Court Opinion

ID: 6320275
Source: CourtListenerOpinion
Date Created: 2022-03-04 20:02:01.436718+00
Date Added: 2024-06-11T09:02:36.918637
License: Public Domain

Filed 3/4/22 Ron Blasco Real Estate v. FCA US CA4/2

                     NOT TO BE PUBLISHED IN OFFICIAL REPORTS
 California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
                                     or ordered published for purposes of rule 8.1115.

           IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                  FOURTH APPELLATE DISTRICT

                                                 DIVISION TWO

 RON BLASCO REAL ESTATE, INC. et
 al.,
                                                                         E072999
          Plaintiffs and Appellants,
                                                                         (Super.Ct.No. CIVDS1609641)
 v.
                                                                         OPINION
 FCA US, LLC,

          Defendant and Respondent.

        APPEAL from the Superior Court of San Bernardino County. Janet M. Frangie,

Judge. Affirmed.

        Knight Law Group, Steve B. Mikhov, Radomir R. Kirnos; Hackler Daghighian

Martino & Novak, Sepehr Daghighian, Erik K. Schmitt; Greines, Martin, Stein &

Richland, Cynthia E. Tobisman, and Gary J. Wax for Plaintiffs and Appellants.

        Horvitz & Levy, Andrea L. Russi, Lisa Perrochet, Curt Cutting; Hawkins Parnell

& Young, Barry R. Schirm, and Ryan K.C. Marden for Defendant and Respondent.

                                                             1
         Appellants Blasco Real Estate, Inc. and Ron Blasco (Blasco) sued FCA US, LLC

(Chrysler) for fraudulent concealment of problems with the Totally Integrated Power

Module (TIPM) component of the 2011 Dodge Durango that Blasco purchased in June

2011. He also brought a claim under the Song-Beverly Consumer Warranty Act (Song-

Beverly Act), Civil Code section 1790 et seq. (the “lemon law” statute) based on

Chrysler’s refusal to refund the purchase price when it became evident the car had

substantial defects. He sought compensatory damages, punitive damages, and a civil

penalty available under the Song-Beverly Act for willful refusal to refund the purchase

price.

         The trial judge, San Bernardino County Superior Court Judge Janet Frangie, ruled

Chrysler had conceded violating the Song-Beverly Act, and a jury found Chrysler liable

for fraudulent concealment and awarded Blasco the purchase price of the vehicle and a

civil penalty of twice the compensatory damage award. However, the trial judge granted

a nonsuit on Blasco’s request for punitive damages on the fraud claim, and that issue did

not go to the jury. The trial judge gave two reasons for her ruling—first, that there was

insufficient evidence of punishable conduct by an officer, director, or managing agent at

Chrysler and second, that awarding both the civil penalty under the Song-Beverly Act

and punitive damages on the fraudulent concealment claim would constitute an improper

double recovery.

         Blasco argues he was entitled to recover punitive damages based on Chrysler’s

fraudulent concealment. He identifies evidence that specific Chrysler employees who had

                                             2
knowledge of the defects were officers, directors, or managing agents of the company,

which he argues was sufficient to send the issue of punitive damages to the jury. He also

argues the severity of problems with the TIPM beginning in 2007 warrants the inference

that higher-ups knew of the problem when Blasco purchased his vehicle. He argues both

remedies were available because punitive damages would punish Chrysler for their

fraudulent concealment of the problems with the TIPM component, which induced him to

make the purchase in the first place, while the civil penalty punishes Chrysler’s willful

refusal to buy back the vehicle after it proved to have substantial problems. He contends

the two acts were distinct and subject to separate punishments.

       Chrysler defends the ruling on several grounds. First, they argue the trial judge

was correct to conclude no evidence supported finding any of its officers, directors, or

managing agents were responsible for the fraudulent concealment. Second, they attack

the evidence of the underlying tort. They argue they were not obligated to inform

consumers of the chance they would experience problems with the TIPM because they

believed they would be able to address any problems under the vehicle warranties. They

also argue Blasco offered no evidence anyone at Chrysler knew 2011 Durangos would

have TIPM problems because he relied on evidence Chrysler had previously recalled

different vehicle models due to flaws in a different version of the TIPM. They argue these

last two deficiencies in the evidence establish Blasco suffered no prejudice from the trial

                                             3
judge ruling because there was no ground for the jury’s fraudulent concealment verdict
                                                        1
and therefore no basis for awarding punitive damages.

       Finally, Chrysler argues the trial judge was right to conclude punitive damages

would be duplicative of the Song-Beverly Act civil penalty. They argue the Legislature

created a statutory scheme for awarding compensatory damages against a manufacturer

who sells a “lemon” to a consumer and determined willful conduct violating the act gives

rise to a maximum penalty of two times the amount of compensatory damages. They

argue a punitive damages award for failing to notify the car-buying public of a potential

defect would punish Chrysler a second time because the civil penalty already punished

them for failing to repair the defect.

       We conclude there was insufficient evidence that any managing agent of Chrysler

was involved in the decision not to disclose problems with the TIPM component and

affirm for that reason.

       1 Chrysler do not cross-appeal the jury’s fraudulent concealment verdict, which
ordinarily would prevent them from attacking the evidence supporting the verdict. They
argue Code of Civil Procedure section 906 allows them to do so as a means of
establishing Blasco suffered no prejudice from the punitive damages ruling because he
wasn’t entitled to any relief at all. We don’t reach the issue because we conclude the trial
judge correctly concluded there was insufficient evidence of corporate responsibility.

                                             4
                                              I

                                           FACTS

       A. Blasco’s 2011 Dodge Durango

       In June 2011, appellants Ron Blasco and his business, Blasco Real Estate, Inc.,

purchased a new 2011 Dodge Durango from Jeep Chrysler Dodge of Ontario, California
             2
for $42,802. Chrysler, who are respondents and manufactured the vehicle, issued a three-

year or 36,000-mile warranty and a five-year or 100,000-mile limited warranty. Blasco

financed the purchase, but had paid the vehicle off in full by the time of trial.

