63 Cal.App.5th 194
Cal. Ct. App.2021Background
- Crayton leased a new 2016 Dodge Charger (upfront payments $6,750; 47 monthly payments totaling $23,505.64; purchase option/residual $24,458.60). Ally was the lessor.
- Charger developed defects defendant (FCA US LLC) could not repair; FCA stipulated to liability but offered restitution excluding the residual value and agreed to pay 2x actual damages as civil penalty.
- Bench trial proceeded on damages only; parties stipulated plaintiff was entitled to actual damages and 2x civil penalties.
- Trial court awarded restitution limited to amounts paid or payable under the lease (totaling $28,984.60 after offsets), doubled for civil penalties; declined to include residual, registration renewal fees, or insurance premiums; awarded reduced attorney fees largely limited because court found post-admission litigation unnecessary.
- On appeal, Crayton challenged exclusion of residual and incidental damages (registration and insurance), and the trial court’s reduction of attorney fees. Court affirmed in part, reversed in part, and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether residual (lease buyout) is part of restitution under Cal. Civ. Code §1793.2(d)(2)(B) | Residual is needed for manufacturer to reacquire vehicle; should be included as restitution. | Restitution is limited to amounts actually paid or payable at signing/under the lease; optional buyout not payable at signing and thus excluded. | Residual excluded: optional purchase price is not "actual price paid or payable" at lease signing; restitution aims to restore status quo ante. |
| Whether lessee must exercise purchase option / transfer title to allow manufacturer reacquisition and satisfy branding obligations | Lessee must buy and transfer title so manufacturer can reacquire without branding issues; otherwise lessee cannot get restitution. | Manufacturer can acquire title directly from lessor; Act imposes branding/reacquisition duties on manufacturers, not a purchase duty on lessee. | Lessee not required to purchase; Act imposes reacquisition/branding obligations on manufacturers. |
| Recoverability of registration renewal fees and insurance premiums as incidental damages | Both registration and insurance paid after manufacturer's duty arose are recoverable incidental damages. | Such amounts are not recoverable; at most registration fees may be. | Registration renewal fees may be recoverable per Kirzhner if incurred after manufacturer's duty arose; insurance premiums can be recoverable depending on causation/facts. Remand for factual determination. |
| Attorney fees for post-admission work — was reduction arbitrary? | Fees after admission were reasonable because FCA’s conduct forced continued litigation; entitlement to fees should reflect any increased damages on remand. | Only pre-admission fees were necessary; post-admission work was unnecessary and fees should be limited. | Fee award reversed in part and remanded: trial court must reconsider fees in light of any changed damages on remand (reduction was tied to damages outcome). |
Key Cases Cited
- Kirzhner v. Mercedes-Benz USA, LLC, 9 Cal.5th 966 (Supreme Court of California) (incidental damages such as registration renewal may be recoverable if incurred after manufacturer’s duty arose)
- Mitchell v. Blue Bird Body Co., 80 Cal.App.4th 32 (Cal. Ct. App.) ("actual price paid or payable" means amounts the buyer/lessee became legally obligated to pay at agreement)
- Niedermeier v. FCA US LLC, 56 Cal.App.5th 1052 (Cal. Ct. App.) (discussing restitution as restoration to status quo ante)
- Martinez v. Kia Motors America, Inc., 193 Cal.App.4th 187 (Cal. Ct. App.) (no requirement that buyer retain or re-acquire vehicle to obtain restitution)
- Aguilar v. Lerner, 32 Cal.4th 974 (Supreme Court of California) (elements and discretionary nature of judicial estoppel)
- MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc., 36 Cal.4th 412 (Supreme Court of California) (judicial estoppel is equitable and discretionary)
- Murillo v. Fleetwood Enterprises, Inc., 17 Cal.4th 985 (Supreme Court of California) (Act is remedial and should be construed to protect consumers)