Ivar v. Volkswagen Group of America, Inc. (Sept. 26, 2023, E078783) 2023 WL 6224689

GMSR’s clients leased a vehicle that proved to be a lemon and sued the manufacturer under California’s lemon law, the Song-Beverly Act.  The manufacturer sent the clients a Code of Civil Procedure section 998 settlement offer, and they accepted.  Under the settlement agreement, the manufacturer agreed to pay the clients $69,500, some of which would be used to cover the “lease payoff owed by Plaintiffs.”

Nevertheless, the manufacturer paid GMSR’s clients just half of the $69,500, arguing that the “lease payoff”—which was to be covered by the settlement proceeds—included the manufacturer’s cost to purchase and transfer the vehicle’s title from the lessor.  GMSR’s clients moved to enforce the settlement under Code of Civil Procedure section 664.6, but the trial court denied the motion, relying on a declaration from the lessor indicating that the phrase “lease payoff” included any cost incurred to purchase the vehicle.

Agreeing with GMSR’s arguments, the Court of Appeal reversed.  The Court held that the lessor’s declaration was irrelevant because the meaning of the phrase “lease payoff owed by Plaintiffs” was a legal question to be determined by the court, not to be resolved by testimony from a third party who did not draft the settlement agreement.  The Court further held that, under the settlement’s terms, the phrase “lease payoff owed by Plaintiffs” necessarily referred only to “the amounts [Plaintiffs] actually owe the [lessor] under the known circumstances,” which did not include the manufacturer’s costs incurred in purchasing the leased vehicle.  The Court remanded and instructed the trial court to re-determine the amount the manufacturer owed the plaintiffs.

To read the Court of Appeal opinion, click HERE.

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