Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-00181/USCOURTS-caed-2_05-cv-00181-15/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 15:2301 Magnuson-Moss Warranty Act

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

STEVE CARLSON; TARA 

CARLSON; and KAREN 

PEARSON,

NO. CIV. S-05-181 LKK/GGH

Plaintiffs,

v. O R D E R

MONACO COACH CORPORATION,

Defendant.

 /

Plaintiffs, Steve and Tara Carlson and Karen Pearson, bring

a breach of warranty suit against Monaco Coach Corporation

(defendant). Plaintiffs’ complaint arises from a sales transaction

in which defendant sold plaintiffs a 2004 Dynasty recreational

vehicle (“vehicle”), which was manufactured and warranted by

defendant. 

Although suit was filed in 2005, there has been no substantive

law and motion practice. A pretrial conference was held on

February 12, 2007 and a pretrial order was issued on March 21,

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2007. At the pretrial conference, plaintiffs requested and were

granted leave to file a motion to revive their claim pursuant to

the California Song-Beverly Act. That motion is now pending before

the court. 

I.

BACKGROUND

A. Relevant Factual Allegations 

On September 29, 2003 plaintiffs entered into a sales contract

with DeMartini’s RV Sales (seller) for the purchase of a

recreational vehicle. The contract was executed in Grass Valley,

California, for a total price of $356,416.00. The contract

provided that “seller agrees to deliver the vehicle to you on the

date this contract is signed by Seller and you.” See Contract, Ex.

A of Tara Carlson Decl. Plaintiffs made a down payment of

$145,000.000 to seller in California on September 30, 2003. Also

on September 30, plaintiffs and the seller signed a warranty

registration form which documented that plaintiffs had inspected

and accepted the vehicle. See Warranty Registration Form, Ex. D

of Carlson Decl. Plaintiffs allege that on that day they agreed

to return on October 7, 2003 to have the vehicle transported out

of state for delivery. Carlson Decl. ¶ 7. Defendant issued a

limited express warranty and started the warranty on September 30,

2004 at 675 miles in Grass Valley. Defendant’s internal records

reflect the “customer purchase date” as September 30, 2003. Owner

Information Sheet, Ex. A of Baker Decl. 

On October 7, 2003, plaintiff Steve Carlson returned to the

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seller’s lot to ride with the seller to Nevada to consummate the

out of state delivery. Plaintiffs aver that the purpose of the out

of state delivery was to forego paying California sales tax. 

Defendant points out that plaintiffs signed two documents

required by the California Board of Equalization (“BOE”) where in

they certified that the vehicle was to be delivered to them in

Nevada. See Exs. B & C of DeMartini Decl. 

B. Procedural History 

Plaintiffs filed suit on January 27, 2005 alleging violations

of the Song-Beverly Consumer Warrant Act and the Magnuson-Moss

Federal Trade Commission Act. There was no law and motion practice

in this case. Trial is set for August 7, 2007.

On January 4, 2006 the California Court of Appeal, Second

Appellate District issued an order in Davis v. Newmar, 136 Cal.

App. 4th 275 (2006). Plaintiffs read this case as stating that for

purposes of the Song-Beverly Act, title to a vehicle passes upon

delivery. Plaintiffs believed themselves bound by the Davis

decision and voluntarily dismissed the Song-Beverly claim on

October 5, 2006. Plaintiffs aver, and defendant does not dispute,

that discovery was completed prior to plaintiffs dismissing the

Song-Beverly claim. In other words, discovery was conducted while

the Song-Beverly claim was still part of the case. 

On January 17, 2007 the United States District Court for the

Central District of California issued a decision in Gusse v. Damon

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 On February 14, 2007, the same judge who issued the 1

decision in Gusse, issued a decision in Gaynor v. Western

Recreational Vehicles Inc., 473 F. Supp. 2d 1060 (C.D. Cal. 2007).

The facts and holding are, in essence, identical to those at issue

Gusse. 

It is worth noting at the outset that plaintiffs fail to 2

set forth any legal basis to bring the pending motion. Neither the

Federal Rules nor case law provide for “motions to revive” and

accordingly, the procedural position of this motion is not clear.

In many respects, the motion could be construed as a motion to

amend under Rule 16: a pretrial order has issued and plaintiffs are

attempting to amend their complaint to add a claim. That said,

neither party has briefed the issue of what standard, if any, the

court should apply in adjudicating this motion. Given that

defendant does not challenge plaintiffs’ procedural position, the

court will proceed to adjudicate the dispute as framed by the

parties, namely, whether the sale transpired in California or

Nevada, and thus whether plaintiffs can bring a claim under

California’s Song-Beverly Act. 

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Corporation, 470 F. Supp. 2d 1110 (C.D. Cal. 2007). Plaintiffs 1

assert that the Gusse decision suggested that plaintiffs in fact

could state a claim under the Song-Beverly Act. Accordingly,

plaintiffs seek permission to “revive” this claim prior to trial. 

II.

