’s repurchase request, and, after the buyer filed a lawsuit, GM had somehow put together a finalized repurchase offer despite representing, two days prior, that the buyer needed to provide further information. Plaintiff has not substantiated the same sort of game-playing here, so the same scrutiny does not apply. To the contrary, the undisputed evidence shows that Ford sent Plaintiff a conditional buyback offer on April 19, 2017, Plaintiff indicated interest in the buyback and sent Ford necessary documents in May 2017, and Ford sent Plaintiff a finalized offer on June 5, 2017. (Pl. Depo. Ex. 3, DUMF 16-17.) This undisputed evidence reflects a reasonable and prompt finalization of Ford’s buyback offer.

Plaintiff has not established a triable issue of material fact as to whether Ford’s buyback offer was prompt.

2. Adequacy of Buyback Offer

Ford’s buyback offer made two deductions from its total payout offer: (1) costs for negative equity ($4,000) and (2) costs for a third party service contract ($3,350). Plaintiff argues that these two deductions rendered Ford’s buyback offer noncompliant with the Song-Beverly Act.

When a manufacturer makes restitution for a defective new motor vehicle under the Song-Beverly Act, the manufacturer must do so in accordance with section 1793.2(d)(2)(B). That subparagraph states: “In the case of restitution, the manufacturer shall make restitution in an amount equal to the actual price paid or payable by the buyer, including any charges for transportation and manufacturer-installed options, but excluding nonmanufacturer items installed by a dealer or the buyer, and 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.” This subparagraph and subparagraph (d)(2)(A) (regarding replacement) “comprehensively address restitution; specified predelivery offset; sales and use taxes; license, registration, or other fees; repair, towing, and rental costs; and other incidental damages. None contains any language authorizing an offset in any situation other than the one specified. This omission of other offsets from a set of provisions that thoroughly cover other relevant costs indicates legislative intent to exclude such offsets.” (Jiagbogu v. Mercedes-Benz USA (2004) 118 Cal.App.4th 1235, 1243-44.)

a. Negative Equity Deduction

Ford deducted negative equity costs of $4,000 from its buyback offer because this negative equity carried over from Plaintiff’s purchase of another vehicle, the Civic.

Plaintiff contends that this deduction was improper. Plaintiff claims that negative equity is recoverable as part of the “actual price paid or payable by the buyer.” (Civ. Code § 1793.2(d)(2)(B).) Plaintiff cites no judicial opinions reaching this same conclusion.

Several district courts have considered and rejected this same argument based on general principles of restitution. The district court in De Leon notes that “[r]estoring the status quo between Plaintiff and Defendant before Plaintiff purchased the Ford Edge [i.e., the alleged lemon] does not include reimbursing Plaintiff for money owed on the Ford Fusion [i.e., the traded-in vehicle]. [Citation.] To do so would result in a windfall because Plaintiff would receive damages beyond the ‘purchase price’ of the ‘new motor vehicle.’ ” (See De Leon, supra, 2019 WL 7195325, at *4.) The district court in Gonzalez similarly opined that “[r]estoring the status quo prior to the lease transaction does not reasonably include Ford paying off debt for a trade-in that Plaintiff was responsible to pay. Restoring the status quo requires placing Plaintiff in the same debt position he was in at the time he entered into the lease agreement, which was that he owed $5,041.00 more than the value of his trade-in vehicle. To require Ford to pay an additional $5,041.00 to Plaintiff would place Plaintiff in a better position than he was in at the time he entered into the lease.” (Gonzalez v. Ford Motor Co. (C.D. Cal., Oct. 23, 2019, No. LACV1900652PAASX) 2019 WL 6122554, at *7 (citing two out-of-state authorities which arrived at the same conclusion under similar lemon law statutes).) In addition, one district court has found that negative equity was not recoverable because the Song-Beverly Act excludes reimbursement for “nonmanufacturer items installed by a dealer.” (Rivera v. Ford Motor Company (C.D. Cal., Feb. 10, 2020, No. CV1807798DSFPJWX) 2020 WL 1652534, at *5.)