       In July 2011, less than a month after Blasco purchased the vehicle, Chrysler issued

a “service bulletin” to its dealers, alerting them to an electrical problem in the 2011

Dodge Durango. A service bulletin functions as an addendum to the service manual. The

bulletin reported the vehicles would sometimes fail to start and the remote keyless entry

system wouldn’t work. It prescribed a flash reprogramming of the wireless ignition node

(WIN) module with new software to correct these problems. Blasco’s expert witness said

he attributed the problems to an “unsteady power supply through the TIPM-7 to the

wireless ignition node.”

       The next month, in August 2011, Chrysler issued a second service bulletin about

TIPM failures in 2011 Dodge Durangos and several other vehicle models. The bulletin

reported “[t]he vehicle theft alarm intermittently sounds for no apparent reason,” and

“[m]ultiple attempts are required to start the vehicle before the vehicle will start.”

       2Blasco sued the dealer as well as Chrysler, but they were dismissed with
prejudice after a settlement.

                                              5
Chrysler recommended dealers “Flash reprogram the TIPM” to resolve the problems.

These service bulletins are not public documents, and Chrysler did not make them

available to purchasers like Blasco. Blasco testified the dealer never told him that

Chrysler had identified problems with the electrical system of the Durango when he

purchased the vehicle.

       Over the next two years, Blasco reported and sought service for multiple problems

with his vehicle’s electrical system. The warning lights on the dashboard came on,

including the check engine light. The hazard lights turned on for no reason a few times.

Chrysler was unable to verify that problem, and it stopped occurring. The spare remote

key failed to unlock the doors or start the vehicle. Later, the dashboard lights came on

again and the vehicle wouldn’t go any faster than 45 miles per hour. Though Chrysler

told him these problems were fixed after he presented the vehicle for service, Blasco said

his problems with the vehicle continued.

       Later Blasco brought his vehicle back to the dealer to report yet more serious

electrical failures. First, in September 2013, the vehicle wouldn’t start. Blasco would

press the start button, but the “engine would just start to crank and keep cranking and not

start.” Blasco said he took the car in for service after this problem happened two or three

times, but the problem persisted. Chrysler told him they had to order a part and asked him

to bring the car back later. To address the failure to start, the dealer ordered a new TIPM,

but had none in stock for an immediate fix. According to Blasco’s expert mechanic,

Thomas Lepper, Chrysler had a problem with TIPMs being on backorder because “there

                                             6
were so many failures, they couldn’t make them fast enough.” He said, “I saw a lot of the

Chrysler work on that, even to the point of them going through and seeing if they could

refurbish them. So they just had to do something, and the external relay was the patch.”

       A month later, Blasco took the car back in because it was exhibiting a new

problem. He would start the car, “step on the gas and it felt like it wanted to go and then

it would just stop. The entire engine would shut off.” This problem would occur while he

was driving the car. “It would be like at a stop sign, you step on the gas and it starts to go

and then it just stops.” The car continued to exhibit the crank and no start problem, which

he said happened about 50 times over the years he owned the vehicle. The dealer again

told Blasco they would have to order the part to complete a repair. No one told Blasco

Chrysler knew customers across the country were reporting the same “intermittent crank”

and “no start” defects or that Chrysler had issued a service bulletin on his vehicle

instructing its dealers how to bypass the TIPM to get the car running.

       Following Chrysler’s instructions, the dealer did perform a bypass to move the

fuel pump relay outside the TIPM. As Lepper testified, the fuel pump is a small electric

pump that sends gas from the gas tank over to the engine. The fuel pump receives

electricity from the fuel pump relay, which is a small switch located inside the TIPM.

When the fuel pump relay doesn’t work, the fuel pump won’t receive electricity, and the

engine will die or fail to start. Installing the fuel pump relay bypass involved installing a

new fuel pump relay on the outside of the TIPM unit with the goal of getting electricity

consistently to the fuel pump. Lepper explained Chrysler “identified the problem [was]

                                              7
the printed circuit boards inside the circuit board with the TIPM [were] overheating. They

realized that the current draw from that built-in fuel pump relay was causing that. So this

was developed to get that electrical load out of the TIPM and run it through a relay that’s

separate.”

       When Blasco picked up the vehicle after the dealer installed the fuel pump relay

bypass, they told him it was fixed. However, Chrysler’s engineers privately called the

bypass procedure a “MacGyver trick” and “a temporary work around to get cars back on

the road.” Blasco’s expert mechanic opined that the workaround was not an adequate

remedy. “I believe the problems with the TIPM and the unsteady power supply that it

provides to the vehicle has affected his safety of the vehicle, has affected his use of the

vehicle and will affect the value of his vehicle. I think the repairs that were done to this

vehicle were both unreasonable in what they were trying to do. They knew it wouldn’t

work. I think they were unreasonable because the amount of times they tried the same

thing.”

       Lepper testified that many of the problems with the electrical system traced to the

vehicle’s TIPM. He explained the factory fuel pump relay “overworks the circuit board,

overheats the circuit board, and causes either the engine to stall or not start. That then

compounds into other areas where that overheated circuit board won’t properly flow

electricity and affects windshield wipers, the alarm system, the hazard lights. Anything

that electrically that gets funneled through the TIPM can be affected by the problems

with it overheating.” He said he had seen the problem with the illumination of the brake,

                                              8
traction, and ABS lights in other vehicle models with TIPMs. He explained, “what’s

happening here is the fuel pump relay is overheating the circuit board and the power

won’t flow through. When you get an electrical item hot . . . you burn your fingers, but

that resistance sucks up a lot of electricity. There’s not enough power left to supply the

systems. . . . So when that happens it’s not transferring the power out, and these various

systems don’t have enough power to work and will shut down.” He said the same

problem caused the malfunctioning of the hazard lights, which was “a known problem on

TIPM vehicles.” “What’s happening there is we’re getting enough problems in the TIPM.

