Court Opinion

ID: 4582504
Source: CourtListenerOpinion
Date Created: 2020-10-30 19:02:10.163538+00
Date Added: 2024-06-11T09:28:20.957485
License: Public Domain

Filed 10/30/20
                 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                 SECOND APPELLATE DISTRICT

                         DIVISION ONE

 LISA NIEDERMEIER,                      B293960

        Plaintiff and Respondent,       (Los Angeles County
                                        Super. Ct. No. BC638010)
        v.

 FCA US LLC,

        Defendant and Appellant.

      APPEAL from a judgment of the Superior Court of
Los Angeles County, Daniel S. Murphy, Judge. Affirmed as
modified.
      Gibson, Dunn & Crutcher, Thomas H. Dupree, Jr.,
Matt Gregory, Shaun Mathur; Clark Hill and David L. Brandon
for Defendant and Appellant.
      Knight Law Group, Steve Mikhov, Amy Morse; Hackler
Daghighian Martino & Novak, Sepehr Daghighian, Erik K.
Schmitt; Greines, Martin, Stein & Richland, Cynthia E.
Tobisman and Joseph V. Bui for Plaintiff and Respondent.
                 ____________________________
       Defendant FCA US LLC, an automobile manufacturer,1
appeals from a judgment in favor of plaintiff Lisa Niedermeier.
Plaintiff brought claims under the Song-Beverly Consumer
Warranty Act (Civ. Code,2 § 1790 et seq.) (the Act), commonly
known as the “lemon law.” (See Warren v. Kia Motors America,
Inc. (2018) 30 Cal.App.5th 24, 28.) The jury awarded plaintiff the
full purchase price of her defective vehicle, offset by mileage
accrued before she first delivered it for repair, plus incidental and
consequential damages and a civil penalty.
       Following the jury’s verdict, the trial court denied
defendant’s motion to reduce plaintiff’s damages by the $19,000
credit plaintiff received towards the purchase price of a new
vehicle when she traded in her defective vehicle to a GMC dealer.
The trial court ruled that reducing the damages here would
reward defendant for its delay in providing prompt restitution as
required under the Act. On appeal, defendant challenges that
ruling.
       As a matter of first impression, we hold that the Act’s
restitution remedy, set at “an amount equal to the actual price
paid or payable” for the vehicle (§ 1793.2, subd. (d)(2)(B)),
does not include amounts a plaintiff has already recovered by
trading in the vehicle at issue. The Legislature chose to call the
Act’s refund remedy “restitution,” indicating an intent to restore
a plaintiff to the financial position in which she would have been
had she not purchased the vehicle. Granting plaintiff a full

      1  Defendant was formerly known as Chrysler Group LLC.
It is a wholly owned subsidiary of FCA North America Holdings
LLC, which in turn is wholly owned by Fiat Chrysler
Automobiles N.V.
      2   Undesignated statutory citations are to the Civil Code.

                                     2
refund from defendant in addition to the proceeds of the trade-in
would put her in a better position than had she never purchased
the vehicle, a result inconsistent with “restitution.”
      Allowing plaintiff a full refund also would undercut other
parts of the Act. The Act contains extensive provisions requiring
manufacturers to label vehicles reacquired under the Act as
“Lemon Law Buybacks,” and to notify potential purchasers of the
reacquired vehicles of that designation as well as the vehicles’
history of deficiencies. These provisions apply only when the
manufacturer reacquires or assists another in reacquiring the
vehicle. Yet if a buyer could trade in a defective vehicle in
exchange for a reduction in the price of a new car while still
receiving a full refund from the manufacturer, few if any buyers
would sacrifice the extra money by returning the vehicle. This
would render the labeling and notification provisions largely
meaningless, a consequence the Legislature could not have
intended.
      Accordingly, we reduce the damage award to reflect the
value of plaintiff’s trade-in, and also reduce the civil penalty,
which is capped at twice the amount of actual damages. (§ 1794,
subd. (c).) As modified, we affirm the judgment.

                  FACTUAL BACKGROUND
      Plaintiff purchased a new Jeep Wrangler in January 2011
for approximately $40,000. Over the several years she owned the
vehicle, plaintiff experienced numerous problems with it and
brought it in for repair multiple times.
      Around April 2015, plaintiff requested that defendant, the
Jeep’s manufacturer, buy back the vehicle. Defendant did not do
so. Plaintiff then traded in the vehicle to a GMC dealership, in
exchange for which she received $19,000 off the purchase price of

                                   3
a GMC Yukon. Plaintiff’s counsel represented to the trial court
that the sticker price of the Yukon was $80,000.

                PROCEDURAL BACKGROUND
        In October 2016, plaintiff filed a lawsuit against defendant
alleging, inter alia, causes of action for breach of express and
implied warranty under the Act.3
        In advance of trial, plaintiff filed a motion in limine to
exclude “evidence or argument relating to a monetary offset
based on plaintiff’s sale of the subject vehicle.” (Capitalization
omitted.) The trial court granted the motion, and stated it would
address the issue of an offset after trial if plaintiff prevailed.
        At trial, plaintiff testified regarding her failed attempts to
sell the car before ultimately trading it in to the GMC dealer. In
light of this testimony, the trial court allowed defense counsel to
elicit testimony regarding the value of the trade-in. Defense
counsel asked plaintiff: “You sold it to a GMC dealership for
$19,000; right?” Plaintiff replied, “Right.”
        Following the close of evidence, defendant requested that
the trial court add an offset for the trade-in of the Jeep to the
special verdict form. The trial court declined the request,
preferring to decide the offset issue itself after trial. Plaintiff
agreed with this approach.
        The jury found in favor of plaintiff on her cause of action for
breach of express warranty. The jury awarded damages of
$39,584.43, which included $39,799 for the purchase price of the

      3  The complaint also alleged causes of action for fraudulent
inducement/concealment against defendant and negligent repair
against Glendale Dodge. Those causes of action are not at issue
in this appeal.

