Opinion
A112623 A114267
5-1-2007
JAMES TOWNSEND et al., Plaintiffs and Respondents, v. BOAT AND MOTOR MART, Defendant and Appellant. JAMES TOWNSEND et al., Plaintiffs and Appellants, v. BOAT AND MOTOR MART, Defendant and Respondent.
NOT TO BE PUBLISHED
Boat and Motor Mart appeals from a judgment entered against it for breach of express and implied warranties under the Song-Beverly Consumer Warranty Act (the Act) (Civ. Code, § 1790 et seq.) in connection with its sale of a boat to James and Diane Townsend (the Townsends). Boat and Motor Mart contends: (1) the trial court erred in awarding the Townsends a refund of the purchase price as well as allowing them to keep the boat; (2) the court should have required the Townsends to elect between remedies for express warranty and implied warranty; (3) Boat and Motor Mart was not liable for breach of express warranty, because it did not give an express warranty and because the Townsends did not allow a reasonable opportunity for repairs to be made; (4) there was no breach of any implied warranty because the boat did not actually malfunction; (5) the jurys award of incidental damages was not supported by the evidence; and (6) Boat and Motor Mart was the prevailing party on the Townsends breach of contract cause of action and, despite losing on the warranty claims, was entitled to recover its attorney fees and costs as the prevailing party under section 1717. The Townsends oppose these contentions and, in their cross-appeal, argue that the trial court should have awarded them damages for breach of implied warranties as well as for breach of express warranty.
Unless otherwise indicated, all further section references are to the Civil Code.
We conclude that the Townsends were not entitled to relief under an express warranty theory, but they are entitled to the damages awarded by the jury for breach of implied warranties. We further conclude that the trial court did not err in denying Boat and Motor Marts request for attorney fees. Because these rulings resolve the matter, it is unnecessary to decide the other issues raised by the parties. The judgment will be vacated and remanded for entry of a new judgment consistent with this opinion.
I. FACTS AND PROCEDURAL HISTORY
In 2004, James Townsend (Townsend) discovered undisclosed and substandard patches in the hull of the Osprey 30 sport-fishing boat he had purchased new from Boat and Motor Mart in 2001. Unable to resolve the matter with Boat and Motor Mart and the vessels manufacturer, Osprey Boat Company (Osprey), Townsend and his wife filed a lawsuit against them for damages.
In their complaint, the Townsends alleged that Boat and Motor Mart breached its contract to provide a "2000 OSPREY 30" in "new, good condition," and that Osprey committed fraud. Against both Boat and Motor Mart and Osprey, the Townsends asserted claims for breach of express warranty and breach of the implied warranties of merchantability and fitness for a particular purpose under the Act. (§ 1790 et seq.)
Boat and Motor Mart filed a cross-complaint against Osprey for indemnification. The matter proceeded to a jury trial, at which Osprey did not appear.
Boat and Motor Mart represents that Osprey filed for bankruptcy protection under Chapter 7 of the Bankruptcy Code. When Osprey did not appear at trial, the Townsends dismissed Osprey as to all causes of action, but Boat and Motor Mart proceeded on its indemnity cross-complaint. The jury found for Boat and Motor Mart on its cross-complaint, but the judgment does not mention it.
A. EVIDENCE AT TRIAL
Townsend testified that he first saw an Osprey boat at a boat show in 1997. As a saltwater fisherman, he was attracted to the Osprey because, as stated in its brochure and sales literature, the hull had 12 fiberglass laminates and a foam insulation that made the boat more buoyant and slower to sink.
At a boat show in 2001, Townsend visited Boat and Motor Marts display and looked at an Osprey 30, a 30-foot sport-fishing boat. As Townsend testified at trial, when he "stepped on the 30, I was in love. That was going to be mine." Chris Martin, a Boat and Motor Mart salesperson, told Townsend that the Osprey 30 had a lifetime warranty on its hull, which had 12 layers of fiberglass throughout and a foam filling. Townsend signed an order form for an Osprey 30—which the parties describe as their purchase agreement or contract—and put down a refundable $1,000 deposit toward the purchase price of $185,000 plus tax (totaling approximately $199,800), while at the boat show.
Townsend arranged for a "test drive" of an Osprey 30 with Martin and Jay "Kelly" Veach (Veach), who was Boat and Motor Marts owner. During the sea test, both Martin and Veach told Townsend that the boats hull was constructed of 12 fiberglass laminates and that it had a lifetime warranty. Townsend testified that he relied upon these representations in buying the boat.
On January 27, 2001, after driving the boat, Townsend deposited an additional $50,000 toward the purchase price. He paid the balance of $148,918.75 on February 20, 2001.
