Opinion
B185193
4-19-2007
MARYANN P. GALLAGHER et al., Plaintiffs and Appellants, v. MERCEDES-BENZ USA, LLC et al., Defendants and Respondents.
Law Offices of Maryann P. Gallagher and Maryann P. Gallagher for Plaintiffs and Appellants Maryann P. Gallagher and Blake Brown. Bannan, Green, Frank & Terzian, Ronald F. Frank and Julie A. Giacopuzzi for Defendants and Respondents Mercedes-Benz USA, LLC and Calabasas Motorcars, Inc.
NOT TO BE PUBLISHED
INTRODUCTION
Plaintiffs and appellants Maryann Gallagher and Blake Brown bought a new Mercedes-Benz ML430. Defendant and respondent Mercedes-Benz USA (Mercedes-Benz ) distributes the ML430. Plaintiffs car experienced, among other things, a series of stalling episodes. After some or all of those episodes, defendant and respondent Calabasas Motorcars, Inc. (Calabasas), serviced plaintiffs car. Based on a claim their ML430 is defective, plaintiffs demanded a refund under the Song-Beverly Consumer Warranty Act (Song-Beverly Act). When defendants refused, plaintiffs sued Mercedes-Benz and Calabasas for a violation of the act and for fraud. The trial court directed a verdict in defendants favor on the fraud claims, and the jury found in defendants favor on the claim under the act.
With respect to their claims under the act, plaintiffs primary contention concerns the admission of evidence that they bought a service contract, rather than an extended warranty, after the cars original warranty expired. Plaintiffs contend that the trial court prejudicially erred in admitting that evidence and by failing to instruct the jury that defendant had the burden of proving the existence of the service contract. Additionally, they contend that the court erred in excluding evidence of other consumer complaints about the ML430. We hold that no error occurred, and we therefore affirm the judgment on the claims brought under the act.
But, with respect to plaintiffs fraud claims, we reverse the judgment. There was evidence that defendants represented to plaintiffs that they were buying an extended warranty. Therefore, the trial court erred in directing a verdict on the fraud causes of action.
FACTUAL AND PROCEDURAL BACKGROUND
I. Factual background .
A. Plaintiffs buy a new ML430 Mercedes-Benz.
On November 17, 1998, Maryann Gallagher and her husband, Blake Brown, bought a 1999 ML430 Mercedes-Benz for $51,003.98. The car came with a basic warranty for 50,000 miles or four years, whichever came first.
But the warranty for, among other things, wheel alignment and balancing was one year or 12,000 miles.
B. The car experiences problems.
For approximately the first 15,000 miles that Gallagher and Brown drove the car, it had no substantial problems. But, when the car had almost 16,000 miles on it, the break assist system (BAS)/anti-lock brake system (ABS) warning lights came on. On September 14, 1999, Calabasas replaced a control module, the steering column with shaft, and the electronic stability program hydraulic unit (ESP). Days later, however, the ABS lights came on again, although Calabasas found no problem.
Plaintiffs did take the car to Calabasas in March 1999, because a sound was coming from the steering. Calabasas found no problem, and the problem did not recur. Plaintiffs do not claim that this problem was a significant defect.
About nine months later, on June 30, 2000, Brown was driving the car from Los Angeles to Las Vegas. The car, which had almost 30,000 miles on it, stalled for the first time. While driving at approximately 80-85 miles per hour, the BAS light came on and the car lost power, although the engine did not completely die. Brown got the car to the side of the road, and, after a few minutes, the car seemed to "hook back up." Brown continued onto Las Vegas, but en route he lost power about five or six more times. Brown took the car to Fletcher Jones in Las Vegas. Fletcher Jones told him that the steering column was off 12½ degrees and that they had to align the car. Although Fletcher Jones told Brown the problem had been fixed, it recurred during his drive back to Los Angeles, with the BAS light coming on and a loss of power, although it was not as severe as before. Brown took the car to Calabasas on July 3, 2000. Calabasas performed an alignment.
Six months later, in December 2000, Gallagher took the car to Calabasas because the brakes were not responding properly. Calabasas tested the car and found no fault with the front and rear brake pads. Months later, in March 2001, the brake pad warning light came on, and Calabasas replaced the brake pads.
About a year and a half after the first stalling episode in June and July 2000, Gallagher was driving from San Diego to Los Angeles in December 2001 when she lost power in the car. She pulled to the side of the road, but the engine picked up and she was able to drive the car home. Although Gallagher and Brown testified they took the car to Calabasas upon arriving in Los Angeles, neither they nor Calabasas had any record the car was taken in and serviced at that time.
The next stalling episode occurred about eight months later, on August 26, 2002, when the car had just over 60,000 miles on it. The car died while Gallagher was driving it on the freeway. She took it to Calabasas, which replaced the fuel pump and filter. Gallagher also asked Calabasas to check the electric control unit. Michael Conover at Calabasas told Gallagher the car was fixed. Gallagher picked up the car on August 27, but it stalled again two days later. This time, Calabasas replaced the crank shaft position sensor.
Plaintiffs took the car to Calabasas in February 2002 because the windows werent working. This, however, is not raised as a substantial defect.
Although Calabasas said the car had been repaired, Gallagher and Brown did not pick it up, having decided not to drive it anymore. Gallagher wrote a letter to Mercedes-Benz asking it to make "full restitution for all of the collateral charges." Mercedes-Benz determined that the car didnt meet the parameters for a refund.
C. The extended warranty versus the service contract.
In October 2001, Calabasas sent a mass mail letter to plaintiffs informing them they "may still be eligible for a NEW car extended warranty" for their car. The letter went on, "This extended coverage could result in as much as 100,000 total accrued miles of warranty protection. We have several programs and rates available to suit your individual driving habits and needs. [¶] Youll be surprised at how affordable and easy it is to sign up on the program, but keep in mind that the qualification period is only available on vehicles that have under 60,000 miles. [¶] Please contact us . . . for a quote on a tailored program that will give you the right amount of coverage to put your mind at ease." Plaintiffs paid $2,959 in December 2001 to Calabasas for what they believed was an extended warranty. They did not, however, receive any documents back from Mercedes-Benz or Calabasas concerning their purchase. Although Calabasas prepared a vehicle service contract application for plaintiffs, Billy Wu, Calabasass finance manager who handled the transaction, was not certain whether a service contract was ever sent to plaintiffs. But repair orders dated after December 2001 refer to a service contract provided by Warrentech, a company which Billy Wu testified provides such contracts.
D. Expert testimony at trial.
Plaintiffs expert, James L. Hughes, testified that a "drivability/electrical" defect caused the losses of power or stalling, although he did not know what caused this "transmission" or electrical glitch. It was this drivability/electrical defect that caused the stalling episodes in June and July 2000, December 2001, and August 2002. According to him, the 12½ degrees steering wheel deviation in June and July 2000 would not have caused the car to lose power. Nor did replacing the fuel pump and crank shaft position sensor in August 2002 address the defect. Nonetheless, he agreed that an intermittingly firing fuel pump and a crank shaft position sensor that shuts off while the car is being driven will cause stalls.
