DEFENDING CALIFORNIA LEMON LAW CASES
By Vanessa Case
June 2010
California's Song-Beverly Act is a consumer protection law covering all consumer
goods, including motor vehicles. In the motor vehicle context, the Song-Beverly Act is
frequently referred to as California's "lemon law." The act creates rules governing warranties
on consumer goods and outlines the penalties for breaching both express and implied warranties.
This article will address key issues that arise in the defense of lemon law cases and tips for
dealing with them during the course of litigation.
Application of State Law
The moment a lemon law case hits your desk, pay close attention to the facts surrounding
the sale of the vehicle. Did plaintiff purchase the vehicle in California? If not, where did the
actual purchase occur? Consumers will often purchase vehicles, particularly costly vehicles,
from a state with a lower sales tax and later transport the vehicle to California. This may raise
choice of law issues. If you represent a retailer, request the complete deal jacket immediately.
Carefully review the complaint and sales documents to determine whether to challenge venue
and to determine all applicable state law. Song-Beverly strongly favors consumers. Other states,
such as Arizona, place greater obligations on consumers to notify manufacturers or retails of
alleged warranty breaches. Your initial analysis should always include an evaluation of
potentially applicable law and whether your client should challenge the state law selected by
plaintiff via a motion for summary judgment.
Prepare Your Defenses
Read the Song-Beverly Act in its entirety to get the big picture. Then read through CACI
instructions 3200 through 3244 and VF-3200 through VF-3206 to review the specific elements
plaintiff must prove under the Act. The instructions will also alert you to significant law for
your case. Note that some of your client's affirmative defenses in the answer will be unique to
this area of law, such as the consumer's unreasonable or unauthorized use of the vehicle or
disclaimer of the implied warranties.
Waiver Language
Before you file your clients' answer, obtain a copy of the sales documents and any
written warranties pertaining to the product. Carefully read the fine print. Is there language
waiving express or implied warranties? Any waiver of Song-Beverly provisions, except as
expressly provided in the Act, shall be deemed contrary to public policy and shall be
unenforceable and void. California Civil Code ß 1790.1.
The implied warranty of merchantability is implied in the sale of all consumer goods and
warrants that the goods are fit for their ordinary purpose. The implied warranty of fitness for a
particular purpose accompanies the sale of goods where the seller of consumer goods knows or
has reason to know that the goods are required for a particular purpose, and that the buyer is
relying on the retailer's or distributor's skill or judgment to select or furnish goods. Under these
circumstances, the implied warranties will accompany the sale, whether an express warranty
exists or not.
Song-Beverly allows a disclaimer of implied warranties only where a written disclaimer
includes specific language under Civil Code ßß 1792.3 and 1792.4. For the disclaimer to apply,
the vehicle must be accompanied by a conspicuous writing attached to the goods which clearly
informs the buyer, prior to the sale, in simple and concise language of each of the following: (1)
The goods are being sold on an "as is" or "with all faults" basis. (2) The entire risk as to the
quality and performance of the goods is with the buyer. (3) Should the goods prove defective
following their purchase, the buyer and not the manufacturer, distributor, or retailer
assumes the entire cost of all necessary servicing or repair. Disclaimers of this
language or a simple statement that the vehicle is sold "as is" will not be enforced
for the purposes of Song-Beverly.
Although the implied warranty of merchantability may be disclaimed by the
manufacturer or retailer in a conspicuous writing, the implied warranties may not be
limited, modified or disclaimed if the sale is accompanied by express warranties. Civil
Code ß 1793.
If you locate disclaimer language in the sales documents, be sure to include it as an
affirmative defense and recommend a motion for summary judgment and/or summary
adjudication, depending on whether plaintiff's causes of action include breach of express
warranty or only allege breach of implied warranties.
Length of Warranties and Statute of Limitations
The length of an express warranty is generally set forth in the language of the express
warranty. In the motor vehicle context, manufacturers almost always include a fixed warranty
period. The duration of an implied warranty on new vehicles varies from 60 days to one year. If
the express warranty is of a reasonable duration within that range, the duration of the implied
warranties will be coextensive with that of the express warranty. If no express warranty exists,
or if the express warranty is silent as to duration, the implied warranties will be in effect for one
year. Civil Code ß 1791.1.
The durations of implied warranties for used vehicles is much shorter. Where the express
warranty accompanying the sale is of a reasonable duration of 30 days to three months, the
express and implied warranties are of the same duration. Where the duration is not specified, the
duration of implied warranties for used vehicles is three months. Civil Code ß 1795.5.
Song-Beverly does not contain its own statute of limitations. California courts apply the
four year Uniform Commercial Code statute of limitations for warranty causes of action, found
in Cal. Com. Code ß 2725 (a). The statute runs from the moment the breach occurred, even if the
plaintiff was unaware of the breach at the time. Com. Code ß 2725(b). The breach generally
occurs when tender of delivery is made. However, where a warranty expressly extends to future
performance and the discovery of the breach cannot be made until the time of such performance,
the cause of action accrues when the breach is or should have been discovered. Id.
