California Court Puts the Brakes on Warranty Claim

The Plaintiff in Shtofman v. Mercedes-Benz of North America, Inc., No. B195677, 2008 WL 3984219 (Cal. Ct. App, Aug. 29, 2008) bought a new 1997 Mercedes S420 in 1997. It came with a 4-year, 50,000 mile warranty. During the warranty period, Shtofman returned the dealer 12 times for repairs of “a recurrent brake light problem.” But it was not until September 2003 that defendants fessed up tnat they would were unable to fix the problem. Shtofman brought suit in August 2004 claiming, among other things, breach of warranty. On cross-motions for summary judgment or summary adjudication of issues, the trial court ruled in Shtofman’s favor. He was awarded the purchase price of the vehicle, plus costs incurred in having defendants make attendant repairs plus attorneys fees. The total award topped $200,000.

On appeal, the California Court of Appeal, Second District, Division 8, reversed and awarded summary judgment to defendants on the warranty issue. Defendants pointed out that the warranty had expired in 1999, by which time Shtofman had driven the car 50,000 miles. Under the four-year statute of limitations provided for in UCC s. 2-725, the claim was barred back in 2003 and was not brought until 2004. The court sided with defendants.

In so doing, the court had to distinguish Shtofman’s case from Krieger v. Nick Alexander Imports, Inc., 234 Cal.App.2d 205 (1991). Krieger is clearly distinguishable. That case involved a BMW, not a Mercedes, and the problem with the BMW was that its drive train fell out one day after purchase. That’s gotta hurt! There was some dispute about exactly when Krieger’s cause of action for breach of warranty was triggered, but there was no dispute that he had discovered the breach of warranty “at some point during the warranty period.” The court denied summary judgment to both sides and remanded for a determination of when Krieger had learned that the damage to his car was irreparable. Once it made that determination, the trial court could then count to four and determine whether the claim was time-barred. Here, there was no dispute that Shtofman did not discover the breach until after the warranty period had expired.

The court found that, given Shtofman’s repeated visits to the dealer for the same repairs, it required no “specialized mechanic’s acumen” to discover the breach of warranty. Accordingly, Shtofman had four years from December 1999 to file his cause of action for breach of warranty. His failure to do so until 2004 was fatal to that claim. But the court reinstated Shtofman’s other claims, which had been dismissed by the trial court, because he had already recovered on breach of warranty.

I have no problem with the rule announced in this case, but how does the Court of Appeals know that Shtofman “should have discovered” that the dealer would be unable to fix his car? He brought the car back to them repeatedly after the warranty had lapsed, and I don’t expect that they worked for free. Indeed, I suspect that each time he brought them the car, they had some new theory for how they were going to fix it. Why shouldn’t he be entitled to rely on such representations? And wouldn’t defendants’ expert opinion render Shtofman’s ignorance of his car’s irreparable state reasonable? Seems like a remand for further fact-finding would have been appropriate.

I would like to see the case remanded to the Car Talk Guys.  I’ve never heard them say, “Oh, that can’t be fixed.”

[Jeremy Telman]