Apart from citing these authorities, Ford points to 16 CCR section 3398.11, a regulation promulgated under those provisions of the Song-Beverly Act that allow manufacturers to establish nonbinding alternative dispute resolution procedures. (See Civ. Code § 1793.22(d), (e).) The regulation states that when an arbitrator concludes that a manufacturer must provide a refund, the arbitrator “shall include payment of incidental damages to the extent authorized by the applicable law including Commercial Code Sections 2711 to 2715 inclusive, and Civil Code Sections 1793.2(d)(2) and 1794(a) and (b); and shall include all reasonable repair, towing and rental car costs, any sales or use tax, license fees, registration fees, other official fees, prepayment penalties, early termination charges and earned finance charges, if actually paid, incurred or to be incurred by the consumer (but need not include charges for which the consumer is justly responsible).” (Emphasis added.) Ford claims that negative equity costs are “charges for which [Plaintiff] is justly responsible.”

The Court agrees with the district courts on this issue. The Song-Beverly Act contemplates that an aggrieved buyer can recover restitution or replacement. “The object of restitution is to restore the status quo by returning to the plaintiff funds in which he or she has an ownership interest.” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1149 (describing UCL); see also Mitchell v. Blue Bird Body Co. (2000) 80 Cal.App.4th 32, 36 (noting that restitution remedy under Song-Beverly Act is intended “to restore ‘the status quo ante as far as is practicable…’ ”).) In this case, restitution would mean returning to Plaintiff the funds in which she had an ownership interest prior to the purchase of the Vehicle. Because Plaintiff did not have an ownership interest in the $4,000 in negative equity in the Civic, i.e., her traded-in vehicle, Plaintiff cannot recover that sum in this action. The regulation cited by Ford corroborates this conclusion by excluding recovery of finance charges “for which the consumer is jointly responsible.”

Plaintiff’s interpretation of this statute is unpersuasive for several reasons. First, the statute uses the term “restitution,” and restitution principles support the exclusion of negative equity. Second, implicit in the statute is the notion that the buyer will receive restitution for the actual price of the new motor vehicle, i.e., the lemon. The statute says nothing about restitution for rolled-over finance charges on another vehicle. Third, negative equity is arguably a “nonmanufacturer item[] installed by a dealer or the buyer.” As conceded by Plaintiff (Opp. at 15), it is the dealer, not the manufacturer, that determines whether to roll over the negative equity into the new transaction. Finally, construing this statute in the manner posited by Plaintiff would, as the district courts have noted, impermissibly result in a windfall to Plaintiff by absolving her of prior debts. This is a mischief to be avoided. (Hubbard v. California Coastal Com. (2019) 38 Cal.App.5th 119, 135-36 (noting that statutory interpretation “should be practical, not technical, and should also result in wise policy, not mischief or absurdity”).)

Assuming arguendo that the Department of Consumer Affairs (DCA) Arbitration Review Program (Memorandum) cited by Plaintiff is admissible, the Court agrees with the district courts that the Memorandum is “unavailing.” (See De Leon, supra, 2019 WL 7195325, at *4.) Its points about statutory interpretation are belied for the aforementioned reasons; and its points about equity are mixed because permitting aggrieved buyers to recover negative equity leads to the aforesaid windfall.

Plaintiff also contends that negative equity should be recoverable because Ford participates in the BBB’s Autoline dispute resolution program and, under the laws governing that program, Ford cannot lawfully deduct negative equity. The Court disagrees. The BBB Autoline rules incorporate 16 CCR section 3398.11 nearly verbatim. (Lopez Decl. Ex. A, p. 10.) Hence, under the BBB Autoline, the arbitrator should not award negative equity costs because such costs are “charges for which the consumer is justly responsible.”

b. Service Contracts Deduction

Ford deducted third party service contract costs of $3,350 from its buyback offer.

Plaintiff argues that this deduction was impermissible because it is not a deduction enumerated in section 1793.2(d)(2)(B). Plaintiff cites no judicial opinion in support of this argument.

