Title: Gavaldon v. DaimlerChrysler
Citation: N/A
Docket Number: S104477
State: California
Issuer: California Supreme Court
Date: May 27, 2004

Filed 5/27/04 
 
 
 
IN THE SUPREME COURT OF CALIFORNIA 
 
 
 
ROSEMARIE GAVALDON et al., 
) 
 
 
) 
 
Plaintiff and Appellant, 
) 
S104477 
 
 
) 
 
v. 
) 
Ct.App. 4/3 
 
 
) 
Nos. G026626, G027036 
DAIMLERCHRYSLER CORPORATION, ) 
 
 
) 
Orange County 
 
Defendant and Appellant. 
) 
Super. Ct. No. 785866 
___________________________________ ) 
 
 
 
The Song-Beverly Consumer Warranty Act (hereafter sometimes the Act or 
the Song-Beverly Act), Civil Code section 1791 et seq.,1 provides, in section 
1793.2, subdivision (d)(2), 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 item replaced, or may return the item and 
obtain restitution for its cost (hereafter sometimes the replacement/restitution 
remedy).  In the present case, the trial court found that plaintiff Rosemarie 
Gavaldon’s Dodge Caravan minivan was substantially impaired because of a 
defective transmission that defendant DaimlerChrysler Corporation and its 
representatives (hereafter DaimlerChrysler) had been unable to repair after 
numerous attempts.  The court found that the defect arose after the expiration of 
                                             
 
1  
All statutory citations are to this code unless otherwise indicated. 
 
 
2
Gavaldon’s 3-year/36,000-mile warranty.  Nonetheless, the court concluded that 
Gavaldon was entitled to section 1792.3, subdivision (d)’s replacement/restitution 
remedy because the transmission defect was covered by Gavaldon’s 7-
year/70,000-mile service contract, and that, for purposes of the Song-Beverly Act, 
a service contract was a type of express warranty.  The trial court therefore 
awarded Gavaldon the purchase price of the vehicle, minus the value attributed to 
its past use (see § 1792.3, subd. (d)(2)(C)), for a total of $13,623.63, plus attorney 
fees provided under the Act.  The Court of Appeal disagreed and reversed the trial 
court’s award.  Gavaldon’s petition for review calls on us to decide whether a 
service contract is an express warranty within the meaning of the Act.  We 
conclude that it is not. 
 
Gavaldon also contends that even if a service contract is not an express 
warranty, section 1794, governing remedies available under the Act, authorizes the 
replacement/restitution remedy for breaches of service contracts.  As explained 
below, we conclude Gavaldon misreads the statute.  Gavaldon also contends that 
she may prevail on the theory that she properly revoked acceptance of the vehicle, 
and is therefore authorized to be reimbursed for the vehicle under section 1794, 
subdivision (b), which expressly incorporates various Commercial Code remedies 
into the Act.  We conclude the Court of Appeal is correct that she did not properly 
raise this issue below, and we will not consider it here.  We also conclude that 
Gavaldon did not properly raise in the Court of Appeal the issue of whether the 
judgment in her favor could be sustained on the theory that DaimlerChrysler’s 
breach of the service contract entitled her to damages based on the diminution in 
the value of the automobile. 
 
 
3
I.  STATEMENT OF FACTS 
 
The facts below are taken largely from the Court of Appeal opinion.  
Gavaldon bought her new Dodge Caravan minivan in June 1993. The vehicle 
came with DaimlerChrysler’s standard factory warranty under which the owner 
could choose either a 3-year/36,000-mile basic warranty (the 3/36 warranty) or a 
12-month/12,000-mile basic warranty plus a 7-year/70,000-mile power train 
coverage. Gavaldon stipulated, and the trial court found, that the 3/36 warranty 
applied.   
 
When Gavaldon purchased the minivan, she also purchased a service 
contract, issued by DaimlerChrysler, for an additional $890.  The service contract 
provided it was to “protect [the buyer] against major repair bills should a 
component covered by the Plan fail in normal use.”  The stated coverage was: 
“The plan will pay the total cost (parts and labor) less a $25 deductible per visit, to 
correct any of the following part failures, due to a defect in materials or 
workmanship, not covered by the vehicle limited warranties.”  Covered 
components included power train parts such as the engine and transmission.  The 
service contract advised the buyer that the vehicle might also be covered by a 
manufacturer’s limited warranty, that only vehicles covered by one of 
DaimlerChrysler’s standard limited warranties are eligible for the service contract, 
and that it did not cover “[r]epair or replacement of any component covered by the 
vehicle’s factory warranty or recall policies.”  It provided that coverage for repairs 
would not start until the vehicle limited warranties expired, and would end “7 
years after the factory warranty start date or when the vehicle has accumulated 
70,000 total miles of service (whichever occurs first).”  The service contract 
warned the buyer, “Important! The maximum reimbursable amount should a 
 
 
4
covered component fail will be the Total Cost of the Repairs Less the Deductible 
or, If Less, the Cash Value of the Vehicle!” 
 
After she had driven the minivan about 22,000 miles, Gavaldon began to 
notice the transmission was “slipping.”  Although she took the vehicle to the 
dealer for regular service at 25,854 miles, 30,868 miles and 34,467 miles, she 
made no mention of any transmission problems.   
 
At 39,361 miles, and again at 43,686 miles, Gavaldon took the minivan to 
the dealer for regular service and complained the transmission was shifting “hard”  
and getting stuck in gear.  On both occasions, the dealer investigated but found no 
problems.   
 
