Case Title: Kirzhner v. Mercedes-Benz USA, LLC

Citation: 

Docket Number: S246444

State: california

Court: California Supreme Court

Date: 2020-07-27T00:00:00Z

Document:
IN THE SUPREME COURT OF 
CALIFORNIA 
 
ALLEN KIRZHNER, 
Plaintiff and Appellant, 
v. 
MERCEDES-BENZ USA, LLC, 
Defendant and Respondent. 
 
S246444 
 
Fourth Appellate District, Division Three 
G052551 
 
Orange County Superior Court 
30-2014-00744604 
 
 
July 27, 2020 
 
Justice Groban authored the opinion of the Court, in which 
Chief Justice Cantil-Sakauye and Justices Chin, Corrigan, Liu, 
Cuéllar, and Kruger concurred. 
 
1 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
S246444 
 
Opinion of the Court by Groban, J. 
 
This case involves the Song–Beverly Consumer Warranty 
Act (the Act), Civil Code section 1790 et seq.,1 popularly known as 
the “lemon law.”  The Act allows buyers or lessees of new motor 
vehicles that are under warranty and have defects the 
manufacturer is unable to repair after a reasonable number of 
attempts to elect one of two remedies:  Consumers may choose 
either a replacement vehicle or restitution “in an amount equal to 
the actual price paid or payable by the buyer.”  (§ 1793.2, subd. 
(d)(2)(B).)  The manufacturer must also pay for any “collateral 
charges” (ibid.) and “incidental damages” incurred (id., subd. 
(d)(2)(A), (B)).   
In this case, plaintiff Allen Kirzhner selected restitution and 
requested reimbursement for vehicle registration renewal and 
nonoperation fees he paid after the initial lease of his vehicle.  
The question before us is whether the Act requires defendant 
Mercedes-Benz USA, LLC (Mercedes) to reimburse these fees, 
either as collateral charges or as incidental damages.  We hold 
that such fees are not recoverable as collateral charges because 
they are not auxiliary to and do not supplement the price paid for 
the vehicle, but they are recoverable as incidental damages if they 
                                        
1 
All further statutory references are to the Civil Code 
unless otherwise indicated. 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
2 
were incurred as a result of the manufacturer’s breach of its duty 
to promptly provide a replacement vehicle or restitution under the 
Act.  Because Kirzhner has not yet had an opportunity to prove 
causation in this case, we reverse the judgment of the Court of 
Appeal and remand the case for further proceedings consistent 
with our opinion. 
I.  BACKGROUND 
In 2012, Kirzhner leased a new vehicle from Mercedes.  
Kirzhner alleges that, during the warranty period, the vehicle 
exhibited a variety of defects that caused the command system, 
navigation system, and key fob to malfunction; the steering 
column adjustment mechanism and power seats to be inoperative; 
the coolant level warning light to illuminate; and smoke to 
emanate from the cigarette lighter. Kirzhner further alleges that 
he presented the vehicle to Mercedes for repair, but Mercedes was 
unable to remedy the defects after a reasonable number of repair 
attempts.     
Nearly six months after filing suit, Kirzhner accepted a 
settlement offer Mercedes made pursuant to Code of Civil 
Procedure section 998 (section 998).2  Mercedes’s section 998 offer 
does not specify a monetary amount it offers to pay Kirzhner to 
settle the case.  Instead, the offer sets forth verbatim the 
replacement and restitution remedies provided by the Act and 
                                        
