SUZANNE HARVILL, Plaintiff and Respondent,
FLEETWOOD ENTERPRISES, INC. et al., Defendants and Appellants.
Court of Appeals of California, First Appellate District, Division One.
Filed July 23, 2003.
San Francisco County Super. Ct. No. 315725.
Suzanne Harvill purchased a new motor home manufactured by Fleetwood Enterprises, Inc. and Fleetwood Motor Homes of Indiana, Inc. (collectively, Fleetwood). Despite multiple repair attempts, Harvill experienced recurrent problems with the vehicle, including difficulty opening the entry door. When Fleetwood declined her demand to rescind the purchase contract, Harvill sued Fleetwood under the Song-Beverly Consumer Warranty Act1 for failing either to replace the vehicle or refund the purchase price.
A jury awarded Harvill the purchase price of the vehicle less the cost to repair modifications she made to it, and assessed a civil penalty of an equal amount against Fleetwood. Fleetwood appeals from the ensuing judgment, contending that: (1) Harvill’s action was barred by her failure to bring the motor home to Fleetwood’s factory service center for repair; (2) the trial court prejudicially erred in excluding evidence of the cost of repairing the defects; and (3) civil penalties and prejudgment interest were improperly awarded. We find no error in the trial court proceedings, and affirm the judgment.
On July 27, 1999, Harvill purchased a new 1999 Fleetwood Discovery motor home (the Discovery) at an Arizona Fleetwood dealership for $ 107,900. Harvill’s husband was terminally ill at the time, and she was planning some travel excursions with him before he died.
Fleetwood manufactured the Discovery, and Freightliner Custom Chassis (Freightliner), a separate company, manufactured the chassis. The motor home came with a one-year express warranty from Fleetwood covering the coach portion.2
The Discovery had only one entry door located on the passenger side at the front of the motor home. During a “walkthrough” of the vehicle at the dealership before she took possession of it, Harvill noticed that the entry door was difficult to open and close. She pointed this out to the dealer. The dealer told her that the problem was covered by her warranty, and that it would be fixed either by her local Fleetwood dealer or by the Fleetwood plant in Riverside, California.
Within a month after taking possession of the motor home, Harvill called Fleetwood’s Riverside plant to report problems with the door and other issues. Fleetwood referred Harvill to her local Fleetwood-authorized service facility and dealership, Mike Thompson’s RV in Colton, California (Thompson’s). On August 26, 1999, she took the Discovery to Thompson’s for servicing. Among several other issues, she reported that the entry door was extremely hard to open from both the inside and the outside, sometimes requiring her to pull on the handle with both hands.3 Along with other repair work that it performed, Thompson’s loosened the door-frame and tried to square the door into the door-frame. The Discovery was
in the dealership for approximately three weeks on that visit.
Harvill’s husband passed away at the end of September 1999. On October 12, 1999, Harvill wrote to Fleetwood complaining that none of her major complaints had been resolved and asking for her money back. A Fleetwood representative who had been given a copy of the letter called Harvill to offer her an appointment to bring the Discovery to Fleetwood’s Riverside factory for repairs in January 2000. At Thanksgiving in 1999, she was unable to open the door from the inside during a trip and was forced to call on a fellow RV club member for assistance in opening the door. On December 1, a Fleetwood representative called Harvill
and told her that her January 2000 appointment to bring the motor home to Riverside had to be canceled, and that she should bring the vehicle back to Thompson’s for further repair work.
Harvill brought the Discovery to Thompson’s on December 9, 1999. Thompson’s initiated paperwork on that date to order a replacement door to be paid for by Fleetwood. Thompson’s records show that no actual repair work was done on December 9, but Harvill recalled that Thompson’s did work on the door that day.
On January 12, 2000, Harvill brought the Discovery back to Thompson’s to have the carpeting replaced. She reported continued problems with the entry door on that visit and Thompson’s tried again to adjust the door without success.4 On March 10, 2000, Thompson’s installed a new entry door in the Discovery.