At 44,346 miles, the vehicle’s transmission became stuck in “limp-in 
mode” and was towed to the dealership.  In limp-in mode, the vehicle gets locked 
in second gear to protect the transmission from further damage while permitting 
the car to be driven at a reduced speed to a repair facility.  The transmission was 
removed, overhauled, and the torque converter replaced.  The repairs were 
covered by the service contract. 
 
At 47,901 miles, Gavaldon took the minivan to the dealer, complaining it 
was stalling at stops and surging as if running out of gas. The throttle position 
sensor, spark plug wires, and transmission controller were replaced. These repairs 
were covered by the emissions systems warranty. 
 
At 48,644 miles, the vehicle was towed to the dealer because of 
overheating. The water pump, water pump gasket, and a heater hose were replaced 
and the repairs were covered by the service contract. Although the dealer records 
made no mention of complaints about the transmission, Gavaldon testified the car 
was stuck in limp-in mode and she complained about the transmission. 
 
 
5
 
At 50,989 miles, Gavaldon brought the car in, complaining the transmission 
was slipping in and out of limp-in mode. The solenoid pack, which controls the 
transmission’s hydraulic fluid, was replaced, as were a throttle positioning sensor 
and wiring harness. 
 
At the same time in February 1997, Gavaldon wrote to the dealer, and then 
directly to DaimlerChrysler, complaining of the vehicle’s chronic transmission 
problems and asking that it be repurchased or replaced.  Her request was denied. 
 
At 54,922 miles, Gavaldon brought the car to the dealer complaining about 
the transmission’s hard shifting and slipping.  The dealer determined that the front 
and rear brakes were in disrepair, that they had been worked on by another repair 
shop, and that it could not authorize its service personnel to drive the vehicle 
without first repairing the brakes.  Gavaldon did not authorize that work.  The 
dealer was unable to verify or diagnose the transmission complaint. 
 
In July 1997, at 56,922 miles, the minivan again got stuck in limp-in mode 
and was towed to the dealer.  The transmission was completely replaced.  The 
service contract covered the cost of the repairs.  This new transmission was itself 
replaced at 57,589 miles under a parts warranty because it was leaking.   
 
Gavaldon testified that these measures did not solve her transmission 
problem, and she continued to experience hard shifting and slipping.  She did not 
present the minivan for further repairs.  In October 1997, she filed her complaint 
alleging DaimlerChrysler had breached its obligations under section 1793.2, 
subdivision (d), by failing to promptly replace or repurchase the minivan when it 
was unable to conform the vehicle to the applicable express warranties after a 
reasonable number of attempts.  She also alleged DaimlerChrysler breached the 
express warranty under the Act and common law.  Gavaldon alleged the vehicle 
was covered by the 3/36 warranty, a defect arose while that express warranty was 
 
 
6
still in effect, and DaimlerChrysler breached the express warranty by failing to 
remedy the defect.  At trial, Gavaldon was permitted to amend her complaint to 
allege breach of the service contract as well. 
 
A jury trial ended in a mistrial when the judge became ill.  A second trial, 
this time a bench trial, commenced.  Before it began, the trial court ruled the 
service contract was not an express warranty under the Song-Beverly Act. 
 
On August 17, 1999, the court issued a tentative ruling in favor of 
DaimlerChrysler.  It concluded the minivan’s transmission was defective, but that 
the defect arose after the applicable 3/36 warranty had expired.  It concluded the 
service contract was not an express warranty. Thus, the court stated, the “only 
remedy available to plaintiff[ ] is the repairs under the service agreement.”  A 
judgment for DaimlerChrysler was entered on August 24. 
 
On September 10, Gavaldon filed a notice of intention to move for a new 
trial.  At a hearing on September 14, the court noted that its August 17 ruling was 
only a tentative ruling and it had now reached a different conclusion about the 
nature of the service contract.  The court stated the August 24 judgment had been 
entered by mistake; the court had not intended that a final judgment be entered 
because it had not yet finished deciding the case; and vacated the August 24 
judgment. 
 
On September 15, the court issued a new tentative ruling in favor of 
Gavaldon.  In response to DaimlerChrysler’s request, the court issued a formal 
statement of decision on October 6, which included answers to questions posed by 
DaimlerChrysler.  The court concluded that the service contract constituted an 
express warranty, a conclusion it believed to be compelled by the holding in 
Reveles v. Toyota by the Bay (1997) 57 Cal.App.4th 1139 (Reveles).  Given that 
conclusion, and given the trial court’s finding that “plaintiffs suffered damages 
 
 
7
[from] having purchased an automobile that was substantially impaired,” the trial 
court ruled that Gavaldon was entitled to the replacement/restitution remedy set 
forth in section 1793.2, subdivision (d).  The court concluded that 
DaimlerChrysler was entitled to an offset for the use of the vehicle until the time 
Gavaldon first delivered it for correction, pursuant to section 1793.2, subdivision 
(c), which it determined to be at 44,388 miles, when the transmission first became 
stuck in limp-in mode.  Further, the trial court found that Gavaldon was entitled to 
costs, including attorney fees, but not to civil penalties.  In response to the 
question “whether [Gavaldon] would have the remedy under the Song-Beverly . . . 
Act if the service contract purchased at additional cost is not considered an express 
warranty under the [Act],” the trial court replied: “Not at the time this decision 
was brought.” 
 
