GMSR secures another Court of Appeal win holding that manufacturers cannot offset their Song-Beverly Act damages by amounts the plaintiff receives for trading in a “lemon” vehicle

The Song-Beverly Act requires car manufacturers to promptly buy back defective cars without the consumer having to sue.  Consumer advocates have long argued that manufacturers may not offset damages for amounts that plaintiffs are credited when they sell or trade in a defective car under the Act – the manufacturers must pay the consumer the full amount of statutory damages.

In Niedermeier v. FCA, the Court of Appeal rejected that interpretation, holding that manufacturers are entitled to an offset.  At GMSR’s urging, the California Supreme Court is currently reviewing the decision.

Since that time, a split of authority has developed among the courts of appeal.  Ruling for a different GMSR client, the court in Figueroa v. FCA US, LLC diverged from Niedermeier and held that GMSR’s client was entitled to statutory damages without any resale offset.

Now, that split of authority has deepened.  Ruling for yet another GMSR client, the Third District Court of Appeal agreed with Figueroa and rejected Niedermeier.  The court held that the plain language, policy purpose, and legislative history of the Song-Beverly Act all make clear that, where a plaintiff trades-in or sells a lemon vehicle after a manufacturer fails to repair or repurchase the car, the manufacturer is not entitled to any damages offset.

“Crediting the manufacturer with the trade-in value of or sale proceeds received for the defective vehicle to reduce the buyer’s remedy under the restitution provision would create a disincentive to reacquire or promptly replace or provide restitution for a defective vehicle.  Such an interpretation would, in essence, reward manufacturer for declining or not offering to reacquire the vehicle. We decline to interpret the Act in that manner.”

To read the Court of Appeal Opinion, click here: Williams v. FCA US LLC (2023) 88 Cal.App.5th 44 [Third District]