Lemke-Vega v. Mercedes-Benz USA, LLC

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 CHEYENNE LEMKE-VEGA, Case No. 23-cv-01408-DMR

8 Plaintiff, ORDER ON MOTION TO DISMISS 9 v. PLAINTIFF'S AMENDED COMPLAINT 10 MERCEDES-BENZ USA, LLC, Re: Dkt. No. 24 11 Defendant.

12 This is a lemon law case involving an allegedly defective 2019 Mercedes-Benz that 13 Plaintiff Cheyenne Lemke-Vega purchased in July 2022. Lemke-Vega claims violations of state 14 law against Defendant Mercedes-Benz USA, LLC (“MBUSA”). MBUSA now moves pursuant to 15 Federal Rule of Civil Procedure 12(b)(6) to dismiss the first amended complaint. [Docket No. 16 24.] This matter is suitable for determination without oral argument. Civ. L.R. 7-1(b). For the 17 following reasons, the motion to dismiss is granted. 18 I. BACKGROUND 19 The first amended complaint (“FAC”) contains the following allegations.1 On July 18, 20 2022, Lemke-Vega purchased a 2019 Mercedes-Benz A220 (“the vehicle”) from Mercedes-Benz 21 of Walnut Creek, an MBUSA-authorized dealership and repair facility. [Docket No. 20 (FAC) ¶¶ 22 8, 17.] The total sale price was $62,427.04. Id. at ¶ 3, Ex. A. Lemke-Vega alleges that “[e]xpress 23 warranties accompanied the sale of the Subject Vehicle . . . by which [MBUSA] undertook to 24 preserve or maintain the utility or performance” of the vehicle or to provide compensation in the 25 event of “failure in such utility or performance.” FAC ¶ 17. She further alleges that “the Subject 26

27 1 When reviewing a motion to dismiss for failure to state a claim, the court must “accept as true all of the factual allegations contained in the complaint.” Erickson v. Pardus, 551 U.S. 89, 94 (2007) 1 Vehicle was sold with a 4-Year and 50,000 mile Basic Warranty, which covered the vehicle parts 2 and powertrain, a Federal Emissions Performance/Control Warranty, which ran for 8-years and 3 80-000 [sic] miles, and a California Emissions Control Warranty, which ran for 7-years and 4 70,000-miles.” Id. at ¶ 18. 5 The Retail Installment Sales Contract (“sales contract”) lists the vehicle as “used.” FAC 6 Ex. A (Sales Contract) at 1. Lemke-Vega alleges that “it is unknown to [her] whether the vehicle 7 was inspected and designated as ‘Certified Pre-Owned’ or a Demonstrator vehicle by” MBUSA 8 and/or its dealerships. She further alleges that “it is unknown” “whether or not the vehicle was 9 previously sold or registered to a consumer,” and that she “intends to conduct discovery on the 10 vehicle’s ownership and registration history and amend her complaint at the time of trial in order 11 to conform to proof.” FAC ¶ 19. 12 Lemke-Vega alleges that the vehicle had “serious defects and nonconformities to warranty 13 and developed other serious defects and nonconformities to warranty,” including defects in the 14 powertrain, engine, transmission, steering, and HVAC systems. Id. at ¶ 21. 15 Lemke-Vega filed the complaint on March 24, 2023. MBUSA moved to dismiss the 16 complaint and/or strike portions thereof. The court granted the motion to dismiss and denied the 17 motion to strike as moot on May 22, 2023, and granted Lemke-Vega leave to amend. Lemke-Vega 18 v. Mercedes-Benz USA, LLC, No. 23-CV-01408-DMR, 2023 WL 3604318 (N.D. Cal. May 22, 19 2023). Lemke-Vega timely filed the FAC, alleging four claims for relief: 1) breach of express 20 warranty under the Song-Beverly Consumer Warranty Act (“Song-Beverly Act”), California Civil 21 Code section 1793.2(d)(2); 2) breach of implied warrant under the Song-Beverly Act, California 22 Civil Code section 1792; 3) breach of express warranty under California Commercial Code section 23 2313; and 4) violation of the Magnuson-Moss Warranty Act (“MMWA”), 15 U.S.C. § 2310. 24 MBUSA now moves to dismiss the complaint.2 25 26 2 MBUSA asks the court to take judicial notice of five documents. Each is an opinion granting 27 motions to dismiss, to compel arbitration, or for summary judgment, and all are available on II. LEGAL STANDARD 1 A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the claims alleged in 2 the complaint. See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). 