A judgment awarding Gavaldon $13,612.63 (purchase price minus a 
deduction for actual use of the vehicle) was entered on November 5, 1999.  
DaimlerChrysler appealed the November 5 judgment.  A postjudgment order 
awarded Gavaldon $75,000 in attorney fees and costs.  DaimlerChrysler appealed 
that order as well and the two appeals were consolidated. 
 
The Court of Appeal reversed.  After reviewing the statutory language and 
legislative history of the Song-Beverly Act, it concluded that the service contract 
could not be considered an express warranty under the Act.  It further concluded 
that Reveles was distinguishable on various grounds.  It also rejected Gavaldon’s 
contention that the judgment could be upheld on the alternative ground that it was 
an appropriate award for breach of the service contract, holding that the trial court 
had rejected that theory and sufficient evidence supported the trial court’s ruling.  
The court rejected as not properly raised below Gavaldon’s further claim that she 
was entitled to the damages award under a provision of the Commercial Code 
 
 
8
because she had revoked acceptance of the vehicle.  It also reversed Gavaldon’s 
award of costs and attorney fees.  We granted review. 
II. 
DISCUSSION 
A. Is a Service Contract an Express Warranty Within the Meaning of 
the Song-Beverly Act? 
 
The Song-Beverly Act, in section 1793.2, subdivision (d)(2), provides in 
pertinent part that “[i]f the manufacturer or its representative in this state 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 . . . or promptly make restitution to the 
buyer . . . . However, the buyer shall be free to elect restitution in lieu of 
replacement, and in no event shall the buyer be required by the manufacturer to 
accept a replacement vehicle.”  Gavaldon argues that a service contract is an 
“express warranty” within the meaning of that section and the Song-Beverly Act 
generally, and therefore she is entitled to the replacement/restitution remedy, as 
the trial court concluded.  DaimlerChrysler contends that the Court of Appeal is 
correct in holding that a service contract is not an express warranty, and the 
judgment cannot be sustained.  We conclude that DaimlerChrysler is correct. 
 
DaimlerChrysler essentially advances two arguments as to why a service 
contract cannot be considered an express warranty: (1) a service contract, as 
defined by statute, does not fit the statutory definition of “express warranty”; and 
(2) aside from the definitions, the terms “service contract” and “express warranty” 
are used together in the statute in such a way as to make clear that they are 
mutually exclusive terms.  We find the second persuasive.  The legislative history 
of the Act provides additional support for DaimlerChrysler’s interpretation. 
 
 
9
1. The Definitions of “Express Warranty” and “Service Contract” 
 
An express warranty under the Song-Beverly Act is defined in section 
1791.2 in pertinent part as follows:  “(a) . . .  A written statement arising out of a 
sale to the consumer of a consumer good pursuant to which the manufacturer, 
distributor, or retailer undertakes to preserve or maintain the utility or performance 
of the consumer good or provide compensation if there is a failure in utility or 
performance; . . .  [¶]  . . .  [¶]  (b) It is not necessary to the creation of an express 
warranty that formal words such as ‘warrant’ or ‘guarantee’ be used, but if such 
words are used then an express warranty is created.  An affirmation merely of the 
value of the goods or a statement purporting to be merely an opinion or 
commendation of the goods does not create a warranty.  [¶]  (c) Statements or 
representations such as expressions of general policy concerning customer 
satisfaction which are not subject to any limitation do not create an express 
warranty.” 
 
Section 1791, subdivision (o) provides: “ ‘Service contract’ means a 
contract in writing to perform, for an additional cost, over a fixed period of time or 
for a specified duration, services relating to the maintenance, replacement, or 
repair of a consumer product, except that this term does not include a policy of 
automobile insurance, as defined in Section 116 of the Insurance Code.”  
 
DaimlerChrysler argues that an express warranty “arises out of the sale of a 
consumer good” (see § 1791.2, subd. (a)) because “it is a representation integrally 
included in the purchase price; a service contract does not because it offers 
additional performance purchased for ‘additional cost.’ ”  (See § 1791, subd. (o).)  
Moreover, it argues, section 1794.4 addresses the “sale of a service contract,” 
implying that a service contract is sold separately from the consumer good, and 
therefore cannot be said to “arise out of” the sale of the latter.  Gavaldon points 
 
 
10
out, however, that the purchase of her automobile and her service contract were 
part of the same transaction, concluded at the same time, and therefore the service 
contract would be reasonably understood to “arise out of” the sale of the 
automobile.  (See Reveles, supra, 57 Cal.App.4th at pp. 1155-1156.)   
 
We need not decide which party has the better argument.  As discussed 
below, another reason supports the conclusion that DaimlerChrysler’s position is 
correct. 
 
2. 
The Use of the Terms Together in the Statute 
 
The terms “service contract” and “express warranty” are used together in 
several sections of the Song-Beverly Act in such a way as to indicate, 
DaimlerChrysler argues, that the Legislature conceived of them as distinct entities.  
Section 1794.41, subdivision (a)(3), for example, provides: “The [service] contract 
is applicable only to items, costs, and time periods not covered by the express 
warranty.  However, a service contract may run concurrently with or overlap an 
express warranty if (A) the contract covers items or costs not covered by the 
express warranty or (B) the contract provides relief to the purchaser not available 
under the express warranty, such as automatic replacement of a product where the 
express warranty only provides for repair.”  (Italics added.) 
 