ANALYSIS2

A. Applicable Law

 The Song-Beverly Consumer Warranty Act (“Song-Beverly Act”)

applies to warranties given for many types of consumer goods in

addition to automobiles and is often referred to as California's

“lemon law.” Cal. Civ. Code § 1794, et seq. It also regulates

express warranties, including service contracts, covering consumer

goods. Cal. Civ. Code § 1794, et seq. See also National R.V., Inc.

v. Foreman, 34 Cal. App. 4th 1072, 1077 (1995) (“Enacted in 1970

to improve the lot of consumers who purchase defective products,

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the Act contains substantive regulations of warranty terms,

disclosure requirements and strengthened consumer remedies.”)

Application of the Song-Beverly Act is expressly limited to

goods sold in California. See Cal. Civ. Code §§ 1792, 1792.1,

1792.2, 1793.3, 1793.6. See also Cummins, Inc. v. Superior Ct.,

36 Cal.4th 478(2005) (Song-Beverly Act did not apply to motorhome

sold in Idaho and subsequently brought into California); Davis v.

Newmar Corp., 136 Cal. App.4th 275, 278(2006) (Song-Beverly Act did

not apply to sale of motorhome negotiated in California where

contract required delivery in Arizona); Cal. State Elecs. Ass'n v.

Zeos Int'l Ltd., 41 Cal. App.4th 1270, 1278 (1996) (Song-Beverly

Act did not apply to goods shipped from seller in Minnesota to

buyer in California). 

Under the Act, “sale” means “(1) the passing of title from the

seller to the buyer for a price, or (2) a consignment for sale.”

Cal. Civ. Code § 1791(n). The California Commercial Code governs

how to interpret when title passes under the Song-Beverly Act. See

Zeos Internat. Ltd., 41 Cal. App. 4th at 1276. 

The California Commercial Code provides that:

Unless otherwise explicitly agreed title passes to the

buyer at the time and place at which the seller

completes his performance with reference to the physical

delivery of the goods ....

(a) If the contract requires or authorizes the seller to

send the goods to the buyer but does not require him to

deliver them at destination, title passes to the buyer

at the time and place of shipment; but

(b) If the contract requires delivery at destination,

title passes on tender there.

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Cal. Com. Code § 2401(2). “Thus, when the parties agree to

or contemplate shipment by the seller, title passes to the buyer

upon that shipment, unless the agreement specifically requires the

seller to make delivery at the destination.” Zeos Internat. Ltd.,

41 Cal. App. 4th at 1277. Shipment contracts are the presumptive

form in California. Wilson v. Brawn of California, Inc., 132 Cal.

App. 4th 549, 556 (2005); Zeos, 41 Cal. App. 4th at 1277.

B. Whether the Title Transferred in California or Nevada

The dispositive issue in the case at bar is whether title

passed in California, as plaintiffs argue, or in Nevada, as

defendant argues. For the reasons discussed herein, the court

finds that title passed in California and therefore, plaintiffs may

assert a claim under the Song-Beverly Act. 

Analysis is guided by two cases, Davis v. Newmar, 136 Cal.

App. 4th 275(2006), and Gusse v. Damon Corp., 470 F. Supp. 2d 1110

(C.D. Cal. 2007). In Davis, the Court of Appeal for the Second

District held that for purposes of the Song-Beverly Act, title

passed upon delivery. The buyer had purchased the motorhome in

California and it was delivered to Nevada. However, unlike the

case at bar, one of the terms of the sales contract was that the

motorhome be delivered to the buyer in Nevada. 136 Cal. App 4th

at 276. 

In Gusse, the Central District was faced with facts that are

virtually identical to the facts in the case at bar. Specifically,

the sales contract was executed in California and, like the

contract in the case at bar, provided that “seller agrees to

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deliver the vehicle to you on the date this contract is signed by

Seller and you.” Gusse, 470 F. Supp. at 1112. Also, in Gusse, as

here, the parties executed two DMV forms which provided that the

motorhome would be delivered out of state. Like plaintiffs here,

the plaintiffs in Gusse were attempting to avoid paying California

sales tax. Several days after the sales contract was signed, the

plaintiffs in Gusse directed a third party to drive the motorhome

to Arizona.

The Central District reasoned that since the sales contract

contained no provision promising out of state delivery, the

contract should be viewed as a “shipment contract”: 

The Court therefore finds that the contract is one which

required or authorized La Mesa RV to transport the

Motorhome, but did not require delivery at the

destination. Accordingly, title passed to Gusse at the

time and place of shipment. 

Gusse, 470 F. Supp. 2d at 1114. 

This court is bound by neither decision, however, the

reasoning of the Central District’s decision is persuasive and the

facts are analogous to the facts in the case at bar. Here, it is

undisputed that the contract was executed in California and that

the contract provided that “seller agrees to deliver the vehicle

to you on the date this contract is signed by the Seller and you.”