3 When reviewing a motion to dismiss for failure to state a claim, the court must “accept as true all 4 of the factual allegations contained in the complaint,” Erickson, 551 U.S. at 94, and may dismiss a 5 claim “only where there is no cognizable legal theory” or there is an absence of “sufficient factual 6 matter to state a facially plausible claim to relief.” Shroyer v. New Cingular Wireless Servs., Inc., 7 622 F.3d 1035, 1041 (9th Cir. 2010) (quotation marks omitted) (quoting Navarro v. Block, 250 8 F.3d 729, 732 (9th Cir. 2001)) (citing Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009)). A claim 9 has facial plausibility when a plaintiff “pleads factual content that allows the court to draw the 10 reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 11 678 (citation omitted). In other words, the facts alleged must demonstrate “more than labels and 12 conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. 13 Corp. v. Twombly, 550 U.S. 554, 555 (2007). 14 III. DISCUSSION 15 A. Song-Beverly Act Claims 16 1. Breach of Express Warranty 17 California’s Song-Beverly Act “is a remedial statute designed to protect consumers who 18 have purchased products covered by an express warranty.” Robertson v. Fleetwood Travel 19 Trailers of Cal., Inc., 144 Cal. App. 4th 785, 798 (2006). The law “regulates warranty terms, 20 imposes service and repair obligations on manufacturers, distributors, and retailers who make 21 express warranties, requires disclosure of specified information in express warranties, and 22 broadens a buyer’s remedies to include costs, attorney’s fees, and civil penalties.” Dominguez v. 23 Am. Suzuki Motor Corp., 160 Cal. App. 4th 53, 57-58 (2008) (quoting Murillo v. Fleetwood 24 Enters., 17 Cal. 4th 985, 989-90 (1998)). A buyer “who is damaged by a failure to comply with 25 any obligation under [the Song-Beverly Act] . . . may bring an action for the recovery of damages 26 and other legal and equitable relief.” Cal. Civ. Code § 1794(a). 27 Lemke-Vega seeks relief under the “refund or replace” provision of the Song-Beverly Act, 1 California Civil Code section 1793.2(d)(2). FAC 6, ¶¶ 25, 26. That provision states that “[i]f the 2 manufacturer or its representative in this state is unable to service or repair a new motor vehicle, as 3 that term is defined in paragraph (2) of subdivision (e) of Section 1793.22, to conform to the 4 applicable express warranties after a reasonable number of attempts, the manufacturer shall either 5 promptly replace the new motor vehicle . . . or promptly make restitution to the buyer” in 6 accordance with the statute. Cal. Civ. Code § 1793.2(d)(2). The statute defines “new motor 7 vehicle” as “a new motor vehicle that is bought or used primarily for personal, family, or 8 household purposes,” and includes “a dealer-owned vehicle and a ‘demonstrator’ or other motor 9 vehicle sold with a manufacturer’s new car warranty.” Cal. Civ. Code § 1793.22(e)(2). “A 10 demonstrator is a vehicle assigned by a dealer for the purpose of demonstrating qualities and 11 characteristics common to vehicles of the same or similar model and type.” Id. 12 MBUSA moves to dismiss the breach of express warranty claim, arguing that Lemke-Vega 13 admits that she purchased a “used” car. MBUSA argues that used cars do not fall under section 14 1793.22’s definition of “new motor vehicle” pursuant to Rodriguez v. FCA US, LLC, 77 Cal. App. 15 5th 209, 225 (2022). Mot. 1-3; see FAC ¶ 19 (“the Subject Vehicle is listed as ‘USED’” in the 16 sales contract). Lemke-Vega responds that a used car “sold with a transferrable new vehicle 17 warranty is a ‘new vehicle’ for purposes of the Act,” relying on Jensen v. BMW of North America, 18 Inc., 35 Cal. App. 4th 112, 123 (1995). Opp’n 5. She argues that “[e]ven under Rodriguez, used 19 cars purchased from manufacturer-affiliated retail sellers can be subject to the [Song-Beverly] 20 Act’s provisions where the manufacturer issues a new warranty with the sale of a used vehicle.” 