Ericka Perez Beruman v. Volkswagen Group of America, Inc., et al.

Relevant Facts:

On September 16, 2023, Plaintiff purchased a used, non-certified pre-owned 2022

Volkswagen Tiguan (the Subject Vehicle) from STG Auto Group, a third-party retailer that is not

5 Material facts are “facts that relate to the cause of action, claim for damages, issue of duty, or affirmative defense that is the subject to the motion and that could make a difference in the disposition of the motion.” (Rules of Court, Rule 3.1350(a)(2).) Page | 10

an authorized VW dealership and has no affiliation with VW. (UF # 1 - Undisputed.) VW did not

issue or extend any warranties on the Subject Vehicle as part of its sale to Plaintiff. (UF # 2 -

undisputed.)

Despite multiple repair attempts, the Subject Vehicle continued to exhibit the same or

related nonconformities. (AF # 1.) Defendant was provided a reasonable number of opportunities

to repair the Subject Vehicle, but failed to bring the vehicle into conformity with its warranties.

(AF # 2.) As a result of Defendant’s failure to repair the Subject Vehicle, Plaintiff suffered

damages. (AF # 3.)

On or about October 8, 2024,6 Plaintiff commenced this action against VW and Martin

Motors, alleging non-conformities with the Subject Vehicle that was not a dealer demonstrator.

Plaintiff also asserted a cause of action for negligent repair against Martin Motors and a cause of

action under California’s Unfair Competition Law against Defendants. (UF Nos. 3 and 5. -

Undisputed.) No Authorized VW retailer sold the Subject Vehicle to Plaintiff with either a VW

new car warranty or a CPO warranty. (UF # 4 - Undisputed.)

There is absolutely no evidence of any alleged non-conformity of the Subject Vehicle

having caused any personal injury or property damage. (UF # 6 - Undisputed.)

Analysis:

Plaintiff’s First and Second Causes of Action for Violation of the Song-Beverly Act:

Summary judgment is appropriate as to Plaintiff’s causes of action for violation of the

Song-Beverly Act, because the Subject Vehicle is not a “new motor vehicle” under the Act,

which provides special consumer remedies to purchasers of new consumer goods including “new

motor vehicles” sold with express warranties. (Robertson v. Fleetwood Travel Trailers of

6 Defendants’ undisputed facts indicate that the Complaint was filed on October 14, 2024. This is a typo as the complaint was filed on October 8, 2024.

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California, Inc. (2006) 144 Cal.App.4th 785, 798 (Robertson); (Rodriguez v. FCA US, LLC

(2024) 77 Cal.App.5th 209 (Rodriguez) [holding that the Song-Beverly Act does not apply to

used cars.].) The remedy at issue here, commonly called the “refund-or-replace” provision or

“buy-back” provision, is set forth in Civil Code section 1793.2, subdivision (d)(2), which is one

of the Act’s provisions specifically applicable to motor vehicles and provides:

If the manufacturer or its representative in this state is unable to service or repair a new motor vehicle, as that term is defined in paragraph (2) of subdivision (e) of Section 1793.22, 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). (Civ. Code § 1793.2, subd. (d)(2).)

The Act defines “new motor vehicle” as: A new motor vehicle that is bought or used

primarily for personal, family, or household purposes. New motor vehicle also means a new

motor vehicle with a gross vehicle weight under 10,000 pounds that is bought or used primarily

for business purposes by a person or any other legal entity, to which not more than five motor

vehicles are registered in this state. New motor vehicle includes the chassis, chassis cab, and that

portion of a motor home devoted to its propulsion, and a dealer-owned vehicle and a

demonstrator or other motor vehicle sold with a manufacturer’s new car warranty. A

demonstrator is a vehicle assigned by a dealer for the purpose of demonstrating qualities and

characteristics common to vehicles of the same or similar model and type. (Civ. Code, §

1793.22, subd. (e)(2).)

The Act also provides for implied warranties of merchantability and fitness for consumer

goods, i.e., new products, including motor vehicles. (Civ. Code, §§ 1791.1 subd. (c) and 1792.)

These implied warranties may not last less than 60 days or more than one year after the sale of

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the consumer goods to which they apply, and liability for their breach lies with the manufacturer.

(Civ. Code, §§ 1791.1, subd. (c) and 1792.)

