On May 2, 2024, California’s Second District Court of Appeals (appeals court for LA, Ventura, San Luis Obispo and Santa Barbara counties) issued an important decision on California’s lemon law. This decision allows buyers of used cars with the balance of the manufacturer’s warranty to use the California lemon law to obtain relief and damages. Stiles v. Kia Motors America, Inc. (case is too new for an official citation, but you can Google the decision.)
This is an important decision as many manufacturers sell vehicles with lengthy warranties—the basic warranties on many vehicles commonly extend to 4 years and 50,000 miles or more. Car dealers currently offer for sale “certified pre-owned” vehicles which are lease returns, where the cars were originally leased but the lease has expired. Lease terms may vary but a 3 year/36,000 mile lease is common. The dealers take back these lease returns and then offer them for sale as “certified pre-owned vehicles” that come with the manufacturer’s warranty.
If the original manufacturer’s warranty has not expired (i.e. the lease driver only drove 36,000 miles out of a 50,000 basic warranty), then the second buyer has the remaining balance of the manufacturer’s warranty: 14,000 miles or the time remaining before warranty expiration. The buyer of one of these “certified pre-owned vehicles” may also receive a separate manufacturer’s warranty covering the vehicle for an additional term, sometimes up to 100,000 miles.
Thanks to the Stiles decision, buyers of used cars, whether or not “certified pre-owned”, that were sold with the balance of the original manufacturer’s warranty, now have rights under the California lemon law. If such vehicles cannot be repaired for defects following a reasonable number of repair attempts, the buyer can seek a refund of the purchase price or cash damages, and a winning consumer can have his or her attorney’s fees paid by the manufacturer.
In 2022, California’s Fourth District Court of Appeals (covering San Diego, Riverside and San Bernardino counties) decided Rodriguez v. FCA US LLC, 77 Cal. App. 5th 209. The Rodriguez decision held the opposite—that the California lemon law only applies to new cars, and does not cover used cars sold with the balance of the original manufacturer’s warranty. What this means is that if the car is purchased in the Second District (LA, Ventura, etc.), the Stiles rule applies. If purchased in the Fourth District (Riverside, San Diego, San Bernardino), the Rodriguez rule applies. Of course, if someone buys a car in the Fourth District and has a lemon law situation, he or she can always contact my firm to see if we can file the case in Los Angeles—there are several ways for a consumer to file his or her lawsuit in LA even if the car is bought in Riverside, San Diego or San Bernardino.
The Rodriguez decision did not specifically address “certified pre-owned warranties”, and my firm takes the position that “certified” pre-owned vehicles are 100% covered by the California lemon law.
I hope this short article helps you. Thank you for reading.