As Ford notes, district courts have concluded otherwise. In Rupay v. Volkswagen Group of America Inc. (C.D. Cal., Nov. 15, 2012, No. CV 12-4478-GW FFMX) 2012 WL 10634428, the district court concluded that third party service contracts are excludable as “non-manufacturer items installed by a dealer or the buyer.” In Robbins v. Hyundai Motor America (C.D. Cal., Aug. 7, 2014, No. SACV 14-00005-JLS) 2014 WL 4723505, the district court applied the canon of construction ejusdem generis and concluded that third party service contract costs were not “collateral charges” within the meaning of section 1793.2(d)(2)(B) because such costs are “optional items provided by third parties” and because they provide “a benefit of coverage during the period the car was used.” (Id. at *5.) “Requiring reimbursement of charges for such coverage would not restore the status quo ante, but would result in the consumer having received a benefit for which she never paid.” (Ibid.)

The district courts’ reasoning on this issue is also well-taken. Third party service contract costs are excluded from recovery under section 1793.2(d)(2)(B) as “non-manufacturer items installed by a dealer or the buyer.” Further, recovery of such costs is antithetical to the principles of restitution because, as the Robbins court noted, such recovery would “not restore the status quo ante, but would result in the consumer having received a benefit for which never paid.” The dissimilarity of third party service contract costs to other costs enumerated in section 1793.2(d)(2)(B) reinforces these findings.

In sum, Plaintiff has not established a triable issue of material fact as to whether Ford’s buyback offer was adequate.

Conclusion

Ford’s motion for summary judgment is granted.


[1] Ford’s request for judicial notice of a Certificate of Certified Status from the California Department of Consumer Affairs – Arbitration Certification Program is denied as irrelevant.

Ford’s objection to Exhibit A of the Lopez Declaration is overruled. Ford’s objection to Exhibit B of the Lopez Declaration is sustained for lack of authentication and hearsay.

[2] Plaintiff also contends that Ford’s argument does not disturb Plaintiff’s prima facie case because the Song-Beverly Act requires the manufacturer to actually provide restitution or replacement, not simply offer to provide restitution or replacement. While the language of section 1793.2(d) arguably supports this contention by not referencing “offers” of any kind, case law has interpreted this statute differently. (See Dominguez v. American Suzuki Motor Corp. (2008) 160 Cal.App.4th 53, 58 (finding that manufacturer complied with obligations of Song-Beverly Act when manufacturer made appropriate buyback offers despite no actual restitution or replacement).)

Case Number: BC692823    Hearing Date: June 26, 2020    Dept: 32

noemi e. perez sanchez,

Plaintiff,

v.

FORD MOTOR COMPANY, et al.

Defendants.

Case No.: BC692823

Hearing Date: June 29, 2020

[TENTATIVE] order RE:

Motion for summary judgment or, alternatively, summary adjudication

Background

Plaintiff Noemi E. Perez Sanchez (Plaintiff) commenced this action against Defendant Ford Motor Company (Ford) on February 2, 2018. Plaintiff asserts causes of action for (1) violation of the Song-Beverly Act – breach of express warranty, (2) violation of the Song-Beverly Act – breach of implied warranty, and (3) violation of the Song-Beverly Act ­section 1793.2. Plaintiff alleges that she purchased a new 2016 Ford Mustang (Vehicle) on November 8, 2016. Plaintiff alleges that the Vehicle contained or developed serious transmission and electrical system defects within the express warranty period. Plaintiff alleges that she delivered the Vehicle to an authorized Ford repair facility for repair of the defects and that Ford was unable to repair the Vehicle after a reasonable number of attempts.

Statement of Facts

On November 8, 2016, Plaintiff purchased the Vehicle from Puente Hills Ford. (DUMF 1.) To finance the purchase, Plaintiff traded in her 2014 Honda Civic (Civic). (DUMF 2.) At the time of the trade-in, Plaintiff owed $14,000 dollars on her Civic loan. (DUMF 3.) Plaintiff accepted the offered value of $10,000 for the Honda Civic, and the remaining $4,000 of negative equity was added to the amount financed for the purchase of the Vehicle. (DUMF 4-5.)