The Act does have protections for used goods; however, those protections are limited and

bind the seller or distributor of the used product. (Civ. Code, § 1795.5.) The evidence presented

show and Plaintiff does not disagree, VW was neither the seller nor distributor of the used

vehicle in this case. Civil Code section 1795.5 provides express warranty protections for used

goods only where the seller or distributor of the used product issues an express warranty at the

time of sale. The provision states: Notwithstanding the provisions of subdivision (a) of Section

1791 defining consumer goods to mean new goods, the obligations of a distributor or retail seller

of used consumer good in a sale in which an express warranty is given shall be the same as that

imposed on manufacturers under this chapter. (Civ. Code, § 1795.5.) It shall be the obligation of

the distributor or retail seller making express warranties with respect to such goods when new to

maintain sufficient service and repair facilities within this state to carry out the terms of such

express warranties. (Civ. Code, § 1795.5, subd. (a).)

Further, the Act also provides implied warranties for used products. These are shorter

than the implied warranties for new products; their maximum duration is three months. (Civ.

Code, § 1795.5, subd. (a).) As with liability for breach of express warranties, in the sale of used

consumer goods, liability for breach of implied warranty lies with distributors and retailers, not

the manufacturer, unless the manufacturer issues a new warranty along with the sale of the used

good. (Ruiz Nunez v. FCA US LLC (2021) 61 Cal.App.5th 385, 398 (Nunez); Kiluk v. Mercedes-

Benz USC, LLC (2019) 43 Cal.App.5th 339, 340 (Kiluk) [finding that “The Song-Beverly Act

provides similar remedies in the context of the sale of used goods, except that the manufacturer

is generally off the hook.”].)

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The statutory framework makes one principle clear: the Act’s consumer remedies apply

against the party that sold the product and issued the operative warranty.

Here, it is undisputed that neither VW nor one of its authorized dealerships sold the

Subject Vehicle to Plaintiff. (UF Nos. 1 and 4.) It is further undisputed that VW did not issue or

extend any warranty in connection with Plaintiff’s purchase of the used vehicle. (UF # 2.) VW

was not involved in the transaction at all. (UF Nos. 1 and 4.) Because the Subject Vehicle was

purchased used from a non-authorized third-party retailer, and because VW did not issue an

express warranty in connection with that sale, the refund-or-replace provisions of Civil Code

section 1793.2, subdivision (d)(2) do not apply as a matter of law.

Plaintiff attempts to argue that she bought the Subject Vehicle with residual warranty

rights. However, the mere existence of residual warranty rights does not transform the used car

sale into a new car sale. The Rodriguez Supreme Court expressly held that the Song-Beverly

Act’s buy-back or restitution rights are not available to purchasers of used motor vehicles with

some balance remaining on the manufacturer’s express warranty. (Rodrigues, supra, 77

Cal.App.5th at pp. 220-223.)

In Rodriguez, the plaintiffs argued that the phrase “other motor vehicle sold with a

manufacturer’s new car warranty” described their used vehicle because it still had a balance

remaining on an express warranty from the manufacturer when the dealer sold the vehicle to

plaintiffs. (Rodrigues, supra, 77 Cal.App.5th at p. 220.) The Rodriguez court found the plaintiffs’

interpretation of the phrase incorrect, concluding that plaintiffs’ interpretation of the phrase was

at odds with the rest of the Act’s definition of “new motor vehicles.” (Id. at pp. 220-223.) “While

we acknowledge that in isolation the phrase “other motor vehicle sold with a manufacturer’s new

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car warranty” could arguably refer to any car sold with a manufacturer’s warranty still in force,

we agree with FCA that context clearly requires a narrower interpretation.” (Id. at pp. 219-220.)

“To begin with, the phrase appears in a definition of new motor vehicles. That fact alone strongly suggests the Legislature did not intend the phrase to refer to used (i.e., previously sold) vehicles. But, more importantly, the phrase is preceded by ‘a dealer-owned vehicle and demonstrator,’ which comprise a specific and narrow class of vehicles.... [D]emonstrators and dealer-owned vehicles comprise a narrow category of basically new vehicles - they have never been previously sold to a consumer and they come with full express warranties. Given this context, we think the most natural interpretation of the phrase ‘other motor vehicle sold with a manufacturer’s new car warranty’ is that it, too refers to vehicles that have never been previously sold to a consumer and come with full express warranties.”