Townsend received a written warranty on the hull from Osprey, the manufacturer of the boat. The warranty stated: "Osprey Boats, Incorporated, hereinafter Osprey, warrants each Osprey deck and hull to be free from any defects which are caused by faulty workmanship for a lifetime warranty." The warranty further provided: "During the warranty period, repairs covered under warranty will be made by Osprey or its authorized service representatives without charge." Boat and Motor Mart was Ospreys only authorized representative in California.
Townsend took possession of the Osprey 30 in February 2001. The boat he actually received was the one he had taken for a test drive, not the one he had seen at the boat show.
Between February 2001 and January 24, 2004, Townsend used the boat for fishing in San Francisco Bay, coastal waters, and elsewhere. He experienced no problems with the boats seaworthiness. He did, however, observe water in the boat on occasion, but was never able to ascertain the source.
In April 2001, Townsend ran his Osprey 30 into a break wall in San Francisco Bay, crushing the bow above the waterline. The entire bow and roughly the front third of the hull required replacement at a cost of approximately $ 50,000. The parties do not contend that this incident contributed to the condition of the hull for which Townsend sought compensation at trial.
On January 24, 2004, Townsend took the boat to the Berkeley Marine Center for routine maintenance and to have the bottom of the hull repainted. As Townsend sanded off the old bottom paint, he discovered a number of patches in the stern area of the hull. Unknown to Townsend, the hull to his boat had originally been molded for an inboard engine with four large holes and over 16 small holes in its bottom; Osprey had patched the holes and painted the hull before delivering the boat to Boat and Motor Mart.
Cree Partridge (Partridge), the owner of the Berkeley Marine Center, told Townsend that the patches in the hull were consistent with the hull having been converted from an inboard, through-hull drive, to an inboard/outboard drive configuration. At trial, Partridge testified that the patch bond would have failed within a day of its being made, the patches as constructed could have popped out in ordinary operating conditions and caused the boat to sink, and there was "no way" the patched area contained 12 laminates. Partridge told Townsend that he had a "worthless patch" and should obtain a new hull.
Townsend telephoned Veach at Boat and Motor Mart on January 27, 2004. Veach in turn contacted Osprey. Within a couple of days, Townsend spoke by telephone with Ospreys owner, Tim Sims. Sims admitted that the holes in the boat were a "mistake," Osprey had patched the holes, and Osprey would guarantee the hull for life. When Townsend requested that the hull be replaced, Sims became angry and hung up.
At the Berkeley Marine Center on February 12, 2004, Townsend met with Partridge, Veach, and Ospreys Rian Sims. Rian Sims claimed there was nothing wrong with the integrity of the boat, represented that the patch had 12 laminates, and confirmed that there was a lifetime warranty on the boat.
Townsend paid Partridge to take a core sample of one of the patches on February 14, 2004. When the core sample indicated that the patch did not, in fact, contain 12 laminates, Townsend hired a marine surveyor, Stephen Wedlock (Wedlock), to evaluate the boats condition. Wedlock inspected the core sample in February 2004 and concluded that the patch was of poor quality; Veach, who attended the inspection, agreed. Wedlocks written survey report confirmed that the patch was poorly done.
At trial, Wedlock explained that the fiberglass patch was substandard because there was a high resin-to-fiberglass ratio and it did not appear that there was a complete bond where the edge of the patch met the hull. In fact, Wedlock testified, it "was probably one of the worse [sic] repairs I have ever seen in a hull, strength-wise," the voids, cracks, and separating in the patches evidenced their failure, and the boats hull was at risk of "catastrophic failure." Because of the poor quality of the patches, Wedlock opined, they would have failed at some point during the boats useful life. Veach also admitted at trial that the patch would have failed at some point.
Townsend received a letter from Osprey on March 13, 2004. Osprey offered to pick up the boat and have it trucked to Ospreys plant in Washington, redo the patches, have the repairs inspected by a marine surveyor and return the boat to Townsend with the hull unpainted, so that he could inspect the repairs for himself—all at no cost to Townsend.
Townsend rejected Ospreys offer, because he did not trust Osprey to make adequate repairs. Townsend instead wanted the boats hull replaced. According to Townsend, Veach agreed that this was the appropriate course of action. Veach told him that Boat and Motor Mart would see if they could make the repairs and charge Osprey.
On March 27, 2004, Townsend met with another representative from Boat and Motor Mart, who observed the boat, inspected the core sample, and received Wedlocks survey report. On April 15, 2004, however, Boat and Motor Mart informed Townsend that it would not repair the boat, and if Townsend wanted any action he would have to get a lawyer. He did.