                                      4
Jeep plus certain specified charges, taxes, and fees; $5,000 in
incidental and consequential damages; and a deduction of
$5,214.57 reflecting the use plaintiff obtained from the vehicle
before first bringing it in for repairs. The jury also awarded a
civil penalty of $59,376.65, one-and-a-half times the damages
award, for a total award of $98,961.08.4
       Defendant then filed a motion requesting the trial court
reduce the damages by $19,000 to reflect the trade-in of the Jeep.
Because the jury had imposed a civil penalty one-and-a-half
times the damages, defendant requested the civil penalty be set
at one-and-a-half times the reduced damages, for a total award of
$51,461.07.
       The trial court denied the motion. Relying primarily on
Martinez v. Kia Motors America, Inc. (2011) 193 Cal.App.4th 187
(Martinez) and Jiagbogu v. Mercedes-Benz USA (2004)
118 Cal.App.4th 1235 (Jiagbogu), the trial court concluded that
reducing the damages and penalty would be “inconsistent with
the proconsumer policy supporting the Act,” and would “reward
defendant for its delay in replacing the car or refunding plaintiff’s
money when defendant had complete control over the length of
that delay, and an affirmative statutory duty to replace or refund
promptly.” The trial court stated that “ ‘[i]nterpretations that
would significantly vitiate a manufacturer’s incentive to comply
with the Act should be avoided.’ ” (Quoting Jiagbogu, at p. 1244.)
       Defendant filed motions for a new trial and to set aside and
vacate the judgment, again arguing that the damages and civil

      4The jury found in favor of plaintiff on her implied
warranty claim as well, awarding damages of $20,799. Those
damages were not added to the final award, presumably because
they were duplicative.

                                     5
penalty should be reduced to reflect the $19,000 trade-in. The
trial court denied the motions.
       Defendant timely appealed.

                   STANDARD OF REVIEW
       This appeal presents “a question of
statutory . . . interpretation subject to our independent review.”
(Dignity Health v. Local Initiative Healthcare Authority of
Los Angeles County (2020) 44 Cal.App.5th 144, 154.) “To
determine the Legislature’s intent in interpreting [the Act], ‘[w]e
first examine the statutory language, giving it a plain and
commonsense meaning.’ [Citation.] We do not consider statutory
language in isolation; instead, we examine the entire statute to
construe the words in context. [Citation.] If the language is
unambiguous, ‘then the Legislature is presumed to have meant
what it said, and the plain meaning of the language governs.’
[Citation.] ‘If the statutory language permits more than one
reasonable interpretation, courts may consider other aids, such
as the statute’s purpose, legislative history, and public policy.’ ”
(Kirzhner v. Mercedes-Benz USA, LLC (2020) 9 Cal.5th 966, 972
(Kirzhner).) “[W]e may reject a literal construction that is
contrary to the legislative intent apparent in the statute or that
would lead to absurd results.” (Simpson Strong-Tie Co., Inc. v.
Gore (2010) 49 Cal.4th 12, 27 (Simpson Strong-Tie).)
       “We keep in mind that the Act is ‘ “manifestly a remedial
measure, intended for the protection of the consumer; it should be
given a construction calculated to bring its benefits into
action.” ’ ” (Kirzhner, supra, 9 Cal.5th at p. 972.)

                                    6
                          DISCUSSION

A.    The Song-Beverly Consumer Warranty Act
      The Act “provides certain protections and remedies for
consumers who purchase consumer goods such as motor
vehicles covered by express warranties.” (Martinez, supra,
193 Cal.App.4th at p. 193.) The Act requires that manufacturers
of consumer goods covered by express warranties provide “service
and repair facilities” in the state “to carry out the terms of those
warranties.” (§ 1793.2, subd. (a)(1)(A).) “In order to trigger the
manufacturer’s service and repair obligations, the buyer . . . ‘shall
deliver nonconforming goods to the manufacturer’s service and
repair facility within this state. . . .’ ” (Martinez, at p. 193,
quoting § 1793.2, subd. (c).)5 Motor vehicles are nonconforming
for purposes of the Act if the nonconformity “substantially
impairs the use, value, or safety of the new motor vehicle to the
buyer or lessee.” (§ 1793.22, subd. (e)(1).)
      If a manufacturer “is unable to service or repair a new
motor vehicle . . . to conform to the applicable express warranties
after a reasonable number of attempts,” the manufacturer must
either “promptly replace the new motor vehicle” or “promptly
make restitution to the buyer . . . .” (§ 1793.2, subd. (d)(2).) “In
the case of restitution, the manufacturer shall make restitution
in an amount equal to the actual price paid or payable by the
buyer, including any charges for transportation and

      5  A buyer need not deliver the nonconforming goods to the
manufacturer’s service and repair facility if, “due to reasons of
size and weight, or method of attachment, or method of
installation, or nature of the nonconformity, delivery cannot
reasonably be accomplished.” (§ 1793.2, subd. (c).)