On November 19, 2016, Plaintiff presented the Vehicle to Puente Hills Ford for repairs for the first time. (DUMF 6.) That same day, Puente Hills Ford returned the Vehicle to Plaintiff. (DUMF 7.)

On December 5, 2016, Plaintiff presented the Vehicle to Puente Hills Ford for repairs for the second time. (DUMF 8.) On December 9, 2016, Puente Hills Ford returned the Vehicle to Plaintiff. (DUMF 9.)

On December 15, 2016, Plaintiff presented the Vehicle to Puente Hills Ford for repairs for the third time. (DUMF 10.) On January 6, 2016, Puente Hills Ford returned the car to Plaintiff. (DUMF 11.)

On March 20, 2017, during a call with a Ford customer service representative, Plaintiff stated that she no longer wanted the Vehicle. (DUMF 12.)

On April 11, 2017, Plaintiff presented the Vehicle to Puente Hills Ford for repairs for the fourth time. (DUMF 13.) Puente Hills Ford returned the Vehicle to Plaintiff on April 28, 2017. (DUMF 15.)

On April 19, 2017, Ford sent Plaintiff a conditional settlement offer to replace or purchase the Vehicle. (Pl. Depo., Ex. 3.) In May 2017, Plaintiff indicated that she was interested in pursuing a buyback of the Vehicle from Ford and agreed to send Ford the necessary documents for Ford to process the buyback. (DUMF 16.)

On June 5, 2017, Ford sent Plaintiff a “Refund Worksheet” outlining the numbers associated with its buyback offer. (DUMF 17.) Ford’s worksheet excluded the negative equity costs and third party service contract costs from its offer. (DUMF 18.)

Plaintiff rejected Ford’s buyback offer. (DUMF 19.) Plaintiff testified at deposition that she rejected the offer because it did not provide compensation for the negative equity related to her Civic. (DUMF 20.)

Plaintiff commenced this action on February 18, 2019. (DUMF 21.)

Discussion

Ford moves for summary judgment of the Complaint or, in the alternative, summary adjudication of Plaintiff’s prayer for civil penalties under Civil Code section 1794.[1]

A. Summary Adjudication of Plaintiff’s Prayer for Civil Penalties

As Plaintiff notes, Ford’s request for summary adjudication of her civil penalties claim is improper. “A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for claims for damages, or one or more issues of duty.” (CCP § 437c(f)(1).) Under CCP section 437c(f)(1), the phrase “one or more claims for damages” is “qualified by, and limited to, punitive damages” under Civil Code section 3294. (DeCastro West Chodorow & Burns, Inc. v. Superior Court (1996) 47 Cal.App.4th 410, 421.) Because Plaintiff’s civil penalties claim does not fall within the ambit of the summary judgment statute and the parties did not jointly stipulate to adjudication of this claim (CCP § 437c(t)), Ford cannot obtain summary adjudication of this claim.

B. Summary Judgment of Plaintiff’s Causes of Action

Ford contends that it is entitled to summary judgment because it complied with its obligations under the Song-Beverly Act by promptly offering to repurchase or replace the Vehicle. Plaintiff responds that there are triable issues of material fact as to whether Ford’s buyback offer was prompt and adequate.[2]

1. Promptness of Buyback Offer

The basis for Plaintiff’s first and third causes of action is Civil Code section 1793.2(d)(2). This subparagraph states in pertinent part: “If the manufacturer or its representative in this state 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 … or promptly make restitution to the buyer….” (Emphasis added.)

Determining whether Ford’s buyback offer was prompt requires resolution of two interrelated questions: (1) how should promptness be measured and (2) was Ford’s buyback offer prompt as a matter of law?

a. Measuring Promptness

Ford contends that Plaintiff’s request for restitution or replacement triggered its obligation to tender Plaintiff a buyback offer. Plaintiff responds that Ford’s failure to repair the Vehicle after a “reasonable number of attempts” triggered Ford’s obligation to tender Plaintiff a buyback offer.