2 
Section 998 “creates an incentive for settlement” by 
“authoriz[ing] an award of costs to a party that makes a 
pretrial settlement offer when the opponent rejects the offer 
and obtains a lesser result at trial.”  (Heimlich v. Shivji (2019) 
7 Cal.5th 350, 356, citing Martinez v. Brownco Construction 
Co. (2013) 56 Cal.4th 1014, 1019.)   
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
3 
states that Mercedes will furnish one or the other of the remedies 
in exchange for the vehicle.  The offer further states that the 
precise amount of restitution, including any collateral charges 
and incidental damages, will “be determined by court motion if 
the parties cannot agree.”  The trial court entered judgment in 
favor of Kirzhner in accordance with the terms of the offer.   
Because the parties could not agree on the total amount 
Mercedes was required to pay in restitution pursuant to the 
section 998 offer, Kirzhner filed a postjudgment motion 
requesting the trial court to determine the amount owed.  The 
trial court awarded $47,708.06 to Kirzhner.  This amount 
included the initial vehicle registration fee of $101 paid at the 
time Kirzhner entered into the lease agreement.  It excluded, 
however, vehicle registration renewal fees Kirzhner paid in 2013 
and 2014.  It also excluded a nonoperation fee—a fee that a 
vehicle owner may pay in lieu of a registration renewal fee upon 
“certification that the vehicle will not be operated, moved, or left 
standing upon a highway” (Veh. Code, § 4604, subd. (a))—
Kirzhner paid in 2015.    The excluded fees totaled $680.  These 
fees were excluded based on the trial court’s determination that 
the registration fees recoverable under the Act “do not include all 
registration fees that a buyer pays over the course of a lease.”   
The Court of Appeal affirmed, explaining, “The only 
registration fee that could be considered a ‘collateral charge’ 
associated with ‘the actual price paid or payable’ is the one which 
is paid when the vehicle is purchased or leased (or accounted for 
in financing).  [Citation.]  Registration fees for future years 
cannot be considered a ‘collateral charge’ because they are 
incurred and paid after the initial purchase or lease.”  (Kirzhner v. 
Mercedes-Benz USA, LLC (2017) 18 Cal.App.5th 453, 458 
(Kirzhner).)  The Court of Appeal further explained that 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
4 
incidental damages are limited to costs “incurred as a result of a 
vehicle being defective” and “[s]uch is not the case with vehicle 
registration 
renewal 
fees, 
which 
are 
more 
accurately 
characterized as a standard cost of owning any vehicle.”  (Ibid., 
italics omitted.)  
We granted review. 
II.  DISCUSSION 
 We are asked to determine whether the Act requires a 
manufacturer 
to 
reimburse 
registration 
renewal 
and 
nonoperation fees, either as collateral charges or as incidental 
damages.  Our resolution of these questions requires us to 
interpret several interrelated statutory provisions.   
Section 
1793.2, 
subdivision 
(d)(2) 
sets 
forth 
the 
manufacturer’s affirmative obligation to “promptly” repurchase or 
replace a defective vehicle it is unable to repair, providing that if 
a manufacturer is “unable to service or repair a new motor vehicle 
. . . to conform to the applicable express warranties after a 
reasonable number of attempts, the manufacturer shall either 
promptly replace the new motor vehicle in accordance with 
subparagraph (A) or promptly make restitution to the buyer in 
accordance with subparagraph (B).”  In turn, the restitution 
remedy in subdivision (d)(2)(B) states that “the manufacturer 
shall make restitution in an amount equal to the actual price paid 
or payable by the buyer, . . . including any collateral charges such 
as sales or use tax, license fees, registration fees, and other 
official fees, plus any incidental damages to which the buyer is 
entitled under Section 1794, including, but not limited to, 
reasonable repair, towing, and rental car costs actually incurred 
by the buyer.”    Finally, section 1794 is the Act’s general damages 
provision, providing that a buyer may seek damages for a 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
5 
manufacturer’s “failure to comply with any obligation under this 
chapter or under an implied or express warranty,” the measure of 
which includes the restitution and replacement remedies as well 
as the remedies allowed by the California Uniform Commercial 
Code, including incidental damages.  We must interpret the 
meaning of “collateral charges” under section 1793.2, subdivision 
(d)(2)(B), as well as the meaning of “incidental damages” as meant 
by that same section and relevant portions of the California 
Uniform Commercial Code.           
To determine the Legislature’s intent in interpreting these 
statutory provisions, “[w]e first examine the statutory language, 
giving it a plain and commonsense meaning.”  (Coalition of 
Concerned Communities, Inc. v. City of Los Angeles (2004) 34 
Cal.4th 733, 737.)  We do not consider statutory language in 
isolation; instead, we examine the entire statute to construe the 
words in context.  (West Pico Furniture Co. v. Pacific Finance 
Loans (1970) 2 Cal.3d 594, 608.)  If the language is unambiguous, 
“then the Legislature is presumed to have meant what it said, 
and the plain meaning of the language governs.”  (Kizer v. Hanna 
(1989) 48 Cal.3d 1, 8.)  “If the statutory language permits more 
than one reasonable interpretation, courts may consider other 
aids, such as the statute’s purpose, legislative history, and public 
policy.”  (Concerned Communities, at p. 737.)  We keep in mind 
that the Act is “ ‘manifestly a remedial measure, intended for the 
protection of the consumer; it should be given a construction 
calculated to bring its benefits into action.’ ”  (Murillo v. 
Fleetwood Enterprises, Inc. (1998) 17 Cal.4th 985, 990.) 
A.  The Fees Are Not Recoverable as Collateral 
Charges   
The Act allows for recovery of restitution “in an amount 
equal to the actual price paid or payable by the buyer, . . . 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
6 
including any collateral charges such as sales or use tax, license 
fees, registration fees, and other official fees.”  (§ 1793.2, subd. 
(d)(2)(B).)  The parties do not dispute that the initial registration 
fee paid at the time of the purchase or lease of a vehicle is a 
recoverable collateral charge.  Their dispute instead centers on 
whether subsequent registration renewal or nonoperation fees 
that are typically paid on an annual basis after the initial 
purchase or lease of the vehicle are recoverable as collateral 
charges.  Based on the plain language of this section considered in 
its statutory context, we conclude that only the initial registration 
fee paid at the time of the lease or purchase of the vehicle and not 
any subsequent registration renewal or nonoperation fees are 
recoverable as collateral charges. 
The Act makes clear that charges must be “collateral” to the 
“price paid or payable” to be recoverable.  (§ 1793.2, subd. 
(d)(2)(B).)  The word “price” means “[t]he cost at which something 
is obtained” or “[t]he consideration given for the purchase of a 
thing” (Black’s Law Dict. (5th Ed. 1990) p. 1188, col. 2), and the 
word “collateral” means “[a]dditional or auxiliary; supplementary; 
co-operating; accompanying as a secondary fact” or “[r]elated to, 
complementary, accompanying as a co-ordinate” (id. at p. 261, col. 
1).  Initial registration fees are typically paid at the time of the 
sale or lease and are itemized as part of the total price paid for 
the vehicle in the sale or lease agreement.  (See Veh. Code, 
§ 4456, subd. (a)(2) [dealers are responsible for collecting 
registration fees and submitting them to the Department of Motor 
Vehicles within 30 days of the sale]; Civ. Code, §§ 2981.9, 2982, 
subd. (a)(2)(B) [conditional sales contracts subject to the 
Automobile Sales Finance Act must be in writing and must 
itemize all charges paid to the dealer, including registration, 
transfer, and titling fees].)  By contrast, subsequent registration 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
7 
renewal and nonoperation fees are not auxiliary to and do not 
supplement the price paid to own or lease the vehicle.  Buyers do 
not pay these fees to the dealer in exchange for the vehicle.  
Instead, buyers renew their vehicles’ registration on an annual 
basis (or obtain a certificate of nonoperation) and pay the 
associated fees to the Department of Motor Vehicles (DMV), but 
only so long as they continue to own or lease the vehicle at the 
time the fees become due.   
Kirzhner points out that section 1793.2, subdivision 
(d)(2)(B) uses the plural form of “fees” in providing that 
“registration fees” are recoverable as collateral charges, but this 
fact offers little guidance as to whether registration renewal and 