(Id. at p. 220)

The Rodriguez court provided further context for and explanation of its holding: “As

we’ve seen, the Act makes it clear when a provision applies to used or previously owned

products by including the term ‘used’ in the provision. Notably, that term is absent from the

definition of ‘new motor vehicle’ as well from the manufacturer’s refund or replace provision.’

Further, the Song-Beverly Act defines ‘express warranty’ as any ‘written statement arising out of

a sale to the consumer of a consumer good pursuant to which the manufacturer ... undertakes to

preserve or maintain the utility or performance of the consumer good .... Cal. Civ. Code, §

1791.2, subd. (a)(1).” (Id. at p. 222.) The Rodriguez court found that the powertrain warranty

applicable to the plaintiffs’ vehicle did not arise out of the sale of the vehicle to the plaintiffs;

instead, it transferred to the plaintiffs by operation of law along with title to the truck. (Id.) In

fact, the limited powertrain warranty arose from the initial sale to the truck’s first buyer. (Id.)

This definition of “consumer” indicates the Legislature is aware of the distinction

between warranties that arise out of a sale and those that transfer to subsequent purchasers as a

result of a sale. The lack of reference to transferred warranties in the definition of “new motor

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vehicle” suggests the Legislature made a deliberate choice not to include sales of used vehicles

accompanied by unexpired express warranties. (Id.)

The Rodriguez court thus concluded that the phrase “other motor vehicle sold with a

manufacturer’s new car warranty” unambiguously refers to cars that come with a new or full

express warranty. (Id.) In so doing, the court held that the Act’s refund-or-replace remedy is not

available to purchasers of used cars accompanied by some balance of the original warranty.

The Rodriguez court found additional support for its holding in Johnson v. Nissan N. Am.,

Inc. (N.D. Cal. 2017) 272 F.Supp.3d 1168, where the plaintiff sued Nissan under the

manufacturer’s refund-or-replace provision after the used car she purchased suffered alleged

defects. She argued she was entitled to relief because her car was still covered by Nissan’s three-

year basic warranty. The court disagreed and dismissed her claim on the ground that her car was

not a “new motor vehicle.” The court explained that the only way plaintiff would be entitled to

the Act’s express warranty protections was if the used car seller had “extended express and

implied warranties to her.” (Id. at p. 1179.)

This case mirrors Rodriguez and Johnson. The undisputed facts establish that Plaintiff

purchased the Subject Vehicle used, from STG Auto Group, a third-party, non-authorized retailer

unaffiliated with VW. (UF # 1.) VW did not sell the vehicle to Plaintiff and did not issue or

extend any warranty in connection with that sale. (UF Nos. 1-2 and 4.) Any remaining warranty

coverage did not arise from Plaintiff’s transaction; it merely transferred, if at all, by operation of

law from the original retail sale.

Under Rodriguez, that transfer does not convert a used vehicle into a “new motor

vehicle” within the meaning of the Song-Beverly Act. Because the Subject Vehicle was

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purchased used, non-certified pre-owned, and without a new VW warranty issued in connection

with Plaintiff’s sale (UF Nos. 1-2 and 4), it does not qualify as “new” as a matter of law.

Plaintiff has failed to submitted any admissible evidence to raise a triable issue of

material fact as to Plaintiff’s Song-Beverly claims against VW.

For these reasons, Plaintiff’s Song-Beverly claims against VW fail and summary

adjudication is proper as to Plaintiff’s first and second causes of action.

Plaintiff’s Third Cause of Action for Negligent Repair:

The Economic-Loss Rule provides that “[w]here a purchaser’s expectations in a sale are

frustrated because the product he bought is not working properly, his remedy is said to be in

contract alone, for he has suffered only ‘economic’ losses.” (Robinson Helicopter Co., Inc. v.

Dana Corp. (2004) 34 Cal.4th 979, 988.) The doctrine hinges on a distinction between

transactions involving the sale of goods that fail to meet the buyer’s economic expectations, and

“those involving the sale of defective products to individual consumers who are injured in a

manner which has traditionally been remedied by resort to the law of torts.” (Id.)

