Johnson v. Ford Motor Co. 11/25/03 CA5

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State: California

Court: 1st District Court of Appeal 1st District Court of Appeal

Docket No: F040188

Case Date: 03/24/2004

Preview:Filed 11/25/03 Johnson v. Ford Motor Co. CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIFTH APPELLATE DISTRICT GREG JOHNSON et al., F040188 & F040529 Plaintiffs and Respondents, (Super. Ct. No. 647076-9) v. FORD MOTOR COMPANY, Defendant and Appellant.

OPINION

APPEAL from a judgment of the Superior Court of Fresno County. Edward Sarkisian, Jr., Judge. McCormick, Barstow, Sheppard, Wayte & Carruth, D. Greg Durbin; Gibson, Dunn & Crutcher, Theodore J. Boutrous, Jr., Sonja R. West and Courtney A. Cook for Defendant and Appellant. William M. Krieg & Associates, William M. Krieg and Kimberly L. Mayhew for Plaintiffs and Respondents. Chavez & Gertler, Mark A. Chavez and Kathryn C. Palamountain for Consumers for Auto Reliability and Safety as Amicus Curiae on behalf of Plaintiffs and Respondents. -ooOooThis is an appeal from a portion of a judgment for plaintiffs, used car purchasers, against the car's manufacturer, based on its failure to make certain consumer-protection

disclosures. The appeal primarily challenges the award of punitive damages in the amount of $10 million. We conclude there is sufficient evidence to support the jury's conclusion that punitive damages were appropriate. After our constitutionally mandated independent review of the amount of punitive damages, we conclude the punitive damages award must be modified to $53,435, three times the compensatory damages. STATUTORY CONTEXT This action concerns events from 1996 through 1998. The following summary of various consumer protection laws refers to the code provisions existing at that time; many of the code sections have been amended several times since then. All section references are to the Civil Code, except as otherwise indicated. Section 1793.2, subdivision (d)(2), required a motor vehicle manufacturer who was unable "to service or repair a new motor vehicle ... to conform to the applicable express warranties after a reasonable number of attempts" to replace the vehicle or make restitution to the buyer, at the buyers election. We refer to this as the "reasonable attempts" requirement. Section 1793.22, subdivision (b), provided in part: "It shall be presumed that a reasonable number of attempts have been made to conform a new motor vehicle to the applicable express warranties if, within one year from delivery to the buyer or 12,000 miles on the odometer of the vehicle, whichever occurs first, either (1) the same nonconformity has been subject to repair four or more times by the manufacturer or its agent and the buyer has at least once directly notified the manufacturer of the need for the repair of the nonconformity or (2) the vehicle is out of service by reason of repair of nonconformities by the manufacturer or its agents for a cumulative total of more than 30 calendar days since delivery of the vehicle to the buyer." (The provision has a number of exceptions and qualifications that are not germane to the present case.) We refer to this as the "statutory presumption" that a car is a "lemon."

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Section 1793.23, subdivision (c), required that "a manufacturer who reacquires or assists a dealer ... to reacquire a motor vehicle" pursuant to the provisions of section 1792.2, subdivision (d) must (1) cause the vehicle to be retitled in the name of the manufacturer, (2) request the Department of Motor Vehicles to inscribe the ownership certificate with the notation "Lemon Law Buyback," and (3) affix a notification decal to the vehicle "if the manufacturer knew or should have known that the vehicle is required by law to be replaced" or accepted for restitution for failure to conform the vehicle to an express warranty. We refer to this as the "title branding requirement." Section 1793.23, subdivision (d) stated: "Any manufacturer who reacquires or assists a dealer ... to reacquire a motor vehicle in response to a request by the buyer or lessee that the vehicle be either replaced or accepted for restitution because the vehicle did not conform to express warranties shall, prior to the sale, lease, or other transfer of the vehicle, execute and deliver to the subsequent transferee a notice" disclosing the nature of the alleged problems with the vehicle. We refer to this as the "notification requirement." FACTS AND PROCEDURAL HISTORY Plaintiffs Greg and Jo Ann Johnson bought a used 1997 Ford Taurus from Decker Ford (Decker) in early 1998. Plaintiffs were told the previous owners of the car, the McGills, had traded in the car less than a year after they leased it from Decker because they wanted a pickup truck instead. Plaintiffs asked to see the repair records for the car and were told by the Decker salesperson that there was no record of significant repairs for the car. The underlying facts were otherwise. The McGills leased the new Taurus in December of 1996. On January 8, 1997, Luis McGill returned the car to the dealership complaining of a whistling noise in the transmission. After the car was in the shop a day or two, Decker diagnosed the problem

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as a stuck valve in the transmission. Decker returned the car to the McGills and said it had to order a part. The necessary repairs were made at the end of January. On February 6, McGill returned the car to Decker, complaining it was "shifting too hard": "When it would shift the front tires would leave like a skidmark," according to McGill. Decker apparently could not identify the cause of the problem. McGill returned on February 12 and Decker decided it needed to replace the transmission. After the transmission was replaced, McGill next returned the car to Decker with transmission complaints on May 21, 1997. At that time, he complained that the transmission "would just keep acting up." "Same problems like I did from the beginning, same thing." Over the next few months, McGill complained about the transmission when he took the car to Decker for repairs. Finally, while the family was driving to San Diego, the transmission locked in low gear near Bakersfield, and the McGills had to drive home in the emergency lane at 30 miles per hour. As a result of this last incident, the McGills filled out Ford's "customer review request form" on July 28, 1997. In it, they requested that Ford "buy back vehicle. Not happy at all with this vehicle[.] This vehicle is a lemon!!" They complained, "Transmission problem six times have had same problem!!" Decker presented the form to Ford's customer service manager for the district, Belinda Buchanan. As was her routine, Buchanan first reviewed the dealer's service file. By restrictively construing Decker's records,1 Buchanan concluded the McGill car was not a "lemon" that Ford was required to repurchase. However, she authorized Decker to offer McGill an "owner appreciation certificate" for a credit of $1,500 on any trade-in

For example, Buchanan did not treat the February 6 visit as a "service attempt" because Decker could not locate the problem on that date, even though Decker replaced the transmission six days later as a result of McGill's renewed complaint.

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transaction within the next 30 days "to facilitate concerns." Decker's service manager conveyed this offer to McGill, who accepted it and traded in the car for a new pickup truck. Decker, having purchased the Taurus as a trade-in from the McGills, placed it for sale on its own used car lot without any further repairs. Plaintiffs, the Johnsons, bought the Taurus, as described above. In July of 1998, Greg Johnson (Johnson) took the car to Decker, complaining that the transmission delayed in shifting and "slams into gear." Decker ordered a replacement transmission and installed it on August 11. The car appeared to operate normally until February of 1999. At that time, Johnson took the car back to Decker, complaining that it was starting to make the same noises as before. Decker could not find a problem and returned the car to Johnson. A month later, the transmission would not shift into reverse. Decker again agreed to replace the transmission. At this point, Johnson voiced concerns to Decker's service writer and was allowed to review the service file on the car. For the first time he discovered McGill's problems and he concluded the car was a lemon. Two subsequent repair attempts were unsuccessful. By complaint filed March 2, 2000, the Johnsons sued Decker and Ford. As against Ford, the complaint alleged fraud and concealment, in addition to violations of the Song-Beverly Consumer Warranty Act (

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