Section 1794.4, subdivision (a) provides that “Nothing in this chapter shall 
be construed to prevent the sale of a service contract to the buyer in addition to, or 
in lieu of, an express warranty if that contract fully and conspicuously discloses in 
simple and readily understood language the terms, conditions and exclusions of 
that contract . . . .”  (Italics added.)  And section 1794, subdivision (a) provides: 
“Any buyer of consumer goods who is damaged by a failure to comply with any 
obligation under this chapter or under an implied or express warranty or service 
 
 
11
contract may bring an action for the recovery of damages and other legal and 
equitable relief.”  (Italics added.) 
 
The above three statutes indicate that the Legislature not only conceived of 
service contracts as distinct from express warranties, but intended the two 
categories to be mutually exclusive.  Section 1794.41, subdivision (a)(3), does not 
permit a service contract to cover the same items as an express warranty.  Section 
1794.4 specifies that service contracts are sold in addition to or in lieu of express 
warranties.  And section 1794 refers to express warranties and service contracts in 
the alternative.  If express warranties and service contracts were intended to 
overlap, then these sections would have been phrased differently, by modifying 
the term “express warranty” to at least leave open the possibility of overlap.  For 
example, section 1794.4, subdivision (a) might have read:  “Nothing in this 
chapter shall be construed to prevent the sale of a service contract to the buyer in 
addition to, or in lieu of, an express warranty that is included in the original price 
of the consumer good if that contract fully and conspicuously discloses in simple 
and readily understood language the terms, conditions and exclusions that contract 
. . . .” Without such a modifier to the term “express warranty,” it is difficult to 
escape the inference that the Legislature considered service contracts to be 
categorically distinct from express warranties. 
 
The legislative history of the Song-Beverly Act supports this interpretation.  
As originally enacted, the Song-Beverly Act’s sole reference to service contracts 
was the provision in section 1794.4 allowing service contracts to be sold “in 
addition to or in lieu of” express warranties.  (Stats. 1970, ch. 1333, § 1, p. 2482.)  
The Act was amended in 1971 to, among other things, specify in section 1791, 
subdivision (a), that the term “consumer goods” with which the Act was 
concerned signified “new” goods.  (Stats. 1971, ch. 1523, § 2, p. 3001.)  At the 
 
 
12
same time, section 1795.5 was added to extend the Song-Beverly Act’s application 
to used consumer goods sold with express warranties.  It provided that, 
notwithstanding the definition of consumer goods as new goods, the obligation of 
a distributor or retail seller of used consumer goods in a sale in which an express 
warranty is given “shall be the same as that imposed on the manufacturer under 
this chapter,” with certain enumerated exceptions.  (Stats. 1971, ch. 523, § 17, 
p. 3008.) 
 
In response to concerns about the prospective enactment of section 1795.5 
from the Northern California Motorcar Dealers Association, Inc., Senator Song’s 
staff assured the association that the proposed remedies with respect to express 
warranties on used vehicles would not apply to used vehicles with service 
contracts.  That response is perhaps the clearest window we have into the 
Legislature’s reason for distinguishing between a service contract and an express 
warranty.  It stated: “You may be correct that the distinction between a warranty 
and a service contract is purely one of semantics, but such is often the most 
important kind.  I believe the words ‘guarantee’ and ‘warranty’ possess a meaning 
that ‘service contract’ does not share. . . . .  We think that an ‘as is’ sale, with or 
without a service contract, will better inform the public as to what they are 
actually buying than a sale accompanied by the express warranties presently used 
in the used car trade.”  (Richard Thomsen, Admin. Asst. to Sen. Song, Letter to 
Wallace O’Connell, Apr. 16, 1971, p. 2.)2 
                                             
 
2  
Although in subsequent years the Legislature enacted more protection for 
consumers who purchased service contracts, there is no indication from 
subsequent amendments or their legislative history that the Legislature ever sought 
to blur or abandon this distinction between service contracts and express 
warranties.  For example, in 1985, Assembly Bill No. 2285 amended section 
 
(Footnote continued on next page.) 
 
 
13
 
It is true that, functionally speaking, warranties and service contracts appear 
to have the same purpose  to guarantee the repair or replacement of certain 
products or parts of products for a specified period of time.  But, as the above 
passage suggests, the Legislature apparently conceived of an express warranty as 
being part of the purchase of a consumer product, and a representation of the 
fitness of that product that has particular meaning for consumers.  In contrast, it 
apparently thought of the purchase of a service contract as distinct from the 
purchase of the product, and not as a representation of fitness but only an 
agreement to provide repair services, a kind of insurance.  Hence, one difference 
between express warranties and service contracts is that the latter is generally 
purchased “for an additional cost.”3  (§ 1791, subd. (o).) 
                                                                                                                                      
 
 
(Footnote continued from previous page.) 
 