Despite the new door, Harvill continued
having problems opening and closing it. She had an appointment for Thompson’s to work on the door on April 5, 2000. When she was pulling out of her yard to get to her appointment she needed to get out of the Discovery to close the gates to her property. Despite repeated attempts she was unable to open the door to the coach so she could exit. Harvill, who is a senior citizen, wound up having to crawl out the driver’s side window which was six or seven feet off the ground. She ended up falling because her feet did not reach the ground. When she got up she realized that she had left the keys in the ignition and left the motor on. She had to climb back in through the window with a neighbor’s ladder to turn off the engine. She then climbed back out and had to work the key in the entry door for a few minutes before it would open.
After regaining entry to the motor home, Harvill drove it to the Thompson’s dealership for her appointment. Thompson’s again adjusted the door. While Harvill was driving the Discovery back from this appointment, the entry door came partially open. To prevent this problem from recurring, Harvill was forced secure the door to the interior of the motor home with
a bungee cord on future trips. She also began keeping an aluminum ladder inside the coach with her in case she had to crawl out of the window.
In May 2000, Harvill was planning to take a trip with her motor home club to Idaho, Montana, and Wyoming. She contacted Fleetwood in Riverside and reported that a crack had started to develop in the side of the Discovery. She also informed Fleetwood about the problems she had experienced with the entry door on April 5. Fleetwood advised her that the crack and other problems, including the entry door, could be repaired at the factory, but that it could take six weeks or more. During her conversations with Fleetwood in May 2000, Harvill again stated that she wanted Fleetwood to take the motor home back, but Fleetwood declined.
Fleetwood offered her an appointment to bring the Discovery in to the factory on October 30, 2000, after her trip.5 When Harvill complained that she was renting out her house during that period and would have no place to sleep, Fleetwood offered to reimburse her for 4 days of hotel expenses in November. Harvill accepted the October 30 appointment.
Harvill had trouble getting in and out of the Discovery throughout her trip. At times, she had to get other club members to help her open the door. In July 2000, she called Fleetwood from Idaho to report the problems she was having. At Fleetwood’s suggestion, she drove the Discovery to an authorized service center in Idaho Falls, Idaho where the entry door was adjusted once again.
On September 11, 2000, Harvill called Fleetwood from Saint George, Utah to report that she had been unable to exit from the Discovery while parked at a gas station and had to yell to another customer for help in getting the door open. During that conversation, Harvill asked for Fleetwood to either pay her hotel expenses for the six weeks that the motor home would be at the factory starting on October 30 or let her live in the vehicle. Fleetwood told her that it would not pay her hotel expenses and explained that she could not stay in the coach because the side wall was going to be removed to perform repairs. Harvill again told Fleetwood that she wanted to return the motor home, but the Fleetwood representative made no response to this statement.
As of September 2000, Harvill decided that it was unsafe
to take the Discovery on any long trips or to drive it without someone else being present to help her get out of the coach. Harvill felt the entry door was a serious safety problem in the event of a fire. She knew of two motor homes that had caught on fire and burned rapidly. On October 4, 2000, Harvill called Fleetwood to cancel her October 30 appointment. This action was filed one week later.
During pretrial discovery, experts from both sides examined the motor home and attempted to determine the cause of its entry door problem. Shortly before trial, a Fleetwood engineer determined that the problem was caused by failed or missing “huck bolts.” Huck bolts are used to fasten the motor home floor to the chassis at 41 specific locations. The engineer determined that one or more missing or damaged bolts at the front of the motor home had caused the coach and chassis to separate, leading to “hammering” between their surfaces when the vehicle was in motion. The hammering caused adjacent huck bolts to fail and led to structural damage that compromised the fit between the entry door and the door threshold. Harvill’s expert agreed with this assessment.
At trial, Harvill’s expert opined that
the bolts must have been removed or damaged before the motor home left the factory, and that Harvill could not have caused this problem when she and her husband made minor modifications to the Discovery. Fleetwood’s expert testified that the problems with the entry door were not the result of a defect in manufacturing or workmanship, but were caused by Harvill’s modifications, during which one or more of the huck bolts at the front of the vehicle were damaged or removed.
