Garcia v. Mercedes-Benz USA, LLC

21 Cal.App.5th 1259

231 Cal.Rptr.3d 123

Efigenia GARCIA, Plaintiff and Appellant,

v.MERCEDES-BENZ USA, LLC, Defendant and Respondent.

B279897

Court of Appeal, Second District, Division 2, California.

Filed April 5, 2018

As Modified on Denial of Rehearing May 3, 2018

Law Offices of René Korper, René Korper and Thomas E. Solmer, Valencia, for Plaintiff and Appellant.

Universal & Shannon, Jon D. Universal and James P. Mayo, Sacramento, for Defendant and Respondent.

After the engine of a brand new Mercedes-Benz died, the car's manufacturer offered to repurchase the car for the full amount less the $3,090 the buyer paid the dealer for additional products and services ("dealer add-ons"). After the buyer sued the manufacturer for breach of the implied warranty of merchantability under the Song-Beverly Consumer Warranty Act (the Act) ( Civ. Code, § 1790 et seq. ),¹ the parties entered into a confidential settlement leaving attorney's fees and costs unresolved, and the buyer moved for attorney's fees as the "prevailing party" under the Act. This appeal chiefly presents the question: Is a buyer a prevailing party entitled to recover attorney's fees under the Act if, through settlement with the manufacturer, all she obtains by litigating is the payment of dealer add-ons for which the manufacturer is not responsible and the payment of attorney's fees? We conclude the answer is "no." For these reasons and others, we affirm the denial of attorney's fees but modify the judgment to award costs because the buyer obtained a net monetary recovery by virtue of the settlement.

FACTS AND PROCEDURAL BACKGROUND

In April 2015, plaintiff Efigenia Garcia (Garcia) bought a Mercedes-Benz GLA250W4 at Keyes European, an authorized Mercedes-Benz dealer. Garcia paid $46,593.97, comprised of a $8,540 down payment and a loan for the balance.² The $46,593.97 amount included the cost of the car and $3,090 in dealer add-ons (namely, $1,700 for Mercedes-Benz tires and wheels, $995 for Ownerguard protection, and $395 for a third-party surface protection product).

A month later, the car's engine "failed entirely."

Soon thereafter, Garcia contacted defendant Mercedes-Benz USA, LLC (Mercedes-Benz), and Mercedes-Benz offered to repurchase the car. Before Mercedes-Benz laid out the details of the repurchase, Garcia hired an attorney. Mercedes-Benz sent a follow-up email, explaining that it would repurchase Garcia's car for the amount she paid the manufacturer, but would not reimburse her for dealer add-ons (or $18.99 in interest on those add-ons) or pay any attorney's fees.

A few days after receiving Mercedes-Benz's more detailed offer, Garcia sued Mercedes-Benz in a single-count complaint alleging breach of the implied warranty of merchantability, but which made additional allegations regarding the breach of an express warranty and sought relief only available for a breach of implied and express warranties. Pursuant to the Act, Garcia sought a refund of the full purchase price (including the amount paid to Mercedes-Benz for the car and the amount paid for the dealer add-ons), civil penalties of twice her actual damages, attorney's fees, and costs.³ Garcia did not sue the dealer.

Before and after Garcia filed her complaint, the parties tried to negotiate a settlement. Garcia demanded (1) that Mercedes-Benz take custody of the car, (2) refund her the amounts paid to the dealer as well as Mercedes-Benz, and (3) pay her attorney's fees, initially of $2,500 and subsequently of $4,020. Mercedes-Benz's pre-complaint offer eventually gave way to an offer to refund her everything (including the amounts paid for the dealer add-ons) and to pay either $1,000 in attorney's fees and costs or to leave them open for resolution by the court.

The parties entered into a confidential settlement that did not disclose the settlement amount and left the issues of attorney's fees and costs for judicial resolution. Garcia surrendered the car, and was paid the confidential amount.

Garcia then filed a motion for $8,430 in attorney's fees as the prevailing party under the Act as well as a memorandum of costs seeking $750 in costs. After full briefing, the trial court issued a written order denying attorney's fees and costs. In denying attorney's fees, the court noted that Garcia's entitlement to attorney's fees under the Act turned on whether she was the prevailing party and thus had achieved her litigation objectives, but ruled that the confidentiality of the settlement made it impossible to know whether Garcia had, in fact, achieved those objectives by obtaining more in the settlement than Mercedes-Benz had offered her prior to the lawsuit. The court declined to award costs on the ground that they could not be obtained by noticed motion.

A few weeks later, the trial court entered a judgment dismissing Garcia's lawsuit with prejudice. Garcia thereafter filed this timely appeal.

DISCUSSION

Garcia argues that the trial court erred in denying her attorney's fees and costs. Mercedes-Benz asserts that we need not reach these questions because the trial court's denial order is not appealable. We address the appealability question first.

I. Appealability

Mercedes-Benz contends that we are without jurisdiction to entertain Garcia's appeal from the trial court's order denying attorney's fees and costs because it is an interim order prior to judgment that is outside our appellate jurisdiction. We independently review questions regarding our own jurisdiction. ( California Redevelopment Assn. v. Matosantos (2011) 53 Cal.4th 231, 252, 135 Cal.Rptr.3d 683, 267 P.3d 580.)

