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AB-1755 Civil actions: restitution for or replacement of a new motor vehicle.(2023-2024)

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Date Published: 09/30/2024 09:00 PM
AB1755:v92#DOCUMENT

Assembly Bill No. 1755
CHAPTER 938

An act to add Chapter 12 (commencing with Section 871.20) to Title 10 of Part 2 of the Code of Civil Procedure, relating to civil actions.

[ Approved by Governor  September 29, 2024. Filed with Secretary of State  September 29, 2024. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 1755, Kalra. Civil actions: restitution for or replacement of a new motor vehicle.
Existing law, the Song-Beverly Consumer Warranty Act, provides that if a manufacturer of a new motor vehicle, as defined, or the manufacturer’s in-state representative, is unable to service or repair the vehicle to conform to the applicable express warranties after a reasonable number of attempts, the manufacturer must either repurchase or replace the vehicle, as specified. Existing law, the Tanner Consumer Protection Act, creates the presumption that a reasonable number of attempts have been made to conform a new motor vehicle to the applicable express warranties if specified conditions are met. Under existing law, the buyer of a new motor vehicle may not assert this presumption until after the buyer has initially resorted to a qualified third-party dispute resolution process, if that process exists and certain additional conditions are met. Existing law provides that if, among other things, a qualified third-party dispute resolution process does not exist, the buyer of a new motor vehicle may assert the above presumption in an action to enforce the buyer’s rights under the Song-Beverly Consumer Warranty Act. Existing law provides that the buyer of a new motor vehicle who is damaged by a manufacturer’s failure to comply with specified requirements of the Song-Beverly Consumer Warranty Act or the Tanner Consumer Protection Act may bring an action for the recovery of damages and other equitable and legal relief. Existing law provides that if the buyer establishes that the manufacturer’s failure to comply was willful, the judgment may also include a civil penalty which shall not exceed 2 times the amount of actual damages.
This bill would provide that an action seeking the restitution for or replacement of a new motor vehicle, or for civil penalties, pursuant to the provisions of the Song-Beverly Consumer Warranty Act or Tanner Consumer Protection Act described above must be commenced within one year after the expiration of the applicable express warranty, and in no event may be brought later than 6 years after the date of original delivery of the vehicle, subject to specified tolling provisions. Beginning April 1, 2025, the bill would require the consumer to, prior to seeking civil penalties, provide a written notice to the manufacturer that, among other things, demands the manufacturer’s restitution for or replacement of the consumer’s vehicle. The bill would require mediation in an action seeking the restitution for or replacement of a new motor vehicle, or for civil penalties, and would stay all discovery, except a limited set of disclosures and depositions, in such actions until mediation is concluded. The bill would, for such actions filed on or after January 1, 2025, authorize the court to impose specified sanctions on represented parties who fail to comply with its provisions. The bill would provide that the duties and obligations it imposes are cumulative with, and do not limit or expand, duties and obligations imposed under any other law.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Chapter 12 (commencing with Section 871.20) is added to Title 10 of Part 2 of the Code of Civil Procedure, to read:
CHAPTER  12. Actions for Restitution for or Replacement of Certain Motor Vehicles

871.20.
 (a) Notwithstanding any other law, this chapter applies to an action seeking restitution or replacement of a motor vehicle pursuant to subdivision (b) or (d) of Section 1793.2, Section 1793.22, or Section 1794 of the Civil Code, or for civil penalties pursuant to subdivision (c) of Section 1794 of the Civil Code, where the request for restitution or replacement is based on noncompliance with the applicable express warranty.
(b) This chapter does not apply to service contract claims under Section 1794 of the Civil Code or any action seeking remedies that are not restitution or replacement of a motor vehicle.

871.21.
 (a) An action covered by Section 871.20 shall be commenced within one year after the expiration of the applicable express warranty.
(b) Notwithstanding subdivision (a), an action covered by Section 871.20 shall not be brought later than six years after the date of original delivery of the motor vehicle.
(c) The time periods prescribed in subdivisions (a) and (b) shall be tolled as follows:
(1) As provided by tolling requirements prescribed in subdivision (c) of Section 1793.22 of the Civil Code, as applicable.
(2) For the time the motor vehicle is out of service by reason of repair for any nonconformity.
(3) For the time period after a pre-suit notice is provided to the manufacturer in accordance with Section 871.24, which time period shall not exceed 60 days.

