Date: 12-15-2017

Case Style: Allen Kirzhner v. Mercedes-Benz USA, LLC

Case Number: G052551

Judge: Thompson

Court: California Court of Appeals Fourth Appellate District on appeal from the Superior Court, Riverside County

Plaintiff's Attorney: Martin W. Anderson and Jeffrey Kane

Defendant's Attorney: Jon D. Universal, Marie L. Wrighten-Douglass, Jay C. Patterson and James P. Mayo

Description: This case under the Song-Beverly Consumer Warranty Act (Civ. Code,
§ 1790 et seq., Act), concerned an allegedly defective car which could not be repaired
after multiple attempts. Plaintiff Allen Kirzhner accepted an offer of compromise
pursuant to Code of Civil Procedure section 998 (998 offer) from defendant MercedesBenz
USA, LLC, including a restitution provision identical to Civil Code section 1793.2,
subdivision (d)(2)(B) (section 1793.2(b)(2)(B); all further statutory references are to the
Civil Code).
The court awarded plaintiff over $47,000 in accordance with the 998 offer.
Plaintiff appealed and asserts the court erred because it denied him recovery
of approximately $680 in vehicle registration renewal and certificate of nonoperation fees
which he incurred in the years after he first leased the car.
We conclude the court properly determined section 1793.2(b)(2)(B) does
not require payment of vehicle registration renewal fees and related costs incurred after
the initial purchase or lease. Accordingly, we affirm.
FACTS
In June 2012, plaintiff leased a Mercedes-Benz from defendant for personal
use. The complaint alleged the car came with an express written warranty covering
repairs for any defects. During the warranty period, the car allegedly exhibited a variety
of defects which caused the navigation system and key fob to malfunction, the steering
column adjustment mechanism and power seats to be inoperative, the coolant level
warning light to illuminate, and smoke to emanate from the cigarette lighter.
After bringing the issues to defendant’s attention, and frustrated with
defendant’s supposed failure to abide by its warranty obligations, plaintiff filed suit.
Among the complaint’s six causes of action was one alleging defendant, following
unsuccessful attempts to repair the problems, refused to promptly replace the car or pay
restitution pursuant to section 1793.2. The relief sought included damages in the amount
of approximately $46,800, civil penalties, and attorney’s fees and costs.
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Defendant filed an answer and, thereafter, made the 998 offer, which
specified, in relevant part: “Pursuant to California Civil Code § 1793.2(d)(2)(B), in
exchange for the subject vehicle, [defendant] offers to make restitution in an amount
equal to the actual price paid or payable by the Plaintiff, including any charges for
transportation and manufacturer-installed options, but excluding non-manufacturer items
installed by a dealer or the Plaintiff, and including any collateral charges such as sales or
use tax, license fees, registration fees, and other official fees, plus any incidental damages
to which the buyer is entitled under [Civil Code] Section 1794, including, but not limited
to, reasonable repair, towing, and rental costs actually incurred by [plaintiff], less a
reasonable mileage offset in accordance with Civil Code Section 1793.2(d)(2)(C), all to
be determined by court motion if the parties cannot agree.” Plaintiff accepted the 998
offer, and the court entered judgment accordingly.
The parties were unable to agree on an amount due under the above-listed
provision of the 998 offer, so plaintiff filed a motion requesting the court to make the
determination. Plaintiff claimed he was entitled to just under $55,000, including $680 in
registration renewal fees he paid in the years 2013 and 2014, and an anticipated 2015
payment for a certificate of nonoperation. Defendant opposed the motion largely due to
the amount plaintiff requested. It asked the court to award about $45,500.
Because the 998 offer referenced and included the language of section
1793.2(d)(2)(B) set out above, the trial court focused on amounts recoverable as
restitution under that statute. Following a hearing, the court determined plaintiff was
entitled to approximately $47,700, and entered an order accordingly. The amount
awarded excluded the $680 associated with the 2013 and 2014 vehicle registration
renewal fees and the 2015 certificate of nonoperation fee. The court explained the
“registration fees” mentioned in the statute “do not include all registration fees that a
buyer pays over the course of the lease[,]” but instead are limited to fees paid in
conjunction with the original purchase or lease transaction.
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DISCUSSION
Plaintiff’s sole contention on appeal concerns the denied recovery of his
$680 vehicle registration renewal and certificate of nonoperation fees. He claims the
court erred in interpreting section 1793.2(d)(2)(B). We disagree.
As with any statutory interpretation issue, we begin with the words of the
statute to ascertain the intent of the Legislature. (Cummins, Inc. v. Superior Court (2005)