1794.4 and enacted section 1794.41 to add certain disclosure and cancellation 
requirements for motor vehicle service contracts.  Commenting on these changes, 
an analysis by the Department of Consumer Affairs, included in Governor 
Deukmejian’s enrolled bill file, demonstrates that service contracts and express 
warranties continued to be thought of separately:  “Existing law regulates implied 
and express warranties on consumer goods, including motor vehicles, sold in 
California.  Existing law does not specifically regulate service contracts on 
consumer goods, other than to require that all of the terms and conditions be 
disclosed in the contract.”  (Dept. of Consumer Affairs, Enrolled Bill Rep. on 
Assem. Bill No. 225 (Sept. 20, 1985) p. 1.) 
3  
We say “generally” because the phrase “for an additional cost” was not part 
of the original definition of “service contract,” and is set to be deleted from its 
future definition. When section 1791, subdivision (o) was originally enacted in 
1976, it did not contain the phrase “for an additional cost.”  (Stats. 1976, ch. 416, 
§ 1.5, p. 1068.)  That phrase was only added in 1998.  (Stats. 1998, ch. 196, § 2.)  
An amendment enacted in 2002, but not effective until 2008, deletes the phrase.  
(Stats. 2002, ch. 405, § 62.)  It is unclear from the legislative history why the 
phrase was added, and why it is to be deleted.  In light of these amendments, it 
may be the case that some instruments will be considered service contracts despite 
 
(Footnote continued on next page.) 
 
 
14
 
In arguing that express warranties and service contracts do indeed overlap, 
Gavaldon points to language in the definition of express warranty in section 
1791.2 stating that “[i]t is not necessary to the creation of an express warranty that 
formal words such as ‘warranty’ or ‘guarantee’ be used, but if such words are used 
then an express warranty is created.”  Therefore, a service contract that is 
denominated an “extended warranty,” as service contracts are sometimes called, 
will also be an express warranty under section 1791.2, and therefore subject to the 
replacement/restitution remedy. 
 
This argument does not assist Gavaldon.  As discussed above, the 
Legislature apparently believed that the terms “warrant” or “guarantee” had 
particular significance to consumers.  And because the Legislature generally 
conceived of service contracts and extended warranties as falling into distinct 
categories, it also provided that a manufacturer that confused those categories by 
labeling service contracts as warranties should assume the obligations imposed on 
manufacturers that issued express warranties.  DaimlerChrysler did not so label its 
service contract in the present case. 
 
Gavaldon also argues that sections 1794.4 and 1794.41 are antifraud 
provisions, designed to protect a consumer who pays for an express warranty, as 
part of the price of the vehicle or other consumer good, from paying extra for a 
service contract that partly provides the same coverage as the warranty.  Assuming 
                                                                                                                                      
 
 
(Footnote continued from previous page.) 
 
the fact that they were not purchased for an additional cost.  Nonetheless, the 
“additional cost” factor appears to be an important, if not infallible, means of 
distinguishing between express warranties that are an integral part of the purchase 
of a product, and service contracts that are not. 
 
 
15
she is correct, such purpose is nonetheless wholly consistent with the Legislature’s 
view that service contract and express warranty should be considered distinct 
entities. 
 
In sum, reading the various portions of the Act, together with relevant 
legislative history, it appears that the Legislature thought of service contracts and 
express warranties as mutually exclusive categories, except when the manufacturer 
chooses to use the terms “warrant” or “guarantee” in a service contract.   When, as 
here, the manufacturer has not used those terms in its service contract, the breach 
of its service contract does not make it subject to the replacement/restitution 
remedy reserved in section 1793.2, subdivision (d) for purchasers of motor 
vehicles sold with “express warranties.” 
3. The Reveles Case 
 
Gavaldon argues that the above conclusion conflicts with the Court of 
Appeal’s holding in Reveles, supra, 57 Cal.App.4th 1139.  The Court of Appeal in 
the present case usefully summarized Reveles:  “In that case, the plaintiff 
purchased a used vehicle from a dealership. The sale was ‘as is,’ i.e., without an 
express warranty, so he also purchased a ‘vehicle service agreement’ covering 
‘repair of mechanical failures’ of various parts for two years or 24,000 miles. Two 
months later, the front end of the car suddenly dropped, and the dealer’s mechanic 
told the plaintiff the vehicle had significant preexisting frame damage and could 
not be repaired.  Nonetheless, the dealer refused the plaintiff’s demand it replace 
the vehicle or refund his purchase price, insisting repairs would be made.  
([Reveles,] at p. 1145.) 
 
“The plaintiff sued the dealer for breach of contract, rescission and 
restitution, negligent and intentional misrepresentation, breach of the Consumers 
Legal Remedies Act (§ 1750 et seq.) and breach of the Song-Beverly Act.  After 
 
 
16
rejecting the plaintiff’s repeated offers to settle for $9,300, on the morning of trial 
the dealer announced it would settle for that amount.  The plaintiff settled but 
reserved his right to move for attorney fees and costs to which he argued he was 
entitled under various statutes, including the Song-Beverly Act.  The trial court 
eventually found the plaintiff was the prevailing party and awarded him $19,000 
in attorney fees, plus expert witness fees and costs.  (Reveles, supra, 57 
Cal.App.4th at pp. 1146-1148.)” 
 
The Court of Appeal affirmed the award, concluding in part that the 
plaintiff was the prevailing party under the Song-Beverly Act, and was therefore 
entitled to costs and attorney fees pursuant to section 1794, subdivision (d).  
(Reveles, supra, 57 Cal.App.4th at pp. 1149, 1158.)  In so deciding, the court had 
to address the argument that the Act’s remedies do not apply to used vehicles sold 
“as is.” As discussed ante, the Act generally applies to the purchase of “consumer 
goods” which are generally defined as being “new” goods.  (§  1791, subd. (a).)  
Notwithstanding that definition, section 1795.5 provides, as noted ante, that the 
Act also applies to “used consumer goods in a sale in which an express warranty is 
given.”  The plaintiff’s used car was sold “as is,” but he had purchased a service 
contract.  The court was faced with the issue of whether that service contract was 
an express warranty, in which case the used car purchaser would be afforded the 
Act’s protection under section 1795.5. 
 