Rod Silver, Calabasass shop foreman, agreed that typically the steering wheel being off 12½ degrees would not cause a car to lose power, although it could happen. Grigor Koko Sarkisyan, who worked on the car in July 2000 and in August 2002 said he had not heard of a steering angle or alignment problem causing stalling.
Defendants expert, Peter Koch, testified that different problems caused the different episodes. A steering misalignment of 12½ degrees caused the Las Vegas loss of power in June and July 2000, and that problem was fixed when Calabasas performed the alignment. The car lost power because the misalignment triggered a safety program that causes the car to slow down, i.e., to go into the "limp home mode." The crank shaft position sensor caused the stall complaints at 60,000 miles in August 2002. Replacing that sensor fixed the problem. In fact, the car never stalled during a physical inspection of the car, during which Koch drove the car 580 miles.
II. Procedural background .
Maryann Gallagher, an attorney, acted as cocounsel in all trial proceedings.
Gallagher and Brown filed a complaint against Mercedes-Benz and Calabasas in December 2002. The first amended complaint alleged a cause of action for breach of statutory duty under the Song-Beverly Act (Civ. Code, § 1790 et seq.) and two causes of action for fraud and misrepresentation.
Plaintiffs sued other defendants, who were dismissed before trial and who are not parties to this appeal.
B. The motion for directed verdict.
At the close of evidence, defendants moved for a directed verdict on the fraud causes of action. The trial court granted the motion. The case therefore went to the jury solely on the Song-Beverly Act claim.
Defendants had moved for nonsuit on the fraud causes of action at the close of plaintiffs case. The trial court denied the nonsuit motion.
C. The verdict.
On June 9, 2005, the jury found in favor of Mercedes-Benz and Calabasas. As to Mercedes-Benz, the jury answered "no" to special verdict question No. 3: "Did the ML430 have a defect covered by the warranty that substantially impaired its use, value, or safety to a reasonable buyer in Ms. Gallagher and Mr. Browns situation?" The jury also answered "yes" to special verdict question No. 12: "Was the ML430 of the same quality as those generally acceptable in the trade or was it fit for the ordinary purpose for which such a vehicle is used?"
The special verdict is discussed in detail in Discussion Section III.A.(2), post.
Judgment was entered on June 10, 2005. This appeal followed.
DISCUSSION
The Song-Beverly Act is a remedial statute designed to protect consumers who have purchased products covered by an express warranty. (Jensen v. BMW of North America, Inc. (1995) 35 Cal.App.4th 112, 121.) The act provides, in part, that if "the manufacturer or its representative in this state is unable to service or repair a new motor vehicle . . . to conform to the applicable express warranties after a reasonable number of attempts, the manufacturer shall either promptly replace the new motor vehicle . . . or promptly make restitution to the buyer . . . , and in no event shall the buyer be required by the manufacturer to accept a replacement vehicle." (Civ. Code, § 1793.2, subd. (d)(2).)
An express warranty under the act is a "written statement arising out of a sale to the consumer of a consumer good pursuant to which the manufacturer, distributor, or retailer undertakes to preserve or maintain the utility or performance of the consumer good or provide compensation if there is a failure in utility or performance." (Civ. Code, § 1791.2, subd. (a)(1).) A service contract is "a contract in writing to perform, for an additional cost, over a fixed period of time or for a specified duration, services relating to the maintenance, replacement, or repair of a consumer product, . . ." (Civ. Code, § 1791, subd. (o).) Under the act, a service contract is not an express warranty. (Gavaldon v. DaimlerChrysler Corp. (2004) 32 Cal.4th 1246 (Gavaldon).) Therefore, if a car is subject to a service contract, rather than to a warranty, then the acts remedy under section 1793.2, subdivision (d)(2), is not available to the buyer.
Gavaldon overruled Reveles v. Toyota by the Bay (1997) 57 Cal.App.4th 1139, which held that a service contract is a type of express warranty under the act. Gallagher and Brown argue that Reveles should control this case. This argument is contrary to the general rule that judicial decisions are given retroactive effect. (Brennan v. Tremco Inc. (2001) 25 Cal.4th 310, 318.) Prospective application may be allowed as an exception to the general rule of retroactivity only "when considerations of fairness and public policy are so compelling in a particular case that, on balance, they outweigh the considerations that underlie the basic rule. A court may decline to follow the standard rule when retroactive application of a decision would raise substantial concerns about the effects of the new rule on the general administration of justice, or would unfairly undermine the reasonable reliance of parties on the previously existing state of the law. In other words, courts have looked to the `hardships imposed on parties by full retroactivity, permitting an exception only when the circumstances of a case draw it apart from the usual run of cases." (Newman v. Emerson Radio Corp. (1989) 48 Cal.3d 973, 983.) Here, plaintiffs merely argue that Reveles, and not Gavaldon, should govern this case because when they bought additional coverage for the car in December 2001, Gavaldon had not yet been decided. Gavaldon, however, had been decided by the time this case went to trial. Gavaldon therefore controls this case.
Here, Gallagher and Brown argued at trial that they were entitled to the remedies the act provides because the cars alleged defects were subject either to the original warranty or to an extended warranty they purchased in December 2001. Mercedes-Benz and Calabasas countered that Gallagher and Brown did not buy an extended warranty in December 2001; instead, they bought a service contract, which is not an express warranty for the purposes of the act.
This warranty versus service contract issue is the focus of Gallaghers and Browns appeal. They first raise numerous contentions concerning this issue, including whether defendants should have raised the service contract as an affirmative defense, whether evidence of the service contract should have been precluded at trial, and sufficiency of the evidence of the service contract. Second, they contend the trial court erroneously instructed the jury. Third, they contend the trial court erroneously excluded evidence of other consumer complaints. Finally, they contend the trial court erred in granting a directed verdict on the fraud causes of action in Mercedes-Benzs and Calabasass favor. They argue, among other things, that in December 2001 defendants told them they were buying an extended warranty. Therefore, if in fact Gallagher and Brown bought a service contract, defendants committed fraud.
I. No error occurred in admitting evidence that plaintiffs bought a service contract in December 2001 .
It was plaintiffs theory at trial that in December 2001, after their original warranty expired, they bought an extended warranty for their car. Over plaintiffs objections, the trial court allowed defendants to introduce evidence that plaintiffs did not buy an extended warranty; they bought a service contract. Plaintiffs now contend on appeal that the court erred in admitting that evidence because (A) defendants failed to raise the service contract as an affirmative defense, (B) plaintiffs were precluded from conducting discovery into the service contract, (C) there was insufficient evidence of a service contract, and (D) even if plaintiffs did buy a service contract rather than an extended warranty, defendants are still liable under the Song-Beverly Act.