                                     7
manufacturer-installed options, but excluding nonmanufacturer
items installed by a dealer or the buyer, and including any
collateral charges such as sales or use tax, license fees,
registration fees, and other official fees, plus any incidental
damages to which the buyer is entitled under Section 1794,
including, but not limited to, reasonable repair, towing, and
rental car costs actually incurred by the buyer.” (§ 1793.2,
subd. (d)(2)(B).)
       The Act permits a manufacturer to reduce the restitution
“by that amount directly attributable to use by the buyer prior to
the time the buyer first delivered the vehicle to the manufacturer
or distributor, or its authorized service and repair facility for
correction of the problem that gave rise to the nonconformity.”
(§ 1793.2, subd. (d)(2)(C).) The Act provides a specific formula to
calculate this reduction based on the vehicle’s mileage prior to
the buyer first delivering it for repair.6 (§ 1793.2, subd. (d)(2)(C).)
       A buyer “who is damaged by a failure to comply with any
obligation under [the Act] . . . may bring an action for the
recovery of damages and other legal and equitable relief.”
(§ 1794, subd. (a).) “The measure of the buyer’s damages in an
action under this section shall include the rights of replacement

      6   “The amount directly attributable to use by the buyer
shall be determined by multiplying the actual price of the new
motor vehicle paid or payable by the buyer, including any charges
for transportation and manufacturer-installed options, by a
fraction having as its denominator 120,000 and having as its
numerator the number of miles traveled by the new motor vehicle
prior to the time the buyer first delivered the vehicle to the
manufacturer or distributor, or its authorized service and repair
facility for correction of the problem that gave rise to the
nonconformity.” (§ 1793.2, subd. (d)(2)(C).)

                                      8
or reimbursement as set forth in subdivision (d) of Section
1793.2, and the following: [¶] (1) Where the buyer has rightfully
rejected or justifiably revoked acceptance of the goods or has
exercised any right to cancel the sale, Sections 2711, 2712,
and 2713 of the Commercial Code shall apply. [¶] (2) Where the
buyer has accepted the goods, Sections 2714 and 2715 of the
Commercial Code shall apply, and the measure of damages shall
include the cost of repairs necessary to make the goods conform.”
(§ 1794, subd. (b).)
      Upon a showing that a manufacturer’s noncompliance with
the Act was “willful,” the Act allows “a civil penalty which shall
not exceed two times the amount of actual damages.” (§ 1794,
subd. (c).)7 A prevailing buyer may also recover reasonable
attorney’s fees and costs. (Id., subds. (d), (e)(1).)
      The Act also contains provisions preventing manufacturers
and others from reselling “used and irrepairable motor vehicles”
reacquired under the Act “without notice to the subsequent
purchaser.” (§ 1793.23, subd. (a)(2).) When a manufacturer
“reacquires” a vehicle, or “assists a dealer or lienholder to
reacquire” a vehicle, and knows or should know that the
manufacturer must replace or “accept[ the vehicle] for
restitution” under section 1793.2, subdivision (d)(2), the
manufacturer may not sell, lease, or transfer the vehicle to
another party without first retitling the vehicle in the name of
the manufacturer, requesting that the Department of Motor
Vehicles “inscribe the ownership certificate with the notation
‘Lemon Law Buyback,’ ” and “affix[ing] a decal to the vehicle”

      7 Subdivision (e) of section 1794 provides circumstances in
which a buyer may obtain a civil penalty without proving willful
noncompliance. That subdivision is not at issue in this case.

                                   9
indicating that it has been designated a “Lemon Law Buyback.”
(Civ. Code, § 1793.23, subd. (c); Veh. Code, § 11713.12, subd. (a).)
        In addition, a “manufacturer who reacquires or assists a
dealer or lienholder to reacquire a motor vehicle in response to a
request by the buyer or lessee that the vehicle be either replaced
or accepted for restitution because the vehicle did not conform to
express warranties” may not sell, lease, or transfer the vehicle
without providing written notice to the transferee of, inter alia,
the “Lemon Law Buyback” notation on the vehicle’s title, the
nonconformities reported by the original buyer or lessee, and any
repairs attempted to correct the nonconformities. (§§ 1793.23,
subd. (d), 1793.24, subd. (a)(2)–(4).) These notice requirements
also apply to “[a]ny person, including any dealer” who acquires
the vehicle for resale knowing the manufacturer had reacquired
it for replacement or restitution under the Act. (§ 1793.23,
subd. (e).)
        Similarly, the Act prohibits the sale, lease or transfer of a
vehicle “transferred by a buyer or lessee to a manufacturer
pursuant to [section 1793.2, subdivision (d)] or a similar statute
of any other state” absent disclosure of the vehicle’s
nonconformities, correction of those nonconformities, and a one-
year manufacturer warranty that the vehicle is free of the
nonconformities. (§ 1793.22, subd. (f)(1).)
        We refer to sections 1793.22, subdivision (f)(1) and 1793.23,
subdivisions (c) through (e) as the Act’s “labeling and notification
provisions.”

B.    Relevant case law
      There are three cases interpreting the Act that are of
particular relevance to the issues in this appeal. In its decision
below, the trial court relied on two of them, Martinez and

                                    10
Jiagbogu, as does plaintiff on appeal. Defendant relies on the
third case, Mitchell v. Blue Bird Body Co. (2000) 80 Cal.App.4th
32 (Mitchell). We discuss the cases in chronological order.

      1.     Mitchell
       Mitchell held that the restitution remedy under
section 1793.2, subdivision (d)(2) includes the finance charges
paid by a buyer who purchases a new motor vehicle on credit,
even though those charges are not listed as an item of recovery in
that subdivision. (Mitchell, supra, 80 Cal.App.4th at pp. 34, 36.)
       The court concluded that “the mere absence of a reference”
to finance charges in section 1793.2, subdivision (d)(2)(B) “is not,
by itself, controlling.” (Mitchell, supra, 80 Cal.App.4th at p. 36.)
The court quoted section 1790.4 of the Act, stating “ ‘[t]he
remedies provided by [the Act] are cumulative and shall not be
construed as restricting any remedy that is otherwise
available . . . .’ ” The court then cited cases for the proposition
that “the [A]ct is remedial legislation intended to protect
consumers and should be interpreted to implement its beneficial
provisions.” (Ibid.) “In addition,” the court stated, “section
1793.2(d)(2) expressly characterizes the refund remedy as
‘restitution.’ [Citation.] This remedy is intended to restore ‘the
status quo ante as far as is practicable . . . .’ ” (Mitchell, at p. 36,
quoting Alder v. Drudis (1947) 30 Cal.2d 372, 384 (Alder).)
       The court rejected the argument that, because
section 1793.2, subdivision (d)(2)(B) “does not expressly allow
recovery of paid finance charges,” it therefore impliedly prohibits
recovery of those charges. (Mitchell, supra, 80 Cal.App.4th at
p. 37.) “[F]inding an implied prohibition on recovery of finance
charges would be contrary to both the . . . Act’s remedial purpose
and section 1793.2(d)(2)(B)’s description of the refund remedy as

                                      11
restitution. A more reasonable construction is that the
Legislature intended to allow a buyer to recover the entire
amount actually expended for a new motor vehicle, including paid
finance charges, less any of the expenses expressly excluded by
the statute.” (Mitchell, at p. 37.)