In support of her position, Plaintiff cites Krotin v. Porsche Cars North America, Inc. (Krotin) (1995) 38 Cal.App.4th 294. The Krotin court noted that, unlike the Commercial Code provisions on warranties, the Song-Beverly Act “contains no ‘reasonable time’ requirement by which the consumer must invoke the Act or lose rights granted by that statutory scheme. Rather, the Act creates an affirmative duty upon the manufacturer or its representative to provide restitution or replacement when a covered defect, i.e. a nonconformity [Citation], is not repaired after a reasonable number of attempts.” Because the Act imposes this affirmative duty on manufacturers, the Krotin court deduced that “the consumer’s request [for repurchase or replacement] is not mandated by any provisions in the Act.” (Krotin, supra, 38 Cal.App.4th at 303.) To wit, “the Act does not require consumers to take any affirmative steps to secure relief for the failure of a manufacturer to service or repair a vehicle to conform to applicable warranties — other than, of course, permitting the manufacturer a reasonable opportunity to repair the vehicle.” (Id. at 302 (emphasis in original).)

Plaintiff’s reliance on Krotin is unavailing. The issue in this motion is not whether Ford had an affirmative duty to provide, or offer to provide, restitution or replacement after failing to repair a nonconformity in the Vehicle after a reasonable number of attempts. That issue is uncontested for purposes of this motion. The issue is how to measure promptness. Krotin did not address the requirement of promptness at all. (State Farm Fire & Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 614 (“Cases are not authority for propositions not considered therein.”).)

Several district courts have adopted Ford’s stance. (De Leon v. Ford Motor Company (C.D. Cal., Nov. 13, 2019, No. CV187975PSGFFMX) 2019 WL 7195325, at *6 (collecting cases); Islas v. Ford Motor Company (C.D. Cal., July 29, 2019, No. 5:18-cv-02221-GW-SP) at *10-*11; Rivera v. Ford Motor Company (C.D. Cal., Feb. 10, 2020, No. CV1807798DSFPJWX) 2020 WL 1652534, at *6.) The logic underlying their holdings is compelling: a request for a buyback offer puts the manufacturer on notice that a buyback offer is sought and that conditions requiring a buyback may be present. Prior to a buyback offer request, the manufacturer is unable to determine that a buyback offer is sought and/or warranted. In line with these district court cases, the Court concludes that the buyer’s request for a buyback offer triggers the manufacturer’s duty to provide prompt restitution or replacement.

b. Promptness as a Matter of Law

Ford contends that its buyback offer was prompt as a matter of law. The undisputed evidence supports Ford’s contention. Ford sent Plaintiff a buyback offer 30 days after Plaintiff indicated to a Ford customer service representative that she no longer wanted the Vehicle. (DUMF 12; Pl. Depo. Ex. 3.) A buyback offer tendered within 30 days of the buyer’s request is prompt as a matter of law. (See De Leon, supra, 2019 WL 7195325, at *6 (noting that courts have found that a manufacturer makes a prompt offer when it is made within 50 days).)

Plaintiff’s reliance on Lukather v. General Motors, LLC (Lukather) (2010) 181 Cal.App.4th 1041 to show otherwise is unpersuasive. In Lukather, the buyer requested that GM repurchase his vehicle on March 8, 2007. On several occasions after making this request, the buyer was told by GM that he “would not be able” to get his money back. The buyer was then told “it would take several months for GM to decide whether to buy back” his vehicle. On April 12, 2007, after GM’s repeated delays with the buyer’s repurchase request, the buyer filed a complaint against GM. On May 23, 2007, six weeks after the lawsuit was filed, GM requested that the buyer provide GM with information about the vehicle in order to prepare a repurchase offer. On May 25, 2007, without having received further documentation, GM tendered a repurchase offer. (Lukather, supra, 181 Cal.App.4th at 1043.)