Gallagher and Brown additionally contend that even if they did buy a service contract rather than an extended warranty, defendants are still liable under the Song-Beverly Act because defendants confused the warranty with a service contract. This issue is addressed in Section IV.B., post.
A. Defendants did not have to raise the service contract issue via an affirmative defense.
Plaintiffs first contention concerning the service contract is defendants were required to raise it as an affirmative defense. We disagree.
A party must raise as an affirmative defense any "matter [that] is not responsive to essential allegations of the complaint. [Citations.] Thus, where a defendant relies on facts not put in issue by the plaintiff, the defendant must plead such facts as an affirmative defense." (Bevill v. Zoura (1994) 27 Cal.App.4th 694, 698; see also Code Civ. Proc., § 431.30, subd. (b)(2) [an answer to a complaint shall contain a statement of any new matter constituting a defense].) Otherwise, a general denial is sufficient to deny all the allegations of the complaint. To sum up the difference between an affirmative defense and a denial, " ` "all facts which directly tend to disprove any one or more of these averments may be offered under the general denial: all facts which do not thus directly tend to disprove some one or more of these averments, but tend to establish a defense independently of them cannot be offered under the denial; they are new matter, and must be specially pleaded." [Citation.]" (Walsh v. West Valley Mission Community College Dist. (1998) 66 Cal.App.4th 1532, 1546, Italics omitted.)
Mercedes-Benz and Calabasas filed a joint answer, which contained a general denial of the allegations in the complaint. The answer also asserted various affirmative defenses, although none were expressly based on the theory that the December 2001 coverage plaintiffs purchased was a service contract rather than an extended warranty. Defendants did not, however, have to raise the issue of a service contract as an affirmative defense. Rather, the first amended complaint alleged that a warranty covered the defects. The material allegations of the complaint therefore put at issue the service contract, which defendants argued was what plaintiffs purchased instead of an extended warranty. Thus, the general denial had the effect of denying that the defects were covered by a warranty, and defendants did not have to raise the service contract as an affirmative defense.
B. Plaintiffs were not precluded from conducting discovery into the service contract.
Gallagher and Brown next contend that Mercedes-Benz and Calabasas should have been precluded from introducing evidence of the service contract because Gallagher and Brown were precluded from conducting discovery into that contract. Again, we disagree.
(1) Additional facts.
The trial court vacated the original trial date. At the time it did so, the court said it intended the discovery deadline to be controlled by the new trial date. But when the court thereafter set the new trial date, the minute order failed to state whether the new trial date would control the discovery cutoff.
The court said, "The intention is when you come back as far as setting the trial, the discovery cutoff will be based upon the new trial date."
Plaintiffs have not submitted a reporters transcript from that hearing.
After the new trial date was set, plaintiffs filed two discovery motions. The first motion took the position that the new trial date controlled the discovery cutoff, and plaintiffs therefore asked the discovery referee to compel defendants to provide responses to written discovery. The second motion asked, in the alternative, to reopen discovery and to compel responses. In both motions, plaintiffs stated that the discovery was necessary to discover, among other things, facts about Warrentech, the company that provided the service contract, which defendants argued plaintiffs bought in December 2001 instead of a warranty.
A discovery referee heard the motions. He recommended denying the motions to compel because "the level of time, effort and expense being generated by this case has become completely disproportionate to the value of the issues involved." He did, however, recommend that plaintiffs be allowed to propound additional discovery concerning any issues that might arise from the physical inspection of the car, which was scheduled to occur. As to the Warrentech issue, he said, "The record reflects that a company known as `Warrentech sold to Plaintiffs an extended warranty. Warrentech is not stated to be the manufacturer of the vehicle, but rather is described as the obligor on a warranty contract. The record reflects that the problems which precipitated this action occurred after expiration of the manufacturers warranty, and during the extended warranty period sold by Warrentech. [¶] Plaintiffs claim to have only recently learned that the obligor on their extended warranty was Warrentech, rather than one of the other defendants. Although this is not developed in the briefing, it appears that a claim against Warrentech would be for breach of warranty or breach of contract for, perhaps, refusing to pay for repair of the vehicle. It does not appear that the claim against Warrentech would be the same claim as are presently being advanced against (a) Mercedes-Benz USA LLC and (b) Calabasas Motor Car Inc. At least no such showing has been made. [¶] If the claim against Warrentech were a warranty claim on a written contract, it would seem that a four year statute of limitations would apply. This statute would seem not yet to have run. [¶] The record in this case is characterized by conflict over matters that should have produced little or no conflict. The fact that inspection of the vehicle was accomplished only in the present very-late timeframe is symptomatic. If this case were delayed further to allow discovery into, and preparation of, a lawsuit against new party Warrentech, this history of this case suggests that Mercedes-Benz USA LLC and Calabasas Motor Car Inc. would be caused considerable additional delay and expense even though they might have little or no involvement in claims against Warrentech. [¶] Accordingly, in these circumstances, I recommend against either allowing or re-opening discovery into claims against Warrentech. Plaintiffs may pursue a separate claim against Warrentech if they believe that Warrentech has breached the terms of its warranty, and the case against Mercedes-Benz USA LLC and Calabasas Motor Car Inc. can be resolved now. In the event that Plaintiffs believe they can show that Warrentech is an alter ego of one of the other defendants, Plaintiffs can attempt to show that in a separate case focused on the conduct and function of Warrentech." Plaintiffs objected to the referees report, but the trial court adopted it.
For example, the case was essentially on hold from December 26, 2003 until about August 2004 due because Maryann Gallagher was on bedrest and then on maternity leave.
Plaintiffs thereafter filed a motion in limine to prevent defendants from asserting that the warranty expired or that Warrentech had a service contract with plaintiffs. Plaintiffs also objected to an exemplar service contract (exhibit 80), which defendants produced in January 2005, just one month before trial. The trial court asked plaintiffs, in the event they felt prejudiced by admission of the service contract, what they wanted to do, for example, take a deposition or continue trial. The court also indicated that it would be inclined to grant a motion to amend. Gallagher asked to depose Billy Wu, Calabasass finance manager who handled the sale of the alleged service contract. Plaintiffs deposed Wu.
They then again asked the trial court to exclude evidence of the service contract. The court said it would hear plaintiffs case before ruling. After plaintiffs rested, defendants indicated they would call Wu in their case-in-chief. At plaintiffs request, the court held a 402 hearing. Wu testified that exhibit 80 is an exemplar of a service contract from Warrentech. Wu did not, however, have any knowledge whether exhibit 80 was ever sent to plaintiffs. The court overruled plaintiffs objections, allowed Wu to testify, and admitted exhibit 80.
(2) The record does not show that the trial court abused its discretion in permitting evidence of the service contract.