      2.    Jiagbogu
       In Jiagbogu, our colleagues in Division Four rejected a
defendant manufacturer’s arguments that common law and
statutory principles of rescission and equitable offset limit the
remedies under the Act. The manufacturer argued that a request
for restitution under section 1793.2, subdivision (d)(2) constituted
a rescission, and therefore a buyer who continued to use the
vehicle after requesting restitution could waive his right to that
remedy. (Jiagbogu, supra, 118 Cal.App.4th at p. 1240.)
       Relatedly, the manufacturer argued that it could receive a
statutory offset for the continued use of the vehicle under
section 1692, a provision of the Civil Code, separate from the Act,
that allows for offsets in rescission actions. (Jiagbogu, supra,
118 Cal.App.4th at pp. 1240, 1242; § 1692 [providing, in relevant
part, “If in an action or proceeding a party seeks relief based
upon rescission, the court may require the party to whom such
relief is granted to make any compensation to the other which
justice may require and may otherwise in its judgment adjust the
equities between the parties”].)
       The court disagreed, noting that “section 1793.2 does not
refer to rescission or any portion of the Commercial Code that
discusses rescission,” nor does the Act “requir[e] formal rescission
to obtain relief.” (Jiagbogu, supra, 118 Cal.App.4th at p. 1240.)
Moreover, “the Act is designed to give broader protection to
consumers than the common law or [Uniform Commercial Code]

                                   12
provide. [Citation.] Had the Legislature intended this more
protective statute to be limited by traditional doctrines, or the
remedies provided in section 1793.2, subdivision (d) to be treated
as a rescission under common law, it surely would have used
language to that effect. We may not rewrite the section to
conform to that unexpressed, supposed intent.” (Jiagbogu,
at p. 1241.) Thus, principles of “waiver of right to rescind
or . . . statutory offsets for postrescission use” under section 1692
were not applicable to “request[s] for replacement or refund
under the Act.” (Jiagbogu, at p. 1242.)
         The court also rejected the manufacturer’s argument that it
was entitled to an offset for continued use of the vehicle as a
matter of equity. (Jiagbogu, supra, 118 Cal.App.4th at pp. 1242,
1244.) The court recognized that, under section 1790.3, the Act
did not supplant the provisions of the Commercial Code unless
the provisions conflicted with those of the Act. (Jiagbogu, at
p. 1242.) Moreover, “Commercial Code section 1103 provides that
in general, ‘principles of law and equity . . . shall supplement [the
Commercial Code’s] provisions.’ ” (Jiagbogu, at p. 1242.) Thus,
the manufacturer “could be entitled to an equitable offset,” but
“only if the offset does not conflict with provisions of the Act.”
(Ibid.)
         Having laid out these principles, the court concluded
that an offset for continued use of a vehicle after requesting
replacement or restitution would conflict with the provisions
of the Act. (See Jiagbogu, supra, 118 Cal.App.4th at pp. 1243–
1244.) The court noted that section 1793.2, subdivision (d)(2)
expressly provides for an offset for use of the vehicle prior to the
buyer first delivering the vehicle for repair, and otherwise
“comprehensively addresses” the relief to which a buyer is

                                    13
entitled, including replacement and restitution, specified taxes,
fees, and costs, and other incidental damages. (Jiagbogu, at
p. 1243.) “This omission of other offsets from a set of provisions
that thoroughly cover other relevant costs indicates legislative
intent to exclude such offsets.” (Id. at pp. 1243–1244.)
        The court further concluded that excluding an offset for
continued use after a request for replacement or restitution “is in
keeping with the Act’s overall purpose” to “protect consumers.”
(Jiagbogu, supra, 118 Cal.App.4th at p. 1244.) “The predelivery
offset creates an incentive for the buyer to deliver a car for
repairs soon after a nonconformity is discovered. An offset for the
buyer’s use of a car when a manufacturer, already obliged to
replace or refund, refuses to do so, would create a disincentive to
prompt replacement or restitution by forcing the buyer to bear all
or part of the cost of the manufacturer’s delay.” (Ibid.)
“Interpretations that would significantly vitiate a manufacturer’s
incentive to comply with the Act should be avoided.” (Ibid.)
        The court was unmoved that a buyer might “receive a
windfall if he is not required to pay for using the car after his
buyback request.” (Jiagbogu, supra, 118 Cal.App.4th at p. 1244.)
“[T]o give [the manufacturer] an offset for that use would reward
it for its delay in replacing the car or refunding [the plaintiff’s]
money when it had complete control over the length of that delay,
and an affirmative statutory duty to replace or refund promptly.
‘No one can take advantage of his own wrong.’ (§ 3517.) Nor can
principles of equity be used to avoid a statutory mandate.”
(Jiagbogu, at p. 1244.)

      3.    Martinez
     Martinez held that a “plaintiff does not need to possess or
own the vehicle to avail himself or herself of the Act’s remedies.”