It’s overheating the [hazard light] relay and is turning on and holding itself on because of

that heat.” He testified the overheating also caused the problems Blasco experienced with

the remote key fob, the check engine light, the exhaust cam phasers, dashboard light

illumination, and limited acceleration. He said the failure to start was a problem which

went “[r]ight to the heart of TIPM problems,” which is why Chrysler responded by

ordering him a new TIPM, though the part was out of stock.

       Blasco continued to have problems with the vehicle after the dealer performed the

fuel pump relay bypass. Though they told him at the time that the problem was fixed, the

car continued to have trouble starting and continued to stall while being driven. He also

later reported problems with the key fob not working, the check engine light coming on,

the dashboard lights coming on. Blasco stopped driving the vehicle because the electrical

defects were never resolved, and he was concerned stalling could cause the car to crash.

He said at the time of trial the car was no longer in working condition.

                                              9
       B. Blasco’s Attempt to Get a Refund

       Concerned with the continued problems, with ensuring he had reliable

transportation, and with his safety, Blasco decided to call Chrysler’s customer service

number to report his vehicle was a lemon and request a refund. The agent who took his

call advised Blasco she would look into the matter and put him on hold. Blasco waited

for about 30 minutes, but he was disconnected and no one called him back.

       The next day, Blasco’s wife called the customer service line. She told the agent

they had spoken to an attorney who recommended calling Chrysler again to resolve the

issue before hiring counsel and filing a lawsuit. She reported the vehicle had “a lot of

problems” and asked Chrysler to refund them the purchase price. Blasco got on the phone

because the car was in his name. Chrysler’s agent told him the vehicle didn’t qualify for a

buyback and also said they couldn’t talk to him any more if he was working with an

attorney.

       Blasco then hired an attorney. He later learned there was a class action suit against

Chrysler, and he was a putative class member. In October 2015, he opted out of the class

because he didn’t think a settlement would make him whole. He said he had been a

member in other class actions and received minimal compensation. Blasco said he

understood Chrysler ultimately offered to settle with the class by offering an extended

warranty on the fuel pump relay and a lifetime warranty on the TIPM. He said he found

that inadequate because he had already purchased a lifetime warranty on the vehicle.

                                             10
       On March 4, 2016, five months after he had opted out, Chrysler sent Blasco a

letter offering to repurchase his vehicle for “the actual price paid or payable for that

vehicle, including any incidental and consequential expenses incurred,” in compliance

with the Song-Beverly Act. Blasco said he felt the offer was too little too late. By that

point, he had hired an attorney and learned his car model had multiple electrical problems

going back several years and that Chrysler knew about them. He said he felt cheated

because, “if they knew that they had all those problems, they should have either fixed

them or replaced the parts or do whatever they had to do to get the car so that it would

keep running.” Rather than accept their offer, Blasco filed this lawsuit in June 2016.

       Blasco still has the Durango, but it doesn’t run, and he bought another vehicle to

replace it.

       C. Chrysler’s Knowledge of the Problems with TIPMs

       A TIPM—which includes a circuit board—is essentially “a smart fuse box,” or

power “hub” for the vehicle. A TIPM processes power from a vehicle’s alternator and

battery and distributes it to the components that use power to function, like windshield

wipers, headlights, the fuel pump, and the ignition. A TIPM isn’t supposed to wear out or

be replaced; it’s a component meant to work for the life of the vehicle.

       According to Blasco’s expert mechanic, Thomas Lepper, problems with

Chrysler’s TIPMs have resulted in the malfunction of numerous electrical components of

their vehicles. He testified the biggest problem is with the fuel pump relay. “It overworks

the circuit board, overheats the circuit board, and causes either the engine to stall or not

                                              11
start. That then compounds into other areas where that overheated circuit board won’t

properly flow electricity and affects windshield wipers, the alarm system, the hazard

lights. Anything that electrically gets funneled through the TIPM can be affected by the

problems with it overheating.” As we’ve discussed, he testified that several of the

problems Blasco had with the Durango were caused by the TIPM. He also testified these

were problems Chrysler was having with earlier models of vehicles with TIPM modules.

       Before Blasco purchased his vehicle, Chrysler employees knew about problems

with its TIPM components and electrical systems in several other models of vehicles.

Lepper said Chrysler first started noticing problems with the TIPM component in 2007,

and in July 2007 there was a safety recall of the version of the TIPM installed in 2007

Wranglers and 2007 Nitros. Though the TIPM in use at that time had a slightly different

model number, Lepper testified it was substantially the same. The problems included the

same failure to start and stalling problems Blasco experienced with his later model

Durango. According to the expert mechanic, the problems were the same, and the

evidence showed Chrysler knew about the problems that would come to affect Blasco’s

vehicle. “[I]t shows the problem with the TIPM, the known problems with the TIPM, the

attempts to patch the TIPM, all these things occurred before Mr. Blasco even bought his

truck.”

       Lepper said he had reviewed internal Chrysler documents related to the problems

as well as documents related to a government investigation. He said Chrysler tried

different fixes over the years. When the recall issued, “they were trying to control the

                                             12
electrical load through the TIPM, such that it wouldn’t let the engine stall” by installing

“a new flash program to control that power flow.” However, Chrysler vehicles were still

stalling due to problems with power flow through the TIPM in 2009.

       In 2009, a group of Chrysler engineers discussed the problem by e-mail. One

engineer, Rick Peck, wrote, “How about you fix the TIPM since it is the root cause of the

failures?” Nazmi Sabi responded, “Yes there is a fix for the TIPM in 2011. But what I am

talking about is a field fix and the remaining of 2010 [model year].” Peck suggested

Sabi’s group “fix the TIPM for 2010 as a V2 rather [than] have me do it. Pull your

changes into 2010 and fix the issue.” Nazmi responded that kind of fix couldn’t be

accomplished for 2010 models, and reiterated that Peck’s group might be the right one to

design the fix because of their “expertise about relays and wire harnesses,” but

acknowledged “If we have to go to service for a field fix we will do so.”