The standard of review for the admission of evidence is abuse of discretion. (People ex rel. Lockyer v. Sun Pacific Farming Co. (2000) 77 Cal.App.4th 619, 639.) " `Broadly speaking, an appellate court reviews any ruling by a trial court as to the admissibility of evidence for abuse of discretion. [Citation.] This standard of review applies to a trial courts determination of the relevance of evidence, as well as to whether the evidences probative value is substantially outweighed by its prejudicial effect. [Citations.] The trial courts `discretion is only abused where there is a clear showing [it] exceeded the bounds of reason, all of the circumstances being considered. [Citation.]" (Id. at pp. 639-640.)
Plaintiffs first complain that evidence of the service contract should have been excluded because they werent permitted to conduct discovery into it when defendants took the position the discovery deadline had passed. When was the deadline, however, is not really relevant. The referees recommendation that plaintiffs not be permitted to conduct additional discovery was not premised on the discovery cutoff. It was premised on a finding that the case had already suffered too many delays, a finding plaintiffs do not attack on appeal.
Moreover, the record is not clear what trial date controlled the discovery cutoff. Although the trial court had indicated its intent that the cutoff would be governed by the new trial date, it did not, on this record, expressly so order when it set the new trial date.
The case was filed in December 2002. Plaintiff Maryann Gallagher was on bedrest or maternity leave from December 2003 to August 2004. The parties also had discovery disputes, for example, over whether defendants would be permitted to inspect the car. Therefore, the record supports the discovery referees finding that the case had been too long delayed.
Nor does plaintiffs suggestion that the discovery referee refused additional discovery because it improperly failed to recognize the difference between a warranty and service contract show any abuse of discretion. Gavaldon, supra, 32 Cal.4th 1246, was published in May 2004, before the discovery referee heard plaintiffs discovery motions in December 2004. It was plaintiffs burden to brief the referee and trial court on that case and to articulate clearly the basis for the discovery. They did not do so.
Plaintiffs similar suggestion that defendants did not dispute that plaintiffs bought an extended warranty until immediately before trial also does not evidence an abuse of discretion. Plaintiffs rely on a declaration of James Hormann, Mercedess service development project manager. He stated that plaintiffs had "an aftermarket extended warranty for the SUV with a company called Warrentech." Plaintiffs thus argue that even defendants believed plaintiffs had an extended warranty. That declaration, however, is dated in 2003, before Gavaldon was published in May 2004. At the time Hormann signed his declaration, Gavaldon had not yet clarified that service contracts are not warranties for the purpose of the Song-Beverly Act.
Moreover, notwithstanding any initial preclusion of discovery into Warrentech and the service contract, plaintiffs were later given an opportunity to conduct that discovery. Plaintiffs raised their inability to conduct discovery immediately before trial. The trial court asked plaintiffs counsel, Gallagher, what she wanted to do if she believed plaintiffs would be prejudiced by admission of evidence concerning the service contract. The court set forth various options available to plaintiffs, including motions to amend and to continue trial. Plaintiffs counsel decided to take Billy Wus deposition. Therefore, plaintiffs claim that they were precluded from conducting discovery into the service contract is wrong. They asked for, and were granted, the opportunity to take Wus deposition. They did not ask for any other relief, although it was offered.
Nor is it clear what prejudice plaintiffs suffered from being unable to pursue additional discovery. Plaintiffs never requested leave to amend the complaint to state a cause of action for breach of service contract. Instead, they denied that what they purchased in December 2001 was a service contract. Plaintiffs theory at trial was they had an extended warranty. Evidence relevant to that precise issue was admitted, for example, the October 2001 letter, plaintiffs testimony about their conversation with Billy Wu; Wus testimony; and the exemplar service contract. It is therefore unclear what other evidence discovery might have revealed on the narrow issue of what plaintiffs bought in December 2001.
C. Sufficiency of the evidence.
Plaintiffs additionally contend that the trial court erred in admitting evidence of the service contract (and, in particular the exemplar contract and Billy Wus testimony), because there was no evidence plaintiffs bought a service contract, there was no evidence plaintiffs consented to enter into a service contract, the only evidence defendants presented that there was a service contract was the repair orders, and Wu testified that nobody at Calabasas determined whether plaintiffs were entitled to an extended warranty. What this contention boils down to is a sufficiency of the evidence argument, namely, was there sufficient evidence that plaintiffs bought a service contract? There was sufficient evidence.
This issue, raised under the lemon law claim, is distinct from the fraud issue, which we address in Section IV.B., post. The fraud issue concerns whether defendants told plaintiffs they were buying an extended warranty, when in fact plaintiffs bought a service contract.
Under a sufficiency of the evidence standard of review, " ` "[w]hen a finding of fact is attacked on the ground that there is not any substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether there is any substantial evidence contradicted or uncontradicted which will support the finding of fact." [Citations.] ` "[W]e have no power to judge of the effect or value of the evidence, to weigh the evidence, to consider the credibility of the witnesses, or to resolve conflicts in the evidence or in the reasonable inferences that may be drawn therefrom." [Citations.]" (Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 766; see also Oregel v. American Isuzu Motors, Inc. (2001) 90 Cal.App.4th 1094, 1100.)
There was sufficient evidence from which the jury could conclude that what plaintiffs bought in December 2001 was a service contract, not an extended warranty. In October 2001, Calabasas sent a mass mail letter to plaintiffs informing them they "may still be eligible for a NEW car extended warranty." The letter went on, "We have several programs and rates available to suit your individual driving habits and needs. [¶] . . . [¶] Please contact us . . . for a quote on a tailored program that will give you the right amount of coverage to put your mind at ease." Although the letter referred to an extended warranty, the letter did not state that plaintiffs were entitled to an extended warranty. Indeed, Billy Wu, Calabasass finance director, testified that to qualify for a Mercedes-Benz extended warranty, a vehicle must be in the first year of ownership. Otherwise, the customer would be offered a service contract.
Although Gallagher and Brown testified they believed they were buying an extended warranty, they never received any documents back from Mercedes-Benz or Calabasas confirming that they bought an extended warranty. And although Gallagher testified that she called the dealership and was told that Mercedes-Benz had an extended warranty, Wu testified that he didnt recall discussing with Gallagher and Brown whether they purchased an extended warranty or a service contract. Brown agreed that he did not discuss the coverage with anyone at Mercedes-Benz or Calabasas. Wu also said he did not know whether a service contract (exhibit 80) was sent to plaintiffs, but Ram Tehrani, Wus colleague, prepared a vehicle service contract application for plaintiffs.
Plaintiffs objected to the admission of exhibit 80. The court overruled the objections.
Also, repair orders dated after December 2001 refer to a service contract and to Warrentech. For example, a repair order dated August 29, 2002 states that Warrentech authorized repairs. Michael Conover, a former service consultant at Calabasas, testified that authorization is not needed to do a warranty repair, but authorization is needed for a repair under a service contract. Charles Houck, Calabasass service and parts director, ran a vehicle master inquiry, and it did not show that the car had an extended warranty. From this evidence, the jury could have concluded that plaintiffs bought a service contract rather than an extended warranty.