By special verdict, the jury determined that the motor home contained one or more nonconformities covered by Fleetwood’s warranty that substantially impaired its use, value, or safety to Harvill. The jury further determined that Fleetwood failed to either replace the motor home or reimburse its purchase price despite Harvill’s demand, and that Harvill was entitled to damages of $ 103,500. This amount reflected a deduction of $ 4,400 from the original purchase price, which was the amount Fleetwood’s expert estimated it would cost to repair holes made by Harvill in the roof and floor of the Discovery. The jury also found that Fleetwood’s failure to replace the motor home or reimburse the purchase price was willful and
it awarded Harvill a civil penalty of $ 103,500. Fleetwood timely appealed from the ensuing judgment and from an order awarding prejudgment interest to Harvill.
The legislative history and major provisions of Song-Beverly were well-summarized in Murillo v. Fleetwood Enterprises, Inc. (1998) 17 Cal.4th 985, 953 P.2d 858: “[Song-Beverly] ‘ 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.] It supplements, rather than supersedes, the provisions of the California Uniform Commercial Code. [Citations.] [P] In 1982, the Legislature added a provision designed to give recourse to the buyer of a new automobile that suffers from the same defect repeatedly, or is out of service for cumulative repairs for an extended period. [Citations.]‘ [Citation.] [P] Popularly known as the automobile ‘lemon law‘ [citation] the Song-Beverly Act is strongly pro-consumer, expressly providing that waiver
of its provisions by a buyer, ‘except as expressly provided in this chapter, shall be deemed contrary to public policy and shall be unenforceable and void.’ (Civ. Code, § 1790.1.) . . . The 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.]‘ [Citation.]” (17 Cal.4th 985 at pp. 989-990.)
In this case, the jury’s verdict rests on a determination that Fleetwood violated section 1793.2, subdivision (d)(1) of Song-Beverly: “If the manufacturer or its representative in this state does not service or repair the goods to conform to the applicable express warranties after a reasonable number of attempts, the manufacturer shall either replace the goods or reimburse the buyer in an amount equal to the purchase price paid by the buyer, less that amount directly attributable to use by the buyer prior to the discovery of the nonconformity.” Section 1793.22, subdivision (e)(1) specifies that to be actionable under section 1793.2, subdivision (d), the nonconformity must be one that “substantially impairs the use, value, or safety”
of the product.
Under section 1794, subdivision (c), if the jury finds that a manufacturer’s violation of Song-Beverly’s replace-or-reimburse provisions was willful, it can assess a civil penalty of up to twice the amount of the plaintiff’s “actual damages.”
Harvill’s Asserted Warranty Obligations
Fleetwood contends that the determination of whether it was given a “reasonable number of attempts” to conform Harvill’s motor home to its express warranties for purposes of section 1793.2, subdivision (d)(1) cannot be determined independently of the buyer’s obligations under the written warranty. In particular, Fleetwood asserts that Harvill’s cancellation of her October 2000 appointment to bring the Discovery to Fleetwood’s plant in Riverside-where Fleetwood believes it would have diagnosed and resolved the entry door problem if given the chance-defeats her claim for rescission. According to Fleetwood, a manufacturer can contractually dictate that a “reasonable number of attempts” must include at least one submission of the product to the manufacturer itself for repair.
We are not persuaded. Section 1790.1 states that “any waiver by the buyer of consumer goods of
the provisions of [Song-Beverly], except as expressly provided in this chapter, shall be deemed contrary to public policy and shall be unenforceable and void.” Nothing in Song-Beverly authorizes a manufacturer to impose terms or conditions in the warranty agreement that modify or redefine the manufacturer’s statutory duties. Although Fleetwood maintains that section 1790.1 only bars waiver of the remedies provided by Song-Beverly, it cites no authority for that proposition. The statute provides that a waiver of any provision of the Act is void. By its plain and unambiguous terms, section 1790.1 forecloses Fleetwood’s argument as a matter of law.