       According to Blasco’s expert, Chrysler hadn’t found the root cause of the

problems by the time Blasco bought his vehicle, and they were still trying to find a way

to stop the malfunctions. First, they issued a service bulletin in July 2011, one month

after Blasco purchased his vehicle, trying to address the problems with starting the engine

and the using key fob. That bulletin prescribed reprogramming the wireless ignition node.

Then in August 2011, they issued a second service bulletin recommending Chrysler

mechanics perform a fuel pump relay bypass, which involved taking “the fuel pump relay

module out, doubl[ing] its size, . . . and set[ting] it out where it will be cooler and not

                                              13
affect the circuit board of the TIPM.” As we discussed above, the dealer performed this

bypass fix on Blasco’s car in late 2013.

       By 2013, Chrysler engineers had come to believe heat generated in the TIPM was

causing a protective conformal coating made of silicone to melt and interfere with other

relays in the TIPM module. On August 21, 2013, a Chrysler engineer named Dennis

Gauthier e-mailed a group of Chrysler engineers and engineers from the company who

manufactured the TIPM module to explain the source of the problem. “According to

different studies, silicone in a gaseous state can cover the contacts in a relay, increase the

resistance, and subsequently reduce the life of the relay. This is why [the relay

manufacturer] states that the use of silicone is highly prohibited.” Lepper explained

Gauthier was telling them “the problem’s a lot greater than they think. He’s giving them a

quick overview of the silicone and how it off-gases it into silane and contaminating the

relays.” “We saw the physical effects of that discussion. We saw how that melted silicone

was in there contaminating that relay. It looked like a fried egg or a bunch of short

circuits within the contact points. And we saw the effect of heat damaging those contact

points.”

       By mid to late 2013, Chrysler had also figured out the fuel pump relay was the

component generating the heat which was melting the conformal coating and damaging

other relays. In May 2013, they began recommending their dealers perform the fuel pump

relay bypass to remove the source of heat from inside the TIPM. On September 27, 2013,

Christopher Pare, whose e-mail signature identifies him as a manager of body electronics,

                                              14
wrote to other Chrysler engineers, “There is an issue with TIPM failure on 2011

[Cherokees and Durangos] with the fuel pump relay. It was found that [the TIPM

manufacturer] was conformal coating the boards with a product containing silicon. The

higher current draw for the fuel pump is shown to cause failure over time. This same

conformal coating was used through March 2013. Service is running short on TIPMs, and

several techs are coming up with alternate, unapproved work around methods.” Lepper

said these documents “strengthen my opinion and backed it up. We see that they are

finding problems with the [con]formal coating. We find that there are problems, they

acknowledge the problems with the TIPM, and the fuel pump power is the central issue at

this time.”

       Though the dealer performed the fuel pump relay bypass on Blasco’s vehicle, it

continued to have the same problems, even up to the time the parties’ expert mechanics

inspected the vehicle in preparation for this litigation.

       Blasco put on an expert witness, Dr. Barbara Luna, to testify as an expert fraud

examiner. She spoke about Chrysler’s problems with the TIPM units and focused on the

extent to which officers, directors, and managing agents of Chrysler were aware of the

TIPM problems. She also testified about damages, including how a punitive damages

award would relate to the net worth of Chrysler.

       Dr. Luna identified Alan Amici as a high level management employee who was

aware of problems with the TIPM. She said she had reviewed e-mails produced by

Chrysler to determine whether upper management in the company understood the

                                              15
problems. She said, “[T]he corrective action process issue detail reports shows as early as

2007 a fellow by the name of Alan Amici . . . knew about a number of TIPM problems

and was on the team as [Chrysler] was testing TIPM issues.” She said, based on her

review of Chrysler’s e-mails, Amici knew about the TIPM problems beginning in 2007

and continuing through 2011. She concluded that “prior to [Blasco’s] purchase of the

Durango I would say that what I have information is this fellow Alan Amici” was aware

of the problems with the TIPM.

       Dr. Luna described how she reached her conclusions about the positions and

responsibility of Chrysler’s employees. She said she concluded Amici was a “high up

management person” by “looking at his position we looked at the e-mails to see what the

positions were.” She described her team’s process of reviewing Chrysler’s documents to

identify potential management personnel and explained that she supplemented that work

with searches on the business social media site LinkedIn. “Where we didn’t see the

positions, we then looked up people on LinkedIn to try to get their positions. And he did

have a LinkedIn page as well, and it showed that he, at the time of the—when he first

started in 2007, he was a director. And by 2009, I believe, he was a vice president.” In

Amici’s case, she didn’t identify in her testimony specific documents that led her to

conclude Amici had a management position or was aware of the problems with the

TIPM. In his briefs in this court, Blasco relies on Dr. Luna’s testimony rather than cite

documents identifying Amici’s knowledge or role.

                                            16
       In the end, Dr. Luna concluded Amici’s position of director put him in an “upper

management” position at Chrysler. She said Amici was “responsible for a group that was

investigating the TIPM and electrical issues.” He “supervis[ed] a number of the

engineering folks in the electrical area” and was copied on “corrective action” reports

along with other senior engineers. However, on cross-examination, she acknowledged

she didn’t know how many people he supervised. She said he was on “a whole big string

of people investigating the TIPM from, you could see on the various corrective action

issue process detail reports. I assumed he was supervising those people.” Asked what

Amici’s job duties were in 2011, she responded, “He would be supervising a number of

the engineering folks in the electrical area. I think I could get out the page from LinkedIn

if you want me to.” She said it was “[p]robably true” that Amici was not an officer of

Chrysler and that he was not a member of its board of directors. She refused to say

whether he was a “managing agent,” calling that a legal conclusion. She also

acknowledged she didn’t know who Amici reported to, by name or title.