871.22.
 For purposes of this chapter, the following definitions apply:
(a) “Applicable express warranty” means the written warranty provided by the manufacturer at the time of delivery of the subject motor vehicle, which provides coverage for the specific nonconformity at issue in the action, subject to the terms and exclusions of that warranty.
(b) “Distributor” means any individual, partnership, corporation, association, or other legal relationship that stands between the manufacturer and the retail seller in purchases, consignments, or contracts for sale of consumer goods or motor vehicles.
(c) “Manufacturer” means any individual, partnership, corporation, association, or other legal relationship that manufactures, assembles, or produces consumer goods or motor vehicles.
(d) “Motor vehicle” includes any of the following:
(1) A motor home, as defined in paragraph (3) of subdivision (e) of Section 1793.22 of the Civil Code.
(2) A new motor vehicle, as defined in paragraph (2) of subdivision (e) of Section 1793.22 of the Civil Code.
(3) A travel trailer.
(e) “Travel trailer” means a vehicular unit without motive power that is designed to be towed or carried by a motor vehicle. “Travel trailer” does not include a mobilehome.
(f) “Warrantor” means any entity or person who gives or offers to give a written warranty or who is or may be obligated under an implied warranty.

871.23.
 For purposes of this chapter, any reference to a manufacturer also applies to a distributor or warrantor.

871.24.
 (a) At least 30 days prior to the commencement of an action seeking civil penalties under subdivision (c) of Section 1794 of the Civil Code, the consumer shall do all of the following:
(1) Notify the manufacturer of the consumer’s name, the accurate Vehicle Identification Number (”VIN”) of the motor vehicle, and a brief summary of the repair history and problems with the motor vehicle.
(2) Demand that the manufacturer repurchase or replace the motor vehicle.
(b) Minor deviations in the notice submitted pursuant to subdivision (a) shall not disqualify consumers from seeking civil penalties.
(c) At the time that notice submitted pursuant to subdivision (a) is sent, the consumer shall have possession of the motor vehicle.
(d) The notice required by subdivision (a) shall be in writing and shall be sent either by email to the email address prominently displayed on the manufacturer’s website for this purpose or by certified or registered mail, return receipt requested, to the address provided by the manufacturer in the owner’s manual or warranty booklet. The notice information on the manufacturer’s website, owner’s manual, and warranty booklet shall be provided in both English and Spanish.
(e) (1) A request for or action seeking civil penalties under subdivision (c) of Section 1794 of the Civil Code shall not be allowed or maintained if both of the following conditions are present:
(A) Within 30 days after receipt of the notice, the manufacturer makes an offer of restitution or replacement of the motor vehicle for the amount provided by subdivision (d) of Section 1793.2 of the Civil Code and Section 871.27, plus reasonable attorneys’ fees and costs, if the consumer is represented by an attorney.
(B) The motor vehicle replacement or restitution is completed within 60 days from the date of receipt of the original notice.
(2) The consumer shall comply in good faith with reasonable requests from the manufacturer for documentation required to complete the requested restitution or replacement of the motor vehicle.
(f) A prelitigation dispute as to attorney’s fees and costs shall be resolved by neutral, binding arbitration. A dispute as to the amount of attorney’s fees and costs shall not, by itself, be a sufficient basis to show that the manufacturer’s offer is out of compliance with this section.
(g) The consumer shall maintain possession of the motor vehicle for at least 30 days after the manufacturer’s receipt of written notice seeking restitution or replacement.
(1) If the manufacturer does not offer restitution or replacement of the motor vehicle within 30 days of receiving the consumer’s notice, the consumer shall be permitted to sell their motor vehicle and seek remedies, including, but not limited to, civil penalties under subdivision (c) of Section 1794 of the Civil Code.
(2) If the manufacturer offers restitution or replacement of the motor vehicle, the consumer shall maintain possession of the motor vehicle for the full 60 days after the manufacturer’s receipt of the consumer’s notice.
(h) An action seeking restitution or replacement under Section 871.20 may be commenced without compliance with subdivision (a). In that event, the consumer shall have possession of the motor vehicle at the time of the filing of the complaint, and shall not seek civil penalties, whether by amendment of the complaint or otherwise. If, however, notice is provided pursuant to subdivision (a) and the manufacturer fails to comply with their obligations under subdivision (e), the consumer may commence an action for restitution or replacement, including, but not limited to, civil penalties under subdivision (c) of Section 1794 of the Civil Code.
(i) A consumer shall act in good faith in order to comply with this section.
(j) This section shall become operative on April 1, 2025.