There is also no factual basis for Fleetwood’s claim that Harvill breached her warranty obligations. First, by its own terms, the warranty does not obligate the buyer to submit the product to the manufacturer for repair. It merely advises the buyer that if the dealer is unable or unwilling to resolve a problem covered by the warranty the buyer “should contact” the manufacturer. Although one section of the warranty is labeled “Owner’s Obligations,” the instruction to contact the manufacturer is found in a separate section of the warranty
under the heading, “When the Dealer Does Not Resolve the Problem.” Second, Harvill did contact Fleetwood-repeatedly-and did attempt to bring the Discovery to the factory. She had an appointment to bring the Discovery to the factory in January 2000, but Fleetwood canceled the appointment and referred her back to the dealership instead.
Thus, the contention that Harvill breached her alleged warranty obligation is neither factually accurate nor legally relevant.
Cost of Repair Evidence
Fleetwood asserts that the trial court committed prejudicial error by excluding evidence that it would have cost little money to repair the entry door problem. According to Fleetwood, such evidence would have been relevant to proving that the nonconformity did not “substantially impair the use, value, or safety” of the Discovery. (§ 1793.22, subd. (e)(1).)
As an initial matter, we find no indication in the record that Fleetwood made an offer of proof as to the amount of the repair costs. “A verdict or finding shall not be set aside, nor shall the judgment or decision based thereon be reversed, by reason of the erroneous exclusion of evidence unless . . . it appears of record that:
(a) the substance, purpose, and relevance of the excluded evidence was made known to the court . . . .” (Evid. Code, § 354.)6
In any event, we would find no evidentiary error even if Fleetwood had made an offer of proof that the repair costs were low. Fleetwood relies on the following excerpt from Lundy v. Ford Motor Co. (2001) 87 Cal.App.4th 472 at p. 478: “Section 1793.22 . . . was added to section 1793.2 in 1982. [Citation.] Before then, the Act referred to ‘nonconformity’ without defining that term. [Citation.] The plain meaning of the amended provision is that the nonconformity must be of a degree that ‘substantially impairs the use, value, or safety of the [product] to the buyer . . . .’ [Citation.] [P] . . . [P] . . . The most analogous definition of ‘substantially’ we have found in a context similar to its usage here is in the
Uniform Commercial Code, section 2-608. Like the clause at issue here, this provision requires a determination of whether a defect ‘substantially impairs’ the value of goods sold to a buyer. Under it, the trier of fact may consider: ‘ the nature of the defects; the cost and length of time required for repair; whether past repair attempts have been successful; the degree to which the goods can be used while repairs are attempted; [inconvenience to buyer]; and the availability and cost of alternative goods pending repair . . . .’ [Citation.]”
There are undoubtedly circumstances in which the cost of repair is relevant to determining whether an impairment is substantial. For example, if the means of repairing a nonconformity are readily apparent to the buyer, and the cost of doing so is low relative to the product’s purchase price, then the cost to cure is obviously relevant. A minimal cost to repair in these circumstances means that the market value of the product would not be significantly reduced by the defect and that the buyer could readily cure the defect himself. In these circumstances, the fact that the defect is readily curable would weaken the buyer’s
right to rescind the purchase contract. However, merely because the cost of repair may be relevant in some cases does not mean it is relevant in all cases.
Until long after this suit was filed, Harvill had no idea what was causing the entry door to stick or to fly open or how much it would cost to fix it. Neither the dealership’s service department nor Fleetwood possessed this information. Harvill’s own expert did not connect the problem to missing huck bolts. It took extensive, pretrial forensic work by Fleetwood’s engineer to uncover the root cause of the problem. In these circumstances, evidence that the cost of actually fixing the problem was relatively low, assuming it existed, could not logically have changed the jury’s verdict.
As the trial court recognized in this case, impairment of use can be substantial even when the cost of repair is minor. (See Knight v. Hallsthammar (1981) 29 Cal.3d 46, 171 Cal. Rptr. 707, 623 P.2d 268 [landlord-tenant context]; Werner v. Montana (1977) 117 N.H. 721, 730-731, 378 A.2d 1130 [leaking boat]; Jorgensen v. Pressnall (1976) 274 Or. 285, 290-291, 545 P.2d 1382 [mobile home].) The evidence
established that Harvill, a senior citizen, was locked in or out of the motor home on several occasions, and was forced to shout for help or climb out of the window at great risk to herself. She testified that she was concerned about her safety in the event of a fire, and this concern was reinforced by her expert who testified that a motor home can burn to the ground in 11 minutes. All of this evidence was unrefuted by Fleetwood.7 Absent evidence that Harvill knew before this suit was filed that she could have fixed the door problem at minimal cost, and an adequate offer of proof shown in the trial record, we cannot say that the trial court abused its discretion in precluding evidence concerning the cost of repair or that any error in doing so could have prejudiced Fleetwood.