                                    14
(Martinez, supra, 193 Cal.App.4th at p. 192.) Therefore the trial
court erred in granting summary judgment against a plaintiff
whose lien holder had repossessed and sold her vehicle. (Id.
at p. 190.)
       The court in Martinez began with the “plain language” of
the Act, which “says nothing about the buyer having to retain the
vehicle after the manufacturer fails to comply with its obligations
under its warranty and the Act. If the Legislature intended to
impose such a requirement, it could have easily included
language to that effect. It did not.” (Martinez, supra,
193 Cal.App.4th at p. 194.)
       The court distinguished cases from other states relied on by
the defendant, noting that the “ ‘lemon law[s]’ ” of those
jurisdictions had specific provisions requiring the buyer to return
the vehicle in order to receive restitution. (Martinez, supra, 193
Cal.App.4th at p. 196.) “The absence of a similar express
statutory requirement in California’s ‘lemon law’ is significant.
In line with the legislative intent and purpose, there is simply no
requirement that California consumers be able to tender the
allegedly defective car for purposes of availing themselves of the
remedies provided by the Act.” (Id. at p. 197.)
       In a footnote, the court rejected the argument “that return
of the vehicle is ‘compelled’ ” by the Act’s labeling and notification
provisions under sections 1793.22, subdivision (f) and 1793.23,
subdivisions (d) and (e). (Martinez, supra, 193 Cal.App.4th at
p. 194, fn. 4.) “Because defendant did not ‘reacquire’ the present
vehicle, the [notification] statutes are simply inapplicable and do
not assist our interpretation of the relevant provisions.” (Ibid.)
       The court further was concerned that “[t]o read into the
statute an unexpressed requirement that the consumer possess

                                     15
or own the vehicle as a condition to obtaining relief would have a
chilling effect on the availability of the Act’s remedies.”
(Martinez, supra, 193 Cal.App.4th at p. 195.) The court surmised
that many consumers, faced with continuing payments for a
“derelict vehicle” while pursuing the Act’s remedies in court,
“would reasonably do just what plaintiff did here—discontinue
the payments and allow the vehicle to be repossessed.” (Ibid.) To
preclude those consumers from the Act’s remedies “[n]ot only
is . . . inconsistent with the proconsumer policy supporting the
Act, but . . . would encourage a manufacturer who has failed to
comply with the Act to delay or refuse to provide a replacement
vehicle or reimbursement; any delay increases the likelihood that
the buyer will be forced to relinquish the car to a lienholder.”
(Ibid.) “Defendant’s construction of the statute is calculated to
allow the manufacturer to sidestep the protections afforded the
consumer by the Act and encourage ‘the manufacturer’s
unforthright approach and stonewalling of fundamental warranty
problems.’ ” (Ibid.)
         Citing Jiagbogu, the court also concluded that the Act
was not subject to common law and Commercial Code
requirements that “a party seeking to rescind a contract must
generally return any consideration received.” (Martinez, supra,
193 Cal.App.4th at pp. 197–198.) The court was not persuaded
by the defendant’s reliance on the discussion of restitution in
Mitchell and Alder: Mitchell, concerned with whether restitution
under section 1793.2, subdivision (d)(2) included finance charges,
“has no application to the issues in this case and Alder predates
the Act by 23 years and applies common law rules of equity.”
(Martinez, at p. 199.)

                                  16
C.    Analysis

      1.    Restitution under the Act does not include
            amounts recovered from the trade-in of the
            defective vehicle
       Defendant does not challenge the holding of Martinez or the
principle that a buyer need not return the vehicle to the
manufacturer to receive restitution under the Act. Instead,
defendant contends that if a buyer recovers some of the purchase
price of the vehicle through a trade-in to a third party dealer,
rather than returning it to the manufacturer, the Act requires
that the buyer’s restitution be reduced accordingly.
       Defendant raises three arguments in favor of its position.
First, defendant argues that the concept of restitution
contemplates that the buyer is restored to the same economic
position she would have been in had she never purchased the
vehicle. By obtaining a full refund in addition to the proceeds
from the trade-in, plaintiff received “a windfall that cannot
possibly be characterized as ‘restitution.’ ”
       Second, defendant argues that the Commercial Code
sections expressly incorporated into section 1794 of the Act
“recognize that a buyer’s warranty recovery is reduced by the
amount she obtains by reselling the nonconforming goods.”
       Third, defendant contends that the trial court’s decision, if
upheld, would effectively nullify the Act’s requirement that
manufacturers notify subsequent purchasers of reacquired
vehicles’ defects, because “no rational consumer would return her
defective car” and forego the opportunity to recover additional
money by selling it. This would undermine “the Legislature’s
protections for downstream consumers in the used-car market.”

                                   17
       We agree with the first and third arguments and therefore
do not address defendant’s second argument under the
Commercial Code.
       Like the court in Mitchell, we think it significant that the
Legislature chose the term “restitution” to define the Act’s refund
remedy in section 1793.2, subdivision (d)(2). The Mitchell court
interpreted that choice to mean that the Legislature intended
that remedy “to restore ‘the status quo ante as far as is
practicable . . . .’ ”—in other words, to place the buyer in the
position he or she would have been in had he or she not
purchased the defective vehicle. (Mitchell, supra, 80 Cal.App.4th
at p. 36.) Relying on this principle, the Mitchell court interpreted
section 1793.2, subdivision (d)(2) to permit the recovery of costs
beyond those expressly listed there, in that case the interest
payments on the vehicle loan, in order to make the plaintiff
whole. (Mitchell, at p. 37).
       Just as the Mitchell court concluded that “restitution”
under the Act cannot leave a plaintiff in a worse position than
when he or she purchased the vehicle, it similarly would be
inimical to the concept of restitution to leave a plaintiff in a
better position, rather than merely restoring her to the status quo
ante. Yet that is the outcome of the trial court’s ruling here—
plaintiff obtains not only a full refund from defendant, but also
the $19,000 benefit she had already obtained by trading in the
Jeep. It is true that section 1793.2, subdivision (d)(2)(B) sets the
amount of restitution at “the actual price paid or payable.” To
read this literally, however, to permit plaintiff to recover far more
from defendant than her actual economic loss disregards the
Legislature’s choice of the term “restitution,” and leads to an
unjustified windfall.