871.25.
 A remedy in compliance with this chapter shall not be contingent on the execution of any release other than the following Standardized SBA Release:
Standardized SBA Release
Release as it relates to settlements:
 
The parties have previously agreed to settle the case as follows and hereby memorialize all terms of their settlement as follows:
 
1. Within 60 days from the date of receipt of the notice requesting restitution or replacement of the Subject Vehicle [Vehicle Year/Make/Model and VIN] (hereinafter “Subject Vehicle”), [Manufacturer] (hereinafter “Defendant”) will make the following payments:
 
a. Defendant shall pay the remaining loan balance or lease balance and residual value on the Subject Vehicle directly to the lienholder [Lender Name] in the amount necessary to relieve Plaintiff of all obligations related to Plaintiff’s purchase or lease of the Subject Vehicle, excluding any late fees or penalties in the amount of [Loan Payoff Amount]. Said payment shall include interest through the date of payoff. This payment shall be expedited to the lienholder following completion of the return of the Subject Vehicle to the manufacturer or its agents.
 
b. Defendant shall pay to [Plaintiff’s Full Name] (hereinafter “Plaintiff”) a total amount of [Restitution Amount] in a check payable to Plaintiff. This payment shall be provided to Plaintiff at the time of the return of the Subject Vehicle to the manufacturer or its agents. In the event Plaintiff makes an additional payment that is not included in the above amount, Defendant shall reimburse Plaintiff for any payments made according to proof, with the exception of any late fees, within 30 days from the date proof of payment is provided to Defendant.
 
c. [If applicable] Defendant shall pay civil penalties in the amount of [Civil Penalties Amount] in a check payable to [Plaintiff, if not represented by counsel, or Name of Law Firm/Attorney, if Plaintiff is represented by counsel]. This payment shall be expedited following completion of the return of the Subject Vehicle to the manufacturer or its agents.
 
d. Defendant shall pay to Plaintiff’s counsel, if Plaintiff was represented by counsel (select one option below):
 
(i) In the event there is an agreement as to attorney’s fees and costs, a check in the amount of [Attorney’s Fees and Costs] payable to [Name of Law Firm/Attorney] shall be provided to Plaintiff’s counsel. This agreed upon payment shall be expedited to the attorney following completion of the return of the Subject Vehicle to the manufacturer or its agents.
 
(ii) In the event the matter is resolved before the filing of a lawsuit and the parties cannot agree as to the amount of attorney’s fees, costs, and expenses, then reasonable attorneys’ fees, costs, and expenses shall be determined by neutral, binding arbitration.
 
(iii) In the event the matter is resolved after the filing of a lawsuit and the parties cannot agree as to the amount of attorney’s fees, costs, and expenses, then reasonable attorneys’ fees, costs, and expenses pursuant to subdivision (d) of Section 1794 of the Civil Code shall be determined by the court by way of a noticed motion. Defendant agrees Plaintiff is the prevailing party for purposes of said fee motion.
 
2. Before transfer of the settlement funds set forth in Paragraph 1 above, Plaintiff shall execute all documents necessary for the transfer of ownership of the Subject Vehicle to Defendant or its designee.
 
3. The payments described above are intended as a compromise resolution of [Plaintiff’s Full Name] and [Defendant] with respect to all claims relating to the purchase, lease, condition, use, or repair of the Subject Vehicle during Plaintiff’s purchase or possession of the Subject Vehicle. In signing this agreement, Plaintiff hereby releases [Defendant] from all claims relating to the purchase, lease, condition, use, or repair of the Subject Vehicle that arose during Plaintiff’s purchase or possession of the Subject Vehicle, including, but not limited to, all claims under Sections 1793.2, 1793.22, and 1794 of the Civil Code. All releases are to take effect once Plaintiff returns the Subject Vehicle to Defendant.
 