       The only other “high level” Chrysler employee Dr. Luna identified was Matt

Liddane, who she identified as the vice president of vehicle concepts integration,

functional sciences and regulatory affairs/safety development and vice president of

assistance and components. She said that was his position as of November 20, 2013 but

acknowledged she didn’t know his title or role at the time Blasco purchased his vehicle.

The Chrysler document which mentions Liddane was an e-mail exchange from

November 20, 2013 in which a product investigator wrote to an engineer that he had been

                                             17
asked to put the TIPM malfunction issue “on the radar screen with Matt Liddane (in a

regular review we have with him) tomorrow. Since the awareness of this issue is going to

my VP in my organization . . . I just wanted to make sure your upper management chain

is aware that there is an issue being investigated.” The engineer responded that his team

“will be meeting on Friday with Bustamante and root cause team to review status.” He

copied David Bustamante on the e-mail and asked him to “see below escalation to

Liddane tomorrow.” We know nothing else about Liddane’s knowledge of the TIPM

issue or his role at Chrysler either from Dr. Luna or the documents included in the record

on appeal.

       D. Trial Court Rulings and Verdict

       Blasco and Blasco Real Estate, Inc., sued Chrysler, alleging Chrysler breached an

express warranty under the Song-Beverly Act (Civ. Code, § 1793.2, subd. (d)) by failing

to promptly repurchase or replace the vehicle after a reasonable number of repair

opportunities. Blasco also sued for fraudulent concealment, alleging Chrysler knowingly

concealed the TIPM modules in their vehicles were defective when he purchased his

Durango. Blasco sought compensatory damages, a civil penalty equal to twice his actual

damages, and punitive damages.

       In their opening statement, Chrysler’s attorney stated Chrysler remained willing to

repurchase Blasco’s vehicle. “FCA is here to stand behind its offer to repurchase the

Plaintiffs’ vehicle that was made in March of 2016.” Blasco moved for a partial directed

                                            18
verdict on his Song-Beverly Act claim based on what he construed as Chrysler’s

admission it was liable for failing to promptly repurchase his vehicle.

       The trial judge granted Blasco’s motion. She held the admission was a “strategic

decision” binding on Chrysler. She directed a partial verdict in favor of Blasco and later

instructed the jury that all six elements of the Song-Beverly Act claim were met,

including that Chrysler failed to “promptly replace or buy back the vehicle.” Chrysler has

not appealed that ruling.

       As a result, the only issues left for the jury to decide were (1) the amount of

compensatory damages, (2) whether Chrysler’s conduct was willful, justifying a civil

penalty under the Song-Beverly Act, (3) whether Chrysler fraudulently concealed the

problems with his vehicle’s TIPM, (4) whether the evidence of fraud was sufficient to

support an award of punitive damages, and if so, (5) the appropriate amount of punitive

damages.

       However, the trial judge took the punitive damages issues away from the jury. At

the close of Blasco’s evidence, Chrysler moved for a nonsuit on punitive damages. They

argued there was insufficient evidence that a managing agent authorized or ratified

Chrysler’s fraudulent conduct. The trial judge granted Chrysler’s motion. She held there

was sufficient evidence to send the fraudulent concealment claim to the jury but ruled the

evidence that Chrysler had acted with callous indifference and through the conduct of a

managing agent did not meet the clear and convincing standard required to impose

punitive damages.

                                             19
       The jury found Chrysler liable for fraudulent concealment. They also found

Chrysler had willfully failed to repurchase or replace Blasco’s vehicle. The jury awarded

Blasco $39,030 in compensatory damages and $78,060 in civil penalties under the Song-

Beverly Act. The court entered judgment against Chrysler on the jury’s verdict in the

amount of $121,107.

       Blasco moved for a new trial based on the trial judge’s punitive damages ruling.

The trial judge denied the motion, holding Blasco had not submitted sufficient evidence

to reach the jury on whether Chrysler’s managing agents had knowledge of the TIPM

problems and, in the alternative, that awarding punitive damages would improperly

duplicate Blasco’s recovery of civil penalties under the Song-Beverly Act.

       Blasco filed a timely notice of appeal.

                                              II

                                        ANALYSIS

       A. Multiple Punishments

       Blasco challenges the trial judge’s conclusion that allowing punitive damages on

top of the Song-Beverly Act civil penalties would constitute an improper double

recovery. Chrysler defends the order granting a nonsuit on that basis.

       The principle against double recovery is sound, but it isn’t implicated by this case.

“California courts have held that if a defendant is liable for a statutory penalty or multiple

damages under a statute, the award is punitive in nature, and the award penalizes

essentially the same conduct as an award of punitive damages. The plaintiff cannot

                                             20
recover punitive damages in addition to that recovery but must elect its remedy.”

(Fassberg Construction Co. v. Housing Authority of City of Los Angeles (2007) 152

Cal.App.4th 720, 759-760, italics added.) Here, the punitive damages and the civil

penalties punish different conduct. Specifically, Blasco alleged and proved Chrysler

engaged in fraudulent concealment to induce him to purchase their vehicle, and then later

acted willfully in violating his statutory rights to receive compensation under the lemon

law statute. “It’s not a double recovery to obtain damages from two separate allegations

of misconduct.” (Cieslikowski v. Fiat Chrysler (C.D.Cal., Dec. 21, 2020) 2020 WL

7868128, *3.)

       We therefore conclude the trial court erred by relying on this principle as a basis

for granting a nonsuit on punitive damages.

       B. Involvement of an Officer, Director, or Managing Agent

       Blasco argues the trial judge erred by granting a nonsuit on punitive damages

because there was sufficient evidence to allow the jury to find Chrysler’s managing

agents knew the company was fraudulently concealing material information about the

defects in the Durango Blasco purchased in June 2011, as well as that managing agents

authorized or ratified the concealment.