21 Id. at 8. 22 In Jensen, the plaintiff leased a car from a dealership that the salesperson described as a 23 “demonstrator.” 35 Cal. App. 4th at 119. The salesperson offered her a “36,000-mile warranty on 24 top of the [7,565] miles already on the car and gave her the warranty booklet” and “[t]he dealer 25 wrote ‘factory demo’ on the credit application.” In fact, the car had been previously owned. The 26 manufacturer argued that the car was not a “new motor vehicle” under section 1793.22. Id. at 120, 27 122. The court considered the phrase “a dealer-owned vehicle and a ‘demonstrator’ or other motor 1 remaining on the manufacturer’s new motor vehicle warranty are included within [section 2 1793.22’s] definition of ‘new motor vehicle.’” Id. at 122-23. It affirmed a jury’s verdict for the 3 plaintiff for breach of the manufacturer’s express written warranty. Id. at 119, 128, 138. 4 Courts have questioned Jensen’s seemingly broad holding about whether a used car can be 5 a “new motor vehicle” under the Song-Beverly Act and have limited its holding to its facts. See, 6 e.g., Kiluk v. Mercedes-Benz USA, LLC, 43 Cal. App. 5th 334, 340, n.4 (2019) (noting 7 “reservations” about Jensen’s holding; observing that language “or other motor vehicle sold with a 8 manufacturer’s new car warranty” from section 1793.22 “arguably . . . refers to cars originally 9 sold with a new motor vehicle warranty, not subsequent sales”); Dagher v. Ford Motor Co., 238 10 Cal. App. 4th 905, 923 (2015) (limiting the application of Jensen to its facts). Recently, 11 Rodriguez examined the statutory framework and history of the motor vehicle refund-or-replace 12 provision in section 1793.2(d)(2) and definition of “new motor vehicle” in section 1793.22(e)(2).3 13 77 Cal. App. 5th at 217-23. The court disagreed with Jensen’s construction of the definition, 14 holding that the phrase “‘other motor vehicle sold with a manufacturer’s new car warranty’ refers 15 to cars sold with a full warranty, not to previously sold cars accompanied by some balance of the 16 original warranty.” Id. at 225. It reasoned that “demonstrators and dealer-owned vehicles 17 comprise a narrow category of basically new vehicles—they have never been previously sold to a 18 consumer and they come with full express warranties.” Id. at 220. Therefore, Rodriguez 19 concluded, “the most natural interpretation of the phrase ‘other motor vehicle sold with a 20 manufacturer’s new car warranty’ is that it, too, refers to vehicles that have never been previously 21 sold to a consumer and come with full express warranties.” Id. “[T]he phrase functions . . . as a 22 catchall for sales of essentially new vehicles where the applicable warranty was issued with the 23 sale.” Id. at 215 (emphasis in original). Rodriguez also distinguished Jensen on its facts, noting 24 that “Jensen involved a lease by a manufacturer-affiliated dealer who issued a full new car 25 3 The California Supreme Court granted review of Rodriguez in July 2022. 295 Cal. Rptr. 3d 351 26 (2022). It declined to depublish the opinion and held that the Court of Appeal’s opinion could be cited “not only for its persuasive value, but also for the limited purpose of establishing the 27 existence of a conflict in authority that would in turn allow trial courts to exercise discretion . . . to 1 warranty along with the lease.” Id. at 223 (emphasis in original). “[T]he court [in Jensen] was 2 not asked to decide whether a used car with an unexpired warranty sold by a third party reseller 3 qualifies as a ‘new motor vehicle.’” Id. at 224. 4 As the court previously found in ruling on MBUSA’s motion to dismiss the complaint, this 5 court finds the reasoning in Rodriguez persuasive and adopts it here. See Lemke-Vega, 2023 WL 6 3604318, at *4. “Under Rodriguez, a plaintiff must allege that they purchased a vehicle which 7 was ‘not previously sold to a consumer’ and was sold with ‘full express warranties’ in order to 8 plead the purchase of a ‘new motor vehicle.’” Id. (quoting Rodriguez, 77 Cal. App. 5th at 220). 