A recent appellate opinion from the Fourth District, Division Two, Rodriguez v. FCA US LLC (2022) 77 Cal.App.5th 209, changes the definition of a “new motor vehicle” in California’s Song-Beverly Consumer Warranty Act (“Act”) thereby limiting the number of consumers who can avail themselves of the Act. Courts have previously held that the Act is “manifestly a remedial measure, intended for the protection of the consumer; it should be given a construction calculated to bring its benefits into action.” Murillo v. Fleetwood Enterprises, Inc. (1998) 17 Cal.4th 985, 990.
Many consumers purchase previously owned vehicles that are still covered by the manufacturers’ express new car warranties. For example, a consumer might purchase a vehicle that was previously leased for two years, and, as part of the sale, receive the remaining balance of the manufacturer’s new car limited warranties. Prior to Rodriguez, the subsequent consumer would be afforded the same protections as the first consumer, with the Act serving as an enforcement mechanism requiring the manufacturer to live up to its warranties. However, the Rodriguez Court held the subsequent consumer is not protected under the Act despite the existence of an express warranty from the manufacturer. As a result, the subsequent owner is in the unlucky position of owning a car covered by a warranty without any means to require the manufacturer to fulfill its warranty obligations. California’s Supreme Court has granted review in Rodriguez and has the opportunity to return California consumers to the status quo ante.
A Brief History of the Song-Beverly Consumer Warranty Act
Prior to 1970, a California consumer who purchased a defective consumer good would have little recourse other than what was provided under the Uniform Commercial Code and at common law.[1] The Legislature enacted the Song-Beverly Consumer Warranty Act in 1970, following investigations and hearings by the California Senate Business and Professions Committee.[2] The Committee found that warranties issued by manufacturers of consumer goods were not only confusing and misleading, but also that retailers rarely accepted responsibility for performing repairs under warranty.[3] California Senator Alfred Song, co-author of the Act, indicated that the purpose of creating the Act was to establish “legal weapons” for consumers to combat manufacturers’ pervasive practice of issuing warranties at the time of sale as “little more than sales gimmicks.”[4] Since the Act was passed, it has been expanded and refined through new legislation and decades of court decisions.
One such statutory expansion, specifically designed to protect buyers of motor vehicles with express warranties from the manufacturer, is the remedy in section 1793.2(d)(2), which requires a manufacturer to “promptly replace” a vehicle or “promptly make restitution” to the consumer for the purchase price when the manufacturer fails to repair a vehicle under warranty after a reasonable number of repair attempts. This “replace or reimburse” remedy is “[o]ne of the [Act’s] most significant protections” for car buyers. Martinez v. Kia Motors America, Inc. (2011) 193 Cal.App.4th 187, 191. The manufacturer is required to brand the title of any vehicle returned as a “Lemon Law Buyback” and disclose the same to any subsequent purchaser. Civ. Code §1793.23(c)-(e).
Since it was enacted, courts have held the Act provides more extensive consumer protections than the California Commercial Code. Jiagbogu v. Mercedes-Benz USA, LLC (2004) 118 Cal.App.4th 1235, 1240. Additionally, courts have described the purpose of the Act as being to deliver to California consumers the benefits of additional protections and should be construed by the courts to carry out this objective. Joyce v. Ford Motor Co. (2011) 198 Cal.App.4th 1478, 1486. Unfortunately, Rodriguez forces subsequent purchasers, who have enjoyed the benefits of the Act for decades, to rely on the UCC and common law – the very remedies the Legislature found inadequate in 1970.
New Changes to the Song-Beverly Consumer Warranty Act
Before Rodriguez, the replace or reimburse remedy in section 1793.2(d)(2) was applicable to “a new motor vehicle” as defined in section 1793.22(e)(2), which includes “a dealer-owned vehicle and a ‘demonstrator’ or other motor vehicle sold with a manufacturer’s new car warranty …” Civ. Code § 1793.22(e)(2) (underline added). The meaning of the underlined phrase was settled nearly 30 years ago when the Jensen Court held “the words of section 1793.22 are reasonably free from ambiguity and cars sold with a balance remaining on the manufacturer’s new motor vehicle warranty are included within its definition of ‘new motor vehicle.’” Jensen v. BMW of North America, Inc. (1995) 35 Cal.App.4th 112, 127. The Court held that this reading of the Act “merely reflects the Legislature’s intent to make car manufacturers live up to their express warranties, whatever the duration of coverage.” Id.
In Rodriguez, the Court conversely held that section 1793.22’s definition of new motor vehicle “unambiguously refers to cars that come with a new or full express warranty” and “not to previously sold cars accompanied by some balance of the original warranty.” Rodriguez 77 Cal.App.5th at 222, 225. The Court’s holding eliminates the replace or reimburse remedy previously available to subsequent purchasers of cars warranted by a manufacturer and runs contrary to the spirit of the Act and subsequent case law. This holding could incentivize car manufacturers to breach their duties under the Act by waiting for defective vehicles to enter the used-car market to be resold, without branded titles, to unwitting consumers who cannot rely on the protections of the Act, resulting in an increased number of defective vehicles on California streets. The California Supreme Court is urged to give the Act a construction calculated to bring its benefits into action by affirming the definition of “new motor vehicle” in Jensen.
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[1] Eileen K. Jenkins, Consumer Protection: The Effect of the Song-Beverly Consumer Warranty Act, 4 Pac. L. J. 183 (1973). Available at: https://scholarlycommons.pacific.edu/mlr/vol4/iss1/16
[2] The Law and Society Reader II 112 (Erik Larson & Patrick Schmidt eds., 2014).
[3]Id.
[4]Id. at 113.