       The Legislature authorized the award of punitive damages (exemplary damages) in

Civil Code section 3294. “In an action for the breach of an obligation not arising from

contract, where it is proven by clear and convincing evidence that the defendant has been

guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may

                                             21
recover damages for the sake of example and by way of punishing the defendant.” (Civ.

Code, § 3294, subd. (a).) The Legislature defined “malice” as “conduct which is intended

by the defendant to cause injury to the plaintiff or despicable conduct which is carried on

by the defendant with a willful and conscious disregard of the rights or safety of others,”

“oppression” as “despicable conduct that subjects a person to cruel and unjust hardship in

conscious disregard of that person’s rights,” and “fraud” as “intentional

misrepresentation, deceit, or concealment of a material fact known to the defendant with

the intention on the part of the defendant of thereby depriving a person of property or

legal rights or otherwise causing injury.” (Civ. Code, § 3294, subd. (c)(1)-(3).)

       For the acts of an agent to expose an employer to punitive damages, the plaintiff

must prove the defendant “had advance knowledge of the unfitness of the employee and

employed him or her with a conscious disregard of the rights or safety of others or

authorized or ratified the wrongful conduct for which the damages are awarded or was

personally guilty of oppression, fraud or malice.” (Civ. Code, § 3294, subd. (b).) For a

corporate employer to be liable for the acts of an agent, “the advance knowledge and

conscious disregard, authorization, ratification or act of oppression, fraud, or malice must

be on the part of an officer, director, or managing agent of the corporation.” (Civ. Code,

§ 3294, subd. (b).)

       In specifying that the actor must be an officer, director, or managing agent, the

Legislature sought to “avoid imposing punitive damages on employers who were merely

negligent or reckless and to distinguish ordinary respondeat superior liability from

                                             22
corporate liability for punitive damages.” (White v. Ultramar, Inc. (1999) 21 Cal.4th 563,

572 (White).) The California Supreme Court interpreted these provisions as “limit[ing]

corporate punitive damage liability to those employees who exercise substantial

independent authority and judgment over decisions that ultimately determine corporate

policy.” (Id. at p. 573.) However, the “principal liability for punitive damages [is] not

depend[ent] on [the] employees’ managerial level.” (Id. at pp. 576-577.) Only

“supervisors who have broad discretionary powers and exercise substantial discretionary

authority in the corporation could be managing agents.” (Id. at p. 577.) As a result, “to

demonstrate that an employee is a true managing agent under section 3294, subdivision

(b), a plaintiff seeking punitive damages would have to show that the employee exercised

substantial discretionary authority over significant aspects of a corporation’s business.”

(Ibid., italics added.)

       As we’ve discussed, the trial judge determined the evidence was not sufficient to

tie Chrysler’s fraudulent concealment to a managing agent of the company. We review an

order granting a nonsuit de novo, standing in the shoes of the trial judge to determine

whether substantial evidence supported sending the issue to the jury. (Saunders v. Taylor

(1996) 42 Cal.App.4th 1538, 1541.) “‘A defendant is entitled to a nonsuit if the trial court

determines that, as a matter of law, the evidence presented by plaintiff is insufficient to

permit a jury to find in his favor.’ [Citation.] In determining the sufficiency of the

evidence, the trial court must not weigh the evidence or consider the credibility of the

witnesses. Instead, it must interpret all of the evidence most favorably to the plaintiff’s

                                              23
case and most strongly against the defendant, and must resolve all presumptions,

inferences, conflicts, and doubts in favor of the plaintiff. If the plaintiff’s claim is not

supported by substantial evidence, then the defendant is entitled to a judgment as a matter

of law, justifying the nonsuit.’” (Mejia v. Community Hospital of San Bernardino (2002)

99 Cal.App.4th 1448, 1458.) To convince us the evidence was sufficient to send the issue

of punitive damages to the jury in this case, Blasco leans heavily on the testimony of Dr.

Luna, his expert fraud examiner, to show Chrysler agents, Alan Amici and Matt Liddane,

were managing agents who were involved in concealing defects in the TIPM units.

       We agree with the trial judge that the evidence pertaining to Amici’s role at

Chrysler was not sufficient to establish he was a managing agent. Dr. Luna testified that

documents produced by Chrysler showed Amici was aware of problems with the TIPM

unit in 2007 and concluded that “prior to [Blasco’s] purchase of the Durango I would say

that what I have information is this fellow Alan Amici” was aware of the problems with

the TIPM. However, her evidence that Amici was a managing agent was lacking. She

refused to say he was a managing agent on the ground that was a legal conclusion. (Cf.

White, supra, 21 Cal.4th at p. 567 [the scope of a corporate employee’s discretion and

authority under the managing agent test is a question of fact].) And though she did

conclude he was a “high up management person” by looking at his position as listed in e-

mails and on LinkedIn, she gathered no real information about his actual job duties. Dr.

Luna didn’t identify in her testimony any specific documents that led her to conclude

Amici had substantial discretionary authority.

                                               24
       Blasco emphasizes Dr. Luna testified Amici was “responsible for a group that was

investigating the TIPM and electrical issues” and “supervis[ed] a number of the

engineering folks in the electrical area” and was copied on “corrective action” reports

along with other senior engineers. However, she acknowledged she didn’t know how

many people he supervised, saying only that he was on “a whole big string of people

investigating the TIPM” and had merely “assume[d] he was supervising those people.”

(Italics added.) She also concluded that in 2011 he was “supervising a number of the

engineering folks in the electrical area,” but offered no specific information about his

responsibilities, and instead offered to read from a printout from Amici’s LinkedIn

profile (in the end she didn’t). She also acknowledged Amici probably wasn’t an officer

of Chrysler, wasn’t a member of its board of directors, and she admitted she didn’t know

who Amici reported to, by name or title. We conclude, as the trial judge did, that her

testimony was insufficient to show Amici exercised any discretionary authority over

significant aspects of Chrysler’s business, much less substantial discretion over aspects of

the business related specifically to addressing the problems they were having with TIPM

modules. (White, supra, 21 Cal.4th at p. 577.)