nonoperation fees incurred after the initial registration fee are 
recoverable as collateral charges.  The plural and singular forms 
of the word “fee” are often used interchangeably.  Indeed, the 
Vehicle Code uses the plural form of “fees” to refer to the initial 
registration fee as well as the annual registration renewal fee, 
even though both of these fees require a single, lump-sum 
payment.  (See, e.g., Veh. Code, §§ 4000, subd. (a)(1) [“A person 
shall not drive, move, or leave standing upon a highway, or in an 
offstreet public parking facility, any motor vehicle . . . unless it is 
registered and the appropriate fees have been paid” (italics 
added)], 4601, subd. (a) [“The department may, upon payment of 
the proper fees, renew the registration of vehicles” (italics added)], 
9553, subd. (b) [where a vehicle is transferred and penalties have 
not yet accrued for failure to renew registration, “the transferee 
has 20 days from the date of the transfer to pay the registration 
fees” (italics added)].)  This may be because both the initial 
registration fee and the registration renewal fee are, in fact, made 
up of multiple fees, including a base registration fee, 
transportation 
improvement 
fees, 
service 
fees, 
California 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
8 
Highway Patrol fees, air pollution fees, and various county and 
district fees.  (Veh. Code, §§ 9250–9250.19.)  We therefore cannot 
conclude that the use of the word “fees” indicates a legislative 
intent to allow consumers to recover all registration renewal and 
nonoperation fees incurred subsequent to the initial registration 
fee. 
Focusing on the word “payable,” Kirzhner additionally 
argues that the phrase “actual price paid or payable” indicates “a 
legislative intent to ensure that the manufacturer pays the 
consumer what he actually paid in connection with the vehicle as 
of the time the repurchase occurs, rather than merely what he 
was obliged to pay at the time of contracting.”  Kirzhner relies on 
Mitchell v. Blue Bird Body Co. (2000) 80 Cal.App.4th 32, in which 
the court interpreted the phrase “ ‘actual price paid or payable’ ” 
to include finance charges paid after the date of purchase because 
these charges are amounts consumers become “legally obligated 
to pay” at the time they buy or lease a new car.  (Id. at p. 38.)  
Kirzhner contends that registration renewal and nonoperation 
fees are akin to finance charges in that the buyer is legally 
obligated to pay them; the buyer can avoid the fees by simply 
selling the car; and the fees are paid over the course of several 
years rather than on the date of the sale or lease.  
Kirzhner’s interpretation reads the word “price” out of the 
statute.  As explained above, the word “price” means the cost at 
which at item is obtained.  The word “payable” modifies the word 
“price” and operates to acknowledge that some buyers do not pay 
the full cost of the vehicle at the time of the initial purchase or 
lease.  It does not, however, indicate that all charges and 
expenses that may later be incurred in connection with the 
ownership or use of the vehicle are recoverable, even if they are 
not a part of and do not accompany the price of the vehicle.  The 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
9 
finance charges at issue in Mitchell are unlike registration 
renewal and nonoperation fees because a buyer obtains financing 
at the time of the purchase or lease in order to cover the total cost 
of the vehicle.  Finance charges therefore supplement and are 
paid auxiliary to the price of the vehicle.      
Kirzhner also argues that the statute’s inclusion of use and 
sales taxes as recoverable collateral charges supports his 
interpretation.  (§ 1793.2, subd. (d)(2)(B) [“including any collateral 
charges such as sales or use tax, license fees, registration fees, 
and other official fees”].)  A use tax is paid “where a particular 
transaction is exempt from sales tax, such as one involving goods 
purchased in another state and stored or used in California.”  
(Wallace Berrie & Co. v. State Bd. of Equalization (1985) 40 
Cal.3d 60, 67; accord, Cal. Code Regs., tit. 18, § 1620, subd. (b).)  
Kirzhner contends that because a buyer typically pays use tax 
only after the vehicle is purchased (Rev. & Tax. Code, § 6291) and 
sales tax is paid to the state by the retailer after the sale (Rev. & 
Tax. Code, § 6051), the Legislature intended for a buyer to recover 
charges paid for the vehicle “after its acquisition.”   
While Kirzhner is correct on the technical point that sales 
tax is paid to the state by the retailer, the practical reality is that 
sales tax is “almost invariably passed through in full to 
consumers” at the time of purchase.  (Weatherford v. City of San 
Rafael (2017) 2 Cal.5th 1241, 1256 (conc. opn. of Kruger, J.).)  A 
dealer may decline to pass the sales tax to the consumer, but if 
the dealer makes payment of sales tax a condition of the sale (as 
most do), the consumer must pay the tax in order to obtain the 
vehicle.  (Loeffler v. Target Corp. (2014) 58 Cal.4th 1081, 1108–
1109; § 1656.1, subd. (a); Cal. Code Regs., tit. 18, § 1700, subd. 
(a).)  Use tax is simply a substitute for sales tax when a particular 
transaction is exempt from sales tax.  Although use tax is “the 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
10 
obligation of the consumer ([Rev. & Tax. Code,] § 6202, subd. (a)), 
retailers with a nexus to California must collect use tax from the 
purchaser and remit it to [the State Board of Equalization].  
([Rev. & Tax. Code,] §§ 6203, 6204; Cal. Code Regs., tit. 18, § 
1684, subd. (a).)”  (Dell, Inc. v. Superior Court (2008) 159 
Cal.App.4th 911, 922.)  Thus, sales and use taxes are auxiliary to 
and supplement the price paid for the vehicle.  
The initial registration fee is a recoverable collateral charge 
because, like finance charges and sales or use taxes, it is auxiliary 
to and supplements the price paid for the vehicle.  As explained 
above, the buyer pays the initial registration fee to the dealer as 
part of the total cost of the vehicle and in exchange for the vehicle.  
It is thus a charge that is collateral to the price paid.  In contrast, 
registration renewal and nonoperation fees are not auxiliary to 
and do not supplement the price paid because they are not paid as 
part of the total cost of the vehicle and in exchange for the vehicle.  
They are instead paid to the DMV long after the initial purchase 
or lease transaction in order to continue to legally own or operate 
the vehicle.  For these reasons, Kirzhner’s interpretation is 
contrary to the plain meaning of section 1793.2, subdivision 
(d)(2)(B).    
Turning to statutory context, the replacement remedy in 
section 1793.2, subdivision (d)(2)(A)—which applies when the 
buyer elects a replacement vehicle rather than restitution—adds 
further support for the conclusion that registration renewal and 
nonoperation fees are not recoverable as collateral charges.  This 
section provides that the manufacturer must “replace the buyer’s 
vehicle with a new motor vehicle substantially identical to the 
vehicle replaced” and also “pay for, or to, the buyer the amount of 
any sales or use tax, license fees, registration fees, and other 
official fees which the buyer is obligated to pay in connection with 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
11 
the replacement.”  (§ 1793.2, subd. (d)(2)(A), italics added.)  As 
Kirzhner acknowledges, the phrase “in connection with the 
replacement” (ibid.) limits the registration fees recoverable under 
the replacement remedy to those incurred in registering the 
replacement vehicle and does not include reimbursement of any 
registration renewal or nonoperation fees the buyer might have 
paid over the course of owning or leasing the defective vehicle.  
Nevertheless, Kirzhner argues that the Legislature, by inserting 
this limiting language in subdivision (d)(2)(A) (governing the 
replacement remedy) and omitting it in subdivision (d)(2)(B) 
(governing the restitution remedy), intended the restitution 
remedy to be more expansive and cover all registration fees paid 
over the course of a buyer’s ownership or possession of a defective 
vehicle.   
The Act’s legislative history, however, indicates the 
Legislature intended the manufacturer to be responsible for an 
equivalent amount of registration fees regardless of whether the 
consumer elects a replacement vehicle or restitution.  In 
analyzing Assembly Bill No. 2057 (1987-1988 Reg. Sess.)—the bill 
that enacted the replacement and restitution remedies—the 
Department of Finance stated that the identical remedies 
proposed verbatim in the related Assembly Bill No. 2050 (1987-
1988 Reg. Sess.) would require “the manufacturer to pay sales 
tax, license and registration fees on the replacement, or an 
equivalent amount in restitution.”  (Dept. of Finance, Enrolled Bill 