                                    18
       Further, “[w]e do not consider statutory language in
isolation,” and must “examine the entire statute to construe the
words in context.” (Kirzhner, supra, 9 Cal.5th at p. 972.)
Applying those principles of statutory construction, we agree with
defendant that to interpret section 1793.2, subdivision (d)(2)(B) to
permit plaintiff to trade in her vehicle and still receive a full
refund from defendant undercuts the Act’s labeling and
notification provisions, which require manufacturers to label
vehicles reacquired under the Act as “lemons” and to notify
subsequent buyers of that fact. (§§ 1793.22, subd. (f); 1793.23,
subds. (c)–(e).)
       Importantly, the labeling and notification provisions are
triggered only when a manufacturer reacquires a vehicle or
assists a dealer or lienholder in reacquiring a vehicle. (See
§ 1793.22, subd. (f) [applying to persons transferring vehicles
previously transferred to a manufacturer under § 1793.2,
subd. (d)(2)]; § 1793.23, subds. (c)–(d) [applying to manufacturers
who reacquire or assist a dealer or lienholder in reacquiring a
vehicle]; id., subd. (e) [applying to persons who acquire vehicles
for resale knowing the vehicles were reacquired by the
manufacturer].) Accordingly, they are not triggered when a
buyer resells or trades in the vehicle, as plaintiff did in this case.
       This limitation makes sense only if, in the usual case, the
vehicle is returned to the manufacturer rather than resold or
traded in. Otherwise, the labeling and notification provisions
would have marginal utility, and the used-car market would be
replete with unlabeled lemons resold or traded in by their
dissatisfied owners. Yet this would be the outcome if buyers
could resell or trade in their vehicles and still receive a full
refund of the purchase price under the Act. Under that

                                    19
interpretation, we cannot conceive why a buyer would ever return
a vehicle to the manufacturer rather than obtain the extra
proceeds from a resale or trade. Return of the vehicle to the
manufacturer would be the rare exception rather than the rule.
       In short, a ruling in plaintiff’s favor here would render the
labeling and notification provisions largely meaningless, a result
contrary to the rules of statutory construction. (Aleman v.
Airtouch Cellular (2012) 209 Cal.App.4th 556, 568 [“We seek to
avoid any interpretation that renders part of the statute
‘ “meaningless or inoperative” ’ ”].) Worse, it would incentivize
buyers to reintroduce defective vehicles into the market without
the warnings a manufacturer otherwise would have to provide.
This cannot have been the Legislature’s intent.
       We thus conclude that the requirement in section 1793.2,
subdivision (d)(2)(B) that a manufacturer “make restitution in an
amount equal to the actual price paid or payable by the buyer”
does not include amounts already recovered by the buyer through
trade-in. To conclude otherwise would be “contrary to the
legislative intent apparent in the statute” and “would lead to
absurd results” (Simpson Strong-Tie, supra, 49 Cal.4th at p. 27),
including a near nullification of the labelling and notification
provisions.
       Jiagbogu and Martinez, the cases relied upon by the trial
court, presented decidedly different circumstances. In those
cases, rulings in the manufacturers’ favor would have deprived
the plaintiffs of the full purchase price of their vehicles—in
Jiagbogu, by reducing the refund to reflect use of the vehicle
after the buyer requested restitution (Jiagbogu, supra,
118 Cal.App.4th at p. 1240), and in Martinez by barring recovery
at all after the vehicle was repossessed (Martinez, supra, 193

                                   20
Cal.App.4th at p. 190). That concern does not exist here, where
plaintiff can recover the full purchase price through a
combination of the trade-in and restitution from defendant.
Plaintiff is not “bear[ing] all or part of the cost of the
manufacturer’s delay.” (Jiagbogu, at p. 1244.)
       Jiagbogu and Martinez are further distinguishable in that
their holdings do not incentivize plaintiffs to thwart other
provisions of the Act. It is true the repossessed vehicle in
Martinez, like the traded-in vehicle here, presumably would
evade the Act’s labeling and notification provisions. The holding
in Martinez did not financially reward the plaintiff for this result;
it merely relieved her of the burden of shouldering payments for
a derelict vehicle in order to seek remedies under the Act.
       Here, in contrast, plaintiff received a $19,000 discount on
the price of a new vehicle that, according to plaintiff’s counsel,
cost twice the purchase price of the Jeep she traded in. Allowing
plaintiff also to receive a full refund from defendant would not
relieve a financial burden, as was the case in Martinez. Instead,
it would give plaintiff a windfall and incentivize future plaintiffs
to seek that same windfall. Neither Jiagbogu nor Martinez
confronted that possibility. Martinez, moreover, did not address
the question before us, that is, what impact not returning the
vehicle would have on the amount of a plaintiff’s restitution
under the Act.
       Plaintiff raises a number of arguments challenging
defendant’s interpretation of the Act. Plaintiff argues, in line
with Jiagbogu, that section 1793.2, subdivision (d)(2)’s single
express offset—for use of the vehicle before it is first brought in
for repairs—indicates legislative intent not to permit other
offsets. (Jiagbogu, supra, 118 Cal.App.4th at pp. 1243–1244.)