A buyer who has suffered only “economic loss due to disappointed expectations” is

therefore generally required to seek recovery under contract law, not tort law. (Id.) “Economic

loss” means “damages for inadequate value [received], costs of repair and replacement of the

defective product or consequent loss of profits—without any claim of “personal injury or

damages to other property....” (Id.; Jimenez v. Superior Court (2002) 29 Cal.4th 473, 482.)

That basic dichotomy - requiring purely economic damages to be sought in contract and

permitting recovery in tort only where the losses involve personal injury or harm to other

property - dates back to the California Supreme Court’s decision in a case that involved a

defective vehicle covered by a warranty. (Seely v. White Motor Co. (1965) 63 Cal.2d 9, 14.) The

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Seely Court noted that tort law had been expanding to deal with the problem of injuries caused

by defective products. (Id. at pp. 15-16.) But the Court refused to expand it further to cover

situations that involved only economic loss. Expanding tort liability was appropriate in physical

injury cases because of the severe consequences to the injured party and because the risk could

be insured against and then “distributed among the public [through increased prices] as a cost of

doing business.” (Id. at pp. 18-19.) But “[t]hat rationale in no way justifies requiring the

consuming public to pay more for their products so that a manufacturer can insure against the

possibility” that some customers might incur a purely economic loss because its products failed

to meet expectations. (Id. at p. 19.)

Recovery for economic loss was therefore limited to contract law. (Seely, supra, 63

Cal.2d at p. 19.) The U.S. Supreme Court held that where the harm is limited to economic loss,

“warranty law sufficiently protects the purchaser by allowing it to obtain the benefit of its

bargain.” (East River S.S. Corp. v. Transamerica Delaval, Inc. (1986) 476 U.S. 858, 871-875.)

Here, Plaintiff does not allege any personal injury or damage to property other than the

Subject Vehicle. (UF Nos. 5-6.) Plaintiff does not dispute these facts. Plaintiff’s Prayer for Relief

seeks only economic damages. In discovery, when asked to identify the nature and amount of

damages sought, Plaintiff identified only economic losses – such as amounts related to the

purchase contract, insurance premiums, registration fees, and related vehicle expenses. (UF # 6,

Exh. C.)

There is no evidence of personal injury. There is no evidence of damage to other

property. (Id.) Plaintiff’s alleged losses stem solely from the Subject Vehicle’s purported failure

to meet her expectations. Under California law, such purely economic losses are recoverable, if

at all, in contract, not in tort. Accordingly, to the extent Plaintiff asserts tort-based claims seeking

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recovery for economic losses only, those claims are barred by the economic loss rule and must

be dismissed as a matter of law.

Plaintiff has failed to submitted any admissible evidence show any personal injury or

property damage and only argues economic loss related to the repair of the Subject Vehicle.

For these reasons, Plaintiff’s negligent repair claim against Martin Motors fails and

summary adjudication is proper as to Plaintiff’s third causes of action.

Plaintiff’s Fourth Cause of Action for California’s Unfair Competition Law (UCL):

UCL prohibits “any unlawful, unfair or fraudulent business act or practice.”

(Massachusetts Mutual Life Ins. Co. v. Superior Court (2002) 97 Cal. App. 4th 1282, 1288; Bus.

& Prof. Code, § 17200.) The statute encompasses three distinct prongs - unlawful, unfair, and

fraudulent conduct. (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 619.)

Here, there has been no evidence produced supporting Plaintiff’s UCL claim, just legal

conclusions. Plaintiff has not identified any independent unlawful, unfair, or fraudulent conduct

by Defendants. The absence of supporting evidence alone warrants granting summary

adjudication.

The Complaint makes clear that Plaintiff’s UCL claim is entirely derivative of her Song-

Beverly warranty claims. (Compl. ¶¶ 31, 43 and 47.) The alleged “unlawful” conduct is nothing

more than the purported breach of express and implied warranties.

Accordingly, since UCL predicated upon unlawful prong, and the Act claims fails, then

so does the UCL. Therefore, grant Defendants’ motion for summary judgment, or in the

alternative, summary adjudication in its entirety.

Ruling

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GRANT Defendants’ motion for summary judgment, or in the alternative, summary adjudication in its entirety. (UF Nos. 1-6; and Evidence: Roberson Decl. and Exhs. 1A-1D; Lewis Decl. and Exh. 2A; and Peronace Decl. and Exh. 3A)

Movant to give notice.

Dated-

____________________________ Judge

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