Rep. on Assem. Bill No. 2057 (1987–1988 Reg. Sess.) as amended 
May 13, 1987, p. 3; italics added.)  Other departments, such as 
the Department of Consumer Affairs, noted that Assembly Bill 
No. 2057 would require manufacturers “to reimburse sales or use 
tax, license and registration fees and incidental damages” without 
differentiating between the replacement and restitution remedies.  
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
12 
(Dept. of Consumer Affairs, Enrolled Bill Rep. on Assem. Bill No. 
2057 (1987–1988 Reg. Sess.) prepared for Governor Deukmejian 
(Sept. 25, 1987) p. 4; accord, Dept. of Justice, Analysis of Assem. 
Bill No. 2057 (1987–1988 Reg. Sess.) as amended June 11, 1987, 
p. 2.)  Kirzhner does not point us to anything in the legislative 
history indicating an intent to treat the two remedies differently 
with respect to the amount of registration fees for which the 
manufacturer would be responsible.  
Moreover, there is a straightforward reason for the 
difference in the precise wording of the replacement and 
restitution remedies.  The replacement remedy specifies that the 
manufacturer must pay for all official fees, including registration 
fees, that will be incurred “in connection with the replacement” 
(§ 1793.2, subd. (d)(2)(A)) because a buyer would normally be 
responsible for paying such fees upon obtaining a new vehicle.  
When a buyer opts for restitution, no new fees will be incurred for 
which 
the 
buyer 
would 
otherwise 
be 
obliged 
to 
pay.  
Consequentially, the restitution remedy need only specify that the 
manufacturer must reimburse the “price” the buyer paid for the 
original car “including any collateral charges such as . . . 
registration fees.”  (§ 1793.2, subd. (d)(2)(B).)  Thus, the language 
used in these two provisions reflects a basic, practical difference 
between ensuring that a buyer is reimbursed with a cash 
payment for the initial registration fee paid on the defective 
vehicle when the buyer selects the restitution remedy and 
ensuring that the buyer does not pay the initial registration fee 
on the replacement vehicle when the buyer selects the 
replacement remedy.  The language is not intended to effectuate a 
fundamental difference in a buyer’s ability to recover subsequent 
registration renewal fees depending on which remedy the buyer 
selects.  (Cf. Jiagbogu v. Mercedes-Benz USA (2004) 118 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
13 
Cal.App.4th 1235, 1243 (Jiagbogu) [similarly concluding that the 
offset a manufacturer may claim for the buyer’s use of the vehicle 
is the same regardless of whether the buyer selects the 
replacement or restitution remedy, despite a difference in the 
offset provision’s wording with respect to the two remedies].)   
In sum, based on the plain meaning of section 1793.2, 
subdivision (d)(2)(B)’s text and considering it in its statutory 
context, we hold that while the initial registration fee is 
recoverable as a collateral charge, subsequent registration 
renewal and nonoperation fees are not auxiliary to and do not 
supplement the price paid for a vehicle and are, therefore, not 
recoverable as collateral charges.  
B.  The Fees May Be Recoverable as Incidental 
Damages  
Although registration renewal and nonoperation fees are 
not recoverable as collateral charges, we hold that they are 
recoverable as incidental damages if they were incurred as a 
result of the manufacturer’s failure to promptly provide a 
replacement vehicle or restitution once its obligation to do so 
under section 1793.2, subdivision (d)(2) arises.   
Section 1793.2, subdivision (d)(2)(B) provides that a buyer 
may recover restitution “plus any incidental damages to which 
the buyer is entitled under Section 1794, including, but not 
limited to, reasonable repair, towing, and rental car costs actually 
incurred by the buyer.”  Section 1794, in turn, provides that a 
consumer “who is damaged by a failure to comply with any 
obligation under [the Act] or under an implied or express 
warranty or service contract may bring an action for the recovery 
of damages,” the measure of which “shall include the rights of 
replacement or reimbursement as set forth in subdivision (d) of 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
14 
Section 1793.2, and the following: [¶] (1) Where the buyer has 
rightfully rejected or justifiably revoked acceptance of the goods 
or has exercised any right to cancel the sale, Sections 2711, 2712, 
and 2713 of the Commercial Code shall apply. [¶] (2) Where the 
buyer has accepted the goods, Sections 2714 and 2715 of the 
Commercial Code shall apply . . . .”  (Id., subds. (a), (b)(1)-(2).) 
California 
Uniform 
Commercial 
Code 
section 
2715, 
subdivision (1) defines “[i]ncidental damages resulting from the 
seller’s breach” as “includ[ing] expenses reasonably incurred in 
inspection, receipt, transportation and care and custody of goods 
rightfully 
rejected, 
any 
commercially 
reasonable 
charges, 
expenses or commissions in connection with effecting cover and 
any other reasonable expense incident to the delay or other 
breach.”  California Uniform Commercial Code section 2711, 
subdivision (3) contains nearly identical language, providing that 
“[o]n rightful rejection or justifiable revocation of acceptance a 
buyer has a security interest in goods in his possession or control 
for any payments made on their price and any expenses 
reasonably incurred in their inspection, receipt, transportation, 
care and custody . . . .”  No California court has examined the 
meaning of these sections in any detail.  But because California’s 
Uniform Commercial Code was adopted verbatim from the 
Uniform Commercial Code, we may look to the Uniform 
Commercial Code’s official comments, as well as to how other 
courts have interpreted the Uniform Commercial Code, for 
guidance.  (Arriaga v. CitiCapital Commercial Corp. (2008) 167 
Cal.App.4th 1527, 1536; Pacific Sunwear of California, Inc. v. 
Olaes Enterprises, Inc. (2008) 167 Cal.App.4th 466, 474–475; see 
also Porter v. Gibson (1944) 25 Cal.2d 506, 512 [courts should 
review decisions of other jurisdictions when interpreting uniform 
acts to ensure they are applied in a uniform manner].)    
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
15 
Since the Act expressly states that a buyer may recover 
incidental damages under California Uniform Commercial Code 
section 2715 where a buyer has “accepted the goods” (Civ. Code, § 
1794, subd. (b)(2)) but refers only to California Uniform 
Commercial Code sections 2711, 2712, and 2713 where a buyer 
has “revoked acceptance of the goods” (Civ. Code, § 1794, subd. 
(b)(1)), it may seem as though California Uniform Commercial 
Code section 2715 applies only when a buyer accepts the defective 
vehicle.  The comment to California Uniform Commercial Code 
section 2715 makes clear, however, that this section was 
“intended to provide reimbursement for the buyer who incurs 
reasonable expenses in connection with the handling of rightfully 
rejected goods or goods whose acceptance may be justifiably 
revoked, or in connection with effecting cover where the breach of 
the contract lies in non-conformity or non-delivery of the goods.”  
(U. Com. Code com., 23A pt. 2 West’s Ann. Cal. U. Com. Code 
(2002 ed.) foll. § 2715, p. 119, italics added.)  Courts have 
accordingly held that buyers who revoke acceptance of defective 
goods are entitled to any incidental damages recoverable under 
Uniform Commercial Code section 2-715.  (See, e.g., Newmar 
Corp. v. McCrary (2013) 129 Nev. 638, 646 [309 P.3d 1021, 1027]; 
Durfee v. Rod Baxter Imports, Inc. (Minn. 1977) 262 N.W.2d 349, 
357.)  Courts have also determined that the same types of 
expenses are recoverable as incidental damages under either 
Uniform Commercial Code section 2-715 or Uniform Commercial 
Code section 2-711.  (See, e.g., Lanners v. Whitney (1967) 247 Or. 
223, 236 [428 P.2d 398, 404] (Lanners); Warren v. Guttanit, Inc. 
(1984) 69 N.C.App. 103, 114 [317 S.E.2d 5, 13].)  We therefore 
need not resolve whether Kirzhner accepted or revoked 
acceptance of his vehicle—or whether California Uniform 
Commercial Code section 2715 or 2711 applies—in order to 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
16 
evaluate whether he is entitled to recover his registration renewal 
and nonoperation fees as incidental damages.   
The parties do not dispute that Kirzhner’s registration 
renewal and nonoperation fees were “reasonably incurred.”  (Cal. 
U. Com. Code, § 2715, subd. (1).)  We accordingly focus only on 
the following two questions in determining whether Kirzhner’s 
registration renewal and nonoperation fees are recoverable as 
incidental damages:  First, are such fees incurred in the 
“inspection, receipt, transportation and care and custody” of a 
vehicle?  (Ibid.)  Second, do such fees “result[] from” or are they 
incurred “incident to” a manufacturer’s breach of warranty or 
