Auto Law Blog

Welcome

Auto Law Blog

Automobile warranty and related consumer claims amount to some of the most common and troublesome legal issues auto dealers face in the course of doing business.

Partner Chris Bruni of Sinunu Bruni LLP provides automobile dealerships effective legal counsel in avoiding and defending these types of claims.  He has successfully tried cases for dealerships involving “Lemon Law” allegations, manufacturing defects and Business and Professions Code 17200 claims. In addition, he was counsel for all DaimlerChrysler-insured dealerships in California for more than seven years, and has handled more than 400 cases on behalf of auto dealerships.  The Auto Law Blog is dedicated to providing analysis and discussion on legal issues impacting auto dealers and manufacturers nationwide.

It Has To Be Your Part

The California Supreme Court recently handed down a long awaited decision in the case of O'Neil v Crane Co. (2012) 53 Cal.4th 335.  The case dealt with the liability of a valve manufacturer for asbestos containing gaskets and packing that were used in conjunction with a Crane Co. valve.

The plaintiff in the case never encountered the original asbestos containing products in the valve, he claimed that he was exposed to the "replacement" gaskets and packing used in the valve, which also contained asbestos. The difference was, the replacement parts weren't made or supplied by Crane Co. The Supreme Court looked at this issue and determined that Crane Co. had no liability for the replacement parts that were used in it valves-even though the plaintiff claimed it was foreseeable that this type of part would be used with the valve.

Fast forward to a dealership: Even though the car you sold was designed to operate with a specific type of part, if a similar replacement part sold by someone else causes an injury to the consumer, under the facts of  O'Neil it is doubtful a claim could be stated against you. Bottom line, in most instances, to be liable, it has to be your part.

Computer on Wheels

I came across an interesting article on vehicle safety today. It dealt with the growing reliance on computers in the current generation of automobiles.  Bloomberg News posted a story that discussed the increasing number of entertainment computers that can overlap with safety computers on board a vehicle.  The concern is that these entertainment systems can be "hacked" like any other computer. If that happens and it affects the safety computers, then this could cause unforeseen trouble for the owner of the vehicle. The example that comes readily to mind is remote start and remote entry systems. But there are other vulnerabilities, from GPS to braking systems. Currently NHTSA is researching auto cyber security, as the technology is changing so fast they need to make sure they can keep up. This is fascinating stuff, but now Master Mechanics not only need to be able to diagnose a drivability problem, but they need to make sure the onboard vehicle computer hasn't been hacked. Brave New World, no?

Not So Fast!

Recently I came across this case decided by the Fourth Appellate District in San Bernardino that deals with the complexities of "indemnity" among dealerships, manufacturers and component part suppliers.It is an unpublished case--which means it can't be officially cited in court--but it does give some insight as to how cross-complaints against co-defendants are sometimes handled.

In Tiffin Motorhomes, Inc.v Superior Court, 2011 Cal. App. Unpublished, LEXIS 9051, the court determined that an engine manufacturer could not settle with the purchaser of an allegedly defective motor home  and then file a "Good Faith Settlement" motion to bar any cross-complaint by the motor home manufacturer or selling dealership.

In this case, the purchaser had complained of various engine problems when using the motor home. When the problems weren't resolved to the purchaser's satisfaction, suit was filed against the selling dealership, the motor home manufacturer and the engine manufacturer. The purchaser sued under the California Lemon Law for breach of warranty, but alleged there were multiple warranties given by the various defendants.

The engine manufacturer settled directly with the purchaser and then brought a motion for "Good Faith Settlement" under California Civil Code Section 877.6, which the Trial Court granted. As a result the selling dealership and motor home manufacturer were barred from pursuing a claim for indemnity or contribution against the engine manufacturer.

"Not so fast" said the remaining defendants. They took the matter up with the Appellate Court, which ruled that Civil Code Section 877.6 did not apply to the current situation, as the defendants were not "co-obligors on a single contract." The Trial Court's ruling was reversed, leaving the non-settling defendants free to pursue a cross-complaint against the engine manufacturer.

As noted, indemnity claims can be tricky, especially when you have multiple parties. When one party attempts to settle out, you need to make sure you have retained your indemnity rights so you can pursue them later if necessary. Best to keep this in mind as you approach trial or arbitration.

This is Heavy!

Last month the Third District of the California Court of Appeals came out with an heavy decision regarding the definition of a "New Motor Vehicle" under the Song-Beverly Act. In Joyce v Ford Motor Company, No. C064453, California Court of Appeal, Third District,  Sept. 6, 2011, the Court determined that a truck purchased for business use, qualified for inclusion under the Song-Beverly Act, also known as the "Lemon Law". I say "heavy  decision" because one of the defenses in the case was that since the vehicle had a Gross Vehicle Weight Rating in excess of 10,000 pounds it was exempt from the Lemon Law.

The law is a little tricky here: Civil Code Section 1793.22, subdivision (e)(2), defines "new motor vehicle" as "a new motor vehicle that is bought or used primarily for personal, family, or household purposes." However, `New motor vehicle' also means a new motor vehicle with a gross vehicle weight under 10,000 pounds that is bought or used primarily for business purposes by a person, including a partnership, limited liability company, corporation, association, or any other legal entity, to which not more than five motor vehicles are registered in this state."

Vehicle owner’s manuals typically specify both a vehicle’s gross vehicle weight (often referred to as the “GVW”) and the vehicle’s gross vehicle weight rating (called the “GVWR”). The GVW refers to actual weight of the vehicle, while the GVWR specifies the fully-loaded (with passengers and gear) weight capacity that the vehicle is designed to handle. So the GVWR is substantially greater than the GVW.

In Joyce, Ford didn't actually dispute that the truck weighed less than 10,000 pounds. The invoice stated that the truck's shipping weight was 6,787 pounds. Joyce added a diesel fuel tank,which weighed about 700 pounds when full. Joyce also added a rack to hold pipe, an isolator to provide an additional power source, and a back-up camera. Nor did Ford contend that these additions brought the vehicle's weight to 10,000 pounds. Instead, Ford argued that when the Legislature drafted section 1793.22, subdivision (e)(2), the phrase "gross vehicle weight" was intended to mean "gross vehicle weight rating." And because the F-250 had a gross vehicle weight rating of 10,000 pounds, it did not qualify as a "new motor vehicle" within the meaning of the Act.

Although the Court felt it was a close call, ultimately it weighed in on the side of the consumer. The Court of Appeal rejected Ford’s argument, and ruled that the California Lemon Law’s weight limit in Civil Code Section 1793.22 refers to the vehicle’s GVW.

As a result, dealerships and manufacturers have one less defense when attempting to tip the scales of justice in their favor.