Appellate Review

Lemon Law: a “new motor vehicle” means a vehicle sold by a new-car dealer for the first time, not just one sold with an unexpired manufacturer’s warranty. Also, the sophisticated-user defense in products liability

2024 December

Song-Beverly Consumer Warranty Act; definition of “new” car subject to act

Rodriguez v. FCA US, LLC (2024) __ Cal.5th __ (Cal. Supreme)

The Song-Beverly Consumer Warranty Act provides buyers of new motor vehicles with specific remedies when a vehicle turns out to be defective. (Civ. Code, § 1791 et seq.) Section 1793.2, subdivision (d)(2) gives new car buyers what is known as a refund-or-replace remedy: It requires manufacturers to “promptly replace” a defective new motor vehicle or “promptly make restitution” to the buyer when the manufacturer is “unable to service or repair a new motor vehicle, as that term is defined in paragraph (2) of subdivision (e) of Section 1793.22, to conform to the applicable express warranties after a reasonable number of attempts.” These enhanced remedies under the Act for breach of express warranty are “distinct from” and “in addition to” remedies otherwise available in contract under the California Uniform Commercial Code. (Niedermeier v. FCA US LLC (2024) 15 Cal.5th 792, 810, 811.)

Section 1793.22, subdivision (e)(2) defines “new motor vehicle” to include a new vehicle “bought or used primarily for personal” purposes as well as “a dealer-owned vehicle and a ‘demonstrator’ or other motor vehicle sold with a manufacturer’s new car warranty.”

Plaintiffs Everardo Rodriguez and Judith Arellano bought a two-year-old car with over 55,000 miles on it. The car had an unexpired manufacturer’s new car warranty. The car repeatedly experienced engine problems despite numerous repair attempts by defendant FCA US, LLC (FCA). Plaintiffs sued FCA to enforce the refund-or-replace provision, claiming that their car was a “new motor vehicle” because it was a “motor vehicle sold with a manufacturer’s new car warranty” FCA argued that the refund-or-replace remedy does not apply because plaintiffs’ car was not a “new motor vehicle.” The trial court and Court of Appeal agreed with FCA. The Supreme Court did, as well.

It concluded that a motor vehicle purchased with an unexpired manufacturer’s new car warranty does not qualify as a “motor vehicle sold with a manufacturer’s new car warranty” under section 1793.22, subdivision (e)(2)’s definition of “new motor vehicle” unless the new car warranty was issued with the sale.

The Act’s definition of a “new motor vehicle” makes clear that certain used cars – “a dealer-owned vehicle and a ‘demonstrator’ or other motor vehicle sold with a manufacturer’s new car warranty” – qualify as “new motor vehicles” for purposes of the statute. (§ 1793.22, subd. (e)(2).) The meaning of the disputed phrase is informed by the specific mention of dealer-owned vehicles and demonstrators as examples of a “motor vehicle sold with a manufacturer’s new car warranty.” (Ibid.) As the Court of Appeal explained, “What makes these vehicles unique is that even though they aren’t technically new, manufacturers (or their dealer-representatives) treat them as such upon sale by providing the same type of manufacturer’s warranty that accompany new cars.” In other words, they are vehicles for which a new car warranty “was issued with the sale.”

As the Supreme Court noted, dealer-owned and demonstrator vehicles are not warranted before the sale. Citing FCA’s argument, the Court explained, “In every case, the first customer to purchase or lease a demonstrator or dealer-owned vehicle receives a new warranty arising in that transaction, directly from the manufacturer ....” In other words, a warranty in this context is a guarantee made by the manufacturer to a retail buyer. Before a sale transaction, there is no such warranty to speak of; the manufacturer or its dealer representative owns the car. The sale of a dealer-owned vehicle or demonstrator to a retail buyer is what gives rise to a new car warranty. “Thus, . . . whether the manufacturer ‘reinstates’ the original warranty period, ‘extends’ the warranty’s mileage, or simply sells the vehicle with a warranty arising in that first retail transaction, demonstrators – unlike preowned cars – are always sold to the first retail buyer ‘with a manufacturer’s new car warranty.’”