other violation of the Act?  (Ibid.)  In examining these interrelated 
questions, 
we 
conclude 
that 
registration 
renewal 
and 
nonoperation fees paid after the manufacturer’s duty to promptly 
provide a replacement vehicle or restitution arises are expenses 
incurred in the “care and custody” of a defective vehicle.  (Ibid.)  
We further conclude that such fees “result from[]” and are 
incurred “incident to” the manufacturer’s breach of its duty to 
promptly provide restitution or a replacement vehicle because the 
buyer would not have incurred the fees but for the manufacturer’s 
delay.  (Ibid.) 
1. 
Care and Custody Costs 
Turning to the first question, we consider whether 
registration renewal and nonoperation fees are expenses incurred 
in the “inspection, receipt, transportation and care and custody” of 
a vehicle.  (Cal. U. Com. Code, § 2715, subd. (1).)   
As cases applying Uniform Commercial Code section 2-715 
make clear, the phrase “care and custody” should not be read 
broadly to encompass all costs incurred over the course of 
possessing, owning, operating, or using nonconforming goods.  
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
17 
Though the Court of Appeal was concerned about opening up a 
“ ‘Pandora’s box’ ” of potential costs manufacturers would be 
required to pay if it were to rule that registration renewal fees 
were recoverable as incidental damages (Kirzhner, supra, 18 
Cal.App.5th at p. 458), there are limits on such damages.  Indeed, 
Kirzhner concedes that standard ownership or use costs—like 
gas, car washes, or oil changes—will normally not qualify as 
incidental damages.  We do not foreclose the possibility that, in an 
unusual case, a buyer may be able to present particular 
circumstances that might justify an exception to this general rule.  
Ordinarily, however, buyers are free to choose whether to put gas 
or oil in the car and usually opt to expend such costs solely for 
their own benefit in order to drive the vehicle and keep it 
operational.  We have not found any case in which a court has 
awarded such standard ownership or use costs—incurred solely 
for the buyer’s benefit and unconnected to the manufacturer’s 
breach—as incidental damages.  Registration renewal and 
nonoperation fees are different, at least where they are incurred 
after the manufacturer’s duty to promptly provide a replacement 
vehicle or restitution arises.  At this point in time, the fees are no 
longer simply a standard cost of ownership.  They instead closely 
resemble 
the 
types 
of 
post-revocation 
preservation 
and 
maintenance costs courts have awarded as incidental damages 
reasonably incurred in the care and custody of nonconforming 
goods pending their return to the seller.   
In Lanners, for example, the Oregon Supreme Court 
awarded as incidental damages costs necessary to protect and 
maintain a defective airplane after revocation, including storage 
costs, ground insurance charges, the costs of removing the radio 
and battery, and the costs of installing special storage oil.  
(Lanners, supra, 428 P.2d at p. 404.)  Similarly, in Western 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
18 
Conference Resorts, Inc. v. Pease (Colo.App. 1983) 668 P.2d 973, 
the court awarded service work expenses and tie-down fees—i.e., 
fees incurred in “tying down” an airplane to minimize the 
possibility of damage from strong winds—to preserve and protect 
a defective airplane after revocation.  (Id. at pp. 976–977.)  The 
buyers in Lanners and Western Conference did not incur these 
costs in order to fly the airplanes.  Nor did they incur the costs in 
order to increase the value of their ownership interest in the 
airplanes, given that they no longer had any ownership interest 
having revoked acceptance of the airplanes.  (Cal. U. Com. Code, 
§ 2401, subd. (4) [rejection or revocation of acceptance of the goods 
“revests title to the goods in the seller”].)  Instead, the buyers 
incurred the costs in order to maintain the nonconforming 
airplanes and to protect them from damage or theft for the sellers’ 
benefit while they were still in the buyers’ care and custody 
pending their eventual return to the sellers.  (Lanners, at p. 404; 
Western Conference, at pp. 976–977.) 
Registration renewal and nonoperation fees serve similar 
purposes, at least when they are incurred and paid after the 
manufacturer fails to comply with its duty to promptly repurchase 
or replace a defective vehicle.  To explain, the Act provides that, 
where a manufacturer is unable to repair the vehicle after a 
reasonable 
number of 
attempts, 
the 
manufacturer 
must 
“promptly” 
provide 
a 
replacement 
vehicle 
or 
restitution.  
(§ 1793.2, subd. (d)(2).)  Once the manufacturer’s duty to do so 
arises, the buyer no longer has the same ownership interest in the 
vehicle since the manufacturer can (and should) replace or 
repurchase it at any moment.  A lessee’s interest in “possession 
and use of” the vehicle (Cal. U. Com. Code, § 10103, subd. (a)(10)) 
for a certain number of years under the lease agreement is 
likewise diminished.  A lessee never owns the car during the term 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
19 
of the lease, and the car typically reverts to the lessor in just two 
or three years under the terms of the lease agreement.  The lessee 
is nonetheless obligated to make ongoing registration payments 
as long as the manufacturer fails to comply with its duty to 
promptly replace or repurchase the vehicle.  Indeed, despite this 
lessened interest, buyers and lessees are legally required to pay, 
and cannot avoid paying, registration renewal fees incurred prior 
to the vehicle’s transfer back to the manufacturer.  (Veh. Code, 
§§ 4000, subd. (a)(1), 4601, 4604.)  Moreover, the buyer’s payment 
of such fees inures to the benefit of the manufacturer in two ways:  
First, the fees are tied to and transfer with the vehicle and, as a 
result, the manufacturer will not need to pay any further 
registration fees so long as it retrieves the vehicle more than 30 
days prior to the registration’s expiration.  (Veh. Code, §§ 5902.5, 
9255.)  The buyer cannot obtain a refund from the DMV for any 
paid fees, even if they were paid only one day prior to the vehicle’s 
return to the manufacturer.  (See Veh. Code, § 42231.)  Second, 
payment of the fees safeguards the vehicle against impoundment 
(Veh. Code, § 22651, subd. (o)(1)(A)) and hefty delinquency 
penalties (Veh. Code, §§ 9553, subd. (a), 9554)—penalties for 
which the manufacturer would be responsible upon transfer 
unless it could show that it was unaware of the buyer’s failure to 
pay the fees (Veh. Code, § 9562, subd. (a)).   
For these reasons, registration renewal and nonoperation 
fees incurred after the manufacturer’s duty to promptly 
repurchase or replace the vehicle arises are unlike the standard 
costs of ownership or use that buyers freely choose to incur for 
their own benefit in order to drive the vehicle.  They are more 
akin to post-revocation care and custody costs courts have 
awarded as reasonably incurred in order maintain and protect the 
goods for the seller’s benefit pending the seller’s retrieval of the 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
20 
goods.  The few cases that have analyzed whether registration 
renewal fees or similar fees are among the types of costs that may 
be recovered as incidental damages are in accord with our view.  
(See, e.g., Jacobs v. Rosemount Dodge-Winnebago South (Minn. 
1981) 310 N.W.2d 71, 77 [awarding all licensing fees paid from 
the date of revocation through trial on the ground that the buyers 
paid these fees in fulfillment of their post-revocation duty to hold 
the defective motorhome with reasonable care until the seller 
retrieved it].)  We therefore conclude that registration renewal 
and nonoperation fees paid after the manufacturer’s duty to 
promptly repurchase or replace the vehicle arises are recoverable 
as incidental damages incurred in the care and custody of a 
defective vehicle.  
2. 
Causation 
We next consider whether Kirzhner’s registration renewal 
and nonoperation fees “result[ed] from” or were incurred “incident 
to” Mercedes’s breach or other violation of the Act.  (Cal. U. Com. 
Code, § 2715, subd. (1).)  Kirzhner argues the he incurred the fees 
as a result of several different alleged breaches, including 
Mercedes’s alleged (1) breach of the implied warranty of 
merchantability; (2) breach of its duty to repair under its express 
written warranty; and (3) breach of its duty under the Act to 
promptly repurchase the vehicle after a reasonable number of 
repair attempts.  We conclude that Kirzhner is entitled to recover 
only those fees incurred and paid as a result of Mercedes’s failure 
to promptly provide him with restitution. 
In general, incidental damages incurred as a result of the 
seller’s breach of its duties under its express and implied 
