Cal Biz Lit

New Auto Dealership Case: New Cars, Used Cars and the Consumer Legal Remedies Act

This is a development of potential significance to our automobile dealership clients. The most valuable California statute for the plaintiff in consumer litigation is often the Consumer Legal Remedies Act (CLRA; Civ.Code section 1750 et seq.)  The CLRA lists 23 business practices as "unlawful" (Id., section 1770, subd.(a)), and is intended to "protect consumers against unfair and deceptive business practices."  Subdivision (a)(6) makes it unlawful for a seller to represent goods are new "if they have deteriorated unreasonably or are altered, reconditioned, reclaimed, used or secondhand."  The statute applies to the sale of any consumer goods.

On the other hand, Vehicle Code section 430 defines a "new" vehicle as one "constructed entirely from new parts that has never been the subject of a retail sale, or registered" with a government agency or authority.  And  Vehicle Code section 9990 requires motor vehicle dealers to disclose prior repaired material damage, while section 9991 defines "material"  damage is damage requiring repairs costing more than 3 per cent of the MSRP or $500, whichever is greater.

So what happens when the CLRA and the Vehicle Code collide?  That was the question in Bourgi v. West Covina Motors (September 24, 2008) ___Cal.App.4th___ (Second Dist., Div. Eight, B195738). 

More after the jump.

Court of Appeal Endorses Early Use of Code of Civil Procedure Section 998 Offers of Judgment

I’ve blogged often on California’s Code of Civil Procedure Section 998 – recent previous posts are here and here.  Briefly, Section 998 is our version of FRCP 68, and can be effective for obtaining pre-judgment interest, and for shifting both enhanced costs (primarily expert costs, which can be substantial) and sometimes attorneys’ fees.

Some of the open questions have been these:  When the case is brand new, and there has effectively been no time for discovery, can one party set up the other for cost and fee shifting by sending out an offer of judgment, with thirty days to respond?  Can the party receiving the offer object that it is premature?  It now appears that the answers to these questions are “yes” and “no.”

Barba v. Perez (2008) ___ Cal.App.4th ___ (3rd Dis., C05428) was a personal injury case.  Nine days after filing, plaintiff served defendant with the summons, complaint and a Section 998 offer to compromise for $99,999.99.  The case went to trial, and the jury awarded $117,053.432.  So Plaintiff beat the offer.

When the plaintiff sought pre-judgment interest and enhanced costs, the defendant contested on the ground that “[i]t is unreasonable to expect that [he], when first faced with the service of summons and a complaint, would have a reasonable basis to believe an offer to compromise was fair,” and he “had absolutely no basis to determine if the offer was reasonable.”  The trial court granted enhanced costs and interest.

Held:  affirmed.  The trial court had discretion to award interest and enhanced costs, and there is no waiting period for an offer of judgment: 

"Even assuming a situation . . . where a defendant has no information about the plaintiff’s damages when served with an early section 998 offer, defense counsel may request that plaintiff provide informal discovery on the damage issue and/or allow an extension of time to respond to the demand.  If plaintiff’s counsel refused to accord the defendant these courtesies and unyieldingly insisted that defendant respond without information, such conduct could then be presented to the trial court when it considered whether to award special fees and costs.”

Stunner Verdict Against Utility for Failing to LIght Tower

When I was a young associate in an insurance defense firm about 300 years ago, our senior partner made one of the other associates try a plaintiff death case.  I say "made him" try it, because the theory was that our client's decedent, a small airplane pilot, was the victim of negligence when he flew his plane into the side of a mountain next to an air strip on a bright, sunny, cloudless day.  We always thought it was the senior partner's way of teaching the associate humility, and I think the jury was out just about long enough to choose a foreperson before coming back with a defense verdict.

Well, here's a verdict from a rather similar case, obtained by a pretty talented lawyer:  A San Diego jury awarded $15.2 million in compensatory damages and $40.4 million in a death case involving four Camp Pendleton marines killed in a 2004 helicopter crash.  The accident, of course, is tragic.  But the theory, which the jury apparently bought, was that San Diego Gas & Electric was negligent for not putting safety lights on a tower;  the pilot whose heirs were not parties to the case) crashed into the unlit tower.  Per the Los Angeles Times story, the cable (and presumably the tower) had been on the base without incident for twenty-five years.

Hat tip to California Punitive Damages, An Exemplary Blog.