As I have mentioned quite a few times in my blogs, I mediate a lot of lemon law cases or cases filed under California’s Song-Beverly Consumer Warranty Act (Civ. Code section 1790 et seq. (“Act”). In many of my mediations, once the defendant vehicle manufacturer agrees to repurchase the vehicle, the plaintiff demands that all the registration fees (i.e., for each year of ownership) be reimbursed.

A recent case decided by the Fourth Appellate District covering Orange County, California has held that only the initial registration fee, or the fee paid at the time of the purchase or lease of the vehicle is recoverable.  All subsequent registration renewals are costs to be absorbed by the consumer even if the vehicle is repurchased.

In  Kizhner v Mercedes-Benz USA, LLC  (G052551 ) case no. G052551, Defendant Mercedes-Benz USA, LLC (MBZ) agreed to repurchase the vehicle.  The parties agreed that if they could not agree on the exact amounts to be paid by MBZ to plaintiff, they would allow the court to decide.  As one might suspect, the parties disagreed on the amount to be paid to plaintiff and so left it to the court to determine.

After a hearing, the court declined to award $680 in registration renewal fees paid by plaintiff for the years 2013 and 2014, and an anticipated 2015 payment for a certificate of nonoperation. (Plaintiff initially leased the vehicle in June 2012.) The trial court reasoned that the term “registration fees” mentioned in the statutes did not include any registration fees paid subsequent to the lease of the vehicle but only those fees paid “…in conjunction with the original purchase of lease transaction.” (Id. at 3.)

In quoting the language in Civil Code Section 1793.2(d)(2), the court noted that it provides that,

a “manufacturer or its representative” who “is unable to service or repair a new motor vehicle . . . to conform to the applicable express warranties after a reasonable number of attempts, . . . [to] either promptly replace the new motor vehicle . . . or promptly make restitution to the buyer in accordance with subparagraph (B) . . . .” (§ 1793.2, subd. (d)(2).) In turn, subparagraph (B) states, “the manufacturer shall make restitution in an amount equal to the actual price paid or payable by the buyer, including any charges for transportation and manufacturer-installed options, but excluding nonmanufacturer items installed by a dealer or the buyer, and including any collateral charges such as sales tax, license fees, registration fees, and other official fees, plus any incidental damages to which the buyer is entitled under Section 1794, including, but not limited to, reasonable repair, towing, and rental car costs actually incurred by the buyer.” (§ 1793.2, subd. (d)(2)(B), italics added.  (Id. at 4.)    

In the court’s view, the term “paid or payable” was simply a recognition by the Legislature that most consumers do not pay the total purchase price of the vehicle at the time of the transaction but rather finance a portion of the purchase price. (Id. at 5.)  Thus, the statute allows for the plaintiff to be reimbursed not just the amounts paid at the time of purchase but also the amounts paid subsequently pursuant to a financing agreement.

The appellate court also rejected the notion that the subsequent registration fees could be classified as “incidental damages” noting that the statute – Section 1793.2(d)(2)(B) – mentions “reasonable repair, towing and rental car costs actually incurred by the buyer” or, costs actuallyincurred as a result of the defect in the vehicle.  (Id. at 5-6.)

Consequently, the appellate court affirmed the decision of the trial court that plaintiff was not entitled to be reimbursed his $680 in subsequent (or renewal) registration fees. (Id. at 6.)

Because of this decision, I suspect that in my future lemon law mediations, the defendant manufacturers will not be as generous in reimbursing “consequential damages” or “incidental damage” as they have been in the past.  Rather, most will probably narrowly construe what items are reimbursable, taking their lead from this case.

….Just something to think about.

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By Phyllis G. Pollack

Phyllis G. Pollack is a full time neutral in Los Angeles where, as President of PGP Mediation, she focuses on business, real estate, contract and “lemon law” disputes. She may be reached at Phone: 213-630-8810 / phyllis@pgpmediation.com / Website: www.pgpmediation.com