       “The determination whether employees act in a managerial capacity does not

hinge solely on their level or position in the corporate hierarchy. [Citations.] ‘Rather, the

critical inquiry is the degree of discretion the employees possess in making decisions that

will ultimately determine corporate policy.’” (Hobbs v. Bateman Eichler, Hill Richards,

Inc. (1985) 164 Cal.App.3d 174, 193.) Dr. Luna’s testimony focused almost exclusively

                                             25
on Amici’s titles when he worked at Chrysler, and too little on his degree of discretion in

making corporate decisions. Dr. Luna said he was a “director” in 2007 and promoted to

vice president in 2009, but we know nothing of the scope of his responsibilities, we have

no indication that he exercised discretion in carrying out his job, and even the evidence

that he was involved in the project of addressing problems with the TIPM units is

underwhelming. We know only that he was copied on some e-mails and reports. Even

then, we have only Dr. Luna’s assurances, as the e-mails and reports in the appellate

record are not linked to him. The bottom line is Blasco did not provide sufficient

information about Amici to justify concluding he exercised substantial discretion in

setting Chrysler’s response to the TIPM issue and therefore warrant imposing punitive

damages on Chrysler.

       Though Dr. Luna also emphasized the role of Matt Liddane, who as a vice

president was informed of the ongoing TIPM problem in 2013, Dr. Luna’s testimony

about his role in the corporation’s decision-making was even less informative. One

document mentions the need to inform Liddane about the malfunction “to make sure your

upper management chain is aware that there is an issue being investigated.” However,

this occurred in 2103 and Dr. Luna provided no other information about Liddane’s

knowledge of the TIPM issue or his role at Chrysler. Such limited evidence is not

sufficient to tie a managing agent to the decision to keep the TIPM problems from the

public at the time Blasco purchased the vehicle or to show someone responsible at

Chrysler authorized or ratified the decision.

                                                26
       The contrast with the cases Blasco relies on is stark. In White, the corporate

employee, Salla, “[a]s the zone manager for Ultramar, . . . was responsible for managing

eight stores, including two stores in the San Diego area, and at least sixty-five employees.

The individual store managers reported to her, and Salla reported to department heads in

the corporation’s retail management department.” (White, supra, 21 Cal.4th at p. 577.)

Moreover, Salla’s superiors testified “they delegated most, if not all, of the responsibility

for running these stores to her.” (Ibid.) In Egan v. Mutual of Omaha Ins. Co. (1979) 24

Cal.3d 809, the corporate employees were insurance claims department managers. One of

them testified “he was manager of the Los Angeles claims department for Mutual, and in

that capacity had ultimate supervisory and decisional authority regarding the disposition

of all claims, like that of plaintiff, processed through the Los Angeles office.” (Id. at

p. 823.) No one in this case offered comparable testimony.

       The difference is even more marked in Mazik v. Geico General Ins. Co. (2019) 35

Cal.App.5th 455. There, the corporate employee was a regional liability administrator for

Geico with responsibility for the settlement of insurance claims in Orange County, Los

Angeles, San Bernardino, and Alaska. (Id. at p. 465.) The employee testified about his

own role and said he had approval authority over 100 claims adjusters for claims up to

$50,000, which required him to have about 18 to 20 meetings a day with claims adjusters

seeking his approval or direction for handling claims. (Id. at pp. 465-466.) Moreover, he

testified it was “an important part of his job . . . to establish settlement standards within

                                              27
his region” for the purpose of maintaining consistency in settlement valuations. (Id. at

p. 466.)

       The other cases Blasco cites are similar. In Hobbs v. Bateman Eichler, Hill

Richards, Inc., supra, 164 Cal.App.3d at p. 193, the corporate agent “testified that he was

the office manager and he signed himself as such on the Customer Option Agreement and

Information Form. . . . [He] stated that he supervised the trades being made for clients to

be certain no advantage was taken of them, that he supervised all 8,000 accounts in the

office, that semi-annually he checked to see if suitable securities were being purchased

for clients, that he was responsible for making sure the accounts were not being

‘churned,’ and that in general he was in charge of compliance in the Woodland Hills

office.” He also testified that he had authorized the specific purchases challenged in the

lawsuit after the fact despite knowing the customer hadn’t agreed to that kind of purchase

and said he would approve them again if presented with the same situation in the future.

(Id. at pp. 193-194.) In Major v. Western Home Ins. Co. (2009) 169 Cal.App.4th 1197,

1220-1221, the Court of Appeal held there was sufficient evidence an employee of an

insurance company was a managing agent where she managed 35 employees, oversaw

the claims operation, supervised lower ranking supervisors, trained adjusters, supervised

some files, authorized payment of benefits, and “made the decision to refuse to pay the

benefits ultimately awarded by the jury on the basis, later proven untrue, that the receipts

were illegible because they were faxed.” In Powerhouse Motorsports Group, Inc. v.

Yamaha Motor Corp., U.S.A. (2013) 221 Cal.App.4th 867, 886, the Court of Appeal

                                             28
upheld the jury’s finding that an employee was a managing agent where “[t]he evidence

established [he] was the ‘Regional Sales Manager for the Western Region’ which

included . . . between 140 and 240 dealerships. He managed a group of ‘district

managers’ and, as he testified, was ‘ultimately responsible for the total well-being of

Yamaha Motor Corporation Dealers.’ Further, evidence shows that [he] was directly

involved in the Powerhouse/MDK sale and was responsible for the decision to terminate

the dealership.” These cases show the kind of evidence required to establish a corporate

employee was acting as a managing agent, and Blasco simply failed to meet that mark.

       Blasco relies on Romo v. Ford Motor Co. (2002) 99 Cal.App.4th 1115, 1139,

certiorari granted and judgment vacated by Ford Motor Co. v. Romo (2003) 538 U.S.

