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Provision of ‘Lemon Law’ Disallowing Waiver Of Rights Is Not Absolute, C.A. Declares
Statute Says There’s No Waiver Except As Expressly Authorized; Opinion Says That Language May Sometimes Be Disregarded
By a MetNews Staff Writer
Div. One of the Fourth District Court of Appeal has held that in light of a provision of the state’s “lemon law” precluding the waiver of rights under the act except where expressly allowed, a man may proceed in his action against Nissan based on defects in a vehicle he leased notwithstanding a settlement he reached with the auto-maker—but the opinion specifies that in appropriate cases, the anti-waiver provision could be ignored.
That opinion, filed Tuesday, reverses a summary judgment awarded by San Diego Superior Court Judge Timothy B. Taylor in favor of Nissan North America, Inc. and one of its dealerships. At issue was the applicability of Civil Code §1790.1, a portion of the Song-Beverly Consumer Warranty Act, known as the “lemon law.” It says:
“Any waiver by the buyer of consumer goods of the provisions of this chapter, except as expressly provided in this chapter, shall be deemed contrary to public policy and shall be unenforceable and void.”
No provision of the act expressly authorized plaintiff Derek Rheinhart’s relinquishment of rights under the act by agreeing that his acceptance of a cash payment of roughly $3,500 cut off any litigation remedy.
No Categorical Prohibition
Justice Terry B. O’Rourke said that Taylor erred in failing to apply the no-waiver provision, but declared:
“[W]e do not interpret the Act’s antiwaiver provision to categorically prohibit all settlement agreements.”
While finding that the equities compel applying it in Rheinhart’s action against Nissan, he wrote:
“We emphasize that our holding is not that section 1790.1 precludes settlement and release of claims under the Act. To be sure, there are many instances where parties have settled disputes over a claimed breach of the Act.”
He explained in a footnote:
“[W]e do not hold the antiwaiver provision bars parties in Song-Beverly Act cases from ever settling disputes. We may reject a literal construction that would lead to absurd results….This appeal gives us no occasion to enumerate the circumstances validating settlements of Song-Beverly Act claims, we simply hold that the Release here contravened Rheinhart’s rights to elect the Act’s substantive remedies.”
Release Is Void
In finding that the release in issue “contravenes Rheinhart’s substantive rights under the Act and is void and unenforceable as against public policy,” O’Rourke set forth:
“It is undisputed that Rheinhart presented the rear-view camera issue to Nissan on three occasions, and that thereafter Nissan agreed to pay him $3,548.40 in compromise. There is no evidence that before Nissan presented Rheinhart with the settlement agreement that it advised him of the Act’s replacement or restitution remedies or the fact Nissan had an affirmative obligation to offer those remedies once it engaged in a reasonable number of repair efforts.”
He continued:
“There is no indication Nissan’s $3,548.40 settlement payment endeavored to approximate the vehicle’s purchase price or other sums owed under the Act for reimbursement. There is no evidence otherwise that Rheinhart, who was unrepresented by counsel, was aware of his rights under the Act or its antiwaiver provision. He did not expressly waive his rights under the Act. The circumstances suggest unequal bargaining strength between a consumer unaware of his rights and a manufacturer seeking to circumvent its statutory obligations.”
The case is Rheinhart v. Nissan North America, Inc., 2023 S.O.S. 2172.
Second Case
Also decided on Tuesday was another case involving the lemon law. Acting Court of Appeal Presiding Justice Helen I. Bendix of this district’s Div. One authored the opinion, which was not certified for publication.
Laurence and Tambia Rossiter sued American Honda Motor Co., Inc. under the Song-Beverly Act on Oct. 22, 2021, alleging a breach of the implied warranty of merchantability based on defective transmission-controlling software in a vehicle that was delivered to them no later than Oct. 22, 2015. In the ensuing years, Honda was unwilling to remedy the problem despite demands.
Los Angeles Superior Court Judge Rupert A. Byrdsong sustained demurrers without leave to amend based on a four-year statute of limitation. The Rossiters appealed from the ensuing judgment of dismissal, arguing that it was not until June 22, 2021, that they received a letter from Honda advising of its awareness of the defect.
Delayed Discovery Rule
They contended that under the delayed-discovery rule, the clock on the limitations period did not start ticking until they received the 2021 letter.
Honda relied on Commercial Code §2725, which provides:
“(1) An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued. . . .
“(2) A cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.”
The Rossiters invoked the fourth paragraph of the section which says:
“This section does not alter the law on tolling of the statute of limitations nor does it apply to causes of action which have accrued before this code becomes effective.”
Bendix’s Opinion
Bendix said that before the Commercial Code was adopted in 1967, the date of discovery of a defect was relevant to when the cause of action accrued. But the Legislature’s enactment of the code, based on the Uniform Commercial Code, changed that.
“Were we to deem the delayed discovery rule a tolling doctrine under Commercial Code section 2725, subdivision (4), we would be resurrecting the ‘pre-section-2725’ case law that the Legislature intended to abrogate.”
The Rossiters also alleged that Honda fraudulently concealed knowledge of the defect.
“By failing to address the issue of intent to defraud at all in their briefing, the Rossiters have abandoned any claim that they can, or have already, pleaded sufficient facts to show Honda possessed the requisite intent,” Bendix wrote.
That case is Rossiter v. American Honda Motor Co., B321877.
Palmdale attorney James S. Kostas represented the Rossiters. Trevor J. Ingold, Jessica L. Barakat and Jordan R. Fisher of the downtown Los Angeles firm of Lewis Brisbois Bisgaard & Smith acted for Honda.
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