In addressing the problem, the Reveles court reviewed the patchwork of 
relevant amendments to the Act.  As noted above, the Act as originally passed in 
1970 hardly mentioned service contracts, but subsequent amendments have 
increased protection for service contract purchasers.  Section 1796.5, added in 
1978, provides that any entity “which engages in the business of providing service 
or repair to new or used consumer goods has a duty to the purchaser to perform 
 
 
17
those services in a good and workmanlike manner.”  (Stats. 1978, ch. 991, § 13, p. 
3066.) 
 
Subdivision (b) of section 1794.4, added in 1988, states that “[e]xcept as 
otherwise expressly provided in the service contract, every service contract shall 
obligate the service contract seller to provide to the buyer of the product all of the 
services and functional parts that may be necessary to maintain proper operation of 
the entire product under normal operation and service for the duration of the 
service contract and without additional charge.”  (Stats. 1988, ch. 581, § 2, 
p. 2136, as amended by Stats. 1993, ch. 1265, § 13, pp. 7422-7423, italics added.)  
Additionally, section 1794.4, subdivision (c), added at the same time, requires the 
service contract to contain substantial information, including a “step-by-step 
explanation of the procedure which the buyer should follow in order to obtain 
performance of any obligation under the service contract . . . .”  (See § 1794.4, 
subd. (c)(5); Stats. 1988, ch. 581, § 2, p. 2137.)  Subdivision (d) was also added to 
section 1794.4, providing: “Subdivisions (b) and (c) of this section are applicable 
to service contracts on new or used home appliances and home electronic products 
entered into on or after July 1, 1989.  They are applicable to service contracts on 
all other new or used products entered into on and after July 1, 1991.”  (Stats. 
1988, ch. 581, § 2, p. 2137, as amended by Stats. 1990, ch. 127, § 1, p. 1141, 
italics added.) 
 
Section 1794 was added in 1982, enumerating the remedies available to a 
consumer for breach of the Act.  It states in part:  “Any buyer of consumer goods 
who is damaged by a failure to comply with any obligation under this chapter or 
under an implied or express warranty or service contract may bring an action for 
the recovery of damages and other legal and equitable relief.”  (§ 1794, subd. (a); 
 
 
18
Stats. 1982, ch. 385, § 2, p. 1716, as amended by Stats. 1987, ch. 1280, § 4, p. 
4562, italics added.) 
 
The Reveles court therefore confronted an apparent statutory anomaly, in 
which, under sections 1794.4 and 1796.5, buyers of any service contract, for either 
a new or used good, were entitled to the proper enforcement of the contract as well 
as various statutory protections, but the remedies provided under the Act, in 
sections 1794, and 1795.5, seemed not to include remedies for breaches of service 
contracts for used goods. 
 
The Reveles court reasoned that “[i]f ‘express warranty’ under section 
1795.5 is interpreted to exclude the vehicle service agreement, Reveles has no 
Song-Beverly Act remedy for [the dealership’s] breach of sections 1794.4, 
subdivisions (b) and (d) and 1796.5, and they would thus be rendered 
meaningless.”  (Reveles, supra, 57 Cal.App.4th at p. 1157.)  But the fact that 
equating “express warranty” and “service contract” would solve an apparent 
statutory anomaly does not free us to so interpret the statute, when such 
interpretation would be at variance with the statutory language and the legislative 
history reviewed above.  Although we will not interpret a statute literally if it leads 
to an absurd result, we cannot say that the statute’s failure to explicitly provide a 
remedy under the Act for breaches of service contracts on used vehicles is an 
absurd result.  We need not decide whether the result in Reveles  that attorney 
fees under the Act may be awarded for breach of a service contract on a used 
vehicle  is correct under a different rationale.  But we disapprove of its 
conclusion that a service contract is a type of express warranty under the Song-
Beverly Act.   
 
For all the above reasons, we conclude that the service contract in the 
present case, which was sold for an additional cost and which does not use the 
 
 
19
words “warrant” or “guarantee,” is not an express warranty for purposes of the 
Act. 
 
B.  Section 1794 Does Not Provide a Replacement/Restitution  
 
 Remedy for Breach of a Service Contract 
 
Gavaldon argues that even if we reject the argument that her service 
contract was an express warranty, section 1794, which concerns consumer 
remedies under the Song-Beverly Act, makes clear that the replacement/restitution 
remedy applies to a breach of a service contract as well as a breach of an express 
warranty.  We conclude that Gavaldon is incorrect. 
 
Section 1794 states in pertinent part that “(a) Any buyer of consumer goods 
who is damaged by a failure to comply with any obligation under this chapter or 
under an implied or express warranty or service contract may bring an action for 
the recovery of damages and other legal and equitable relief.  [¶]  (b) The measure 
of the buyer’s damages in an action under this section shall include the rights of 
replacement or  as set forth in subdivision (d) of Section 1793.2.” 
 