warranties to deliver a merchantable and defect-free vehicle or to 
repair the vehicle are recoverable under the Act.  Such damages 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
21 
would include the types of exemplar costs listed in the Act—i.e., 
“repair, towing, and rental car costs” (§ 1793.2, subd. (d)(2)(B))—
because such costs “result[] from” and are incurred “incident to” 
(Cal. U. Com. Code, § 2715, subd. (1)) the defect itself and the 
failure to repair the defect.  Stated differently, the causal link is 
clear with respect to these types of costs since the buyer would not 
have incurred them but for the breach.  To provide an example, 
where a vehicle’s defective engine breaks down and the vehicle 
ceases to function, a buyer may incur costs in towing the vehicle 
to a repair facility, additional costs in repairing the vehicle, and 
further costs in renting a car while the defective vehicle is being 
repaired.  All such costs are recoverable as resulting from the 
manufacturer’s failure to provide the buyer with a defect-free 
vehicle, since the costs would not have been incurred but for the 
defect.  
By contrast, Kirzhner would have incurred and paid 
registration renewal or nonoperation fees even if his vehicle had 
been defect-free and even if Mercedes had been successful in 
repairing the defects.  We therefore cannot conclude that 
Kirzhner would not have incurred the fees but for the fact that 
Mercedes provided him with a defective vehicle that never 
conformed to its warranties.  As many courts have held, “[a]n 
expense will not ordinarily be considered as an item of incidental 
or consequential damage to a breach of warranty when the buyer 
would have incurred the claimed expense even if the product or 
goods had been as warranted.”  (Delhomme Industries, Inc. v. 
Houston Beechcraft, Inc. (5th Cir. 1984) 735 F.2d 177, 185–186; 
accord, Industrial Graphics, Inc. v. Asahi Corp. (D. Minn. 1980) 
485 F.Supp. 793, 808  [overhead expenses were “not recoverable 
in total”  because they “would have been incurred . . . even if the 
[goods] had been as warranted[,]” but they were recoverable in 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
22 
the amount greater than the buyer would have otherwise 
expended had the goods been defect-free]; Cal. U. Com. Code, 
§ 1305, subd. (a) [the goal is to put the “aggrieved party . . . in as 
good a position as if the other party had fully performed”].)   
In a different case, there may be unique facts presented 
under which registration renewal fees could be found to have been 
caused by a manufacturer’s breach of express or implied 
warranties.  For example, if the buyer could not use the vehicle 
due to the defects and was forced to acquire a substitute vehicle 
as cover, the buyer might be able to recover the additional 
registration fee incurred and paid on the substitute vehicle.  But 
because registration renewal fees are a standard cost of owning or 
leasing any vehicle, defective or not, they will normally not be 
recoverable as incidental damages resulting from a breach of an 
express or implied warranty.  Here, Kirzhner does not allege any 
facts tending to show that he incurred increased or additional 
registration fees that he would not have otherwise paid absent his 
vehicle’s defects and Mercedes’s failure to repair.  Simply put, the 
causal link between Mercedes’s alleged breach of implied or 
express warranties and Kirzhner’s payment of registration 
renewal and nonoperation fees is missing. 
Kirzhner is entitled, however, to recover any registration 
renewal and nonoperation fees he incurred after the date 
Mercedes failed to promptly provide him with restitution.  At this 
point in time, when the buyer or lessee has a greatly diminished 
interest in the vehicle and payment of the fees primarily benefits 
the manufacturer, it is reasonable to conclude that the fees 
“result[ed] 
from” 
and 
were 
incurred 
“incident 
to” 
the 
manufacturer’s delay.  (Cal. U. Com. Code, § 2715, subd. (1).)   
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
23 
We provide the following hypothetical scenario to illustrate:  
A buyer first presents a defective car to a manufacturer for repair 
three months after purchase.  The manufacturer is unable to 
repair the car during the first repair attempt or three subsequent 
repair attempts over the next four months, triggering a 
presumption under section 1793.22, subdivision (b)(2) that a 
reasonable number of repair attempts have been made.  The 
manufacturer nevertheless delays providing the buyer with 
restitution or a replacement vehicle and, six months later, the 
buyer incurs a registration renewal fee.  The buyer pays the fee 
and the very next day the manufacturer finally repurchases or 
replaces the vehicle.  The payment of the fee, while legally 
required, was not a standard cost of ownership or use of the 
vehicle since the buyer had a lessened ownership interest at the 
time the fee was paid and was simply waiting for the 
manufacturer to comply with its duty to promptly repurchase or 
replace the vehicle.  The fee covers the vehicle for an entire year 
but, now that the vehicle is back in the manufacturer’s ownership 
and possession, its payment benefits the manufacturer.  Even 
under a less extreme hypothetical scenario where the buyer 
continues to possess and even use the car for some time after 
payment of the registration renewal fee, the fee still benefits the 
manufacturer as it might finally comply with its duty to 
repurchase or replace the vehicle at any moment.  Under either 
scenario, a trier of fact may reasonably conclude that the buyer 
would not have paid the registration renewal fee but for the 
manufacturer’s delay in repurchasing or replacing the vehicle.       
In short, we conclude that Kirzhner may recover as 
incidental 
damages 
only 
those 
registration 
renewal 
and 
nonoperation fees resulting from Mercedes’s alleged breach of its 
duty under section 1793.2, subdivision (d)(2) to promptly provide 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
24 
him with restitution.  He is not entitled to recover any 
registration renewal and nonoperation fees he paid prior to 
Mercedes’s alleged delay because those fees were not caused by 
Mercedes’s breach or other violation of the Act. 
C. Incidental Damages May Be Based on Violations of 
the Act   
Mercedes argues that its duty under section 1793.2, 
subdivision (d)(2) to promptly provide restitution or a replacement 
vehicle after a reasonable number of repair attempts cannot serve 
as a basis for incidental damages because this duty does not 
constitute an independent ground for liability under the Act.  
Mercedes further asserts that the question of whether a 
manufacturer complied with its obligation to promptly provide 
restitution or a replacement vehicle is relevant only to the buyer’s 
potential recovery of civil penalties for the manufacturer’s willful 
failure to comply with the Act.  Since its section 998 offer did not 
include an offer to pay civil penalties, Mercedes believes the issue 
of whether it failed to promptly provide restitution is not 
presently before us in this case.   
Mercedes is correct that a manufacturer’s willful failure to 
promptly provide restitution or a replacement vehicle may result 
in an award of civil penalties pursuant to section 1794.  (§ 1794, 
subds. (c) & (e)(1); Lukather v. General Motors, LLC (2010) 181 
Cal.App.4th 1041, 1051–1052 (Lukather).)  But section 1794 also 
allows buyers to recover damages for nonwillful violations of the 
Act.  (Kwan v. Mercedes-Benz of North America, Inc. (1994) 23 
Cal.App.4th 174, 184 (Kwan).)  Subdivision (a) of section 1794 
allows a buyer “who is damaged by a failure to comply with any 
obligation under [the Act] or under an implied or express 
warranty or service contract” to “bring an action for the recovery 
of damages.”  (§ 1794, subd. (a), italics added.)  The Act imposes 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
25 
several affirmative obligations on manufacturers in addition to 
the requirement that they comply with their own warranties.  
These obligations include maintaining “sufficient service and 
repair facilities” (§ 1793.2, subd. (a)(1)(A)); commencing repairs 
“within a reasonable time” (§ 1793.2, subd. (b)); completing 
repairs “within 30 days” (ibid.); and “promptly” replacing or 
providing restitution for those vehicles the manufacturer cannot 
repair after a reasonable number of attempts (§ 1793.2, subd. 
(d)(2); accord, Jiagbogu, supra, 118 Cal.App.4th at p. 1244).  The 
Act does not indicate that a buyer may recover only civil 
penalties—and not damages—for certain violations of the Act’s 
obligations, as Mercedes contends.  In fact, the civil penalty 
provision set forth in section 1794, subdivision (c) indicates the 
opposite, providing that “[i]f the buyer establishes that the failure 
to comply was willful, the judgment may include, in addition to 
