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Garcia v. Mercedes-Benz USA, LLC

California Court of Appeals, Second District, Second Division

April 5, 2018

EFIGENIA GARCIA, Plaintiff and Appellant,
MERCEDES-BENZ USA, LLC, Defendant and Respondent.

          APPEAL from a judgment of the Superior Court of Los Angeles County. No. BC588535 Mel Red Recana, Judge. Affirmed as modified.

          Law Offices of René Korper, René Korper and Thomas E. Solmer for Plaintiff and Appellant.

          Universal & Shannon, Jon D. Universal and James P. Mayo for Defendant and Respondent.


         After the engine of a brand new Mercedes-Benz died, the car's manufacturer offered to repurchase the car for the full amount less the $3, 090 the buyer paid the dealer for additional products and services (“dealer add-ons”). After the buyer sued the manufacturer for breach of the implied warranty of merchantability under the Song-Beverly Consumer Warranty Act (the Act) (Civ. Code, § 1790 et seq.), [1] the parties entered into a confidential settlement leaving attorney's fees and costs unresolved, and the buyer moved for attorney's fees as the “prevailing party” under the Act. This appeal chiefly presents the question: Is a buyer a prevailing party entitled to recover attorney's fees under the Act if, through settlement with the manufacturer, all she obtains by litigating is the payment of dealer add-ons for which the manufacturer is not responsible and the payment of attorney's fees? We conclude the answer is “no.” For these reasons and others, we affirm the denial of attorney's fees but modify the judgment to award costs because the buyer obtained a net monetary recovery by virtue of the settlement.


         In April 2015, plaintiff Efigenia Garcia (Garcia) bought a Mercedes-Benz GLA250W4 at Keyes European, an authorized Mercedes-Benz dealer. Garcia paid $46, 593.97, comprised of a $8, 540 down payment and a loan for the balance.[2] The $46, 593.97 amount included the cost of the car and $3, 090 in dealer add-ons (namely, $1, 700 for Mercedes-Benz tires and wheels, $995 for Ownerguard protection, and $395 for a third-party surface protection product).

         A month later, the car's engine “failed entirely.”

         Soon thereafter, Garcia contacted defendant Mercedes-Benz USA, LLC (Mercedes-Benz), and Mercedes-Benz offered to repurchase the car. Before Mercedes-Benz laid out the details of the repurchase, Garcia hired an attorney. Mercedes-Benz sent a follow-up email, explaining that it would repurchase Garcia's car for the amount she paid the manufacturer, but would not reimburse her for dealer add-ons (or $18.99 in interest on those add-ons) or pay any attorney's fees.

         A few days after receiving Mercedes-Benz's more detailed offer, Garcia sued Mercedes-Benz in a single-count complaint alleging breach of the implied warranty of merchantability, but which made additional allegations regarding the breach of an express warranty and sought relief only available for a breach of implied and express warranties. Pursuant to the Act, Garcia sought a refund of the full purchase price (including the amount paid to Mercedes-Benz for the car and the amount paid for the dealer add-ons), civil penalties of twice her actual damages, attorney's fees, and costs.[3] Garcia did not sue the dealer.

         Before and after Garcia filed her complaint, the parties tried to negotiate a settlement. Garcia demanded (1) that Mercedes-Benz take custody of the car, (2) refund her the amounts paid to the dealer as well as Mercedes-Benz, and (3) pay her attorney's fees, initially of $2, 500 and subsequently of $4, 020. Mercedes-Benz's pre-complaint offer eventually gave way to an offer to refund her everything (including the amounts paid for the dealer add-ons) and to pay either $1, 000 in attorney's fees and costs or to leave them open for resolution by the court.

         The parties entered into a confidential settlement that did not disclose the settlement amount and left the issues of attorney's fees and costs for judicial resolution. Garcia surrendered the car, and was paid the confidential amount.

         Garcia then filed a motion for $8, 430 in attorney's fees as the prevailing party under the Act as well as a memorandum of costs seeking $750 in costs. After full briefing, the trial court issued a written order denying attorney's fees and costs. In denying attorney's fees, the court noted that Garcia's entitlement to attorney's fees under the Act turned on whether she was the prevailing party and thus had achieved her litigation objectives, but ruled that the confidentiality of the settlement made it impossible to know whether Garcia had, in fact, achieved those objectives by obtaining more in the settlement than Mercedes-Benz had offered her prior to the lawsuit. The court declined to award costs on the ground that they could not be obtained by noticed motion.

         A few weeks later, the trial court entered a judgment dismissing Garcia's lawsuit with prejudice. Garcia thereafter filed this timely appeal.


         Garcia argues that the trial court erred in denying her attorney's fees and costs. Mercedes-Benz asserts that we need not reach these questions because the trial court's denial order is ...

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