A state appeals panel has sliced a verdict against Kia, finding a car buyer is limited in how much he can squeeze out of automakers under California’s “lemon law.”
Formally known as the Song-Beverly Consumer Warranty Act, the so-called “lemon law” enumerates rights of car owners and, among other things, obligates car makers, distributors and retailers to buy back defective vehicles from consumers who grant a reasonable opportunity to fix defects.
In May 2014, Luis Valdovinosin bought a new Kia Optima with only 19 miles on the odometer. He said he began having problems with the car that August and in January 2015 first asked Kia to buy back the car because it wouldn’t go into reverse; the dealership couldn’t replicate the issue during more than 10 different service visits through May 2019.
Valdovinos first sued Kia in September 2016 but the matter didn’t proceed to trial until May 2022. A Los Angeles County Superior Court jury ruled in Valdovinos’ favor, awarding him both the $30,127 purchase price and $12,912 in “incidental and consequential damages,” $380 for mileage and double that restitution as a civil penalty for a total of $127,976.
After initial posttrial motions, Judge Steven Kleifield issued an amended verdict striking the civil penalty, but following a second round of posttrial motions, he rejected a request to further reduce the penalty by recalculating Valdovinos’ insurance expenditures. Both parties asked the California Second Appellate District Court to rule on the matter.
Justice Brian Hoffstadt wrote the panel’s opinion, filed Aug. 29; Justices Judith Ashmann-Gerst and Victoria Chavez concurred. The panel said there were three issues on appeal: whether a consumer can obtain restitution for expenses of a third-party service contract, the amount to which insurance payments are recoverable and if Kia’s alleged conduct was “willful” to the degree required to trigger the civil penalty.
On appeal, Valdovinos conceded Kia correctly challenged his right to recover a $2,000 manufacturer rebate, a $299 theft deterrent device and insurance premiums for coverage prior to December 2014. He contested the later premiums and a $2,298 optional service contract. The panel sided with Kia, noting American Financial sold the service contract and not Kia, rejecting Valdovinos’ argument a court should apply different standards to physically installed car components and immaterial, on-paper agreements, finding the law allows the terms “options” and “items” to be interchangeable.
The panel further said insurance premiums are not part of the purchase price of a car or collateral charges on par with signing fees or initial registration. Although Kia did concede it had some liability based on a December 2014 service visit where employees had to help push the Optima because it wouldn’t shift into reverse, Hoffstadt noted a car owner can only recover the portion of insurance premiums tied to the replacement value of a vehicle and not those for a driver’s obligations linked to use of the vehicle. That would leave only $1,595 for policy periods in 2015-2016 and 2021-2022.
Regarding the civil penalty, Hoffstadt wrote “moustache-twirling malevolence is not required to show willfulness” in order to establish Kia’s liability. The panel said Valdovinos failed to show a negligent lemon law act violation would be willful, saying the two terms are antithetical and Valdovinos’ attempt to paint unreasonable conduct as a willful violation misconstrues the larger legal context.
“Only by recognizing an end point to the inquiry into willfulness is it possible to avoid turning the civil penalty into a Sword of Damocles that browbeats manufacturers into offering settlements containing every term on the consumer’s litigation wish list or else risk having the consumer’s restitution award trebled,” he wrote, framing the relevant window as the 21 months between a December 2014 repair attempt and the lawsuit filing in September 2016.
The panel said there is evidence — albeit conflicting — that Kia knowingly violated the state law during that period because Valdovinos alleged dealership employees' physically intervened with his broken car, while the business has no record of that interaction.
“Because we must presume that the jury resolved this conflict in plaintiff’s favor, there is substantial evidence that the dealership — and hence Kia — had verified the defect in plaintiff’s Optima in December 2014 and yet did not offer to replace or repurchase his vehicle for another 14 months,” Hoffstatdt wrote.
The panel rejected Kia’s three arguments, finding the distinction between manufacturers and dealers irrelevant under the lemon law where a dealership services vehicles on a manufacturers’ behalf, explaining identifying the cause of a defect isn’t a required legal trigger and saying Kia’s commitment to investigating the defect didn’t lift its obligation to replace the car or make restitution.
However, the panel upheld Judge Kleifield’s decision to grant a new trial on the civil penalty because it found “substantial evidence” to support his finding Kia wasn’t willfully noncompliant. It said the new trial should be “subject to the guardrails” the panel established, including focusing only on the 21-month window and instructing a jury to remember “Kia’s violation of the Act was ‘willful’ for purposes of the civil penalty only if Kia’s failure to comply was deliberate, knowing, or not based on a good faith and reasonable belief that it was complying with the Act. In the event the jury makes the necessary willfulness finding, the civil penalty imposed ‘shall not exceed two times’ the amount of the ‘restitution’ award as amended consistent with this opinion.”
The plaintiffs are represented by Gupta Wessler and Knight Law Group. Jessica Garland, of Gupta Wessler, did not respond to a request for comment.
Kia is represented by Horvitz & Levy and Lehrman, Villegas, Chinery & Douglas. Kia did not respond to a request for comment.