the amounts recovered under subdivision (a), a civil penalty . . . .”  
(§ 1794, subd. (c), italics added.)  Thus, the plain language of this 
section makes clear that the Act creates a “two-tier system of 
damages” for willful and negligent violations of any of the Act’s 
affirmative obligations.  (Kwan, at p. 184.)   
The 
Act’s 
legislative 
history 
supports 
the 
above 
interpretation.  Section 1794 originally provided that consumers 
who were injured by “willful” violations of the Act could bring an 
action “to recover 3 times actual damages plus attorney’s fees.”  
(Legis. Counsel’s Dig., Assem. Bill No. 3560 (1981–1982 Reg. 
Sess.).)  It was amended in 1982 to expressly include a remedy for 
nonwillful violations of the Act’s statutory obligations, which was 
previously only available under the common law doctrine of 
negligence per se.  (Dept. of Consumer Affairs, Explanation and 
Analysis of Assem. Bill No. 3560 (1981–1982 Reg. Sess.) March 
1982, pp. 4–5, 10.)  The amendment thus “entitle[d] a buyer to 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
26 
recover damages . . . for nonwilful [sic] (negligent) Song–Beverly 
violations by a warrantor, in addition to the buyer’s present right 
to recover [civil penalties] for wilful [sic] (intentional) violations.”  
(Dept. of Consumer Affairs, Analysis of Assem. Bill No. 3324 
(1979–1980 Reg. Sess.).)  Accordingly, buyers may seek incidental 
damages resulting from a manufacturer’s alleged failure to 
promptly provide restitution or a replacement vehicle.    
D.  The Section 998 Offer Does Not Bar Recovery 
Mercedes argues that Kirzhner is precluded from showing 
that his registration renewal and nonoperation fees resulted from 
any of Mercedes’s alleged breaches because the section 998 offer 
does not constitute an admission that Mercedes’s breached its 
warranty or otherwise violated the Act.  It is true that a section 
998 offer is not an adjudication of liability.  (Milicevich v. 
Sacramento Medical Center (1984) 155 Cal.App.3d 997, 1004.)  It 
does not follow, however, that Kirzhner is precluded from showing 
he is entitled to recover the fees as incidental damages, as 
Mercedes seems to suggest.  The section 998 offer, accepted by 
Kirzhner, states that Mercedes will “make restitution in an 
amount equal to the actual price paid or payable . . . including 
any collateral charges . . . plus incidental damages to which the 
buyer is entitled under Section 1794 . . . all to be determined by 
court motion if the parties cannot agree.”  By offering to pay 
incidental damages, the section 998 offer presumes liability with 
the precise amount of damages to be later agreed upon by the 
parties or ruled upon by a court.  In other words, Mercedes “has 
already conceded that it would be liable for incidental damages; 
the question is only whether the damages alleged are, in fact, 
incidental.”  (Carrion v. Kirby Oldsmobile, Inc. (C.D.Cal., Nov. 9, 
2018, No. SACV 17-00231 JVS(JCGx)) 2018 WL 6137127, p. *2 
[rejecting similar argument made in relation to a settlement 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
27 
agreement providing for reimbursement of an unspecified amount 
of incidental damages].)  Thus, the section 998 offer does not 
prevent Kirzhner from seeking recovery of the fees as incidental 
damages. 
E.  Remand is Necessary on the Issue of Causation 
Although the section 998 offer does not preclude Kirzhner 
from seeking incidental damages, and although we conclude that 
registration renewal and nonoperation fees incurred as a result of 
a manufacturer’s failure to promptly provide restitution or a 
replacement vehicle under section 1793.2, subdivision (d)(2) are 
recoverable as incidental damages, we are unable to evaluate 
whether any of the fees Kirzhner paid resulted from Mercedes’s 
failure to promptly provide him with restitution.  The duty to 
promptly provide restitution arises only after the manufacturer is 
unable to repair the vehicle after being afforded the opportunity 
to make a reasonable number of repair attempts.  (Krotin v. 
Porsche Cars North America, Inc. (1995) 38 Cal.App.4th 294, 303.)  
This case comes to us upon an early section 998 settlement offer 
and, consequentially, no record has been developed to show the 
dates on which Kirzhner presented the vehicle for repair; the total 
number of attempted repairs; how long the repairs took; whether 
Mercedes attempted to fix the same problem or different 
problems; whether any of the repairs were successful; or whether 
any of the Act’s presumptions, set forth in section 1793.22, 
subdivision (b), that a “reasonable number of attempts have been 
made,” apply.  We accordingly have no way of knowing when, if 
ever, Mercedes’s duty to promptly provide restitution arose and 
when its breach of this duty occurred.   
Kirzhner argues that, because he commenced this lawsuit in 
September 2014 and Mercedes did not provide him with 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
28 
restitution until August 2015, Mercedes failed to promptly 
provide him with restitution.  But, even though we agree that a 
delay of nearly a year from the date the manufacturer’s duty to 
provide restitution arises to the date it actually provides 
restitution is not prompt, Kirzhner’s filing of a lawsuit is not 
evidence that Mercedes’s duty had already arisen by the date the 
lawsuit was filed.  We note, however, that while Kirzhner must 
show when the breach arose in order to recover his registration 
renewal and nonoperation fees as incidental damages, he need not 
prove that Mercedes’s failure to promptly provide him with 
restitution was willful since he is not seeking civil penalties.  
Thus, Mercedes cannot escape its obligation to pay the fees as 
incidental damages by, for example, showing that it held a “good 
faith and reasonable belief” that its repurchase obligation had not 
yet arisen at the time Kirzhner incurred and paid the fees.  
(Kwan, supra, 23 Cal.App.4th at p. 185.)  Instead, Kirzhner may 
recover any fees resulting from Mercedes’s negligent failure to 
promptly provide him with restitution.  We additionally note that 
if Kirzhner proves that Mercedes’s repurchase obligation had, in 
fact, arisen by the time he filed suit, he will likely be able to 
recover the nonoperation fee he paid in June 2015 since a delay of 
at least nine months from the time he filed suit to the date he 
paid the fee is not prompt.   
We acknowledge that our holding requires a buyer to prove 
not only that the manufacturer’s duty to provide restitution or a 
replacement vehicle arose but also that a manufacturer failed to 
promptly comply with that duty in order to recover restitution 
renewal and nonoperation fees as incidental damages.  But we 
believe that, in many cases, this added burden will not be difficult 
to meet.  The question of whether a manufacturer has any 
obligation to provide restitution or a replacement vehicle is 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
29 
almost always the key issue in dispute in these cases, with 
manufacturers arguing that they have not yet been afforded with 
the opportunity to make a reasonable number of repair attempts 
or denying that the vehicle is defective.  (See, e.g., Ibrahim v. 
Ford Motor Co. (1989) 214 Cal.App.3d 878, 888; Lundy v. Ford 
Motor Co. (2001) 87 Cal.App.4th 472, 479–480.)  As such, courts 
regularly determine whether and when the manufacturer’s duty 
to provide restitution or a replacement vehicle arose.  (See, e.g., 
Lukather, supra, 181 Cal.App.4th at p. 1052 [determining the 
date by which the manufacturer’s duty arose]; Robertson v. 
Fleetwood Travel Trailers of California, Inc. (2006) 144 
Cal.App.4th 785, 804 [same].)  If the buyer succeeds in proving 
that the duty arose well before filing suit, it should not be difficult 
for the buyer to also prove that the manufacturer failed to act 
promptly since the buyer had to resort to a lawsuit in order to get 
the manufacturer to finally comply with its duty. 
To summarize, although the parties’ section 998 settlement 
presumes liability, it leaves the amount of damages to be awarded 
open and requires a court to determine the amount “if the parties 
cannot agree.”  Here, the parties could not agree on an amount 
and dispute whether Mercedes’s alleged delay caused Kirzhner to 
incur any of his registration renewal or nonoperation fees as 
incidental damages.  We accordingly reverse the judgment of the 
Court of Appeal with directions to remand the matter for further 
proceedings consistent with our opinion.   
III.  DISPOSITION 
In conclusion, we hold that registration renewal and 
nonoperation fees are not recoverable as collateral charges under 
section 1793.2, subdivision (d)(2)(B) of the Act because they are 
not collateral to the price paid for the vehicle, but they are 
KIRZHNER v. MERCEDES-BENZ USA, LLC 
Opinion of the Court by Groban, J. 
 