Ex. A of Carlson Decl. The contract was signed on September 29,

2003 and plaintiffs made a down payment of $145,000.00 on September

30, 2003. Also, as in Gusse, there were other documents which

established that the vehicle was sold on September 29 and title

passed at that time. For example, the Bill of Sale specifically

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lists the sale date as “9/29/03.” Ex. C, Carlson Decl. Similarly,

on September 30, 2003, plaintiffs signed a Monaco Motorized

Warranty Registration form which documented that they had inspected

and accepted the vehicle. The form also listed the retail delivery

date as September 30, 2003. Ex. D, Carlson Decl. Even by

defendant’s own records, the sale of the motorhome transpired on

September 30, 2003. See Ex. A Baker Decl. 

Under the California Commercial Code, this contract is a

shipment contract as it “requires or authorizes the seller to send

the goods to the buyer but does not require him to deliver them at

destination,” accordingly, “title passes to the buyer at the time

and place of shipment . . .” Cal. Com. Code § 2401(2). See also

Zeos, 41 Cal. App. 4th at 1278 (Song-Beverly Act did not apply to

goods shipped by Minnesota retailer to buyer in California because

title passed in Minnesota upon shipment). 

Just as in Gusse, here, the sale agreement was signed in

California, even though it is also clear that the parties intended

for the motorhome to be transported to Nevada so as to avoid

California sales tax. “The fact that the parties may have agreed

to transport the motorhome to [Nevada] for tax purposes does not

. . . necessarily create a delivery contract.” Gusse, at 1114.

Here, as in Gusse, the contract does not provide for delivery to

a specific location and does not require that the vehicle be

accepted in Nevada. To the contrary, plaintiffs accepted and

signed for the vehicle in California. 

These facts also make the case at bar distinguishable from the

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facts in Davis. In Davis, the contract specifically provided for

delivery at a predesignated location. Accordingly, the contract

in Davis was construed as a “delivery contract.” See Davis, 136

Cal. App. 4th at 276. Here, delivery in Nevada was not a contract

term. See also Gusse, at 1114 n. 5. (distinguishing Davis for the

same reasons).

Defendant in the case at bar raises the same argument raised

by the defendant in Gusse, namely, that plaintiffs’ avoiding

California Sales tax is evidence that the sale did not take place

in California. In other words, defendant maintains that plaintiffs

want the benefits of California law without having to pay

California taxes. The Gusse court squarely addressed this very

argument: 

The flaw in [defendant’s] argument is that protection

under the Song-Beverly Act and exemption from California

sales tax are not mutually exclusive. The Song-Beverly

Act requires that title to the goods pass in California

. . .However, a sale is exempt from sales tax if the

contract of sale requires the goods to be shipped to a

point not in California, and the goods are actually

shipped out of the state . . . As used in Section 6396

of the Tax and Revenue Code, “ ‘delivery’ is not

synonymous with ‘passage of title’ to the goods

(although the two may occur at the same time). Rather,

it is a term of art denoting the point at which

ownership is transferred, and the goods are no longer

property of the seller.” . . . Thus, a consumer good

that is sold and shipped from California to another

state pursuant to a shipment contract is “sold in

California” for purposes of the Song-Beverly Act, but is

exempt from California sales tax.

Gusse, at 1115 (internal citations omitted). As the Gusse

court explains, this situation must be very common as internet

sales increase: 

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For example, imagine a buyer who orders a box of widgets

from a California retailer, to be shipped to an address

in Arizona. The retailer delivers the widgets to its

parcel carrier of choice, who in turn ships the widgets

to the buyer in Arizona. Title to the widgets would

pass in California upon shipment, and the Song-Beverly

Act would apply. See Cal. Com. Code § 2401(2)(a); cf.

Zeos, 41 Cal. App.4th at 1278. However, because the

retailer delivered the widgets to a carrier for shipment

to Arizona as required by the contract, and the widgets

were actually delivered in Arizona, the sale is exempt

from California sales tax.

Gusse, at 1115 n. 7. The reasoning of the Gusse decision applies

with equal force here. 

In the case at bar, defendant fails to present a compelling

reason as to why plaintiffs should not be entitled to revive their

claim under the Song-Beverly Act. The contract at issue was

clearly a shipment contract and title passed at the time the

contract was signed. Accordingly, plaintiffs may raise a claim

under California’s Song-Beverly Act. 

Defendant’s sole argument is that plaintiffs should not be

entitled to obtain the benefit of tax exemption and the benefits

of the Song-Beverly Act. This argument, while compelling, is

legally unsound. Defendant argues that Gusse was wrongly decided

but fails to cite any case law in support of its position. 

Defendant does not argue that it will be prejudiced by the

revival of plaintiffs’ Song-Beverly Act. Plaintiffs aver, and

defendant does not dispute, that discovery was conducted while the

Song-Beverly claim was part of the suit and accordingly, defendant

will not be prejudiced or harmed by having the claim reinstated at

this point in time.

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For these reasons, the court orders as follows: 

1. Plaintiffs’ Motion to Revive the Song-Beverly Claim is

GRANTED.

IT IS SO ORDERED. 

DATED: May 8, 2007.

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