Fleetwood contends the civil penalty award of $ 103,500 must be reversed because: (1) as a matter of law, the rescission remedy of restoring the purchase price to the buyer is not an award of “actual damages” that can support a civil penalty; and (2) the trial court erroneously instructed the jury that it could find willfulness without finding that Fleetwood acted in bad faith.
A jury may assess civil penalties as follows under Song-Beverly: “If the buyer establishes that the failure to comply was willful, the judgment may include, in addition to the amounts recovered under subdivision (a), a civil penalty which shall not exceed two times the amount of actual damages.” (Civ. Code, § 1794, subd. (c), italics added.) Fleetwood argues at some length that restitution of the purchase price of the product, as part of the buyer’s rescission remedy, does not constitute “actual damages” for purposes of subdivision (c). Fleetwood points out that in other statutory contexts the case law has sometimes distinguished “actual damages” from other remedies such as restitution or benefit-of-the-bargain damages. (See, e.g., Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1249-1250, 900 P.2d 601
[equating actual damages with out-of-pocket losses and consequential damages, as opposed to a benefit-of-the-bargain measure of damages, in the context of fraud remedies]; People v. Toomey (1985) 157 Cal. App. 3d 1, 25-26, 203 Cal. Rptr. 642 [stating that restitutionary remedy under unlawful business practices statute is intended to penalize the defendant, and no proof of actual damages is required].)
We do not find cases arising in wholly unrelated contexts to be persuasive in interpreting section 1794. Fleetwood cites no case holding that “actual damages” for purposes of awarding civil penalties do not include an award of reimbursement for the purchase price paid under Song-Beverly. Some reported Song-Beverly cases have affirmed civil penalties based on the amount of reimbursement awarded to the purchaser, without any apparent concern over whether such reimbursement constitutes “actual damages.” (See, e.g., Bishop v. Hyundai Motor America (1996) 44 Cal.App.4th 750; Jensen v. BMW of North America, Inc. (1995) 35 Cal.App.4th 112.) We find that the statute clearly permits the jury to count such awards as “actual damages” in determining
the amount of any civil penalty to be assessed.
Section 1794 discusses the buyer’s recoverable damages in pertinent part as follows: “(a) Any buyer of consumer goods who is damaged by a failure to comply with any obligation under this chapter . . . may bring an action for the recovery of damages and other legal and equitable relief. [P] (b) The measure of the buyer’s damages in an action under this section shall include the rights of replacement or reimbursement as set forth in subdivision (d) of Section 1793.2 and [incidental and consequential damages as provided in specified Commercial Code provisions].”
In this case, the jury found that Fleetwood failed to comply with its obligation under section 1792, subdivision (d)(1) to either replace Harvill’s motor home or reimburse her for an amount equal to the purchase price she paid, less any amount attributable to her use of it before discovering the nonconformity. Fleetwood’s breach of this legal obligation damaged Harvill, and the measure of her damage, as expressly provided by section 1794, includes the amount she would have received from Fleetwood had Fleetwood fulfilled its statutory obligation to her. Under this statutory
scheme, the $ 103,500 awarded to Harvill represented compensatory damages for Fleetwood’s breach of its statutory duty to her. Compensatory damages and actual damages are synonymous in the law. (Saunders v. Taylor (1996) 42 Cal.App.4th 1538, 1544.)
Had the Legislature intended the most significant element of “damages” mentioned in section 1794, subdivision (b)-reimbursement of the purchase price-to be excluded from the definition of “actual damages” in subdivision (c), it would surely have said so directly and explicitly, rather than leaving such an exclusion to be inferred from case law interpreting unrelated statutes. In this statutory context, the most reasonable interpretation of the term “actual damages” in subdivision (c) is that it excludes amounts, such as litigation fees and expenses, that are not part of the “buyer’s damages” as defined in subdivision (b). The civil penalty of $ 103,500 awarded by the jury was properly determined.
