DeNike v. Mathew
Enterprise, Inc., 76 Cal.App.5th 371, H046420 (Mar. 16, 2022)
DeNike bought a 2014
Jeep Wrangler with a hardtop from defendant. Soon after, DeNike discovered that
the vehicle was originally manufactured as a soft top and that the hardtop had
been installed at some point after it left the factory. Before buying, DeNike asked
if everything on the vehicle was “factory installed” and the salesman assured
him it was. After purchase, problems quickly developed with the wipers, and he
soon found that the hardtop had been installed, improperly, after the vehicle
left the factory.
DeNike ultimately
filed a lawsuit and a jury found in favor of DeNike on his claims under the
Consumers Legal Remedies Act and the Song-Beverly Consumer Warranty Act, and
for intentional misrepresentation. The trial court issued a permanent
injunction against SCJ and awarded DeNike attorney fees.
The court of appeals
found the restitution claim under the CLRA was barred because of defendant’s
offers of correction before suit, but sustained the rest of the verdict,
including permanent injunctive relief. DeNike’s counsel wrote to defendant asking
for rescission of the purchase agreement, payment of the vehicle loan, plus
attorney fees and costs pursuant to the CLRA. Several weeks later, defendant offered
to: (1) repair the vehicle if DeNike still wanted it, and provide a loaner
vehicle while it was repaired; or (2) rescind the purchase agreement, refund
all payments DeNike had made, pay off the remaining balance on the vehicle,
reimburse DeNike for any repairs or out-of-pocket costs, and pay DeNike’s
“reasonable attorney’s [sic] fees.” “The parties exchanged additional letters
seeking to resolve the dispute, but negotiations ultimately failed when they
could not reach an agreement on the amount of attorney fees.”
The jury awarded $36,192.79,
consisting of $26,001.61 for restitution/rescission, plus incidental damages of
$10,191.18. The trial court enjoined defendant from: “a. selling a new vehicle
that has been modified, and/or had additions made to it, from its
factory-delivered condition without an addendum sticker attached to the vehicle
disclosing such modification and/or addition as required by law; and b. failing
to disclose to a customer as required by law the fact or existence of a
modification and/or addition having been made to a new vehicle from its
factory-delivered condition before the customer enters into a written agreement
to purchase the vehicle.” The trial court further ordered it to “implement
policies, procedures, and training to apprise its employees of, and to ensure
compliance with” the terms of the injunction.
The CLRA provides:
“[N]o action for damages may be maintained … if an appropriate correction,
repair, replacement, or other remedy is given, or agreed to be given within a
reasonable time, to the consumer within 30 days after receipt of the notice.”
This provision extends to restitution. Though it’s true that damages and
restitution are different remedies, the specific language and structure of the
law counseled in favor of reading “damages” capaciously, including the statute’s
goal to “facilitate precomplaint settlements of consumer actions wherever
possible.” “If an appropriate offer of correction under section 1782,
subdivision (b) applies only to bar claims for monetary damages, that
provision’s safe harbor is neutered.”
However, the
evidence supporting the misrepresentation verdict was sufficient; the jury
appropriately found that DeNike reasonably relied on the representation that
the vehicle had a “factory installed” hardtop. [DeNike was apparently aided by
his practice of taking notes on his entire buying journey, apparently including
at different dealers, which certainly validates some of my spouse’s habits.]
Also, there was no need
to instruct the jury that DeNike had to show “impaired safety” in order to
prevail on his cause of action for violation of an implied warranty under the
Song-Beverly Act. It was enough on this element that the vehicle did not have
the quality that a buyer would reasonably expect. The implied warranty
certainly covers safety, but that’s not all; it also has to “[c]onform to the
promises or affirmations of fact made on the container or label.” Even if that
makes Song-Beverly duplicative of other California statutes prohibiting false
advertising, it expressly provides that its “remedies ... are cumulative and
shall not be construed as restricting any remedy that is otherwise available.”
And injunctive
relief under the CLRA was appropriate. The trial court noted that “the
viability of injunctive relief here comes down to the extent of the threat of
continuing CLRA violations as established by the evidence.” It commented that
defendant “offered no facts or theories at trial to explain just how the Jeep
came to be sold to DeNike in its altered or modified condition or why there was
no internal documentation reflecting replacement of the original soft top with
the [hardtop] and no accurate addendum affixed reflecting this change and the
costs associated with it.” Given “the void in the evidence about how or why
this occurred; the inconsistent understanding on the part of defendant’s
employees of internal documentary systems that arguably should have prevented
the sale of the vehicle to DeNike in violation of the CLRA; and the seeming
lack of recognition by defendant of the need to ensure its policies and
procedures are sufficient to not just capture profit but to also satisfy full
and accurate disclosure and compliance with the law,” injunctive relief was
warranted.
Defendant argued
that injunctive relief was improper because: (1) DeNike “received a benefit”
due to its failure to charge him for the dealer-installed hardtop; (2) there
was no evidence to support DeNike’s expressed desire not to have any
dealer-installed features based on his fear of potential effects on the
manufacturer’s warranty; and (3) there was no evidence the violation was likely
to recur. But defendant’s own failure to explain what happened, along with the
rest of the evidence, supported the injunction.
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