1028, to argue we should conclude the evidence showing the information in Chrysler’s

possession together with the evidence about the structure of management decisionmaking

“permits an inference that the information in fact moved upward to a point where

corporate policy was formulated.” However, what was at issue in Romo was the entire

process of “design, production, and marketing of an automobile,” which involved the

entire organization in the acts that constituted malice—specifically, the decisions to

ignore the corporation’s own safety standards for vehicle roof strength, not to test the

roof strength prior to production, and to create the appearance of including the roll bar in

the roof structure. (Romo v. Ford, at pp. 1139-1140, 1144-1145.) When the company

later tested the vehicle, it turned out, unsurprisingly, to be unsafe. (Ibid.) A former Ford

executive testified that “in the ordinary course of business, the responsible executives

                                             29
within the light truck division would have known about the safety engineers’ conclusions

concerning the use of unreinforced fiberglass for passenger compartment panels. These

executives clearly had the power within the corporation to enforce or not enforce as

company policy the safety engineers’ findings.” (Id. at p. 1145.) That executive’s

testimony tied the malicious conduct directly to the corporation in a way that properly put

it on the hook for punitive damages despite the lack of evidence tying the malicious

conduct to a specific actor. In this case, the problem involved the operation of a module

in the vehicle and there was no testimony establishing that decisions about the problem

would make their way up the chain of command before the new vehicles went into

production. We conclude Blasco failed to “present evidence that ‘permits a clear and

convincing inference that within the corporate hierarchy authorized persons acted

despicably in “willful and conscious disregard of the rights or safety of others.”’” (Butte

Fire Cases (2018) 24 Cal.App.5th 1150, 1173, as mod., rehg. den.)

       Blasco also argues the jury should have been allowed to infer corporate knowledge

of the ongoing problems with the TIPM based on the “recall in 2007 regarding the same

TIPM model that was later used in Blasco’s vehicle.” While it is true that Blasco’s expert

mechanic testified the TIPM modules in the 2007 vehicles and the 2011 vehicles were

substantially the same, we don’t believe the jury could infer from the mandatory recall in

2007 that managing agents of the corporation knew the same issues persisted in 2011.

The reason is simple. The recall required action on Chrysler’s part to address the problem

they had identified, and the fix involved a software update designed to relieve the

                                             30
problem. Blasco’s expert mechanic testified that Chrysler tried “to control the electrical

load through the TIPM, such that it wouldn’t let the engine stall” by installing “a new

flash program to control that power flow,” but that problems with the TIPM continued to

plague Chrysler vehicles in 2009. Whether the fix simply failed is open to question, but

the fact that Chrysler undertook to repair the problem—absent evidence that they knew

the fix was a sham or that managing agents became aware the problem persisted despite

the repair—cuts the link required to impose punitive damages on the corporation. In other

words, though we agree with Blasco that “a reasonable jury could conclude that

Chrysler’s knowledge of a federal-government-triggered recall would rise to the top of

Chrysler’s corporate hierarchy,” we don’t agree a reasonable jury could conclude from

that fact alone that Chrysler’s knowledge of later problems with the same module had

risen to the top of the hierarchy as well.

       Blasco’s reliance on California Shipbuilding Corp. v. Industrial Acc. Commission

(1947) 31 Cal.2d 270, offers no further support. In that case, an employee “was burned

by electricity when the boom of a locomotive crane . . . came in contact with a high-

voltage electric line. (Id. at p. 272.) The employee sought compensatory damages but also

an increase of compensatory damages under the Labor Code section 4553 on the basis

that the maintenance of the unsafe work conditions was willful misconduct on the part of

an executive, managing officer, or general superintendent. (Id. at p. 271.) The Industrial

Accident Commission found the employee’s injury “was proximately caused by the

serious and wilful misconduct of the employer, consisting of a violation of” electrical

                                             31
safety orders “which forbids operation of equipment which can be brought within 6 feet

of high-voltage lines.” (Ibid.) The California Supreme Court held the evidence supported

the inference that managing agents were involved. (Id. at p. 274.) However, unlike in this

case, the dangerous conditions were open and obvious. High-voltage wires had hung

throughout the yard over a period of three and a half years. The employer had gradually

taken some of the wires down because employees were running into them too often, and

about a year before the most recent incident, “a similar accident involving the same crane

had happened at about the same place under similar conditions,” an accident that was

“known to the superintendent of transportation and to the foreman who dispatched the

crane to the road.” (Id. at p. 273.) Here Blasco failed to make the evidentiary connection

between the prior problems with the TIPM, which Chrysler management did know about,

and the later problems with the same unit.

       We also reject Blasco’s argument that the jury could infer corporate awareness of

the problems before Blasco purchased his vehicle from evidence that Chrysler’s

managing agents were aware of the TIPM problems in 2013 and chose not to disclose

them at that time. Blasco relies on Johnson v. Ford Motor Co. (2005) 35 Cal.4th 1191,

for the proposition that the evidence of later concealment could support the jury’s

inference that managing agents knew about the prior concealment or authorized or

ratified it. However, in Johnson, the California Supreme Court was concerned with the

distinct question whether evidence of conduct toward nonparties could justify a larger

punitive damages award for plaintiff because “‘such evidence may be relevant to the

                                             32
determination of the degree of reprehensibility of the defendant’s conduct.’” (Id. at

pp. 1202-1203.) In other words, if Blasco had established corporate involvement in the

fraudulent concealment before he purchased the vehicle, he could rely on the later

concealment to establish Chrysler had an ongoing corporate policy and practice of

concealing the problem to justify a larger punitive damages award, but he can’t use that

evidence of later concealment to establish corporate involvement in concealing the

problem at the earlier time.

                                            III

                                     DISPOSITION

       We affirm the judgment. Appellants shall pay costs on appeal.

       NOT TO BE PUBLISHED IN OFFICIAL REPORTS

                                                               SLOUGH
                                                                                           J.

We concur:

MILLER
                Acting P. J.

CODRINGTON
                          J.

                                            33