Townsend also obtained an estimate of $15,520 to remove and replace the patches in the Ospreys hull. Townsend elected to have only two of the large fiberglass patches redone in February 2005, at a cost of $3,256.
Michael Wiest (Wiest), a yacht broker, testified at trial that Boat and Motor Mart should have disclosed the patches and the manner in which they had been constructed. If this disclosure had been made, Wiest testified, the boat sold to the Townsends would have had "zero" market value. Given the state of the repairs made to the hull by the time of trial, and with several of the patched holes not yet repaired, the boats fair market value was less than $100,000, compared to values around $120,000 to $130,000 for similar vessels without the patched holes.
B. VERDICT AND JUDGMENT
At the close of the Townsends case, Boat and Motor Mart moved for a nonsuit. Before the case went to the jury, the court granted the motion as to the cause of action for breach of contract, on the ground that there was no evidence the contract required delivery of a new boat in "good condition."
The warranty claims were decided by special verdict of the jury. The jury found that Boat and Motor Mart breached both an express warranty made to the Townsends and the implied warranties of merchantability and fitness for a particular purpose. As to the express warranty claim, the jury determined that $102,400 was the "amount of money, if any, that will reimburse [the Townsends] for the purchase price of the Osprey 30 less the value of its use by [the Townsends] before discovering the defects." The jury also awarded incidental damages of $ 12,981 to reimburse the Townsends for storage costs and lay days ($7,540), the fee for the marine survey ($425), and "repairs" ($ 5,016). As to the claim for breach of implied warranties, the jury determined that $83,100 was "the amount of money, if any, that is the difference between the value of the Osprey 30 as accepted and the value the Osprey 30 would have had as warranted, including the cost of repairs necessary to make the Osprey 30 conform to the implied warranties." The jury imposed a civil penalty of $100,000 against Boat and Motor Mart, pursuant to the Act, for Boat and Motor Marts willful failure to repair or replace the vessel. (See § 1794, subd. (c).)
On October 18, 2005, judgment was entered in favor of the Townsends on their claims for breach of express warranty and breach of the implied warranties of merchantability and fitness for a particular purpose, in accord with the jurys verdict, and in favor of Boat and Motor Mart as to the Townsends cause of action for breach of contract, pursuant to the courts grant of the nonsuit motion. The court ordered Boat and Motor Mart to pay the Townsends, in accordance with the verdict, $ 102,400 for breach of the express warranty, $12,981 (including $ 5,016 for repairs) as incidental damages, and the $100,000 civil penalty, as well as any attorney fees and costs to be awarded. The court did not order the Townsends to return the boat.
The court did not award the Townsends the $83,100 assessed by the jury as damages for breach of implied warranties. The judgment instead provides that, if the award based on the express warranty and civil penalty were reversed, the Townsends would recover under their theory of implied warranty in the amount of $83,000, along with the $12,981 for incidental damages.
This portion of the judgment states: "IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that should the judgment in favor of plaintiffs James Townsend and Diane Townsend as to their cause of action for Breach of Express[] Warranty and award of civil penalties, as set forth in paragraphs 1, 4 and 5 above, be determined to be unlawful, improper or erroneous by a court of competent jurisdiction, then plaintiff shall have judgment against defendant Boat and Motor Mart, a Corporation, on the jurys special verdict for defendants Breach of Implied Warranties of Merchantability and Fitness for Particular Purpose. Said judgment shall be in the amount of $83,000 which is the amount of money that is the difference between the value of the Osprey 30 as accepted and the value the Osprey 30 would have been as warranted, including the cost of repairs necessary to make the Osprey 30 conform to the implied warranties. Additionally, defendant Boat and Motor Mart, a Corporation, shall pay plaintiffs James Townsend and Diane Townsend $7,540 for storage costs/lay days, $425 for a survey fee, and $5,016 for repairs." The courts reference to "$83,000" instead of the $83,100 awarded by the jury appears to be a typographical error.
In November 2005, the Townsends filed a memorandum of costs and a motion to recover their attorney fees under section 1794, subdivision (d). The court ordered that the Townsends were entitled to recover $164,701.25 in attorney fees and $20,714.83 in costs.
Section 1794, subdivision (d), reads: "If the buyer prevails in an action under this section, the buyer shall be allowed by the court to recover as part of the judgment a sum equal to the aggregate amount of costs and expenses, including attorneys fees based on actual time expended, determined by the court to have been reasonably incurred by the buyer in connection with the commencement and prosecution of such action."
