grudge litigation over warranties with no harm leads to fee award

Grundman v. Tranik Enters., Inc., 2021 WL 565813, 2d Civil No. B297024 (Cal. Ct. App. Feb. 16, 2021)

“This appeal concerns the sale of four luxury watches and a buyer who suffered no cognizable injury. The watches work and there was nothing wrong with the internet sales of these watches.” How’s this going to go?

The watches were sold without the manufacturer’s express warranty but the seller, AuthenticWatches.com, provided its own warranty. Grundman sued under the CLRA, the federal Magnuson-Moss Consumer Warranty Act, California’s Grey Market Goods Act, and its Song-Beverly Consumer Warranty Act. The complaint alleged that Tranik posted watch manufacturer trademarks and logos on AuthenticWatches.com but did not disclose the watches were not eligible for authorized service from the manufacturer. After granting summary judgment (and judgment on the pleadings for the Grey Market Goods claim), the trial court awarded Tranik over $177,000 in attorney’s fees, finding that Grundman brought the action in bad faith on behalf of her husband Fulda, who had a “blood feud” with Tranik.

The feud included Fulda’s purchase of AuthenticWatches.online as an internet domain; filing of a  trademark application for AuthenticWatches.com; and creation of an Amazon.com storefront using the name “AuthenticWatches.com” advertising watches with a link to AuthenticWatches.online. Unsurprisingly, that triggered a federal lawsuit.

Ultimately, Grundman bought four watches, and demanded a refund as soon as they were delivered because they didn’t come with a manufacturer’s warranty even though AuthenticWatches.com provided its own warranty. Fulda was deposed and stated that he spent “close to a million dollars on legal fees” in his vendetta against Tranik, which started when he had to pay a $150 shipping fee as part of their very first watch dispute in 2013.

“The Grey Market Goods Act requires that trademarked goods imported by someone other than the manufacturer’s authorized United States distributor without a warranty valid in the United States be sold with a conspicuous disclosure.” There’s no standalone cause of action; instead, the remedy is to sue under the UCL or CLRA. Judgment on the pleadings was appropriate because this claim duplicated the CLRA claim.

CLRA: Grundman didn’t show reliance—or harm causation. She testified that she didn’t read or recall reading the AuthenticWatches.com disclosures, but bought the watches to help Fulda’s vendetta. The watches were in good working order and she didn’t return them. There was thus no reliance or cognizable injury. The court pointed out that the site’s “Authenticity and Service Guarantee” disclosed that: “ ‘We are not, nor are we affiliated with authorized dealers of any of the timepiece manufacturers advertised.’ ” It further disclosed that “ ‘AuthenticWatches.com does not sell products in accordance to manufacturer suggested retail pricing, therefore, the warranty of merchantability provided is directly through AuthenticWatches.com.’ ” Though she claimed the watches were counterfeit, she testified that she did not know whether they were. “Missing here is the deceptive sales representation, reliance on that representation, and economic damage.” She argued that the watches were worth less without a manufacturer’s warranty, but there was no evidence of that, not even an appraisal.

Appellant did not present the watches for repair or refund, and for good reason. Fulda had the watches tested, found no timekeeping defects, and wore one of the watches to his deposition. Fulda said the watch keeps good time and that he wears it regularly because it is one of his favorite watches.

(He also said: “[m]oney is no object. I want to make as big a mess of this as possible.”) Yeah, I would probably have awarded fees too.

“To sue for a Song Beverly Warranty Act violation, appellant must present the watch for repair.” She didn’t. That also got rid of the MMWA claim.