Fleetwood also challenges the instruction on willfulness given by the trial court. The trial court instructed the jury using BAJI No. 9.86, a pattern instruction for Song-Beverly Act cases, which contains the following definition
of willfulness: ” ‘ Willful’ as used in this act, means that the defendant’s decision was either made in bad faith, or was unreasonable in light of the available information on the repair history of the vehicle in question. The defendant has a duty to gather information concerning the repair history of the vehicle. A decision made without the use of reasonably available information relevant to that decision is not a reasonable, good faith decision. If the defendant failed to gather the available information on repair history, the decision to refuse to replace or refund is deemed to be willful.” (Italics added.)
The italicized portion of the willfulness instruction is drawn from Kwan v. Mercedes-Benz of North America, Inc. (1994) 23 Cal.App.4th 174 (Kwan). (Com. to BAJI No. 9.86 (9th ed. 2002) pp. 361-362.) The pertinent language from Kwan is as follows: “As our Supreme Court recently observed, ‘. . . courts refuse to impose civil penalties against a party who acted with a good faith and reasonable belief in the legality of his or her actions. [Citations.]‘ [Citations.] [P] The statutory obligation Kwan claimed MBNA willfully violated was to replace
the vehicle or refund the purchase price. [Citation.] [Fn. omitted.] The considerations discussed above lead us to conclude such a violation is not willful if the defendant’s failure to replace or refund was the result of a good faith and reasonable belief the facts imposing the statutory obligation were not present. This might be the case, for example, if the manufacturer reasonably believed the product did conform to the warranty, or a reasonable number of repair attempts had not been made, or the buyer desired further repair rather than replacement or refund.” (Kwan, at p. 185, italics added.)
Fleetwood argues that under Kwan, willfulness requires a showing of bad faith whereas BAJI No. 9.86 erroneously permits the jury to find willfulness if Fleetwood’s failure to provide a refund or replacement was either in bad faith or was unreasonable in light of the facts. In other words, based on Kwan, Fleetwood contends that the instruction should have required the jury to find that Fleetwood’s decision was both (1) objectively unreasonable in light of the facts and (2) that it was made in subjective bad faith, i.e., without a belief that the facts justified
Fleetwood misreads Kwan. Kwan holds that a defendant’s decision to not refund or replace is not willful if it is based on a good faith and reasonable belief that the facts imposing the obligation to do so were not present. Therefore, as a matter of logic, any such decision that is made either in bad faith (i.e., not believing it is justified) or in an unreasonable belief that the facts justify it, must be deemed willful under Kwan. BAJI No. 9.86 thus correctly translates Kwan’s definition of non-willful conduct into a definition of willfulness, whereas Fleetwood’s interpretation is based on faulty logic.
Moreover, Kwan’s reasoning is persuasive. Its interpretation of the willfulness requirement gives manufacturers a strong incentive to honor Song-Beverly’s replace-or-refund requirement: “The 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.] In particular, the penalty provided in section 1794(c) is important as a deterrent to deliberate violations. Without such a provision, a seller or manufacturer who knew the
consumer was entitled to a refund or replacement might nevertheless be tempted to refuse compliance in the hope the consumer would not persist, secure in the knowledge its liability was limited to refund or replacement. Any interpretation that would significantly vitiate the incentive to comply should be avoided.” (Kwan, supra, 23 Cal.App.4th at p. 184.)
Requiring proof of a manufacturer’s subjective bad faith in all cases would unduly restrict the availability of civil penalties under section 1794, subdivision (c) and undermine its deterrent value. The instruction on willfulness was correct.