The trial court found that GM “did not act promptly in offering to repurchase the” vehicle. The appellate court affirmed. The appellate court rejected GM’s argument that the trial court erred in imposing the duty to make restitution on the “very same day it determined the [vehicle] was a lemon or in the very first call offering [the buyer] his options.” The appellate court stated that this argument mischaracterized the trial court’s rulings. The trial court had found that the buyer communicated his desire for a vehicle repurchase and “for weeks thereafter GM did not try to comply with his request, but instead tried ‘to persuade him to accept a replacement rather than the repurchase he initially and periodically requested.’ (Italics added.) Thus, the trial court found that GM stalled and frustrated [the buyer’s] attempts to obtain restitution for many weeks.” The appellate court also noted that the evidence supported the implied finding that GM had ample time in the period between March 8 and April 12, 2007 in order to comply with the Act. In support, the appellate court pointed out that it took GM two days — May 23 to May 25, 2007 — to obtain the appropriate information to calculate the repurchase offer, to make those calculations, and to send the buyer a letter with its offer. (Lukather, supra, 181 Cal.App.4th at 1049.)

In Lukather, the trial court’s promptness determination, which was upheld on appeal, was based on the manufacturer’s obvious stalling tactics and the 78-day delay between the date of the buyer’s repurchase request and the manufacturer’s repurchase offer. Accordingly, Lukather does not contradict the conclusion that a manufacturer’s repurchase offer made 30 days after Plaintiff’s repurchase request was prompt.

Plaintiff further contends that Lukather raises a triable issue of material fact as to the promptness of Ford’s finalized buyback offer. Plaintiff notes that in Lukather, GM provided a finalized offer within two days of requesting further information from the buyer. The Court disagrees. The trial court and appellate court in Lukather were plainly alarmed by GM’s dilatory tactics. GM had repeatedly attempted to deter the buyer’s repurchase request, and, after the buyer filed a lawsuit, GM had somehow put together a finalized repurchase offer despite representing, two days prior, that the buyer needed to provide further information. Plaintiff has not substantiated the same sort of game-playing here, so the same scrutiny does not apply. To the contrary, the undisputed evidence shows that Ford sent Plaintiff a conditional buyback offer on April 19, 2017, Plaintiff indicated interest in the buyback and sent Ford necessary documents in May 2017, and Ford sent Plaintiff a finalized offer on June 5, 2017. (Pl. Depo. Ex. 3, DUMF 16-17.) This undisputed evidence reflects a reasonable and prompt finalization of Ford’s buyback offer.

Plaintiff has not established a triable issue of material fact as to whether Ford’s buyback offer was prompt.

2. Adequacy of Buyback Offer

Ford’s buyback offer made two deductions from its total payout offer: (1) costs for negative equity ($4,000) and (2) costs for a third party service contract ($3,350). Plaintiff argues that these two deductions rendered Ford’s buyback offer noncompliant with the Song-Beverly Act.

When a manufacturer makes restitution for a defective new motor vehicle under the Song-Beverly Act, the manufacturer must do so in accordance with section 1793.2(d)(2)(B). That subparagraph states: “In the case of restitution, the manufacturer shall make restitution in an amount equal to the actual price paid or payable by the buyer, including any charges for transportation and manufacturer-installed options, but excluding nonmanufacturer items installed by a dealer or the buyer, and 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.” This subparagraph and subparagraph (d)(2)(A) (regarding replacement) “comprehensively address restitution; specified predelivery offset; sales and use taxes; license, registration, or other fees; repair, towing, and rental costs; and other incidental damages. None contains any language authorizing an offset in any situation other than the one specified. This omission of other offsets from a set of provisions that thoroughly cover other relevant costs indicates legislative intent to exclude such offsets.” (Jiagbogu v. Mercedes-Benz USA (2004) 118 Cal.App.4th 1235, 1243-44.)

a. Negative Equity Deduction

Ford deducted negative equity costs of $4,000 from its buyback offer because this negative equity carried over from Plaintiff’s purchase of another vehicle, the Civic.

Plaintiff contends that this deduction was improper. Plaintiff claims that negative equity is recoverable as part of the “actual price paid or payable by the buyer.” (Civ. Code § 1793.2(d)(2)(B).) Plaintiff cites no judicial opinions reaching this same conclusion.