Gavaldon contends that subdivision (b) signifies that anyone injured under 
subdivision (a) may obtain the replacement/restitution remedy.  But the statute on 
its face does not so read.  The right to replacement or restitution is qualified by the 
phrase “as set forth in subdivision (d) of section 1793.2.”  It is most reasonable to 
assume that this qualification means that the remedy is subject to the provisions 
set forth in section 1793.2, subdivision (d) (section 1793.2(d)), otherwise the 
reference to section 1793.2(d) would be superfluous.  Gavaldon argues in effect 
that only some of the provisions of section 1793.2(d) apply, but not the provision 
stating that the replacement/restitution remedy is available only for breach of an 
express warranty.  Gavaldon advances no principled basis for incorporating into 
 
 
20
section 1794, subdivision (b) some of the provisions found in section 1793.2(d) 
but not others. 
 
Any ambiguity that might obscure this statutory language is dispelled by 
the relevant legislative history.  The current version of section 1794, subdivision 
(b) came into being in 1987, when Assembly Bill No. 1367 (1987-1988 Reg. 
Sess.) (Assembly Bill No. 1367) amended the section to include the current 
language providing that “[t]he measure of a buyer’s damages under this section 
shall include the rights of replacement or reimbursement as set forth in subdivision 
(d) of section 1793.2.”  (Stats. 1987, ch. 1280, § 4, p. 4562.)  An uncodified 
provision, section 2 of the enactment, states that “the amendment of subdivision 
(b) of Section 1794 of the Civil Code . . . does not constitute a change in, but is 
declaratory of, existing law.”  (Stats. 1987, ch. 1280, § 9, p. 4567.) 
 
The analysis by Senator Robbins, chairman of the Senate Insurance, Claims 
and Corporations Committee, states that before the amendment section 1794 did 
not “specifically mention that the buyer has the specific remedy of replacement of 
the product or restitution for the product.  However, section 1793.2 of the Civil 
Code provides a replacement or restitution remedy for the buyer under specified 
conditions. . . .  This bill was spawned when an automobile manufacturer in a 
court case argued (unsuccessfully) that the buyer can only sue for the remedy 
specifically enumerated in section 1794 of the Civil Code, which does not include 
replacement or restitution remedies.”  (Sen. Insurance, Claims and Corporations 
Committee, Analysis of Assem. Bill No. 1367, July 1, 1987.) 
 
If Assembly Bill No. 1367 had been intended to extend the 
replacement/restitution remedies to service contracts, that would have constituted 
a significant change in the law.  The uncodified section 9 of the 1987 enactment 
amending the Act and the legislative history recited above make clear that no such 
 
 
21
change was contemplated.  Rather, the amendment of section 1794, subdivision 
(b), was intended to foreclose the then-current argument that, because the 
replacement or restitution obligation imposed on manufacturers for violation of 
express warranties in section 1792.3(d) was not included in the remedies section 
of the Song-Beverly Act, section 1794, such remedy was not available to service 
contract consumers.  Accordingly, the legislative history confirms that the only 
reasonable reading of section 1794, subdivision (b), is that the 
replacement/restitution remedy applies only if the conditions of section 1793.2(d) 
are met. 
 
C. 
Alternative Theories of Recovery 
 
In addition to the replacement/restitution remedy discussed above, section 
1794 provides, in subdivision (b)(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.”  
Gavaldon claims that even if she is not entitled to restitution pursuant to section 
1793.2(d) or section 1794, subdivision (b), her $13,612.63 damages award is 
nonetheless justified as a remedy for revoking acceptance of her automobile, 
pursuant to Commercial Code section 2711.  
 
Commercial Code section 2608 provides the grounds on which a buyer can 
revoke acceptance of goods.  It states in pertinent part: “(1) The buyer may revoke 
his acceptance of a lot or commercial unit whose nonconformity substantially 
impairs its value to him if he has accepted it  [¶]  (a) On the reasonable assumption 
that its nonconformity would be cured and it has not been seasonably cured; or  [¶]  
(b) Without discovery of such nonconformity if his acceptance was reasonably 
induced either by the difficulty of discovery before acceptance or by the seller’s 
assurances.  [¶]  (2) Revocation of acceptance must occur within a reasonable time 
 
 
22
after the buyer discovers or should have discovered the ground for it and before 
any substantial change in condition of the goods which is not caused by their own 
defects.  It is not effective until the buyer notifies the seller of it.” 
 
As can be readily observed, revocation of acceptance requires more and 
different actions of the buyer than is required under section 1793.2(d).  Whereas 
revocation of acceptance must take place “within a reasonable time after the buyer 
discovers or should have discovered the ground for it (Comm. Code, § 2608, subd. 
(2)),” the replacement/restitution remedy under section 1793.2(d) only requires 
that the defect or defects be covered by an express warranty and that there be a 
failure to repair after a reasonable number of attempts.  Revocation of acceptance 
must be done before “any substantial change in condition of the goods” (Comm. 
Code, § 2608, subd. (2)), whereas section 1793.2(d) has no such requirement.  
Therefore, a conclusion that a buyer is entitled to a remedy under section 
1793.2(d) is not necessarily a conclusion that he or she is entitled to revoke 
acceptance of goods purchased and obtain the corresponding damages remedy. 
 