The trial court awarded Harvill $ 20,145 in prejudgment interest, based on applying the statutory rate of 7 percent per annum to the principal sum of $ 103,500 for the period from October 12, 1999 until the date of judgment. Fleetwood objects to the award on two grounds: (1) Fleetwood’s monetary liability was not certain or capable of being made certain prior to trial because Harvill made buy-back demands against the chassis manufacturer as well as Fleetwood;8 and (2) the trial court erred in setting as a starting date for the accrual
of interest the date of Harvill’s first demand for rescission since, under Song-Beverly, she had no right to rescission until a later point when Fleetwood had been afforded a reasonable number of attempts to repair the product.
The trial court awarded interest under Civil Code section 3287, subdivision (a).9 Under this provision, “prejudgment interest is allowable where the amount due plaintiff is fixed by the terms of a contract, or is readily ascertainable by reference to well-established market values. [Citations.] On the other hand, interest is not allowable where the amount of the damages depends upon a judicial determination based upon conflicting evidence and is not ascertainable from established market prices or values. [Citations.] [P] . . . [P] Where the amount of a claim is certain, but is
reduced by reason of an unliquidated setoff, interest properly is allowed on the balance found to be due from the time it became due. [Citations.] [P] . . . [P] In an action based upon rescission of a contract, the plaintiff’s right to repayment of moneys paid under the contract is fixed by the rescission, and interest on the moneys paid thus is recoverable from the date of rescission. [Citations.]” (Leaf v. Phil Rauch, Inc. (1975) 47 Cal. App. 3d 371, 375-376, 120 Cal. Rptr. 749 (Leaf).)
In Leaf, the Court of Appeal reversed a judgment denying prejudgment interest in an action seeking rescission
of a contract to purchase an automobile and restitution of the purchase price. The court held that the elements of plaintiffs’ damage were sufficiently “certain” for purposes of section 3287 even though the determination of the amount of the offset for use of the automobile was based on conflicting evidence. (Leaf, supra, 47 Cal. App. 3d at p. 376.)
Fleetwood distinguishes Leaf on the ground that the plaintiffs in that case sought restitution from a single defendant. Fleetwood relies instead on multiple-defendant tort cases in which prejudgment interest was disallowed because the portion of damages for which each defendant was liable could not be made certain until the fact-finder determined its comparative fault. (See National Union Fire Ins. Co. v. Showa Shipping Co., Ltd. (9th Cir. 1995) 47 F.3d 316 [no prejudgment interest in indemnity suit arising from auto accident where defendant's liability to indemnify insurer could not be made certain without determining the proportionate liability of other tortfeasors]; Taing v. Johnson Scaffolding Co. (1992) 9 Cal.App.4th 579 [error to award prejudgment interest under Code Civ. Proc., § 998
in personal injury case where plaintiff made joint settlement offer to multiple defendants without specifying how the amount should be allocated among the defendants]; see also, Wisper Corp. v. California Commerce Bank (1996) 49 Cal.App.4th 948 [damages not capable of being made certain under § 3287, subd. (a) before relative fault of plaintiff and defendant are determined].)
However, cases involving comparative fault principles are of little guidance here. Freightliner and Fleetwood each manufactured separate components of the motor home and made separate warranties. Each defendant was either 100 percent liable for reimbursement of the purchase price to Harvill or it was not liable at all. Fleetwood’s liability could not be reduced by Freightliner’s comparative fault or vice versa.
The facts here are more analogous to those in Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 863 P.2d 179 (Lakin) than to the comparative fault cases Fleetwood relies on. The plaintiff in Lakin made an offer pursuant to Code of Civil Procedure section 998, subdivision (b) to a trucking company in a personal injury case.
After the jury awarded compensatory damages jointly and severally against the trucking company and the truck driver, plaintiff sought an award of prejudgment interest. (Id. at p. 649.) The California Supreme Court held that the fact that another defendant was found jointly liable for the same damages as the trucking company did not affect the plaintiff’s right to prejudgment interest: “We perceive no significance in the fact that the compensatory damages claimed against defendant trucking company included damages for the conduct of defendant truck driver. If plaintiff had made an undifferentiated settlement offer to both defendants and then had obtained a judgment for which defendants were not jointly liable, an issue of apportionment might arise. (See, e.g., Taing v. Johnson Scaffolding Co. (1992) 9 Cal.App.4th 579.) The present situation, however, differs in two respects: plaintiff made her offer to only one defendant, and that defendant was either solely liable or jointly and severally liable for the entire judgment. [Citation.]” (Lakin, at p. 658, fn. 9; see also, Bihun v. AT&T Information Systems, Inc. (1993) 13 Cal.App.4th 976, 1000-1001
(Bihun) and Steinfeld v. Foote-Goldman Proctologic Medical Group, Inc. (1996) 50 Cal.App.4th 1542, 1546-1550 (Steinfeld) [upholding validity of unapportioned 998 offers made to multiple defendants where defendants are jointly liable for same damages].)