4. [If the case has gone to litigation insert this Paragraph 4] The Parties to this release agree that the court shall retain jurisdiction pursuant to Section 664.6 of the Code of Civil Procedure to enforce its terms. In the event of a breach of this agreement, the prevailing party shall be entitled to recover reasonable attorney’s fees and costs incurred in the enforcement of this agreement. Within five business days of all of the above payments clearing, Plaintiff will file a Request for Dismissal with prejudice of [Plaintiff(s) v Defendant(s); Case Number/County] with the court.
 
(signature of Plaintiff)(date) 
(signature of Defendant)(date) 

871.26.
 (a) This section only applies to a civil action seeking restitution or replacement of a motor vehicle pursuant to Section 871.20.
(b) Within 60 days after the filing of the answer or other responsive pleading, all parties shall, without awaiting a discovery request, provide to all other parties an initial disclosure and documents pursuant to subdivisions (f), (g), and (h).
(c) Within 120 days after the filing of the answer or other responsive pleading, all parties have the right to conduct initial depositions, each not to exceed two hours, of the following deponents:
(1) The plaintiff.
(2) The defendant, and if the defendant is not a natural person, the person who is most qualified to testify on the defendant’s behalf. This deposition shall be limited to the topics listed in subdivision (i).
(d) Within 90 days after filing of the answer or other responsive pleading, all parties shall schedule a mediation to occur within 150 days after filing of the answer or other responsive pleading with a court-appointed or private mediator.
(1) Costs shall be distributed equally, but costs may be recoverable by the plaintiff as part of a settlement or judgment.
(2) The plaintiff and a person with settlement authority for the manufacturer shall attend the mediation in person or by remote means.
(e) Except as provided in subdivisions (b) and (c), all other discovery shall be stayed until mediation is concluded. If the case is not resolved at the conclusion of mediation, standard discovery procedures prescribed in Title 4 (commencing with Section 2016.010) of Part 4 of the Code of Civil Procedures shall apply, including an additional deposition of the plaintiff and the defendant and, if the defendant is not a natural person, the person who is most qualified to testify on the defendant’s behalf.
(f) The plaintiff shall provide the following documents to all other parties pursuant to the timeline set forth in subdivision (b):
(1) Sales or lease agreement.
(2) Copy of current registration.
(3) Any finance information, account information, including payment history and estimated payoff amount, and any loan modification agreements.
(4) Any repair orders, including to third-party repair facilities or the location of where information relating to repair orders may be found.
(5) Documents detailing all underlying claimed incidental damages.
(6) Information pertaining to the market value of the motor vehicle that is currently in the consumer’s possession.
(7) Any written, pre-suit communications with the manufacturer, including, but not limited to, any restitution or replacement request.
(g) The plaintiff shall provide the following information to all other parties pursuant to the timelines set forth in subdivision (b):
(1) Mileage of the motor vehicle as of the date of the disclosure described in subdivision (b).
(2) Primary driver or drivers of the motor vehicle.
(3) If the motor vehicle is primarily used for a business purpose, whether more than five vehicles are registered to the business.
(4) Whether the plaintiff is still in possession of the motor vehicle.
(5) Address where the motor vehicle is located.
(6) Whether the plaintiff is an active or prior member of the Armed Forces.
(7) Whether the motor vehicle has been involved in a collision or accidents reported to insurance prior to the nonconformity, and if so, the approximate date of the collision, the name of the insurance company, and any applicable claim number.
(8) Whether the motor vehicle has any aftermarket modifications done after purchase of the motor vehicle, and if so, a list of each modification.
(9) Dates and mileages for presentations that are not included in the provided repair orders or the location of where the information may be found.
(10) Whether the plaintiff has had any pre-suit communications with the manufacturer, including, but not limited to, any restitution or replacement request.
(11) Any need for an interpreter for purposes of a deposition.
(h) The defendant or manufacturer shall provide the following documents to all other parties pursuant to the timelines prescribed in subdivision (b):
(1) Copy of or access to a version of the owner’s manual for a motor vehicle of the same make, model, and year.
(2) Any warranties issued in conjunction with the sale of the motor vehicle.
(3) Sample brochures published for the motor vehicle.
(4) The motor vehicle’s original invoice, if any, to the selling dealer.
(5) Sales or lease agreement, if the manufacturer is in possession.
(6) Motor vehicle information reports, including build documentation, component information, and delivery details.
(7) Entire warranty transaction history for the motor vehicle.