Plaintiffs nonetheless argue that there was insufficient evidence of the service contract. They point to, among other things, the absence of an executed service contract and of a completed registration page, which the service contract states is required for the contract to be valid. Defendants, however, were not trying to establish the service contracts "validity." Defendants were trying to establish that plaintiffs bought a service contract rather than an extended warranty. The service contracts validity or invalidity is not really relevant to that issue. The validity of the service contract might have been relevant if plaintiffs had alleged a breach of service contract cause of action, but they did not.
II. The trial court did not abuse its discretion in excluding stalling complaints from other consumers .
Plaintiffs sought to introduce evidence of 121 complaints of stalling in the ML430 and of crank shaft sensor complaints that caused stalls. Plaintiffs argued that the evidence was relevant, first, to their fraud causes of action to prove that Mercedes-Benz knew the ML430 was not safe and functional as represented. Second, the evidence was relevant to plaintiffs experts opinion that the nature of the defect is an intermittent failure, which is hard to diagnose. Third, the evidence was relevant to show under the Song-Beverly Act that defendants acted unreasonably when they refused plaintiffs request for a refund. The trial court ruled that, as to plaintiffs case-in-chief, the evidence was inadmissible under Evidence Code section 352. It also found, under Ault v. International Harvester Co. (1974) 13 Cal.3d 113 (Ault), that the other stalling complaints were not shown to be similar to the stalls in this case. The trial court did not abuse its discretion in so finding.
Defendants filed a motion in limine to exclude this evidence.
We have set forth the standard of review on the admission of evidence in Discussion Section I.B.(2), ante.
In Ault, the plaintiff was injured in a car accident. He contended that the cars gear box broke because the aluminum 380 out of which it was made suffered from metal fatigue. (Ault, supra, 13 Cal.3d at p. 117.) Plaintiffs expert witnesses testified about two other accidents in which gear boxes made out of aluminum 380 failed. (Id. at p. 121.) Because the experts had examined the gear boxes involved in the other accidents, as well as the gear box in Ault, the court found that the trial court had not erred in admitting the evidence. The court said, "Evidence of other accidents is admissible to prove a defective condition, knowledge, or the cause of an accident, provided that the circumstances of the other accidents are similar and not too remote." (Id. at pp. 121-122.)
Similarly, the trial court here did not err in refusing to admit evidence of other complaints. Plaintiffs expert, unlike the experts in Ault, did not inspect the other cars, and he therefore could not testify as to what caused the stalls in other cars. Rather, Mark Mosseri, a technical specialist at Mercedes-Benz, testified that a computer search he ran using the words "stall," "died," "dies," "dead," and "stalling" came up with the results. But there was no evidence or showing that the stalls in those cases resulted from an electrical problem, which is what plaintiffs expert witness said caused the stalls in this case. For example, excluded Exhibits 38 and 39, which are lists of the stalling and crankshaft sensor complaints, state that the stalls were attributable to, for example, faulty fuel pumps and mass air flow sensors. The lists do not state whether the problems recurred after the repairs. There was thus no evidence that the stalls in other cases occurred under circumstances similar to the ones here. (See, e.g., Sambrano v. City of San Diego (2001) 94 Cal.App.4th 225, 238 [prior incident was not admissible because it was not sufficiently similar to current incident].)
The low probative value of these other complaints also supports the trial courts ruling. Defense counsel argued that the 121 complaints were not probative, when balanced against the total number of ML430 models, i.e., 34,000, and given that only one of the complaints predated plaintiffs purchase of their ML430, thereby undercutting plaintiffs contention defendants knew or had notice of a defect. Thus, given the paucity of evidence of the similarity between the stalling in this case and the stalls in other cases and the absence of evidence of any statistical relevance, we cannot say the trial court erred in concluding that the probative value of the evidence was outweighed by other factors.
Plaintiffs argument that the evidence should have been admitted because the discovery referee and trial court had previously permitted plaintiffs to discover such complaints is unpersuasive. As the trial court noted, what is admissible and what is discoverable are different issues. Not everything that is discoverable is admissible.
III. No instructional error occurred with respect to Gallaghers and Browns lemon law claim .
Plaintiffs make two basic claims of instructional error. First, the trial court erred by failing to instruct the jury on defendants burden of proof. Second, the trial court incorrectly answered a jury question. No reversible error occurred.
A. CACI No. 3201.
(1) Additional facts.
CACI No. 3201 sets forth the elements a plaintiff has the burden of proving on a claim under the Song-Beverly Act. Plaintiffs and defendants submitted proposed versions of CACI 3201. After the trial court discussed CACI 3201 with the parties, they agreed it would be given to the jury as follows: "Ms. Gallagher and Mr. Brown claim that they were harmed by one or both Defendants breach of a warranty. To establish this claim, Ms. Gallagher and Mr. Brown must prove all of the following: [¶] 1. That Ms. Gallagher and Mr. Brown purchased a new motor vehicle distributed by the Defendant; [¶] 2. That the Defendant gave Ms. Gallagher and Mr. Brown a written warranty; [¶] 3. That the vehicle had a defect or defects covered by the warranty that substantially impaired the vehicles use, value, or safety to a reasonable person in Ms. Gallagher and Mr. Browns situation; [¶] 4. That Ms. Gallagher and Mr. Brown delivered the vehicle to Defendant or its authorized repair facilities for repair of the defects; [¶] 5. That the Defendant or its authorized repair facilities failed to repair the defects after a reasonable number of opportunities to do so; [¶] 6. That the Defendant did not promptly replace or buy back the vehicle as requested by Ms. Gallagher and Mr. Brown; [¶] 7. That Ms. Gallagher and Mr. Brown were harmed; [¶] 8. That the Defendants conduct was a substantial factor in causing Ms. Gallagher and Mr. Browns harm. [¶] It is not necessary for Ms. Gallagher and Mr. Brown to prove the exact cause of a defect in the ML430."
After the parties agreed to this version of CACI 3201, plaintiffs asked "that the defendants burden of proof also be added into 3201" by virtue of the following proposed instruction: "The defendant(s) have the burden to proving the following: [¶] 1. The vehicle was repaired; [¶] 2. That plaintiff did not rely on the written warranty from [Mercedes-Benz]; [¶] 3. That plaintiff entered into a service contract with Warrentech." The court asked defense counsel if it had a separate instruction and indicated that it would have to be "explained to them that there is a burden of proof by you. . . ." Defense counsel replied he had submitted separate instructions on violation of a service contract. The court said it thought there would have to be an instruction, but that at this time it wanted to deal only with the lemon law claim.
Defendants submitted two proposed jury instructions on breach of a service contract.