Several district courts have considered and rejected this same argument based on general principles of restitution. The district court in De Leon notes that “[r]estoring the status quo between Plaintiff and Defendant before Plaintiff purchased the Ford Edge [i.e., the alleged lemon] does not include reimbursing Plaintiff for money owed on the Ford Fusion [i.e., the traded-in vehicle]. [Citation.] To do so would result in a windfall because Plaintiff would receive damages beyond the ‘purchase price’ of the ‘new motor vehicle.’ ” (See De Leon, supra, 2019 WL 7195325, at *4.) The district court in Gonzalez similarly opined that “[r]estoring the status quo prior to the lease transaction does not reasonably include Ford paying off debt for a trade-in that Plaintiff was responsible to pay. Restoring the status quo requires placing Plaintiff in the same debt position he was in at the time he entered into the lease agreement, which was that he owed $5,041.00 more than the value of his trade-in vehicle. To require Ford to pay an additional $5,041.00 to Plaintiff would place Plaintiff in a better position than he was in at the time he entered into the lease.” (Gonzalez v. Ford Motor Co. (C.D. Cal., Oct. 23, 2019, No. LACV1900652PAASX) 2019 WL 6122554, at *7 (citing two out-of-state authorities which arrived at the same conclusion under similar lemon law statutes).) In addition, one district court has found that negative equity was not recoverable because the Song-Beverly Act excludes reimbursement for “nonmanufacturer items installed by a dealer.” (Rivera v. Ford Motor Company (C.D. Cal., Feb. 10, 2020, No. CV1807798DSFPJWX) 2020 WL 1652534, at *5.)

Apart from citing these authorities, Ford points to 16 CCR section 3398.11, a regulation promulgated under those provisions of the Song-Beverly Act that allow manufacturers to establish nonbinding alternative dispute resolution procedures. (See Civ. Code § 1793.22(d), (e).) The regulation states that when an arbitrator concludes that a manufacturer must provide a refund, the arbitrator “shall include payment of incidental damages to the extent authorized by the applicable law including Commercial Code Sections 2711 to 2715 inclusive, and Civil Code Sections 1793.2(d)(2) and 1794(a) and (b); and shall include all reasonable repair, towing and rental car costs, any sales or use tax, license fees, registration fees, other official fees, prepayment penalties, early termination charges and earned finance charges, if actually paid, incurred or to be incurred by the consumer (but need not include charges for which the consumer is justly responsible).” (Emphasis added.) Ford claims that negative equity costs are “charges for which [Plaintiff] is justly responsible.”

The Court agrees with the district courts on this issue. The Song-Beverly Act contemplates that an aggrieved buyer can recover restitution or replacement. “The object of restitution is to restore the status quo by returning to the plaintiff funds in which he or she has an ownership interest.” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1149 (describing UCL); see also Mitchell v. Blue Bird Body Co. (2000) 80 Cal.App.4th 32, 36 (noting that restitution remedy under Song-Beverly Act is intended “to restore ‘the status quo ante as far as is practicable…’ ”).) In this case, restitution would mean returning to Plaintiff the funds in which she had an ownership interest prior to the purchase of the Vehicle. Because Plaintiff did not have an ownership interest in the $4,000 in negative equity in the Civic, i.e., her traded-in vehicle, Plaintiff cannot recover that sum in this action. The regulation cited by Ford corroborates this conclusion by excluding recovery of finance charges “for which the consumer is jointly responsible.”

Plaintiff’s interpretation of this statute is unpersuasive for several reasons. First, the statute uses the term “restitution,” and restitution principles support the exclusion of negative equity. Second, implicit in the statute is the notion that the buyer will receive restitution for the actual price of the new motor vehicle, i.e., the lemon. The statute says nothing about restitution for rolled-over finance charges on another vehicle. Third, negative equity is arguably a “nonmanufacturer item[] installed by a dealer or the buyer.” As conceded by Plaintiff (Opp. at 15), it is the dealer, not the manufacturer, that determines whether to roll over the negative equity into the new transaction. Finally, construing this statute in the manner posited by Plaintiff would, as the district courts have noted, impermissibly result in a windfall to Plaintiff by absolving her of prior debts. This is a mischief to be avoided. (Hubbard v. California Coastal Com. (2019) 38 Cal.App.5th 119, 135-36 (noting that statutory interpretation “should be practical, not technical, and should also result in wise policy, not mischief or absurdity”).)