9 Here, Lemke-Vega alleges on information and belief that the vehicle “qualifies as a ‘new motor 10 vehicle’ under the provisions of Cal. Civ. Code § 1793.22(e)(2).” FAC ¶ 20. However, she 11 admits that the sales contract describes the vehicle as a used car. She also admits that she does not 12 know whether the vehicle was “‘Certified Pre-Owned’ or a Demonstrator vehicle” or whether “the 13 vehicle was previously sold or registered to a consumer” and alleges that she needs discovery “on 14 the vehicle’s ownership and registration history.” Id. at ¶ 19. The court concludes that the FAC 15 fails to allege any facts from which the court could draw a reasonable inference that the vehicle 16 was “not previously sold to a consumer.” 17 Additionally, the FAC does not allege that the vehicle was sold with “full express 18 warranties.” Lemke-Vega points to the “MBUSA Service Contract or Extended Warranty” 19 contained in the sales contract to argue that “she purchased her vehicle with MBUSA’s express 20 warranty.” See Opp’n 8 (citing Sales Contract at 2, § I(2)). However, the relevant portion of the 21 service contract appears in a section entitled, “Optional Service Contract” with “Company MB 22 PPM.” Sales Contract 2. It does not identify MBUSA and the FAC does not allege that MBUSA 23 issued the service contract, as opposed to “MB PPM,” the entity listed. Moreover, Lemke-Vega 24 does not offer any authority or argument that a service contract is a “full express warranty” for 25 purposes of the relevant provisions of the Song-Beverly Act.4 26 4 The Song-Beverly Act defines an “express warranty” as “[a] written statement arising out of a 27 sale to the consumer of a consumer good pursuant to which the manufacturer, distributor, or 1 Accordingly, the court concludes that the FAC does not allege facts from which the court 2 can reasonably infer that Lemke-Vega purchased a “new motor vehicle” under section 1793.22.5 3 MBUSA’s motion to dismiss the first claim for breach of express warranty is granted. As Lemke- 4 Vega has already been given an opportunity to amend the complaint to state a claim for breach of 5 express warranty but failed to do so, the dismissal is with prejudice. 6 2. Breach of Implied Warranty 7 The second claim for relief is for breach of implied warranty. MBUSA moves to dismiss 8 this claim on the ground that as the vehicle’s manufacturer, it is not liable for breach of implied 9 warranty. Mot. 10-11. Lemke-Vega responds that MBUSA is liable because it “stepped into the 10 role of the retailer.” Opp’n 10. 11 The Song-Beverly Act provides that “every sale of consumer goods that are sold at retail in 12 this state shall be accompanied by the manufacturer’s and the retail seller’s implied warranty that 13 the goods are merchantable.” Cal. Civ. Code § 1792. “‘Consumer goods’ means any new product 14 or part thereof that is used, bought, or leased for use primarily for personal, family, or household 15 purposes.” Cal. Civ. Code § 1791(a). Section 1795.5 extends the Song-Beverly Act to “used 16 consumer goods.” It provides that “[i]t shall be the obligation of the distributor or retail seller 17 making express warranties with respect to used consumer goods (and not the original 18 manufacturer, distributor, or retail seller making express warranties with respect to such goods 19 when new) to maintain sufficient service and repair facilities within this state to carry out the 20 terms of such express warranties.” Cal. Civ. Code § 1795.5(a). It further states that “[t]he 21 duration of the implied warranty of merchantability and where present the implied warranty of 22 fitness with respect to used consumer goods sold in this state, where the sale is accompanied by an 23 express warranty, shall be coextensive in duration with an express warranty which accompanies 24 the consumer goods, provided the duration of the express warranty is reasonable . . . ” Cal. Civ. 25

26 1791.2(a)(1).