Boat and Motor Mart also filed a request for attorney fees and costs, claiming it was entitled to those amounts under section 1717 and a clause in the purchase agreement providing for recovery "for costs of suit and reasonable attorneys fees," because it had prevailed on the Townsends contract cause of action. The motion was denied on the ground that Boat and Motor Mart was not the prevailing party within the meaning of section 1717 and, in any event, it had failed to prove the amount of fees expended in defense of the contract claim.
An amended judgment, different from the original judgment only in that it included the amount of attorney fees and costs the Townsends would recover, was entered on March 9, 2006. Boat and Motor Mart filed notices of appeal from the original judgment and the amended judgment. The Townsends filed a cross-appeal. The appeals have been consolidated.
II. DISCUSSION
The parties raise numerous issues regarding the Townsends theories of liability and the proper measure of damages. We first address whether the Townsends were entitled to recover under express warranty or implied warranty theories. We then turn to the issue of damages and whether Boat and Motor Mart was entitled to recover for its attorney fees and costs.
A. EXPRESS WARRANTY
To prevail on a cause of action for breach of express warranty under the Act, the Townsends had to prove: (1) Boat and Motor Mart provided a written warranty, or a sample or model of the boat to be purchased by Townsend; (2) the warranty was breached; (3) the Townsends delivered the boat to Boat and Motor Mart for repair or notified Boat and Motor Mart of the need for repairs but could not deliver the boat due to its size and weight; (4) Boat and Motor Mart failed to repair the boat to conform to the express warranty, despite a reasonable opportunity to do so; and (5) Boat and Motor Mart did not replace the boat or reimburse the Townsends an amount of money equal to the purchase price less the value of its use before the defect was discovered. (See § 1791.2; see generally Judicial Council of California, Civil Jury Instructions (2006), No. 3200, at pp. 565-566.)
Boat and Motor Mart contends that two of these elements were not established, arguing that Boat and Motor Mart did not provide to the Townsends an express warranty, and that the Townsends did not provide to Boat and Motor Mart a reasonable opportunity to make the repairs.
1. Express Warranty
An express warranty arises under the Act when the buyer is given a writing warranting the condition of the merchandise. (§ 1791.2, subd. (a).) Alternatively, if the buyer has been provided a sample or model of the merchandise, there is an express warranty that the "whole of the goods" ultimately purchased will conform to the sample or model. (Ibid.) Although the Act does not define a sample or model, the Commercial Code indicates that a "sample" refers to an item drawn from a bulk of goods, with the idea that it is representative of the rest of the bulk of goods; a "model" is an item not drawn from the bulk of goods, but offered for inspection when the subject matter is not at hand, with the idea that the bulk of goods will meet that standard. (Cal. U. Com. Code, § 2313, com. 6, p. 297.)
Section 1791.2 provides: "(a) `Express warranty means: [¶] (1) 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; or [¶] (2) In the event of any sample or model, that the whole of the goods conforms to such sample or model. . . ."
The jury in this case found that Boat and Motor Mart gave Townsend "a warranty." It also found that the Townsends Osprey 30 did not match the quality of "the sample or model." From this it may be inferred that the jury believed the Townsends were shown a sample or model of the boat they ultimately purchased.
Indeed, the jury was instructed that the Townsends could recover on an express warranty theory only if "BOAT AND MOTOR MART gave [Townsend] a warranty by showing him a sample or model of an Osprey 30 boat and representing [by] words or conduct that the Osprey 30 boat he was buying would match the quality of the sample or model." (Italics added.)
The Townsends contend that substantial evidence supported the jurys finding of an express warranty. First, they argue that Boat and Motor Marts representatives represented orally that the Osprey 30s hull was exceptionally sturdy and seaworthy with 12 layers of fiberglass laminate. As a matter of law, however, these statements by themselves do not constitute an express warranty under the Act, because they were not made in writing. (§ 1791.2, subd. (a)(1); see also § 1791.2, subd. (b) ["[a]n affirmation merely of the value of the goods or a statement purporting to be merely an opinion or commendation of the goods does not create a warranty"].)
The Townsends next point to the written lifetime warranty issued by the boats manufacturer. The warranty stated: "Osprey Boats, Incorporated, hereinafter Osprey, warrants each Osprey deck and hull to be free from any defects which are caused by faulty workmanship for a lifetime warranty." (Italics added.) This warranty was made by Osprey, not Boat and Motor Mart. In fact, Boat and Motor Mart is not even mentioned by name. The Townsends argue that Boat and Motor Mart is nonetheless liable for breach of this express warranty, because the warranty stated that "repairs covered under warranty will be made by Osprey or its authorized service representatives without charge," and Boat and Motor Mart was Ospreys only authorized repair facility in California. (Italics added.) That language, however, does not contain any undertaking by Boat and Motor Mart as to the condition of the vessel; it merely constituted a representation by Osprey that the boat would be repaired by someone of appropriate expertise at no cost to the buyer.
