Gavaldon v. DaimlerChrysler (2004) 32 Cal.4th 1246

Horvitz & Levy LLP represented DaimlerChrysler Corporation in this California Supreme Court case involving an issue important to California's automotive industry: whether California’s “lemon law” requires a new car manufacturer to repurchase or replace a vehicle based on problems arising after the express warranty period, but before a separately purchased service contract covering the cost of post-warranty repairs has expired.

The Song-Beverly Consumer Warranty Act, Civil Code section 1791 et seq., provides that when a manufacturer does not repair a motor vehicle to conform to an express warranty after “a reasonable number of attempts,” the buyer may opt to have the vehicle replaced or repurchased by the manufacturer. In Gavaldon, the plaintiff contended she was entitled to repurchase of her 1993 Dodge minivan because it was substantially impaired by several transmission repairs that were required after the express warranty had expired, but while a service contract was still in force.

The Supreme Court addressed whether the Court of Appeal correctly held that a service contract is not an express warranty entitling the consumer to Song-Beverly’s repurchase remedy, and agreed with DaimlerChrysler that it is not. In a unanimous 7-0 decision, the court held that where a service contract does not use the terms “warrant” or “guarantee,” an alleged breach of the service contract “does not make [the manufacturer] subject to the replacement/restitution remedy reserved in section 1793.2, subdivision (d) for purchasers of motor vehicles sold with ‘express warranties.’” (Click to see the Supreme Court's opinion.)

In its opinion, the court also expressly disapproved of language in an earlier lower court decision, Reveles v. Toyota by the Bay (1997) 57 Cal.App.4th 1139, that had concluded a service contract is a type of express warranty under the Song-Beverly Act.

The Gavaldon decision was reported in the Los Angeles Daily Journal, which quoted Horvitz & Levy attorney John Taylor as stating that "the opinion 'clarifies that replacement and repurchase remedies provided by the lemon law are available only during the express warranty period.'" (Domino, 'Lemon Law' Doesn't Cover all Warranties, Los Angeles Daily Journal (May 28, 2004), p. 2.)

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