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Dagher v. Ford Motor Co.

California Court of Appeals, Fourth District, First Division

July 17, 2015

GREG DAGHER, Plaintiff and Appellant,
FORD MOTOR COMPANY, Defendant and Respondent.

APPEAL from a judgment of the Superior Court of San Diego County, No. 37-2013-00046812- CU-BC-CTL Joel M. Pressman, Judge.

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Rosner, Barry & Babbitt, Hallen D. Rosner, Arlyn L. Escalante; and Susan A. Yeck for Plaintiff and Appellant.

Wilson Turner Kosmo, Vickie E. Turner, Robert A. Shields, Robert K. Dixon; Dykema Gossett, John M. Thomas and Tamara A. Bush for Defendant and Respondent.


HUFFMAN, Acting P. J.

Plaintiff and appellant Greg Dagher (Plaintiff) sued defendant and respondent Ford Motor Company (Ford), alleging violations of the Song-Beverly Consumer Warranty Act (the Act). (Civ. Code, § 1790 et seq.; all further statutory references are to this code unless noted.) In 2009, Plaintiff bought a used Ford 2006 vehicle in a private sale, then determined its engine needed substantial repairs. He obtained them by using

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Ford's transferable, unexpired express warranty that the private party sellers had originally been issued upon their purchase of the vehicle, new, from a Ford dealer. Plaintiff contends the warranty repairs attempted by the dealer were unsuccessful and he is entitled to the statutory remedies in the Act, the same as the original purchasers could have sought, including restitution, damages, and civil penalties. (§ 1793.2 [refund or replacement].)[1] Based on the remedial purposes of the Act, Plaintiff contends that this statutory right of action was transferred to him, along with ownership of the vehicle and its express warranty. (Cal. U. Com. Code, § 2313; Jensen, supra, 35 Cal.App.4th 112, 121-126 [Act contains protections and remedies for certain subsequent purchasers of new vehicles from dealers].)

In opposition, Ford sought summary judgment on the ground it had not failed to comply with any obligation owed to Plaintiff under the Act, because the available statutory remedies are restricted to aggrieved buyers of "consumer goods, " chiefly new ones that are covered by express warranties. (See Code Civ. Proc., § 437c.) This was a used vehicle that was not sold to Plaintiff by a dealer, and even though the express warranty was transferable, Ford contended that Plaintiff lacked standing to sue for additional statutory remedies under the Act. (Martinez v. Kia Motors America, Inc. (2011) 193 Cal.App.4th 187, 190-191 [122 Cal.Rptr.3d 497] (Martinez) [plaintiff who purchased vehicle from dealership, which repossessed it, still qualified to seek the Act's remedies even though she did not continue to own vehicle].) In arguing it is entitled to judgment as a matter of law, based on lack of coverage by the Act's provisions, Ford mainly relies on its definitions of terms in section 1791, subdivisions (b) ("buyer" of consumer goods), and (l) ("retail seller" engaged in the business of selling or leasing consumer goods to retail buyers). (See pt. III, post.)

Along with opposing the summary judgment motion, Plaintiff filed a motion to amend the complaint to assert a new cause of action on the same facts, for breach of express warranty under the federal "lemon law, " the Magnuson-Moss Warranty—Federal Trade Commission Improvement Act. (15 U.S.C. § 2301 et seq. (Magnuson-Moss); see Code Civ. Proc., § 473.) The trial court granted summary judgment and denied leave to file an amended complaint.

On appeal, Plaintiff argues the trial court erred because (1) even though the sellers were private parties, he qualifies as a buyer in a "retail" context within section 1791, the definitional section of the Act, due to his transferred express

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warranty rights; (2) when the sellers transferred to him the express warranty provisions, they also effectively assigned their rights or standing to sue Ford under the Act, for its additional remedies such as implied warranties; (3) the ruling against him "produced an absurd result that goes against the very nature of the Song-Beverly Act, a consumer protection statute"; (4) even if he lacks statutory qualifications under the Act, the trial court should have allowed him leave to amend the complaint to pursue a more limited federal consumer protection remedy under Magnuson-Moss (express warranty), on the same set of facts.

We reject Plaintiff's interpretations of the Act that would have allowed him standing to sue under it, and we affirm the summary judgment order. Finding that the trial court did not properly exercise its discretion on the amendment issue, we reverse that order and the resulting judgment, with directions to the trial court to allow further proceedings on amendment of the complaint as proposed.