When plaintiffs raised the issue the next day, defense counsel objected to the proposed instruction. He said, "Those are not the defendants burdens. On the first of the three points on Ms. Gallaghers proposed burden of proof the burden of proving the reasonable number of attempts is on the plaintiff. [¶] It is in CACI 3701. I believe Element 4. [¶] On the second point, the reliance issue. We are not raising a defense of absence of reliance. We dont have the burden on something that we dont believe we share a burden on. [¶] On the third point with respect to the manner in which it is phrased is not accurate, and the plaintiff has the burden of proof that the substantial defect was covered by warranty. [¶] We [ ] submitted a proposed instruction on service contract to which the plaintiff objected, and we subsequently withdrew. [¶] So I just dont think any of those three are elements of the defendants burden in this case."
The trial court refused the requested instruction.
(2) The proposed instruction was properly refused because plaintiffs had the burden of proving defendants gave them a warranty.
To address plaintiffs contention that the trial court erred in refusing to instruct the jury with plaintiffs proposed CACI 3201, it is first important to restate what was plaintiffs theory of the case with respect to the lemon law claim. Their theory was the original warranty or an extended warranty they purchased in December 2001 covered any defects. It was also their theory that both Mercedes-Benz and Calabasas gave those warranties. But defendants theory of the case was plaintiffs did not buy an extended warranty in December 2001; they bought a service contract, which was provided by Calabasas, and not by Mercedes-Benz.
Plaintiffs argument that the trial court should have been instructed with their proposed CACI 3201 appears to be limited to only that portion of the instruction concerning the service contract.
Because defendants argued that plaintiffs bought a service contract in December 2001, plaintiffs contend that the trial court should have instructed the jury that defendants had the burden to prove that fact. This contention confuses the burden of proof with the burden of producing evidence. A party has the burden of proof as to each fact the existence or nonexistence of which is essential to the claim for relief she or he is asserting. (Evid. Code, § 500; 1 Witkin, Cal. Evidence (4th ed. 2000) Burden of Proof and Presumptions § 3.) The burden of proof does not shift. (Sargent Fletcher, Inc. v. Able Corp. (2003) 110 Cal.App.4th 1658, 1667.) In contrast, the burden of producing evidence can shift. (Ibid.) The burden of producing evidence as to a particular fact is on the party against whom a finding on that fact would be required in the absence of further evidence. (Evid. Code, § 550, subd. (a).) The party who bears the burden of proof bears the initial burden of producing evidence. (Evid. Code, § 550, subd. (b).)
Our California Supreme Court said, "From commencement to conclusion, the moving party bears the burden of persuasion that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law. [Fn omitted.] There is a genuine issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof. Initially, the moving party bears a burden of production to make a prima facie showing of the nonexistence of any genuine issue of material fact. If he carries his burden of production, he causes a shift: the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a genuine issue of material fact. How each party may carry his burden of persuasion and/or production depends on which would bear what burden of proof at trial. Thus, if a plaintiff who would bear the burden of proof by a preponderance of evidence at trial moves for summary judgment, he must present evidence that would require a reasonable trier of fact to find any underlying material fact more likely than not. By contrast, if a defendant moves for summary judgment against such a plaintiff, he may present evidence that would require such a trier of fact not to find any underlying material fact more likely than not. In the alternative, he may simply point out-he is not required to present evidence (see Fed. Rules Civ. Proc., rule 56(b), 28 U.S.C.)-that the plaintiff does not possess, and cannot reasonably obtain, evidence that would allow such a trier of fact to find any underlying material fact more likely than not." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 845.)
Here, plaintiffs claim was for breach of the Song-Beverly Act. An element of that claim is defendants gave plaintiffs a warranty. Plaintiffs had the burden of proving that element. (Oregel v. American Isuzu Motors, Inc., supra, 90 Cal.App.4th at p. 1101; see also CACI 3201.) To satisfy their initial burden, plaintiffs produced evidence, for example, that they received a letter offering them an extended warranty and that in December 2001 they purchased coverage, which they believed was an extended warranty. Although the burden of proof remained on plaintiffs, the burden of producing evidence on this element shifted to defendants, who then produced evidence that plaintiffs bought a service contract in December 2001. The burden of proof, however, did not shift to defendants. Hence, the trial court properly refused plaintiffs proposed CACI 3201.
In any event, plaintiffs have not demonstrated they were prejudiced by any instructional error. Although plaintiffs argue they were prejudiced because the jury found that plaintiffs purchased a service contract and that therefore there was no Mercedes-Benz warranty that covered the defects, the jury was entitled to make this finding. Thus, defense counsel did not "fan[ ] the flames of prejudice" by arguing, for example, that plaintiffs entered into a service contract with Calabasas rather than an extended warranty. Defendants were entitled to make that argument.
Moreover, it is not possible to determine what the jury believed on the warranty versus special contract issue based on the way in which the special verdict was prepared. Specifically, the relevant portions of the special verdict form, with the jurys responses, provide:
"Question No. 1: Did Ms. Gallagher and Mr. Brown purchase a new motor vehicle from or distributed by the defendant?
Answer: As to Mercedes-Benz USA X Yes ___No As to Calabasas Motorcars ___Yes X No
If your answer to question 1 is yes for a Defendant(s), then answer question 2 for that defendant(s). If you answered no as to Defendant Mercedes-Benz USA, skip to question 10 as to that Defendant. If you answer no as to Defendant Calabasas Motorcars, stop here and answer no further questions as to that Defendant.
Question No. 2:
Did the Defendant give Ms. Gallagher and Mr. Brown a written warranty?
Answer: As to Mercedes-Benz USA X Yes ___No As to Calabasas Motorcars ___ Yes ___No
If your answer to question 2 is yes for a Defendant(s), then answer question 3 for that defendant(s). If you answered no as to Defendant Mercedes-Benz USA, skip to question 10 as to that Defendant. If you answer no as to Defendant Calabasas Motorcars, stop here and answer no further questions as to that Defendant.
Question No. 3:
Did the ML430 have a defect covered by the warranty that substantially impaired its use, value, or safety to a reasonable buyer in Ms. Gallagher and Mr. Browns situation?
Answer: As to Mercedes-Benz USA ___Yes X No As to Calabasas Motorcars ___Yes ___ No
If your answer to question 3 is yes for a Defendant(s), then answer question 4 for that defendant(s). If you answered no as to Defendant Mercedes-Benz USA, skip to question 10 as to that Defendant. If you answer no as to Defendant Calabasas Motorcars, stop here and answer no further questions as to that Defendant." (Italics added.)
The jury never decided whether Calabasas gave plaintiffs a warranty or a service contract. The special verdict form—which plaintiffs expressly approved—instructed the jury not to proceed to Question no. 2 if it found that plaintiffs did not buy a new car from Calabasas. The jury found that plaintiffs did not buy a new car from Calabasas, and it therefore never answered whether Calabasas gave plaintiffs a warranty. Thus, plaintiffs claim that the verdict somehow shows a finding by the jury that they entered into a service contract with Calabasas rather than an extended warranty is incorrect.