“Like the Court of Appeal, we think that if the Legislature had intended to define “‘new motor vehicle’ to include a potentially vast category of used cars” with unexpired new car warranties, “it would have been done so more clearly and explicitly than tucking it into a reference to demonstrators and dealer-owned vehicles.”

Judicial-disqualification motions; timing; waiver or forfeiture of timing requirement

North American Title Co. v. Superior Court of Fresno County (Cortina): (2024) __ Cal.5th __ (Cal. Supreme)

Section 170.3(c)(1) of the Code of Civil Procedure states that a party who seeks to disqualify a trial court judge by filing a verified statement of disqualification must do so “at the earliest practicable opportunity after discovery of the facts constituting the ground for disqualification.” But section 170.3(b)(2) provides that, notwithstanding a party’s general ability to waive a disqualification, “[t]here shall be no waiver of disqualification if the basis therefor” falls into one of two categories, one of which is that “[t]he judge has a personal bias or prejudice concerning a party” (§ 170.3, subd. (b)(2)(A)).

The Court granted review to decide whether the nonwaiver provision precludes application of the timeliness requirement when a party alleges that a judge is disqualified due to bias or prejudice concerning a party. In its opinion below, the Court of Appeal held that it does. According to the Court of Appeal, the nonwaiver provision must be read “to prohibit all forms of waiver, including implied waiver due to untimeliness.” Under the court’s reading of the statute, a party alleging bias or prejudice cannot “waive[ ]” its right to seek judicial disqualification, even when the claim is asserted long past the point of “discovery of the facts constituting the ground for disqualification” and, for that reason, is not required to assert its claim of judicial bias “at the earliest practicable opportunity.” (§ 170.3(c)(1).)

The Supreme Court disagreed. In its view, the Court of Appeal’s interpretation of the statute conflates the concepts of waiver and forfeiture, and extends the statute’s prohibition on waiver to scenarios where forfeiture based on failure to comply with the timeliness requirement may properly be found. As the statutory text, structure, legislative history, and case law make clear, the nonwaiver provision of section 170.3(b)(2) applies only in circumstances in which “a judge [has] determine[d] himself or herself to be disqualified” and, absent an explicit waiver of disqualification by the parties, would recuse himself or herself from the proceedings. (§ 170.3, subds. (a)(1) & (b)(1).)

Hence, the nonwaiver provision is limited to the process of judicial self-disqualification, and it is inapplicable when a party seeks disqualification by filing a written verified statement of disqualification. When a party seeks disqualification, the statute’s timeliness requirement contemplates that the litigant may forfeit the right to seek disqualification by failing to file a statement of disqualification “at the earliest practicable opportunity after discovery of the facts constituting the ground for disqualification.” (§ 170.3(c)(1).) The statute’s nonwaiver provision has no effect on the separate issue of forfeiture in this context.

Torts; asbestos product liability; sophisticated-user defense

Watts v. Pneumo Abex, LLC (2024) __ Cal.App.5th __ (First District, Div. 2.)

Plaintiff Watts operated an auto-repair shop from 1983 until 2005. He was diagnosed with mesothelioma, a rare cancer caused by exposure to asbestos, in 2019. He and his wife sued 36 defendants. Before trial, he resolved the claims with respect to all but one defendant, Abex, a brake-lining manufacturer. The jury returned a verdict for plaintiffs, apportioning 60 percent of fault to Abex, 25 percent to other brake manufacturers, and 15 percent to Watts. During the trial, the trial court directed a verdict against Abex on its sophisticated-user defense. Reversed and remanded for a new trial.

