Gutierrez v. Carmax Auto Superstores Cal.
19 Cal. App. 5th 1234
| Cal. Ct. App. 5th | 2018Background
- In May 2013 Gutierrez bought a 2008 Hyundai Elantra from CarMax with a 30‑day limited warranty and a CQI "125‑point" inspection certificate stating the car passed CarMax's inspection.
- At the time of sale the vehicle was subject to a national recall for the stop‑lamp switch, which Gutierrez alleges is a safety‑critical component; she does not allege the switch on her car actually failed before replacement.
- CarMax did not disclose the outstanding stop‑lamp switch recall before sale; the complaint implies CarMax knew of the recall but failed to disclose it for profit motives.
- After purchase the car developed transmission problems; during a June 2013 repair the stop‑lamp switch was replaced per recall and the transmission was repaired/replaced under a technical bulletin.
- Gutierrez sued for (among other claims) breach of implied warranty of merchantability, violations of the CLRA (Civ. Code § 1770) and the UCL (Bus. & Prof. Code § 17200); trial court sustained CarMax’s demurrer without leave to amend and dismissed.
- The Court of Appeal reversed as to the CLRA and UCL claims (but affirmed dismissal of the implied‑warranty claim) and remanded, holding the CLRA nondisclosure theory was sufficiently pleaded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an undisclosed safety recall rendered the car unmerchantable (breach of implied warranty) | Gutierrez: a vehicle subject to an unresolved safety recall (stop‑lamp switch) is not fit for ordinary purpose (safe driving) and breached merchantability at sale | CarMax: mere existence of a recall, without allegations the specific part was defective or that the vehicle's use was impaired, does not make it unmerchantable; issue waived if raised first on appeal | Held: Dismissal as to implied warranty affirmed — pleadings lacked facts that the switch in this vehicle was defective or that the recall impaired use or safety so as to show unmerchantability |
| Whether CLRA (proscribed representing paragraphs) covers nondisclosures/omissions | Gutierrez: CLRA proscribes deceptive omissions where omission is material; CarMax’s statement that car passed 125‑point inspection plus nondisclosure of recall was misleading | CarMax: "representing" means affirmative oral/written statements only; omissions not covered by paragraphs alleged; plaintiff failed to plead an affirmative misrepresentation or reliance with specificity | Held: "Representing" is ambiguous; court adopts established test — omissions actionable under CLRA when (1) contrary to a defendant representation or (2) defendant was obliged to disclose. Plaintiff sufficiently pleaded material omission, reliance and damage for pleading purposes |
| Whether CarMax had a duty to disclose the recall (element of CLRA omission) | Gutierrez: CarMax had actual knowledge (reasonably inferable from allegations) and made partial/positive representations about inspection, so duty to disclose arose | CarMax: No duty — inspection did not imply recall checks; plaintiff failed to plead CarMax’s knowledge or that omission was misleading | Held: Duty to disclose adequately pleaded — plaintiff alleged recall implicated safety, inspection emphasized braking/lighting checks (including brake lights), and complaint reasonably inferred CarMax knew of the recall, so omission was plausibly misleading |
| Whether UCL claim (unlawful prong) survives given CLRA holding | Gutierrez: UCL unlawful prong can be predicated on CLRA violation; seeks restitution and injunctive relief | CarMax: UCL claim fails if CLRA claim fails | Held: Because CLRA claim survives demurrer, UCL (unlawful) claim anchored to CLRA likewise survives; demurrer should be overruled as to UCL and CLRA counts |
Key Cases Cited
- City of Dinuba v. County of Tulare, 41 Cal.4th 859 (review standard on demurrer; any possible legal theory)
- Isip v. Mercedes‑Benz USA, LLC, 155 Cal.App.4th 19 (vehicle must be safe and substantially free of defects for merchantability)
- Brand v. Hyundai Motor Am., 226 Cal.App.4th 1538 (safety hazard defects can support implied warranty claim)
- Outboard Marine Corp. v. Superior Court, 52 Cal.App.3d 30 (CLRA interpretation: concealment/omission discussed as proscribed conduct)
- Daugherty v. American Honda Motor Co., 144 Cal.App.4th 824 (CLRA omission actionable when contrary to representation or defendant obliged to disclose)
- McAdams v. Monier, Inc., 182 Cal.App.4th 174 (omissions under CLRA recognized in context of class claims)
- Klein v. Chevron U.S.A., Inc., 202 Cal.App.4th 1342 (material omission may state CLRA/UCL claim)
- Collins v. eMachines, Inc., 202 Cal.App.4th 249 (situations creating duty to disclose: fiduciary, exclusive knowledge, active concealment, or partial representations that mislead)
- Meyer v. Sprint Spectrum L.P., 45 Cal.4th 634 (CLRA "any damage" element broader than actual damages)
- Steroid Hormone Product Cases, 181 Cal.App.4th 145 ("wouldn't have purchased" allegation can satisfy CLRA "any damage" for restitution)