Lemon Law Cases Hit the Courts
California’s lemon law seems simple enough: if you experience a serious defect with your car while it is still under warranty, but the dealer can’t fix the problem after a reasonable number of attempts, you are entitled to return the car and get your money back, exchange your vehicle for a replacement, or keep the car and obtain a cash settlement for its diminished value. But just because the lemon law can be summed up in one sentence doesn’t mean it’s that easy to apply in practice. Dealers faced with lemon law claims often fight hard to avoid giving refunds or replacement vehicles, forcing vehicle owners and lessees to get a lawyer and, often, go to court to secure their rights. In fact, several high-profile lemon law cases are currently winding their way through the California courts as we speak. Read on to learn more about some of these cases as we eagerly await a final word from the California Supreme Court to clarify consumers’ vital lemon law rights. Meanwhile, if you believe you have a lemon law claim but are getting pushback from the dealer, contact Nita Lemon Law in Los Angeles to review your case with an experienced and successful California lemon law attorney.
Rodriguez v. FCA US, LLC
This case is set to answer the crucial question of whether the California lemon law applies to people who bought used cars with defects that are still covered by the manufacturer’s original warranty. So far, the California Court of Appeals has said no, but the case was appealed to the California Supreme Court for the final say. Prior to Rodriguez, California courts routinely ruled that the lemon law applied to all vehicles covered under the manufacturer’s new car warranty, regardless of whether the car was currently owned by the original purchaser or a secondary car buyer. The case was fully briefed to the California Supreme Court in May of 2023, and the lemon law world is still eagerly awaiting a ruling.
Niedermeier v. FCA US, LLC
The California Supreme Court heard oral arguments in this case last December. In Niedermeier, the plaintiff sued Chrysler over the manufacturer’s delay in finalizing the buyback of her lemon. The plaintiff in the case alleges that this delay caused her to have to trade in her vehicle instead. The question for the court is whether the vehicle’s trade-in value should be offset from the award she won at trial. The plaintiff claims that allowing the defendant to subtract the trade-in value encourages dealers to delay buybacks and force trade-ins. On the other side of the v., defendants allege that plaintiffs receive a windfall they aren’t entitled to if the award isn’t offset by the trade-in. Appellate courts in California are split on which way to rule in this situation, setting the stage for a showdown in the state’s court of last resort.
Ford Motor Warranty Cases
Several cases have been consolidated on the issue of arbitration of defect claims. Manufacturers often include binding arbitration provisions in their limited express warranties, and enforcing those provisions keeps them from having cases decided by a jury by being forced into arbitration instead. However, manufacturers are not typically signatories to the sales contract, which is between the car buyer and the dealer. In Felisilda v. FCA US LLC, the California Court of Appeals, Third District, held that a manufacturer could enforce the arbitration provision anyway. That court held that breach of warranty claims were closely connected with the sale contract, and the plaintiff could not seek to enforce the consumer protection aspects of the warranty while avoiding other parts of the warranty, i.e., the arbitration provision.
However, subsequent decisions have held that a non-signatory manufacturer cannot enforce these arbitration clauses. Noteworthy, on April 4, 2023, the Court of Appeal of the State of California, Second Appellate District, Division Eight, decided and published the case of Martha Ochoa v. Ford Motor Company (2023) 89 Cal.App.5th 1324, 306, Cal.Rptr.3rd 611. Ochoa is squarely on point and finally resolves the issue of whether a car manufacturer who is a nonsignatory to a lease agreement has a right to compel arbitration under a lease agreement in a lemon law case. It cannot. Ochoa held that a nonsignatory car manufacturer, Ford Motor Company, did not have any right to compel arbitration under the contract–not under the doctrine of equitable estoppel, not as a third-party beneficiary, and not as an undisclosed principal.
Ochoa and Montemayor Ford Motor Cases declined to follow Felisilda and held that a plaintiff buyer’s claims are not intimately founded in and intertwined with the sale contract. Furthermore, Ochoa held that “manufacturer vehicle warranties that accompany the sale of motor vehicles without regard to the terms of the sale contract between the purchaser and the dealer are independent of the sale contract” and that “Plaintiff’s claims are not founded in the sale contract.” According to the Ochoa court, “California law does not treat manufacturer warranties imposed outside the four corners of a retail sale contract as part of the sale contract. In Greenman v. Yuba Power Products, Inc. (1963) 59 Cal.2d 57, our Supreme Court distinguished between, on the one hand, warranty obligations flowing from the seller to the buyer by contract, and, on the other hand, manufacturer warranties ‘that arise independent of a contract of sale between the parties.’”
This split in the appeals courts tees the case up for the high court to resolve the matter. The state’s Supreme Court granted a petition to review the matter last July after the Second Appellate District affirmed an order denying a motion to compel arbitration. Pending the Supreme Court’s review, parties in litigation can cite the Ford Motor Warranty Cases decision for its persuasive value and also for the limited purpose of establishing the existence of a conflict in authority.
Contact Nita Lemon Law for Help With a California Lemon Law Claim
If you think you’ve been stuck with a lemon or victimized by auto dealer fraud, call Nita Lemon Law Firm in Los Angeles at 213-232-5055 or 877-921-5256 throughout California for a free consultation to discuss your situation and find out how we can help.