As the Court of Appeal concluded, the revocation of acceptance theory was 
not presented at trial.  Although Gavaldon’s attorney did briefly argue, during the 
reply portion of his closing argument at trial, that a revocation of acceptance 
theory would apply, Gavaldon did not plead revocation of acceptance, nor did she 
move to amend her pleading, and the presentation of that theory appears to have 
been nothing more than an afterthought.  We cannot say that Gavaldon properly 
raised the theory below, especially given the considerable difference between that 
theory and her main theory at trial, that she was entitled to a section 1793.2(d) 
replacement/restitution remedy.  She may not do so now on appeal.  (See Gibson 
Properties Co. v. City of Oakland (1938) 12 Cal.2d 291, 299-300 [plaintiff 
 
 
23
generally may not raise on appeal theory of damages different from theory at 
trial].) 
 
Gavaldon also argues her damages award may be justified by the 
diminution in value of the automobile as a result of DaimlerChrysler’s breach of 
the service contract by its failure to repair the automobile after a reasonable 
number of times.  Civil Code section 1794, subdivision (b)(2) provides that 
“[w]here the buyer has accepted the goods, Sections 2714 and 2715 of the 
Commercial Code shall apply, and the measure of damages shall include the cost 
of repairs necessary to make the goods conform.”  Commercial Code section 
2714, subdivision (2) provides as follows:  “The measure of damages for breach of 
warranty is the difference at the time and place of acceptance between the value of 
the goods accepted and the value they would have had if they had been as 
warranted, unless special circumstances show proximate damages of a different 
amount.”  Although DaimlerChrysler’s service contract limited remedies to the 
cost of repairs or replacement if less than the cost of repairs, Commercial Code 
section 2719, subdivision (2) provides that alternative remedies may be sought if 
the remedy provided by contract “fail[s] of its essential purpose.” 
 
Gavaldon raised the diminution of value issue late in the trial when it 
became apparent that the trial court was inclined to rule against her on the express 
warranty issue.  Gavaldon did not raise the diminution of value argument in the 
Court of Appeal, instead taking the position that breach of the service contract 
should yield a refund of the service contract price, a position she did not take at 
trial.  The Court of Appeal briefly referred to the diminution of value issue in 
dicta.  As a general rule, we address only issues that have been raised in the Court 
of Appeal.  (Cedar Sinai Medical Center v. Superior Court (1998) 18 Cal.4th 1, 
6.)  Although we sometimes depart from that rule, we decline to do so in this case, 
 
 
24
in which resolution of the issue depends upon a developed evidentiary record and 
the issue was a subsidiary one scarcely litigated at trial.  (Cf. ibid. [court addresses 
question not raised below of whether to recognize tort of intentional first party 
spoliation of evidence when it is “an issue of law that does not turn on the facts of 
this case”].) 
III. 
DISPOSITION 
 
The judgment of the Court of Appeal is affirmed. 
 
 
 
 
 
 
 
 
 
MORENO, J. 
 
WE CONCUR: GEORGE, C. J. 
 
KENNARD, J. 
 
BAXTER, J. 
 
WERDEGAR, J. 
 
CHIN, J. 
 
BROWN, J. 
 
 
25
See next page for addresses and telephone numbers for counsel who argued in Supreme Court. 
 
Name of Opinion Gavaldon v. DaimlerChrysler Corporation 
__________________________________________________________________________________ 
 
Unpublished Opinion 
Original Appeal 
Original Proceeding 
Review Granted XXX 95 Cal.App.4th 544 
Rehearing Granted 
__________________________________________________________________________________ 
 
Opinion No. S104477 
Date Filed: May 27, 2004 
__________________________________________________________________________________ 
 
Court: Superior 
County: Orange 
Judge: Leonard H. McBride* 
__________________________________________________________________________________ 
 
Attorneys for Appellant: 
 
Anderson & Anderson, Anderson Law Firm, Martin W. Anderson and Ivy Tsai for Plaintiffs and 
Appellants. 
 
Norman Taylor & Associates, Norman F. Taylor and Bret A. Shefter for Consumers for Auto Reliability 
and Safety as Amicus Curiae on behalf of Plaintiffs and Appellants. 
 
Kemnitzer, Anderson, Barron & Ogilvie, Bryan Kemnitzer, Alison A. Lawton; Rosner Law & Mansfield, 
Alan M. Mansfield and Lilys D. McCoy for Consumer Attorneys of California as Amicus Curiae on behalf 
of Plaintiffs and Appellants. 
 
__________________________________________________________________________________ 
 
Attorneys for Respondent: 
 
Horvitz & Levy, Lisa Perrochet, John A. Taylor, Jr., Jon B. Eisenberg; Even, Crandall, Wade, Lowe & 
Gates, Gates, O’Doherty, Gonter & Guy, Douglas D. Guy and Matthew M. Proudfoot for Defendant and 
Appellant. 
 
Manning, Leaver, Bruder & Berberich and Halbert B. Rasmussen for California Motor Car Dealers 
Association as Amicus Curiae on behalf of Defendant and Appellant. 
 
Bowman and Brooke, Brian Takahashi and Ronald G. Akasaka for The Alliance of Automobile 
Manufacturers as Amicus Curiae on behalf of Defendant and Appellant. 
 
Barger & Wolen, Steven H. Weinstein and Alena K. Hacopian for National Association of Independent 
Insurers as Amicus Curiae on behalf of Defendant and Appellant. 
 
 
*Retired judge of the Orange Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 
of the California Constitution. 
 
 
26
 
 
 
 
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 
 
John A. Taylor, Jr. 
Horvitz & Levy 
15760 Ventura Boulevard, 18th Floor 
Encino, CA  91436-3000 
(818) 995-0800