February 7, 2022

In Covert v. FCA, the California Court of Appeal reversed an award exceeding $200,000 in attorney fees and other costs in a decision that affirmed the validity of the defendant manufacturer’s settlement offers under the cost-shifting provisions of Code of Civil Procedure section 998. Plaintiffs recovered less than the manufacturer had offered long before trial, and to justify their claim for fees after turning down the offer, they unsuccessfully argued that section 998 does not apply at all to lemon law cases.  Had the gambit worked, manufacturers’ attempts to resolve customers’ issues fairly and promptly would have been badly undercut by plaintiffs’ lawyers’ incentive to overlitigate these cases.

This is just the latest appellate win for auto manufacturers confronting exaggerated, fee-driven lemon law claims.  Others include (1) Fishback v. FCA, in which the Court of Appeal held that a trial court was not required to “show its work” when broadly reducing or disallowing plaintiff’s attorney fees sought in a motion setting forth inflated figures; (2) Ruiz Nunez v. FCA USA LLC, in which the  Court of Appeal held the line against plaintiffs’ attempts to expand liability for warranty claims long beyond the expiration of the warranty, and to expand manufacturers’ statutory liability based on dealers’ attempted repairs of used cars; and (3) Khoshnevis v. Toyota Motor Sales, U.S.A., Inc., upholding the validity of a section 998 offer to limit the recovery of postoffer attorney fees, despite its inclusion of general release language without attaching the actual release.  

Horvitz & Levy also obtained an important win in Montoya v. Ford, in which the Court of Appeal reversed an implied warranty judgment for the plaintiff in a lemon law case, rejecting the claim as untimely despite plaintiff’s multiple tolling theories, including American Pipe tolling based on plaintiff’s membership in successively filed class actions.  And in Zubin v. Toyota Motor Sales, the Court of Appeal agreed with Horvitz & Levy that the plaintiff had failed to establish lemon law liability, rejecting plaintiff’s challenges to the trial court’s discovery orders, evidentiary rulings, and jury instructions, as well as the trial court’s admission of evidence at trial that plaintiff’s counsel had suppressed evidence obtained at a vehicle inspection.