                                    21
We have no quarrel with this principle to the extent it is
consistent with the notion that a buyer is entitled to recover the
full purchase price of the vehicle, with no deductions for wear-
and-tear apart from that which is expressly permitted. It does
not follow that the Legislature intended a buyer to recover more
than the full purchase price of the vehicle, which would be
inconsistent with the Legislature’s chosen term “restitution,” and
would undercut the Act’s labeling and notification provisions.
       Plaintiff contends that buyers trading in their vehicles is
“predictable, and “[t]here is no reason to assume that the
Legislature did not fully anticipate the very situation presented
here.” Thus, plaintiff argues, the “omission of any offset for
trade-in credits must be read as a deliberate decision, not an
oversight or an invitation for courts to imply provisions.”
       Our interpretation does not assume an oversight on the
part of the Legislature. Our interpretation harmonizes express
provisions of the Act, including the term “restitution” and the
extensive labeling and notification provisions for reacquired
vehicles, which indicate a legislative expectation that, in the
usual case, buyers will return their defective vehicles to the
manufacturer. This is not consistent with the regime advocated
by plaintiff that would permit buyers to recover the full purchase
price in addition to amounts obtained from trade-in or resale,
thus incentivizing them not to return defective vehicles to the
manufacturer.
       Plaintiff claims that the legislative history of amendments
to the Act demonstrates a concern that manufacturers exploited
ambiguities in the Act’s original language to claim offsets that
“unfairly reduc[ed] a consumer’s restitution,” such as offsets for
sales tax, license and registration fees, and rental car use.

                                   22
Plaintiff contends the Legislature thus enacted the
“comprehensive damages provision” in order to remove those
ambiguities and provide a straightforward formula to calculate
damages in the consumer’s favor. Accepting arguendo plaintiff’s
characterization of the legislative history, it merely reinforces the
principle that the Act is intended to make buyers whole. Our
interpretation of the Act, which allows plaintiff to recover the full
purchase price of the vehicle through a combination of the trade-
in and damages from defendant, does not conflict with this
principle.
       Plaintiff disputes that Mitchell supports our interpretation
of the term “restitution,” because “Mitchell held that the Act had
to be expansively construed to provide remedies for consumers,”
not manufacturers. The significance of Mitchell is its emphasis
that the Legislature chose the term “restitution” for a reason,
indicating an intent that buyers of defective vehicles be restored
to the status quo ante. (Mitchell, supra, 80 Cal.App.4th at p. 36.)
Nothing in our holding conflicts with this principle—plaintiff
receives the full purchase price of her vehicle, as intended by the
Legislature. It is granting her more than the purchase price that
conflicts with the Legislature’s choice of the term “restitution.”
       To the extent Martinez took issue with Mitchell’s applying
a common-law gloss to the Act’s use of the term “restitution,”
Martinez did so in the context of preserving the plaintiff’s right to
recover under the Act despite not returning the vehicle.
(Martinez, supra, 193 Cal.App.4th at p. 199.) As we have noted
above, Martinez did not confront the situation presented here, in
which plaintiff would be financially rewarded for not returning
the vehicle. Martinez therefore is not instructive on whether the
term “restitution” may be interpreted to allow that result.

                                    23
       Plaintiff’s argument under Mitchell also relies on the false
premise that to disallow her a double recovery would be anti-
consumer. Our interpretation is neutral. It fully compensates
plaintiff while implementing the protective measures in the
labeling and notification provisions in the Act, which benefit the
consuming public.
       Plaintiff contends that interpreting the Act as we have
effectively rewards defendant for failing to provide the prompt
restitution required by the Act. Plaintiff characterizes a
reduction in damages along with a lowered amount of allowable
civil penalty as a “windfall.” Plaintiff argues this will incentivize
similar dilatory conduct from manufacturers hoping buyers will
trade in their vehicles in frustration, rendering “superfluous” the
Act’s requirement that manufacturers provide prompt
restitution.
       It is true that prior cases have rejected interpretations of
the Act that allow manufacturers to benefit from delays in
compliance. (See, e.g., Jiagbogu, supra, 118 Cal.App.4th at
p. 1244 [rejecting restitution offset that “would reward [the
manufacturer] for its delay in replacing the car or refunding [the
buyer’s] money when it had complete control over the length of
that delay, and an affirmative statutory duty to replace or refund
promptly”].) To the extent that concern exists here, however, it is
outweighed by the consequences of interpreting the Act in
plaintiff’s favor, namely actively incentivizing buyers to introduce
lemon vehicles into the used-car market without the labeling and
notifications required of manufacturers who reacquire vehicles.
Neither Jiagbogu nor any other case we have found confronts a
circumstance in which a ruling against the manufacturer would
have such negative consequences. We further note that the Act’s

                                    24
provisions of a civil penalty and attorney fees to a successful
plaintiff serve to encourage prompt compliance, even if the
manufacturer may reduce a plaintiff’s restitution by the trade-in
value of the vehicle.
       Plaintiff disputes the concern that buyers trading in their
vehicles rather than returning them to the manufacturer will
lead to “un-branded lemons entering the stream of commerce.”
Plaintiff argues that a dealer who accepts a trade-in is capable of
determining whether the vehicle is defective. Plaintiff further
contends that the Act contains sufficient protections for buyers of
used vehicles, including implied warranties of fitness and
merchantability, as well as any protections available under an
express warranty.
       The fact that a dealer may on its own discover the
deficiencies in a traded-in vehicle, or that a buyer upon
discovering those deficiencies may seek various warranty
remedies, is hardly a substitute for informing a purchaser up
front that the vehicle is a reacquired lemon and providing the
vehicle’s history of nonconformities and repairs. Indeed, in
enacting the robust labeling and notification provisions in
sections 1793.22 and 1793.23, the Legislature clearly indicated
an intent to provide greater protections for potential buyers of
known lemons than would be available to buyers of other used
cars. As we have already discussed, accepting plaintiff’s
interpretation of the Act would severely undercut if not nullify
those protections.
       Plaintiff argues that statutory damages may exceed actual
damages, and thus it is appropriate for her to recover full
restitution from defendant despite the $19,000 trade-in. Notably,
plaintiff’s cited authorities, none of which is a California case, do