(8) Listing of required field actions applicable to the motor vehicle.
(9) Published technical service bulletins (”TSBs”) for the same make, model, and year reasonably related to the nonconformities pertaining to the motor vehicle.
(10) Published information service bulletins (“ISBs”) for the same make, model, and year reasonably related to the nonconformities pertaining to the motor vehicle.
(11) Records relating to communications between the manufacturer or dealership and the owner or lessee of the motor vehicle, including those related to repair orders or claims involving the motor vehicle.
(12) Warranty policies and procedure manuals.
(13) Service manuals reasonably related to the nonconformities pertaining to the motor vehicle.
(14) If a pre-suit restitution or replacement request is made, all call recordings of pre-suit communications with the consumer available at the time of service of the complaint.
(15) If a pre-suit restitution or replacement request is made, the manufacturer’s written statement of policies and procedures used to evaluate customer requests for restitution or replacement pursuant to “Lemon Law” claims.
(16) If a pre-suit restitution or replacement request is made, any nonprivileged, prelitigation evaluation.
(17) Any warranty extensions or modifications issued by the manufacturer on the motor vehicle.
(i) If the defendant is not a natural person, the initial deposition of the person who is most qualified to testify on the defendant’s behalf shall be limited to the following topics:
(1) All warranties that accompanied the plaintiff’s motor vehicle at the time of purchase or lease.
(2) Questions relating to the nature and extent of the entire service history, warranty history, and repairs relating to the motor vehicle.
(3) Questions relating to recalls applicable to the motor vehicle.
(4) Questions relating to a reasonable number of Technical Service Bulletins or Information Service Bulletins reasonably related to the nonconformities pertaining to the motor vehicle.
(5) Questions relating to relevant diagnostic procedures consulted and followed while diagnosing the plaintiff’s concerns for the motor vehicle.
(6) Questions relating to relevant repair procedures consulted and followed during the repairs for the motor vehicle.
(7) Questions relating to relevant communications between the plaintiff and defendant regarding the motor vehicle.
(8) Questions relating to relevant communications between the defendant and any dealership or other third parties regarding the motor vehicle.
(9) If a pre-suit restitution or replacement request was made, questions relating to why the defendant did not replace the motor vehicle or provide restitution.
(10) If a pre-suit restitution or replacement request was made, any nonprivileged evaluation prepared by the manufacturer.
(11) If a pre-suit restitution or replacement request was made, the manufacturer’s policies and procedures regarding the restitution or replacement of vehicles in response to a consumer’s request for restitution or replacement under the Song-Beverly Consumer Warranty Act, in effect from the date of the notice of the consumer’s request for restitution or replacement of the vehicle to the present, and any changes thereto.
(j) Unless the party failing to comply with this section shows good cause, notwithstanding any other law and in addition to any other sanctions imposed pursuant to this chapter, a court shall impose sanctions as follows:
(1) A one-thousand-five-hundred-dollar ($1,500) sanction against the plaintiff’s attorney or two-thousand-five-hundred-dollar ($2,500) sanction against the defense attorney respectively, paid within 15 business days for failure to comply with the document production requirements as prescribed in subdivision (b).
(2) A one-thousand-five-hundred-dollar ($1,500) sanction against the plaintiff’s attorney or two-thousand-five-hundred-dollar ($2,500) sanction against the defense attorney respectively, paid within 15 business days for failure to comply with the provisions relating to depositions as prescribed in subdivision (c).
(3) For a plaintiff’s repeated noncompliance with subdivision (b), (c), or (d), a court shall order the case dismissed without prejudice and the plaintiff’s attorney to be responsible for costs awarded to the manufacturer.
(4) For a manufacturer’s or defendant’s repeated noncompliance with subdivision (b), (c), or (d), a court shall order that evidentiary sanctions attach precluding the manufacturer or defendant from introducing evidence at trial regarding whether the motor vehicle had a nonconformity that substantially impaired the use, value, or safety of the motor vehicle, or whether the motor vehicle was repaired to match the written warranty after a reasonable number of opportunities to do so.
(5) Notwithstanding paragraph (3) of subdivision (o) of Section 6068 of the Business and Professions Code, the court may, in its discretion, require an attorney who is sanctioned pursuant to this subdivision to report the sanction, in writing, to the State Bar of California within 30 days of the imposition of the sanction.
(k) This section does not apply to a party who is not represented by counsel.
(l) In addition to the requirements prescribed by subdivision (a), this section only applies to a civil action filed on or after January 1, 2025.