Lastly, the Townsends argue that, even if there was no written warranty by Boat and Motor Mart for purposes of section 1791.2, subdivision (a)(1), Boat and Motor Mart showed Townsend a sample or model of the Osprey 30, which suffices as an express warranty under section 1791.2, subdivision (a)(2). As mentioned, the jury implicitly found that Townsend was shown a sample or model in deciding that the Osprey 30 did not "match the quality of the sample or model"; Martins admission at trial that Townsend was shown a model Osprey 30 at the boat show would support this finding. But the parties ask us to draw different legal conclusions from this evidence. Under the Townsends theory, because Boat and Motor Mart represented that the Osprey 30s hull was constructed of at least 12 laminates of fiberglass at the time Townsend was shown the model, and the boat Townsend actually purchased and received did not meet this standard, the express warranty was breached. Under Boat and Motor Marts theory, the sale was not by "sample or model" because Townsend sea-tested the actual boat that he eventually received, and therefore did not make the purchase based on his earlier view of the purported model. Since Townsend had the opportunity to examine the actual item that he purchased, it is argued, subdivision (a)(2) of section 1791.2 does not apply. (See Alexander v. Stone (1916) 29 Cal.App. 488, 489 [no sale by sample where plaintiff had opportunity to examine the goods purchased].)
We conclude that Townsends transaction was not a sale by sample or model within the meaning of section 1791.2, subdivision (a)(2). Section 1791.2, subdivision (a)(2) contemplates the purchase of a large quantity of goods based on a representative sample or model, requiring that the "whole of the goods" that are purchased must conform to the sample or model presented. The Commercial Code likewise defines a sample or model in the context of its adequate representation of the remainder of a bulk of goods. (Cal. U. Com. Code, § 2313, com. 6, p. 297.) This is not a situation where a buyer purchased a "bulk of goods" based on a sample or model provided by the seller: Townsend bought a boat, not a fleet. (See, e.g., Loose v. Flickinger (1932) 121 Cal.App. 77, 78 [500 cases of dates based on sample] (Loose).)
Moreover, even if the sale was based on a sample or model, the Townsends could recover only if the boat they received did not conform to the attributes of the sample or model. In the record before us, there is no evidence of the condition of the hull of the boat Townsend saw at the boat show, or any evidence that Townsend made any observations of the hulls condition. Instead, in characterizing the quality and condition of the hull, the Townsends rely solely on the oral statements of Boat and Motor Marts representatives concerning the Osprey 30 line of boats generally. Therefore, it was not the sample or model that formed the basis of the bargain, but the oral statements of the sellers. To permit recovery under an express warranty theory based on these oral representations would be contrary to the statutory language and plain legislative intent behind the Act. (See Loose, supra, 121 Cal.App. at p. 79 ["In order to constitute a sale by sample so as to give rise to a warranty, it must appear that the parties contracted solely with reference to the sample exhibited."].)
In sum, Boat and Motor Mart made no express warranty concerning the condition of the boat for purposes of the Act, and as a matter of law the Townsends were not entitled to recover on their claim for breach of express warranty. Since they were awarded $102,400 based on their express warranty theory, the award of $102,400 must be stricken. The $100,000 awarded by the jury as a civil penalty must also be stricken. The civil penalty was imposed pursuant to section 1794, subdivision (c), which by its terms does not apply "with respect to a claim based solely on a breach of an implied warranty." (§ 1794, subd. (c).)
Because we conclude that the Townsends had no express warranty claim due to the absence of any express warranty by Boat and Motor Mart, we need not decide whether the Townsends express warranty claim was also unavailing because they failed to provide a reasonable opportunity for the repairs to be made. Nor must we decide Boat and Motor Marts contentions that (1) the express warranty damages created a windfall for the Townsends because they also kept the boat, and (2) the Townsends had to elect between an express warranty theory and implied warranty theories. We turn instead to the Townsends claim for breach of implied warranties.
B. IMPLIED WARRANTIES
The Act authorizes relief for breach of the implied warranty of merchantability and the implied warranty of fitness for a particular purpose. (§ 1791.1.) The implied warranty of merchantability warrants that the consumer goods are, among other things, "fit for the ordinary purposes for which such goods are used." (§ 1791.1, subd. (a)(2), italics added.) The implied warranty that goods are fit for a particular purpose arises where the seller has reason to know that the buyer requires the good for a particular purpose and is relying on the sellers skill and judgment to select and furnish a suitable good. (§ 1791.1, subd. (b); see § 1792.2, subd. (a).) Under section 1791.1, subdivision (c), the duration of the implied warranties, as applied in this case, is one year. Thus, in the matter before us the implied warranties were breached if the Townsends boat did not remain fit for its ordinary and particular purposes—sport-fishing—for a year after it was purchased.