                                    25
not apply this principle in the context of restitution. (See
Parchman v. SLM Corp. (6th Cir. 2018) 896 F.3d 728; Universal
Underwriters Insurance Company v. Lou Fusz Automotive
Network, Inc. (8th Cir. 2005) 401 F.3d 876.) Regardless, to apply
that principle here would incentivize buyers not to return their
vehicles.
        Plaintiff raises additional arguments premised on the
notion that what defendant seeks here is an “equitable offset.”
Plaintiff argues an equitable offset is an affirmative defense that
defendant did not plead in its answer and therefore forfeited.
Plaintiff further contends that trial courts have discretion to
grant or deny equitable offsets, and the court did not abuse its
discretion denying one here. Finally, plaintiff argues that if
defendant is entitled to an equitable offset, it would be “for the
value of a vehicle that was not returned,” and therefore a bench
trial is necessary to determine that value. In making this last
argument, plaintiff asserts that the trade-in credit for the Jeep is
not an accurate measure of its market value.
        Our conclusion that plaintiff is not entitled to a double
recovery is not premised on a discretionary offset under the trial
court’s equitable power. Our conclusion is based on an
interpretation of the Act’s provisions, from which we conclude
“restitution” under the Act cannot include amounts the buyer has
already obtained by trading in the vehicle. The issue is not that
defendant has been deprived of the value of the traded-in vehicle;
it is that plaintiff’s double recovery defies the definition of
“restitution” and will incentivize buyers to undercut the Act’s
labeling and notification provisions. The interpretation that
avoids that absurd result is one in which plaintiff’s damages are
reduced by the amount of her trade-in. To the extent this

                                    26
constitutes an “offset,” it is inherent in the Act, not principles of
equity. Plaintiff’s arguments based on equitable offset therefore
fail.
       Plaintiff’s briefing suggests that the $19,000 does not even
reflect the value plaintiff herself received, and therefore should
not be the basis of an offset. Plaintiff states that dealers
sometimes assign an artificially high value to a trade-in, then
raise the purchase price to compensate. Plaintiff argues there
was no evidence that the trade-in credit “actually reduced the
price of the Yukon.”
       We reject this argument. Plaintiff testified that she sold
the Jeep to the GMC dealer for $19,000, which, in the context of a
trade-in, means she received a $19,000 reduction in the price she
agreed to pay for the Yukon. The fact that the dealer may have
inflated the price of the Yukon or the value of the trade-in is
immaterial; what matters is what plaintiff bargained for and
received. We hold her to that bargain and reduce her restitution
award accordingly.

      2.    It is appropriate to preserve as much of the
            civil penalty as the Act allows because the jury
            already factored in the trade-in proceeds
            plaintiff received
      The jury awarded plaintiff a civil penalty of $59,376.65
on damages of $39,584.43. As discussed, section 1794,
subdivision (c) caps the civil penalty at twice actual damages.
Plaintiff concedes that, to the extent defendant is entitled to
reduce the damages it owes by the value of her trade-in, the civil
penalty cannot exceed twice the reduced damages. Thus, plaintiff

                                    27
concedes that if we reduce plaintiff’s award by $19,000 to
$20,584.43, her civil penalty cannot exceed $41,168.86.8
       Defendant argues that, because the jury imposed a civil
penalty one-and-a-half times the amount of the original damages
award, that same proportion should apply to the reduced award
here, resulting in a penalty of $30,876.65. Defendant claims the
“verdict makes clear that the jury did not intend to impose the
maximum penalty. Instead, the excessive penalty resulted from
the erroneous inflation of [plaintiff’s] compensatory damages.”
       Plaintiff disagrees, arguing that it “would infringe on [her]
right to a jury trial if the Court were to reduce the amount a jury
decided any more than necessary to ensure the award does not
exceed the legal maximum.”
       Courts have expressed concern that “if the jury is not
informed about the mitigation of plaintiff’s actual losses, there is
a strong likelihood that the jury will return an inflated award of
punitive damages.” (Krusi v. Bear, Stearns & Co. (1983)
144 Cal.App.3d 664, 681, italics omitted.) In such a
circumstance, it may be appropriate for the trial court, after
determining any offsets to a compensatory damages award, to
“consider whether there should be a reduction in the amount of
punitive damages.” (Ibid.; but see Behr v. Redmond (2011)
193 Cal.App.4th 517, 537 [appellate court’s reduction of
compensatory damages did not require reduction of punitive
damages award when it was “not so disproportionate as to render
it ‘suspect’ ”].)

      8 Given plaintiff’s concession, we express no opinion
whether the civil penalty cap under section 1794, subdivision (c)
should be calculated before or after reducing plaintiff’s damages
to account for a trade-in or resale.

                                    28
      Accepting arguendo that a court may reduce a punitive
damage award when the jury was unaware that the plaintiff
mitigated her losses, that principle would not apply here. In the
instant case, the jury was aware of the mitigation of plaintiff’s
losses, because the jury heard plaintiff testify that she traded in
the Jeep for $19,000. We may assume the jury’s civil penalty
award factored in that information. We therefore see no reason
not to preserve as much of the jury’s civil penalty award as is
permitted under section 1794, that is, twice plaintiff’s reduced
damages. Given that conclusion, we do not reach plaintiff’s
argument regarding her right to a jury trial.

                         DISPOSITION
      The award to plaintiff is reduced to $61,753.29, reflecting
damages of $20,584.43 and a civil penalty of $41,168.86. As
modified, the judgment is affirmed. Defendant is awarded its
costs on appeal.
      CERTIFIED FOR PUBLICATION.

                                           BENDIX, J.

We concur:

      ROTHSCHILD, P. J.                    CHANEY, J.

                                    29