In 2009, Plaintiff purchased a used 2006 Ford F-350 truck from Ramon and Sandra Audelo. They had bought it new from a dealer and sold it to Plaintiff when it had over 12, 500 miles on it and there were two years left on its five-year express manufacturer's warranty. Plaintiff's declaration states that in deciding to make his purchase, he relied on the remaining warranty coverage and the statement in the warranty booklet that it was transferable.

Plaintiff had trouble with the truck's engine and took it for numerous warranty repairs at Ford dealers, but he was never satisfied with the results. In 2013, he brought this action against Ford in a single cause of action under the Act, seeking restitution, damages and civil penalties. Among other relief, he sought enforcement of his demand for a refund or replacement of the truck, which Ford had denied to him. The complaint alleges that the used vehicle is a "consumer good" and he is a purchaser of it within the meaning of the Act. (§ 1791, subds. (a), (b).)[2]

Ford answered the complaint and brought a summary judgment motion on the ground that Plaintiff could not demonstrate that he is a buyer within the meaning of the Act, because the private sellers, who had bought the vehicle new, were not engaged in the business of selling vehicles at retail to him. (§ 1791, subds. (b), (l).)

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Plaintiff timely filed his opposition to the motion, and a week later, filed a motion for leave to amend the complaint, to plead an additional cause of action under Magnuson-Moss. In his opposition, Plaintiff relied on Jensen, supra, 35 Cal.App.4th 112, for the proposition that express warranties are fully enforceable by a "subsequent purchaser" for the effective duration of their coverage, and the statutory right to enforce the warranties under the Act had, as a matter of law, been transferred or assigned to him. (35 Cal.App.4th at pp. 126-127.) Plaintiff provided an excerpt from the warranty guide he received with the vehicle, notifying consumers that "[i]f you bought a previously owned 2006-model vehicle, you are eligible for any remaining warranty coverages."

Plaintiff argues he should qualify as an assignee of the rights of the original purchasers under the Act, because his right of action under the Act is based on the express warranty and it thus arises out of Ford's legal obligations. (U. Cal. Com. Code, § 2313, subd. (1)(a), (b).) In an abundance of caution, Plaintiff sought leave to amend to plead the identical claims with reference to Magnuson-Moss, and he was attempting to consolidate the hearing on the two motions.

In reply to the opposition, Ford argued that the language and history of the Act clearly apply to "retail" sales, not private sales. (Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 749 [135 Cal.Rptr.2d 433] (Atkinson) [a plaintiff suing under § 1794, subd. (a), part of the Act must be a "buyer of consumer goods"].) Under section 1791, subdivision (b), a " 'buyer' " or " 'retail buyer' " is "any individual who buys consumer goods from a person engaged in the business of manufacturing, distributing, or selling consumer goods at retail." The Act defines " 'retail seller, ' " " 'seller, ' " or " 'retailer '" as "any individual, partnership, corporation, association, or other legal relationship that engages in the business of selling or leasing consumer goods to retail buyers." (§ 1791, subd. (1).) Ford requested judicial notice of legislative history material that showed, in a letter to the Governor from the bill's sponsor, the statement of intent, "Non-retail sales of consumer goods, retail sales of non-consumer goods, and all non-retail commercial transactions will continue to be regulated by the Commercial Code and would not be affected by [the bill]."

Ford relied on Martinez to argue that a claim under the Act need not be based on ownership. The plaintiff in Martinez had lost her ownership and possession of a defective vehicle that she had purchased from a dealer, when it was repossessed, but the court held that statutory remedies under the Act were still available to her, since she had presented the vehicle for repairs in a timely manner. (Martinez, supra, 193 Cal.App.4th at p. 192.) Ford further argued that it was essential to coverage under the Act that a California dealer

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or distributor, not a private party, had sold the truck to Plaintiff. (Cummins, Inc. v. Superior Court (2005) 36 Cal.4th 478, 493 [30 Cal.Rptr.3d 823, 115 P.3d 98] (Cummins) [no standing under the Act for a purchaser buying vehicle outside of California].) Ford argued that standing to sue under the Act should not be conflated with the transferability of the express warranty provisions, and opined that the latter provisions could supply Plaintiff with an adequate contractual remedy under California Uniform Commercial Code section 2313. Additionally, Ford opposed the motion to amend as untimely and legally unsupported.

In its ruling, the trial court considered the pending motion to amend, and denied it without prejudice to Plaintiff filing a new action. In granting summary judgment, the court reasoned that since the sale was admittedly a private sale between citizens, Plaintiff did not qualify as a buyer under section 1791, subdivision (b), as he had not purchased from "a person engaged in the business of manufacturing, distributing, or selling consumer goods at retail." The court noted that the statute was unambiguous, there was no opposite ...

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