As a general rule, we may only entertain appeals from final judgments. ( Code Civ. Proc., § 904.1, subd. (a).) This rule is designed " ‘to prevent piecemeal dispositions and costly multiple appeals.’ [Citation.]" ( Howeth v. Coffelt (2017) 18 Cal.App.5th 126, 133-134, 226 Cal.Rptr.3d 773.) One corollary of this "one final judgment" rule is that " ‘ "interlocutory or interim orders are not appealable." ’ " ( Id. at p. 133, 226 Cal.Rptr.3d 773.) This corollary applies to an order denying interim (that is, prejudgment) attorney's fees. ( Sese v. Wells Fargo Bank N.A. (2016) 2 Cal.App.5th 710, 716, 206 Cal.Rptr.3d 715.) However, a second corollary of the "one final judgment" rule is that interim rulings that are not themselves appealable remain " ‘ " ‘reviewable on appeal’ from the final judgment." ' " ( Howeth , at p. 133, 226 Cal.Rptr.3d 773.) Because "[a] dismissal with prejudice following a settlement constitutes a final judgment on the merits" ( Estate of Redfield (2011) 193 Cal.App.4th 1526, 1533, 124 Cal.Rptr.3d 402 ; Code Civ. Proc., § 581d ), we have jurisdiction to review the trial court's prejudgment attorney's fees and costs order on appeal from the final judgment subsequently entered in this case.

II. Merits

Garcia contends that she is entitled to attorney's fees and costs as a prevailing party under the Act. We review a trial court's attorney's fees and cost rulings, including its determination of whether a party is the prevailing party for an abuse of discretion. ( Goglin v. BMW of North America, LLC (2016) 4 Cal.App.5th 462, 470, 208 Cal.Rptr.3d 646 ( Goglin ); MacQuiddy v. Mercedes-Benz USA, LLC (2015) 233 Cal.App.4th 1036, 1047, 182 Cal.Rptr.3d 691 ( MacQuiddy ); El Dorado Meat Co. v. Yosemite Meat & Locker Service, Inc. (2007) 150 Cal.App.4th 612, 617, 58 Cal.Rptr.3d 590 [award of costs].) To the extent these inquires require us to construe statutes, our review is de novo ( Wohlgemuth v. Caterpillar Inc. (2012) 207 Cal.App.4th 1252, 1258, 144 Cal.Rptr.3d 545 ( Wohlgemuth ) ); to the extent they require us to review the trial court's factual findings, we review for substantial evidence ( Stratton v. Beck (2017) 9 Cal.App.5th 483, 496, 215 Cal.Rptr.3d 150 ).

A. Attorney's Fees

1. Legal framework

The Act is colloquially known as California's "lemon law," and is a "strongly pro-consumer" law aimed at protecting, among others, new car buyers. ( Murillo v. Fleetwood Enterprises, Inc. (1998) 17 Cal.4th 985, 990, 73 Cal.Rptr.2d 682, 953 P.2d 858.) Toward that end, the Act: (1) requires all "manufacturers" and "retail sellers" of new cars to extend an implied warranty of merchantability to the buyer that assures that the car is "fit for the ordinary purposes for which [cars] are used" (§§ 1791.1, subd. (a)(2) & 1792; Brand v. Hyundai Motor America (2014) 226 Cal.App.4th 1538, 1546, 173 Cal.Rptr.3d 454 ( Brand ); see also § 1792.3 [implied warranty not subject to waiver unless strict requirements for "as is" sales are met] ); and (2) regulates how any express warranties made by manufacturers, retail sellers, and others are created and enforced (§§ 1793.1, 1793.2, 1793.3, 1795).

The Act also grants new car buyers the right to sue when a manufacturer or retail seller "fail[s] to comply" with any "implied or express warranty." (§ 1794, subd. (a).) A buyer bringing suit may seek actual damages, which differ depending on whether she alleges a breach of implied warranty or a breach of an express warranty. (Compare §§ 1794, subd. (b), 1791.1, subd. (d); Cal. U. Com. Code, §§ 2711 - 2715 [remedies for breach of implied warranty] with §§ 1793.2, subd. (d), 1793.3 [remedies for breach of express warranty], 1795 ["persons other than the manufacturer of the goods" may make express warranties]; see generally Music Acceptance Corp. v. Lofing (1995) 32 Cal.App.4th 610, 620-621, 39 Cal.Rptr.2d 159 [noting how remedies differ]; Brand , supra , 226 Cal.App.4th at p. 1548, 173 Cal.Rptr.3d 454 [same].) Unless a buyer's "claim [is] based solely on a breach of an implied warranty," the buyer may also seek a "civil penalty" (of up to two times the amount of actual damages) if the manufacturer's or retail seller's "failure to comply was willful." (§ 1794, subds. (c) & (e).)

Most pertinent here, a buyer who "prevails in [her] action" may recover "costs and expenses, including attorney's fees based on actual time expended, determined by the court to have been...