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Lukather v. General Motors

February 4, 2010


APPEAL from a judgment of the Superior Court of Los Angeles County. Dewey Lawes Falcone, Judge. Affirmed. (Los Angeles County Super. Ct. No. VC048559).

The opinion of the court was delivered by: Mallano, P. J.


After a bench trial, the court awarded plaintiff Paul Lukather damages, a civil penalty, prejudgment interest, and attorney fees and costs against defendant General Motors, LLC (GM),*fn1 under the Song- Beverly Consumer Warranty Act (Act), Civil Code sections 1790 et seq., known as California's "lemon law." We affirm the judgment, rejecting GM's contentions that (1) the evidence is insufficient to support the findings that GM violated Civil Code section 1793.2, subdivision (d)(2) (section 1793.2(d)(2)), and that it did so willfully so as to incur a civil penalty; (2) the court erred in rejecting GM's mitigation of damages defense; and (3) the court abused its discretion in awarding prejudgment interest and attorney fees and costs.


On April 25, 2005, Cadillac of Whittier (dealer) leased to Lukather a new 2005 Cadillac manufactured by GM. The lease was financed by GMAC. Within a month the Cadillac began to exhibit an intermittent but recurring malfunction in the electronic stability control system. Lukather first brought the Cadillac into the dealer to repair the malfunction on June 1, 2005, when the car had been driven only 854 miles. Between June 5, 2005, and January 30, 2007, Lukather brought the Cadillac to the dealer for service for the same malfunction on more than four occasions.

Lukather was driving the Cadillac on the freeway on February 12, 2007, when the brakes came on by themselves, making the car hard to drive. Lukather brought the Cadillac to the dealer, where it remained up to the time of trial in March 2008. At the time of trial, Lukather was still making lease and insurance payments on the Cadillac. Beginning in February 2007, GM paid for a rental car for Lukather, but it stopped making those payments on April 4, 2007. Lukather paid $21,290.46 for his rental car from April 5, 2007, to the time of trial.

GM's expert admitted at trial that the malfunction was unable to be repaired after reasonable attempts to do so. GM conceded at trial that the Cadillac qualified as a "lemon" under the Act. Thus, the principal contested issues at trial were whether GM violated section 1793.2(d)(2) by failing promptly to make restitution, and if so, whether the failure was willful so as to permit the assessment of a civil penalty.

The Act applies to leases as well as sales of consumer goods. (See Civ. Code, §§ 1795.4, 1791, subd. (a).) Section 1793.2(d)(2) provides in pertinent part: "If the manufacturer or its representative in this state is unable to service or repair a new motor vehicle . . . to conform to the applicable express warranties after a reasonable number of attempts, the manufacturer shall either promptly replace the new motor vehicle in accordance with subparagraph (A) or promptly make restitution to the buyer in accordance with subparagraph (B). However, the buyer shall be free to elect restitution in lieu of replacement, and in no event shall the buyer be required by the manufacturer to accept a replacement vehicle."

Subparagraph (B) of section 1793.2(d)(2) provides: "In the case of restitution, 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 manufacturer-installed 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."

The key exhibit on the issue of whether GM complied with section 1793.2(d)(2) was a series of written "service request activity" logs that memorialized the telephone contacts between Lukather and GM's call center. The logs reveal the following: On March 8, 2007, Lukather made a complaint to GM's call center, informing a customer relationship specialist (CRS) that he did not feel safe with the Cadillac any more. The CRS contacted the dealership, which confirmed the problem with the Cadillac and that the dealership and the engineer were still working to find out what was wrong with the car. The CRS noted that Lukather requested a "vehicle repurchase" and that he needed someone to help him. Lukather was advised that some research needed to be done and that his file would be "escalated" to a case manager. The log for March 8, 2007, contained the Cadillac's vehicle identification number and Lukather's contact information.

On March 9, 2007, a different CRS, Maggie Weber, contacted the service manager at the dealer, who told her that he thought the Cadillac was repaired. On March 12, 2007, Weber again contacted the service manager at the dealer, who told her that the Cadillac "tested out good over the weekend, and is going back to the customer today." Weber left a voicemail for Lukather on March 12, 2007, offering to cover one month's lease payment. On March 15, 2007, Lukather left a voicemail for Weber stating that he did not want the Cadillac back. Lukather also had a conversation with another CRS on March 15 in which he told her that he did not want the Cadillac back and that he was not satisfied with one month's payment. Lukather also spoke to Weber on March 15, telling her that he did not want the Cadillac back. Weber told Lukather that if the car is repaired, GM "may not be able to assist beyond that."

On March 20, 2007, Lukather again spoke with Weber, telling her that he did not want to accept the Cadillac back as he had safety concerns. Weber told Lukather that she was "escalating" his case to a person who specializes in making such decisions. Weber then left a voicemail message for Paul Wasco, GM's district service manager, informing him that Lukather did not want the Cadillac back and was "seeking alternatives."

Wasco left a voicemail message for Weber on March 22, 2007, admitting that the Cadillac "does basically qualify for lemon law," and asking whether Lukather wanted to be "released from the vehicle, or into a lease to another vehicle." Wasco was aware that Lukather was an elderly gentleman and said "let's see what we can do to get him taken care of." On March 23, Weber called Lukather and asked him whether he wanted "out of lease, or into another vehicle." Lukather told her that he did not want his lease payments to go up. He also asked Weber whether he should make the Cadillac lease payment due on March 25. Weber told him that to avoid credit issues, he should make the payment and that "this will probably not be completed by then." On March 23, Weber left a message for Wasco that Lukather "would like to get into the lease of a used vehicle, does not want his payments to increase." Weber also asked Wasco what he wanted her to do at that point. Wasco returned Weber's call and told her that he will speak directly with Lukather and will work with the dealer "as far as payments and lease."

On March 26, 2007, Lukather told Weber that "he thinks he wants his lease money back." Weber told Lukather that Wasco should be contacting him about that later in the week. Wasco did not contact Lukather by April 2, 2007, when Lukather called Weber. Lukather left a voicemail complaining that the matter was dragging on, he had not heard from Wasco, he was still paying on the lease for the Cadillac, and he had been patient enough. Weber then left a voicemail for Lukather that "repurchase requests are not overnight, that this may take some time." She also said that she would "nudge" Wasco on that. On April 3, 2007, Wasco telephoned Weber and told her that he was "waiting on salesman at dealership, turned over to have [Lukather] go in and discuss what vehicle he would like." Weber then immediately telephoned Lukather and told him that Wasco had contacted the dealer, who was to contact Lukather about a "trade into a new vehicle." Lukather told Weber that he wanted all of his lease money back, and after he got that, he would ...

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