871.27.
 (a) This section only applies to a civil action seeking restitution or replacement of a motor vehicle pursuant to Section 871.20.
(b) The defendant is entitled to an offset in the calculation of the actual price paid or payable for optional equipment, service contracts, or GAP financing purchased by the plaintiff during the motor vehicle purchase or lease transaction from third parties, except for optional purchases for dealer-supplied equipment or services.
(1) Optional equipment and accessories, theft-deterrent devices, surface-protection products, service contracts, extended warranties, debt-cancellation agreements, and guaranteed asset protection (”GAP”) financing supplied by a third party that is not the selling or leasing dealership or an authorized retail facility for the original equipment manufacturer are not recoverable as damages pursuant to this section.
(2) Optional equipment and accessories, theft-deterrent devices, surface-protection products, service contracts, extended warranties, debt-cancellation agreements, and GAP financing, if any of the foregoing constitute dealer additions supplied by the selling or leasing dealership or an authorized retail facility for the manufacturer, are recoverable as damages and do not qualify for the offset prescribed by this section.
(c) The defendant is entitled to an offset for negative equity incorporated in the transaction from prior vehicles.
(d) Noncash credits provided by the manufacturer as a form of down-payment assistance, typically referred to as a manufacturer’s rebate, shall not be included in the calculation of the actual price paid or payable and shall not be used to reduce the amount of any negative equity offset.
(e) For leases, damages and civil penalties shall be calculated as follows:
(1) Amounts paid or payable by the consumer under an existing agreement to extend a lease term shall be allowable as damages.
(2) Amounts paid by the consumer for the residual value shall be allowable as damages. If the consumer has obtained financing to pay the residual value, the defendant shall pay the remaining residual value on the motor vehicle directly to the lienholder in the amount necessary to obtain title.
(3) Amounts paid or payable by the consumer to extend a lease term shall be included in civil penalty calculations if paid for or the lease extension is activated by the consumer no later than 30 days after delivering pre-suit notice or filing a lawsuit, whichever is earlier.
(4) Amounts paid by the consumer for the residual value shall only be included in civil penalty calculations if paid for or financed by the consumer no later than 30 days after delivering pre-suit notice or filing a lawsuit, whichever is earlier.
(5) The residual value shall not be included in civil penalty calculations if not paid or financed by the consumer.
(f) The defendant shall not be responsible for payment of unpaid interest or unpaid financing costs associated with the retail installment sales contract that will not be owed or paid by the consumer when the lien is paid off.
(g) The restitution payment and vehicle return procedures shall comply with all of the following conditions:
(1) A remedy in compliance with this section shall not be contingent on the execution of any release other than the Standardized SBA Release provided in Section 871.25.
(2) The defendant shall promptly process any agreed-upon motor vehicle restitution or replacement pursuant to this section and complete the restitution or replacement within 30 days from the date of receipt of a signed release from the buyer or lessee’s counsel. The defendant’s failure to do so shall result in a mandatory penalty of fifty dollars ($50) per day until the settlement is completed, unless the parties stipulate otherwise. The consumer shall comply in good faith with requests from the manufacturer for reasonable documentation required to complete the requested restitution or replacement of the motor vehicle. In the event the consumer fails to comply in good faith and delays the restitution or replacement, the manufacturer shall not be subject to the daily fifty-dollar ($50) penalty.
(3) The defendant shall provide the consumer with the funds containing their restitution proceeds at the time of the vehicle return. The defendant shall also expedite the funds for the payoff of the vehicle within one business day of the vehicle return. The defendant shall expedite the funds for attorney’s fees, and if applicable, civil penalties to counsel for the consumer within one business day of the vehicle return.

871.28.
 The duties and obligations imposed by this chapter are cumulative with duties or obligations imposed under any other law and shall not be construed to relieve any party from any duties or obligations imposed under any other law.