Similarly, although the jury did find that Mercedes-Benz gave plaintiffs a written warranty, it is not clear what exactly the jury believed regarding the extended warranty versus service contract issue. The jury answered "no" to the question whether the ML430 had a defect covered by the warranty that substantially impaired its use, value, or safety to a reasonable buyer in plaintiffs situation. One interpretation of the jurys response is it did not believe that plaintiffs had an extended warranty with Mercedes-Benz. The jury believed that plaintiffs entered into a service contract.
But another interpretation is the jury believed the ML430 did not have a defect that substantially impaired its use, value, or safety to a reasonable buyer in plaintiffs situation. In fact, the jury was instructed with CACI 3204 ("Substantially Impaired" Explained), which lists various factors the jury must consider to determine whether the cars defects "substantially impaired" its use, value, or safety. Those factors are the nature of the defects, the cost and length of time required for repair, whether past repair attempts have been successful, the degree to which the vehicle could be used while awaiting repair, and the availability and cost of alternative transportation during repair. (CACI 3204.) Using these factors, the jury could have believed that the ML430 had a defect, but that it did not substantially impair its use, value or safety. In other words, the jury may have based its decision on the absence of a substantially impairing defect, rather than on the absence of a warranty.
In short, the special verdict does not conclusively reveal whether the jury believed that what plaintiffs bought in December 2001 was an extended warranty or a service contract. Therefore, even if we were to assume that instructional error occurred, plaintiffs still could not establish prejudice. (See generally, All-West Design, Inc. v. Boozer (1980) 183 Cal.App.3d 1212, 1223 [" `A verdict should be interpreted so as to uphold it and to give it the effect intended by the jury, as well as one consistent with the law and the evidence. (Citation.) "]; Woodcock v. Fontana Scaffolding & Equip. Co. (1968) 69 Cal.2d 452, 456.)
B. Plaintiffs invited any error with respect to the response to the jurys question regarding the implied warranty.
Plaintiffs next raise instructional error in connection with the trial courts response to a jury question. During deliberations, the jurors asked, "At what point in time are we evaluating the quality of the ML430? At the time of purchase or later in the repair history?" The court thought the answer should be at the time of purchase. All counsel, including Gallagher, agreed. The court therefore answered, "at the time of purchase." Then, immediately after the verdict was read, Gallagher asked that the jury be told they could consider the "history after to decide whether or not the warranty was made." The court denied the request, pointing out that all counsel had agreed to the answer given.
The trial court correctly indicated that plaintiffs invited the answer to the jury question. " `Under the doctrine of invited error, where a party, by his conduct, induces the commission of an error, he is estopped from asserting it as grounds for reversal. [Citations]. Similarly an appellant may waive his right to attack error by expressly or impliedly agreeing at trial to the ruling or procedure objected to on appeal. [Citations.]" (Mesecher v. County of San Diego (1992) 9 Cal.App.4th 1677, 1685-1686.) Plaintiffs expressly agreed to answer the jurys question in the manner the trial court proposed. They may not therefore complain on appeal that the answer was incorrect.
Moreover, the jury was instructed with CACI 3212 as follows: "An implied warranty is in effect for one year after the sale of the ML430, unless a shorter period is stated in a writing that comes with the ML430, provided that any shorter period is reasonable. In no event will an implied warranty be in effect for less than 60 days. [¶] The time period of an implied warranty is lengthened by the number of days that the ML430 was made available to Ms. Gallagher and Mr. Brown for repairs under the warranty, including any delays caused by circumstances beyond Ms. Gallagher and Mr. Browns control." Plaintiffs do not challenge that instruction, and, in fact, they agreed to it in the trial court.
IV. The motion for directed verdict .
A. Additional facts.
The amended complaint stated two causes of action for fraud. The second cause of action for fraud and misrepresentation was alleged against Mercedes-Benz only. The third cause of action, also for fraud and misrepresentation, was alleged against Mercedes-Benz and Calabasas. At the close of evidence, the defense moved for a directed verdict on the fraud causes of action. As to the second cause of action, defendants argued that plaintiffs failed to show that at the time Mercedes-Benz made the statements in its sales brochure that the statements were false or that Mercedes-Benz had a reckless disregard for the truth or falsity of the statements made in the brochure. As to the third cause of action, plaintiffs failed to show scienter as to Calabasas, and failed to show that Mercedes-Benz ratified Calabasass post warranty acts. There was also no showing that Calabasas was reckless with respect to any statements in the October 2001 letter.
Plaintiffs responded that because the car was defective at the outset, the jury could infer that defendants had knowledge of the falsity of the statements in the sales brochure. Also, Calabasas represented that the car was fixed, but it did not have any reasonable basis for making those representations. Finally, if plaintiffs got a service contract, they were defrauded because they were promised an extended warranty. Mercedes-Benz ratified the fraud when it took the position plaintiffs did not have an extended warranty.
The trial court granted the motion for directed verdict.
B. The trial court erred in granting the motion for directed verdict as to plaintiffs claim of fraud arising out of the service contract/extended warranty.
A motion for directed verdict is in the nature of a demurrer to the evidence. (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 629.) "In determining such a motion, the trial court has no power to weigh the evidence, and may not consider the credibility of witnesses. It may not grant a directed verdict where there is any substantial conflict in the evidence. [Citation.] A directed verdict may be granted only when, disregarding conflicting evidence, giving the evidence of the party against whom the motion is directed all the value to which it is legally entitled, and indulging every legitimate inference from such evidence in favor of that party, the court nonetheless determines there is no evidence of sufficient substantiality to support the claim or defense of the party opposing the motion, or a verdict in favor of that party. [Citations.]" (Id. at pp. 629-630.) To take the case from a jury by granting a directed verdict, there must be no other reasonable conclusion legally deductible from the evidence. (Hilliard v. A. H. Robins Co. (1983) 148 Cal.App.3d 374, 395.)
The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) Fraud in the inducement is a subset of the tort of fraud. It "occurs when ` "the promisor knows what he is signing but his consent is induced by fraud, mutual assent is present and a contract is formed, which, by reason of the fraud, is voidable." " (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 415.) An action for fraud must be based on a statement of fact, not opinion. (Nibbi Brothers, Inc. v. Home Federal Sav. & Loan Assn. (1988) 205 Cal.App.3d 1415, 1423; San Francisco Design Center Associates v. Portman Companies (1995) 41 Cal.App.4th 29, 43-44.) " `[P]redictions as to future events, or statements as to future action by some third party, are deemed opinions, and not actionable fraud. [Citation.]" (Nibbi Brothers, at p. 1423.)
Three alleged misrepresentations form the basis of plaintiffs fraud claims. First, Mercedes-Benz made misrepresentations about the ML430 in its sales brochure that induced plaintiffs to buy the car. Second, Calabasas said it fixed the car, but it was not fixed, and Mercedes-Benz ratified those statements. Third, if plaintiffs did buy a service contract, then they were defrauded because they were told they were buying an extended warranty.