In this case, although Fleetwood and Freightliner were not jointly and severally liable for restitution of Harvill’s purchase price, each was 100 percent liable, if at all, for the same damages remedy. Thus, Freightliner’s potential liability to Harvill in no way reduced Fleetwood’s liability for its own breach of Song-Beverly’s replace-or-refund requirement. The amount of Fleetwood’s liability was certain in advance of trial because that liability was not subject to reduction by any apportionment based on comparative fault. Just as in Lakin, Bihun, and Steinfeld, the fact that Harvill could not have collected a double recovery of her purchase price does not affect her entitlement to prejudgment interest.
We do not reach the merits of Fleetwood’s objection to the amount of prejudgment interest awarded. No issue was raised in Fleetwood’s trial court brief on prejudgment interest, nor at oral
argument on Harvill’s motion for interest, concerning the starting date for the assessment of prejudgment interest. Fleetwood waived objection to the starting date by failing to raise the issue in the trial court. (In re Marriage of Hinman (1997) 55 Cal.App.4th 988, 1002.)
We concur: Marchiano, P.J., Swager, J.
1. Civil Code sections 1790 et seq. (referred to hereinafter as Song-Beverly). Unless otherwise indicated, all further statutory references are to the Civil Code.
2. Fleetwood’s warranty provided in pertinent part as follows: “Your new motor home, including the structure, plumbing, heating and electrical systems, and all appliances and equipment installed by the manufacturer, is warranted under normal use to be free from manufacturing defects in material or workmanship. [P] . . . [P] If a problem occurs which the owner believes is covered by this warranty, the owner shall contact the selling dealer, or other authorized dealer, giving him sufficient information to resolve the matter. The owner shall deliver the motor home to the dealer or manufacturing plant location for warranty service. [P] . . . [P] If the dealer is unable or unwilling to resolve a problem which the owner is convinced is covered by the warranty, [the owner] should contact the manufacturing plant at the address listed below and provide the manufacturer with a description in writing of the problem and attempts made to resolve it. [P] Upon receipt of notice of a claim, where the dealer was unable or unwilling to resolve the problem, the manufacturing plant will repair or replace any parts necessary to correct defects in material or workmanship or will take other appropriate action as may be required.”
3. Harvill also reported problems in 1999 with the exterior compartment doors, the washer-dryer unit, the glide-out system for adding extra floor space, the jacks used to level the vehicle when parked, the sofa bed, the interior carpeting, and the vehicle’s handling and stability on the road. These issues are not involved in this appeal.
4. Thompson’s records reflect Harvill’s complaint about the entry door on her January 12 visit, but they do not show that any repair work was actually performed on that date.
5. According to Fleetwood’s records, Harvill requested the October date.
6. Harvill asserts on appeal that the necessary repairs would have cost $ 29,000, but Fleetwood disputes this.
7. In fact, Fleetwood admits on appeal that the cost of repair is “the only evidence which might have supported Fleetwood’s contention that Ms. Harvill’s [sic] could not demonstrate substantial impairment.”
8. Freightliner, the chassis manufacturer, settled with Harvill for $ 7,000, and was not named as a defendant in Harvill’s second amended complaint filed just before trial.
9. Civil Code section 3287, subdivision (a) authorizes an award of prejudgment interest in pertinent part as follows: “Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day . . . .”
If you have any questions about the Harvill Case or the California Lemon Law in general please contact Attorney Stephen Barnes for a free consultation. Attorney Barnes has more than 21 years experience handling California Lemon Law cases.