Assuming arguendo that the Department of Consumer Affairs (DCA) Arbitration Review Program (Memorandum) cited by Plaintiff is admissible, the Court agrees with the district courts that the Memorandum is “unavailing.” (See De Leon, supra, 2019 WL 7195325, at *4.) Its points about statutory interpretation are belied for the aforementioned reasons; and its points about equity are mixed because permitting aggrieved buyers to recover negative equity leads to the aforesaid windfall.

Plaintiff also contends that negative equity should be recoverable because Ford participates in the BBB’s Autoline dispute resolution program and, under the laws governing that program, Ford cannot lawfully deduct negative equity. The Court disagrees. The BBB Autoline rules incorporate 16 CCR section 3398.11 nearly verbatim. (Lopez Decl. Ex. A, p. 10.) Hence, under the BBB Autoline, the arbitrator should not award negative equity costs because such costs are “charges for which the consumer is justly responsible.”

b. Service Contracts Deduction

Ford deducted third party service contract costs of $3,350 from its buyback offer.

Plaintiff argues that this deduction was impermissible because it is not a deduction enumerated in section 1793.2(d)(2)(B). Plaintiff cites no judicial opinion in support of this argument.

As Ford notes, district courts have concluded otherwise. In Rupay v. Volkswagen Group of America Inc. (C.D. Cal., Nov. 15, 2012, No. CV 12-4478-GW FFMX) 2012 WL 10634428, the district court concluded that third party service contracts are excludable as “non-manufacturer items installed by a dealer or the buyer.” In Robbins v. Hyundai Motor America (C.D. Cal., Aug. 7, 2014, No. SACV 14-00005-JLS) 2014 WL 4723505, the district court applied the canon of construction ejusdem generis and concluded that third party service contract costs were not “collateral charges” within the meaning of section 1793.2(d)(2)(B) because such costs are “optional items provided by third parties” and because they provide “a benefit of coverage during the period the car was used.” (Id. at *5.) “Requiring reimbursement of charges for such coverage would not restore the status quo ante, but would result in the consumer having received a benefit for which she never paid.” (Ibid.)

The district courts’ reasoning on this issue is also well-taken. Third party service contract costs are excluded from recovery under section 1793.2(d)(2)(B) as “non-manufacturer items installed by a dealer or the buyer.” Further, recovery of such costs is antithetical to the principles of restitution because, as the Robbins court noted, such recovery would “not restore the status quo ante, but would result in the consumer having received a benefit for which never paid.” The dissimilarity of third party service contract costs to other costs enumerated in section 1793.2(d)(2)(B) reinforces these findings.

In sum, Plaintiff has not established a triable issue of material fact as to whether Ford’s buyback offer was adequate.

Conclusion

Ford’s motion for summary judgment is granted.


[1] Ford’s request for judicial notice of a Certificate of Certified Status from the California Department of Consumer Affairs – Arbitration Certification Program is denied as irrelevant.

Ford’s objection to Exhibit A of the Lopez Declaration is overruled. Ford’s objection to Exhibit B of the Lopez Declaration is sustained for lack of authentication and hearsay.

[2] Plaintiff also contends that Ford’s argument does not disturb Plaintiff’s prima facie case because the Song-Beverly Act requires the manufacturer to actually provide restitution or replacement, not simply offer to provide restitution or replacement. While the language of section 1793.2(d) arguably supports this contention by not referencing “offers” of any kind, case law has interpreted this statute differently. (See Dominguez v. American Suzuki Motor Corp. (2008) 160 Cal.App.4th 53, 58 (finding that manufacturer complied with obligations of Song-Beverly Act when manufacturer made appropriate buyback offers despite no actual restitution or replacement).)

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