Abex manufactured brake linings and sold them to manufacturers of aftermarket automotive brakes or original equipment manufacturers for use in brakes sold to end users. Various entities, including Bendix, Ford, and General Motors, purchased asbestos-containing friction material from Abex, but its most significant business came from Rayloc, which manufactured brake products that were distributed to end users through the distribution system of National Automotive Parts Association (NAPA). Individual NAPA stores ordered brakes from NAPA distribution centers, which obtained their brakes from Rayloc, which got the linings for those brakes from Abex.

Watts used NAPA parts in his business. Watts presented evidence that the brake industry was studying the hazards of asbestos in brakes and sharing that information with each other throughout the 1970s and 1980s. And despite the general industry knowledge that asbestos in brakes was hazardous, neither Abex nor anyone else warned Watts of those hazards until 2000.

Abex presented evidence that in the 1970s, before Watts opened his shop, the State of California had implemented regulations mandating the safe handling of asbestos-containing brakes. Abex also introduced evidence that Watts admitted to knowing back in the early 1980s that brakes were made with asbestos (although denying he knew that was “seriously” dangerous), and that brake dust generally should not be further blown around. Watts admitted he never looked at manufacturer manuals or warnings, because he believed he knew enough about doing brake work not to have to read about it. Abex also introduced portions of Watts’s deposition where he admitted he never took a course on workplace safety, never took any steps to educate himself about dangers his employees might face in the workplace, and never gave his employes any training on safe work practices.

Under the sophisticated-user defense, a manufacturer is not liable to a sophisticated user of its product for failure to warn of a risk, harm, or danger, if the sophisticated user knew or should have known of that risk, harm, or danger. The defense is considered an exception to the manufacturer’s general duty to warn consumers, and therefore, if successfully asserted, acts as an affirmative defense to negate the manufacturer’s duty to warn.

The court held that there was sufficient evidence to support Abex’s assertion of the sophisticated-user defense. In the mid-1970s, California implemented regulations concerning safe work with auto parts that contained asbestos. In 1977, the California Department of Public Health sent a letter to vehicle mechanics summarizing these regulations. It stated it was “intended to make [motor vehicle repair facilities] aware that California employers who use or work with asbestos face new legal responsibilities for worker protection as part of an expanded State program to prevent job-related cancer. As you know, brake linings and other friction materials used in your industry contain asbestos, which in fiber form is a known cause of human cancer.”

The letter advised that certain asbestos-reporting requirements had to be satisfied unless the facility was registered with the Bureau of Automotive Repair. Businesses registered with the bureau, like Watts’s shop, were not required to report “because they [were] obligated to register annually with the bureau. But they [were] not otherwise exempt from State regulations requiring that employees be protected from unsafe exposure to asbestos dust.”

All of Watts’s claimed exposure to asbestos from Abex occurred after the late 1970s, that is after the Occupational Safety and Health Administration (OSHA), Cal/OSHA, and other government entities began to regulate the handling of asbestos-containing automotive parts. And, as Watts acknowledged in his brief, he understood that his shop was subject to OSHA and Cal/OSHA regulations regarding workplace safety.

Watts admitted that he knew that brakes contained asbestos. He also said that he avoided using compressed air because he did not want to fill the air with dust, which he knew could be dangerous. Thus, a jury could infer that Watts did in fact know about any dangers of asbestos in brakes as a result of his educational and/or professional training, not to mention his position as an owner-operator of a licensed automotive repair business. At the least, it could have inferred that as a member of a professional class of persons required to know about, and abide by, government warnings about how to safely work with asbestos-containing brakes, Watts should have been aware of the hazards of working with brakes and other asbestos-containing automotive friction products.

In addition, Watts’s testimony supported his being a sophisticated user because he admitted that he did not look at the manuals because he felt he was sufficiently proficient and knowledgeable that he could safely perform brake jobs without referring to them.

Based on ordinary negligence principles alone, the jury assigned 15 percent fault to Watts. A jury instructed on the sophisticated-user defense could have reasonably found that the defense applied, which would have provided a complete defense to Abex. Abex is therefore entitled to a new trial.