As to the breach of the implied warranty of merchantability, the jury found that the Osprey 30 was not "of the same quality as those generally acceptable in the trade." As to breach of the implied warranty of fitness for a particular purpose, the jury found that the Osprey 30 was not suitable for the particular purpose Townsend intended to put it, and Boat and Motor Mart knew or should have known of Townsends particular purpose and that he was relying on its skill and judgment in selecting the boat.
These findings were supported by substantial evidence. There was ample testimony that the boat was neither fit for its ordinary purpose (sports-fishing) or for Townsends particular purpose (also sports-fishing). Witnesses including Partridge, Wedlock, and Veach testified that the hull patches were substandard. Wedlock and Partridge further testified that the patches could result in catastrophic failure and were so poorly constructed that there was a substantial likelihood they would leak or pop out in the future if the boat continued to be used as designed. From this it can be inferred that the boat was not fit for sports-fishing.
Substantial evidence also supported the conclusion that the breaches of the implied warranties occurred within a year after the boat was purchased. Partridge testified that the patches in the boats hull would have failed within a day of being made, and it was not disputed that the patches were made before the boat was sold to Townsend. From this it can be inferred that the defective condition—the boats unfitness for its ordinary and particular purpose—arose not more than a year after purchase.
Boat and Motor Mart argues that there was no breach of the implied warranties because the boat never actually leaked or sunk. For this proposition it relies on American Suzuki Motor Corp. v. Superior Court (1995) 37 Cal.App.4th 1291 (American Suzuki), claiming that a product that has not actually malfunctioned is considered merchantable and fit for its ordinary purpose. (American Suzuki, supra, at p. 1296.) Analogizing to American Suzuki, Boat and Motor Mart contends that the Osprey 30 was used for its ordinary purpose until the time of trial without incident (except for Townsends own act of running the boat into a wall).
We disagree with Boat and Motor Marts contention that the Townsends cannot recover for breach of implied warranties merely because the defective patches did not cause the boat to leak. In the first place, Boat and Motor Mart misstates the evidence. Townsend did not testify that the boat never leaked. He testified that he often found as much as 3-4 inches of water in the boat, but that he was unable to ascertain the source of the water. Thus, even if there had to be an actual failure in performance to constitute a breach of the implied warranties, a reasonable jury could have inferred that the water in the boat evinced leaks from the substandard patches.
At any rate, a breach of implied warranties under the Act does not require proof that the product malfunctioned, but only that the product was unfit for its ordinary or particular purpose because a defect created a substantial certainty that the product would fail during its useful life. The implied warranties are framed in terms of whether the item was "fit," not whether it "functioned."
Of course, by the time a case comes to trial, the useful life of the product may have already expired, and the fact that the product always functioned properly during its useful life might be used as evidence that (1) there was no defect in the first place—i.e. the plaintiff failed to prove that the item was "unfit"; or (2) the item was unfit, but the unfitness did not result in damage. The conclusion that there was no defect does not apply in this case, in light of the overwhelming if not uncontroverted testimony that the patches were substandard, would have failed within a day of being made, and created a danger that the boat would sink. The second conclusion—that the item was unfit but the unfitness did not result in damage—pertains to the extent of damages that might be imposed for breach of implied warranty, but not whether there was, in fact, a breach based on the substandard quality of the product. (Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, 918 ["[P]roof of breach of warranty does not require proof the product has malfunctioned but only that it contains an inherent defect which is substantially certain to result in malfunction during the useful life of the product. The question whether an inherently defective product is presently functioning as warranted goes to the remedy for the breach, not proof of the breach itself."] (Hicks); Chamberlan v. Ford Motor Co. (N.D.Cal. 2005) 369 F.Supp.2d 1138, 1147 [Hicks reasoning applied to cars with defective component].)
Boat and Motor Marts reliance on American Suzuki is misplaced. In American Suzuki, a class action, the plaintiffs alleged that the design of the Suzuki Samurai vehicle created an unacceptable risk of roll-over, and they sought to recover for the cost of repairing the defect. (American Suzuki, supra, 37 Cal.App.4th at p. 1293.) The court concluded that because only a small percentage of Samurais had been involved in rollover accidents, the Samurai was fit for its ordinary purpose and thus not defective. (Id. at pp. 1298-1299.) Because plaintiffs could not maintain an implied warranty claim, the trial court had erred in ruling that plaintiffs implied warranty claims should be certified for class treatment. (Id. at p. 1299.)