This third basis for fraud was not alleged in the complaint, but plaintiffs did make this argument in opposition to defendants nonsuit and directed verdict motions.
As to plaintiffs first category of fraudulent misrepresentations, Gallagher testified about numerous allegedly fraudulent statements in the ML430 brochure that she relied on. On appeal, however, plaintiffs rely on only several of those statements, the gist of which is the ML430 is a safe car. Namely, plaintiffs point to representations in the brochure that the ML430 is "[s]afe as a Mercedes"; that the ML430 may be the most powerful and smartest midsize SUV; that Mercedes-Benz makes some of the most reliable cars in the world and it is here for the "long haul"; that Mercedes spent "113 years perfecting the car"; the transmission and fluids are designed to last for the cars life and under even severe driving conditions; and that the M class "offers two of the lowest maintenance engines you can buy, integrated computer fuel control meaning you will never need a tuneup, just new spark plugs every 100,000 miles."
Gallagher testified that she relied on the following representations in a brochure about the M-class before buying the car: The M-class is "[s]afe as a Mercedes"; the ML430 "is not only the most powerful midsize SUV, it might also be the smartest"; "[w]eve spent 113 years perfecting the car"; "[t]he M-class offers two of the lowest maintenance engines you can buy, integrated, computer-controlled, fuel injection and ignition mean youll never need a tuneup-just new spark plugs every 100,000 miles"; what the car does "is adjust the shift points to match your driving style"; the M-class is "quick and athletic. And its response to your input is reassuringly direct"; the "transmission and transfer case fluids are designed to last for the life of the vehicle, even under severe driving conditions"; the "M-Class is 100% SUV, but its also every bit a Mercedes-Benz"; a vehicle "is only as reliable as the company it comes from"; and "[y]ou already know us as the maker of some of the most reliable vehicles in the world. But its not just the equipment thats built to last. As a service organization and as the guardian of an ethic of motor vehicle excellence, Mercedes-Benz is here for the long haul."
"Although the line of demarcation between expressions of fact and opinion can be unclear at times," the statements at issue are more akin to statements of opinion rather than fact. (See, e.g., Gentry v. eBay, Inc. (2002) 99 Cal.App.4th 816, 835.) In Gentry, eBay stated on its Web site that a positive eBay rating is "worth its weight in gold." (Id. at p. 835.) The court held that representation was merely a statement of opinion.
In contrast, an actionable statement was made in Hauter v. Zogarts (1975) 14 Cal.3d 104, 111. There, the defendant represented that its product, the Golfing Gizmo, was "Completely Safe Ball Will Not Hit Player." The court held that the statement "does not indicate the sellers subjective opinion about the merits of his product but rather factually describes an important characteristic of the product. Courts have consistently held similar promises of safety to be representations of fact." (Id. at p. 112.) Hauter, however, also recognizes that if a "defendants assertion of safety is merely a statement of opinion—mere `puffing—they cannot be held liable for its falsity." (Id. at p. 111.)
The statements at issue here are closer to "puffery" than they are to representations that the ML430 is safe and will not stall. For example, the representation that the ML430 is "safe as a Mercedes" is not a representation that the ML430 will never stall or otherwise have a problem that might endanger its driver. In any event, for the statement to be false, plaintiffs would have had to show that the ML430 is "not safe as a Mercedes." Even if we assume that plaintiffs ML430 was defective, that one out of thousands of cars would not show that ML430s are somehow "not safe as a Mercedes." Nor would admission of the 121 other stalling complaints have helped prove the falsity of this representation. There was no evidence of how many ML430s there are, what were the problems with those 121 other cars or the safety record of Mercedes-Benz cars in general. There was similarly no evidence, for example, that Mercedes-Benz did not spend 113 years perfecting its car or that the ML430 never needs a tuneup. In fact, although plaintiffs car had problems, there was no evidence needing new spark plugs was one of them.
The second set of representations that plaintiffs claim constitute fraud is Calabasass statements that the car was fixed each time plaintiffs brought it in. Evidence that these statements were fraudulent basically consists of Calabasass statement to plaintiffs that the car was fixed and, despite that statement, the car stalled. As a matter of law, this evidence will not support a fraud claim, and, more specifically, it will not support the element of scienter. Although we certainly acknowledge the difficulty plaintiffs face in obtaining direct evidence of scienter, there still must be some circumstantial evidence from which a legitimate inference of scienter can be indulged. (Hart v. Browne (1980) 103 Cal.App.3d 947, 957-958.) Here, the mere fact that the car stalled after Calabasas said it was fixed does not show that Calabasas knew the car was not fixed. This is especially true given that at least a year and a half passed between the July 2000 stall and the alleged December 2001 stall, and eight months passed until the next stall in August 2002. Nor was there evidence that the car had a glaring or obvious defect that Calabasas should have known would cause the car to stall. Instead, plaintiffs expert testified that an electrical/drivability defect caused the stalls, but he did not pinpoint the precise source of that defect. He also agreed that a defective fuel pump and crank shaft position sensor can cause stalls. Calabasas, suspecting that those units were causing the stalls, replaced them.
The final category of fraud goes back to the extended warranty versus service contract dispute. At the hearing on the motion for directed verdict, plaintiffs argued that if what they bought in fact was a service contract, then they were defrauded because they were told it was an extended warranty. There was sufficient evidence to allow the fraud claim to go to the jury on this theory.
Specifically, the October 2001 letter stated that plaintiffs may be eligible for an extended warranty, and that Calabasas had "several programs and rates available to suit your individual driving habits and needs." In response to that letter, Gallagher testified that she spoke to someone whom she thought was Billy Wu. She further testified, "I was told Mercedes has an extended warrant[y] that will extend your existing warrant[y] out to 100,000 miles." Gallagher and Brown then paid $2,959 for what they believed was an extended warranty. This evidence was sufficient to allow this fraud claim to go to the jury.
Nor does the jurys verdict on the lemon law claim preclude a reversal on this claim of fraud. As we discussed in Section III.A.(2), ante, it is not possible to determine from the jurys special verdict what it believed on the service contract versus extended warranty issue. Rather, the jurys response to Special Verdict No. 3 could be interpreted either as a finding that the car had no substantial defect—in which case plaintiffs might not be prejudiced by the dismissal of their fraud claim—or it could be interpreted as a finding that plaintiffs bought a service contract—in which case plaintiffs were prejudiced by the dismissal of their fraud claim.
We therefore hold that the case must be remanded for a retrial on plaintiffs fraud claims on the issue of whether defendants represented to plaintiffs that they were buying an extended warranty.
DISPOSITION
The judgment is affirmed in part and reversed and remanded in part as to that portion the fraud claim concerning the service contract/extended warranty. All parties are to bear their own costs on appeal.
We concur:
CROSKEY, Acting P. J.
KITCHING, J.