30 
recoverable as incidental damages under section 1794 of the Act if 
they were incurred and paid as a result of a manufacturer’s 
failure to promptly provide a replacement vehicle or restitution 
under section 1793.2, subdivision (d)(2).  Because the disputed 
issue of causation has not yet been adjudicated, we reverse the 
judgment of the Court of Appeal and remand with directions to 
remand the case to the trial court for proceedings consistent with 
this opinion. 
 
GROBAN, J. 
 
 We Concur: 
CANTIL-SAKAUYE, C. J. 
CHIN, J. 
CORRIGAN, J. 
LIU, J. 
CUÉLLAR, J. 
KRUGER, J. 
 
 
See next page for addresses and telephone numbers for counsel who argued in Supreme Court. 
 
Name of Opinion Kirzhner v. Mercedes-Benz USA, LLC   
__________________________________________________________________________________ 
 
Unpublished Opinion 
Original Appeal 
Original Proceeding  
Review Granted XX 18 Cal.App.5th 453   
Rehearing Granted 
 
__________________________________________________________________________________ 
 
Opinion No. S246444 
Date Filed:  July 27, 2020 
__________________________________________________________________________________ 
 
Court:  Superior    
County:  Orange 
Judge:  James Di Cesare    
 
__________________________________________________________________________________ 
 
Counsel: 
 
Anderson Law Firm, Martin W. Anderson; Law Office of Jeffrey Kane and Jeffrey Kane for Plaintiff and 
Appellant. 
 
Universal & Shannon, Jon D. Universal, Marie L. Wrighten-Douglass, Patrea R. Bullock, Jay C. Patterson 
and James P. Mayo for Defendant and Respondent. 
 
 
 
 
 
 
Counsel who argued in Supreme Court (not intended for publication with opinion): 
 
Martin W. Anderson 
Anderson Law Firm 
2070 North Tustin Avenue 
Santa Ana, CA 92705 
(714) 516-2700 
 
James P. Mayo 
Universal & Shannon, LLP 
2240 Douglas Blvd., #290 
Roseville, CA 95661 
(916) 780-4050