Here, by contrast, there was ample evidence that the patches were substandard, would have failed within a day of being patched, and rendered the hull defective, notwithstanding the fact that the Townsends boat had not yet sunk. American Suzuki is thus distinguishable on its facts and unhelpful to our analysis in this case. (See Hicks, supra, 89 Cal.App.4th at pp. 922-923 [distinguishing American Suzuki on the ground that it was "not decided on the ground a defect must have resulted in the product malfunctioning in order to give rise to a suit for breach of warranty," but on the ground that the product was not defective].)
C. TOWNSENDS CROSS-APPEAL: DAMAGES FOR BREACH OF IMPLIED WARRANTY
The Townsends argue in their cross-appeal that, besides retaining the boat, being reimbursed for what they spent in repairing the hull by the time of trial, and being awarded $102,400 for breach of the express warranty (the purchase price less the value of their use of the boat), they should also recover the $83,100 under their breach of implied warranties theory for the cost of repairing the boat by replacing its hull. Their argument is that, in addition to what they have spent or must spend to fix up the boat to its warranted condition (i.e. the $12,981 reimbursement plus the $83,100 implied warranties remedy), they should also get a "fair measure of compensatory damages [$102,400] for all they have been put through as a result of the breach of express warranties." Boat and Motor Mart counters that the additional award for breach of implied warranties would be duplicative of the Townsends other recovery.
Because we are reversing the judgment as to the express warranty claim and the $102,400 imposed under the express warranty theory, we need not consider whether the $83,100 would be a windfall or duplicative of the $102,400. Instead, we conclude that the implied warranty remedy, which compensates the Townsends for the difference between the boat as warranted and the boat they got, plus the Townsends retention of the boat and reimbursement for repair and related costs already incurred, provides the Townsends with a lawful and appropriate remedy.
Boat and Motor Mart does not contend that the amount of the jurys $83,100 award is unsupported by the evidence. That amount should therefore be awarded to the Townsends for breach of implied warranties.
D. INCIDENTAL DAMAGES FOR REPAIRS
Boat and Motor Mart next contends that the $5,016 awarded by the jury for "repairs" is not supported by the evidence. In particular, Partridge testified that Townsend paid $3,256 to replace two hull patches, and the $1,760 difference between this amount and the jury award was for the cost of repainting the hull. Repainting the hull, Partridge acknowledged, was part of the maintenance Townsend had planned to undertake anyway.
However, Boat and Motor Mart waived its right to challenge the jurys determination of incidental damages, because it did not file a motion for a new trial. The failure to move for a new trial precludes a party from arguing on appeal that damages were excessive, in the absence of an erroneous instruction, failure to apply the legal measure of damages, or other error of law underlying the jurys award. (Schroeder v. Auto Driveway Co. (1974) 11 Cal.3d 908, 918-919; Christiansen v. Roddy (1986) 186 Cal.App.3d 780, 789 [appellant did not waive argument that trial court incorrectly awarded interest at 20 percent rather than at the legal rate].)
Boat and Motor Mart does not contend that the jurys award was caused by an erroneous instruction or error of law, but simply that the jury awarded the Townsends too much for the repairs made to the hull. Boat and Motor Mart does not address in their reply brief the Townsends assertion that the argument is waived. We concur that it is.
E. ATTORNEY FEES AND COSTS AS PREVAILING PARTY ON CONTRACT CAUSE OF ACTION
The trial court granted Boat and Motor Marts motion for nonsuit on the Townsends first cause of action for breach of contract. Boat and Motor Mart contends that it was thus the prevailing party on the first cause of action and, as the prevailing party on the only contract claim in the case, was entitled to recover its attorney fees and costs under section 1717. Moreover, because the evidence pertinent to the breach of contract claim is the same or intertwined with the evidence relevant to the warranty claims, Boat and Motor Mart maintains that it should recover all of its attorney fees incurred in the entire case, even though the net of the judgment is that Boat and Motor Mart is liable to the Townsends for nearly $ 100,000.
Section 1717, subdivision (a), provides: "In any action on a contract, where the contract specifically provides that attorneys fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorneys fees in addition to other costs."
We begin with the purported attorney fees provision in the parties contract. The provision read: "Buyer hereby irrevocably constitutes and appoints any attorney of any court of record in this State, to be his true and lawful attorney for him and in his name and stead, to enter his appearance in any suit or suits that may be brought in any court in this State at any time when any money is due hereunder, to waive the issuing of process and service thereof and trial by jury or otherwise, and to confess a judgment or judgments for such money so due and for costs of suit and for reasonable attorneys fees in favor of Seller and to release all errors that may occur or intervene in such proceedings, including the issuance of execution upon any such judgment, and to stipulate that no writ of error or appeal shall be prosecuted from such judgment or judgments, nor any bill in equity filed, nor any proceedings of any kind taken in law or equity to interfere in any way with the operation of such judgment or judgments or of execution issued thereon and to consent that execution may immediately issue thereon."