27 5 The facts of this case are also distinguishable from Jensen because the complaint does not allege 1 Code § 1795.5(c). 2 “[O]nly distributors or sellers of used goods—not manufacturers of new goods—have 3 implied warranty obligations in the sale of used goods.” Nunez v. FCA US LLC, 61 Cal. App. 5th 4 385, 399 (2021) (emphasis in original). See also Johnson v. Nissan N. Am., Inc., 272 F. Supp. 3d 5 1168, 1179 (N.D. Cal. 2017) (noting “[t]he plain language of the section clearly only creates 6 obligations on behalf of ‘the distributor or retail seller making express warranties with respect to 7 used consumer goods (and not the original manufacturer . . . )” and dismissing implied warranty 8 claim on the ground that “the Song-Beverly Act does not create any obligation on behalf of 9 Nissan, the original car manufacturer, with respect to used goods” (emphasis in original) 10 (quotation omitted)). Nonetheless, one court has explained that “the assumption baked into 11 section 1795.5 is that the manufacturer and the distributor/retailer are distinct entities. Where the 12 manufacturer sells directly to the public, however, it takes on the role of a retailer.” Nunez, 61 13 Cal. App. 5th at 399 (quoting Kiluk v. Mercedes-Benz USA, LLC, 43 Cal. App. 5th 334, 339 14 (2019)). In Kiluk, the manufacturer “partnered with a dealership to sell used vehicles directly to 15 the public by offering an express warranty as part of the sales package,” which the court described 16 as “a crucial incentive for buyers.” 43 Cal. App. 5th at 340. The court held that “[b]y partnering 17 with the dealership, Mercedes Benz stepped into the role of a retailer and was subject to the 18 obligations of a retailer under section 1795.5.” Id. 19 The court previously dismissed this claim on the ground that “the complaint does not 20 allege facts to support a reasonable inference that MBUSA ‘stepped into the role of a retailer.’” 21 Lemke-Vega, 2023 WL 3604318, at *5. The FAC fares no better. Lemke-Vega again alleges that 22 she purchased the subject vehicle and that express warranties by MBUSA accompanied the sale. 23 FAC ¶ 17. But the sales contract is between Lemke-Vega and Mercedes Benz of Walnut Creek, 24 not MBUSA. Moreover, even though the FAC alleges that the vehicle was sold with a “Basic 25 Warranty,” a “Federal Emissions Performance/Control Warranty,” and a “California Emissions 26 Control Warranty,” it does not allege that MBUSA offered these warranties. Lemke-Vega also 27 admits that she does not know if the vehicle was sold as “Certified Pre-Owned.” Id. at ¶¶ 18, 19. 1 Vehicle’s sale and, therefore, stepped into the role of the retailer.” Opp’n 10 (citing Kiluk, 43 Cal. 2 App. 5th at 340). The court concludes that the FAC lacks sufficient “factual content that allows 3 the court to draw the reasonable inference that” MBUSA was acting as a retailer in connection 4 with the sale of the subject vehicle. See Iqbal, 556 U.S. at 678; Nunez, 61 Cal. App. 5th at 399 5 (“plaintiff presented no evidence that defendant was ‘a distributor or retail seller of used consumer 6 goods’ (§ 1795.5), or in any way acted as such,” distinguishing Kiluk). As this is Lemke-Vega’s 7 second attempt to plead a claim for breach of implied warranty, any further opportunity to amend 8 would be futile. Accordingly, the breach of implied warranty claim is dismissed with prejudice. 9 B. Breach of Express Warranty- California Commercial Code 10 California Commercial Code section 2313 sets forth the methods by which a seller creates 11 express warranties. In relevant part, it states:

12 (a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain 13 creates an express warranty that the goods shall conform to the affirmation or promise. 14 (b) Any description of the goods which is made part of the basis of 15 the bargain creates an express warranty that the goods shall conform to the description. 16 . . . 17 18 Cal. Com. Code § 2313(1)(a), (b). See Opp’n 11-12 (clarifying that Lemke-Vega’s claim is under 19 subsections (a) and (b)). “A plaintiff pleading a breach of express warranty claim must allege 20 facts that sufficiently show: ‘(1) the seller’s statements constitute an affirmation of fact or promise 21 or a description of the goods; (2) the statement was part of the basis of the bargain; and (3) the 22 warranty was breached.’” Scott v. Saraya USA, Inc., ---F. Supp. 3d---, No. 22-CV-05232-WHO, 23 2023 WL 3819366 (N.D. Cal. June 5, 2023) (quoting Zeiger v. WellPet LLC, 304 F. Supp. 3d 837, 24 853 (N.D. Cal. 2018)); Hastings v. Ford Motor Co., 495 F. Supp. 3d 919, 924 (S.D. Cal. 2020) 25 (same). 26 The FAC fails to allege facts to support these elements of the claim. First, it does not 27 allege that MBUSA made “statements constitute[ing] an affirmation of fact or promise or a 1 warranties as set forth herein,” FAC ¶ 55, but it does not identify any such written warranties or 2 include facts about their terms. Nor does it allege that MBUSA issued such warranties. To the 3 extent that the claim is based upon the “Optional Service Contract” set forth in the sales contract, 4 as discussed above the FAC does not allege that MBUSA issued the service contract. The FAC 5 also fails to allege facts about how the warranty was breached, other than generally alleging that 6 the vehicle “suffered [unspecified] defects, malfunctions, and nonconformities covered by the 7 Subject Vehicle’s express warranties” and that “Defendant failed to service or repair the Subject 8 Vehicle to conform to the express written warranties . . .” FAC ¶ 56. Accordingly, the FAC fails 9 to state a claim for breach of express warranties under section 2313(1)(a) or (b). Lemke-Vega 10 alleged this claim for the first time in the FAC, and the court cannot say that amendment would be 11 futile. Accordingly, the claim is dismissed with leave to amend. 12 C. MMWA Claim 13 Lemke-Vega also brings a claim under the MMWA based on alleged breaches of express 14 and implied warranties. See FAC ¶ 48. 15 15 U.S.C. § 2310(d) provides that “a consumer who is damaged by the failure of a 16 supplier, warrantor, or service contractor to comply with any obligation under this chapter, or 17 under a written warranty, implied warranty, or service contract, may bring suit for damages and 18 other legal and equitable relief . . . .” The FAC does not allege that MBUSA violated any 19 particular provision of the MMWA, and the parties agree that Lemke-Vega’s MMWA claim 20 “stand[s] or fall[s] with [her] express and implied warranty claims under state law.” Clemens v. 21 DaimlerChrysler Corp., 534 F.3d 1017, 1022 & n.3 (9th Cir. 2008); Mot. 12; Opp’n 10-11. As 22 discussed above, the FAC fails to state claims under the Song-Beverly Act or the California 23 Commercial Code. Accordingly, the MMWA claim is dismissed. As with the California 24 Commercial Code claim, Lemke-Vega alleged this claim for the first time in the FAC. Since the 25 court cannot say that amendment would be futile, the dismissal is with leave to amend. 26 IV. CONCLUSION 27 For the foregoing reasons, MBUSA’s motion to dismiss is granted. The Song-Beverly Act 1 dismissed with leave to amend. Lemke-Vega may file a second amended complaint by no later 2 || than October 3, 2023 and shall plead her best case. KES DISTR 3 Sy 4 IT ISSO ORDERED ey & ORDERED > 2[Vir 38 8° 5 || Dated: September 12, 2023 < 6 / yy GUA GL. L, Z. Dé; na M.aRyvb Ry | | As 7 O agaie ous □□ a CISA ciate Tic Le Sy 8 LO OY ° VORTICES 10 11 a 12

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