Retailer, Manufacturer or Lender.
Under Song-Beverly, the consumer can sue the retailer, distributor or manufacturer of
consumer goods, as well as any lender that provides financing for the vehicle's purchase.
Possible Sources of Indemnity
The express warranty can only be breached by the parties to that agreement. For
example, a retail seller cannot be liable for breach of the manufacturer's express warranty. The
implied warranty of merchantability applies to both the retail seller and manufacturer. However,
the retail seller has a statutory right of indemnity from the manufacturer under Civil Code ß
1792. No such statutory right of indemnity attaches to breach of the implied warranty of fitness
for a particular purpose. The implied warranty of fitness depends on the knowledge of the
manufacturer or retailer regarding the consumer's intended use of the product, whereas the
implied warranty of merchantability pertains to whether the vehicle is fit for its ordinary use.
From a policy perspective, it is easy to see why the statutory right of indemnity only applies to
the warranty of merchantability, since breach of that warranty is most likely due to
manufacturing and/or design defects.
The retailer may also have an additional basis for tendering its defense and indemnity to
the manufacturer in certain circumstances. For example, under Civil Code ß 1793.5, where a
manufacturer makes express warranties but fails to provide statutorily mandated service and
repair facilities in California, the manufacturer shall be liable to every retail seller of the
manufacturer's goods who incurs obligations in giving effect to the express warranties. Civil
Code 1793.5 also provides specific remedies to the retailer, depending on the actions the retail
seller took. The retail seller may be reimbursed for the cost of replacing the vehicle,
reimbursement to the consumer and service and repair. The remedies include additional
expenses incurred by the retail seller in the course of enforcing the express warranty terms. The
manufacturer is similarly liable to service and repair facilities for the costs of warranty repairs
under Civil Code ß 1793.6.
In cases where a retailer or entity providing vehicle repair services
("independent serviceman") is injured by the willful or repeated violation of Song-
Beverly, the retailer or independent serviceman may bring an action for the recovery
of damages. Judgment may be entered for three times the amount at which the
actual damages are assessed plus reasonable attorney fees. Civil Code ß 1794.1.
When representing a retailer, this can be particularly valuable, for instance, where the
manufacturer consistently distributes a defective product and refuses to reimburse the
retailer for warranty repairs.
The Interplay Between Song-Beverly and the California Commercial Code
Song-Beverly's Supplemental Provisions
Song-Beverly supplements, rather than supercedes, the provisions of the California
Commercial Code. Its remedies are available in addition to those available to a consumer under
the Commercial Code. Where provisions of the Commercial Code conflict with the rights
guaranteed to buyers of consumer goods under Song-Beverly, the provisions of Song-Beverly
shall prevail.
Notification Requirements
The Commercial Code places certain obligations on the plaintiff to notify the seller of
nonconformities in order to recover Commercial Code remedies. Under Commercial Code ß
2602, a plaintiff must reject the nonconforming goods prior to acceptance to avoid responsibility
for the purchase price. The rejection must occur "within a reasonable time after their delivery or
tender." Under ß 2607, a buyer must notify the seller of any breach within a reasonable time
after the buyer discovers or should have discovered the breach. At least one recent opinion has
held that these notification requirements do not apply to a cause of action under Song-Beverly.
Mexia v. Rinker Boat Company, Inc. (2009) 174 Cal.App.4th 1297. However, the court noted
that the Commercial Code provisions did not apply to plaintiff's claims, even if the Commercial
Code sections might apply in some case arising under the Song-Beverly Act.
Express Warranties
Song-Beverly requires that express warranties be in writing for consumers to reap the
benefits of Song-Beverly's pro-consumer remedies. The Act also provides very specific
obligations for manufacturers or other entities that issue express warranties. Civil Code ßß
1790.3; 1791.2. The Commercial Code permits a party to recover for breach of an oral express
warranty. Commercial Code ß 2313. If a plaintiff alleges breach of an oral express cause of
action, his or her remedies will be limited to those available under the Commercial Code.
Similarly, plaintiff must meet the notification requirements, depending on the remedies sought.
Different Remedies
Although Song-Beverly refers to certain Commercial Code remedies, it also makes
substantial additional remedies available to consumers, including costs, attorneys' fees and civil
penalties.
Used Vehicles
There is a common misconception that lemon laws do not apply to used vehicles in
California. While the Song-Beverly Act provides greater consumer protection for the sale of
new consumer goods, Civil Code ß 1795.5 states that, subject to specific exceptions, "the
obligation of a distributor or retail seller of used consumer goods in a sale in which an express
warranty is given shall be the same as that imposed on manufacturers under this section." 1795.5
also shortens the duration for implied warranties accompanying the sale of used goods. It does
not limit the definition of "used goods" to good manufactured within a specific time
period before the alleged defects arose. It is more common for the sale of used
goods to be accompanied by disclaimer language, since the implied warranties are
still in effect long after the express warranty expires.