The parties do not discuss whether a provision purporting to appoint "any attorney" to be the buyers lawyer for the purpose of confessing judgment for any amount allegedly due, and consenting to execution on such judgment, without issuance of process, trial, appeal, or any other redress of any error that might occur in the process, is even enforceable under California law. Assuming arguendo that it is, and assuming further that the language provides for an award of attorney fees and costs to Boat and Motor Mart as the prevailing party, we note that the provision does not limit the types of causes of action that might be within its scope. Given the language of the attorney fees provision of the purchase agreement, an action on the contract for purposes of section 1717 may include not only a claim for breach of the contract itself, but also claims for breach of warranties implied in the sale that is the subject of the contract.
With this in mind, we turn to whether Boat and Motor Mart can be considered the prevailing party within the meaning of section 1717. We review the trial courts decision on this point for an abuse of discretion, noting that the courts discretion in this context is particularly broad. (Sears v. Baccaglio (1998) 60 Cal.App.4th 1136, 1158; McLarand, Vasquez & Partners, Inc. v. Downey Savings & Loan Assn. (1991) 231 Cal.App.3d 1450, 1456.)
A determination of "prevailing party" under section 1717, subdivision (b)(1), requires "`a comparison of the extent to which each party ha[s] succeeded and failed to succeed in its contentions." (Hsu v. Abbara (1995) 9 Cal.4th 863, 876 (Hsu).) If a party has an unqualified win (i.e., the defendant has defeated all the claims against him, as in Hsu), the trial court has no discretion to deny the party attorney fees as a prevailing party under section 1717. (Hsu, supra, at p. 876.) But when a decision on a contract claim does not represent a "`simple, unqualified win" for either party, but is considered "`good news and bad news to each of the parties," the trial court has discretion to rule that neither party prevailed on the contract. (Id. at pp. 874, 877.) In deciding whether there is a party prevailing on the contract, the trial court must "compare the relief awarded on the contract claim or claims with the parties demands on those same claims and their litigation objectives as disclosed by the pleadings, trial briefs, opening statements, and similar sources." (Id. at p. 876.) Therefore, a prevailing party determination is an examination of the extent to which each party obtained what it sought.
In the matter before us, the trial court did not abuse its discretion in concluding that Boat and Motor Mart was not a prevailing party within the meaning of section 1717. It is true that Boat and Motor Mart avoided liability for the condition of the hull under the cause of action specifically denominated as a breach of contract claim. But it did so because the trial court believed that the contract did not contain a specific term requiring the boat to be new and in "good condition." The quality and condition of the boat being sold under the contract, the court opined, was instead subject to the warranties of merchantability and fitness for a particular purpose, which were implied in the sale. Thus, given the circumstances presented by this case, as well as the nature of implied warranties generally, the Townsends claims based on the warranties implied in the contract must be considered in determining which party prevailed on the contract. (See Windham at Carmel Mountain Ranch Assn. v. Superior Court (2003) 109 Cal.App.4th 1162, 1168 ["`A warranty is a contractual term concerning some aspect of the sale, such as title to the goods, or their quality or quantity." (Italics added.)]; 4 Witkin, Summary of California Law (10th ed. 2005) Sales, § 51, p. 62.) On these implied warranty claims, Boat and Motor Mart lost in the amount of $83,100 plus incidental damages.
Indeed, the final result of the litigation was that Boat and Motor Mart has to pay the Townsends incidental damages and implied warranty damages totaling nearly $100,000, plus attorney fees and costs under section 1794. Winning on the breach of contract cause of action did not help Boat and Motor Mart avoid damages for the condition of the hull, and the Townsends obtained much more of what they requested in the pleadings and at trial, than Boat and Motor Mart did. (See Hsu, supra, 9 Cal.4th at p. 876.) It was within the trial courts discretion to rule that Boat and Motor Mart was not a prevailing party for purposes of section 1717.
III. DISPOSITION
The judgment for plaintiff on the cause of action for breach of express warranty is reversed, thereby striking the award of $102,400 and the $100,000 penalty. The judgment for plaintiff is affirmed in all other respects, including the award of attorney fees and costs to plaintiff. Accordingly, the matter is remanded to the trial court for entry of a new judgment.
We concur.
JONES, P. J.
GEMELLO, J.