36 Cal.4th 478, 487.) “[T]he Act ‘regulates warranty terms, imposes service and repair
obligations on manufacturers, distributors, and retailers who make express warranties,
requires disclosure of specified information in express warranties, and broadens a buyer’s
remedies to include costs, attorney’s fees, and civil penalties. [Citations.] . . . ‘[T]he 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.’ [Citation.]” (Joyce v.
Ford Motor Co. (2011) 198 Cal.App.4th 1478, 1486.)
“Section 1793.2 is part of a statutory scheme similar to laws enacted in
many other states, commonly called ‘lemon laws.’ [Citations.]” (Mitchell v. Blue Bird
Body Co. (2000) 80 Cal.App.4th 32, 35 (Mitchell).) It requires a “manufacturer or its
representative” who “is unable to service or repair a new motor vehicle . . . to conform to
the applicable express warranties after a reasonable number of attempts, . . . [to] either
promptly replace the new motor vehicle . . . or promptly make restitution to the buyer in
accordance with subparagraph (B) . . . .” (§ 1793.2, subd. (d)(2).) In turn, subparagraph
(B) states, “the manufacturer shall make restitution in an amount equal to the actual price
paid or payable by the buyer, including any charges for transportation and manufacturerinstalled
options, but excluding nonmanufacturer items installed by a dealer or the buyer,
and including any collateral charges such as sales tax, license fees, registration fees, and
other official fees, plus any incidental damages to which the buyer is entitled under
Section 1794, including, but not limited to, reasonable repair, towing, and rental car costs
actually incurred by the buyer.” (§ 1793.2, subd. (d)(2)(B), italics added.)
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Plaintiff argues the term “registration fees” means all vehicle registration
fees whenever paid, including registration renewal fees. We are not persuaded. The
wording and structure of the statute dictate otherwise. In defining the amount of
restitution, subparagraph (B) specifies it shall be equal to “the actual price paid or
payable by the buyer.” (§ 1793.2, subd. (d)(2)(B).) All language thereafter simply
clarifies the meaning of that phrase by listing items which must be accounted for, and
excluded from, the calculation. Among the items to be included are “collateral
charges[,]” which is the category within which registration fees fall. The only
registration fee that could be considered a “collateral charge” associated with “the actual
price paid or payable” is the one which is paid when the vehicle is purchased or leased
(or accounted for in financing). (See Mitchell, supra, 80 Cal.App.4th at p. 37 [“[T]he
Legislature intended to allow a buyer to recover the entire amount actually expended for
a new motor vehicle, including paid finance charges, less any of the expenses expressly
excluded by the statute”].) Registration fees for future years cannot be considered a
“collateral charge” because they are incurred and paid after the initial purchase or lease.
Plus, the statute’s use of the word “payable” does not mean the Legislature
intended all registration renewal fees to be recoverable as part of restitution. It is simply
a recognition that many buyers do not pay the full amount due at the actual time of the
original transaction. Instead, and for various reasons, car buyers obtain financing which
allows them to make installment payments. (Mitchell, supra, 80 Cal.App.4th at p. 38.) If
the phrase “or payable” was not included in the statute, those types of buyers would only
receive restitution for the amount already paid, leaving them liable for all future financing
payments. Such a result would be contrary to the statute’s remedial purpose.
Plaintiff next argues the fees at issue should be considered “‘incidental
damages.’” Not so. The statute provides examples of incidental damages specific to the
defective vehicle context, which includes “reasonable repair, towing, and rental car costs
actually incurred by the buyer.” (§ 1793.2, subd. (d)(2)(B).)
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Although the list is nonexhaustive, the examples give guidance as to what
constitutes an “incidental damage.” The common characteristic among them is each
would be a cost incurred as a result of a vehicle being defective. Such is not the case
with vehicle registration renewal fees, which are more accurately characterized as a
standard cost of owning any vehicle. Were we to adopt plaintiff’s interpretation, it would
open up a “Pandora’s box” of potential costs for which a defendant would need to pay
restitution in these types of cases (e.g., costs for gas, car washes, oil changes). Plaintiff
provides no authority for such an expansive interpretation.
In sum, the trial court properly concluded the restitution payable under
section 1793.2 does not include vehicle registration renewal fees, as opposed to vehicle
registration fees associated with the purchase of a vehicle.

Outcome: The order is affirmed. Respondent is entitled to its costs on appeal.

Plaintiff's Experts:

Defendant's Experts:

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