Determine Whether the Vehicle Is A "New Motor Vehicle" Under the Tanner Act
The Tanner Consumer Protection Act applies only to the sale of new vehicles.
The act includes a rebuttable presumption regarding defects. Civil Code ß 1793.22.
The Act presumes that the a reasonable number of attempts have been made to
conform a new vehicle to applicable express warranties if one or more of the
following events occur within 18 months of delivery to buyer or 18,000 miles, whichever is earlier: (1) the nonconformity creates a condition likely to cause death or
serious injury, the nonconformity has been tendered for repair two or more times and
the buyer or lessee has notified the manufacturer of the need to repair at least once;
(2) the vehicle has been subject to repair four or more times for the same
nonconformity and the buyer has notified the manufacturer of the need for repair;
(3) the vehicle is out of service for repair of the non-conformities for more than 30
calendar days since delivery to buyer. The owner may be required to notify the
manufacturer or retailer of the nonconformity if the warranty or owner's manual
clearly states the proper mailing address for notification and provides instructions for
sending notification.
If plaintiff demonstrates that the vehicle was defective under the Tanner Act, the burden
shifts to defendant to show (1) that the vehicle was subject to fewer than four repairs for the
same nonconformity, (2) the nonconformity was not likely to cause death or serious injury and
the vehicle was repaired two to three times for the same non-conformity or (3) the vehicle was
out of service for repair of the non-conformities for less than 30 calendar days or was out of
service for some reason other than repair of the nonconformities. The nature of defendant's
rebuttal will depend on plaintiff's allegations regarding the nonconformities.
Always check plaintiff's complaint and discovery responses in new vehicle lemon law
cases to determine whether the Tanner Act will apply and how your client will present evidence
rebutting a presumption that the vehicle was defective.
Damages, Costs and Fees
Civil Code ß 1794 sets forth the damages available to Song-Beverly plaintiffs. Available
damages include the right to replacement or reimbursement, incidental and
consequential damages, cost of repairs, damages under Commercial Code ßß 2711,
2712, 2713, 2714 and 2715. Buyers may also recover an additional civil penalty of
twice the amount of actual damages if plaintiff proves that the violation was willful.
However, the civil penalty provision does not apply to claims based solely on breach
of implied warranties. Civil penalties are sometimes awarded by juries, but it is often
challenging for a plaintiff to prove that violations of the act were willful.
A prevailing buyer is entitled to recover costs and expenses incurred in
connection with the case, including reasonable attorney's fees, filing fees, expert
witness fees. The Act does not permit the prevailing retailer, manufacturer or lender
to recover similar fees. The availability of costs and fees should be taken into
account when formulating a discovery plan and early settlement strategy.
Magnuson-Moss and Federal Court Lemon Law Claims
Vehicles are frequently purchased in one state and transported to another. If that is the
case, plaintiff may file the claim in federal Court based on both diversity and federal question
jurisdiction. Generally, plaintiffs will include a claim under the federal Magnuson-Moss
Warranty Act in federal cases. It can also be asserted in California courts to bolster a plaintiff's
claim for breach of warranty.
Magnuson-Moss, which regulates the contents, durations and requirements of consumer
warranties, is generally consistent with the Song-Beverly Act. However, Magnuson-Moss
covers a larger class of plaintiffs, beyond the "buyer of consumer products" defined in Song-
Beverly. Consumers under Magnuson-Moss can include the buyer, any person to whom the
goods are transferred during the warranty period, or any other person designated by the terms of
the warranty. Unlike Song-Beverly, Magnuson-Moss also disallows a waiver of implied
warranties if a written warranty exists. Similarly, if the dealer or manufacturer sells a service
contract to the consumer within 90 days of the sale, any waiver of implied warranties will be
void. Song-Beverly creates greater and more specific remedies for purchasers of consumer
goods and is more likely to form the primary basis of a California lemon law claim.
Causes of Action That May Accompany a Lemon Law Claim
A Song-Beverly case is often accompanied by additional consumer protection law claims,
often allowing plaintiff's to recover additional attorney's fees, civil penalties and cumulative
damages. Common provisions to look for include: (1) The Consumer Legal Remedies Act (Civil
Code ß 1750, et seq.); (2) The Rees-Levering Motor Vehicle Sales and Finance Act (Civil Code
ß2981, et seq.) and (3) California Business & Professions Code ßß 17200 and 17500 (False
Advertising). Know these rules and their accompanying remedies so that you will be prepared
to respond if your client is served with an amended complaint.
Conclusion
The Song-Beverly Act is a lengthy and labrynthine collection of statutes. Understanding
the Act and how it applies to your client is essential from the moment your client is served with
the complaint. This article provides a general overview of key issues in defending lemon law
cases, but it is by no means exhaustive. The economic downturn and subsequent bankruptcy
filings by manufacturers has led to more aggressive claims against retailers and lenders.
Therefore, we recommend that you keep apprised of the developing case law and its impact on
your case.
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